Husky Energy Delivers in Third Quarter
CALGARY, ALBERTA -- (Marketwire) -- 11/01/12 -- Husky Energy Inc.
(TSX:HSE) achieved steady results during the third quarter through
consistent execution of key performance milestones.
"Our two new heavy oil thermal projects reached their design
production rates within two months of first oil, we completed the
SeaRose Floating Production Storage and Offloading (FPSO) offstation
program safely and more than three weeks ahead of schedule, and we
increased our Downstream throughputs and reliability," said CEO Asim
The Company continued to transform its foundation in Western Canada
over the quarter. It accelerated production at its 8,000 barrels per
day (bbls/day) Pikes Peak South and 3,000 bbls/day Paradise Hill
heavy oil thermal projects and ramped up drilling and well completion
activities in its oil resource plays while reducing investment in dry
Significant advancements were made on the growth pillars in the Asia
Pacific Region and the Oil Sands. The central platform jacket for the
Liwan Gas Project was launched and fixed to the seabed in the South
China Sea, and central plant and field facility modules arrived and
were installed at the Sunrise Energy Project.
"We remain focused on delivering value to shareholders as we continue
to build operational momentum in a volatile commodity price
environment," said Ghosh.
-- Net earnings for the quarter were $526 million, or $0.53 per share
(diluted), compared to $521 million, or $0.53 per share (diluted), in
the third quarter of 2011.
-- Cash flow from operations of $1,271 million, or $1.29 per share
(diluted), compared to $1,326 million, or $1.39 per share (diluted), in
the third quarter of 2011.
-- Total production before royalties averaged 285,000 barrels of oil
equivalent per day (boe/day), compared to 309,000 boe/day in the third
quarter of 2011, reflecting the planned impacts from the now-completed
SeaRose FPSO maintenance program, continuing Terra Nova FPSO offstation
and lower dry gas production.
-- Achieved design production rates ahead of schedule at the 8,000 bbls/day
Pikes Peak South and 3,000 bbls/day Paradise Hill heavy oil thermal
-- Advanced construction of the Central Processing Facility and field
facilities at the Sunrise Energy Project. The overall project was
approximately 50 percent complete at the end of the quarter.
-- Secured the central platform jacket for the Liwan Gas Project to the
seabed in preparation for installation of the topsides portion of the
platform in 2013. The overall project is now approximately 75 percent
complete. First gas is anticipated in late 2013/early 2014.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Three Months Ended Nine Months Ended
Sept. 30 June 30 Sept. 30 Sept. 30 Sept. 30
2012 2012 2011 2012 2011
1) Daily Production,
Production (mboe/day) 285 282 309 296 310
Crude Oil and NGLs
(mbbls/day) 194 189 207 202 209
Natural Gas (mmcf/day) 545 560 615 564 610
2) Total Upstream Netback
($/boe) (1) 30.08 30.43 37.22 34.83 39.14
3) Refinery and Upgrader
Throughput (mbbls/day) 328 323 310 325 313
4) Cash Flow from
Operations(2) (Cdn $
millions) 1,271 1,153 1,326 3,596 4,001
Per Common Share - Basic
($/share) 1.29 1.18 1.40 3.69 4.38
Per Common Share -
Diluted ($/share) 1.29 1.17 1.39 3.69 4.34
5) Net Earnings (Cdn $
millions) 526 431 521 1,548 1,816(3)
Per Common Share - Basic
($/share) 0.53 0.44 0.55
Per Common Share -
Diluted ($/share) 0.53 0.43 0.53 1.57 1.93
6) Adjusted Net
Earnings(3) (Cdn $ 512 445 503 1,523 1,796
Per Common Share - Basic
($/share) 0.52 0.46 0.53 1.56 1.97
Per Common Share -
Diluted ($/share) 0.52 0.45 0.53 1.56 1.95
7) Capital Investment,
(Cdn $ millions) 1,252 882 1,003 3,228 3,286
Per Common Share
($/share) 0.30 0.30 0.30 0.90 0.90
(1) The Upstream netback includes results from Upstream Exploration and
Production and excludes results from Upstream Infrastructure and
(2) Cash flow from operations is a non-GAAP measure. Refer to the Q3 MD&A,
Section 11 for reconciliation.
