Husky Energy reports $7B loss in 3rd quarter as merger partner Cenovus Energy takes $450M hit

Cenovus Energy Inc. reported a loss in its third quarter as its results were hit by a $450-million impairment charge related to a refinery it co-owns with Phillips 66 in Texas and lower oil prices due to the pandemic.

Meanwhile, Husky Energy Inc. which Cenovus is buying in a friendly takeover deal valued at $3.8 billion in shares reported a nearly $7.1-billion loss in its latest quarter as it was hit by $6.7 billion in non-cash impairment charges after taxes related to lower long-term commodity price assumptions and reduced capital investment.

Calgary-based Cenovus says it lost $194 millionor 16 cents per diluted sharein the quarter ended Sept. 30 compared with a profit of $187 millionor 15 cents per diluted sharea year ago.

Cenovus says its adjusted funds flow amounted to $414 million or 34 cents per share compared with $928 million or 76 cents per share a year ago.

Total production in the quarter was 471,799 barrels of oil equivalent per day, up from 448,496 in the same quarter last year.

Cenovus has said it will look to cut between 20 and 25 per cent of the 8,600 employees and contractors currently working at the two companies if it is successful in its takeover.

Husky said says its losses amounted to $7.05 per share for the quarter ended Sept. 30 compared with a profit of $273 million or 26 cents per share in the same quarter last year. Revenue totalled $3.33 billion, down from $5.29 billion a year ago.

Husky says funds from operations for the quarter amounted to $148 million or 15 cents per share, down from $1.02 billion or $1.02 per share in the same quarter last year.

Total upstream production averaged 258,400 barrels of oil equivalent per day for the quarter with 294,800 in the third quarter of 2019 and 246,500 in the second quarter of 2020.

"We are confident that the combination with Cenovus will deliver significant long-term value by creating a larger, stronger and more resilient Canadian integrated energy producer," Husky chief executive Rob Peabody said in a statement.

"Over the next few months while the transaction is pending, we will maintain our focus on safe and reliable operations, while planning for a seamless integration to facilitate the accelerated return of capital to shareholders."