Husky Boosts Production, Profit in 2Q11

- Husky Boosts Production, Profit in 2Q11

Wednesday, July 27, 2011
Husky Energy Inc.

Husky continued to execute against its strategic plan in the second quarter of 2011, recording strong growth in earnings, cash flow and production compared to the same period a year earlier. Net earnings grew 274 percent compared to the second quarter of 2010, cash flow increased 104 percent, and production grew 10 percent.

"This marks a second consecutive quarter of strong results across key performance metrics," said Husky CEO Asim Ghosh. "Over the past 12 months we have made significant progress in implementing our strategic plan and executing a financing strategy to carry out our growth initiatives. The momentum we have built in growing production combined with a strong performance from our Midstream and Downstream segments, has enabled us to deliver solid improvements in results."

Production for the quarter averaged 311,600 barrels of oil equivalent per day (boe/day), compared to 283,900 boe/day in the second quarter of 2010. Production gains were achieved despite forest fire and pipeline disruptions in northern Alberta as the Company realizes the benefits from recent acquisitions of oil and gas properties in Western Canada and increased investment in organic growth opportunities.

"In addition, we continue to achieve key milestones in advancing our growth pillars," said Ghosh. "This quarter Husky and its partner in the Liwan Gas Project reached agreements on natural gas prices and have jointly approved the Overall Development Plan (ODP) for the first phase of the development. The submission of the ODP to Chinese government authorities will now take place. This will be a cornerstone development for Husky as we look to build a substantial oil and gas business in the region."

Highlights from the second quarter included the following:

• Net earnings of $669 million, or $0.71 per share (diluted). This compares to net earnings of $179 million or $0.19 per share in the second quarter of 2010.
• Cash flow from operations of $1,511 million, or $1.67 per share (diluted), compared to cash flow of $739 million or $0.87 per share in the second quarter of 2010.
• Drilling was completed on an additional producing well at the North Amethyst field in the Atlantic Region. North Amethyst achieved average gross production of 33,000 bbls/day (23,000 net to Husky) in the quarter.
• Executed an agreement for the sale of gas from the first phase of the Liwan Gas Project The gas price mechanism is in line with the anticipated Guangdong "city gate" market price and provides for an attractive rate of return on the project.
• Phase 1 of the Sunrise Energy Project continued to achieve its milestones, with the first 12 steam-assisted gravity drainage (SAGD) horizontal well pairs completed on schedule.
• Closed a $1.2 billion common share offering, providing the Company with enhanced financial flexibility to accelerate its growth strategy.

Production volumes in the second quarter were in line with annual guidance of 290,000 to 315,000 boe/day. Volumes were impacted by difficult operating conditions in the Slave Lake region where forest fires caused production interruptions, and by the outage of the Rainbow pipeline. The northern portion of the Rainbow pipeline was out of operation through May and June and impacted production by approximately 13,600 boe/day. The northern portion of the pipeline remains shut down, however, Husky has been able to reduce the impact of the outage to approximately 11,000 boe/day through a number of mitigating activities.

"Our thoughts and support are with the people of the Slave Lake region as they look to recover from this devastating event and begin the long process of rebuilding their homes and lives," said COO Rob Peabody. "We are grateful none of our workers were injured and our team in the region deserves a great deal of credit for the work they are doing to mitigate the effects of the disruptions."

Reduced volumes from the Slave Lake region were offset by recent acquisitions and strong performance from the North Amethyst field, which began producing in May 2010. A turnaround of the SeaRose Floating Production, Storage and Offloading (FPSO) vessel, originally scheduled for 16 days, was completed in two days in early July.

Second quarter earnings and cash flow growth were driven by higher production, higher realized crude oil and natural gas prices and strong throughput rates and margins within the Downstream segment. This was partially offset by a stronger Canadian dollar.

Average realized crude oil pricing in the quarter was $86.90 per barrel, compared to $64.75 in the same period of 2010. U.S. refining market crack spreads increased in the quarter, with the average Chicago 3:2:1 crack spread at U.S. $28.90 per barrel, compared to U.S. $11.33 in the same period of 2010.