(3) The nine months ended Sept. 30, 2011 net earnings included after-tax
gains of $198 million on the sale of non-core assets and the asset swap.
Third quarter production averaged 285,000 boe/day compared to 309,000
boe/day in the third quarter of 2011, and remains on track with the
overall annual production guidance of 290,000 to 315,000 boe/day.
This takes into account the planned impacts from the now-completed
SeaRose FPSO offstation, continuing Terra Nova FPSO maintenance
program and the reduction in dry gas production. The Terra Nova FPSO
is scheduled to resume operations in the fourth quarter.
Increased heavy oil production, including achieving full production
at the Pikes Peak South and Paradise Hill thermal projects, helped to
partially offset the impact from the offstations.
Average realized crude oil pricing in the third quarter was $70.14
per barrel, compared to $78.70 per barrel a year ago. Natural gas
average realized pricing was $2.48 per thousand cubic feet (mcf)
compared to $4.12/mcf a year ago. The realized U.S. refining margin
averaged U.S. $24.36 per barrel, compared to U.S. $16.13 per barrel
in the third quarter of 2011.
In the Downstream business, increased throughputs, operational
reliability and higher crack spreads helped drive improved results.
"Consistently strong operational execution across our business
enabled us to maintain our solid financial position," said CFO
Alister Cowan. "Net earnings were comparable to the same quarter last
year despite the planned impact of the offstations."
KEY AREA SUMMARY AND GROWTH UPDATE
THE FOUNDATION BUSINESS
-- Western Canada
Oil Resource Plays
Husky is accelerating the transformation of its Western Canada
business with a continuing focus on oil resource plays.
Drilling and completion activity was centred on the Viking, Lower
Shaunavon and Oungre Bakken operations in southern Saskatchewan and
the Redwater and Alliance Viking projects in Alberta. A total of 32
(gross) horizontal wells were drilled in the third quarter. During
the first nine months of 2012, 66 horizontal wells and two vertical
wells have been drilled in Western Canada, and an additional 60
horizontal wells completed. Another 31 wells are planned for the
remainder of 2012.
At the Rainbow Muskwa shale oil project, four horizontal wells have
been drilled and four completed in the first nine months of 2012,
with up to six additional wells planned for the remainder of the
Evaluation of the results from the two vertical wells drilled in the
first quarter at the Slater River Project in the Northwest
Territories is continuing. Planning is advancing on land use permit
applications for the Company's proposed winter program, which will
include construction of an all-season road and further evaluation of
the vertical wells.
Gas Resource Plays
The Company is developing its suite of liquids-rich gas opportunities
in the producing Ansell and Kaybob plays in west central Alberta. Two
wells were drilled at Ansell following a prolonged spring break-up,
bringing the number of wells drilled on the play to 14 for the year,
along with a total of 38.5 net well completions.
A second Duvernay horizontal well was completed and tested at Kaybob,
while a third Husky well and a partner-operated well are on track for
completion in the fourth quarter. One well in the play is currently
-- Heavy Oil
The Company made significant progress over the quarter in
repositioning its heavy oil business as it continues to target
greater production from thermal projects and horizontal drilling. The
8,000 bbls/day Pikes Peak South and 3,000 bbls/day Paradise Hill
thermal projects reached their design production rates within two
months of first oil.
During the first nine months of 2012, 99 horizontal wells have been
drilled out of a planned 140 to 150 well program.
Site grading was completed at the 3,500 bbls/day Sandall thermal
development, which is on track for commissioning in 2014. Design work
continued on the 8,000 bbls/day Rush Lake thermal development, which
is scheduled to begin production in 2015, and additional thermal
projects are currently being evaluated.
The Downstream business continued to support the Upstream foundation
and captured additional margin value through increased throughputs,
reliability and market access.
-- Asia Pacific Region
The Liwan Gas Project in the South China Sea is approximately 75
The central platform jacket has been launched and secured to the
seabed in preparation for the installation of the topsides portion of
the platform in the second quarter of 2013. The Mono-ethylene Glycol
Recovery Unit, a key module on the central platform, is in the final
stages of completion.
Approximately half of the two 79-kilometre long pipelines have been
laid from the gas field to the central platform in the deepwater
portion of the project. The project remains on target to realize
first production in late 2013/early 2014.
