Source: Business News Network
Canadian oil producers Husky Energy Inc and Penn West Petroleum Ltd slashed their 2015 capital budgets due to a slide in crude oil prices.
Penn West (PWT.TO 8.09%), one of Canada’s largest conventional oil producers, also cut its dividend to 3 Canadian cents per share from 14 Canadian cents.
Penn West and Husky join several Canadian oil producers such as Cenovus Energy Inc, MEG Energy Corp (MEG.TO 10.99%), Athabasca Oil Corp. (ATH.TO 6.73%) and Tourmaline Oil Corp. (TOU.TO 3.35%) in cutting investment plans for next year.
Oil prices have nearly halved in the past six months due to tepid demand growth and a supply glut, worsened by major exporter group OPEC’s refusal to cut its output ceiling.
Husky (HSE.TO 10.62%), Canada’s No. 3 integrated oil company, said its capital budget for 2015 would drop by a third to about $3.4 billion.
The company, controlled by Hong Kong billionaire Li Ka-shing, said about three-quarters of the budget would go into exploration, development and production.
Penn West said its capital budget for 2015 would drop by 26 percent to $625 million.
Despite the reduced capital spending, neither company forecast big cuts in production.
Penn West trimmed its 2015 production forecast by about five percent to 90,000-100,000 barrels of oil equivalent per day (boe/d).
Husky said it expected to produce 325,000-355,000 boe/d in 2015, compared with the 341,000 boe/d estimated for 2014.
The company said it would spend about $5.1 billion on capital projects in 2014, up from the $4.8 billion it had planned earlier, due to inclusion of the final costs of its Sunrise Energy oil sands project in Alberta.
The Calgary-based company said in October it had raised cost estimates on the project by nearly 19 percent to $3.2 billion.
Penn West on Wednesday also scrapped a plan that had permitted shareholders to use their cash dividends to buy the company’s shares.
Penn West’s shares were up more than 1 percent at $2.36, while Husky’s stock was up 1 percent at $23.65 on the Toronto Stock Exchange. Penn West’s U.S.-listed shares were up 1.3 percent at $2.04.
Up to Tuesday’s close, Husky’s shares had fallen 30 percent this year. Penn West shares had slumped nearly 74 percent to $2.35 on the Toronto Stock Exchange.