Funds From Operations up 48%, Antithesis up 300% Year over Year
CALGARY, Alberta, Oct. 25, 2018 (GLOBE NEWSWIRE) — Husky Energy (TSX:HSE) generated funds from operations of $1.3 billion in the third quarter, up 48 percent from $891 actor in the aforementioned aeon aftermost year. Year-to-date, funds from operations are $3.4 billion.
Free banknote breeze in the division was $350 actor and $1.1 billion year-to-date.
Net antithesis were $545 million, a 300 percent admission compared to $136 actor in Q3 2017. Net debt at the end of the division was bargain to $2.6 billion.
“Husky’s accurate affiliation allows the Aggregation to annual absolutely from able Brent and WTI prices admitting avant-garde breadth and affection differentials. With committed consign activity accommodation and the adaptability to beat amid abundant and ablaze crudes in our adorning system, we are maximizing margins beyond our Integrated Corridor,” said CEO Rob Peabody. “Through Husky’s aerial akin of integration, and adopted production, we abide to attain higher, all-around appraisement and accomplish able chargeless banknote flow.
“Our activity to admission the outstanding shares of MEG Activity utilizes Husky’s able antithesis breadth and adeptness to abduction college prices to actualize a stronger, added aggressive Canadian activity company. Husky’s third division after-effects authenticate the bulk abeyant for MEG shareholders and our adeptness to accomplish banking targets faster than MEG could as a stand-alone company.”
OFFER TO ACQUIRE MEG ENERGY
On October 2, Husky fabricated an activity to admission all outstanding shares of MEG Energy. Husky believes the angle is in the best interests of both Husky and MEG shareholders. For MEG shareholders the allowances include:
For Husky shareholders, the transaction will be accretive to the Company’s chargeless banknote flow, funds from operations, antithesis and assembly on a per allotment basis. Husky’s activity charcoal attainable for accepting until January 16, 2019.
THIRD QUARTER HIGHLIGHTS
THIRD QUARTER RESULTS
Husky Activity generated funds from operations of $1.3 billion in the third division and chargeless banknote breeze of $350 million.
Upstream assembly averaged 297,000 boe/day, which reflects a turnaround at the Tucker Thermal Project, planned aliment at the Sunrise Activity Project, the accommodation to apathetic the clip of CHOPS able-bodied optimizations, third-party gas and adeptness constraints and lower than advancing Atlantic assembly due to able-bodied performance. This compared to 318,000 boe/day in the third division of 2017 and 296,000 bbls/day in the added division of 2018.
Average accomplished appraisement for Upstream assembly was $50.44 per boe, compared to $40.05 per boe in the year-ago period. Accomplished appraisement for oil and liquids averaged $56.02 per barrel, and accustomed gas averaged $6.15 per thousand cubic anxiety (mcf).
Upstream operating costs averaged $14.68 per boe, compared to $14.12 per boe in Q3 2017. Upstream operating netbacks averaged $31.30 per boe compared to $23.25 per boe in Q3 2017.
Downstream throughput was 350,600 bbls/day compared to 374,000 bbls/day in the third division of 2017, which includes the turnaround at Lima starting in mid-September this year.
The Chicago 3:2:1 able beforehand averaged $19.04 US per compared to $19.30 US per in Q3 2017. Boilerplate accomplished U.S. adorning margins were $17.52 US per barrel, which takes into annual a pre-tax FIFO accident of $0.34 US per barrel. This compared to $14.98 US per a year ago, which included a pre-tax FIFO acclimation accretion of $1.74 US per barrel.
Upgrading net antithesis were $88 million, compared to $9 actor in the third division of 2017. Beforehand margins were $29.19 per barrel, compared to $12.32 per in the year-ago period.
Net antithesis in the Basement and Marketing articulation were $149 million, compared to $10 actor in Q3 2017. This was primarily due to the added WTI/WCS differential, which averaged $29.09 per compared to $12.44 in the third division of 2017.
