Spnding cut: Penn West
Penn West set to cut spending
Canada’s Penn West Energy Trust will cut its capital spending by 20% next year as it looks to weather weak oil prices it believes will continue for a year or more, but it said the downturn may lead to acquisition opportunities.
The trust said it plans to spend about C$800 million (US$669 million) next year on capital projects, 20% less than its forecast of a $1 billion outlay this year.
Penn West said it could further cut next year's budget by another $200 million if conditions worsen or bump it back up to $1 billion if high prices return, said a Reuters report.
The trust is the latest among Canada's big oil producers to rein in spending next year to weather tough markets. Nearly all the country's big oil companies have said they will try to live within their means next year and avoid debt.
Canadian Natural Resources said last week it would slash its capital spending next year by nearly half it made the most severe cut yet for the sector.
Penn West said it expects the shaky fundamentals for the oil industry will firm in the next one to two years. But that may lead to acquisition opportunities for the trust.
Murray Nunns, Penn West's chief financial officer, said that "structural damage to the junior market" in Canada as well as US companies selling off assets to cut debt would let the trust add output and properties to its portfolio.