CALGARY — Oil production and refining volumes at Husky Energy Inc. are gradually returning to normal after deep cutbacks earlier this year but the company is braced for a “bumpy” recovery, CEO Rob Peabody said Thursday.
The Calgary-based energy producer and refiner reported having curtailed about 80,000 barrels per day of mainly heavy oil output at the start of the second quarter as COVID-19-related shutdowns hit refined product demand, leading to lower utilization rates at its refineries.
It now has about 30,000 bpd of oil off-line but plans to bring it back as market conditions allow, Peabody said on a conference call.
“We are being cautious not to outstrip physical demand and continue to pace our throughput with our product liftings,” he said.
“We expect the path forward to be bumpy, and we’ll continue to respond rapidly.”
Husky has the flexibility to reduce capital spending to between $1.2 billion and $1.4 billion in 2021 from between $1.6 billion and $1.8 billion this year, while maintaining its production base and refining capacity, Peabody said.
Its 2020 capital budget had originally been set at $3.3 billion in December but was reduced through measures including delaying construction of the offshore West White Rose Project off Newfoundland.
Husky, controlled by Hong Kong billionaire Li Ka-Shing, owns a refinery in Lima, Ohio, and is a 50-50 partner with BP in a refinery in Toledo, Ohio.
Those operations were about 60 per cent utilized in April and May, said Jeff Rinker, executive vice-president of downstream for Husky, but have bounced back since to between 80 and 90 per cent utilization.
Shares in the company dropped by as much as 5.3 per cent and were down 23 cents at $4.49 in Toronto as oil prices fell on Thursday.
Husky reported a $304-million net loss in the three months ended June 30 as revenues plunged nearly 55 per cent to $2.38 billion.
That compares with net income of $370 million on revenue of $5.24 billion in the second quarter of 2019.
Total production fell 7.8 per cent to 247,000 barrels of oil equivalent per day, from 268,000 boe/d a year earlier.
This report by The Canadian Press was first published July 30, 2020.
Companies in this story: (TSX:HSE)
Dan Healing, The Canadian Press