Husky Energy (TSX:HSE) is on track to deliver another year of
strong business and operational results and is announcing several
new initiatives to build on its momentum.
"We have consistently executed against our strategy for nine
consecutive quarters," said Husky CEO Asim Ghosh. "This performance
is a result of strong delivery and reliability in all business
segments and our focused integration strategy. Our major growth
projects in Asia Pacific, the Oil Sands and the Atlantic Region are
progressing and continue to meet their milestones.
"The rejuvenation of our foundation in Heavy Oil and Western
Canada is also well underway with increased production from heavy
oil thermal projects and an emerging focus on oil resource
plays."
New initiatives announced today include:
Corporate
1 Production in 2013 is expected to be in the range of 310,000 to 330,000
barrels of oil equivalent per day (boe/day), compared to estimated
average annual production of 301,000 boe/day for 2012.
The Company is on track to meet its five-year compound annual
production growth goal of 3-5 percent as set in 2010. A new target
has been set for the plan period 2012-2017 at an increased compound
annual growth rate of 5-8 percent.
2 The $4.8 billion capital expenditure program for 2013 is comparable with
the $4.7 billion program in 2012. Approximately 50 percent of Upstream
spending will be directed towards the Company's growth pillars.
Foundation
3 The Rush Lake heavy oil thermal project has been sanctioned and the
production capacity has been increased to 10,000 barrels per day
(bbls/day) compared to the originally planned 8,000 bbls/day. First oil
is expected in 2015.
4 Production from heavy oil thermal is expected to achieve 55,000 bbls/day
by 2017 with an additional four thermal projects planned to come on
stream, including the 3,500 bbls/day Sandall project, now under
construction.
5 Two new heavy oil thermal projects, the 8,000 bbls/day Pikes Peak South
and 3,000 bbls/day Paradise Hill, came online ahead of schedule in 2012
and are currently achieving production levels approximately 40 percent
higher than their design rates.
Growth Pillars
6 The Liwan Gas Project in the South China Sea is approximately 75 percent
complete and remains on target for first production in late 2013/early
2014.
7 Offshore Indonesia, the Company has made four new gas discoveries on the
Madura Strait Block. The discoveries are being evaluated for potential
tie-in to existing nearby infrastructure.
8 Substantial cost certainty related to the first phase of the Sunrise
Energy Project was achieved in the fourth quarter with the conversion of
the lump sum contract for the Central Processing Facility. Over 85
percent of the $2.7 billion cost estimate for Phase 1 is now fixed and
incorporates all significant contract conversions and facility and
efficiency design improvements.
9 Work continued in anticipation of sanction of the South White Rose
Extension Project in the Atlantic Region, with the excavation of a
subsea drill centre. First oil is expected in 2014.
10 A five-year contract was awarded for the new-build harsh environment
semi-submersible drilling rig, West Mira, to support the Company's
exploration and development opportunities in the Atlantic Region.
2012 Operational Highlights
The Company focused on executing its business plan in 2012 and
the stage is set for the delivery of its major growth projects.
Highlights include the following:
Heavy Oil
-- The Pikes Peak South thermal project achieved first oil in the second
quarter and reached its 8,000 bbls/day design rate within two months.
The project is now realizing production of approximately 11,000
bbls/day.
-- The Paradise Hill thermal project achieved first oil in the second
quarter and is achieving production beyond its 3,000 bbls/day design
capacity at approximately 4,600 bbls/day.
-- A single well-pair pilot at Rush Lake is contributing approximately
1,000 bbls/day of production and has provided the basis for expanding
the full commercial project to 10,000 bbls/day.
-- Site grading was completed at the 3,500 bbls/day Sandall thermal
development and the project remains on track for commissioning in 2014.
-- Horizontal well production reached 8,000 bbls/day. Thirty-one well pads
were added in 2012 and 125 wells were drilled.
-- A CO2 capture and liquefaction project was completed at the Company's
ethanol plant in Lloydminster. CO2 from the plant is captured and used
to enhance oil recovery in nearby reservoirs. The innovation provides a
double benefit by allowing more oil to be recovered while reducing CO2
emissions.
