Husky Energy Inc, Canada’s No.3 integrated oil company, swung to a quarterly loss and cut its capital budget for the second time in three months as oil trades at five-year lows. The company, controlled by Hong Kong billionaire Li Ka-shing, said it expects to spend C$3 billion to C$3.1 billion ($2.47 billion) in 2015. The company cut its budget by a third to C$3.4 billion in December.
Husky joins Cenovus Energy Inc, MEG Energy Corp and other Canadian oil producers, who have lowered capital investments due to a 50 percent drop in global prices since June. “…By the end of 2016, about half of our total production will be from low sustaining capital projects,” Husky’s Chief Executive Asim Ghosh said on Thursday.
Husky’s cash flow from operations, a measure of its ability to pay for new projects and drilling, remained flat at C$1.15 billion during the fourth quarter ended Dec. 31. The company reported a net loss of C$603 million, or 65 Canadian cents per share, compared with a net income of C$177 million, or 18 Canadian cents, a year earlier.
The company took a non-cash charge of C$622 million related to the impairment of mature assets in Western Canada. A steep fall in oil prices since June has dented the value of a number of fields, prompting companies such as Britain’s BG Group and BP Plc and Canada’s Talisman Energy Inc to write down their assets by billions of dollars. Up to Wednesday’s close, Husky’s stock had declined 23 percent since June when oil prices began to fall.
($1 = C$1.2554 )