Canada’s largest condensate producer is reducing capital spending this year by about $500 million compared to 2018, but expects to maintain the same levels of overall production.
Seven Generations Energy announced a 2019 capital budget of $1.25 billion on Thursday, and production guidance of 200,000 to 205,000 boe/d of natural gas and natural gas liquids.
This compares to 2018 production guidance of 200,000 to 210,000 boe/d, and a capital program of up to $1.775 billion.
“Despite our lower capital investments, we expect to both maintain production at the 2018 level and make substantial investments for future growth,” CEO Marty Proctor said in a statement.
“Approximately 12 percent of our 2019 budget supports important investments that will enhance understanding of our Lower Montney resource through further delineation drilling and will expand future growth capabilities with valuable infrastructure.”
GMP FirstEnergy analyst Cody Kwong noted that the company’s 2019 plans are more efficient than was being modelled by consensus, “with capital expenditures 21 percent lower than expected, while the production bogey moves only 6 percent lower with this update.
“The proposed capital budget in 2019e is ~$500 mm less than 2018, with only minor infrastructure expenditures required this year and growth capital being removed from the picture in the current commodity price environment,” Kwong wrote in a research note.
The $1.25 billion budget includes $1.1 billion in maintenance capital and $125 million on delineation drilling.