Negotiations continue on a gas sales agreement for the Liuhua 34-2
field. Front-end engineering design has been completed on the Liuhua
29-1 gas field and an Overall Development Plan for that field is now
In Indonesia, first gas from the offshore Madura Strait Block is
anticipated in 2014/2015 and work is continuing on an exploration
drilling program. Recent new discoveries offshore Indonesia are under
-- Oil Sands
The first phase of the Sunrise Energy Project is progressing as
planned and is approximately 50 percent complete with all the wells
drilled. Modules for the Central Processing Facility (CPF) and the
field facilities are being delivered and installed.
The project remains on course for first oil production in 2014.
-- Atlantic Region
Production has ramped up at the White Rose field following the
mid-August re-commissioning of the SeaRose FPSO. A White Rose infill
well has been brought online to support increased recovery from the
field, with results as expected.
The planned Terra Nova FPSO offstation that began on June 8 is
scheduled to conclude in the fourth quarter with a gradual resumption
North Amethyst development drilling continued over the quarter and a
new production well is expected to start up in the fourth quarter. A
new subsea drill centre was excavated in preparation for future
development of the South White Rose satellite field.
Husky continues to evaluate development options for the West White
Rose satellite field, including a fixed wellhead platform that would
use existing FPSO facilities for processing and storage. A decision
on the preferred option is on track.
An exploration well was spud on the Searcher prospect offshore
Newfoundland in the southern Jeanne d'Arc Basin. In the fourth
quarter, the Company will participate in the partner-operated Harpoon
exploration well located near the Mizzen discovery in the Flemish
Strong upgrader and refinery throughputs contributed to a solid
quarter of performance for the Downstream business segment.
The Company's Lloydminster Upgrader and the Ohio refineries in Lima
and Toledo continue to implement safety and efficiency improvements.
At the Lima Refinery, construction of a planned 20,000 barrels per
day kerosene hydrotreater to increase jet fuel production is
advancing toward scheduled start up in early 2013.
Husky's Board of Directors has declared a quarterly dividend of $0.30
(Canadian) per share on its common shares for the three-month period
ending September 30, 2012. The dividend will be payable on January 2,
2013 to shareholders of record at the close of business on November
A regular quarterly dividend on the 4.45 percent Cumulative
Redeemable Preferred Shares, Series 1 (the "Series 1 Preferred
Shares") will be paid for the period October 1, 2012 to December 31,
2012. The dividend of $0.27813 per Series 1 Preferred Share will be
payable on December 31, 2012 to holders of record at the close of
business on November 27, 2012.
A conference call will take place on Thursday, November 1, at 9 a.m.
Mountain Time (11 a.m. Eastern Time) to discuss Husky's third quarter
results. To listen live to the conference call, please call one of
the following numbers:
Canada and U.S. Toll Free: 1-800-319-4610
Outside Canada and U.S.: 1-604-638-5340
CEO Asim Ghosh, CFO Alister Cowan, COO Rob Peabody, and Senior
Downstream VP Bob Baird will participate in the call. To listen to a
recording of the call, available at 11 a.m. Mountain Time on November
1, please call one of the following numbers:
Canada and U.S. Toll Free: 1-800-319-6413
Outside Canada and U.S.: 1-604-638-9010
Passcode: 2658 followed by the # sign
Duration: Available until Dec. 1, 2012
An audio webcast of the call will also be available for approximately
90 days via Husky's website, www.huskyenergy.com, under Investor
Husky Energy is one of Canada's largest integrated energy companies.
It is headquartered in Calgary, Alberta, Canada and is publicly
traded on the Toronto Stock Exchange under the symbol HSE and
HSE.PR.A. More information is available at www.huskyenergy.com
Certain statements in this news release are forward-looking
statements within the meaning of Section 21E of the United States
Securities Exchange Act of 1934, as amended, and Section 27A of the
United States Securities Act of 1933, as amended, and forward-looking
information within the meaning of applicable Canadian securities
legislation (collectively "forward-looking statements"). The Company
hereby provides cautionary statements identifying important factors
that could cause actual results to differ materially from those
projected in these forward-looking statements. Any statements that
express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but
not always, through the use of words or phrases such as "will
likely," "are expected to," "will continue," "is anticipated," "is
targeting," "estimated," "intend," "plan," "projection," "could,"
"aim," "vision," "goals," "objective," "target," "schedules" and
"outlook") are not historical facts, are forward-looking and may
involve estimates and assumptions and are subject to risks,
uncertainties and other factors some of which are beyond the
Company's control and difficult to predict.
