- Company's 2016 spending cut to C$2.1 billion-C$2.3 billion
- Morgan Stanley sees Canadian producers cutting capex 35%-40%
Husky Energy Inc., the Canadian energy company controlled by Hong Kong billionaire Li Ka-Shing, said it’s suspending fourth-quarter dividend payments and reducing spending as the oil-price collapse worsens.
The company plans to spend C$2.1 billion to C$2.3 billion ($1.44 billion to $1.58 billion), down from a previous estimate of C$2.9 billion to C$3.1 billion, Husky said in a statement Tuesday. It’s also considering the partial sale of some pipelines and storage terminals in the Lloydminster region in Western Canada.
Husky is among oil producers seeking to sell assets to shore up finances as crude trades below $30 a barrel for the first time in more than a decade. Western Canadian energy producers are set to cut capital spending this year by as much as 40 percent, or about C$15 billion, as they reduce drilling, defer projects and seek cost cuts to weather the rout, Morgan Stanley analysts led by Benny Wong said in a note to clients Tuesday.
“We continue to take decisive action in this period of persistent supply-demand imbalance,” Husky Chief Executive Officer Asim Ghosh said in the statement. "The steps we are taking will see Husky emerge from this cycle as a more resilient and more profitable company."
Husky cut its production outlook to 315,000 to 345,000 barrels of oil equivalent per day, from 330,000 to 360,000 barrels.
The producer said it will continue to dispose of some legacy oil and natural gas assets in Western Canada to focus on operations that can deliver higher returns in a lower commodity price environment. Those sales brought in about C$100 million last year.
The planned divestitures, which produce about 55,000 barrels of oil equivalent a day, don’t include heavy oil or oil-sands assets.
Husky, which has seven buy, 11 hold and three sell recommendations from analysts, has slumped 49 percent in the past year to C$13.20 Tuesday.