Husky boosts capital spending but production stalls, at least in the short term
In this week's 2018 budget and production guidance, Husky Energy says it plans to increase capital spending to about $3 billion, slightly less than initially anticipated but almost $1 billion more than spent in 2017. About $900 million will be allocated to Husky's heavy thermal properties in Alberta and Saskatchewan, including Sunrise, Lloyd and Tucker.
Average upstream production is expected to be in the 320,000 to 335,000 boe/day range, roughly unchanged from 2017. Production increases from the Sunrise and Tucker heavy thermal projects are expected to largely offset production losses from divestitures. Husky also says its Rush Lake 2 project is tracking ahead of schedule, now expected to come online in the first quarter of 2019.
Average upstream operating costs are expected to fall from about $14/boe this year to a range of $13 to $13.50 in 2018. Operating costs at Lloyd and Tucker are expected to be closer to $10/bbl next year. Husky says it remains on track to lower costs to $12/boe across its entire upstream portfolio by 2021.
Refinery throughput is expected to increase about 7% to a range of 360,000 to 370,000 bbl/day. By the middle of 2018, Husky's Lima Refinery will have the capacity to process 40,000 bbl/day of heavy crude, up from the current 10,000 bbl/day.
The company added it is targeting 400,000 boe/day of total upstream output by 2021 and hinted it may eventually reinstate its dividend.