Husky Energy Inc (TSX: HSE) Corporate Update September 2009

Transcription

1 Corporate Overview September 2009 Corporate Overview Fully integrated energy company Market capitalization approx $25 billion, enterprise value $29 billion Heavy Oil pioneer 70-year track record of responsible development Diversified operations in Canada, USA, Greenland, China and Indonesia Top tier dividend yield Traded on the Toronto Stock Exchange under the symbol HSE Focused on Providing Best-in-Class Returns from a Diversified Energy Portfolio 2

2 Corporate Values Mission To maximize returns to shareholders in a socially responsible manner Vision To create superior shareholder value through financial discipline and a quality asset base Sustainable Development Vision, commitment and leadership, built on integrity and social conscience 3 Grow heavy oil production through technology innovation and application Grow production from world class bitumen portfolio Build on the East Coast success by exploring and developing new fields Build a material South East Asia E&P business Maintain and exploit extensive Western Canadian asset base Integrated business approach - from the well head through to the consumer Operations conducted with full regard to safety and environmental performance Strives to be the Highest Value Creating Integrated Energy Company and Distribute that Success to Shareholders 4

3 Total Shareholder Return vs. Indices Since August 28, Quarterly dividend: $0.30 per share is the highest yield (~4%) among Canadian Peers Over $5.4 billion in dividends paid since Aug/00 Market Capitalization: $25 billion Enterprise Value: $29 billion $ $6. 50 Husky Energy TSX Energy Index TSX Composite Index Sept Growth as a Public Company ($ billions) 25 $ % Earnings Growth 336% Cash Flow Growth 387% Revenue Growth 10 5 $5.1 $6.0 $3.8 0 $1.4 $ Net Earnings Cash Flow from Operations Revenue Consistent Growth in Earnings and Cash Flow 6

4 Q2 Earnings Canadian Peer Comparisons 500 Husky 2009 Q2 Earnings ($ millions) 1,600 1, Months Earnings ($ millions) 400 1, , Husky (200) (100) (400) Peer group includes: Canadian Natural, Encana, Imperial Oil, Nexen, Suncor & Talisman A Leader in Creating Shareholder Value 7 Husky s Focus Areas Western Canada (Production 258 mboe/day & Exploration) 2.U.S.A (Refining & Exploration) 3.Newfoundland (Production 86 mboe/day & Exploration) 4.Labrador & Greenland (Exploration) 5.South East Asia (Production 12 mboe/day & Exploration) Growth Strategy is Focused in Areas where it has a Competitive Advantage 5 8

5 Production and Reserves Months Production 2008 Year End Reserves (at December 31, 2008) Daily Production by Product (mboe/d) 103 (31%) Heavy Oil / Oil Sands 92 (28%) Natural Gas 135 (41%) Light & Medium Oil & N GLs Proved + Probable 2,459 mmboe ( ,465) 494 (20%) Natural Gas 1,452 (59%) Heavy Oil / Oil 513 (21%) Sands Light & Medium Oil & NGLs Daily Production mboe/d Daily Production by Region (mboe/d) 244 (74%) Western Canada 74 (22%) East Coast 12 (4%) SE Asia Possible 1,572 mmboe 1,095 (69%) Heavy Oil / Oil Sands 278 (18%) Natural Gas 199 (13%) Light & Medium Oil & NGLs Reserves in accordance with 2009 SEC annual average pricing rules, Natural Gas converted to BOE at 6:1 A Balanced Production Portfolio 9 Heavy Oil Grow production levels > 100 mbbl/d through the application of technology Increase recoveries Husky's working interest Discovered PIIP in the Lloydminster area is 9.3 billion barrels with only 7% recovered to date Thermal production growth of 20 mbbl/d to come from projects in the existing portfolio Well positioned to take advantage of acquisition opportunities months production of ~ 100 mbbl/d Focus on enhanced recovery Thermal production ~ 20 mbbl/d Cold solvent CO 2 EOR pilots underway Drilled 157 wells and optimized 320 wells in 2009 Canada s Largest Producer of Heavy Oil 10

