"The recent volatility in world oil prices is creating a challenging environment in which to set plans for 2015," CEO Brian Ferguson told analysts on a conference call Thursday.
"It is the kind of price environment that demands flexibility and financial resilience."
Next year's capital budget is expected to range between $2.5 billion and $2.7 billion, down 15 per cent from this year's projected spending.
The bulk of the 2015 expenditures — $2.1 billion — is what Cenovus describes as "committed capital" for its flagship Christina Lake and Foster Creek oilsands projects, safety and maintenance and contractual obligations.
Cenovus expects to maintain its 26.6-cent quarterly dividend throughout 2015 and has set aside between $400 million and $600 million for "discretionary" capital.
Spending on projects that would deliver production growth in the long-term, such as Narrows Lake, Telephone Lake and Grand Rapids will take a back seat. Spending on Narrows Lake is projected to drop 64 per cent, while "emerging" oilsands projects are seeing a 46 per cent cut.
But even at reduced spending levels, Cenovus can add 80,000 barrels per day in production in 2016 and 2017 from expansions underway at its existing Foster Creek and Christina Lake operations.
In an interview, Ferguson described the mood at Cenovus as "determined" rather than gloomy.
In fact, he sees some silver lining in the downturn as construction costs fall.
"I think this is one of those opportunities where we can really achieve some improvements around costs and productivity," he said.
Cenovus had already been targeting between $400 million and $500 million in annual cost savings.
"It couldn't surprise me if we're able to exceed that, too, given the current low price environment," Ferguson said.
For next year, Cenovus plans to hold its headcount level at about 5,000 — between employees and contractors — rather than make any additions. The workforce is about double where it was five years ago, but is now at an appropriate level, Ferguson said.
Company-wide oil and natural gas liquids production is expected to grow by about four per cent to between 197,000 and 214,000 barrels per day next year.
Cenovus estimates its 2015 cash flow at between $2.6 billion and $2.9 billion, down 29 per cent from this year.
The Cenovus budget is based on oil prices being higher than their current levels, but below what they were earlier this year.
Its estimates are based on West Texas Intermediate crude at between US$74 and US$81 a barrel on average next year. The January crude oil contract on the New York Mercantile Exchange is currently around US$60 a barrel, down more than 40 per cent since the summer.
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