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Major energy companies suffer big losses

Last Updated Apr 29, 2020 at 12:30 pm MDT

A de-commissioned pumpjack is shown at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. Landowners and legal experts are criticizing Alberta's hastily passed new legislation intended to help clean up the province's huge stockpile of abandoned energy facilities.THE CANADIAN PRESS/Jeff McIntosh

CALGARY (CityNews) – Three of the big players in Canada’s energy sector have seen a devastating drop, but there is hope that as the world recovers from COVID-19, so to will Alberta’s economic engine.

However, the numbers are nothing scoff at. Vermilion Energy saw a loss of $1.3 billion in its Q1 report Wednesday while Husky Energy is down $1.7 billion and Cenovus dropped $1.8 billion.

RELATED: Cenovus Energy reports $1.8B first-quarter loss as oil prices plunged

“Vermilion, which is a very international company, 75 per cent of the total write-down it took came against its Canadian assets shows that we have some unique challenges here in Western Canada,” said Richard Masson Executive Fellow with the School of Public Policy at the University of Calgary.

RELATED: Husky Energy reports $1.7-billion first-quarter loss, cuts dividend

The companies are taking different steps to protect themselves by continuing to cut production and capital spending, suspending dividends, and rolling back salaries.

“The federal program to deal with orphaned and abandoned wells that was announced a few days ago, the entire program was $1.7 billion. So, Husky has cut more capital than the entire federal program,” said Masson.

“These are big cuts, they result in cuts for many contractors who were expecting that money to come in this year and so it just flows through the whole value chain in western Canada and across Canada.”

However, Masson and others remain optimistic COVID-19 is a temporary problem and any return to normalcy will see the sector rebound to near pre-pandemic levels.

“We have at least a 30 per cent reduction in demand for gasoline and jet fuel right now because we’re all staying home. But we’re starting to hear economies in the US and Canada talking about how we’re going to re-open, which can lead to more travel (and) more demand for those products several months from now.”

Masson added it’s all just a matter of getting back to that normal state.

“If we can help them with a Federal program or something like that, that provides liquidity to get them through a few months through this downturn. We expect prices to rebound, and we’ll see a return to profits and a return to jobs.”