Falling oil prices taking a toll on Alberta's economy, more cuts could follow
CALGARY (Reuters) — Canada's largest oil and gas company Suncor Energy said on Tuesday it would cut about 1,000 employees and contractors, freeze hiring and slash $1 billion in capital spending in response to falling crude oil prices.
Suncor said it would also defer some capital projects that have not yet been sanctioned, such as MacKay River 2 in northern Alberta and the White Rose Extension offshore Atlantic Canada.
Production outlook for 2015 remained unchanged at 540,000 to 585,000 barrels per day.
"Today's cuts are consistent with our commitment to spend within our means and maintain a strong balance sheet," Suncor Chief Executive Steve Williams said in a statement.
"We will monitor the pricing environment and take further action as required."
Suncor's revision of its 2015 capital budget to between $6.2 billion to $6.8 million, from $7.2 billion to $7.8 billion when it was presented in November, brings it in line with other Canadian oil producers that have cut spending as oil prices fell.
Benchmark crude oil prices have fallen more than 50 per cent since June in response to a global supply glut and producer group OPEC's refusal to cut production. U.S. crude fell to a near six-year low of $44.20 a barrel on Tuesday.
The majority of the 1,000 job cuts will be among Suncor's contract workforce, although some employees will also be laid off. A Suncor spokeswoman said the company had around 14,000 salaried employees, not including contractors.
Royal Dutch Shell said last week that it would cut between 5 percent and 10 percent of the positions at its Albian Sands mining project. The company employs 3000 people at that site.
Canadian Natural Resources Ltd, which on Monday reduced its capital spending and deferred an oil sands project, also has a hiring freeze.
"Without a sharp bounce back in the price of oil, I would expect further announcements of layoffs and a rise in unemployment," said Jim Hall, chief investment officer at Mawer Investment Management which oversees more than $25 billion.
