3 Min Read
(Adds CEO comments, details on new projects)
By Nia Williams
CALGARY, Alberta, Feb 12 (Reuters) - Husky Energy Inc , Canada's No.3 integrated oil company, swung to a quarterly loss and cut its capital budget for the second time in three months on Thursday as weak oil prices took their toll.
The company, controlled by Hong Kong billionaire Li Ka-shing, said it expects to spend C$3.0 billion to C$3.1 billion ($2.47 billion) in 2015. The company cut its budget by a third to C$3.4 billion in December.
Husky joins Cenovus Energy Inc, MEG Energy Corp and other Canadian oil producers, who have lowered capital investments due to a 50 percent drop in global prices since June.
"We took a realistic approach with our 2015 business plan and continue to identify strategies to further support our balance sheet in today's lower oil price environment," said chief executive officer Asim Ghosh.
Despite the cautious outlook, the company is plowing ahead with new oil sands, heavy oil and offshore projects that will add around 85,000 barrels per day of production net to Husky by the end of 2016.
The largest of these, the Sunrise thermal oil sands project in northern Alberta, has begun steam injection and is expected to see first production by the end of March.
Thermal projects involve pumping steam underground to liquefy tarry bitumen and allow it to flow to the surface.
"All of these projects have low sustaining capital needs and very good full cycle rates of return," Ghosh said on a fourth-quarter earnings call. "All of these are smart investments even when oil prices are low."
Total output for 2015 is expected to be 325,000 to 355,000 bpd, in line with the average 340,000 bpd produced last year.
Husky's cash flow from operations, a measure of its ability to pay for new projects and drilling, remained flat at C$1.15 billion during the fourth quarter ended Dec. 31.
The company reported a net loss of C$603 million, or 65 Canadian cents per share, compared with a net income of C$177 million, or 18 Canadian cents, a year earlier.
Husky took a non-cash charge of C$622 million on the impairment of mature assets in Western Canada, mainly relating to its Rainbow oilfield in northern Alberta.
Plunging oil prices have dented the value of a number of fields, prompting companies such as BP Plc and Talisman Energy to write down their assets by billions of dollars.
Husky shares were last up 2.3 percent at C$28.60 on the Toronto Stock Exchange. ($1 = C$1.2554 ) (Additional reporting by Sneha Banerjee; Editing by Don Sebastian and Andrew Hay)