Husky Energy Advances Asset Sales to Lower Debt in Oil Slump

  • Company has hired financial advisers to sell 50,000 boe/d
  • Data room being prepared, CEO Asim Ghosh says on analyst call

Husky Energy Inc., the Canadian energy company controlled by Hong Kong billionaire Li Ka-Shing, said it’s hired advisers to help sell lands producing the equivalent of 50,000 barrels of oil a day in Western Canada.

Data rooms are being developed for buyers to see details of the assets, Chief Executive Officer Asim Ghosh said Tuesday on an analyst conference call to discuss Husky’s 2016 spending plan. The Calgary-based company is also considering selling royalty-generating properties that produce the equivalent of 2,000 barrels of oil a day and midstream assets in the Lloydminster area of Saskatchewan, on the boundary with Alberta, according to a company statement.

“We have had a lot of interest already,” Ghosh said. “Anything from asset dispositions goes to strengthening the balance sheet.”

Husky joins the ranks of peers weighing the sale of properties, pipelines and other facilities to shore up finances as U.S. crude fell below $38 a barrel in a price slump that’s lasted almost 18 months. The company, which first disclosed it may sell assets in October, said Tuesday it’s designing its business to operate at a U.S. oil price of $40 a barrel for the next two years, and plans to reduce its earnings break-even point below that level by the end of 2016.

“We have a bias toward conservatism,” Ghosh said. “We are ultimately in a period of enormous volatility.”

The midstream assets the company may sell could include 1,900 kilometers (1,181 miles) of pipelines and associated storage that generate between C$150 million ($110 million) and C$200 million of earnings before interest, taxes, depreciation and amortization, executives said on the call.

The company is planning for capital spending of between C$2.9 billion and C$3.1 billion in 2016, in line with its 2015 budget of C$3 billion. Shares rose 0.1 percent to C$15.67 at 2:57 p.m. in Toronto. The stock, which has eight buy, 10 hold and three sell recommendations from analysts, has fallen 42 percent this year.

Before it's here, it's on the Bloomberg Terminal.