CALGARY, Alberta, Dec 17 (Reuters) - Oil sands developer MEG Energy Corp said on Wednesday it will slash the 2015 capital budget it released less than two weeks ago by three-quarters, as it copes with tumbling oil prices, sparking a 24 percent jump in its stock.
The company, which operates the Christina Lake oil sands project in northern Alberta, will spend C$305 million ($262 million) next year, down from a planned capital budget of C$1.2 billion it announced on Dec. 4.
The company is the latest to cut back on spending to cope with the collapse in benchmark North American oil prices from over $100 a barrel in June to under $57 on Wednesday.
Husky Energy Inc, Cenovus Energy Inc, Canadian Oil Sands Ltd and other oil sands producers have all cut capital budgets in recent weeks because of the price drop.
”The revision of our 2015 capital investment plan is in response to the continuing deterioration of global crude oil markets,“ Bill McCaffrey, MEG Energy’s chief executive officer, said in a statement. ”While our projects remain economic at current strip pricing, we believe it is prudent to reduce capital spending until we see a sustained improvement in commodity prices.
MEG Energy said it expects to end the year with C$650 million in cash on hand.
The company’s shares were up nearly 24 percent to C$18.88 by late morning on the Toronto Stock Exchange. ($1 = 1.1640 Canadian dollars) (Reporting by Scott Haggett; Editing by Jeffrey Benkoe)