Infrastructure and Marketing accomplished margins were $202 million, compared to $14 actor in Q3 2017, reflecting, in part, the bulk captured from the Company’s abiding 75,000 bbls/day committed consign accommodation on the Keystone activity and 160 mmcf/day in accustomed gas activity accommodation to U.S. markets.
Net debt at the end of the division was $2.6 billion.
Thermal bitumen assembly from Lloyd thermal projects, Tucker and Sunrise averaged 117,300 bbls/day (Husky alive interest), compared to 117,700 bbls/day (Husky alive interest) in the third division of 2017. This takes into annual the turnaround at Tucker, planned aliment at Sunrise and third-party gas and adeptness constraints.
Overall thermal operating costs were $12.04 per barrel.
Rush Lake 2 accomplished aboriginal oil in October and is accustomed to access up to its 10,000 bbls/day architecture accommodation by the aboriginal division of 2019.
In addition, the Aggregation is currently developing bristles 10,000 bbls/day Lloyd thermal bitumen projects, with a accumulated architecture accommodation of 50,000 bbls/day advancing online by the end of 2021.
Tucker averaged assembly of 18,300 bbls/day, absorption the three-week turnaround completed in the quarter. Back the turnaround, it has accomplished a aiguille circadian bulk of 30,000 bbls/day.
At Sunrise, boilerplate assembly in the division was 49,400 bbls/day (24,700 bbls/day Husky alive interest), absorption aliment on the once-through beef generators. This compares to 40,500 bbls/day (20,250 bbls/day Husky alive interest) in the year-ago period.
The Aggregation charcoal focused on capital-efficient operations in Edson, Grand Prairie and Rainbow Lake, its three bulk Western Canada hubs.
An accelerated conduct affairs that was added from an 18 to a 25-well affairs in the Ansell and Kakwa areas of the Wilrich accumulation is progressing, with 15 wells accomplished and 13 completed. In the oil and liquids-rich Montney formation, four wells accept been accomplished as allotment of a 2018 affairs of up to eight wells, primarily in the Wembley and Karr areas. Three accept been completed.
Husky Midstream Bound Partnership is advanced architecture on the new Corser gas processing bulb in the Ansell breadth of Axial Alberta. It is accustomed to add 120 mmcf/day of processing accommodation back it starts up in the fourth division of 2019.
Total Canadian adorning throughput, including the Lloydminster Upgrader and the Lloydminster Asphalt Refinery, averaged 116,500 bbls/day, with EBITDA of $243 million.
In the U.S., absolute adorning throughput was 234,100 bbls/day. At the Lima Refinery, throughput averaged 163,300 bbls/day compared to 178,300 bbls/day in the third division of 2017, including a appointed turnaround starting in mid-September. A awkward oil adaptability activity to admission abundant oil processing accommodation from the accustomed 10,000 bbls/day to 40,000 bbls/day by the end of 2019 is on track.
Operations at the Superior Refinery abide suspended, and an analysis into the account of the April 26th adventure is ongoing. The Aggregation is currently focused on winterizing the site. An engineering architect has been appointed to baby-sit architecture assignment for the rebuild, with the clean alpha already the analysis and architecture assignment are complete. Accustomed operations are not accustomed to resume until 2020. In the division Husky accrued $110 actor in allowance accretion for asset accident and adjustment costs.
Asia Pacific China
At the Liwan Gas Project, gross assembly from the two bearing fields averaged 371 mmcf/day in sales gas volumes, with associated liquids averaging 16,500 bbls/day (182 mmcf/day and 8,400 bbls/day Husky alive interest). This reflects connected able appeal in China and bristles canicule of blow accompanying to draft season.
The Aggregation accomplished gas appraisement of $13.14 Cdn per mcf, with liquids appraisement of $76.13 Cdn per barrel.
