CALGARY -- Husky Energy Inc. (TSX:HSE) says its 2015 capital budget will be $3.4 billion, about $1.7 billion less than it expects to spend this year on major projects, as it cuts spending plans for various operations in Western Canada by about 42 per cent.

The Calgary-based company says the 2015 budget reflects weaker commodity prices and the near completion of two major projects, the Sunrise oil project in northeastern Alberta and an offshore natural gas project in the South China Sea.

"With a focus on business fundamentals and capital efficiency, we have a clear line of sight to continued production and reserves growth while maintaining financial strength and providing for our strong dividend," said Asim Ghosh, Husky's chief executive officer.

Several of Canada's major energy producers and drilling companies have announced reduced spending plans, as the industry responds to a dramatic decrease in the price of crude since a recent peak of about US$105 per barrel last summer. It's currently trading below US$60, which is the average price assumed in Husky's calculations.

Husky will trim spending across all major upstream areas, although the impact will be relatively small in the Atlantic region where the company is active in offshore production off the coast of Newfoundland. The biggest spending reductions will be in Western Canada, where it has heavy oil, oilsands and conventional oil and gas operations.

The 2015 capital budget cuts allocations for production projects in Western Canada by about 42 per cent, to $1.8 billion, while its spending in the Atlantic region will be reduced by 14 per cent to $600 million from $700 million. The projects in the West include Husky's Western Canada conventional upstream assets, as well as heavy oil and oilsands production.

Husky will maintain its capital budgets for downstream operations, which include refining and retailing, at $700 million and for corporate spending at $100 million -- the same as in 2014.

The company said it expects to spend about $5.1 billion on capital projects in 2014, including about $3.1 billion in production assets in Western Canada.

The company is an integrated producer and retailer, with a network of about 500 locations including independent retailers. Its upstream activities include oilsands and heavy oil production in Western Canada, offshore oil and gas production off the Newfoundland coast, and offshore natural gas production in the South China Sea.

Husky expects Phase 1A of the Sunrise oilsands project in northeastern Alberta, which is co-owned 50-50 with BP, will begin producing towards the end of the first quarter of 2015. Phase 1B is expected to begin steam-injections in mid-2015 and production a few months later.

Each half of Phase 1 is designed to produce up to 30,000 barrels per day, although output will ramp up over a two-year period.

Overseas, Husky and CNOOC -- one of China's biggest oil and gas companies -- have been ramping up production at the Liwan natural gas field in the South China Sea. The first of three fields began production in March and a second was brought online this month.

It has been paying a quarterly dividend of 30 cents Cdn per common share.

Husky shares were up in early trading Wednesday, continuing a rally into a second day. The shares gained $1.34 to close at $23.36 on Tuesday and added another $1 in the first half our of trading on Wednesday. The stock is still down from a month ago, when it closed at $26.97 on Nov. 17.