Husky reports another quarterly loss and raises more cash

Husky reports another quarterly loss and raises more cash

Husky Energy unexpectedly reported a net loss of $458 million in the first quarter of 2016, much steeper than analysts were expecting. Cash flow from operations was reported at $434 million, $400 million less than the first quarter of last year.

Husky's total production in the first quarter was 341,000 boe/day, 4% lower than the same quarter last year. Crude oil production averaged 238,000 bbl/day, about the same as the previous year.

Overall operating costs in the quarter were $13.31 per barrel compared to $14.87 per barrel a year ago.

Husky remains on target to produce as much as 60,000 bbls/day of heavy oil by the end of the year through several oil sands and thermal heavy oil projects.


Lloyd thermal production averaged 56,300 bbl/day, compared to 45,500 bbl/day last year:

  • First oil was achieved at Edam East which is currently ramping up to its 10,000 bbl/day capacity.
  • The 10,000 bbl/day Vawn Lloyd Thermal Project is expected to begin steaming in early May and remains on schedule for first oil in Q3. 
  • The 4,500 bbl/day Edam West Lloyd Thermal Project, also on schedule for first oil in the third quarter of this year.

The Tucker Thermal Project near Cold Lake is currently producing 16,200 bbl/day, ramping up to 20,000 bbl/day by year end. Husky's Lloydminster heavy oil sold for an average of $17.35/bbl in Q1, down from $36.24/bbl for the same period last year. Operating costs are down 30% from last year, now averaging $6.63/bbl.

Husky's heavy oil operations use primary recovery methods, predominately cold heavy oil production with sand (CHOPS), and horizontal well technology.


The 60,000 bbl/day Sunrise Energy Project began steaming last December and is currently producing up to 30,000 bbl/day. The SAGD facility underwent a maintenance turnaround in March and should reach nameplate capacity by the end of the year. Sunrise is 50/50 joint venture with BP.


The company also announced it will sell 65% of select Canadian midstream energy assets to two Chinese firms (Cheung Kong Infrastructure Holdings and Power Asset Holdings) for $1.7 billion in cash. The assets consist of 1,900 kms of pipelines in the Lloydminster area and 4.1 million barrels of oil storage capacity at both Hardisty and Lloydminster. Husky will remain the operator of the facilities and retains a 35% interest in the assets. 

Both Cheung Kong Infrastructure and Husky Energy are controlled by Hong Kong billionaire Li Ka-shing. The transaction is subject to regulatory approval. Husky is also expected to sell more royalty assets later this year. The company is currently involved in a spat with CNOOC payments for Liwan gas deliveries which accounts for almost 20% of Husky's revenues. CNOOC has stopped honouring the "take-or-pay" agreement. Husky owns 49% of the project located in the South China Sea.

The is the third consecutive quarter of net losses for Husky. The company eliminated its dividend late last year in order to preserve cash flow. 

All figures are quoted in Canadian dollars.

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