Cenovus, Husky take heavy first quarter hits
Cenovus Energy Inc. reported a $1.8-billion loss in its first quarter as oil prices fell due to a drop in demand as a result of the COVID-19 pandemic and a oil price war between Saudi Arabia and Russia.
According to Canadian Press, the oilsands producer says the loss amounted to $1.46 per diluted share for the quarter compared with a profit of $110 million or nine cents per diluted share in the first quarter of 2019.
Like Cenovus, Husky Energy Inc. slashed its dividend as it reported a $1.7-billion loss in its first quarter due to impairment charges related to the plunge in crude oil prices as a result of the pandemic, with the company now paying a quarterly dividend of 1.25 cents per share, down from 12.5 cents per share.
Husky chief executive Rob Peabody told Canadian Press the company was hit by severe pricing headwinds, amplified by geopolitical events, COVID-19 and the associated collapse of global oil and refined product demand.
“We have acted quickly to cut our planned capital spending by half, safely shut in production and reduce refinery throughput to avoid cash-negative margins, with a view that global oil and refined product prices could remain under pressure for a while,” Peabody said.
On an operating basis, Cenovus says it lost nearly $1.2 billion or 97 cents per diluted share in the quarter compared with an operating profit of $69 million or six cents per share a year ago.
Cenovus has moved to protect itself from the downturn by slashing capital spending, suspending its dividend and rolling back salaries.
The company told Canadian Press it is managing its production levels as market conditions change to optimize the value it receives for its products.
Cenovus says its oilsands production has been reduced by approximately 60,000 barrels per day, but that it has the flexibility to ramp up production when market conditions improve.