Cenovus net profit jumps on gain from sale of royalty unit

“There’s more uncertainty in the macro environment today than there has been”, said Ferguson.

Cenovus shares were up 2.4 per cent at $19.70 in afternoon trading in Toronto. The company’s 52-week high price was $29.11 last November.

The company said about 35 per cent of the new cost savings is expected to come from lower capital spending.

The job cuts mean the company will have 24 percent fewer staff at the end of the year than in 2014, Ferguson said during an earnings conference call.

“We expect about 60 per cent of these cost savings to be sustainable even with oil prices recovering to the $60 to $65 WTI range”.

Cenovus said in June it had agreed to sell its portfolio of oil and gas royalty properties to the Ontario Teachers’ Pension Plan for about C$3.3 billion to strengthen its balance sheet and create flexibility to invest in growth projects.

Cenovus said expansions at Christina Lake and Foster Creek in Alberta, joint ventures with ConocoPhillips, are expected to complete in 2016 and would add about 100,000 bpd of production capacity.

Oil production rose 6 per cent to average 210,422 barrels per day in the quarter.

The company said net income rose to C$1.8 billion, or C$2.16 a share, from C$354 million, or 47 cents, a year earlier.

Cenovus Energy Inc. said a workforce reduction will help lower costs this year and next as the Canadian oil producer tackles the oil-price slump.

The company paid out about $3 million in severance in the third quarter and expects to incur another $32 million in severance cost in the fourth quarter, in relation to its most recent round of staff cuts.

CVE says it cut oil sands per-unit operating costs by 23% Y/Y, with total 2015 savings of ~C$400M compared with a July forecast of C$280M.

That’s on top of the 800 positions Cenovus eliminated in February. He also pointed out four executive vice-presidents are retiring and their internal replacements will receive “capped” compensation with their promotions.