Husky Energy Reports 2006 First Quarter Results

Husky Energy Inc. reported net earnings of $524 million or $1.24 per share (diluted) in the first quarter of 2006, compared with $384 million or $0.91 per share (diluted) in the same quarter of 2005. Cash flow from operations in the first quarter was $967 million or $2.28 per share (diluted), compared with $816 million or $1.93 per share (diluted) in the same quarter of 2005. Sales and operating revenues, net of royalties, were $3.1 billion in the first quarter of 2006, compared with $2.1 billion in the first quarter of 2005.

"Husky's first quarter results continue to demonstrate the financial and operational strength, and the value the White Rose project brings to the company," said Mr. John C.S. Lau, President & Chief Executive Officer, Husky Energy Inc. "Husky has benefited from the first quarter production from the White Rose oil field and we look forward to achieving gross production of 100,000 barrels per day by mid-2006."

In the first quarter of 2006, total production averaged 353,600 barrels of oil equivalent (boe) per day, an 11 percent increase, compared with 319,600 boe per day in the first quarter of 2005. Total crude oil and natural gas liquids production was 239,400 barrels (bbls) per day, compared with 206,900 bbls in the first quarter of 2005. Natural gas production was 685.4 million cubic feet (mmcf) per day, compared with 676.2 mmcf per day in the same period last year.

Due to operational issues at Terra Nova, Husky's share of production for the quarter was 9,300 bbls per day compared to 13,700 bbls per day in the first quarter of 2005.

The White Rose oil field had production averaging 46,400 bbls per day net to Husky in the first quarter. The completion of the fourth and fifth production wells during the second quarter will allow total production from the field to reach 100,000 bbls per day.

At the Tucker Oil Sands project, drilling operations for the initial 30 well pairs were completed in February. All structures and major components are in place and overall facility construction is 82 percent complete. The project remains on-time and on-budget with steam scheduled to be injected into the reservoir by the third quarter and first oil is expected by the end of the year.

For the Sunrise Oil Sands project, the program has been focused on delineating the resource along portions of the northern boundary of the lease. Selection of engineering firms for the Front-end Engineering and Design Phase has been initiated.

Evaluation drillings were also conducted on the Caribou and Saleski leases. At Caribou, Husky drilled 15 evaluation wells to better quantify the resources potential. At Saleski, a four-well evaluation program was completed. In April, Husky successfully acquired 23,680 acres of oil sands leases adjacent to its Saleski property. The acquisition increases the potential resources in Saleski to approximately 19.5 billion barrels of original bitumen in place.

In China, Husky has now secured the Transocean Discoverer D-534 drill- ship which is expected to spud a deep-water exploration well on Block 29/26 in the South China Sea in the second quarter. The well is targeting a gas prone structure.

Regarding the Midstream operations, Husky announced in March that it will proceed with the engineering design work to double the capacity of its Lloydminster heavy oil Upgrader to a potential capacity of 150,000 barrels per day. The preliminary estimate for the Upgrader expansion is $2.3 billion. Engineering work is expected to be completed in 15 to 18 months at which time Husky will proceed with the appropriate approvals for the project.

The Upgrader planned turnaround in 2006 has been rescheduled to the spring of 2007. This realignment should enhance both throughput and earnings from the Upgrader in 2006.

For the Refined Products business segment, the Clean Fuels program in the Prince George Refinery is nearing completion. The final phase of the project, which will allow Husky to produce low sulphur diesel, is 90 percent complete and will be operational in May 2006.

The Lloydminster ethanol production project is 88 percent complete and the start-up of this facility is planned for the third quarter of this year. In Minnedosa, construction of the new ethanol production facility is progressing well with plant commissioning to be in the second half of 2007.