Husky Budgets Up 28%, Production Estimates Increased for 2008

Husky Energy Inc. announced a capital expenditure program of $3.7 billion for 2008. The program is targeted to maintain production in Western Canada and support the company's ongoing exploration and major project development in the oil sands, offshore the East Coast of Canada and internationally.

"Our 2008 capital expenditure program concentrates on medium and long term project development and is approximately 28% above our forecast for 2007," said Mr. John C.S. Lau, president and CEO of Husky Energy Inc. "The company's strategy is to focus on growth and high return projects offshore the East Coast of Canada, China and Indonesia, as well as enable the company to move forward with its integrated bitumen development at Sunrise."

In addition to the capital program of $2.9 billion in 2007, the company had net acquisition and divestitures of approximately $1.7 billion, including the acquisition of the Lima refinery for $2.0 billion and proceeds of $330 million from divestitures of approximately 5,500 barrels of oil equivalent per day in Western Canada.

Given the current low gas price environment, capital expenditures for natural gas development will be allocated to higher return areas, particularly in enhanced oil recovery and in conventional and heavy oil development. The exploration expenditure of $170 million will be spent on high impact opportunities in British Columbia and shallow depth opportunities in Alberta.

In the oil sands business, Husky will spend $300 million, including $100 million at the Tucker Oil Sands development, and $160 million to progress the first 60,000 barrel per day phase of the joint venture Sunrise project.

In Canada's East Coast and Frontier, Husky plans to spend $650 million in 2008. An estimated $425 million will be spent to progress the White Rose satellite tie-back project at North Amethyst and $120 million will be allocated to the existing White Rose development. In the Central Mackenzie Valley of the North West Territories, Husky plans to drill two exploration wells at an estimated cost of $50 million. Offshore Greenland, $20 million has been allocated for seismic acquisition.

For the China and Indonesia projects, Husky expects a capital program of $430 million in 2008. Approximately $310 million will be spent on drilling, delineation and exploration of the Liwan discovery on Block 29/26 in the South China Sea commencing with delivery of the West Hercules drilling rig in mid-2008. The remainder of the capital expenditure is for exploration in the South and East China Seas and to progress development at the Madura BD field, offshore Indonesia.

2007 production is expected to average approximately 380,000 barrels of oil equivalent per day reflecting a reduction in natural gas development and divestitures in Western Canada. For the year 2008 production guidance, Husky estimates production of 385,000 to 410,000 barrels of oil equivalent per day. Light oil and natural gas liquids production is estimated to be 139,000 to 148,000 barrels per day; medium oil production is estimated to be 28,000 to 29,000 barrels per day; heavy oil/bitumen production is estimated to be 114,000 to 124,000 barrels per day; and natural gas production is estimated to be 625 to 655 million cubic feet per day.