Husky Energy cutting capital spending plan by $500M

Dan Healing, The Canadian Press

Husky cuts capital spending plan

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CALGARY -- About 370 jobs have been cut at Husky Energy Inc. this year with most of the reductions coming in a major round of layoffs in October, CEO Rob Peabody revealed on a conference call Monday to discuss guidance for 2020 and 2021.

The Calgary-based company had refused previously to say how many workers were affected by job cuts designed to better align its workforce with lower capital spending plans going forward.

"What we're seeing is that (the reductions) will generate forward savings of about $70 million," said Peabody, adding the company will take a charge against earnings of $70 million in the fourth quarter to account for the job cuts.

"We're going to continue those efforts to capitalize on the fact we've created a more focused and a simpler company."

In a regulatory filing earlier this year, Husky indicated it had 5,157 permanent employees at the end of 2018, little changed from the numbers at the end of 2016 and 2017.

Capital spending for 2020 and 2021 is being cut by $500 million compared with guidance released last spring due to what Husky called changing market conditions.

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The budget for 2020 is to fall by about $100 million to between $3.2 billion and $3.4 billion while the following year it will drop by about $400 million.

Husky says average upstream production is expected to be in the range of 295,000 to 310,000 barrels of oil equivalent per day for 2020, up about four per cent, despite about 5,000 barrels of oil per day in the first half of the year expected to be interrupted by an oil curtailment program in Alberta and planned maintenance.

Production is expected to rise about about 10 per cent in 2021 as new projects come on stream.

The company says its capital spending for 2020 will focus on its Lloydminster, Sask., thermal project portfolio, its Liuhua 29-1 offshore natural gas project in China, and construction of the West White Rose Project in the Atlantic region.

The guidance does not include $450 million to $525 million related to the ongoing rebuild of the Superior Refinery, which is expected to be covered by insurance.

Husky based its plan on an oil price assumption of US$55 per barrel of West Texas Intermediate for 2020 and US$60 in 2021.