The Calgary-based company said its budget for this year now sits at between $1.8 billion and $2 billion. In mid-December, Cenovus figured it would spend between $2.5 and $2.7 billion, which was already 15 per cent lower than 2014 levels.
"I believe crude oil prices will rebound, but the timing is uncertain. We're taking the actions we deem prudent to help protect the financial resilience of Cenovus without compromising our future," said CEO Brian Ferguson in a release.
U.S. benchmark crude for March delivery was at around US$44 a barrel on Wednesday. Cenovus is assuming a US$50.50 price for 2015.
When Cenovus released its initial 2015 budget, crude prices were at US$60 and the company was expecting US$77 West Texas Intermediate crude for 2015. Last summer, crude was well above US$100.
Bearing the brunt of the budget cuts are the bulk of Cenovus' conventional drilling program in southern Alberta and Saskatchewan and longer-term oilsands projects. Its core Christina Lake and Foster Creek oilsands projects in northeastern Alberta will continue to be funded.
Cenovus expects its total crude production to be between 195,000 and 212,000 barrels a day, slightly lower than the range it predicted back in December.
The company plans to shuffle its employees within the company to better align with its spending plans. Its contract workforce will be reduced, but it didn't say by how much.
Ferguson said there could be some silver lining in the downturn.
"As a result of the dramatic slowdown across the energy sector, we expect to see continued reductions in demand for labour, service and materials. This should create potential opportunities for us to drive improvements in our cost structure."
Cenovus shares were off by about three per cent at $28.90 on the Toronto Stock Exchange around mid-day Wednesday.
"Cenovus is one of the growth entities in the oilsands space, so to push out growth further in time will weigh on the stock," CIBC World Markets analyst Arthur Grayfer wrote in a note to clients.
The firm has been mulling options for its royalty land holdings in Alberta. Grayfer sees Cenovus selling them rather than spinning them out into a new publicly traded entity, much how Encana Corp. (TSX:ECA) created PrairieSky Royalty Ltd. (TSX:PSK) last year. He said the land is likely worth around $900 million.
Cenovus is not the first major oilsands player to rewrite its 2015 budget in the face of lower crude prices. Earlier this month, Canadian Natural Resources Ltd. (TSX:CNQ) reduced its 2015 budget by $2.4 billion. Suncor Energy Inc. (TSX:SU) has reduced its workforce by 1,000 and its budget by $1 billion.
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