(Reuters) - Canadian oil and gas producer Husky Energy Inc (HSE.TO) on Thursday cut its 2019 capital expenditure program by about 8 percent, or C$300 million, citing Alberta’s mandatory curbs on output and lower oil prices.
The company now expects 2019 capital expenditure of C$3.4 billion ($2.52 billion), lower than the C$3.7 billion it forecast at its Investor Day in May 2018.
Husky forecast average annual 2019 production to be about 300,000 barrels of oil equivalent per day (boepd). The company had estimated annual production in the range of 310,000 to 320,000 boepd for 2018.
Alberta earlier this month mandated temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and deep price discounts on Canadian crude.
Producers will be forced to cut output by 8.7 percent, or 325,000 barrels per day (bpd), until the excess crude in storage is drawn down. The cuts will then drop to 95,000 bpd until Dec. 31, 2019. [reut.rs/2EGg7PX]
“The company retains further flexibility to reduce capital spending, including the ability to pace development of growth projects that are currently in flight,” Husky said.
The company also cited lower crude prices, which have slumped more than 30 percent since reaching a four-year high at the beginning of October on concerns over oversupply.
Husky, which made an unsolicited formal offer in October to buy rival MEG Energy Corp (MEG.TO) in a deal valued at C$6.4 billion, said its 2019 forecast does not include any production associated with the proposed acquisition.
The company said it will provide a more detailed 2019 production and capital guidance update in the first quarter, following resolution of the proposed purchase of MEG.
Reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli and Sriraj Kalluvila