In line with what the whole industry is doing due to low oil prices, Canadian oil and gas company Husky Energy has moved to further reduce its cost structure.
According to the company’s Tuesday’s press release, Husky Energy has managed to lower its earnings break-even point for USD WTI oil from the mid-$50s last year to the low $40s today. It aims to further press ahead and reach the sub-$40s by the end of 2016.
“At the same time, we have reduced our sustaining and maintenance average costs by 15 to 20 percent, which means we can now do more with even less,” Husky Energy’s CEO Asim Gosh said.
Husky Energy has set a conservative price planning assumption of $40 US per barrel WTI oil and $3 Cdn per thousand cubic feet (mcf) AECO gas over the next two years.
The company said its capital expenditures would remain price planning assumption of $40 US per barrel WTI oil and $3 Cdn per thousand cubic feet (mcf) AECO gas over the next two years.
As a result of the transition to a low sustaining capital cost base, sustaining and maintenance costs in 2016 are expected to be in the range of $2.4-2.6 billion, a 15 to 20 percent reduction compared to an historical average of $3 billion. This represents the required investment to keep production stable, maintain facilities and meet regulatory requirements, the company said.
To further strengthen its balance sheet, Husky is also looking at is assessing the potential partial sale of select midstream assets in the Lloydminster region.
The 2016 capital expenditure program is in the range of $2.9-3.1 billion projects, majority of which, up to 2.2 billion, earmarked for upstream projects. The company will spend around $900 million on its offshore operations in Canada in Asia Pacific.