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UPDATE 2-Cenovus Energy to axe more jobs during cost-cutting push

Kitco News

(Adds details on layoffs, analyst comment)

Dec 14 (Reuters) - Canadian oil sands company Cenovus Energy Inc said on Thursday it would cut an additional 15 percent of its workforce and lower operating expenses as new chief executive, Alex Pourbaix, seeks to aggressively reduce costs and lower debt.

The move was expected as Pourbaix last month vowed to focus on cost cuts as the company remains under investor pressure to justify its C$17 billion ($13.3 billion) deal to buy ConocoPhillips assets. Calgary-based Cenovus, which hired Pourbaix last month, had said in June that it expected to eliminate some jobs, but did not specify the scale.

The company also said it expected to reduce per-barrel operating costs by 8 percent, compared with estimated 2017 expenses, and lower capital costs needed to sustain each oil barrel by 12 percent. "Our priorities for 2018 are to reduce costs and deleverage our balance sheet," Pourbaix said in a statement.

Cenovus also cut spending in the Deep Basin gas assets it bought from ConocoPhillips, which had been unpopular in part because they departed from the Canadian company's oil sands focus.

Raymond James analyst Chris Cox said such moves were "consistent with the messaging" Pourbaix has provided.

"Tackling the cost structure and improving the balance sheet appear to be the hallmarks of the early strategy for new CEO," he said.

Cenovus also announced the departures of three top-level executives, which was also expected given that new CEOs typically shake up their management teams, said Desjardins analyst Justin Bouchard.

As of Nov. 15, Cenovus had raised just under C$4 billion out of a targeted C$4 billion to C$5 billion to pay down debt it took on to fund the ConocoPhillips deal.

Cenovus also said it expected to produce between 483,000 to 510,000 barrels of oil equivalent per day in 2018, an increase of 4-5 percent compared to 2017. Cenovus shares were last down 1.3 percent at C$11.73 on the Toronto Stock Exchange, while the energy benchmark was down 0.2 percent. (Reporting by Anirban Paul in Bengaluru and Ethan Lou in Calgary, Alberta; Editing by Jim Finkle and Andrew Hay)

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