Husky Energy has confirmed the company's capital expenditure program and production guidance for 2010. The capital program of $3.1 billion, an increase of 20 percent over 2009 guidance, mainly focuses on major project developments in Western Canada, offshore Canada's East Coast, and South East Asia while maintaining Canadian upstream production.
"Husky's financial strength and track record of project execution supports the funding and development of the asset portfolio consistent with our strategic objectives," said John C.S. Lau, President & Chief Executive Officer. "The Company is poised to take advantage of the forecast economic cycle and to pursue business growth. The 2010 budget has been established to cater for spending on those assets that generate the highest shareholder values in our portfolio."
Capital Spending in 2010
Capital expenditure in 2010 will be directed to those assets offering the highest potential returns, in particular, Western Canada heavy oil and oil sands, Eastern Canada offshore developments, and Southeast Asia developments.
Capital investments allocated in 2010 will enable Husky to position its medium and long-term growth while maintaining production levels. The increase in annual oil production is expected to offset the reduction in natural gas production due to low gas prices. Husky is ready to improve gas tie-ins and production if the commodity prices strengthen.
The North Amethyst subsea tie-back work at the White Rose field is complete and the drilling of development wells will be a major focus in 2010. Production from North Amethyst is expected to be in the first quarter of 2010 and will ramp up during the year as new wells are tied-in.
Engineering and construction contracts will be placed to progress the Liwan Gas Project on Block 29/26 in the South China Sea, with project sanction expected in early 2010. The West Hercules deepwater rig will drill six to eight exploration, delineation and development wells during 2010 in the South China Sea. The recently discovered LiuHua gas field, will be developed in conjunction with Liwan gas field, realizing synergies by sharing development facilities.
Husky holds a significant land position in Western Canada. The company's capital program is focused on growth of the upstream production through the use and application of enhanced oil recovery (EOR) technology. In 2010, Husky plans to increase capital spending by over 65% to $1.2 billion focused on its heavy oil properties, EOR projects and unconventional gas holdings.
Significant progress on the Sunrise Oil Sands Project has been made. A review of the project has achieved material reductions in capital costs and improved project efficiencies. Front end engineering and design work will be completed for Sunrise in the first quarter of 2010, targeting first production in 2014.
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