The third-largest producer in the Canadian oilsands has taken a major hit from the global crash in energy prices.
Today, Cenovus Energy reported a $1.8-billion first-quarter loss.
That's quite a reversal from the $110-million profit reported over the same period in 2019.
In a news release, the Calgary-based company stated that it's taken "swift and decisive steps to enhance its financial resilience and protect its balance sheet in the face of the global macro-economic challenges caused by the COVID-19 pandemic".
That included slashing its "capital spending guidance" by $600 million and shaving about $100 million off its operating costs from the original 2020 budget.
"The strength of our balance sheet, the quality of our long-life oil sands reserves and the flexibility of our business to respond quickly to the changing external environment have positioned us well to withstand an extended period of low oil prices," Cenovus president and CEO Alex Pourbaix said in a news release. "When economic conditions improve, we'll be ready to contribute to Canada's economic recovery in a meaningful way."
Cenovus's problems were exacerbated by a dispute between Russia and Saudi Arabia, which flooded the world with oil early this year.
OPEC has since agreed to reduce production by 9.5 million barrels per day. However, some estimates are that global demand has shrunk by 30 million barrels per day during the pandemic.
At the start of this year, the world was consuming about 100 million barrels per day of oil.
According to the federal government, Canada produced 4.6 million barrels per day in 2018 (including condensates and pentanes plus).
Canada has an estimated 168.5 billion barrels of established reserves of crude oil, with 96 percent in the oilsands.
The country is the fourth-largest producer and fourth-largest exporter of oil, with 96 percent of exports going to the United States.
Cenovus reported producing 387,036 barrels per day in the oilsands in the first quarter, up from 342,980 barrels in the first quarter of 2019.
Its total production, including natural gas and liquids, was the equivalent of 482,594 barrels per day.
"Cenovus is actively managing its production levels as market conditions change to optimize the value it receives for its products," the company stated. "Currently, Cenovus's oil sands production has been ramped down by approximately 60,000 barrels per day (bbls/d) and the company has flexibility to quickly ramp up production when market conditions improve."
It had a $4.5-billion committed credit facility before adding an additional $1.1 billion to that in April from some of its existing Canadian lenders.
"Our ability to secure a significant new credit facility in this challenging market gives us even more financial flexibility to withstand a prolonged period of low oil prices," Pourbaix said. "And it is a testament to the confidence our lenders have in our company."
As of this writing, Cenovus Energy shares are trading at $4.62 on the Toronto Stock Exchange, up 5.37 percent since this morning's opening.