Baytex Energy becomes latest Canadian producer to cut 2015 spending

Tue Dec 9, 2014 2:59pm EST
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By Nia Williams

CALGARY, Alberta Dec 9 (Reuters) - Baytex Energy Corp became the latest Canadian oil producer to slash its capital budget and dividend on Tuesday, as industry players braced for even more companies to scale back spending.

Oil sands producer Baytex, which also operates in the Eagle Ford shale play in Texas, said it will spend C$575 to C$650 million in 2015, 30 percent less than originally expected, and reduce monthly dividend payments to 10 cents per share from 24 cents.

Approximately 75 percent of capital spending will be invested in Eagle Ford assets, acquired earlier this year at a hefty premium.

"Given the recent collapse in world oil prices, we believe our 2015 budget strikes the right balance between preserving our operational momentum in delivering organic production growth and managing our dividends prudently to maintain strong levels of financial liquidity," said Baytex Chief Executive James Bowzer.

Baytex's moves mirror tighter budgets announced by other companies headquartered in Canada's oil capital Calgary as global oil prices nosedive. Benchmark U.S. crude last traded at $63.76 a barrel, down from $107 a barrel in June.

On Monday Trilogy Energy Corp scrapped its monthly divided and cut 2015 capital spending by 38 percent, while Vermilion Energy Inc reduced next year's budget by 22 percent to $525 million.

Precision Drilling Corp said it expected 2015 capital spending to be 44 percent lower than this year, and last week Canadian Oil Sands Ltd, the largest owner of the Syncrude Canada Ltd oil sands project, reduced its quarterly dividend by 43 percent and capital budget by nearly half.

Michael Gosselin, head of investment banking in energy and commodities Canada for BNP Paribas, said hefty spending reductions should be expected given the extent of the oil price slide.   Continued...