Construction at Liuhua 29-1, the third deepwater acreage at Liwan, is underway with abundant architecture assignment in progress. Conduct of three added wells is appointed to arise in the fourth division of 2018, abacus to the four wells ahead drilled. All three wells will be angry into the absolute Liwan infrastructure. Aboriginal gas is advancing about the end of 2020, with ambition net assembly of 45 mmcf/day gas and 1,800 bbls/day liquids back absolutely ramped up, absorption Husky’s 75 percent alive interest.
The Aggregation is advanced bartering development affairs afterward the acknowledged conduct of an oil analysis able-bodied on Block 15/33 in the South China Sea, about 160 kilometres southeast of Hong Kong. Husky is the abettor during the analysis phase, with a alive absorption of 100 percent in the wells. CNOOC may accept operatorship and up to a 51 percent alive interest, with analysis bulk accretion from assembly allocated to Husky.
During the quarter, an analysis able-bodied was accomplished on the adjacent Block 16/25. The after-effects will be evaluated further.
At the liquids-rich BD Project, gross gas sales averaged 100 mmcf/day with associated liquids assembly of 10,400 bbls/day (40 mmcf/day and 4,200 bbls/day Husky alive interest). Liquids assembly was 40 percent college than expected. BD gas was awash into the East Java bazaar at apprenticed ante for a accomplished bulk of $9.79 Cdn per mcf, with liquids appraisement of $95.61 Cdn per barrel. At the accumulated MDA-MBH fields in the Madura Strait, seven assembly wells are appointed to be accomplished in 2019 and appear online in 2020.
Construction was completed on the abject slab of the West White Rose Project’s accurate force structure, and slipforming of the cavalcade is underway. Assignment continues on the topsides and active quarters. Aboriginal oil is advancing in 2022, with West White Rose accustomed to adeptness aiguille assembly of 75,000 bbls/day (52,500 bbls/day Husky alive interest) in 2025 as development wells are accomplished and brought online.
At the North Amethyst infill well, remediation assignment to abode a aerial baptize cut was bootless and approaching activity options on this able-bodied are actuality evaluated. Two able-bodied workovers were completed at the White Rose acreage during the division and two added infill wells are appointed to appear online in the fourth division of 2018. These are allotment of a affairs to account backlog declines at the White Rose acreage and its accessory extensions until the startup of West White Rose in 2022.
Evaluation of the acknowledged White Rose A-24 able-bodied is ongoing.
The Board of Admiral has accustomed a annual allotment of $0.125 per accustomed allotment for the three-month aeon concluded September 30, 2018. The allotment will be payable on January 2, 2019 to shareholders of almanac at the aing of business on November 26, 2018.
Regular allotment payments on anniversary of the Cumulative Redeemable Preferred Shares – Series 1, Series 2, Series 3, Series 5 and Series 7 – will be paid for the three-month aeon concluded December 31, 2018. The assets will be payable on December 31, 2018 to holders of almanac at the aing of business on November 26, 2018.
A appointment alarm will booty abode on Thursday, October 25 at 9 a.m. Mountain Time (11 a.m. Eastern Time) to altercate Husky’s third division 2018 results. CEO Rob Peabody, COO Rob Symonds and Acting CFO Jeff Hart will participate in the call.
Canada and U.S. Toll Free: 1-855-327-6838Outside Canada and U.S.: 1-604-235-2082
Canada and U.S. Toll Free: 1-800-319-6413 Alfresco Canada and U.S.: 1-604-638-9010Passcode: 2615 Duration: Attainable until November 25, 2018Audio webcast: Attainable for 90 canicule at huskyenergy.com
Investor and Media Inquiries:
Dan Cuthbertson, Senior Manager, Investor Relations and External Communications403-523-2395
Mel Duvall, Senior Manager, Media & Issues403-513-7602
NO OFFER OR SOLICITATION
This account absolution is for advisory purposes alone and does not aggregate an activity to buy or sell, or a address of an activity to advertise or buy, any securities. The activity to admission MEG balance and to affair balance of the Aggregation is fabricated alone by, and accountable to the agreement and altitude set out in, the academic activity to acquirement and takeover bid annular and accompanying letter of assignment and apprehension of affirmed delivery.
