CALGARY, Alberta, June 1 (UPI) -- Canadian company Husky Energy said it's streamlined its portfolio to the point that it can keep production going if oil sells for about $30 per barrel.
Husky entered the decade with a program designed to focus more on projects with a longer shelf life and lower operating costs. With a 2016 objective of establishing a stronger foundation in an era of market volatility, the company said more than 40 percent of its production this year will come from low-cost projects, compared with just 8 percent in 2010.
The company said it could keep operations steady if the price of crude oil was around $30 per barrel. Anything beyond that meant it was generating a steady stream of cash, with prices above $40 per barrel expected to yield about $800 million in free cash flow.
"As a result, we are now much better positioned to deliver on our three business priorities of maintaining a strong balance sheet, investing in our rich portfolio of opportunities and establishing a sustainable cash dividend," CEO Asim Ghosh said in a statement.
Related
Crude oil was trading in the upper $40 range early Wednesday.
Part of Husky's business plan includes the partial sale of some of its heavy oil properties and the $163 million in cash considerations for the sale of royalty assets in Western Canada, which for Husky represents about 1,600 barrels of oil equivalents in production. Additional agreements are in place for the sale of oil and gas assets in Alberta and Saskatchewan, which will bring in about $900 million in cash for the 20,600 barrels of oil equivalent in daily production.
Average production for Husky during the first quarter was around 341,000 barrels of oil equivalent per day.
The cash flow prediction comes as Canada's economy tries to recover from the pressure of lower oil prices. In April, the provincial government in Alberta, central to Canada's oil sector, said it may take until the next decade to balance its budget. The government estimated revenue from non-renewable resources will be at its lowest level in 40 years.
