Forecast - Production | Capital Markets | Capital Expenditure | Capex Decrease | Capital Expenditure - 2020 | 2020 Guidance
Husky Cuts $900 Million from 2020 Budget; Pauses Exploration, Thermal Ops
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Husky Energy is taking a series of actions to fortify its business in response to challenging global market conditions.
2020 Capital Changes
Husky has reduced its 2020 capital program by $900 million to $2.3-2.5 billion (down 27% at the midpoint from its original plan and down 30% from 2019).
Other changes include:
- Investment in resource plays and conventional heavy oil projects in Western Canada has been halted, with a focus on optimizing existing production and lowering costs.
- Drilling of sustaining pads at all thermal operations has been suspended.
- Lloydminster thermal projects scheduled to be delivered beyond 2020 have been deferred and will be reconsidered as market conditions improve.
- In the Asia Pacific region, the development of the Block 15/33 oil field offshore China has been deferred by a year. In Indonesia, development of the MDA-MBH natural gas field has been deferred. The Liuhua 29-1 field at the Liwan Gas Project is being advanced as planned, with first production expected by the end of 2020.
Husky has revised its 2020 capital and production guidance as follows:
| Current | Previous | |
| Capital Investment1 ($ millions) | ||
| Upstream | 1,750 – 1,900 | 2,625 – 2,800 |
| Downstream | 475 – 550 | 475 – 550 |
| Total | 2,300 – 2,500 | 3,200 – 3,400 |
| Total Upstream Production2 (mboe/day) | 275 – 300 | 295 – 310 |
| 1Includes exploration capital and other capital expenditures but excludes asset retirement obligations, capitalized interest and Superior Refinery rebuild capital 2Includes curtailment allowance of 5,000 bbls/day in first half of 2020 |
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Additional cost reduction initiatives totalling approximately $100 million in 2020 will include a reduction in well servicing activities on uneconomic production, and a halt in exploration activity.
Balance Sheet / Liquidity
Total liquidity is $4.9 billion, comprised of $1.4 billion in cash and $3.5 billion in unused credit facilities. In line with its committed credit facilities, Husky is required to maintain debt to capital of no more than 65%, and is well below this threshold with a ratio of 27% with no long-term debt maturities until 2022.
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