KEY AREA SUMMARY AND GROWTH UPDATE: THE FOUNDATION BUSINESS

Western Canada - Unconventional and Conventional

The Company continues to maintain production levels in Western Canada and has accelerated development of its emerging oil and gas resource portfolio.

Oil Resource Plays

Husky has an extensive Western Canadian oil resource land base of approximately 500,000 acres and is advancing exploration and development of its highest-potential prospects.

In the second quarter, the Company acquired 11,500 acres in the Bakken formation in south central Saskatchewan, adjacent to its Oungre oil resource lands. Husky now holds 18,700 net acres in this light oil play. Current production from four producing wells is approximately 600 bbls/day and two additional wells have been drilled and will be completed once wet conditions recede. Given the positive results from the first Oungre Bakken wells, Husky has committed additional funds to accelerate the drilling and completion of 10 additional wells in the second half of 2011.

The Company continues to develop its opportunities in the Lower Shaunavon zone in southern Saskatchewan, the Viking zone in southwest Saskatchewan and central Alberta, and in the northern Cardium resource trend at Wapiti and Kakwa in west central Alberta. Spring break-up and extended wet conditions delayed drilling and completion plans in the second quarter, however, the Company expects to accelerate its activities in the second half of the year. The Company drilled two wells at its central Alberta Viking oil resource project in the second quarter, following a six well drilling program in the first quarter. A total of 11 Viking wells have been placed on production from this area along with another three from the southwestern Saskatchewan Viking oil resource project.

Gas Resource Plays

Husky continues to build its gas resource portfolio in Alberta and British Columbia, with approximately 16,000 acres of new land acquired in the quarter, adding to the Company's existing base of approximately 800,000 acres.

A key focus of activity has been the liquids-rich Cardium formation at Ansell in west central Alberta. In the first two quarters, Husky drilled 21 Cardium formation wells at Ansell and a further 12 Cardium and nine deeper multi-zone wells are planned in the second half. The Company is currently constructing additional offload capacity, which will increase total production capacity at Ansell to 56 mmcf/day and over 2,000 bbls/day liquids.

The Company took steps in the quarter to seek a joint venture partner to accelerate development of the Ansell assets. A preliminary development plan has been created which could potentially see up to 2,600 Cardium and deeper Manville formation wells drilled on the play, most of which would be horizontal.

Heavy Oil

To maintain current heavy oil production levels, the Company is accelerating thermal developments. The goal is to achieve an increasingly higher proportion of heavy oil production through thermal at finding and development (F&D) and operating costs comparable to current levels.

Construction of the 8,000 bbls/day South Pikes Peak thermal project was approximately 67 percent complete at the end of the second quarter, and is progressing on schedule and within original cost estimates. First production is expected in mid-2012.

The 3,000 bbls/day Paradise Hill thermal development is progressing on schedule and is approximately 28 percent complete. Paradise Hill will use existing Bolney infrastructure and is planned to become operational in the third quarter of 2012.

Exploration

Husky successfully acquired the exploration rights to two parcels of land in the Northwest Territories in a Call for Bids in the Central Mackenzie Valley. Each block contains approximately 215,000 acres with a five-year primary term and a term extension to nine years when a well is drilled. The lands complement the existing portfolio of resource plays and are close to existing pipeline infrastructure. Development of the properties will be considered in the context of Husky's full suite of opportunities.

The Company is presently evaluating the timing of preliminary work on the new concessions, including conducting 3D seismic and well drilling.

GROWTH PILLARS

Oil Sands

Phase 1 of the Sunrise Energy Project continues to progress on schedule towards planned first production in 2014. In the second quarter, drilling was completed on the first 12 SAGD horizontal well pairs, as part of 49 planned initial well pairs. SAGD drilling costs are trending on budget and on schedule, with the full drilling program forecast to be completed in the third quarter of 2012.

Engineering contractors achieved detailed engineering milestones during the quarter and purchases of major equipment and preparation for surface facility construction remain on schedule for the third quarter.

