(Adds quotes, share price reaction, additional detail)
By Nia Williams
CALGARY, Alberta Dec 13 Canadian oil and gas
producer Husky Energy Inc raised its 2017 production
forecast and capital expenditure program on Tuesday, but lowered
its outlook for production at the Sunrise oil sands project in
Husky said it expected average production of 320,000-335,000
barrels of oil equivalent per day (boe/d) in 2017, compared with
318,000-320,000 boe/d in 2016.
The company, controlled by Hong Kong billionaire Li
Ka-shing, also forecast 2017 capital expenditure of C$2.6
billion-C$2.7 billion ($1.98 billion-$2.06 billion), up from C$2
billion in 2016.
U.S. benchmark crude prices are back above $50 a
barrel, doubling since early 2017, after major oil producing
countries agreed to cut output to soak up a supply glut and
Chief executive Rob Peabody told analysts on a conference
Husky's priority would be growing thermal heavy oil projects in
the Lloydminster region of western Canada, but scaled back
expectations of when it would reach full capacity at its Sunrise
project, a joint venture with BP Plc.
Some analysts viewed the 2017 guidance as slightly negative
and Husky shares were last down 0.6 percent on the Toronto Stock
Exchange at C$16.80.
"The Sunrise oil sands project has been performing below
expectations," BMO Capital Markets analyst Randy Ollenberger
said in a note, adding the company plans to bring 14
previously-drilled well pairs into production to lift volumes at
a cost of C$50 million.
Sunrise, which was shut down for a few weeks in the second
quarter because of wildfires in the Fort McMurray region, is
expected to produce 40,000-44,000 barrels per day next year.
That is up from 35,000 bpd in 2016 but below Husky's previous
forecast of 60,000 bpd in 2017.
"What we have been doing in the last quarter is looking at
(Sunrise) performance on a well by well basis and rebasing
everything," Peabody said. "But nothing in this data is
suggesting we won't actually recover the same amount of oil per
Peabody said once Sunrise reaches full capacity there could
be opportunities for further growth if oil trades around $55-$60
Husky has sanctioned three new Lloydminster thermal projects
that will bring on 30,0000 bpd of new production by 2020, and
development is continuing at the 10,000 bpd Rush Lake 2 plant.
Overall sustaining and maintenance capital requirements are
down about 25 percent over the last two years and forecast to be
$2.2-C$2.3 billion for 2017.
($1 = 1.3122 Canadian dollars)
(Additional reporting by Ahmed Farhatha in Bengaluru; Editing
by Anil D'Silva and Andrew Hay)