- Husky Energy (TSX:HSE) has announced additional cutbacks to its proposed capital expenditure budget for 2020
- An original budget of between C$3.2 billion and $3.4 billion was announced in December last year, but revisions have brought it down to half that
- The company currently has $5.2 billion in liquidity, following a recent addition of a $500 million term loan
- Production and refinery throughput will be reduced to address negative cash margins
- Husky Energy (HSE) is currently down 4.5 per cent to $3.61 per share, with a market cap of $3.63 billion
Husky Energy (TSX:HSE) has announced additional cutbacks to its proposed capital expenditure budget for 2020.
In a December 2019 announcement, the company revealed an initial spending plan of between C$3.2 billion and $3.4 billion.
This was then cut in March, with the rise of COVID-19 and declining oil prices, to between $2.3 billion and $2.5 billion.
Today, Husky Energy announced further reductions, bringing the total budget to between $1.6 billion and $1.8 billion, roughly half of what it was at the start of the year.
This comes as part of a wider plan to strengthen the company’s position. Other measures include continuing to advance process and occupational safety performance, as well as reducing production and refinery throughput to address near-term negative cash margins.
Rob Peabody, CEO of Husky Energy, said the company’s primary focus is on health and safety, and increasing Husky’s resilience.
“We have taken immediate action to preserve our balance sheet and core business in this commodity price environment.
“As the market rebalances supply with demand over a very short period in North America, negative cash margins before operating costs are occurring. Reducing production minimizes our negative cash margin exposure,” he added.
Further to the spending reductions, Husky Energy is also making moves to improve its already strong balance sheet.
At the end of the first quarter this year, the company had $4.7 billion in liquidity, made up of $1.3 billion in cash and $3.4 billion in available credit facilities. This has since been increased with the recent addition of a $500 million term loan, bringing Husky’s total liquidity to $5.2 billion.
Husky Energy (HSE) is currently down 4.5 per cent to $3.61 per share at 9:44am EST.