Athabasca Oil Corp. announced on Tuesday that it has undertaken a number of actions to enhance its competitiveness and resiliency. It has introduced a streamlined corporate cost structure that consists of a 25 per cent reduction in head office staff effective immediately and 10 per cent rollback in salaries for executives and directors.
The company did not say how many people were being laid off.
In a news release, the company said Canadian producers have experienced unprecedented price differential and basis spread volatility across light and heavy oil product streams due to pipeline capacity constraints. This has culminated in Western Canadian Select heavy differentials trading to peak levels of US$55 in early fourth quarter.
Recently, the Alberta government announced mandatory short-term industry production curtailments starting in January 2019 to alleviate the high differential situation until additional egress is added in 2019, said Athabasca Oil. The company added that it’s supportive of these actions and views them as a necessary step to rebalance inventories in the near term and provide a bridge to permanent market access initiatives.
“While we are encouraged by the recent short-term steps taken by the Alberta government, significant damage has already been done to both the Canadian economy and investor confidence,” said Robert Broen, Athabasca’s president and chief executive officer, in a statement.
“The sector is still a long ways away from permanent solutions. Our governments, both federally and provincially, need to prioritize long-term projects to ensure access to new end markets and to maximize value for Canada. This environment has forced us to make several challenging decisions to ensure our resiliency as a company, including a 50 per cent reduction in 2019 capital spend and a 25 per cent reduction in our Calgary office staff.”
Athabasca also announced it has entered into an agreement with Enbridge Inc. for the sale of its Leismer pipelines and Cheecham storage terminal for $265 million, with an annual toll of about $26 million.