Husky Energy Delivers Production at the Liwan Gas Project in the South China Sea
CALGARY, ALBERTA -- (Marketwired) -- 03/30/14 -- Husky Energy (TSX:
HSE) and CNOOC Limited have commenced first production at the
landmark Liwan Gas Project in the South China Sea.
"Liwan is Husky's largest project to date and places us inside the
door of one of the fastest growing energy markets in the world," said
CEO Asim Ghosh. "It was a massive undertaking and is a great
achievement for deepwater gas production in the Asia Pacific Region."
Located approximately 300 kilometres southeast of the Hong Kong
Special Administrative Region, the project consists of three fields:
Liwan 3-1, Liuhua 34-2 and Liuhua 29-1, which share a subsea
production system, subsea pipeline transportation and onshore gas
The Liwan 3-1 field has started production, with initial natural gas
sales expected to be approximately 250 million cubic feet per day
(mmcf/day) gross and increasing to approximately 300 mmcf/day in the
second half of 2014. Initial sales of condensates and natural gas
liquids from Liwan 3-1 are expected to be approximately 10,000 to
14,000 barrels of oil equivalent per day (boe/day) gross.
The Liuhua 34-2 field will be tied into the Liwan infrastructure in
the second half of 2014, subject to final approvals. Production from
the Liwan 3-1 field is scheduled to go offline for approximately six
to eight weeks to provide for the tie-in of the field.
Following the tie in of Liuhua 34-2, combined gas sales are
anticipated to increase to approximately 340 mmcf/day (gross).
Natural gas from both fields will be processed at the onshore gas
terminal at Gaolan and sold to the mainland China market, with
initial gas production covered by fixed-price gas sales agreements.
Total gas sales are expected to rise towards a range of 400 to 500
mmcf/day (gross) with the planned tie-in of the Liuhua 29-1 field in
the 2016-2017 timeframe.
Production from Liwan will contribute to the Company's growth this
year as per overall guidance. The startup was achieved during one of
the most extreme weather seasons in recent history in the South China
Sea. Husky expects to achieve the lower end of its Asia Pacific
production guidance of 35,000 to 45,000 boe/day.
Husky holds a 49 percent interest in the Production Sharing Contract
(PSC) for the Liwan Gas Project and operates the deepwater
infrastructure. Its partner CNOOC Limited holds a 51 percent interest
in the PSC and operates the shallow water facilities and onshore gas
terminal. The first stage of the US$6.5 billion project connecting
the Liwan 3-1 field and work to date to tie in the Liuhua 34-2 field
have been completed on budget.
The Company continues to advance a rich portfolio of opportunities in
the Asia Pacific Region, including shallow water gas developments
offshore Indonesia and exploration prospects offshore Taiwan.
-- Husky's working interest in the Liwan Gas Project is 49 percent.
-- Initial gas sales of approximately 250 mmcf/day (gross) from Liwan 3-1
is expected to rise to about 300 mmcf/day in the second half of 2014. It
is then expected to increase to about 340 mmcf/day (gross) following the
Liuhua 34-2 tie-in and rise to a range of 400 to 500 mmcf/day (gross)
once Liuhua 29-1 is online.
-- Husky's share of sales gas from the Liwan project in 2014 is expected to
be in the range of 20,000-25,000 boe/day, including cost recovery.
Liquids production net to Husky is expected to be in the range of 5,000-
7,000 boe/day, including cost recovery.
-- The Liwan 3-1 and Liuhua 34-2 gas sales price is US$11 to $13 per
thousand cubic feet (mcf) in the initial five contract years, then
floating referenced to the Guangdong City Gate price thereafter. Natural
gas liquids will initially be sold to the mainland China market at
competitive market pricing.
-- Negotiations are underway for the Liuhua 29-1 gas sales contract.
-- Husky expects to recover approximately $800 million in exploration costs
in the first 18 months of production.
-- Operating costs are expected to be approximately 10 percent of gross
-- Royalties/taxes are expected to be approximately 20 percent of gross
Additional background information and photos/video are available at
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 and information (collectively "forward-looking
statements"), within the meaning of the applicable Canadian
securities legislation, 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. The forward-looking
statements contained in this news release are forward-looking and not
Some of the forward-looking statements may be identified by
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 result", "are expected to", "will
continue", "is anticipated", "is targeting", "estimated", "intend",
"plan", "projection", "could", "aim", "vision", "goals", "objective",
"target", "schedules" and "outlook").
In particular, forward-looking statements in this news release
include, but are not limited to, references to: with respect to the
Company's Asia Pacific Region: expected initial volumes of sales of
natural gas, condensates, and natural gas liquids from the Company's
Liwan Gas Project; expected levels of increase of production volumes
by the second half of 2014 and following the tie-in of Liuhua 34-2
and Liuhua 29-1; scheduled timing of the tie-in of the Liuhua 34-2
field to the Liwan 3-1 field, including the expected duration of an
associated offline period for the Liwan 3-1 field; anticipated
contribution of production from Liwan to the Company's growth in
2014; the Company's Asia Pacific production guidance for 2014 and its
expectation that it will achieve production within such guidance
range; the Company's expected share of gas and liquid production from
the Liwan Gas Project in 2014; expected timing of recovery of
exploration costs from the project; and expected operating costs,
royalties and taxes as a percentage of gross revenues from the
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,
2013 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.
Manager, Investor Relations
Husky Energy Inc.
Manager, Media & Issues
Husky Energy Inc.
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