December 16, 2008 / 11:12 PM / 10 years ago

UPDATE 1-Husky Energy to cut 2009 spending by 28 percent

CALGARY, Alberta , Dec 16 (Reuters) - Husky Energy Inc (HSE.TO), Canada’s No. 2 oil exploration and refining company, said it will cut its 2009 capital spending budget by 28 percent as it looks to weather low oil prices and economic turmoil.

The company, controlled by Hong Kong billionaire Li Ka-shing, plans to shave $1 billion ($830 million) from its budget next year, spending C$2.6 billion on capital programs, down from an expected C$3.6 billion in 2008.

Most big Canadian oil and gas producers plan to spend less next year as low oil prices — which have fallen more than $100 a barrel from July peaks — cut their profits.

“The economic uncertainty will require the company to be prudent in weathering the financial crisis,” John Lau, Husky’s chief executive, said in a statement.

Husky said its cash will be directed primarily at boosting production from its offshore properties on Canada’s East Coast, and in China and Indonesia.

Spending on the company’s oil sands properties, including the planned 200,000 barrel per day Sunrise project it co-owns with BP Plc (BP.L), will be cut to C$65 million next year, down 78 percent from the C$300 million in will spend in 2008.

Outlays on its downstream refining operations will climb 19 percent to C$315 million, as it works on the Toledo refinery included in the BP joint venture and its Lima, Ohio, facility.

Husky said it expects 2009 oil and gas production to fall to between 310,000 and 345,000 barrels of oil equivalent per day as it cuts spending in Western Canada and temporarily shuts its East Coast fields for maintenance work.

The company expects to average output of 356,000 boe/d in 2009.

Husky shares rose C$1.47 to C$31.49 on Tuesday on the Toronto Stock Exchange. The shares have dropped 27 percent over the past 12 months. ($1=$1.21 Canadian) (Reporting by Scott Haggett; editing by Rob Wilson)

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