Husky Energy has cut its dividend by 90 per cent after a $1.7 billion net loss in the first quarter. The company will now pay a quarterly dividend of 1.25 cents per share which is down from 12.5 cents per share.
The company was hit hard this quarter by the drop in oil prices caused by the COVID-19 pandemic and the price war between Russia and Saudi Arabia.
CEO Rob Peabody said they responded to the situation by cutting capital spending and minimized work on projects that were not immediately cost positive in a conference call on April 29.
“It was clear from what we were seeing on the product demand side in North America that we were going to see supply and demand collide in a very messy way this quarter. Our strategy is to keep as many barrels away from the trainwreck as possible to minimize negative cash margins.”
The company has reduced activity at their upgraders and refineries and shut-in more than 80,000 barrels per day of production.
While Husky has cut production at their crude oil facilities, their asphalt refineries saw a 25 per cent increase this year producing about 28,600 barrels per day.
“Our refineries are currently running at minimum rates with the exception of the asphalt refinery which is running full out and continues to capture strong margins,” Peabody says.
COO Rob Symonds gave an update on current projects after Husky announced they would defer work on several of their projects earlier this year.
“We’re in the final commissioning stages of the Spruce Lake Central thermal project however, the decision to start it up will depend on improved prices. Construction on Spruce Lake North which was originally going to start up at the end of this year has been deferred as is the rollout plan for additional Lloyd zone projects.”
The turnaround at the Lloydminster upgrader was moved to the end of the third quarter.
CFO Jeff Hart says the company is well prepared for the next quarter as they have taken proactive steps and are in good liquidity at the end of the first quarter.
“We expect to see very challenging conditions in the second quarter in terms of low crude and product prices as the market works to bring supply in line with much lower demand.”