Integrated oil and gas companies Cenovus and Husky Energy posted quarterly losses on Wednesday, hammered by a price war between Saudi Arabia and Russia, while the coronavirus pandemic cut demand for their refined products.
The crash in global crude prices has extracted a heavy toll on oil companies, forcing them to undertake extensive measures to stay afloat including costs and production cuts, dividend suspensions and deferring of some projects.
Husky said it would cut dividend by 90 per cent to $0.0125 for the three months to March 31.
“Severe pricing headwinds, amplified by geopolitical events, COVID-19 and the associated collapse of global oil and refined product demand, impacted our first quarter results,” Husky Chief Executive Officer Rob Peabody said.
Cenovus said prices for its crude tumbled 54 per cent to $22.74 per barrel in the first quarter from a year earlier.
Production at both companies, however, rose as Canada’s main crude-producing province, Alberta, eased production curtailments.
Husky’s total production rose about 5 per cent to average 299,000 barrels of oil equivalent per day (boepd), while that of Cenovus was up about 8 per cent to 482,594 boepd.
Weak demand for gasoline, jet fuel and other products hurt refining and marketing units at both companies as more people stayed at home due to lockdowns enforced by governments to contain the spread of the pandemic.
Cenovus had a refining and marketing operating margin shortfall of $375 million in the first quarter, compared with operating margin of $304 million a year earlier, while average crude runs increased 18 per cent to 442,000 bbls/d.
Husky said average realized U.S. refining and marketing margin was a loss of $12.68 per barrel of crude oil.
To address the pains, Prime Minister Justin Trudeau earlier this month said Canada will invest $2.5 billion in measures to help the hard-hit oil and gas industry.
Cenovus posted a net loss of $1.80 billion ($1.29 billion), or $1.46 per share, while Husky’s loss was $1.71 billion, or $1.71 per share.
Husky said it took non-cash asset impairments of $1.1 billion, primarily related to the producing assets in North America and largely due to lower crude oil prices.
Shares of Cenovus have fallen ~67 per cent this year, while those of Husky are down ~65 per cent this year.
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