Husky Energy Completes Gas Sales Contracts for Madura BD Gas

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Husky Energy has completed the Gas Sales Agreements between Husky Oil and PT Parna Raya, PT Inti Alasindo Energy and PT Perusahaan Gas Negara Tbk for the sale of the natural gas production from the Madura BD Field, offshore Indonesia.

The agreements with PT Parna Raya and PT Inti Alasindo Energy are each for 40 million cubic feet per day while the agreement with PGN is for 20 million cubic feet per day, plus an additional 10 million cubic feet per day on a reasonable efforts basis. The initial gas price under each of the contracts is U.S. $4.20 per million British thermal units. The contracts include escalation provisions. The term of each agreement is 20 years commencing with first production, which is expected in 2011.

Husky has submitted a Plan of Development to the Government of Indonesia for the field development and is in the process of negotiating an extension to the Madura Strait Production Sharing Contract ("PSC"). Contracting for front end engineering design of offshore facilities and pipelines will commence shortly.

The Madura BD Field is estimated by Husky to contain probable reserves of 93 billion cubic feet of natural gas and 6 million barrels of condensate in addition to contingent resources of 422 billion cubic feet of natural gas and 17 million barrels of condensate as at December 31, 2006. When development of the field is completed, production is estimated at 100 to 110 million cubic feet per day of sales gas and 6,000 barrels per day of condensate. The natural gas will be processed through a floating production unit and will flow via a 60-kilometer pipeline for delivery onshore to East Java. The gas will ultimately be sold by the above companies to fulfill their industrial customers' gas demand in the East Java area and the condensate will be shipped to markets in South East Asia by shuttle tanker.

Husky Oil (Madura) Ltd., which is wholly owned by Husky Energy Inc., is the operator of the Madura Strait Production Sharing Contract and holds a 100% interest in the PSC.


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