Ensign Energy cuts 2015 spending, defers new drilling rigs

Wed Jan 28, 2015 6:47pm EST
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CALGARY, Alberta Jan 28 (Reuters) - Canadian oilfield services contractor Ensign Energy Services Inc on Wednesday cut its 2015 capital spending budget by nearly a third and deferred the construction of eight new drilling rigs, citing weak oil and gas prices.

The company also said its executives had all taken a 10 percent pay cut, effective Jan. 1, while the board of directors had taken a 20 percent cut.

Ensign now plans to spend C$220 million ($175.56 million) this year, down from an initial 2015 capital budget of C$340 million announced in December.

"The outlook for commodity prices has further declined since that time causing many of Ensign's customers, particularly in North America, to reduce their capital expenditure plans for 2015," the company said in a statement.

U.S. oil prices have slumped nearly 60 percent since June, prompting a number of U.S. and Canadian oil and gas companies to slash spending, defer projects and freeze hiring.

Ensign cut the number of rigs it plans to build this year to nine from 17. It has already delivered two new rigs since December and plans to build seven more, all of which are already contracted to work on completion.

Earlier on Wednesday, Canadian oil sands producer Cenovus Energy Inc cut 2015 spending by C$700 million and suspended conventional drilling projects in the provinces of Alberta and Saskatchewan.

Ensign shares on the Toronto Stock Exchange closed down C$1.21 at C$8.67 on Wednesday. (Reporting by Nia Williams, editing by G Crosse)