Husky Cuts 2020 Upstream Spending by 33%

Canada’s Husky Energy March 12 said its 2020 capital programme had been reduced by C$900mn (US$650mn), which represents a 33% cut in upstream spending as part of “a series of actions to fortify its business in response to challenging global market conditions.” Its upstream spending guidance now stands at C$1.75 – 1.9bn. 

The company will also undertake C$100mn in additional cost-saving measures which will include a reduction in well-servicing activities on uneconomic production, and a halt in exploration activity. Given current market conditions, Husky said it will start the safe and orderly reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices. It has revised its 2020 production guidance to 275-300mn boe/day from 295-310mn boe/day.

“These initiatives reflect the company’s commitment to capital discipline, which includes maintaining the strength of its balance sheet while protecting value in an extended low commodity price environment,” Husky said.

In the Asia-Pacific region, Husky has deferred the development of the Block 15/33 oilfield offshore China by a year. In Indonesia, development of the MDA-MBH natural gas field has been deferred. The Liuhua 29-1 field at the Liwan gas project is being advanced as planned, with first production expected by the end of 2020, the company said.

Investment in resource plays and conventional heavy oil projects in Western Canada has been halted, with a focus on optimising existing production and lowering costs, Husky said. The company has also halted drilling of sustaining pads at all thermal operations. Lloydminster thermal projects scheduled to be delivered beyond 2020 have been deferred and will be reconsidered as market conditions improve, it said.