Husky cuts production by 80,000 bpd, Canadian total 365,000 bpd
Also cutting $700 million in capital budget, second reduction following an earlier cut of $900 million and $100 million in other spending.
CALGARY — A move by Husky Energy Inc. to halt production of 80,000 barrels per day takes the total reduction in Canadian crude output to about 365,000 bpd since the onset of measures to deal with the COVID-19 pandemic, an analyst says.
That’s more than 7% of national production of 5.1 million bpd in December.
On April 20, the Calgary-based company also announced a reduction of $700 million in its 2020 capital budget, its second following an earlier cut of $900 million in capital and $100 million in other spending this year.
Its capital budget for this year is now about $1.7 billion, just over half of the $3.3 billion budget announced in December.
“We have taken immediate action to preserve our balance sheet and core business in this commodity price environment,” said CEO Rob Peabody.
“As the market rebalances supply with demand over a very short period in North America, negative cash margins before operating costs are occurring. Reducing production minimizes our negative cash margin exposure.”
Analyst Phil Skolnick of Eight Capital says the Husky production cuts, mainly from its oil sands and heavy oil operations in Alberta and Saskatchewan, take the total announced in Canada so far to 365,000 bpd.
He said the cuts are needed in the current price environment but questioned why Husky hasn’t also reduced its dividend to save money.
Last week, Houston-based ConocoPhillips Co. announced it would reduce production by May at its Surmont thermal oil sands project in northern Alberta by 100,000 bpd to 35,000 bpd because of low prices.
Earlier, Suncor Energy Inc. said it would reduce production at its two-train Fort Hills oilsands mining project to one train, resulting in a production cut of about 70,000 bpd.
Many analysts are projecting that Canadian production could fall by more than one million barrels per day if prices remained depressed in the face of global production that still exceeds demand despite an agreement by OPEC and other producers to limit output.