Fortifying the Business for the Long Term
October 30, 2015
Balanced Growth in Lower for Longer/Volatile Environment
• Balanced growth strategy calibrated to commodity price planning assumptions
• Running room to grow profitably and generate strong returns
• Ongoing transition to a low sustaining capital business/lowering cost structure
• Broad portfolio diversification helps manage risk
• Physical integration maximizes margin capture, stable cash flows
• Strong dividend
2
Continued Strong Response to Improve Resiliency
• Strong capital discipline, capex and production on track
• Achieved high end of $400-$600 million cost savings target
• Operating costs and SG&A trending down
• Workforce reduction of 1,400 and salary freeze extended
• 40% of production from low-sustaining capital projects by the end of ’16
Production
3
*Low Sustaining Capital Production includes Thermal, Oil Sands and Liwan
Fortifying the Business for the Long Term
• Planning assumptions
• $40 US WTI oil, $3 Cdn AECO gas
• Maintain strong balance sheet
• Current salary freeze extended
through ’16, workforce will be
aligned with business activity
• Investment grade credit rating (BBB+)
• No new net debt
• Projected 15-20% reduction in overall
sustaining capital in ’16 over historical
average
Capital Expenditures ($ bln)
5
4
3
Growth Capital
Sustaining Capital
2
1
0
‘ 14
‘ 15E
‘ 16E
4
Acceleration of Western Canada Rejuvenation
Focusing capital on high-return projects
• Improving resiliency through commodity cycles
• Potential sale of select legacy oil and gas properties in Alberta and Saskatchewan
• Evaluating sale of third-party royalty lands (~2,000 boe/d)
5
Portfolio of Resilient Opportunities – Growing a Higher
Quality, Strong Return Production Base
Project
• Numerous opportunities
identified
Rush Lake Phase 2
•
•
Lloyd Thermal 2
•
4 X 10,000 bbls/d thermal projects
Long life with low sustaining capital
requirements
Fast payback
Lloyd Thermal 3




Western Canada
Select Resource Plays
•
•
• Disciplined capital allocation
to highest returning projects
>10% After Tax IRR at
$40 US WTI and
$3 Cdn AECO gas
Heavy Oil
Lloyd Thermal 1
• Projects are expected to
deliver full cycle after-tax IRR
of >10% at $40 US WTI and
$3 Cdn AECO gas
Business Case
Delivering good returns in current price
environment
Strong land position and production results

Maintain integration, maximize margin
capture
Strong returns

Downstream
Lima Refinery Heavy
Crude Flexibility
Project
•
•
Asia Pacific Region
• Projects range across
upstream and downstream
•
Liuhua 29-1 field
•
•
MDA-MBH, MDK Fields
• Strong balance sheet to
determine pace of investment
•
Can be efficiently developed using existing
infrastructure at Liwan Gas Project
Currently negotiating a fixed price and
volume sales gas contract

Shallow water developments, shared
infrastructure
Ongoing negotiation for fixed price and
volume sales gas contract

Maintain production at White Rose field
Uses existing infrastructure, including the
SeaRose FPSO
Strong netbacks


