Husky Energy Reports Third Quarter 2019 Results
CALGARY, Alberta, Oct. 24, 2019 (GLOBE NEWSWIRE) — Husky Energy continued to execute its 2019 business plan in the third quarter, with the delivery of all planned milestones in the Integrated Corridor and Offshore businesses.
Funds from operations were $1 billion, compared to $1.3 billion in the third quarter of 2018. Net earnings were $273 million. Cash flow from operating activities, including changes in non-cash working capital, was $800 million, compared to $1.3 billion in the third quarter of 2018. The reductions in funds from operations and net earnings include impacts from lower crude oil prices and lower U.S. refining margins.“We achieved all of the milestones for the third quarter as set out at Investor Day in May, and remain on track for the rest of the year,” said CEO Rob Peabody. “We also saw our work to enhance process safety translate to improved reliability across the business.”“In the Integrated Corridor, we started up our latest 10,000 barrel-per-day Saskatchewan thermal bitumen project at Dee Valley, which has already reached its nameplate capacity. We began the final tie-in of the Lima Refinery crude oil flexibility project, received permits to commence the Superior Refinery rebuild, and reached an agreement to sell the Prince George Refinery.”In the Offshore business, the SeaRose floating production, storage and offloading (FPSO) vessel is back up to full rates, the Liuhua 29-1 project in China is 65% complete, and the West White Rose Project is now 52% complete.In line with the reduced capital program set out at Investor Day in May 2019, earlier this week Husky took steps to further align its organization and workforce.THIRD QUARTER HIGHLIGHTSFunds from operations of $1 billion, compared to $1.3 billion in the year-ago periodCash flow from operating activities of $800 million, compared to $1.3 billion in the third quarter of 2018Net earnings of $273 million, compared to net earnings of $545 million in Q3 2018Capital spending of $868 million was directed towards advancing the Saskatchewan thermal portfolio, the Lima crude oil flexibility project, and progressing construction of the Liuhua 29-1 field offshore China and the West White Rose Project in the Atlantic region. Capital expenditure guidance for 2019 remains unchanged at $3.3-$3.5 billionFree cash flow, before dividends, of $153 millionSuccessful startup of the 10,000 barrel-per-day Dee Valley thermal bitumen project, which came in ahead of schedule and under budgetOverall Upstream production averaged 294,800 barrels of oil equivalent per day (boe/day), which takes into account the return to full production at the White Rose field in the Atlantic region, mandated production quotas in Alberta and maintenance at the Liwan Gas Project and the BD Project in the Asia Pacific region; production was approximately 310,000 boe/day at the end of the third quarterDownstream throughput of 356,400 barrels per day (bbls/day), compared to 350,600 bbls/day in the third quarter of 2018Construction commenced on the Superior Refinery rebuild project; full operations expected to resume in 2021Reached an agreement to sell the Prince George Refinery for $215 million in cash plus a closing adjustment for working capital, and a contingent payment of up to $60 million over two years; sale is expected to close in the fourth quarter of 2019 subject to closing conditionsTHIRD QUARTER RESULTSUpstream production averaged 294,800 boe/day, compared to 296,700 boe/day in the third quarter of 2018, which takes into account the start up of the 10,000 bbls/day Dee Valley thermal bitumen project in Saskatchewan and return to full production at the White Rose field in the Atlantic region, partially offset by ongoing mandated production quotas in Alberta and maintenance at Liwan and the BD Project.Average realized pricing for Upstream production was $47.54 per boe compared to $50.44 per boe in the same period in 2018. Realized pricing for oil and liquids averaged $53.46 per barrel compared to $56.02 per barrel in the year-ago period, and natural gas pricing averaged $5.44 per thousand cubic feet (mcf), compared to $6.15 per mcf in Q3 2018. Upstream operating costs were $14.83 per boe compared to $14.68 per boe in the third quarter of 2018, reflecting lower production in the Atlantic region and maintenance at Liwan and the BD Project.Upstream operating netbacks averaged $29.31 per boe compared to $31.30 per boe in the year-ago period.Upgrader and refinery throughput was 356,400 bbls/day, compared to 350,600 bbls/day in the same period in 2018. This reflects strong performance at the Lima Refinery, which averaged 174,300 bbls/day in the third quarter.The average realized U.S. refining and marketing margin was $12.17 US per barrel of crude oil throughput, which reflects an unfavourable first-in, first-out (FIFO) pre-tax inventory valuation adjustment of $0.13 US per barrel. This compared to $17.52 US per barrel a year ago, which included an unfavourable FIFO pre-tax inventory valuation adjustment of $0.35 US per barrel.The Upgrader realized margin was $15.01 per barrel compared to $29.19 per barrel in the same period in 2018, which takes into account lower upgrading differentials.Net earnings in the Infrastructure and Marketing segment were $34 million compared to $149 million in Q3 2018, due to tighter location pricing differentials.Husky has already achieved most of its planned 2019 operational milestones and is making strong progress on its 2020 targets.NEAR & MID-TERM MILESTONES