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CALGARY – Another 2,150 workers are set to lose their jobs in Canada’s ever-shrinking oilpatch after Cenovus Energy Inc. and Husky Energy Inc. confirmed Tuesday their blockbuster merger would mean a 20 per cent to 25 per cent headcount reduction.
Both companies confirmed Tuesday that most of the job losses will occur in Calgary, where the local unemployment is already elevated at 13.1 per cent, according to Statistics Canada, and is expected to head higher as the depressed industry embarks on a fresh round of layoffs. The province’s unemployment rate of 11.7 per cent is among the highest in Canada.
“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,” Husky spokesperson Kim Guttormson said in an emailed statement, confirming the merged company would cut roughly 2,150 positions, or 20 per cent to 25 per cent of the combined workforce of 8,600 employees and contractors.
“The majority are expected to take place in Calgary, although there will be some in other areas as well,” Cenovus Energy spokesperson Sonja Franklin said.
Cenovus announced Sunday a $3.8-billion friendly takeover of Husky , which would turn the combined entity into the second largest oilsands upgrading and refining operation in Canada after Suncor Energy Inc. and the third-largest energy company in the country behind Canadian Natural Resources Ltd. and Suncor.
The merger with Husky would result in $1.2 billion in cost savings, including $600 million in workforce savings, Cenovus said on Sunday.
“Transactions like this are necessary to ensure our companies and our sectors remain strong. But there is no escaping the impact that they have on some extremely talented and dedicated people,” Cenovus president and CEO Alex Pourbaix had said on Sunday in an investor call announcing the deal.
Cenovus shares traded up almost 6.7 per cent, to $4.77 per share as the market digested news of the layoffs. The stock had declined 8.4 per cent on Monday in a broadly negative market. Husky closed 7.3 per cent higher to $3.8 per share.
Asked about the layoffs on Tuesday, Doug Schweitzer, Alberta’s minister of jobs, economy and innovation, said, “my heart goes out to the workers that have been impacted in this.”
“I went through this when I was a kid, my family, my parents lost everything, I know what it’s like to be in a tough spot,” Schweitzer said. “That’s what got us into politics, so many of us, was to help turn around our province, to give people confidence in the future that they’re going to have every single possible opportunity.”
In addition to layoffs at Cenovus and Husky, other major energy players including Suncor and TC Energy Corp. have announced staff reductions in recent weeks, which will further inflate the province’s unemployment rate.
On Oct. 2, Suncor announced a plan to cut up to 2,000 jobs over the next 18 months.
The Canadian energy industry has been shedding jobs since 2014 as a result of the oil price collapse at that time and a lack of export pipelines, which has forced Alberta’s oil producers to sell their oil at a greater than expected discount to global benchmarks.
For instance, annual disclosures from Cenovus show the company’s workforce has shrunk by 34 per cent from the end of 2014 to the end of last year. Now, additional layoffs are expected.
“As companies across the globe navigate unprecedented economic times, job restructurings are an unfortunate reality of weathering the storm,” Alberta Energy Minister Sonya Savage said in an emailed statement Tuesday.
With files from Tyler Dawson
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