Conceptual development engineering for subsequent phases of the Sunrise Energy Project has been initiated and a full field development plan is expected to be completed by the end of 2011.

Progress continues at the Tucker Oil Sands Project as the Company enhances its understanding of how to develop the reservoir. Production averaged 6,400 bbls/day during the quarter and Tucker exited the quarter in excess of 7,000 bbls/day.

Atlantic Region

The North Amethyst satellite development continued to perform well through the second quarter, with average gross production of 33,000 bbls/day (23,000 bbls/day net to Husky). Drilling was completed on an additional producing well and a supporting water injection well is scheduled to be completed in the third quarter. The production well came on stream June 23 at a rate of 6,200 bbls/day.

Husky will participate in a partner-operated exploration well at Mizzen in the third quarter. The well will aid in evaluating the 2009 oil discovery on the prospect, located in the Flemish pass. Husky holds a 35 percent working interest in the field. An exploration well is also planned for the fourth quarter to test the partner-operated Fiddlehead prospect, located south of the Terra Nova field. Husky holds a 50 percent working interest in the well.

South East Asia

Development of the Liwan Gas Project offshore southeast China achieved a significant milestone, with the approval of the ODP for the Liwan 3-1 field by Husky and its joint partner, China National Offshore Oil Corporation (CNOOC). Submission of the ODP to Chinese government authorities will now take place.

The companies continue to advance the development towards planned first gas in late 2013 or early 2014.

In support of the ODP submission, a gas sale agreement has been executed with CNOOC Gas and Power Group, Guangdong Trade Branch, for the sale of gas from the Liwan 3-1 field. The gas will supply the Guangdong Province natural gas grid from an onshore gas plant on Gaolan Island, Zhuhai. The gas price mechanism is in line with the anticipated Guangdong "city gate" market price, establishing an attractive rate of return for the project.

The Liwan Gas Project is comprised of three significant gas discoveries the Company has made on Block 29/26: Liwan 3- 1, Liuhua 34-2 and Liuhua 29-1. A gas contract agreement and ODP filing for the Liuhua 34-2 field is expected later this year and similar milestones are anticipated for the Liuhua 29-1 field in 2012.

Production from the Liwan 3-1 field and the Liuhua 34-2 field is expected to ramp up through 2014 towards a rate above 300 mmcf/day (gross). In 2015, the Liuhua 29-1 field is expected to be placed on stream, increasing gross production to approximately 500 mmcf/day. Husky has a 49 percent ownership interest in production.

The Company's share of the estimated total overall integrated project cost of U.S.$6.5 billion will be approximately U.S.$3 billion.

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Husky Closes $1B Common Share Offering

- Husky Closes $1B Common Share Offering

Wednesday, June 29, 2011
Husky Energy Inc.

Husky has closed its previously announced $1 billion bought-deal public offering of common shares (the "Public Offering") and its $200 million concurrent private placement (the "Private Placement"). The Company has received total gross proceeds of approximately $1.2 billion from the combined Public Offering and Private Placement.

Pursuant to the Public Offering, the Company has issued, through a syndicate of underwriters led by RBC Capital Markets, Goldman Sachs Canada Inc., HSBC Securities (Canada) Inc. and J.P. Morgan Securities Canada Inc., a total of 36,968,500 common shares in the capital of Husky at a price of $27.05 per share for total gross proceeds of approximately $1 billion. The Public Offering was conducted under the Company's universal base shelf prospectus filed November 26, 2010 with the securities regulatory authorities in all provinces of Canada and the Company's universal base shelf prospectus filed June 13, 2011 with the U.S. Securities and Exchange Commission.

Pursuant to the Private Placement, the Company's principal shareholders, L.F. Investments (Barbados) Limited and Hutchison Whampoa Luxembourg Holdings S.a.r.l. have been issued a combined total of 7,393,714 common shares at the same price as the Public Offering, for total gross proceeds of approximately $200 million.

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Husky Raises $1.2B to Boost Growth Strategy

- Husky Raises $1.2B to Boost Growth Strategy

Thursday, June 23, 2011
Husky Energy Inc.

