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CALGARY, AB–(Marketwired – December 08, 2015) – Husky Energy (TSX: HSE) continues to build on its resilience with a focus on growing profitably and further lowering its cost structure.

“Five years ago, Husky set out its balanced growth strategy, which included a deliberate decision to remain diverse, physically integrated and transition into a low sustaining capital business,” said CEO Asim Ghosh.

“We continue to reap the benefits of the changes we have implemented. We have substantially lowered the Company’s earnings break-even point for USD WTI oil from the mid-$50s last year to the low $40s today and the sub-$40s by the end of 2016. At the same time, we have reduced our sustaining and maintenance average costs by 15 to 20 percent, which means we can now do more with even less.

“Looking to the future, our rich and diverse portfolio offers many opportunities for profitable growth, assuming current market conditions, and continued lowering of our earnings break-even price.”


To further strengthen the resiliency of the Company for the long term, several parameters have been established for the business plan:

  • A price planning assumption of $40 US per barrel WTI oil and $3 Cdn per thousand cubic feet (mcf) AECO gas over the next two years
  • Capital expenditures to remain in balance with cash flow from operations (cash flow neutral at price planning assumptions)
  • Investing in projects with a minimum hurdle rate of 10 percent (after tax) internal rate of return at the price planning assumption
  • Earnings break-even point for future investments of $30 US per barrel WTI or less
  • Interim dividend measure to provide for capital flexibility. The Board will continue to review the dividend on a quarterly basis with the objective of returning cash to shareholders
  • Maintaining a strong investment-grade credit rating with no new net debt over near term
  • Debt-to-cash flow to be below 1.5 times

Sustainable Cost Structure Reductions/Improving Resiliency

As a result of the transition to a low sustaining capital cost base, sustaining and maintenance costs in 2016 are expected to be in the range of $2.4-2.6 billion, a 15 to 20 percent reduction compared to an historical average of $3 billion. This represents the required investment to keep production stable, maintain facilities and meet regulatory requirements.

Additional benefits are being realized from ongoing cost savings initiatives, with SG&A reduced by about 30 percent year to date and continued progress in lowering operating costs.

Efficiencies are being achieved in specific areas of the business as well. In heavy oil thermals, a highly modularized, copy-and-paste approach to engineering and construction is being employed. At the Sunrise Energy Project, more efficient design and construction is expected to result in significant future capital expenditure savings for new sustaining pads.

The transition of the Western Canada portfolio is being accelerated through a planned disposition of select legacy assets (up to about 50,000 barrels of oil equivalent per day). This initiative provides for investment in focused, more material plays and is anticipated to improve cash efficiencies by approximately $3.5 billion over 10 years. A sale of royalty assets, representing about 2,000 boe/day, is being assessed.

To further unlock value, Husky is assessing the potential partial sale of select midstream assets in the Lloydminster region. The proceeds would serve to strengthen the balance sheet, enabling the Company to meet its internal debt objectives sooner than originally planned.

While in the preliminary stages of evaluation, a transaction would not include any Downstream assets such as the Lloydminster Upgrader and the refineries. Husky intends to retain operatorship of the midstream assets in order to maintain the tight integration between Upstream production and Downstream facilities.

Capital Expenditure Program

The 2016 capital expenditure program is in the range of $2.9-3.1 billion, and provides for the continued advancement of profitable near-term growth projects. At price planning assumptions, capex will remain in balance with cash flow from operations.

Capital Expenditure Guidance(1)
Upstream ($millions)
Western Canada 400
Heavy Oil 700 – 800
Oil Sands 100
Atlantic Region 400 – 500
Asia Pacific 400
Upstream Total 2,000 – 2,200
Downstream(2) 800
Corporate 100
Total 2,900 3,100

(1) All amounts exclude capitalized interest and administration. Capital expenditures do not reflect potential asset dispositions in Western Canada or royalty land sales.

(2) Includes planned turnarounds.

