Husky Energy Cuts 2020 Spending By $1 Billion

Husky Energy, March 17, 2020

Husky Energy is taking a series of actions to fortify its business in response to challenging global market conditions.

These initiatives reflect the Company’s commitment to capital discipline, which includes maintaining the strength of its balance sheet while protecting value in an extended low commodity price environment. Husky’s drive to improve process and occupational safety is unaffected and remains a top priority.

Husky has three important advantages: a strong balance sheet, an Integrated Corridor which includes a sizeable downstream and midstream segment, and Offshore operations that include long-term gas contracts in the Asia Pacific region not linked to the price of oil,” said CEO Rob Peabody.

Given current market conditions Husky will commence the safe and orderly reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices.

Strong Balance Sheet and Liquidity

Total liquidity is $4.9 billion, comprised of $1.4 billion in cash and $3.5 billion in unused credit facilities. In line with its committed credit facilities, Husky is required to maintain debt to capital of no more than 65%, and is well below this threshold with a ratio of 27% with no long-term debt maturities until 2022.

2020 Capital Program Reduced by $900 Million; Further Cost Reductions of $100 Million

Husky has revised its 2020 capital and production guidance as follows:

Capital Investment1 ($ millions)    
Upstream 1,750 – 1,900 2,625 – 2,800
Downstream 475 – 550 475 – 550
Total 2,300 – 2,500 3,200 – 3,400
Total Upstream Production2 (mboe/day) 275 – 300 295 – 310

Includes exploration capital and other capital expenditures but excludes asset retirement obligations, capitalized interest and Superior Refinery rebuild capital
Includes curtailment allowance of 5,000 bbls/day in first half of 2020

Capital Reductions

  • Investment in resource plays and conventional heavy oil projects in Western Canada has been halted, with a focus on optimizing existing production and lowering costs.
  • Drilling of sustaining pads at all thermal operations has been suspended.
  • Lloydminster thermal projects scheduled to be delivered beyond 2020 have been deferred and will be reconsidered as market conditions improve.
  • In the Asia Pacific region, the development of the Block 15/33 oil field offshore China has been deferred by a year. In Indonesia, development of the MDA-MBH natural gas field has been deferred. The Liuhua 29-1 field at the Liwan Gas Project is being advanced as planned, with first production expected by the end of 2020.
  • The Company continues to review further capital adjustments in response to the current market environment.

Additional cost reduction initiatives totalling approximately $100 million in 2020 will include a reduction in well servicing activities on uneconomic production, and a halt in exploration activity.

* All currency expressed in this news release is in Canadian dollars.

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