Husky strengthening its balance sheet

By Geoff Lee

May 17, 2016 9:50 AM

Husky Energy has put its Lloydminster area Vawn thermal project in Saskatchewan on steam while selling select assets in the southwest part of the province.

Both developments were announced last week as Husky continues to transition its Western Canada business from a legacy oil and gas basin to focus on high quality production on core plays.
The potential 10,000 barrels per day Vawn thermal plant is the second of three thermals projects the company is commissioning this year.

The 4,500 bbls/day Edam West project is set to begin production in the third quarter of 2016 and follows the production startup of the 10,000 bbls/day Edam East facility in mid-April.

“These developments are leading our transition into a low sustaining capital business with among the lowest operating costs in the industry,” said CEO Asim Ghosh from Calgary.

By the end of 2016 more than 40 per cent of Husky’s overall production is expected to come from low sustaining capital projects compared to just eight per cent in 2010.

Husky’s balance sheet tipped in the right direcion with the sale of select assets in southwest Saskatchewan for $595 million to Whitecap Resources.
That is Husky’s third asset sale agreement this year.

Earlier this month, the company reached an agreement under which it will realize $163 million in cash proceeds from the sale of royalty assets in western Canada.

The sale announced on May 2 represents approximately 1,700 barrels of oil equivalent per day of expected western Canada production in 2016 to Freehold Royalties Ltd.

It follows Husky’s agreement to sell a 65 per cent ownership interest in select midstream assets in April for $1.7 billion, while retaining 35 per cent ownership in a newly formed limited partnership and remaining the operator.

Proceeds from these transactions will be used to further strengthen the balance sheet.

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