By Emily Keller

seven generations

Seven Generations Energy cuts capital investment, some jobs expected to be impacted

Mar 11, 2020 | 12:48 PM

Seven Generations Energy Ltd. announced that they will be cutting their Capital Investment Budget for 2020 by 18 per cent, or $200 million, to $900 million.

Marty Proctor, President and Chief Executive Officer of Seven Generations, says the drop is in response to the impacts of the coronavirus, and of Saudi Arabia and Russia increasing production.

“So, we had concerns about demand for oil, and then supplies got increased, the combination meant that oil dropped substantially this week into the 30’s, which we haven’t seen for quite some time. So, the reason we made the change was we need to preserve our balance sheet. We’ve got to maintain the strength of the company.”

Proctor says they are also expecting production to be reduced to about 185,000 and 190,000 barrels of oil equivalent per day, compared to the projected 200,000 to 205,000.

He says he does not expect staff of the company to be impacted greatly, but those they work with will be.

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“The contractors that work with on drilling rigs and pressure pumping spreads, even in construction projects, there is potentially going to be… There will be some job impacts. So, at this time, I can’t say specifically, and our hope is that this is a temporary deferment of our activities and that we resume a very similar program within a couple of months.”

Proctor maintains that he believes the company is strong enough to make it through.

“We will weather this storm, and we need to prepare ourselves to continue to be one of the lowest supply cost producers so that no matter what the price becomes, that we can be the company that can supply the needs for energy in the world. So, we don’t know how long it is going to take, all we can do is to react, and I think we’ve reacted very quickly and nimbly to this situation.”

Seven Generations is not the only company feeling the effects of the oil price plunge, as MEG Energy Corp. also announced they will be reducing their 2020 capital spending plan to $200 million from the $250 million plan that was announced in November 2019.

(With files from the Canadian Press)