Husky Energy announces layoffs
Calgary-based firm cuts staff as it 'aligns' workforce with reduced capital spending
Months after revealing plans to cut its capital spending, Husky Energy Inc. announced Tuesday it's also reducing its workforce but did not say by how much.
"Husky has been taking steps to better align the organization and workforce with our capital plan and strategy," Kim Guttormson, a spokesperson for the Calgary-based company, said in a statement.
"These changes put Husky in the best position to achieve its goals."
The company said it would not be sharing the number of jobs affected.
Outside the Calgary headquarters, cabs were lined up to take people home as they filed out with their belongings.
"This was about changing the way we approach our business, the way we make decisions and the way we work together to meet our goals," Guttormson said.
In the spring, Husky announced it was cutting average annual capital spending by 10 per cent to $3.15 billion under a new five-year plan.
The company — controlled by Hong Kong billionaire Li Ka-Shing — had previously forecast capital spending of about $3.5 billion per year.
Husky, which reports its third-quarter results Thursday, said it would still grow its production by 100,000 barrels per day by 2023.
In a regulatory filing earlier this year, Husky indicated it had 5,157 permanent employees as of the end of 2018, little changed from the numbers at the end of 2016 and 2017.
The timing of the layoffs announcement is sure to be a talking point around Alberta's oilpatch this week, after Justin Trudeau's Liberals won re-election with a minority government.
Some people within the company said approaching layoffs had been an open secret since last week.
Harder time attracting investors
Martin Pelletier, a portfolio manager with TriVest Wealth Counsel Ltd. in Calgary, said the timing of Tuesday's announcement and the election was just a coincidence.
Instead, he linked it to part of a broader trend where energy companies are having a harder time attracting investors with plans to ramp up spending on oil and gas exploration.
"They're not being rewarded for bringing that oil to market — and there's also challenges, obviously, with the production limitations in Alberta," Pelletier said.
When companies look at these challenges together, he said, some are deciding to curtail spending.
"So they're going to use the existing cash flow from operations to buy back stock … and increase dividends," he said. "That means less activity levels. And less activity levels mean less jobs, less work."
Pelletier said it's a phenomenon that's dominating the Canadian energy sector, but it's also happening to some extent in the United States. He said weakening global economic growth is one reason there's a "cloud" over the broader sector.
But Pelletier said the political uncertainty around energy infrastructure, as well as changes around the review process for pipeline projects, doesn't help Canada's oilpatch.
Indeed, there continues to be trepidation around the sector following Monday's election.
Analysts and others who work in the oil and gas sector had speculated that a Liberal victory in Monday's federal election would result in more job losses across the industry.
Robert Cooper, with the institutional sales and trading team at Calgary-based investment firm Acumen Capital Partners, told CBC News on Monday night that he anticipates companies will slash spending, and investors will further shy away from the oilpatch.
Alberta's NDP energy critic wasn't pointing a finger at Ottawa on Tuesday, but at the province's new United Conservative Party (UCP) government for failing to add jobs in the oil and gas sector despite corporate tax cuts.
"This [UCP] government promised that they will create jobs, and they rushed to give a $4.5 billion handout to these corporations," Irfan Sabir said in an interview, referring to the NDP's estimate of the corporate tax cuts. "But we have seen more layoffs in the energy sector."
The industry needs greater takeaway capacity to get its oil to market, he said, adding that the UCP shouldn't have cancelled the previous government's oil-by-rail strategy.
Alberta Energy Minister Sonya Savage was unable to respond to a request for comment late Tuesday.
With files from The Canadian Press