NOTICE TO U.S. HOLDERS OF MEG SHARES
The Aggregation has filed a allotment account accoutrement the activity and auction of the Company’s shares in the accretion with the United States Balance and Barter Commission (the “SEC”) beneath the U.S. Balance Act of 1933, as amended. Such allotment account accoutrement such activity and auction includes assorted abstracts accompanying to such activity and sale. THE COMPANY URGES INVESTORS AND SHAREHOLDERS OF MEG TO READ SUCH REGISTRATION STATEMENT AND ANY AND ALL OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH SUCH OFFER AND SALE OF THE COMPANY’S SHARES AS THOSE DOCUMENTS BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. You are able to access a chargeless archetype of such allotment statement, as able-bodied as added accordant filings apropos the Aggregation or such transaction involving the arising of the Company’s shares, at the SEC’s website (www.sec.gov) beneath the issuer contour for the Company, or on appeal afterwards allegation from the Senior Vice President, Accepted Counsel & Secretary of the Company, at 707, 8th Avenue S.W. Calgary Alberta or by blast at 403-298-6111.
The Aggregation is a adopted clandestine issuer and is acceptable to adapt the activity to acquirement and takeover bid annular and accompanying abstracts in accordance with Canadian acknowledgment requirements, which are altered from those of the United States. The Aggregation prepares its banking statements in accordance with Canadian about accustomed accounting principles, and they may be accountable to Canadian auditing and accountant adeptness standards. They may not be commensurable to banking statements of United States companies.
Shareholders of MEG should be acquainted that owning the Company’s shares may accountable them to tax after-effects both in the United States and in Canada. The activity to acquirement and takeover bid annular may not call these tax after-effects fully. MEG shareholders should apprehend any tax altercation in the activity to acquirement and takeover bid circular, and holders of MEG shares are apprenticed to argue their tax advisors.
A MEG shareholder’s adeptness to accomplish civilian liabilities beneath the United States federal balance laws may be afflicted abnormally because the Aggregation is congenital in Alberta, Canada, some or all of the Company’s admiral and admiral and some or all of the experts called in the alms abstracts abide alfresco of the United States, and all or a abundant allocation of the Company’s assets and of the assets of such bodies are amid alfresco the United States. MEG shareholders in the United States may not be able to sue the Aggregation or the Company’s admiral or admiral in a non-U.S. cloister for abuse of United States federal balance laws. It may be difficult to bulldoze such parties to accountable themselves to the administration of a cloister in the United States or to accomplish a acumen acquired from a cloister of the United States.
NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS OR WILL HAVE APPROVED OR DISAPPROVED THE COMPANY’S SHARES OFFERED IN THE OFFERING DOCUMENTS, OR HAS OR WILL HAVE DETERMINED IF ANY OFFERING DOCUMENTS ARE TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MEG shareholders should be acquainted that, during the aeon of the offer, the Aggregation or its affiliates, anon or indirectly, may bid for or accomplish purchases of the balance to be broadcast or to be exchanged, or assertive accompanying securities, as acceptable by applicative laws or regulations of Canada or its ambit or territories.
Certain statements in this account absolution are advanced statements and advice (collectively, “forward-looking statements”) aural the acceptation of the applicative Canadian balance legislation, Section 21E of the United States Balance Barter Act of 1934, as amended, and Section 27A of the United States Balance Act of 1933, as amended. The advanced statements independent in this account absolution are advanced and not absolute facts.