Accordingly, these factors could cause actual results or outcomes to
differ materially from those expressed in the forward-looking
In particular, forward-looking statements in this document include,
but are not limited to, references to:
-- with respect to the business, operations and results of the Company
generally: the Company's annual production guidance, including the
anticipated impacts of the SeaRose FPSO and Terra Nova FPSO offstations
on the Company's annual production;
-- with respect to the Company's Asia Pacific Region: planned timing of
first production at the Company's Liwan Gas Project; anticipated timing
of installation of the topsides portion of the platform at the Company's
Liwan Gas Project; and anticipated timing of first production at the
Company's Madura Strait Block;
-- with respect to the Company's Atlantic Region: expected timing of return
to operations and resumption in production for the Terra Nova FPSO;
expected timing for the start up of a new production well at North
Amethyst; drilling plans at the North Amethyst field for the remainder
of 2012; and planned timing of the Harpoon exploration well;
-- with respect to the Company's Oil Sands properties: anticipated timing
of first production from Phase 1 of the Company's Sunrise Energy
-- with respect to the Company's Heavy Oil properties: expected timing of
commissioning at the Company's Sandall thermal project; anticipated
timing of production at the Company's Rush Lake thermal project; and the
Company's 2012 horizontal drilling program;
-- with respect to the Company's Western Canadian oil and gas resource
plays: drilling plans in Western Canada for the remainder of 2012,
including drilling plans at Rainbow Muskwa and completion plans at
Kaybob; and construction and evaluation plans at the Company's Slater
River Project; and
-- with respect to the Company's Downstream business segment: scheduled
completion date for the kerosene hydrotreater at the Company's Lima
Refinery in Ohio.
Although the Company believes that the expectations reflected by the
forward-looking statements presented in this news release are
reasonable, the Company's forward-looking statements have been based
on assumptions and factors concerning future events that may prove to
be inaccurate. Those assumptions and factors are based on information
currently available to the Company about itself and the businesses in
which it operates. Information used in developing forward-looking
statements has been acquired from various sources including
third-party consultants, suppliers, regulators and other sources.
Because actual results or outcomes could differ materially from those
expressed in any forward-looking statements, investors should not
place undue reliance on any such forward-looking statements. By their
nature, forward-looking statements involve numerous assumptions,
inherent risks and uncertainties, both general and specific, which
contribute to the possibility that the predicted outcomes will not
occur. Some of these risks, uncertainties and other factors are
similar to those faced by other oil and gas companies and some are
unique to Husky.
The Company's Annual Information Form for the year ended December 31,
2011 and other documents filed with securities regulatory authorities
(accessible through the SEDAR website www.sedar.com and the EDGAR
website www.sec.gov) describe the risks, material assumptions and
other factors that could influence actual results and are
incorporated herein by reference.
Any forward-looking statement speaks only as of the date on which
such statement is made, and, except as required by applicable
securities laws, the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence
of unanticipated events. New factors emerge from time to time, and it
is not possible for management to predict all of such factors and to
assess in advance the impact of each such factor on the Company's
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statement. The impact of any one
factor on a particular forward-looking statement is not determinable
with certainty as such factors are dependent upon other factors, and
the Company's course of action would depend upon its assessment of
the future considering all information then available.
Disclosure of Oil and Gas Information
The Company uses the terms barrels of oil equivalent ("boe"), which
is calculated on an energy equivalence basis whereby one barrel of
crude oil is equivalent to six thousand cubic feet of natural gas.
Readers are cautioned that the term boe may be misleading,
particularly if used in isolation. This measure is primarily
applicable at the burner tip and does not represent value equivalence
at the wellhead.
The Upstream netback per barrel of oil equivalent was determined by
taking the Upstream Exploration and Production netback (price
received less royalties, operating cost and transportation) and
dividing it by gross production for the respective period. The
results from Upstream Infrastructure and Marketing are excluded.
Please refer to Note 1 of the Company's Condensed Interim
Consolidated Financial Statements for the period ended June 30, 2012.
Husky Energy Inc. - Investor Inquiries:
Manager, Investor Relations
Husky Energy Inc. - Media Inquiries:
Manager, Media & Issues
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