Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

RE:RE:RE:RE:RE:RE:RE:RE:RE:Husky Energy cuts 2020 budget by $1-billion

[oilandgasmick]

Pablo--When you say that "capex is burning a hole in Husky's pocket" you have hit the nail on the head.

The World (even before the recent Saudi announcement) was simply producing too much oil and it was putting huge downward pressure on the WTI price.

At the same time, HSE was spending a lot of money on CAPEX and probably wouldn't have turned cash flow positive until late 2021 or even 2022.

Some people have stated that it wasn't really possible for HSE to cut capex but if that was the truth then how did they manage to chop $1B this week?  That's a very big number.

Most of the energy industry has had the same philosophy. Expand, expand, expand but its like the farmers who keep expanding their herds while the beef market is depressed and over supplied. It doesn't make too much economic sense to produce into falling prices.

Analysts warned on several occassions that if you bring a ton of new oil on the market in 2021-22 then you have to ask what will the price environment be then?  

Canada has basically doubled oil production in the last decade and the USA has almost tripled oil production and in doing so they have flooded the market with associated natural gas to the point where it is now flared in some States.

They used to flare the natural gas in Turner Valley in the same way. It was considered worthless.

I have to wonder why HSE didn't do some of this capex cutting before they were literally forced to. Less is more on the bottom line.