Calgary-based Husky Energy announced Monday it is reducing its capital program by half-a-billion dollars in 2022 and 2020.
“We are continuing to focus on safe and reliable operations as we build on our improved 2019 performance and work towards our target of becoming a global top-quartile process safety performer by the end of 2022,” CEO Rob Peabody, said in a news release.
“The reduction in our capital spending, combined with the start-up of growth projects including the Liuhua 29-1 natural gas field offshore China, two new thermal projects, and the Lima Refinery crude oil flexibility project, has set the stage for significant free cash flow growth beginning in 2021.”
The company said its capital program for 2020 will be $3.2-$3.4 billion, with average annual upstream production forecast to be in the range of 295,000-310,000 barrels of oil equivalent per day (boe/day), inclusive of an allowance for curtailment.
The capital program is being reduced by $500 million in the 2020-2021 timeframe compared to Husky’s May 2019 Investor Day plan, reflecting $100 million in reductions in 2020 and $400 million in 2021, the company stated.
“The oil price assumption for 2020 and 2021 is $55 US WTI per barrel, down from $60 US WTI per barrel in the Investor Day plan, reflecting changing market conditions. At this pricing assumption, the Company’s plan generates $500 million of free cash flow before dividends in 2020, growing to $1.5 billion in 2021,” it stated.
Husky said capital spending in 2020 will be directed towards advancing the Lloyd thermal project portfolio, completing Liuhua 29-1, and ongoing construction of the West White Rose Project in the Atlantic region. Capital guidance does not include $450-$525 million related to the ongoing rebuild of the Superior Refinery, which is expected to be substantially covered by insurance, it added. The refinery in Wisconsin was damaged by fire in April 2018.