Whitecap Resources chokes back spending in face of oil price volatility
Calgary-based oil and gas producer unveils 'cautious' $450M capital budget
Calgary-based oil and gas producer Whitecap Resources Inc. says it will choke back spending in the first half of 2019 in view of recent extreme volatility in world and western Canadian oil prices.
The mid-sized producer says it will remain "cautious and defensive" with its plan to spend about $450 million next year, about the same as this year, to grow output by about six per cent to a fourth quarter average of about 78,000 barrels per day.
Crude prices in Western Canada suffered deep discounts in October and November as a glut of oil overwhelmed pipeline and rail export capacity.
Those discounts eased after the Alberta government announced early this month it would impose industry-wide production curtailments in 2019, but New York-traded West Texas Intermediate has also fallen, from a peak of over $76 US per barrel in October to less than $48 US per barrel this week.
Analyst Thomas Matthews of AltaCorp Capital says caution has been the major common theme as intermediate companies like Baytex Energy Corp. and Obsidian Energy Ltd. also rolled out budgets this week.
He says the province's decision to remove 325,000 barrels per day from the market through proportionate curtailments on producers of more than 10,000 barrels per day isn't expected to greatly affect intermediate companies' production.
- Ottawa offers $1.6B backstop for energy sector as political tensions with Alberta fester
- The unintended consequences of Alberta's mandatory oil production cut
- OPINION | Western alienation: Let's be clear, the West didn't pull away until it was pushed away, writes Monte Solberg
- OPINION | What we mean when we talk about Alberta conservatism
- OPINION | Notley is riding a wave of goodwill and can capitalize on that leading into the next election