6 Oil Sands Sanction and develop world class Sunrise lease Adjacent to Firebag, Sunrise is one of the premier in-situ projects in the Athabasca area Continue to improve performance at Tucker Apply technology to produce from over 44 billion bbls of discovered PIIP Opportunity to develop Saleski Preparing for Sunrise sanction in 2010 Optimizing Tucker to ramp up production, some wells now performing according to plan Project evaluation for other oil sands developments Development Future Growth Production Tucker Sunrise Saleski Caribou 10 Additional Lease Areas 44 billion barrels Discovered PIIP (mmbbl) Discovered Reserves Property PIIP Proved Probable Possible Tucker 1, Sunrise (50% W.I.) 4,600 1, Caribou 2,500 Saleski 32,400 Others 3,680 Total 44, ,112 1,022 *Reserves estimated at December 31, 2008 using annual average pricing One of the Largest Oil Sands Resource Holders 11 Sunrise Oil Sands Project (Husky W.I. 50%) Project Overview 50/50 partnership with BP Phase 1 : 60,000 bbls/d Phases 2 3 will bring production to 200,000 bbls/d 3P Reserves* of 3.7 billion bbls (100% W.I.) 40+ years production First oil four years after sanction Finalizing project execution plan Final facility revisions being reviewed by regulator Midstream / downstream planning underway * Husky s W.I. reserves for Sunrise include 1.01 billion barrels of probable reserves and 0.84 billion barrels of possible reserves estimated at December 31, 2008 using annual average pricing. Top Tier Oil Sands Project with Planned Production of 200 mbbl/d 12

7 East Coast of Canada Maximize SeaRose FPSO throughput Extend production via satellite fields Identify and drill exploration prospects Longer-term natural gas development Focus on Terra Nova unitization SeaRose turn around completed in Q3 North Amethyst satellite development progressing for first production in early 2010 West White Rose pilot production expected to commence in late 2010 Low operating costs generate high netbacks Mizzen (35% W.I.) SDL application has been filed by the operator Interests in 2 Producing Fields and 16 Significant Discovery Licenses 13 North Amethyst Project First White Rose satellite field to be developed Subsea tieback to SeaRose FPSO 90 mmbbls of 3P* reserves (100% W.I.) Located ~ 6km SW of SeaRose FPSO North Amethyst ~ $1.8B 17 months from discovery to approval First oil target early 2010 * Husky's W.I. reserves for North Amethyst include 19.4 mmbbls proved, 28.8 mmbbls probable and 13.8 mmbbls possible The fabrication and systems integration teams at Bull Arm One of the World s Largest Offshore Projects in

8 Offshore Newfoundland Future Growth Hibernia Terra Nova White Rose Mizzen 6 production licenses White Rose Terra Nova 16 significant discovery licenses (SDLs) 15 exploration licenses (ELs) Significant inventory of exploration and delineation wells to be drilled in the coming years Gas development Long term opportunity Need to define export strategy Leading Acreage Position Offshore Canada s East Coast 15 Extensive Holdings in Labrador & Greenland Labrador Shelf Greenland Significant Discovery Licenses Hekja (42.5% W.I. - Operator) North Bjarni (17.1% W.I.) Bjarni (17.1% W.I.) Gudrid (17.1% W.I.) Snorri (17.1% W.I.) Hopedale (19.4% W.I. - Operator) Plans Conduct initial seismic program Land Position Blocks 5 & 7 Husky (Operator) 87.5% W.I. Block 6 Husky 43.75% W.I. ExxonMobil (Operator) 43.75% W.I. Plans 1000 km2 3D seismic Block 7 CANADA Leverage East Coast Expertise in Harsh Environment Exploration and Development 16

9 South East Asia Create a material oil and natural gas business in South East Asia Develop the Liwan natural gas discovery Develop the Madura BD field Pursue exploration and development opportunities Completed 3 well appraisal program at Liwan 3-1 in the South China Sea FEED work is proceeding for the Liwan development Block 29/26 exploration program progressing West Hercules deepwater drilling rig is secured under a three year contract Well Positioned Foreign Operator Offshore China 17 Liwan Development Ultra deepwater gas field discovered by Husky in 2006 Successfully completed 3 well appraisal program: Liwan 3-1-2, at 53 mmcf/d (potential > 150 mmcf/d) Liwan 3-1-3, at 55 mmcf/d (potential > 150 mmcf/d) Liwan 3-1-4, at 52 mmcf/d (potential > 150 mmcf/d) FEED engineering underway Efforts underway to access strong gas markets in Hong Kong and Guangdong First gas production targeted for 2013 Appraisal Program Complete, Accelerating Project Commercialization 18