Husky will raise approximately $1.2 billion offering of common shares by way of a bought deal (the "Public Offering") and a concurrent private placement of common shares (the "Private Placement") to its principal shareholders, L.F. Investments (Barbados) Limited, and Hutchison Whampoa Luxembourg Holdings S.a.r.l.

The Company has entered into an agreement with a syndicate of underwriters, led by RBC Capital Markets, Goldman Sachs Canada Inc., HSBC Securities (Canada) Inc., and J.P. Morgan Securities Canada Inc. (the "Underwriters") under which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 36,968,500 common shares in the capital of Husky (the "Common Shares"), at a price of $27.05 per Common Share resulting in aggregate gross proceeds of $1 billion. The Public Offering is made pursuant to a prospectus supplement to the Company's universal base shelf prospectus filed November 26, 2010 with the securities regulatory authorities in all provinces of Canada and to the Company's universal base shelf prospectus filed June 13, 2011, with the U.S. Securities and Exchange Commission ("SEC").

Pursuant to the Private Placement, the principal shareholders L.F. Investments (Barbados) Limited and Hutchison Whampoa Luxembourg Holdings S.a.r.l. will subscribe for a combined total of $200 million in Common Shares (a total of 7,393,714 Common Shares) on a private placement basis at the same price as the Public Offering.

The Company continues to execute on its strategic initiatives to accelerate near-term production and reserve growth. Husky expects production for 2011 to be towards the higher end of its previously announced guidance range.

The Public Offering and Private Placement is a key strategic element of the Company's proactive financing plan announced in November 2010 and will provide additional financial flexibility to advance its growth strategy. Proceeds will be used to accelerate exploration and development of the Company's emerging oil and gas resource portfolio and the continued development of its growth pillars in the Oil Sands, South East Asia and the Atlantic Region, including the Liwan Gas Project offshore China and Phase 2 of the Sunrise Energy Project in the oil sands of northern Alberta.

With the additional capital raised, the Company projects that production for the 2011 to 2015 time frame will be towards the high end of previous guidance of three to five percent average annual growth and is expected to be sustained at three to five percent average annual growth through to 2021. It is also anticipated an annual reserves replacement ratio of 140 percent will be achieved through the same period.

The Public Offering and Private Placement are expected to close on or around June 29, 2011 and are subject to customary closing conditions, including the approval for listing of the additional Common Shares on the TSX.

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Husky Mulls Secondary Listing on HSKE

- Husky Mulls Secondary Listing on HSKE

Monday, May 30, 2011
Husky Energy Inc.

Husky is exploring a potential secondary listing of its shares on The Stock Exchange of Hong Kong Limited ("HKSE"). The Company will maintain its primary listing on the Toronto Stock Exchange.

"The Potential Secondary Listing of Husky's shares on the HKSE is under consideration as we believe it could potentially enhance investors' awareness of the Company and its growth opportunities in one of the fastest growing financial markets in the world," said Husky CEO Asim Ghosh. "The South East Asia region has been identified as a pillar of growth for the Company and we are advancing several multi-billion dollar projects as part of our strategic plan. A Hong Kong listing could provide investors in this important capital market with easier access to participate in our business strategy."

There is no certainty or assurance that approval from the HKSE and relevant authorities will be granted for the Potential Secondary Listing. No final decision has been made by the Company's board of directors and the Company may or may not proceed with the Potential Secondary Listing. Husky will make further announcements in relation to the Potential Secondary Listing at the appropriate time.

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Husky Posts Quarterly Dividend

Husky Posts Quarterly Dividend

Wednesday, April 27, 2011
Husky Energy Inc.

Husky has declared a quarterly dividend of $0.30 (Canadian) per share on its common shares for the three month period ended March 31, 2011. The dividend will be payable on July 5, 2011 to shareholders of record at the close of business on May 20, 2011.

On February 28, 2011, the Company announced that shareholders had approved an amendment to the corporation's articles, which allows shareholders to accept dividends in cash or in common shares.