Husky Energy Sunrise oil sands project operational
By Eric M. Johnson
CALGARY, Alberta, June 1 (Reuters) – Husky Energy Inc, Canada’s No. 3 integrated oilcompany, expects to generate full-year free cash flow and may reinstate a cash dividend after the recent rally in crude oil prices.
Husky also said it successfully restarted its 30,000-barrel-per-day (bpd) Sunrise project that was shut down beginning on May 7 as a massive wildfire threatened the oil sands region in northern Alberta.
The blaze cut Canadian oil output by 1 million barrels a day, though some producers have resumed operations. Evacuees from the key city of Fort McMurray began returning home on Wednesday.
The company said it could maintain production if crude prices hovered around $30 per barrel, though it expects to generate about C$800 million ($611 million) in full-year free cash flow if oilstayed at $50 on an annualized basis.
Cash flow for the first quarter 2016 was about C$410 million. For the year ended in 2015, it was C$3.3 billion.
Its cash flow forecast comes as oil producers have suffered from a rout in crude prices since 2014, though prices have rebounded in recent weeks. Crude futures dropped 0.6 percent to $48.78 on Wednesday.
Husky, controlled by Hong Kong billionaire Li Ka-shing, also operates in southeast Asia, and holds numerous exploration licenses off Canada’s Atlantic shore.
It said it was on track to complete eight projects by the end of 2016 that would eventually contribute 90,000 bpd of new production.
Husky’s average production during the first quarter was roughly 341,000 barrels of oil equivalent per day.
The Calgary-based company cut its budget and production outlook and suspended the quarterly dividend in January.
Company officials told an investor conference on Wednesday it sold legacy assets in the Dodsland area of Saskatchewan for roughly C$100 million, bringing total asset sales in western Canada to about C$1 billion. That amounted to approximately 22,200 barrels of oil equivalent per day.
Husky has agreed to sell assets worth about C$2.9 billion this year, including $163 million in royalty assets.
Husky Chief Executive Officer Asim Ghosh said the company was ramping up output at its Sunrise project. The unexpected shutdown has delayed full operations to early 2017 from late 2016.
“When I put it all together I still believe that we’ll hit our 60,000 bpd some time in ’17,” Husky Senior Vice President John Myer said. “Early ’17.”
Next year it will cut $100 million to $150 million from 2016 “sustaining” capital expenditures of some $2.5 billion, it said.
Husky shares rose 3 Canadian cents to $15.17. ($1 = 1.3083 Canadian dollars) (Additional reporting by Amrutha Gayathri in Bengaluru; Editing by Shounak Dasgupta and Jeffrey Benkoe)