Husky’s Net Earnings Jump 148%



Husky Energy Inc. reported net earnings of $978 million, or $2.31 per share (diluted), in the second quarter of 2006, up 148 percent from $394 million or $0.93 per share (diluted) in the second quarter of 2005. Net earnings for the second quarter of 2006 included tax benefits due to tax rate reductions of $328 million or $0.77 per share (diluted). Cash flow from operations in the second quarter was $1.1 billion or $2.60 per share (diluted), a 33 percent increase compared with $828 million or $1.95 per share (diluted) for the same period in 2005. Sales and operating revenues, net of royalties, were $3.0 billion in the second quarter of 2006, compared with $2.4 billion in the second quarter of 2005.

"We are pleased with Husky's exploration success and White Rose project execution," said John C.S. Lau, President & Chief Executive Officer, Husky Energy Inc. "With a solid balance sheet and cash flow, Husky will continue to benefit from its integrated business strategy and quality asset base in this strong price environment."

Production in the second quarter of 2006 was 344,000 barrels of oil equivalent per day, compared with 308,900 barrels of oil equivalent per day in the second quarter of 2005. Total crude oil and natural gas liquids production was 231,800 barrels per day, compared with 194,000 barrels per day in the second quarter of 2005. Natural gas production was 672.8 million cubic feet per day, compared with 689.3 million cubic feet per day in the second quarter of 2005.

Husky's Tucker Oil Sands Project at Cold Lake, Alberta, is on schedule and on budget. Construction of the facility which will use steam-assisted drainage technology (SAGD) is substantially complete. First steam is planned in August of 2006 with first oil targeted for the fourth quarter. During the production cycle, Husky expects to produce approximately 350 million barrels of bitumen with peak production of more than 30,000 barrels per day.

At the Sunrise Oil Sands Project, work is progressing on the front-end engineering design and Husky is continuing its evaluation of alternatives for the downstream portion of the project.

Husky successfully acquired an additional 14,560 acres of oil sands lease adjacent to its Saleski property. The acquisition increases Husky's land holdings in Saleski from 178,560 acres to 193,120 acres and the potential resources in Saleski to approximately 20.8 billion barrels of original bitumen in place.

At the White Rose oil field, the fifth production well began producing oil at the end of June and has increased reservoir production capacity to approximately 110,000 barrels of oil per day. A sixth production well is scheduled to come on stream at the end of 2006 and will further increase reservoir production capacity to 125,000 barrels of oil per day.

In June, Husky made a hydrocarbon discovery at the White Rose O-28 delineation well in the western section of the White Rose oil field. Based on the company's current interpretation, the discovery at the O-28 well could contain an additional potential recoverable resource of 40 to 90 million barrels of oil. The proved plus probable reserves in the White Rose field were estimated at 240 million barrels (174 million barrels Husky's share).

In the South China Sea, Husky made a significant hydrocarbon discovery on the Liwan 3-1-1, Block 29/26. In accordance with the Company's current interpretation of the 2-D seismic and drilling results, the discovery could contain a potential recoverable resource of four to six trillion cubic feet of natural gas. As such, it would be one of the largest natural gas discoveries offshore China.

Offshore Indonesia, Husky was awarded the East Bawean II Block in the East Java Sea, increasing its holdings in the region by 4,255 square kilometres. The East Bawean II Block is located in the North East Java Basin approximately 200 kilometres north of the Company's BD gas field in the Madura Strait, offshore Indonesia. The acquisition of the East Bawean ll Block increases Husky's total holdings in Indonesia to 7,049 square kilometres or approximately 1.8 million acres. Husky holds a 100 percent interest in the Madura Strait and East Bawean II blocks.

Construction of Husky's Lloydminster Ethanol Plant in Lloydminster, Saskatchewan is essentially complete and commissioning activities have commenced with full production expected in the third quarter of 2006. In Minnedosa, Manitoba, construction of the new ethanol plant is progressing on schedule with start-up planned in the third quarter of 2007.

For the first six months of 2006, Husky's net earnings were $1.5 billion or $3.54 per share (diluted), compared with $778 million or $1.84 per share (diluted) for the same period in 2005, an increase of 93 percent. Cash flow from operations for the first six months of 2006 was $2.1 billion or $4.88 per share (diluted), compared with $1.6 billion or $3.88 per share (diluted) for the same period in 2005.

Production in the first six months of 2006 was 348,700 barrels of oil equivalent per day, compared with 314,200 barrels of oil equivalent per day in the same period in 2005. Total crude oil and natural gas liquids production was 235,500 barrels per day, compared with 200,400 barrels per day during the first six months of 2005. Natural gas production was 679.0 million cubic feet per day, compared with 682.8 million cubic feet per day in the first six months of 2005.

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