Thread regarding Cenovus Energy layoffs

So quiet one can hear a pin drop. The financial folks must be gone reading up on hedging.

Seems the financial folks shutting up as they realize how hedges work.

-6wjx, At 12/31/2018, their annual financial statement on the investor relations website shows $986 million liability for hedging. Seems that is manageable with current cash position and borrowing to get through the short term. Of course that depends on how wide it gets through 3/31/2018. Even if it doubles, does seem there is a short term way out. Q4 2017 earnings report did not really show the effect of the spread widening. Seems Q1 2018 could be ugly, but have to wait and see report.

Looking at their recent report, seems hedging wears off mid year 2018. So, is it a short term blip, second half improves? Folks like hedging when prices go down, criticize when prices go up. Usually the mark to market is compensated in the opposite direction by the actual commodity pricing and cash coming in the door. Does seem the spread widening screwed things up. Is that what you are saying?

How are they hedging 2nd half 2018 and 2019?

You are a bit off the mark there in that prediction.

CVE gets pressured because they had $600M in cash at the end of Q4. They have more than that In mark to market hedging losses. The spread wasn't hedged in any meaningful way. Gate prices for our oil are around $20-25.

We don't sell more assets as selling DB assets now is going to fetch a terrible price and we will take markdowns on the sale. Selling anything else hurts our ability to pay the remaining debt. If you sell something that makes you money, your ability to pay your remaining bills goes down. The conventional sales were ill advised.

I see a bought deal coming and the accompanying dilution.

Hey Brian, that must be you. How's the new gig on the BOD.

Wait and see: here's a prediction. By year-end additional asset sales reduce debt to an even more manageable level and the WCS spread tightens. Ceo has stated publicly the desire to reduce debt faster with additional, unnecessary assets available to sell. Also, keystone xl will get back to full pressure, rail will be used across the industry, and production (eg canadian natural) will curtail until spreads close. There will be huge benefits. The latest earnings releases within the industry were quite enlightening on all these fronts.

Wait and see

This CEO is great, and his leadership team is doing pretty good too considering the current economic climate, really when you think about it they have done nothing wrong. I think we have incredible opportunities ahead of us. Oh no, I'm feel a little parched... back to the Kool-Aid cooler for some beverages.

We got 3 choices. Stay and be positive; stay and be negative; leave and find something else. Doubt the last one improves anything because all companies are under pressure. May as well bring in the unicorns and rainbows and give the new guy a chance.

@RZBiewK-jah.... you are just a wee bit too pro-CVE, perhaps you work in the external communications group. Try a few less rainbows and unicorns next time.

I expect bonuses to s--- next year.

No one is buying dry gas. Good luck getting a fair price for that crap. Most of it is not for sale officially anywya so what is the plan? In the meantime, shelling out big bucks for employees to work those areas makes good sense (eye roll). Haven’t drilled in a well in some areas is many years, time to move on.

Speculate there could have been employment contracts in place for bonuses that cannot be undone. This is especially true if they are high level executive bonuses. Sometimes too, once the company makes a commitment to the bonus for lower level folks, they follow through, then change the parameters the following year. As for dry gas assets, are they on the list to get sold? If so, maybe the people remain to go with the assets?

Still overstaffed in some areas. How many technical people do we really need for unfunded, dry gas assets? The cuts were a start but not deep enough. Bonuses were high considering how bad the company is doing.

That is a very good comment about the CEO and the mess he walked into. The WCS differential and current pipeline issues are beyond his control, however after the first half some of the lower price hedges shown in the earnings report drop off, and should allow a step-up if current oil prices persist. Nothing wrong with the hedging that was done, just a new opportunity 2nd half, which is less hedged per the report. Also, the transportation issues will dissipate as the glut from the November pipeline issues work off. The industry will find a way, even if it's rail. For example, Canadian Natural Resources is cutting back production and moving turnarounds ahead to reduce supply. They talked about it in their earnings call yesterday.

More CVE asset sales and the reasons described in the earnings call are also favorable. Cenovus indicated it just doesn't need all the land assets, they'll never get to drill them all. Once the debt is reduced and differentials close, then it's just a matter of smart capital allocation on favorable long term assets. This new CEO seems to understand that very well, he is doing well with the cards dealt. It will work out very well for the employees that remain. They need to remember that the company kept them because they are talented and the company needs them.

For the first time in a long time, we actually have a strategy and a plan. This company will not turn around overnight, and this CEO is taking good steps to balance us again. He came into a mess (not his mess) and the progress he is making shows more every day.

Read the last earnings call transcript. A well thought-out strategy is described. Good CEO! Glad we have him.

The posts slowing down on this board maybe indicate things steadying out. Time focus on a bright future!

Patience. These cuts tee up the company nicely for the future.