Canadian oil and gas producer Husky Energy Inc. said on Dec. 2 it would lower its capital spending by C$500 million over the next two years when compared to its 2019 outlook in a bid to increase free cash flow.

Oil producers have been under pressure from investors to cut activities and use the cash to improve shareholder returns through dividends and buybacks. The company said it expects 2020 capital expenditure to be between C$3.2 billion (US$2.41 billion) and C$3.4 billion, C$100 million lower than its 2019 forecast of C$3.3 billion to C$3.5 billion.

For 2021, Husky aims to further reduce spending by C$400 million compared to the 2019 level.

Husky said it plans to generates C$500 million of free cash flow before dividends in 2020, growing to C$1.5 billion in 2021.

Husky said it expects average annual 2020 production to be about 295,000-310,000 barrels of oil equivalent per day (boe/d), higher than 2019 guidance of 290,000-305,000 boe/d. The company expects total refining throughput between 320,000 and 340,000 barrels per day for 2020.

Husky in October reported a 50% drop in third-quarter profit as a result of lower U.S. refining margins and crude oil prices.

($1 = 1.3301 Canadian dollars)