CALGARY – Oil and gas producer Whitecap Resources Inc. says it will choke back spending in the first half of 2019 in view of recent extreme volatility in world and western Canadian oil prices.
The mid-sized producer says it will remain “cautious and defensive” with its plan to spend about $450 million next year, about the same as this year, to grow output by about six per cent to a fourth quarter average of about 78,000 barrels per day.
Crude prices in Western Canada suffered deep discounts in October and November as a glut of oil overwhelmed pipeline and rail export capacity.
Those discounts eased after the Alberta government announced early this month it would impose industry-wide production curtailments in 2019, but New York-traded West Texas Intermediate has also fallen, from a peak of over US$76 per barrel in October to less than US$48 per barrel this week.
Analyst Thomas Matthews of AltaCorp Capital says caution has been the major common theme as intermediate companies like Baytex Energy Corp. and Obsidian Energy Ltd. also rolled out budgets this week.
He says the province’s decision to remove 325,000 barrels per day from the market through proportionate curtailments on producers of more than 10,000 barrels per day isn’t expected to greatly affect intermediate companies’ production.
Companies mentioned in this article: (TSX:WCP, TSX:OBE, TSX:BTE)