Husky puts on short-term hedges during refinery turnarounds

Fri Feb 5, 2016 6:09pm EST
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CALGARY, Alberta Feb 5 (Reuters) - Canadian oil producer Husky Energy Inc said on Friday it is implementing a short-term hedging program to help protect itself from volatile oil prices during turnarounds at its two major refineries in the first half of 2016.

The Calgary-based company, which last month slashed its capital budget by 27 percent, declined to comment on what proportion of oil production it has hedged or at what price.

Benchmark U.S. crude prices settled at $30.89 a barrel on Friday, having hit a 12-year low of $26.19 a barrel two weeks ago.

Husky does not generally hedge production using financial derivatives as its refining arm provides a natural cushion against low crude oil prices, but production at its 160,000 barrel-per-day Lima refinery and 160,000-bpd Toledo refinery, both in Ohio, will be cut during the upcoming turnarounds.

Six to eight weeks of maintenance are scheduled at Lima, while there is 70 days of work planned at Toledo, a joint venture with BP Plc, starting in April, according to a source familiar with operations.

In a statement Husky said the program was expected to wrap up mid-year once the turnarounds are finished.

"The objective of this short-term hedging plan is to support the delivery of the 2016 business plan by limiting downside price exposure in this volatile environment," the company said in a statement.

(Reporting by Nia Williams; Editing by Lisa Shumaker)