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2021 oil production and spending forecast upped by Cenovus, following Husky deal

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Canada’s Cenovus Energy Inc has forecast higher production and spending for 2021 after its purchase of rival Husky Energy, but it stressed its focus is on cutting debt, as the oil industry rebounds from the depths of the COVID-19 pandemic.

Forecast production jumped as a result of the Husky acquisition to between 730,000 and 780,000 barrels of oil equivalent per day (boepd), up from a 2020 production forecast of 432,000-486,000 boepd.

The Calgary-based company said it will spend between C$2.3 billion ($1.8 billion) and C$2.7 billion this year, up from a 2020 forecast of C$750 million to C$850 million. The vast majority, C$2.1 billion, of that spending will go toward maintenance capital required to keep existing production flowing.

Cenovus agreed to buy rival Husky last year to create Canada’s No. 3 oil and gas producer, as historically low oil prices caused by a collapse in fuel demand due to COVID-19 and a price war between Saudi Arabia and Russia forced the industry to consolidate.

Like many of its competitors in the Canadian oil patch, Cenovus will use free cash flow to pay down debt and repair balance sheets that were battered by the oil price rout last year. The company is aiming to reduce net debt to less than C$10 billion from around C$12 billion right after the Husky deal.

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