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Cenovus to cut hundreds of jobs after merger with Husky Energy

Last Updated Oct 27, 2020 at 2:10 pm MST

The Cenovus logo seen at the company's headquarters in Calgary, Alta., on November 15, 2017. Cenovus Energy Inc. says it is cutting its capital spending plan for this year by about 32 per cent due to the recent plunge in world oil prices. THE CANADIAN PRESS/Jeff McIntosh

CALGARY – Cenovus confirms it plans to cut up to 25 per cent of its workforce after acquiring Husky Energy.

The company said the losses could affect about 2,150 positions from its total combined workforce of 8,600 employees and contractors, based on the size of their workforces, with the majority to take place in Calgary.

It’s not clear when the cuts will 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,” the company said in a release.

WATCH: Fallout of Cenovus-Husky mega-merger, and the trends to come

It’s the latest blow to the Calgary-centred oilpatch after Suncor Energy Inc. announced three weeks ago it will cut as many as 1,930 jobs over 18 months to reduce total staff by 10 to 15 per cent.

Job cuts are also expected in the Canadian operations of Royal Dutch Shell, which announced in September it would eliminate between 7,000 and 9,000 jobs worldwide by the end of 2022, and, to a lesser extent, from BP, which said in June it would cut around 10,000 jobs from its global workforce.

The cuts could make worse Calgary’s downtown office vacancy rate, which climbed to 28.7 per cent as of the end of September from 27 per cent in June according to real estate firm CBRE.

The nearly $4 billion deal announced Sunday is the largest merger in the Canadian oil and gas sector in years.

It comes as oilsands companies start to roll out third-quarter financial results, with Suncor set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.

Meanwhile, energy analyst Josef Schacter doesn’t see the employment picture getting better in the oilpatch anytime soon

“I think it’s going to be a tough season on the job market here if there are more mergers.”

“I think that’s one of the negative fallouts. Calgary and Alberta are going to be going through some difficulty until we get a vaccine and until we get into $50, $60 sustainable WTIs.”

In fact, he sees more merger activity in the future, in some cases because of poor balance sheets.

He says he sees M&A activity among natural gas producers, thanks to increased pricing and lower storage, but also as some of the bigger companies move to consolidate holdings in the Montney region.

With files from the Canadian Press