Western Canada
-- The Company is moving forward with the transformation of its foundation
in Western Canada to resource plays. Development activities are focused
on six oil resource plays, including the Bakken, Viking, Cardium, Lower
Shaunavon, Rainbow Muskwa and the Slater River Canol in the Northwest
Territories.
-- At Slater River, applications have been filed to construct an all-season
access road to support further development. Evaluations will continue
this winter on two vertical wells drilled during the previous season.
-- Development of the liquids-rich gas Ansell play continued with 17 wells
expected to be completed by the end of the year. Initial production
tests were conducted on the Kaybob Duvernay play, delivering strong
liquids yields.
Oil Sands
-- The first phase of the Sunrise Energy Project achieved its major
construction milestones according to plan and remains on schedule for
first oil in 2014.
-- The Sunrise project continues to achieve its major milestones. All
significant contracts for Phase 1, including the Central Processing
Facility, have now been converted to lump sum payment. Over 85 percent
of the project's costs are now fixed and the project is more than 50
percent complete.
-- Planning, design and engineering for the next phase of Sunrise
continues. Regulatory approvals are in place for up to 200,000 bbls/day
of production. (50 percent W.I.)
Asia Pacific
-- The Liwan Gas Project in the South China Sea remains on schedule for
first gas in late 2013/early 2014. The overall project is now
approximately 75 percent complete.
-- The central platform jacket was installed on the seabed in preparation
for the installation of the topsides portion of the platform in the
second quarter of 2013.
-- Offshore Indonesia, the MDA and MBH dual-field development is on track
for first production in 2014/2015, while first gas from the BD field in
the Madura Strait Block is anticipated in 2015/2016.
-- In addition, four new gas discoveries were made in the Madura Strait
Block offshore Indonesia. The discoveries are being evaluated for
potential tie-in to existing nearby infrastructure.
Atlantic Region
-- The SeaRose FPSO offstation program was completed safely, ahead of
schedule and under budget in the third quarter. An infill well was
brought online with results as expected.
-- A new subsea drill centre was excavated in preparation for development
of the South White Rose extension. Subject to final approvals, first oil
is anticipated from this project in 2014.
-- Pre-sanction work continued on the West White Rose development.
-- To support future drilling and exploration activities, a five-year
contract was awarded for a new harsh environment semi-submersible rig.
The West Mira is scheduled for delivery in 2015.
Downstream
-- Strong refinery and upgrader throughputs contributed substantially to
2012 results. The Company's focused integration strategy captured
additional revenue and reduced risks associated with volatile commodity
pricing.
-- A planned turnaround was completed at the Lloydminster Upgrader in the
second quarter and subsequently the Upgrader achieved record monthly
production.
-- A new continuous catalytic reformer is expected to be completed by year-
end at the Toledo Refinery. The unit replaces three older units and is
expected to improve operating efficiency, overall operating reliability
and reduce emissions.
-- Construction of a 20,000 bbls/day kerosene hydrotreater at the Lima
Refinery is nearing completion, which will increase jet fuel production
capabilities and enhance product flexibility.
-- Storage capacity was expanded at Hardisty with the completion of a
300,000-barrel storage tank that will further improve the Company's
ability to take advantage of pricing opportunities. Additional
throughput capacity has been secured at Patoka, Illinois to increase
crude grade flexibility and maximize arbitrage capabilities.
Production Guidance
In 2010, the Company set a compound annual production growth
target of 3-5 percent through the plan period 2010-2015 and is on
track to achieve that goal. A new target has now been set for the
plan period 2012 to 2017 at an increased compound annual production
growth rate of 5-8 percent.
Average annual production for 2012 is forecast to be 301,000
boe/day, which is within the guidance of 290,000 to 315,000 boe/day
and reflects the SeaRose and Terra Nova offstation programs.
Production in 2013 is expected to be in the range of 310,000 to
330,000 boe/day. The 2013 forecast includes a planned decrease in
natural gas production and an increase in light, medium and heavy
oil production, reflecting the shift in capital to higher netback
opportunities.
