Husky Continues Winning Streak in South China Sea

West Hercules
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Husky Oil China Ltd., a wholly owned subsidiary of Husky Energy, has made another significant gas discovery on Block 29/26 in the South China Sea.

The LH34-2-1 and LW3-1-1 exploration wells are Husky's significant gas discoveries on Block 29/26 in the South China Sea.

The West Hercules deepwater drilling rig recently completed the drilling and testing of the LH 34-2-1 exploration well. This well was drilled 23 kilometers northeast of the Liwan 3-1 Gas Field in a water depth of 1145 meters and encountered a significant thickness of excellent quality, gas charged reservoir. The well tested natural gas, with a high liquids yield, at an equipment restricted rate of 55 million cubic feet (mmcf) per day, with indications that the well's future deliverability could exceed 140 mmcf per day. The well is similar in character to the Liwan 3-1 wells.

"This exciting exploration discovery, combined with the development of the Liwan 3-1 Field, is a significant milestone towards our goal of strategic commercial development and production from this promising area," said John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. "We are very encouraged that our geological predictions regarding the potential of this area are being validated by our drilling program. Combined with our recent oil discovery announcement at White Rose in Newfoundland's offshore, the successful LH34-2-1 exploration well positions Husky for further high impact exploration in the offshore."

The front end engineering design (FEED) for the Liwan 3-1 Field Development Project is at an advanced stage and the LH 34-2 Field will be tied into the planned offshore infrastructure. Husky expects the plan of development for the Liwan 3-1 Field to be submitted to the regulatory authorities in early 2010. First gas production is targeted to be in the 2013 timeframe.

Currently, the West Hercules deepwater drilling rig is preparing to spud another exploration well on Block 29/26 in the South China Sea. In addition, the Company is planning an appraisal well in early 2010 to determine the full potential of the LH34-2 field.

Husky started exploring in offshore China in 2002. Husky signed a Petroleum Contract for Block 29/26 in 2004, which is 2,230 square kilometres in area. The Liwan 3-1 natural gas field was discovered in June, 2006. Under the petroleum Contract, CNOOC Limited has the right to participate in the Liwan development for up to 51 percent working interest. In addition, Husky holds a 40 percent working interest in a production block at the Wenchang oil field and 100 percent working interest in two other exploration blocks offshore China.

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