(Reuters) – Canadian oil and gas producer Husky Energy Inc (HSE.TO) sees an increased opportunity for asset purchases, but will have a “high bar” for determining whether to buy, company Chief Executive Officer Rob Peabody said on Friday.
“Any action acquisition has to compete with what we consider our very strong organic investment portfolio,” Peabody said on a conference call after the company reported a smaller loss for its second quarter.
Global producers have been bailing on Canadian resource investments due to higher development costs, limited pipeline capacity to get crude to market and concerns about high carbon emissions in the sector.
Assets are expected to be available cheaply as the pool of buyers dwindles, investors have said.
Husky is prioritizing investments in its offshore business and its integrated operations, Peabody said.
Chief Financial Officer Jonathan McKenzie said: “What you won’t see us do is something that’s off strategy or outside of sort of the existing operating areas that we’re in.”
Husky on Friday reported a net loss of C$93 million ($73.89 million), or 10 Canadian cents per share, in the second quarter ended June 30, compared with a loss of C$196 million, or 20 Canadian cents a share, a year earlier.
The Calgary, Alberta-based company’s smaller loss was helped partly by higher oil prices and an increase in production.
Oil prices began to rise late last year after a two-year slump, now hovering around $50 per barrel, as an OPEC-led production cut and rebounding demand slowly erode a global glut.
The company’s second-quarter production rose to 320,000 barrels of oil equivalent per day (boed), from 316,000 boed, a year earlier.
Husky, which is controlled by the Hong Kong billionaire Li Ka-Shing, realized C$41.48 per barrel of oil equivalent (boe) in the second quarter, up from C$34.59 per boe a year earlier.
In the year-ago quarter, Husky had incurred a C$105 million after-tax loss related to dispositions, property impairment and asset write-downs.
Husky’s earnings came about a year after one of the company’s pipelines leaked in the province of Saskatchewan and spilled into river, costing the company C$107 million in clean-up costs. The province has said it may lay charges.
Peabody said Husky expects to receive permission to repair the line and will change its design and monitoring equipment before restarting it.
“As a child, my mother used to tell me, ‘Learn from your mistakes.'” he said.
Reporting by John Benny in Bengaluru and Ethan Lou in Calgary, Alberta; editing by Shounak Dasgupta and David Gregorio