Investment Priorities

Husky will invest in a broad portfolio of near term projects in 2016 that are expected to further the transition to a low sustaining capital base and deliver profitable production with 10 percent-plus returns (after tax) at current price planning assumptions, including:

Area Project
Heavy Oil Thermal Projects Edam East
Edam West
Rush Lake 2
Western Canada Resource Plays Ansell Wilrich
Kakwa Wilrich
Downstream Lima Refinery Crude Oil Flexibility Project
Saskatchewan Gathering System
Asia Pacific Region Liuhua 29-1 (South China Sea)
BD, MDA-MBH, MDK (Madura Strait)
Atlantic Region North Amethyst Hibernia formation well
Development wells
Other Near Term Opportunities
Heavy Oil Thermal Projects Three potential 10,000 bbls/day Lloyd thermal projects
Atlantic Region West White Rose


Husky remains on track to achieve its guidance for 2015. Production is expected to average about 346,000 boe/day, while capital expenditures are forecast to be approximately $3.0 billion.

Production in 2016 is anticipated to average in the range of 330,000-360,000 boe/day. The forecast reflects the improvement in the quality of production and the ongoing transition to lower sustaining capital projects, which will comprise more than 40 percent of Husky’s overall production by the second half of 2016.

Guidance takes into account natural production declines, reduced investment in Western Canada assets slated for disposition, and planned turnarounds. It includes the completion of cost recovery production in May 2015 at the Liwan Gas Project.

The forecast reflects additional volumes from three new heavy oil thermal developments and the Tucker Thermal Project, and the ongoing steady ramp up of the Sunrise Energy Project.

A significant portion of the business is not directly affected by commodity price volatility, including the Asia Pacific Region, which is delivering solid value through fixed price contracts, and the margin-based Downstream business.

Production Guidance(1)
Light / Medium Oil and NGLs (mbbls/day) 90 – 95
Heavy Oil and Bitumen (mbbls/day) 145 – 160
Natural Gas Asia Pacific (mmcf/day) 140 – 150
(mboe/day) 23 – 25
Subtotal – Crude Oil, NGLs and Asia Pacific Gas 258 – 280
Natural Gas Canada (mmcf/day) 430 – 480
(mboe/day) 72 – 80
Total Production (mboe/day) 330 – 360

(1) Does not include potential asset dispositions in Western Canada.



  • The Ram River plant in Western Canada is scheduled for a three-week turnaround in mid-year, with an anticipated impact of about 2,200 boe/day averaged over the second quarter.
  • A 28-day turnaround is planned in the second quarter at the partner-operated Terra Nova, with an anticipated net impact of about 1,300 boe/day averaged over the quarter.
  • A planned 14-day shutdown is scheduled at the Liwan Gas Project in mid-year for the installation and tie-in of a second deepwater pipeline, with expected net impacts of approximately 4,600 boe/day averaged over the second quarter.
  • A 20-day turnaround is planned on the SeaRose FPSO (floating production, storage and offloading) vessel in the third quarter, with net impacts expected to be approximately 8,000 boe/day averaged over the quarter.


  • A large six to eight-week turnaround is planned at the Lima Refinery starting early in the second quarter.
  • A nine to eleven-week turnaround has been scheduled at the Toledo Refinery starting in the second quarter.
  • The Prince George Refinery has scheduled a 35-day turnaround in the second quarter.


A conference call will be held on Tuesday, December 8 at 9 a.m. Mountain Time (11 a.m. Eastern Time) to discuss the Company’s 2016 production and capital expenditure guidance. CEO Asim Ghosh, COO Rob Peabody, CFO Jon McKenzie and Downstream Senior VP Bob Baird will participate in the call.

An investor presentation to accompany the Guidance release has been posted on the Company’s website at

To listen to a recording 
Canada and U.S. Toll Free: 1-800-319-6413
Outside Canada and U.S.: 1-604-638-9010
Passcode: 2658 followed by # sign
Duration: Available until January 11, 2016
Audio webcast: Available for 90 days at under Investor Relations

Husky Energy is one of Canada’s largest integrated energy companies. It is headquartered in Calgary, Alberta, Canada and its shares are publicly traded on the Toronto Stock Exchange under the symbols HSE, HSE.PR.A, HSE.PR.C, HSE.PR.E. and HSE.PR.G. More information is available at