Husky Energy Posts 2009 Second Quarter Results

Husky Energy reported net earnings of $430 million or $0.51 per share (diluted) in the second quarter of 2009, compared to $1.36 billion or $1.60 per share (diluted) in the same quarter of 2008. Adjusted Net Earnings for the second quarter were $471 million or $0.55 per share (diluted) compared to $1.4 billion or $1.62 per share (diluted) in the same quarter of 2008. Cash flow from operations in the second quarter was $833 million or $0.98 per share (diluted), compared with $2.08 billion or $2.45 per share (diluted) in the same quarter of 2008. Sales and operating revenues, net of royalties, were $3.92 billion in the second quarter of 2009, compared with $7.20 billion in the second quarter of 2008.

"Lower commodity prices and crack spreads compared to the same period in 2008 impacted Husky's results in the second quarter of 2009. For the quarter, Husky achieved good financial results and remains in a strong financial position," said Mr. John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. "The Company continues to focus on the development of its mid to long term assets. Progress has been made on the North Amethyst satellite tie-back project offshore Newfoundland and on appraisal drillings in the Liwan gas field in the South China Sea."

Financial Performance

Commodity prices and crack spreads were significantly lower in the second quarter of 2009 relative to the same period in 2008. The WTI benchmark crude oil price averaged U.S. $59.62 per barrel in the second quarter of 2009, compared to U.S. $123.98 in the second quarter of 2008. The NYMEX benchmark natural gas price averaged U.S. $3.50 per million British Thermal Units in the second quarter compared to U.S. $10.93 per million British Thermal Units in the second quarter of 2008. The WTI / Lloydminster Crude Blend heavy oil price differential was lower in the second quarter of 2009 at U.S. $7.72 per barrel, than the U.S. $21.95 per barrel in the same quarter of 2008. During the second quarter of 2009, the New York Harbor 3:2:1 crack spread averaged U.S. $9.05 per barrel compared to U.S. $13.02 in the same quarter of 2008.

In May 2009, the Company raised U.S. $1.5 billion in long term notes to increase its financial flexibility. Total long term debt, including current portion and bank operating loans at June 30, 2009 was $3.59 billion compared with $1.96 billion at December 31, 2008. Debt to cash flow and debt to capital employed ratios at June 30, 2009 were 1.0 and 19.8 percent respectively.

The 2009 capital expenditure guidance of $2.6 billion focuses mainly on optimizing upstream production, midstream and downstream developments and progressing projects with the highest potential for near to long term growth. In the second quarter of 2009, spending on capital projects was $492 million compared to $734 million in the second quarter of 2008.

In the first six months, net earnings were $758 million or $0.89 per share (diluted), compared to $2.25 billion or $2.65 per share (diluted) in the same period of 2008. Adjusted Net Earnings for the first six months were $816 million or $0.96 per share (diluted) compared to $2.26 billion or $2.66 per share (diluted) in the first six months of 2008. Cash flow from operations for the first six months was $1.40 billion or $1.64 per share (diluted), compared with $3.62 billion or $4.26 per share (diluted) in the same period of 2008. Sales and operating revenues, net of royalties, were $7.57 billion in the first six months of 2009, compared with $12.29 billion in the first six months of 2008.

Upstream Segment

In the second quarter of 2009, total production averaged 317,200 barrels of oil equivalent per day compared with 359,100 barrels of oil equivalent per day in the second quarter of 2008. Total crude oil and natural gas liquids production was 225,200 barrels per day, compared with 256,100 barrels per day in the second quarter of 2008. Liquids production was lower due to subsea operational issues offshore Canada's East Coast, general facility maintenance and reservoir decline. Natural gas production in the second quarter was 552 million cubic feet per day compared with 618 million cubic feet per day in the same period of 2008. Gas production was lower, mainly due to reduced capital expenditures on drilling and tie-ins, flow line restrictions and reservoir decline.

Production for the first six months of the year averaged 329,600 barrels of oil equivalent per day compared with 354,700 barrels of oil equivalent per day in the first six months of 2008. Crude oil and natural gas liquids production was 237,600 barrels per day, compared with 254,000 barrels per day in the same period of 2008. Natural gas production was 552 million cubic feet per day compared with 604 million cubic feet per day in the first six months of 2009. Production in 2009 remains within the guidance range.

In Eastern Canada, the North Amethyst satellite development is continuing on schedule with production expected to come on stream in late 2009 / early 2010. Specialized lift and installation vessels arrived at the North Amethyst location to begin the installation of subsea equipment. Preparation work on the SeaRose FPSO (Floating Production, Storage and Offloading vessel) has begun for the facility turnaround in the third quarter.

In May of 2009, Husky successfully drilled and tested the second appraisal well, Liwan 3-1-3, at the Liwan discovery field on Block 29/26 in the South China Sea. Front end engineering design commenced in the second quarter and first production is targeted in the 2012 - 2013 timeframe. Two exploration wells drilled in the area encountered hydrocarbons and were considered non-commercial. The West Hercules deep water rig is currently drilling a third appraisal well on the Liwan 3-1 discovery.

In Western Canada, work continues on the optimization of the Sunrise Oil Sands Integrated Project to simplify the scope and take advantage of declining construction price levels.

The enhanced oil recovery project using ASP (alkyline surfactant polymer) at Gull Lake, Saskatchewan is currently being commissioned and will begin commercial operations in the third quarter.

The Company has conducted several gas well tests in the Bullmoose - Sukunka region of North East British Columbia during the 2008-2009 drilling season. Test results from the Bullmoose d-64-B (100% WI) and Burnt River C-A61-A (55% WI) wells each support initial production rates in the order of 30 million cubic feet per day.

 

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Project Manager
Expertise: Project Management
Location: Houston, TX
 
Project Accountant
Expertise: Accounting
Location: Nashville, TN
 
US Conroe: Accountant - Sr. Accountant
Expertise: Accounting|Financial Analyst
Location: Conroe, TX
 
search for more jobs

Brent Crude Oil : $53/BBL 1.72%
Light Crude Oil : $49.77/BBL 2.27%
Natural Gas : $3.6/MMBtu 1.09%
Updated in last 24 hours