Ovintiv Inc. has cut its work force by a quarter to cope with what it sees as a new era of lower production growth in the midst of the COVID-19 crisis, which has hammered energy demand.
Ovintiv, formerly Encana Corp., said it laid off 640 staff this week. They worked in all field locations and in its three main offices in Woodlands, Tex., Denver and Calgary. Staff cuts comprised workers at all levels, including executives, the company said. It now has a work force of 1,900 employees.
“Even though we are a little less than halfway through the year, it has clearly been one to remember, or maybe forget,” Ovintiv chief executive Doug Suttles said in an internal memo to staff. “We’ve all faced many challenges and incredible uncertainty. The decisions we implemented this week were difficult but necessary, but they are now behind us.”
Early this year, the renamed company moved its corporate headquarters to the United States, with the aim of attracting more investment from U.S. index funds. Within weeks, oil prices collapsed in response to a plunge in fuel demand brought on by the global pandemic lockdowns. The market was further hit by a price war between Saudi Arabia and Russia. That prompted investors to dump Ovintiv’s shares, along with those of most other energy producers.
The cuts are part of efforts to save US$200-million in costs this year, Ovintiv said in a corporate presentation.
“This is a significant reduction and the impact was felt at every level and in every corner of the company. Now as we look ahead, I believe we are positioned to prosper,” Mr. Suttles said in the memo.
The deep cuts have not been made just to deal with a short-term loss of energy demand, spokeswoman Cindy Hassler said. The company believes that the industry is preparing for lower production growth, and is concentrating on strengthening corporate balance sheets by reducing debt.
It reduced capital spending in the second quarter by 60 per cent, and shut off as much as 65,000 barrels of oil equivalent a day in May, the company said.
Ovintiv shares fell to as low as $2.95 in early March, but have since rebounded to close at $14.56 on the Toronto Stock Exchange on Thursday.
It joins several other energy companies in reducing staff recently. This week, Enbridge Inc. said 800 employees had accepted voluntary buyouts from the pipeline company, which eliminated the need for companywide layoffs.
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