CALGARY - Three Canadian oil and gas firms say they'll be reining in spending next year in the face of free-falling oil prices.

Shares in Penn West Petroleum Ltd. (TSX:PWT), Husky Energy Inc. (TSX:HSE) and MEG Energy Corp. (TSX:MEG) were all significantly higher on the Toronto Stock Exchange on Wednesday after they announced tighter capital budgets for 2015. The sector as a whole was up about seven per cent.

Penn West aims to spend $625 million next year, down by about a quarter from what it predicted a month ago and from what it estimates to have spent in 2014.

The company has cut its outlook for the price it gets for light, sweet crude in Alberta by 25 per cent to an average of $65 a barrel next year. On Wednesday the U.S. benchmark price settled at $56.47.

Beginning in the first quarter of next year, Penn West is slashing its quarterly dividend to three cents per share from 14 cents. It's also suspending its dividend reinvestment program "until further notice."

Profitability is more important than increasing production, with oil prices falling by about half over the past six months, said CEO Dave Roberts.

"We have the advantage of being able to adjust our spending profile across a diverse portfolio of assets to maximize our returns and focus on higher cash returning assets in such a commodity price environment," he said.

"In addition, we have a number of other means available to protect our long-term sustainability in the event that low commodity prices persist. Our resources are secure, operational performance demonstrated, our future intact."

Penn West shares closed up more than eight per cent at $2.54.

Meanwhile, Husky has set a 2015 capital budget of $3.4 billion, down by a third from 2014 as spending wraps up on two flagship projects: the offshore Liwan gas platform in the South China Sea and the first phase of the Sunrise oilsands development, part of a joint venture with BP.

"We continue to steer a steady ship through stormy waters," said CEO Asim Ghosh. "Our strong financial position and resilient portfolio are helping weatherproof our business against current market conditions."

Next year's spending at Husky is in line with what CIBC World Markets analyst Arthur Grayfer had been expecting, given weak commodity prices.

"Guidance looks to allow the company to live within its means and maintain a strong balance sheet and the dividend," he wrote in a note to clients.

Shares in Husky surged nearly 11 per cent to $25.84.

In a sign of how quickly the outlook for crude markets has unravelled, MEG Energy is slashing its 2015 budget by three quarters from what it estimated only two weeks ago. It now expects to spend just $305 million, down from $1.2 billion.

"The revision of our 2015 capital investment plan is in response to the continuing deterioration of global crude oil markets," said CEO Bill McCaffrey.

Although MEG's projects are economically viable, McCaffrey said "we believe it is prudent to reduce capital spending until we see a sustained improvement in commodity prices."

Opportunities to expand output from existing developments, rather than build new ones from scratch, give MEG the flexibility to increase spending at a "measured pace under the right market conditions."

MEG shares soared by about 11 per cent to trade at $16.56.

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News from © The Canadian Press, 2014