CALGARY, Alberta (Reuters) - EnCana Corp (ECA.TO: Quote) and Petro-Canada (PCA.TO: Quote) moved to cut 2009 capital spending on Thursday to cope with falling commodity prices and market turmoil, but they left themselves enough room to change plans quickly in case the economy swings to the better, or worse.
After years of boosting budgets to increase production from far-flung reserves and the expensive oil sands, Canada's big oil companies are retrenching to cope with crude prices that have fallen by close to $100 a barrel from July peaks.
Instead of looking to expand output at any cost, the producers are now taking a more cautious approach, waiting to see which way the economic winds will blow.
"The business environment is too volatile to count on with any degree of certainty," Petro-Canada Chief Executive Ron Brenneman said on a conference call. Brenneman said his company "will stay as flexible as possible until the situation becomes a little clearer for both the commodity and financial markets."
Petro-Canada, the country's No. 4 oil exploration and refining firm, said it will cut its 2009 capital budget by 36 percent, to C$3.96 billion, from the C$6.16 billion it plans to spend this year.
The company, which last month delayed an investment decision for its Fort Hills oil sands mine by a year, to late 2009, and deferred an upgrader to cut the project's C$21 billion pricetag, said it plans to monitor the markets and adjust spending plans accordingly.
Though directing more than half its cash to growth programs and exploration, Petro-Canada is forecasting a drop in output as it plans major maintenance shutdowns at offshore projects in Atlantic Canada and in the North Sea.
Petro-Canada estimates 2009 production will range between 360,000 and 395,000 barrels of oil equivalent per day, down from its 2008 target of 400,000 to 420,000 boe/d, as the shutdowns are expected to cut average production by 15,000 boe/d next year.
