Husky Energy is slimming down its 2016 capital plan and halting its dividend in response to low oil prices.
The Calgary-based company said Wednesday it has revised its capital plan down to between $1.44 billion to $1.58 billion, or C$2.1 billion to C$2.3 billion, from a previous range of $1.99 billion to $2.12 billion, or C$2.9 to C$3.1 billion
Husky said it will achieve savings primarily through deferring discretionary activities in Western Canada.
Completion of three new Lloyd thermal projects in 2016, a Tucker thermal extension project and the continued development of fixed price Asia Pacific projects expected to come online in 2017 will remain on schedule.
The steady ramp up of the Sunrise Energy Project will continue through the year and downstream turnarounds will also be completed as scheduled.
The company’s overall earnings break-even point is expected to be in the sub-$40s per barrel of West Texas Intermediate crude by the end of 2016.
Husky added that it expects to achieve further gains “through the ongoing reduction of operating and sustaining costs.”
The company now expects to produce between 315,000 to 345,000 barrels of oil equivalent per day, down from its previous guidance of 330,000 to 360,000 boe/day.
“Within the updated capital plan, the transition into a low sustaining capital business continues unabated. Deferral of capital is in those areas that can be quickly switched on as commodity prices recover,” CEO Asim Ghosh said.
Huskys said it will not issue a cash or share dividend for the fourth quarter of 2015.
The company had introduced a stock dividend in the third quarter as an interim measure in lieu of a cash dividend.
“Given the persistent downward pressure on oil prices and the extended lower for longer outlook, the Board of Directors has suspended the quarterly dividend,” Husky said.
The company’s board will continue to review the dividend on a quarterly basis.
Husky is assessing the potential partial sale of select midstream assets in the Lloydminster region, that includes pipelines and storage facilities.
The company said it intends to retain operatorship of these assets in order to “maintain tight integration between its upstream production and downstream facilities.”
Husky is also continuing its planned dispositions of select legacy oil and natural gas assets in its Western Canada portfolio.
“This will allow for a more focused capital program so a larger proportion of capital can be deployed to assets that can deliver higher returns in a lower commodity price environment,” Husky said.
The planned divestitures produce about 55,000 boe per day and do not include heavy oil or oil sands assets.
Late last year, the company realized about $100 million in proceeds from assest sales.
Husky is also continuing an assessment a sale of royalty interests in Western Canada, representing about 2,000 boe per day of production.