Meanwhile, his company will keep using a conservative US$30-a-barrel oil for planning assumptions and will keep investment in line with cash flow.
“We will look for trend lines, not short-term headlines,” Ghosh told shareholders at the company’s annual meeting in Calgary.
“While oil has moved favourably, the exchange has moved unfavourably,” he said.
Caution and more cost cutting are expected to be a dominant theme this year, as companies build defences against price volatility, pay down debt and adjust to new climate change policies. Most major Canadian energy companies are expected to report results in the next two weeks.
Brent spot prices have risen more than 60 per cent since its January low of US$27 a barrel, despite crude inventories building the entire time, Citi said in a report. WTI closed at US$44.04 on Tuesday in New York, up 3.3 per cent.
Benchmark WTI oil prices averaged US$33.45 per barrel in the quarter, compared to US$48.63 per barrel in 2015. But Husky’s realized price was $25.02 per barrel of oil equivalent on average, compared to $40.84 in the first quarter of 2015, reflecting the discount applied to Canadian oil.
The company hopes to sell more assets to strengthen its balance sheet as part of its transition to lower costs and fewer plays.
Husky announced an agreement to sell a 35 per cent interest in a package of Canadian midstream energy assets to two linked Hong Kong-based firms for $1.7 billion in cash. The assets include about 1,900 kilometers of pipelines and tanks able to store 4.1 million barrels of oil in Hardisty and Lloydminster. Husky will continue to operate the assets and the plan is to grow the new business.
CNOOC Ltd., its partner, wants to renegotiate gas prices given deteriorating market conditions in Guangdong. Husky said it has a contract, discussions are ongoing and if the dispute is not resolve it will go to court.
“It’s early days,” Ghosh said. “They have indicated a more difficult market in China and our view is that there is no contractual basis to change the price unilaterally. We have a legally binding take or pay contract.”