Husky Energy slashes spending by $1 billion

The list of companies cutting spending in wake of plunging crude prices continues to grow, with Husky Energy announcing a $1-billion reduction in this year's spending.

Company says move made to 'fortify' business in wake of challenging market

Husky Energy announced Thursday it is cutting its 2020 spending by $1 billion "in response to challenging global market conditions." (CBC)

The list of Canadian oil companies cutting spending in the wake of plunging crude prices continued to grow Thursday, with Husky Energy announcing a $1-billion reduction in its 2020 spending.

The Calgary-based company says it's reducing this year's capital program by $900 million, representing a one-third cut in upstream spending.

Husky said it will also take an additional $100 million in "cost-saving measures"  due to "current market conditions."

Canada's oil and gas sector has been hammered by a double whammy this week — an oil price war between Russia and Saudi Arabia, and growing concerns about the spread of the novel coronavirus. 

The combination of the two has sent both oil and stock markets reeling.

Husky said its actions are intended "to fortify its business."

"Given current market conditions Husky will commence the safe and orderly reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices," the company said in a release.

Husky said it has halted investment in resource plays and conventional heavy oil projects in western Canada. It will now focus on getting the most from existing production and lowering costs.

The company's heavy oil thermal projects in the Lloydminster area scheduled to be delivered beyond 2020 have been deferred and will be reconsidered as market conditions improve.

Husky is also looking outside the country for savings, deferring development of an oil exploration block in offshore China and a natural gas block in Indonesia. 

The company says its plans to save an additional $100-million include a reduction in well-servicing activities on uneconomic production, and a halt in exploration activity.

The company did not say whether there would be layoffs as a result.

"We will always manage our workforce in accordance with our business plans and activities, and will continue to do so," spokeswoman Kim Guttormson said in a statement.

Analysts said earlier in the week they would expect companies to cut capital spending and production in response to plunging oil prices.

Cenvous Energy, MEG Energy and Seven Generations Energy have all announced spending reductions.