[Check against delivery] December 5, :00 a.m. Calgary time

Transcription

1 [Check against delivery] December 5, :00 a.m. Calgary time Thacker: Good morning everyone. Thank you for joining us today to discuss this morning s press release. With me in the room are Mr. John Lau, President and Chief Executive Officer, Rob Peabody, Chief Operating Officer, Don Ingram, Senior Vice President of Midstream and Refined Products and Mike D Aguiar, Vice President of Finance. The format for today s call is as follows. John will give a brief overview of the transaction and discuss the strategic benefits to Husky. We will then open the call to questions. We will begin with analysts and investors for approximately minutes and then conclude with media questions for approximately 15 minutes. To ensure we have time for everyone, please limit yourself to one question per caller. I will now turn the call over to John. Lau: Thank you, Tanis, and good morning to everyone. Today s announcement represents a significant step forward in Husky s strategy of integrated oil sands development. 1

2 Our Sunrise asset has long been recognized as one of the best leases in the Athabasca oil sands. By integrating this asset with the world class refinery at Toledo, Ohio, we are able to ensure a project that maximizes returns to shareholders while minimizing the inherent risk of proceeding with a mega oil sands project. Husky s integrated strategy with respect to large scale oil sands development is critical to protecting the integrity of our business. By participating in the entire value chain, from wellhead to products, we are able to mitigate the pricing risk and volatility associated with selling bitumen or synthetic crude oil. We believe that the joint venture with a U.S. refinery is the best option for value creation for our company. By partnering with BP, we gain expertise in not only the refining business, but also in the upstream development. The Sunrise oil sands development and production, will be handled by Husky. The Sunrise lease contains contingent resources of approximately 9 billion barrels and is expected to achieve peak production of 200,000 barrels per day by 2015 to Development will be in phases with first phase to 60,000 barrels per day in Front end engineering is well advanced and site preparation has 2

3 commenced. Project development approval is expected to be in The refining operation and expansion will be handled by BP. The Toledo refinery, located in Ohio, has a nameplate capacity of 155,000 barrels per day and currently converts 60,000 barrels per day of heavy sour crude into products including low sulphur gasoline, ultra low sulphur diesel, aviation fuels, propane, kerosene and asphalt. The refining plans to expand bitumen processing capacity at Toledo to 120,000 barrels per day with total processing capacity of 170,000 barrels per day by The joint venture transaction, subject to the execution of final definitive agreements and regulatory approval, is expected to close in the first quarter of 2008 with an effective date January 1, Husky will be entitled to receive 50 percent of the earnings and cash flows from the refining operation from the effective date. This partnership solidifies Husky s position in the U.S. refining market and allows both parties to move forward with development of the Sunrise oil sands lease and the conversion of the Toledo refinery to handle bitumen crude. 3

4 Regarding the Lima refinery With the downstream solution determined for Sunrise oil sands, we are able to focus on converting Lima to process conventional heavy oil volumes. The conversion of the Lima refinery to process heavy oil volumes from the Lloydminster area provides the strongest returns to our shareholders. Since the completion of the Lima acquisition, the refinery has been able to increase throughputs to 162,000 barrels per day from 147,000 barrels per day. We have been extremely impressed with this achievement, the level of expertise and commitment of the staff at the refinery and we are excited about the future at this location. Regarding the expansion of the Lloydminster Upgrader, we have completed the front end engineering. As we reviewed all downstream expansion options associated with Husky s heavy oil and bitumen production strategy, the Lloydminster Upgrader expansion has been deferred but remains an option in the future. In conclusion, I would like to summarize the strategic elements of today s transaction as follows: 1. Husky will receive immediate earnings from the refining assets. 2. This transaction increases our level of integration and will match Husky s oil sands production growth profile 4

5 3. The risks of developing a large scale oil sands play are minimized with respect to project costs and timing of completion. 4. It is the best integrated solution to create shareholder value for Husky by capturing the whole value chain. 5. This transaction preserves Husky s option to upgrade heavy oil at the Lima refinery, which is the most efficient, value-added use for this asset. Back to you Tanis. Thacker: Thank you John. That concludes the formal part of the call. We would be pleased to answer any questions you might have. As I stated at the beginning of the call, we will first take calls from analysts and investors, and then we will open the line to the media. I will now turn it back to the conference operator. Question and Answer Period Thacker: Thank you for your participation in our conference call today. If you have any additional questions or comments, please do not hesitate to follow up with me offline. 5