(Reuters) - Canadian oil producers Husky Energy Inc (HSE.TO) and Penn West Petroleum Ltd PWT.TO slashed their 2015 capital budgets due to a slide in crude oil prices.
Penn West, 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 (CVE.TO), MEG Energy Corp (MEG.TO), Athabasca Oil Corp (ATH.TO) and Tourmaline Oil Corp TOU.TO 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, Canada’s No. 3 integrated oil company, said its capital budget for 2015 would drop by a third to about C$3.4 billion ($2.92 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 C$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 C$5.1 billion on capital projects in 2014, up from the C$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 C$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 C$2.36, while Husky’s stock was up 1 percent at C$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 C$2.35 on the Toronto Stock Exchange.
Reporting by Narottam Medhora and Swetha Gopinath in Bengaluru; Editing by Saumyadeb Chakrabarty, Ted Kerr and Sriraj Kalluvila