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Cenovus Energy Inc. (CVE-T) on Thursday forecast higher production and spending for 2021 after its purchase of rival Husky Energy (HSE-T) but stressed its focus on cutting debt as the oil industry rebounds from the depths of the COVID-19 pandemic.

Cenovus agreed to buy rival Husky last year to create Canada’s No. 3 oil and gas producer, as historically low oil prices caused by a collapse in fuel demand due to COVID-19 and a price war between Saudi Arabia and Russia forced the industry to consolidate.

The Calgary-based company said it will spend between $2.3-billion (US$1.8 billion) and $2.7-billion this year, up from a 2020 forecast of $750-million to $850-million. The vast majority, $2.1-billion, of that spending will go toward maintenance capital required to keep existing production flowing.

Forecast production also jumped as a result of the Husky acquisition to between 730,000 and 780,000 barrels of oil equivalent per day (boepd), up from a 2020 production forecast of 432,000-486,000 boepd.

Like many of its competitors in the Canadian oil patch, Cenovus will use free cash flow to pay down debt and repair balance sheets that were battered by the oil price rout last year. The company is aiming to reduce net debt to less than $10-billion from around $12-billion right after the Husky deal.

“We have been banging one drum here pretty hard and it is balance sheet, balance sheet, balance sheet. That’s where our focus is going to be at least until we get comfortably below that $10-billion number,” Cenovus Chief Executive Alex Pourbaix said on a conference call with analysts.

Pourbaix said one of the best ways for Cenovus to accelerate balance sheet recovery would be by divesting assets and the company was “laser focused” on that opportunity.

Cenovus said it expects to achieve synergies - or cost savings - of nearly $1-billion this year from the acquisition of Husky through steps including cutting 20% to 25% of the combined company’s workforce. Most of those layoffs will be in corporate head offices in Calgary.

Cenovus shares were last flat at $7.36 on the Toronto Stock Exchange.

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