Canadian oil and natural gas company Cenovus Energy Inc. (TSX:CVE) has announced a new round of spending cuts and plans to suspend its stock dividend as it grapples with a sharp drop in prices and a global oversupply of product.
The Calgary-based oil producer said its latest measures are needed to help the company protect its balance sheet amid persistently low crude oil prices. Cenovus said it is cutting this year's capital spending budget by an additional $150 million, for a total of $600 million in cuts when combined with savings announced in early March.
Cenovus is also suspending its dividend. In a news release, the company noted that the payout to shareholders – which had most recently been set at 6.25 cents per share – was based on West Texas Intermediate crude oil at $45 U.S. per barrel. WTI closed at $20.31 U.S. earlier this week.
“It is challenging to predict the duration and depth of these unprecedented low commodity prices. We have positioned the company with ample liquidity and a strong balance sheet to manage through this unpredictable global downturn,” Cenovus Chief Executive Officer Alex Pourbaix said in the news release.
Cenovus also announced salary cuts among senior executives, including a 25% reduction for CEO Pourbaix.
Cenovus dropped 16 cents, or 4.8%, by noon EDT Friday, to $3.19.