10 Western Canada Light and Medium Oil Maintain existing production levels Contain operating costs Enhanced recovery using Alkaline Surfactant Polymer (ASP) & Carbon Dioxide (CO 2 ) Natural gas Increase exposure to resource plays Selective exploration Well positioned to take advantage of acquisition opportunities Gull Lake ASP project completed on schedule and budget Exploration success in NE BC Expanded land position in Horn River Material land position in Lower Shaunavon Western Canada Generates Cash Flow from Legacy Assets 19 Midstream Develop Midstream components of Sunrise Integrated Project Maximize performance of the Heavy Oil Upgrader Develop greenhouse gas / CO 2 trading and sequestration opportunities Expand natural gas storage business Active planning to lower refinery feedstock costs Increased oil storage capacity at Hardisty Commodity marketing volumes of 1 mmboe/d Pipeline throughput over 530 mbbl/d Midstream Business Contributes Significant Value 20

11 Downstream Develop Downstream components of Sunrise Integrated Project Build Ohio marketing and trading enterprise Reconfigure Lima to process heavy oil Capture cross-border synergies Continue renewal of retail operations, focus in areas of competitive advantage Defined repositioning project for Lima Work commenced to define the repositioning at Toledo to process the first two phases of production from Sunrise Asphalt refinery turnaround completed in second quarter Established marketing operation in Ohio Developing U.S. Refining Business is Key to Capturing Full Value from Heavy Oil and Oil Sands Assets 21 Lima Refinery Throughput design capacity 160,000 bbls/day Reconfiguration Engineering completed to select optimum refinery process configuration Enable Lima Refinery to process heavy crude oil, improve refinery margins Project is awaiting improved market conditions Established marketing and sales office in Columbus, OH Lima 2008 Performance Crude Run Rate (mbbl/d) Gasoline Yield (mbbl/d) 78.6 Distillate Yield (mbbl/d) 49.8 Other Yield (mbbl/d) 8.8 Refinery to be Converted to Process Heavy Oil 22

12 BP Husky (50/50); Toledo Refining LLC Continuous Catalytic Regeneration Reformer CCRR Project improves gasoline yield / flexibility compliance with benzene regulatory obligations Most efficient option to comply with environmental regulations Refined Products off-take renegotiated with BP Throughput design capacity 160,000 bbls/d Toledo 2008 Performance (50% W.I.) Crude Run Rate (mbbl/d) 60.6 Gasoline Yield (mbbl/d) 35.5 Distillate Yield (mbbl/d) 18.4 Other Yield (mbbl/d) 5.6 Refinery to be Reconfigured to Process First 2 Phases of Sunrise 23 Canadian Refined Products Light Oil Marketing About 500 retail outlets Prince George Refinery capacity of 12 mbbl/d Asphalt Asphalt Refinery capacity of 28 mbbl/d months gross margin was $84 million Ethanol Largest producer of ethanol in Western Canada 2 facilities, each with annual production capacity of 130 million litres Refined Products Capture the Synergies from the Upstream and Midstream Operations 24

13 Sustainable Development Sustainable development is crucial, and Husky seeks to balance its economic activities with the need to minimize its impact on the environment and quality of life Health, safety and operational integrity is of paramount importance to the company A number of sustainability initiatives including: Western Canada s largest producer of renewable fuels Piloting Carbon Capture and Storage technology in Heavy Oil reservoirs Latest technology used in measuring emissions with the Environmental Performance Reporting System (EPRS) 25 Financial Strategies And Position Control and Discipline 2009 capital budget at $2.6 billion, strong focus on safety, project execution and future growth Dividend to be maintained on top quartile basis Raised U.S.$1.5 billion under the U.S. debt shelf prospectus, Company is well funded Maintain focus on debt to cash flow of 2 3 times, debt to capital less than 40% Improve cost efficiencies and effectiveness Actively pursue M&A 26

