Husky Energy to boost spending next year

Canadian energy company Husky Energy will boost its capital expenditure program for 2017 as it had sanctioned several new projects. In addition, Husky will increase production next year compared to 2016 levels. 

In its 2017 production guidance and capital program revealed on Tuesday, the energy company said its 2017 capital expenditure program will be in the range of $2.6-2.7 billion, which is expected to be fully funded within cash flow from operations.

This is an increase compared to this year’s capex of around $2 billion, which is about $100 million below the guided range. Husky explained that this was a reflection of the ongoing cost reduction program, significant procurement savings, and improved productivity throughout 2016.

Production for 2016 is expected to be within guidance at 318,000-320,000 boe/day while annual average production in 2017 is expected to be in the range of 320,000-335,000 boe/day.

Husky CEO, Rob Peabody, said: “Our investment program will generate higher margins, further lower our corporate break even and increase our free cash flow.”

“As a result of the ongoing transformation, overall sustaining and maintenance capital requirements have decreased about 25 percent over the last two years and are forecast to be in the range of $2.2-2.3 billion for 2017,” added Peabody.

Husky plans to add approximately 45,000 barrels per day (bbls/day) of new higher return production.

Among other projects, Husky said the liquids-rich BD field offshore Indonesia is scheduled to ramp up to its full gas sales rate by the second half of 2017, with a fixed-price contract and a net production target of 40 million cubic feet per day (mmcf/day) of gas and 2,400 bbls/day of liquids.

In addition, two new infill wells are planned in the Atlantic Region, with expected combined net peak production of about 15,000 bbls/day.

Looking further ahead, the board has sanctioned several new projects to provide growth while lowering the company’s cost base. Namely, four additional gas fields are being progressed in the Madura Strait offshore Indonesia. The MDA-MBH and MDK fields will be developed in tandem and are scheduled to come on production in the 2018-2019 timeframe, and a plan of development has been approved for the MAC field.

Furthermore, engineering design and subsurface evaluation work continues at West White Rose to increase capital efficiency and improve resource capture; the project will be considered for sanction next year.

During 2016, Husky said the net debt target was achieved and is now approximately $4 billion compared to $7 billion at the beginning of the year.

Offshore Energy Today Staff

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