Penn West Petroleum Ltd. is cutting its capital budget for 2016 to only one-tenth of what it spent last year as the conventional oil and gas producer lowers its average daily output, shuts in wells and works to reduce expenses.
The Calgary-based company says its 2016 budget capital budget will be just $50 million, reflecting plans to shut in the equivalent of 4,000 barrels per day of uneconomic production in the first quarter of this year.
The company also says its 2015 capital spending was $20 million below the $500 million that was anticipated in September. Earlier, the 2015 budget had been set at $840 million for 2015.
Penn West — which operates mostly in southern Alberta and Saskatchewan — cut about 400 full-time employees and contractors last year, about 35 per cent of its workforce., because of the prolonged decline in oil prices.
Penn West ended 2015 producing more than 77,000 barrels per day of oil, gas and liquids.
For the coming year, Penn West projects between 60,000 and 64,000 barrels per day of production in 2016.