Husky Energy’s 2016 sustaining/maintenance costs expected to be $2.4-2.6 billion, a 15-20% reduction compared to $3 billion average
CALGARY, AB – As the North American oil and gas sector braces for a difficult 2016, Husky Energy says it has reduced costs to the point where it can break even if West Texas Intermediate remains below $40USD.
“Five years ago, Husky set out its balanced growth strategy, which included a deliberate decision to remain diverse, physically integrated and transition into a low sustaining capital business,” said CEO Asim Ghosh.
“We continue to reap the benefits of the changes we have implemented. We have substantially lowered the company’s earnings break-even point for USD WTI oil from the mid-$50s last year to the low $40s today and the sub-$40s by the end of 2016.”
Ghosh says Husky Energy has reduced the “sustaining and maintenance average costs” – expected to be in the range of $2.4-2.6 billion, compared to an historical average of $3 billion – by 15 to 20 per cent. The costs represent the required investment to keep production stable, maintain facilities and meet regulatory requirements.
“Looking to the future, our rich and diverse portfolio offers many opportunities for profitable growth, assuming current market conditions, and continued lowering of our earnings break-even price,” he said.
Additional benefits are being realized from ongoing cost savings initiatives, with SG&A reduced by about 30 per cent year to date and continued progress in lowering operating costs.
The 2016 capital expenditure program is in the range of $2.9-3.1 billion, and provides for the continued advancement of profitable near-term growth projects.
Husky Energy says it remains on track to achieve its guidance for 2015.
Production is expected to average about 346,000 boe/day, while capital expenditures are forecast to be approximately $3.0 billion.