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Production Guidance
2012 2013
Light / Medium Oil and NGLs (mbbl/day) 95 - 105 110 - 115
Heavy Oil and Bitumen (mbbl/day) 100 - 110 110 - 120
Subtotal - Crude Oil and NGL 195 - 215 220 - 240
Natural Gas (mmcf/day) 560 - 610 540 - 580
Total Production (mboe/day) 290 - 315 310 - 330
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2013 Capital Expenditure Program
The 2013 capital expenditure program is designed to build on the
momentum achieved over the past two years.
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Capital Expenditure Guidance(1) Guidance Forecast Guidance
2012 2012 2013
($billions) ($billions) ($billions)
Upstream
Western Canada Sedimentary
Basin
(Husky CapEx) 1.0 1.3 1.2
(Husky cash outlay)(2) 0.9 1.3 1.1
Heavy Oil 0.8 0.9 0.9
Sunrise (CapEx) 0.6 0.6 0.5
(Cash outlay)(3) 0 0 0
Atlantic Region 0.5 0.5 0.6
Asia Pacific 1.1 0.8 0.8
Upstream Total (CapEx) 4.0 4.1 4.0
Upstream Total (Cash Outlay) 3.3 3.5 3.4
Downstream (CapEx) 0.6 0.5 0.7
(Cash outlay)(4) 0.7 0.7 0.8
Corporate 0.1 0.1 0.1
Total (Husky CapEx) 4.7 4.7 4.8
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Total (Cash Outlay) 4.1 4.3 4.3
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Notes:
(1) All amounts exclude capitalized interest and administration.
(2) Under joint venture agreements, specified costs on certain developments
are shared or assumed by partner.
(3) Sunrise capital expenditures paid by Husky partner as per terms of joint
venture agreement.
(4) Downstream includes capital expenditures paid by Husky as per joint
venture agreement.
Investor Day
CEO Asim Ghosh and members of the management team will provide
further details on the Company's strategic initiatives and growth
plans at the annual Investor Day, scheduled for 9 a.m. EST December
4 in Toronto, Ontario, Canada. The presentation will be webcast and
posted on www.huskyenergy.com under Investor Relations.
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
FORWARD-LOOKING STATEMENT
Certain statements in this document 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 statements.
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 2013 production guidance, including anticipated
production by product type; the Company's 2013 capital expenditure
program, including anticipated spending by business segment; the
Company's anticipated business and operational results for 2012; the
Company's forecast capital expenditures for 2012; the Company's
estimated average annual production for 2012; the Company's anticipated
compound annual production growth for the plan period 2010-2015; and the
Company's target compound annual production growth for the plan period
2012 to 2017;
-- 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 MDA and MBH fields and the BD field at the Madura Strait
Block;
-- with respect to the Company's Atlantic Region: anticipated timing of
first oil at the Company's South White Rose extension project; and
anticipated timing of delivery of the West Mira semi-submersible rig;
-- with respect to the Company's Oil Sands properties: estimated Phase 1
costs of the Company's Sunrise oil sands project; and anticipated timing
of first production from Phase 1 of the Company's Sunrise Energy
Project;
-- 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;
anticipated volume of production from heavy oil thermal projects by
2017; and plans to add additional heavy oil thermal projects;
-- with respect to the Company's Western Canadian oil and gas resource
plays: drilling plans in Western Canada for the remainder of 2012; the
planned development activity in Western Canada; and planned evaluation
of vertical wells at Slater River; and
-- with respect to the Company's Downstream business segment; expected
timing and effects of completion of a continuous catalytic reformer at
the Company's Toledo refinery; expected timing and effects of completion
of the kerosene hydrotreater at the Company's Lima Refinery in Ohio;
anticipated effects of expansion of storage capacity at Hardisty.
In addition, statements relating to "reserves" and "resources"
are deemed to be forward-looking statements as they involve the
implied assessment based on certain estimates and assumptions that
the reserves or resources described can be profitably produced in
the future.
Although the Company believes that the expectations reflected by
the forward-looking statements presented in this document 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
Unless otherwise noted, historical production numbers given
represent Husky's share.
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.
Note to U.S. Readers
All currency is expressed in Canadian dollars unless otherwise
directed.
Contacts: Husky Energy Inc. - Investor Inquiries: Rob McInnis
Manager, Investor Relations 403-298-6817 Husky Energy Inc. - Media
Inquiries: Mel Duvall Manager, Media & Issues 403-513-7602