Calgary-based Husky Energy is reporting $1.7 billion in Canadian currency in losses in the first quarter in response to tanking oil prices and market volatility during the coronavirus pandemic.
In an announcement Wednesday, CEO Rob Peabody said COVID-19 and the collapse of global demand for oil impacted the company’s first quarter financial results.
“It was clear from what we were seeing on the product demand side in North America that we were going to see supply and demand collide in a very messy way this quarter,” said Peabody in a conference call. “Our strategy is to keep as many barrels away from the train wreck as possible.”
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United States oil prices sunk below $0 per barrel last week. Husky began limiting production in March, known as a shut-in, to lower production than what’s available for output so that its refineries are operating at minimum rates.
Husky previously reported it had cut capital spending in half from December projections and increased liquidity by $500 million to $5.2 billion in response to market changes.
The company also recently suspended the roughly $750 million rebuild in U.S. dollars of Superior’s oil refinery to protect workers during the coronavirus pandemic. An April 2018 explosion at the refinery caused three dozen people to seek medical treatment and a temporary evacuation of some city residents. Husky spent around $43 million in Canadian currency on the project in the first quarter.
“We expect to see very challenging conditions in the second quarter in terms of low crude and product prices, as the market works to bring supply in line with much lower demand,” said Jeff Hart, Husky’s chief financial officer. “We are well prepared for this outcome given our financial strength and the proactive steps we have taken.”
Husky’s losses are a stark contrast to other companies like Kimberly-Clark Corporation, which reported $1.7 billion in sales in the first quarter earlier this month for toilet paper and other household goods.
Husky generated $25 million in Canadian dollars from operations in the first quarter compared to $959 million in the first quarter of last year.
The company typically employs around 200 workers in Superior during normal operations.
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