Husky Energy, a Canadian energy company, has taken actions to reduce costs across its operations in an extended low oil price environment, including cutting about 17 percent of its workforce.
“It is evident that the global oil dynamic has experienced a fundamental shift, driven by the resilience in supply,” said CEO Asim Ghosh.
The company says it has undertaken measures to reduce its cost structure including workforce reductions, transition to low sustaining capital and cost saving program.
About 1,400 employees have been let go as of the end of the third quarter. This is around 17 percent of Husky Energy’s total workforce. Of this total, about 80 percent were contractors and 20 percent were full-time employees. Husky says that there could be more: “Additional workforce adjustments will be undertaken as required in line with the business plan.”
In addition, Husky says , as a result of the transition to a lower sustaining capital production base and efficiencies achieved to date, sustaining and maintenance capital in 2016 is expected to be in the range of $2.4-2.6 billion. This represents a 15-20 percent reduction.
“Back in 2010, we made the decision to stay diversified, integrated and begin a transition into a low sustaining capital business,” Ghosh said.
Furthermore, five years ago, the company began an efficiency and cost savings program and as of the end of 2014, had realized $1.3 billion in cumulative supply and procurement savings. The program was accelerated in 2015 and achieved the high end of a $400-600 million target in overall cost savings.
According to CEO’s words, Husky Energy aims to build a business that will grow profitably at $40 US WTI oil and $3 Cdn AECO gas.
$4B loss in 3Q
The Calgary-based company recorded a net loss of $4.1 billion in the third quarter of 2015, including an after-tax impairment of $3.8 billion and a write down of $167 million related to legacy oil and natural gas assets in Western Canada.
Adjusted net loss, which excludes charges for impairments and write-downs, was $101 million in the third quarter of 2015 compared to adjusted net earnings of $572 million in the third quarter of 2014 with the decline due to lower crude oil prices and decreased crude oil production in Western Canada and the Atlantic Region.
Production on track
In the third quarter, Husky’s average Upstream production was 333,000 boe/day compared to 341,000 boe/day in the third quarter of 2014.
According to Husky, production in the third quarter was impacted by a planned 18-day turnaround on the SeaRose FPSO vessel in August. A 10-week maintenance program on the Terra Nova FPSO concluded in early July.
However, the company noted that overall production in 2015 remained on track with guidance.