How does the Cenovus-Husky merger affect the industry moving forward?
In one of the strangest and most arduous of years for the oil and gas industry, the recent Cenovus-Husky merger is a multi-faceted deal that will have ramifications for years to come in the Canadian landscape.
This deal is several years in the making, according to Husky Energy president and CEO Robert Peabody. It could also potentially offer the opportunity to attract investments as a bigger and more unified company.
Cenovus expects to see $1.2 billion in savings, and after this deal, will be the third-largest producer in the country, producing 750,000 BOE/day.
It’s not to be forgotten that this merger affects thousands of workers on the ground, too, leaving many to wonder if they will still have a job after the dust has settled. A concern with deals like this means fewer jobs, as over 2,000 layoffs are to be expected.
In such a challenging year due to the COVID-19 pandemic and slumps in oil prices, a string of job losses has happened throughout the industry, devastating companies, and people.
Canada’s oilpatch has had to adjust countless times over the past half-dozen years, undergoing seismic changes, major restructuring, and consolidation.
And while the industry faces much scrutiny, there is still a global demand for fossil fuels well into the future. It begs the question, where does the industry go from here, and what does the future look like, and how does it continue to navigate the pandemic?
One variable around layoffs and jobs has become technological innovation within the industry. From horizontal multi-well drilling pads to driverless haul trucks in the oil sands, it has reduced the need for labour and people.
This innovation, while enticing and playing a significant role going forward for projects, still affects a human life at the end of the day.
Projects are on the go and providing optimism, such as the multi-billion dollar Trans Mountain pipeline. Alberta faces a problem by having to move its most important commodity via cargo ship/train and is hopeful for more pipeline projects in the future to get its product to market.
It could all be seen as short-term pain for long-term gain, as this merger could help Cenovus and Husky grow and prosper in the future and position itself well moving forward, which could unlock market opportunities by uniting high-quality assets with extensive infrastructure.
“We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead,” said Alex Pourbaix, Cenovus president and CEO, about the merger.
These are encouraging words to hear for the industry, providing cautious optimism for a resilient industry that has undergone so many changes, yet proven so vital to millions of people.
Heading into 2021, the industry will look a lot more different on Jan. 1 than it did on Jan. 1 2020.
Challenges have been faced before and have been overcome, just as they always have been.