Husky Cites Solid '09 Financial, Operational Performance


White Rose, Hibernia, and Terra Nova
(Click to Enlarge)

Husky Energy reported net earnings in the fourth quarter of 2009 were $320 million or $0.38 per share (diluted), compared to $231 million or $0.27 per share (diluted) in the same period of 2008. Adjusted Net Earnings were $334 million or $0.39 per share (diluted) compared to $360 million or $0.42 per share (diluted) in the fourth quarter of 2008. Cash flow from operations for the fourth quarter was $657 million or $0.77 per share (diluted), compared with $330 million or $0.39 per share (diluted) in the same period of 2008. Sales and operating revenues, net of royalties, were $3.61 billion, compared with $4.70 billion in the fourth quarter of 2008.

"While some stability returned to the commodity markets, prices were down sharply in 2009 from the prior year. Actions taken by Husky to optimize operations and reduce costs partially offset this impact resulting in the Company maintaining a strong financial position for the year," said Mr. John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. "Results in the fourth quarter of 2009 reflected a stronger commodity price environment with cash flow from operations significantly higher than the amount generated in the fourth quarter of 2008."

Selected 2009 Highlights

Husky delivered a solid financial performance in 2009 while advancing a number of major projects:

Sunrise Oil Sands Project, Alberta:

  • Optimized and re-designed project to reduce capital costs
  • Front end engineering and design completed and regulatory approvals for the facility design modification received
  • Revised capital program to re-position BP-Husky Toledo Refinery for Sunrise Phase 1, deferring approximately $900 million downstream capital spending between 2010 and 2014

White Rose, offshore Newfoundland & Labrador:

  • Completed a major turnaround on the SeaRose FPSO (floating production storage and offloading) Vessel
  • Completed North Amethyst sub-sea tie-in work with production planned for Q2 2010
  • Discovered additional resources in the Hibernia formation and increased land position adjacent to the North Amethyst area
  • Oil discovery at Mizzen, offshore Newfoundland & Labrador
  • Completed a 3-D seismic program, offshore Greenland

South China Sea, China:

  • Completed Block 29/26 Liwan 3-1 field appraisal program
  • Front end engineering and design for the Liwan 3-1 field and Overall Development Plan near complete
  • Further proved the prospectivity of Block 29/26 with the discovery of the Liuhua 34-2 field

Financial Performance

Commodity prices and crack spreads were lower in 2009 relative to 2008. The WTI benchmark crude oil price averaged U.S. $61.80 per barrel in 2009, compared to U.S. $99.65 per barrel in 2008. The NYMEX benchmark natural gas price averaged U.S. $3.99 per million British Thermal Units for the year compared to U.S. $9.04 per million BTUs in 2008. The WTI / Lloydminster Crude Blend heavy oil price differential was lower in 2009 at U.S. $9.93 per barrel, than the U.S. $20.38 per barrel in 2008. The Chicago 3:2:1 crack spread averaged U.S. $8.43 per barrel in 2009 down from U.S. $11.17 per barrel in 2008.

Total long term debt, including the current portion and bank operating loans at December 31, 2009 was $3.23 billion compared with $1.96 billion at December 31, 2008. Debt to cash flow and debt to capital employed ratios at December 31, 2009 were 1.3 times and 18.3 percent respectively. The Company's net debt at December 31, 2009 was $2.84 billion. In 2009, the Company filed a U.S. $3 billion debt shelf prospectus and a $1 billion Canadian medium term note shelf prospectus. In May, the Company issued long-term debt of U.S. $1.5 billion under its U.S. shelf prospectus, taking advantage of market conditions to enhance its liquidity.

Capital spending in 2009 was in line with the capital guidance of $2.6 billion. The Company has increased its 2010 capital budget by 20 percent to $3.1 billion, focusing on maintaining production and investing in projects in western Canada, offshore Canada's East Coast, and in South East Asia.

2009 net earnings were $1.42 billion or $1.67 per share (diluted), compared to $3.75 billion or $4.42 per share (diluted) in 2008. Adjusted Net Earnings for the year were $1.48 billion or $1.74 per share (diluted) compared to $3.88 billion or $4.57 per share (diluted) in 2008. Cash flow from operations was $2.51 billion or $2.95 per share (diluted), compared with $5.95 billion or $7.00 per share (diluted) in 2008. Sales and operating revenues, net of royalties, were $15.07 billion for 2009, compared with $24.70 billion in 2008.

Upstream

In the fourth quarter of 2009, total production averaged 291,500 barrels of oil equivalent per day compared with 358,400 barrels of oil equivalent per day in the fourth quarter of 2008. Total crude oil and natural gas liquids production was 203,400 barrels per day, compared with 263,200 barrels per day in the fourth quarter of 2008. Natural gas production in the fourth quarter was 529 million cubic feet per day compared with 571 million cubic feet per day in the same period of 2008.

Production for 2009 averaged 306,500 barrels of oil equivalent per day compared with 355,900 barrels of oil equivalent per day in 2008. Liquids production was lower mainly due to reduced production from the Terra Nova oil field and the planned maintenance and satellite tie-in work in the White Rose oil field offshore Canada's East Coast. Gas production was lower mainly due to the scale back of capital expenditures on drilling, well completions and tie-ins and shut-in production. Crude oil and natural gas liquids production was 216,200 barrels per day, compared with 256,800 barrels per day in 2008. Natural gas production was 542 million cubic feet per day compared with 594 million cubic feet per day in 2008.

In December 2009, Husky discovered another gas field on Block 29/26 in the South China Sea, the Liuhua 34-2-1 exploration well. The Liuhua 34-2 Field will be tied into the planned offshore infrastructure associated with the Liwan 3-1 Deepwater Project. The West Hercules deepwater rig is currently drilling an exploration well at Liuhua 29-1-1 and when complete will return to the Liuhua 34-2 discovery area to drill an appraisal well. Husky expects to submit the Liwan 3-1 Field Overall Development Plan to the regulatory authorities in early 2010 and first gas production is targeted to be in the 2013 timeframe.

Offshore Canada's East Coast, the North Amethyst satellite sub-sea tie-back work was completed and production is expected to come on stream in Q2 2010.

In western Canada, FEED work for the first phase of the Sunrise Oil Sands Project is now complete and tenders for major engineering and construction contracts will commence. The project is planned for sanction in 2010.
 

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