Husky Rides High on $1.27B Third Quarter Net

Husky has reported net earnings of $1.27 billion or $1.50 per share (diluted) in the third quarter of 2008, an increase of 65 percent from $769 million or $0.91 per share (diluted) in the same quarter of 2007. Cash flow from operations in the third quarter of 2008 was $2.0 billion or $2.36 per share (diluted), a 41 percent increase compared with $1.4 billion or $1.67 per share (diluted) in the same quarter of 2007. Sales and operating
revenues, net of royalties, were $7.7 billion in the third quarter of 2008, an increase of 77 percent compared with $4.4 billion in the same quarter of 2007.

"Husky's strong earnings and cash flow allow the Company to finance its current capital program, redeem debt and accumulate cash, positioning the Company for further investment opportunities," said John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. “Husky's focus on financial discipline in respect of costs and project execution over the years has positioned the Company to perform well in these volatile financial and commodity markets."

In the third quarter of 2008, total production averaged 355,900 barrels of oil equivalent per day, compared with 369,900 barrels of oil equivalent per day in the third quarter of 2007, a reduction of four percent. Total crude oil and natural gas liquids production was 256,200 barrels per day, compared with 266,500 barrels per day in 2007. Natural gas production was 598 million cubic feet per day, compared with 620 million cubic feet per day in the same period of 2007.

The decrease in production of barrels of oil equivalent is generally in line with Husky's updated guidance as reported in the second quarter of 2008.

For the first nine months of 2008, Husky's net earnings were $3.5 billion or $4.15 per share (diluted), compared with $2.1 billion or $2.52 per share (diluted) in the first nine months of 2007. Cash flow from operations was $5.6 billion or $6.63 per share (diluted) in the first nine months of 2008, compared with $4.0 billion or $4.71 per share (diluted) in the same period of 2007. Sales and operating revenues, net of royalties, were $20.0 billion in the first nine months of 2008, compared with $10.8 billion in the first nine months of 2007.

Production for the first nine months of 2008 was 355,100 barrels of oil equivalent per day, compared with 379,600 barrels of oil equivalent per day in the same period in 2007. Crude oil and natural gas liquids production was 254,700 barrels per day, compared with 275,400 barrels per day in the first nine months of 2007.

This reflects the severe ice pack and iceberg winter conditions off the East Coast of Canada and the previously disclosed delay in ramp up of production at the Tucker Oil Sands Project.

Natural gas production was 602 million cubic feet per day as compared with 625 million cubic feet per day during the same period of 2007.

Husky's earnings are largely determined by realized prices for crude oil and natural gas, including the effects of changes to the U.S./Canadian exchange rate. Recently, changes in the crude oil and natural gas pricing and the exchange rate have moved together, with changes in the exchange rate providing partial offset to changes in crude oil and natural gas pricing. As at October 20, 2008 crude oil (WTI) and natural gas (NYMEX) prices had fallen to U.S. $74.25 per barrel (26 percent) and U.S. $6.74 per million British Thermal Units (nine percent)
respectively from September 30, 2008, partially offset by a 12 percent reduction in the exchange rate to $0.835 U.S. dollar per Canadian dollar at the same date.

Husky continues to strengthen its financial position and has a very strong balance sheet. Total long-term debt including current portion at September 30, 2008 was $1,719 million compared with $2,814 million at December 31, 2007. The total debt was substantially offset by cash and cash equivalents of $966 million resulting in net debt of $753 million at September 30, 2008. Debt to cash flow from operations decreased to 0.2 times at the end of the third quarter compared with 0.5 times at the 2007 year-end. The ratio of debt to capital employed
improved to 11 percent at September 30, 2008 from 19 percent at December 31, 2007.
 

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