BUSINESS
10/27/2020 15:20 EDT

Cenovus Energy To See Major Layoffs After Merger With Husky

The largest Canadian energy industry merger in years will result in more than 2,000 job cuts.

Todd Korol / Reuters
Steam generators at the Christina Lake Cenovus Energy project, 120 km south of Fort McMurray, Alta., Aug. 15, 2013. Cenovus is planning major layoffs after announcing a merger with Husky Energy earlier this week.

TORONTO/WINNIPEG, Manitoba (Reuters) ― Cenovus Energy Inc. plans to cut 20 per cent to 25 per cent of its workforce after it acquires Husky Energy Inc., the companies said on Tuesday, as Cenovus begins to slash costs in the Canadian oil patch’s biggest merger in nearly four years.

The job losses could total about 2,150, based on the size of their workforces, including contractors. Most will be in Calgary, Alberta, Husky said in a statement.

Cenovus and Husky confirmed the job cuts after two sources told Reuters of the magnitude of the reductions.

Cenovus and Husky shares extended their gains after the Reuters report, rising as much as 8.5 per cent and 7.9 per cent respectively.

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Pandemic lockdowns have hammered fuel demand globally and added to woes for Canada’s oil sands producers, who have struggled since the previous price crash in 2014.

In the United States, Chevron Corp will lay off about 25 per cent of Noble Energy’s employees who joined the oil major after its $4.1 billion purchase this month, the company said on Tuesday.

It was not clear when the Cenovus cuts would take effect.

“As with any merger of this type, there will be overlap and there will be some difficult decisions as we work to create a combined organization best positioned for the future,” Husky spokeswoman Kim Guttormson said.

Cenovus spokesman Reg Curren also confirmed the cuts.

Guttormson said many details had yet to be determined as part of the integration planning process and the transaction has not yet closed.

The $3.8-billion combination announced on Sunday represents the largest Canadian oil and gas deal in nearly four years based on enterprise value, and may pressure peers to get bigger or sell.

Half of the $1.2 billion in targeted savings will be achieved through job cuts and reductions in corporate overhead costs, including streamlined IT systems and procurement savings, the companies said.

Rival producer Suncor Energy Inc. this month said it would cut up to 15 per cent of its workforce over the next year and a half, while Exxon Mobil Corp was expected to cut jobs soon in the United States and Canada.

(Reporting by Jeff Lewis in Toronto and Rod Nickel in Winnipeg; Editing by David Gregorio, Marguerita Choy and Grant McCool)