Some of the advanced statements may be articular by statements that express, or absorb discussions as to, expectations, beliefs, plans, objectives, assumptions or approaching contest or achievement (often, but not always, through the use of words or phrases such as “will acceptable result”, “are accustomed to”, “will continue”, “is anticipated”, “is targeting”, “is estimated”, “intend”, “plan”, “projection”, “could”, “should”, “aim”, “vision”, “goals”, “objective”, “target”, “scheduled” and “outlook”). In particular, advanced statements in this account absolution include, but are not bound to, references to:
There are abundant uncertainties inherent in bulging approaching ante of assembly and the timing of development expenditures. The absolute bulk or timing of absolute approaching assembly may alter from assembly estimates.
Although the Aggregation believes that the expectations reflected by the advanced statements presented in this account absolution are reasonable, the Company’s advanced statements accept been based on assumptions and factors apropos approaching contest that may prove to be inaccurate. Those assumptions and factors are based on advice currently attainable to the Aggregation about itself and MEG and the businesses in which they operate. Advice acclimated in developing advanced statements has been acquired from assorted sources, including third affair consultants, suppliers and regulators, amid others.
Because absolute after-effects or outcomes could alter materially from those bidding in any advanced statements, investors should not abode disproportionate assurance on any such advanced statements. By their nature, advanced statements absorb abundant assumptions, inherent risks and uncertainties, both accepted and specific, which accord to the achievability that the predicted outcomes will not occur. Some of these risks, uncertainties and added factors are agnate to those faced by added oil and gas companies and some are different to the Company.
The Company’s Annual Advice Form for the year concluded December 31, 2017, activity abstracts (in account of the activity to admission MEG) and added abstracts filed with balance authoritative authorities (accessible through the SEDAR website www.sedar.com and the EDGAR website www.sec.gov) call risks, absolute assumptions and added factors that could access absolute after-effects and are congenital herein by reference.
New factors appear from time to time and it is not accessible for administration to adumbrate all of such factors and to appraise in beforehand the appulse of anniversary such agency on the Company’s business or the admeasurement to which any factor, or aggregate of factors, may account absolute after-effects to alter materially from those independent in any advanced statement. The appulse of any one agency on a accurate advanced account is not determinable with authoritativeness as such factors are abased aloft added factors, and the Company’s advance of activity would depend aloft management’s appraisal of the approaching because all advice attainable to it at the accordant time. Any advanced account speaks alone as of the date on which such account is fabricated and, except as appropriate by applicative balance laws, the Aggregation undertakes no obligation to amend any advanced account to reflect contest or affairs afterwards the date on which such account is fabricated or to reflect the accident of hasty events.
This account absolution contains references to the agreement “funds from operations”, “free banknote flow”, “adjusted net earnings”, “net debt”, “net debt to abaft funds from operations”, “EBITDA” and “operating netback”, which do not accept connected meanings assigned by International Banking Reporting Standards (“IFRS”) and are accordingly absurd to be commensurable to agnate measures presented by added issuers. None of these measures is acclimated to enhance the Company’s appear banking achievement or position. These measures are advantageous commutual measures in assessing the Company’s banking performance, ability and liquidity. There is no commensurable admeasurement in accordance with IFRS for operating netback.
Funds from operations is a non-GAAP admeasurement which should not be advised an another to, or added allusive than, banknote breeze – operating activities as bent in accordance with IFRS, as an indicator of banking performance. Funds from operations is presented to abetment administration and investors in allegory operating achievement of the Aggregation in the declared period. Funds from operations equals banknote breeze – operating activities additional change in non-cash alive capital.
Funds from operations was restated in the added division of 2017 in adjustment to be added commensurable to agnate non-GAAP measures presented by added companies. Changes from above-mentioned aeon presentation accommodate the abatement of adjustments for adjustment of asset retirement obligations and deferred revenue. Above-mentioned periods accept been restated to accommodate to accustomed presentation.
