Inter Pipeline Ltd (TSE:IPL, Mkt cap 10.69B, P/E 30.86, Div/yield 0.12/4.49, EPS 1.06, Shares 326.21M) is the latest Canadian energy company to announce drastic cuts to its capital spending budget for 2015, taking it down to C$400 million, which is less than a third of last year's budget.
As Reuters reports, the energy transportation and storage firm said focus will be firmly on completing work on the C$3 billion expansion of its Cold Lake and Polaris systems, with an additional C$110 million having been allocated to pipeline construction and pump station work.
This means that Inter Pipeline, which operates the largest pipeline gathering system in Alberta's oil sands, will implement a reduced capital program in 2015. Last year, it announced a capital spending budget of C$1.3 billion.
The drop is unlikely to come as a surprise to most, with dozens of other Canadian oil and natural gas producers and oilfield services companies having slashed capital budgets in response to tumbling benchmark crude prices, which have more than halved since June 2014.
Inter Pipeline is setting its sights on growing its oil sands transportation and conventional oil gathering businesses in 2015, spending C$195 million and C$115 million respectively on those areas. However, even those figures represent a significantly smaller outlay than in 2014.
In 2015, organic growth projects are expected to account for approximately C$340 million of total capital expenditures, the company said a statement. The remainder will be spent on sustaining capital requirements across Inter Pipeline's business segments.
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