January 22, 2019 / 12:48 PM / a year ago
UPDATE 1-MEG Energy cuts capital expenses to C$275 mln in 2019
(Adds details on capex, Alberta production cuts)
Jan 22 (Reuters) - Canadian oil sands producer MEG Energy Corp said on Tuesday it would halve its capital spending to a maximum of C$275 million ($206.33 million) this year amid a global supply glut.
MEG, which fought off a hostile bid last week from bigger rival Husky Energy Inc, expects 2019 production to average 90,000 barrels per day (bpd) to 92,000 bpd.
Calgary-based MEG said it would spend most of its 2019 budget, which includes maintenance capital of C$115 million, or about $3.50 per barrel, on completion and tie-in of sustaining wells.
In August, the company had estimated to spend C$670 million in 2018, but a supply glut forced Alberta government to mandate a production cut.
Canadian oil producers will be forced to cut output by 8.7 percent, or 325,000 barrels per day (bpd) as mandated by the province of Alberta until the excess crude in storage goes down. The cuts will then drop to 95,000 bpd until Dec. 31, 2019. (reut.rs/2EGg7PX)
Following the curbs, Husky scrapped its bid saying it could not secure over 50 percent support from MEG shareholders. It had offered to buy MEG Energy for C$11 in cash per share or 0.485 of a Husky share.
$1 = 1.33 Canadian dollars Reporting By Shradha Singh in Bengaluru; Editing by Shinjini Ganguli