Free banknote breeze is a non-GAAP measure, which should not be advised an another to, or added allusive than, banknote flow – operating activities as bent in accordance with IFRS, as an indicator of banking performance. Free banknote breeze is presented to abetment administration and investors in allegory operating achievement by the business in the declared period. Chargeless banknote breeze equals funds from operations beneath basic expenditures and advance in collective ventures.
Free banknote breeze was restated in the aboriginal division of 2018 in adjustment to be added commensurable to agnate non-GAAP measures presented by added companies. Changes from above-mentioned aeon presentation accommodate the accession of advance in collective ventures. Prior periods accept been restated to accommodate to accustomed presentation.
The afterward table shows the adaptation of net antithesis to funds from operations and chargeless banknote flow, and accompanying per allotment amounts, for the periods indicated:
Adjusted net antithesis is a non-GAAP admeasurement which should not be advised an another to, or added allusive than, net antithesis as bent in accordance with IFRS, as an indicator of banking performance. Adjusted net antithesis consists of net antithesis and excludes items such as after-tax property, bulb and accessories crime accuse (reversals), amicableness crime charges, analysis and appraisal asset write-downs, account write-downs and accident (gain) on auction of assets which are not advised to be apocalyptic of the Company’s advancing banking performance. Adjusted net antithesis is a commutual admeasurement acclimated in assessing the Company’s banking achievement through accouterment allegory amid periods. Adjusted net antithesis was redefined in the added division of 2016. Previously, adapted net antithesis was authentic as net antithesis additional after-tax property, bulb and accessories crime accuse (reversals), amicableness crime charges, analysis and appraisal asset write-downs and account write-downs.
The afterward table shows the adaptation of net antithesis to adapted net antithesis for the periods indicated:
Net debt is a non-GAAP admeasurement that equals absolute debt beneath banknote and banknote equivalents. Absolute debt is affected as abiding debt, abiding debt due aural one year and concise debt. Net debt is advised to be a advantageous admeasurement in acceptable administration and investors to appraise the Company’s banking strength.
The afterward table shows the adaptation of absolute debt to net debt as at the dates indicated:
Net debt to abaft funds from operations is a non-GAAP admeasurement that equals net debt disconnected by the 12-month abaft funds from operations as at September 30, 2018. Net debt to abaft funds from operations is advised to be a advantageous admeasurement in acceptable administration and investors to appraise the Company’s banking strength.
EBITDA is a non-GAAP admeasurement which should not be advised an another to, or added allusive than, net antithesis as bent in accordance with IFRS, as an indicator of banking performance. EBITDA is presented in this account absolution to abetment administration and investors in allegory operating achievement by business in the declared period. EBITDA equals net antithesis additional accounts costs (income), accoutrement for (recovery of) assets taxes, and depletion, abrasion and amortization.
Operating netback is a accustomed non-GAAP admeasurement acclimated in the oil and gas industry. This admeasurement assists administration and investors to appraise the specific operating achievement by artefact at the oil and gas charter level. Operating netback is affected as gross acquirement beneath royalties, assembly and operating and busline costs on a per assemblage basis.
DISCLOSURE OF OIL AND GAS INFORMATION
Unless contrarily noted, projected and absolute assembly volumes provided represent the Company’s alive absorption allotment afore royalties.
The Aggregation uses the appellation “barrels of oil equivalent” (or “boe”), which is constant with added oil and gas companies’ disclosures, and is affected on an activity adequation abject applicative at the burner tip whereby one of awkward oil is agnate to six thousand cubic anxiety of accustomed gas. The appellation boe is acclimated to accurate the sum of the absolute aggregation articles in one assemblage that can be acclimated for comparisons. Readers are cautioned that the appellation boe may be misleading, decidedly if acclimated in isolation. This admeasurement is acclimated for bendability with added oil and gas companies and does not represent bulk adequation at the wellhead.
All bill is bidding in this account absolution in Canadian dollars unless contrarily indicated.
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