Canada's ARC Resources latest to cut budget as oil prices fall

Wed Jan 7, 2015 5:42pm EST
 
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CALGARY, Alberta Jan 7 (Reuters) - ARC Resources Ltd said on Wednesday it will cut an already reduced 2015 capital spending budget by nearly 15 percent as it joins other Canadian petroleum producers in tightening purse strings to cope with a 50 percent drop in oil prices since June.

The company said it expects to spend C$750 million ($634 million) on capital programs this year, down from the C$875 million 2015 budget it announced in November, and from the C$915 million it expected to spend in 2014.

ARC is the latest Canadian producer to cut its budget in order to cope with oil prices that have fallen to under $50 per barrel after trading above $100 in mid June.

Crescent Point Energy Corp, Canada's No.4 independent oil producer, said on Tuesday it would reduce its 2015 capital budget to C$1.45 billion, 28 percent below its spending in 2014.

Others that have made cuts include Husky Energy Inc , Cenovus Energy Inc, Athabasca Oil Corp and Tourmaline Oil Corp.

Even with the cut to its budget, ARC said its expects to produce around 122,500 barrels of oil equivalent per day this year, up from 115,530 boepd over the third quarter of last year.

To fund part of its planned capital program, the company said it agreed to sell 15.5 million shares to a group of underwriters led by RBC Capital Markets.

The sale of the units, priced at C$22.55 each, will raise gross proceeds of about C$350 million, rising to C$402.7 million if the underwriters exercise an option to boost the size of the offer by an additional 2.3 million shares.

ARC shares fell 21 Canadian cents to C$23.34 on Wednesday on the Toronto Stock Exchange,

($1=$1.18 Canadian) (Reporting by Scott Haggett; Editing by Peter Galloway)