14 Going Forward Maintain a strong balance sheet and ensure financial discipline Sanction Sunrise and Liwan developments Complete East Coast satellite developments Provide safe, environmentally sound and reliable operations Take advantage of market opportunities 27 Advisories Forward Looking Statements Certain statements in this document are forward-looking statements or information (collectively forward-looking statements ), within the meaning of the applicable securities legislation. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as: will likely result, are expected to, will continue, is anticipated, estimated, intend, plan, projection, could, vision, goals, objective and outlook ) are not historical facts and may be forwardlooking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In particular, the forward-looking statements in this presentation include: Husky s general strategic plans; implementation of EOR technologies; greenhouse gas and CO2 sequestration initiatives; reserve and resource estimates; production estimates; Husky s financial strategies; planned expansion of the natural gas storage business; facility production levels and capacity; Western Canadian exploration, production and acquisition plans; oil sands development and production plans; East Coast exploration, drilling, development and production plans; Labrador and Greenland seismic programs; Southeast Asia exploration, drilling, development and production plans; and Downstream plans to build an Ohio marketing and trading enterprise, capture cross border synergies, continue upgrading retail facilities and to reconfigure the Lima refinery to process heavy oil. Although Husky believes that the expectations reflected by the forward-looking statements presented in this document are reasonable, Husky s forward-looking statements have been based on assumptions and factors concerning future events that may prove to be inaccurate. Those assumptions and factors are based on information currently available to Husky about itself and the businesses in which it operates. Information used in developing forward-looking statements has been acquired from various sources including third party consultants, suppliers, regulators and other sources. Husky s Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website and the EDGAR website describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. Except as required by applicable securities laws, Husky disclaims any intention or obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. 28

15 Advisories Disclosure of Proved Oil and Gas Reserves and Other Oil and Gas Information Husky's disclosure of proved oil and gas reserves and other information about its oil and gas activities has been made based on reliance of an exemption granted by Canadian Securities Administrators. The exemption permits Husky to make these disclosures in accordance with requirements in the United States. These requirements and, consequently, the information presented may differ from Canadian requirements under National Instrument , Standards of Disclosure for Oil and Gas Activities. The proved oil and gas reserves disclosed in this document have been evaluated using the United States standards contained in Rule 4-10 of Regulation S-X of the Securities Exchange Act of 1934 and Guide 2 of the Securities Act Industry Guides. The probable and possible oil and gas reserves and discovered petroleum initially-in-place disclosed in this presentation have been evaluated in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument Please refer to Disclosure of Exemption under National Instrument in the Annual Information Form for the year ended December 31, 2008 filed with securities regulatory authorities for further information. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of proved plus probable plus possible reserves. There is at least a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. Discovered petroleum initially-in-place is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for these volumes of discovered petroleum initially-in-place at this time. There is no certainty that it will be commercially viable to produce any portion of the resources. The probable and possible reserves for the Sunrise project disclosed in this document use annual average pricing (see pages 51 to 54 of Husky s Annual Report regarding oil and gas reserve disclosure pertaining to the use of average pricing). Husky uses the term barrels of oil equivalent (boe) which is calculated on an energy equivalence basis whereby one barrel of crude oil is equivalent to six thousand cubic feet of natural gas. Readers are cautioned that the term boe may be misleading if used in isolation. This measure is primarily applicable at the burner tip and does not represent value equivalence at the well head. Please refer to page 73, Disclosure of Proved Oil and Gas Reserves and Other Oil and Gas Information, of Husky s 2008 Annual Report for further information. Cautionary Note to U.S. Investors The United States Securities and Exchange Commission ( SEC ) permits U.S. oil and gas companies, in their filings with the SEC, to disclose only proved reserves, that is reserves that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e. prices and costs as of the date the estimate is made. We use certain terms in this presentation, such as probable reserves, possible reserves, and discovered petroleum initially-in-place that the SEC's guidelines strictly prohibit in filings with the SEC by U.S. oil and gas companies. U.S. investors should refer to our Annual Report on Form 40-F available from us or the SEC for further reserve disclosure. All currency is expressed in Canadian dollars unless otherwise noted. 29 Investor Relations Sharon Murphy General Manager Corporate Communications and Investor Relations Sharon.Murphy@HuskyEnergy.com Patrick Aherne Manager Investor Relations Patrick.Aherne@HuskyEnergy.com 30