UPDATE 3-Canada's Husky keeps 2016 budget tight, plans asset sales

* Sees 2016 capex estimate C$2.9 bln-C$3.1 bln
* Expects 2016 average production 330,000-360,000 boepd
* Explores sale of Lloydminster region's midstream assets

(Adds comment, details of planned asset sales, share price)
By Nia Williams
CALGARY, Alberta, Dec 8 (Reuters) - Canadian oil producer
Husky Energy Inc HSE.TO said on Tuesday it will keep its 2016
budget nearly unchanged from 2015, joining peers who are
focusing on keeping costs under control to cope with a prolonged
slump in oil prices, which touched multi-year lows this week.
The company said it will spend C$2.9 billion ($2.14 billion)
to C$3.1 billion in 2016, compared with an estimated C$3 billion
this year.
Husky is looking at selling some of its midstream assets in
western Canada's Lloydminster region, which straddles the
Alberta-Saskatchewan border, to strengthen its balance sheet and
meet debt obligations.
Chief Financial Officer Jonathan McKenzie said Husky owns
about 1,900 kilometers (1,180 miles) of pipe and associated
storage in the region and is still evaluating how much of the
assets would be sold.
Husky plans to retain operatorship of the midstream
facilities as they link the company's thermal oil operations to
its heavy oil upgrader and refinery in Lloydminster, neither of
which will be put up for sale.
Husky is also looking at selling around 50,000 barrels per
day of conventional oil and gas assets and 2,000 bpd of royalty
assets.
"We believe the potential monetization of conventional,
midstream and royalty assets will likely be viewed favourably as
these divestitures could move the company closer to reinstating
the currently suspended cash dividend," said BMO analyst Randy
Ollenberger.
The company, controlled by Hong Kong billionaire Li
Ka-shing, stopped paying a cash dividend and cut jobs and
spending this year in a bid to weather the more than 60 percent
drop in global oil prices since June 2014.
The company said it was assuming West Texas Intermediate
price of $40 per barrel over the next two years. U.S. crude
CLc1 dropped below $37 a barrel on Tuesday, its lowest level
since February 2009.
Despite lower prices, Husky has been moving forward with new
heavy oil projects in western Canada and is continuing appraisal
work on the Flemish Pass discovery offshore Atlantic Canada with
its project partner Statoil ASA STL.OL .
The company expects 2016 production to average between
330,000 and 360,000 barrels of oil equivalent per day (boepd),
compared with an estimated 346,000 boepd this year.
Husky shares were last trading flat on the Toronto Stock
Exchange at C$15.65.

($1 = 1.3571 Canadian dollars)