Home / Husky Energy Inc to sell assets, cut Alberta spending to survive in oil’s ‘uncharted territory’
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Husky Energy Inc to sell assets, cut Alberta spending to survive in oil’s ‘uncharted territory’

“It is self-evident to everybody that we are into uncharted territory and the old rules of OPEC calling the shots are no longer valid,” Husky Energy Inc CEO Asim Ghosh said.

CALGARY — Husky Energy Inc. is considering the sale of part of its vast midstream business and will cut capital spending – particularly in Alberta – in 2016 to make itself more resilient in a low oil price environment.

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In capital spending plans for next year announced Tuesday, the Calgary-based integrated oil company said it would trim investment to about $2.9 billion to $3.1 billion in 2016, from $3.1 billion in 2015, and from $5.1 billion in 2014. Husky will also reduce the break-even oil price it uses for planning purposes to sub-US$40 West Texas Intermediate, from the mid-US$50s last year.

Asim Ghosh, president and CEO of Husky, said he is strengthening the company to succeed in a post-OPEC world. The OPEC cartel initiated a price war against North American producers in late 2014 that has slashed oil prices by two-thirds.

It is self-evident to everybody that we are into uncharted territory and the old rules of OPEC calling the shots are no longer valid

“It is self-evident to everybody that we are into uncharted territory and the old rules of OPEC calling the shots are no longer valid,” Ghosh said in an interview.

Husky is in discussions to sell part of its midstream business, which includes pipelines and oil tanks in the Lloydmister area, to unlock its value, he said. It would use the proceeds to pay down debt and would continue to be the operator. The company said in late October that it was planning to sell non-core assets.

On Tuesday Husky also said it’s considering the sale of royalty assets that produce 2,000 barrels of oil equivalent a day.

Husky, majority owned by Hong Kong billionaire Li Ka-Shing, is holding back spending in Alberta, where the new NDP government has raised corporate taxes, is implementing a controversial carbon tax and is expected to reveal a new oil and gas royalty regime by the end of the month.

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