Layoffs in the Oil Patch 3

[I-Hate-Hulse]

As an old Husketeer.... some very different corporate cultures there with a quasi private situation at Husky. I see Li Ka-shing still retains 27% of the new entity. Looks like he kept the dollar value of his equity in there, but now owns less of a larger entity.

Add another tower to be 100% empty.... can't see the old WCP building staying occupied. I'm sure everyone will move to Brookfield within a couple of years.

Indeed some nervous times all around with SU, HSE, and IOL all conducting workforce reviews. Build up your emergency funds everyone.....

[Northendzone]

Would mixed use building even work? I mean if you are not working downtown would you choose to live downtown? Is there not already housing inventory on the market downtown?

Office buildings have windows that don’t open, who would want to live where you could not get fresh air. Would property companies want to roll the dice on converting spaces and trying to sell them?

This is where I laugh at one of mckenna’s keys to stimulating the economy - retro-fitting buildings. Will property companies invest in a building that is only half full and wil be for the foreseeable future. Presumably if only if the government subsidizes a huge portion of the cost? What will the future of work look like? Seems like the genie is out of the bottle in terms of working remotely?

Of course I say all of this as my company is in the throws of preparing a space downtown for us to come back to on some level early in 2021.

[bizaro86]

Originally Posted by Murph

More detail in the link below. It’s of particular interest to those of us on the East Coast. Husky operates one of the four offshore platforms, and Cenovus, a heavy oil company, has no other operating interest in the region.

http://www.globenewswire.com/news-re...gy-Leader.html

The east coast operating jobs are probably the safest anywhere in the combined company. Cenovus doesn't have anyone doing anything similar, and it will probably take the same amount of people as it did before.

Corporate functions will likely be the most affected. That news release had a contact number for a director of investor relations for both companies. Not likely they will need two of those after the merger, which is true of lots of similar corporate type roles.

It doesn't sound like the entire 1.2 billion synergies is job cuts though. It sounded like they though they could save money combining diluent purchases and other things like that.

[burn_this_city]

The close match up of upstream and downstream capacities will be where they save/make money. Husky has refining assets and Cenovus has the production, the combined company will avoid differential concerns and capture retail fuel prices.

[Mr.Coffee]

Husky was always fairly over staffed and I believe they’ve done a few rounds of cuts so not sure if that is still true. Same with Cenovus over time pretty sure they have done some heavy cutting. Will be really too bad to see the fall out of this with some of my friends at both companies.

Crazy transaction though... and I would think more of this type of stuff to come especially the mid sized companies. I’ve definitely heard some interesting rumours for the Montney players that are mid-sized. Would imagine it’s just a numbers game and working through the details for a few of them now but whoever knows.

[rain_e]

Montney as in 7 gens?

[Lubicon]

Originally Posted by Fusai

Sounds like CVE wants to get into refineries and offshores.

Husky's refinery and upgrader in Lloyd are a nice pick up for Cenovus since the Conoco venture ended. (I think it ended?).

[bizaro86]

Originally Posted by rain_e

Montney as in 7 gens?

I would get VII would be more likely to be a buyer than a seller. Lots of legitimate distressed operators are likely for sale.

[Bill Bumface]

Originally Posted by RichieRich

Exactly... revenue diversification and protection. Essentially less reliance upon being only a producer.

It's funny how industry members and investors latch so firmly onto trends. For a while everyone was selling their buildings and divesting mid and downstream businesses so they could "focus" and achieve higher valuations, as that was the investing trend of the day. "Pure Play" companies. The pinnacle was EnCana deciding that oil and gas also needed to be split up to get ultra specializes ln one geographic region and one resource, and creating Cenovus.

Oops, turns out it's rather nice to have diverse streams of income for when one aspect of your business ####s the bed. Queue Encana getting back into oil almost immediately. Now Cenovus wants to get further downstream to reduce risk.

Think back to when most of the Canadian companies were heavily geographically diversified. AEC, Nexen, Petro Canada all had sizable global operations that would have been handy when transport became an issue domestically.

It's taken amazing mismanagement to dismantle what was once an international centre of business for a decent chunk of the industry.

[Ahuch]

Originally Posted by Bill Bumface

It's funny how industry members and investors latch so firmly onto trends. For a while everyone was selling their buildings and divesting mid and downstream businesses so they could "focus" and achieve higher valuations, as that was the investing trend of the day. "Pure Play" companies. The pinnacle was EnCana deciding that oil and gas also needed to be split up to get ultra specializes ln one geographic region and one resource, and creating Cenovus.

Oops, turns out it's rather nice to have diverse streams of income for when one aspect of your business ####s the bed. Queue Encana getting back into oil almost immediately. Now Cenovus wants to get further downstream to reduce risk.

Think back to when most of the Canadian companies were heavily geographically diversified. AEC, Nexen, Petro Canada all had sizable global operations that would have been handy when transport became an issue domestically.

It's taken amazing mismanagement to dismantle what was once an international centre of business for a decent chunk of the industry.

In my experience, you just hand some external consultants a giant bag of money... Then you restructure, do layoffs, etc. 5 years later somebody new hits the c-suite, consultants tell you to restructure back to the old way. The consultants always win!

[curves2000]

So as I read this presser on the Cenovus and Husky deal, it appears to me that existing Husky shareholders will receive shares in the new entity?

Given how far the stock price has fallen for Husky over the years, this allows the existing shareholders the ability to participate in the new company's financial performance?

Am I reading it right?

[bizaro86]

Originally Posted by curves2000

So as I read this presser on the Cenovus and Husky deal, it appears to me that existing Husky shareholders will receive shares in the new entity?

Given how far the stock price has fallen for Husky over the years, this allows the existing shareholders the ability to participate in the new company's financial performance?

Am I reading it right?

Yes. Husky shareholders will also get a small amount of warrants, which are long term option to buy shares. That would add value if oil recovers.

[CaptainCrunch]

I wonder how this effects the Calgary employees, I have friends and family members over there.


This is pretty big news.

[Weitz]

Originally Posted by CaptainCrunch

I wonder how this effects the Calgary employees, I have friends and family members over there.


This is pretty big news.

I’m guessing if you belong to an asset team you have a small chance of lay-off. If you don’t there’s a good chance of lay-off.

Going to be a bloodbath I think.

[rain_e]

Originally Posted by CaptainCrunch

I wonder how this effects the Calgary employees, I have friends and family members over there.


This is pretty big news.

There will be layoffs. When it says 1.2 billion in synergies it is cutting overlapping expenses and alot of that will be office employees.

[skudr248]

There will be layoffs forsure. Anytime I’ve been through a merger, it’s happened. I’d have one foot out the door already if I were those people

[Rutuu]

My source at CVE said 2000 total layoffs

[Handsome B. Wonderful]

It will be just like when TransCanada and Nova merged, and Suncor and Petro-Canada merged. The final company will be the same size as the larger of the two parent companies, and the vast majority of the staff will be from them.

[RichieRich]

Both Cenovus and Husky have 5 jobs posted... lets see if that changes this week.
I'd be interested, as would all employees, to get a better understanding of when the merger actually happens, followed by determination of resource estimates (ie manpower), and the subsequent "right-sizing".

As if I need more competition in an already tight job market. Geez. I need to figure out the magic formula for becoming indispensable otherwise I'll need to retrain in something non-energy related.

[JR449]

Its gonad be rough