Atlantic Region
Near-field infills at
White Rose
•
•
West White Rose
•
Balanced Growth in Lower for Longer/Volatile Environment
• Balanced growth strategy calibrated to commodity price planning assumptions
• Running room to grow profitably and generate strong returns
• Ongoing transition to a low sustaining capital business/lowering cost structure
• Broad portfolio diversification helps manage risk
• Physical integration maximizes margin capture, stable cash flows
• Strong dividend
7
Appendix
Heavy Oil – Proven Thermal Formula
• Thermal portfolio continues to expand
• 22,300 bbls/d in ’10 to 55,000 bbls/d
in Q3 ’15
Rush Lake
2015
12,000
• 80,000 bbls/d projected by end of ’16
Edam East
2016
10,000
Vawn
2016
10,000
Edam West
2016
4,500
• Low sustaining capital requirements
First Oil
Date
Current/ Forecast
Net Production
Rate* (bbls/d)
Thermal
Project
• Plenty of running room
Annual Production from Heavy Oil (bbls/d)
’10
(~90K)
25%
Thermal Heavy Oil Production
’14
(~121K)
45%
Non-Thermal Heavy Oil Production
Rush Lake
9
Downstream – Maximizing Margin Capture
• Maintain integration with thermal growth
• Improved flexibility of feedstock
• Strategic investment in gathering
system and storage facilities
• Increased product mix
• New capital equipment and upgrades
• Expanded market access
• Increased product pipeline connectivity
to Chicago, New York Harbor and Gulf
Coast
Upgrading / Refining Facility
Feedstock
Crude Type
Net Operating
Capacity
(bbls/day)
Lloyd Upgrader
Heavy
82,000
Lloyd Asphalt Refinery
Heavy
29,000
Prince George Refinery
Light
12,000
Lima Refinery
Light
160,000
Toledo Refinery1
Heavy
70,000
Total Crude Refining Capacity
353,000
1. Husky has a 50% working interest in the Toledo Refinery (operated by BP)
10
Asia Pacific Region
• Liwan 3-1
• Fixed volume and price contract
• >CAD $70 netback/boe
Project
Business Case
Asia Pacific Region
Liuhua 29-1 field
•
•
• Liuhua 29-1 (’17-’19)
• Low cost production addition
MDA-MBH, MDK
Fields
•
•
• Will utilize existing Liwan offshore infrastructure
Efficiently develop using existing
infrastructure at the Liwan Gas Project
Currently negotiating a fixed price and
volume sales gas contract
Shallow water developments, shared
infrastructure
Ongoing negotiation for fixed price and
volume sales gas contract
• Negotiating fixed volume price contract
• Indonesia gas fields (’17-’19)
• BD (liquids-rich) field in construction
• ~40 mmcf/day (net) + 2,400 boe/day (net)
• ~$7.00/mcf US fixed price contract
• MDA / MBH fields in tender phase
• ~50 mmcf/day (net)
• ~$7.00 US fixed price contract
• MDK Plan of Development approved
• Field in progress
• ~30 mmcf/d (net)
• Regulatory plan of development approved
• Negotiating fixed price
Liwan Gas Project
• Four discoveries under evaluation
11
Sunrise – Steady Ramp Up
• Sunrise focus continues to be steady ramp up
• Phase 1 ramping up to ~60,000 bbls/d
(gross) by end of ’16 (Husky 50% W.I.
/ operator)
• Approvals in place for 200,000 bbls/d
(gross)
• Achieving current operational efficiencies
• Walking rig improving sustaining pad
design
Sunrise Energy Project
• Smaller well pad footprint
• Multi-phase metering
• Additional efficiencies for Phase 1
• De-bottlenecking opportunities expected to surpass
nameplate capacity
• New sustaining pads provide ability to increase production
12
Atlantic Region – Near Field Opportunities
• Infill and satellite extensions stabilizing
production
• South White Rose Extension on stream
(June ’15)
• Net peak production of ~15,000
boe/day
• Combines gas injection and oil
production to improve returns
• North Amethyst field production expected
in ’16/’17
SeaRose FPSO
• Peak production of ~5,000 boe/day
(net)
• Targeting deeper zone beneath main
field
• West White Rose assessment continues
• Flemish Pass
• New basin discovered
• 18 month delineation program
underway, began Oct. ’14
13
Advisories
Forward-Looking Statements and Information
Certain statements in this presentation are forward-looking statements and information (collectively “forward-looking statements”), within the meaning
of the applicable Canadian securities legislation, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of
the United States Securities Act of 1933, as amended. The forward-looking statements contained in this presentation are forward-looking and not
historical facts.
Some of the forward-looking statements may be identified by 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", “is targeting”, "estimated", "intend", "plan", "projection", "could", “aim”, "vision", "goals", "objective",
"target", "schedules" and "outlook"). In particular, forward-looking statements in this presentation include, but are not limited to, references to:
•
with respect to the business, operations and results of the Company generally: the Company’s general strategic plans and strategies; forecast
proportion of production from low-sustaining capital projects by the end of 2016; projected rate of reduction in overall sustaining capital over
historical average in 2016; planned workforce-business environment alignments in 2016; projected capital expenditures for 2015; anticipated
growth capital and sustaining capital for 2015 and 2016; business cases for, and expected full-cycle after-tax IRR from, certain of the Company's
near-term projects;
•
with respect to the Company's Asia Pacific Region: planned features of, timing of first gas from, and expected daily rates of production from the
Liuhua 29-1, Madura Strait BD, MDA, MBH and MDK projects;
•
with respect to the Company's Atlantic Region: anticipated timing of first production from, and forecast net peak daily production from, the
Company’s North Amethyst Hibernia well project;
•
with respect to the Company's Oil Sands properties: anticipated timing of ramp-up of, and forecast net peak daily production from, the Company's
Sunrise Energy Project;
•
with respect to the Company's Heavy Oil properties: anticipated timing of first production from, and forecast net peak daily production from, the
Company’s Edam East, Edam West and Vawn heavy oil thermal projects; expected volumes of daily production from the Company's heavy oil
thermal projects by the end of 2016; and
•
with respect to the Company's Western Canadian oil and gas resource plays: potential sale of select Alberta and Saskatchewan oil and gas
properties; potential sale of third-party royalty lands.
14
Advisories
Although the Company believes that the expectations reflected by the forward-looking statements presented in this presentation are reasonable, the
Company’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 the Company 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.
Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue
reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and
uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks,
uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to Husky.
The Company’s Annual Information Form for the year ended December 31, 2014 and other documents filed with securities regulatory authorities
(accessible through the SEDAR website www.sedar.com and the EDGAR website www.sec.gov) describe risks, material assumptions and other
factors that could influence actual results and are incorporated herein by reference.
Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable securities laws, the
Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement
is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all
of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statement. The impact of any one factor on a
particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company's course of
action would depend upon its assessment of the future considering all information then available.
Disclosure of Oil and Gas Information
Unless otherwise noted, historical production numbers given represent Husky’s share.
The Company uses the terms barrels of oil equivalent ("boe"), which is consistent with other oil and gas producer’s disclosures, and is calculated on an
energy equivalence basis applicable at the burner tip whereby one barrel of crude oil is equivalent to six thousand cubic feet of natural gas. The term
boe is used to express the sum of the total company products in one unit that can be used for comparisons. Readers are cautioned that the term boe
may be misleading, particularly if used in isolation. This measure is used for consistency with other producers but does not represent value equivalency
at the wellhead.
The Company uses the term netback/boe, which is consistent with other oil and gas producers' disclosures. Netback/boe is determined as realized
price less royalties, operating costs and transportation on a per unit basis. This measurement assists management and investors to evaluate the
specific operating performance by product at the oil and gas lease level. Readers are cautioned that the term netback/boe does not have any
standardized meaning and should not be used to make comparisons with other producers.
15