Quarterly / Earnings Reports | Second Quarter (2Q) Update | Oil Sands | Production Rates | Forecast - Production | Oil Sands Projects | Drilling Program

Husky Energy Adding Heavy Oil, Cutting Off New Cardium D&C Activity

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Husky Energy has announced second quarter 2015 results.

Q2 Highlights:

• First steam from the 10,000 barrels per day (bbls/day) Rush Lake thermal project in Saskatchewan, which is now on production.
• First oil at the 15,000 bbls/day South White Rose satellite extension in the Atlantic Region.
• Production ramp up at the Sunrise Energy Project.
• All of these projects provide steady momentum as the Company advances activities that can deliver positive returns in a low oil price environment while offsetting natural declines across the portfolio.
• Approximately 85,000 bbls/day of new production is expected to come online by the end of 2016, with more than 40 percent of total production anticipated to come from low sustaining capital projects by that time.

Highlights

Heavy Oil

• A series of long life, low sustaining capital thermal projects in Saskatchewan are now in planning or production, including the 10,000 bbls/day Rush Lake project that commenced production earlier this month.
• Total production from heavy oil thermal projects, including planned maintenance, was approximately 41,000 bbls/day.
• Including Rush Lake, the Company expects to add more than 34,000 bbls/day of heavy oil thermal production over the next 18 months as it further advances its low-risk, modular construction templates and thermal technologies.
• The 10,000 bbls/day Edam East project is scheduled to come online in the third quarter of 2016.
• The 4,500 bbls/day Edam West project is set to begin production in the fourth quarter of 2016.
• The 10,000 bbls/day Vawn project is expected to start up in the fourth quarter of 2016.
• In keeping with Husky's transition towards low sustaining capital projects, about two-thirds of its heavy oil production will use thermal recovery processes by the end of 2016. Additional opportunities to further expand the thermal production base are under evaluation over the medium and long term.

Western Canada

• Production from the Ansell resource play a veraged 19,000 boe/day compared to about 17,000 boe/day in the second quarter of 2014.
• Overall resource play production was approximately 40,000 boe/day compared to 32,000 boe/day in the second quarter of 2014, with strong performance from the Strachan and Wapiti plays complementing Ansell production.
• Oil-related drilling and completion activity in 2015 has been curtailed in light of the ongoing low oil price environment.

Downstream

• Expansion work on the Company's South Saskatchewan gathering system continued in the second quarter and is now about 50 percent complete. The project is expected to create further capacity for Husky's increasing heavy oil thermal production.
• A six to eight week maintenance turnaround has been scheduled at the Lima Refinery starting in March 2016. As a result, the isocracker is expected to resume operations at the same time as the refinery startup.

Asia Pacific Region

• Combined gross gas sales volumes from the Liwan Gas Project, including the Liuhua 34-2 field, averaged 295 million cubic feet per day (mmcf/day), up about 13 percent from the first quarter of 2015. Sales of associated natural gas liquids were about 15,000 boe/day (gross).
• Husky's share of gas sales from Liwan reverted to its equity interest of 49 percent in late May following the recovery of exploration costs.

Indonesia

• Construction of a wellhead platform and pipeline infrastructure at the liquids-rich BD field is about 45 percent complete. An FPSO is being built to process the gas and liquids production from the field, and a rig procurement process has been completed. The field is on track for first production in 2017.
• A tendering process is under way for a floating production vessel and related engineering, procurement, construction and installation contract to develop the combined MDA-MBH fields in the Madura Strait. These fields are expected to be progressively brought on production in the 2017-2019 timeframe. A plan of development has been approved for the MDK field, which is scheduled to be tied into the MDA-MBH fields in the same timeframe.
• Combined net sales volumes from the BD and MDA-MBH fields are expected to be about 90 mmcf/day of gas and 2,400 boe/day of associated liquids.
• A 3-D seismic program on the Anugerah block offshore East Java was recently completed. The data is being evaluated to determine the potential for future exploration activity.

Oil Sands

• The Sunrise Energy Project is steadily ramping up production towards expected capacity of about 60,000 bbls/day (30,000 bbls/day net to Husky) around the end of 2016.
• Steaming is under way on 43 of 55 well pairs, with 25 well pairs on production and volumes continuing to increase ahead of plan. Strong reservoir and facility performance has contributed to increasing production volumes, which are currently in the range of 5,500-6,000 bbls/day (gross).
• Plant 1B is on schedule and in the final commissioning phase.

Atlantic Region

• Husky is advancing several projects offshore Newfoundland and Labrador to extend the life of the White Rose field and maintain steady production from the region.
• Production has commenced from the first development well at the South White Rose satellite extension, the Company's second subsea tieback development in the Jeanne d'Arc Basin. All production will flow through the SeaRose FPSO vessel for processing. Drilling of a second well is under way with startup expected in late summer. Net peak production from both wells is anticipated to ramp up to about 15,000 bbls/day.
• On completion of the second South White Rose well, the rig will move to complete drilling of a Hibernia formation well beneath the North Amethyst field. This well is scheduled to start up in the fourth quarter, with net peak production expected to ramp up to 5,000 bbls/day.
• Husky continues to assess potential development options for the West White Rose satellite extension. One of two concepts being assessed, a fixed wellhead platform, has received government and regulatory approvals. A subsea option to develop the field is also being evaluated.

Exploration/Appraisal

• An exploration and appraisal program is progressing in the Bay du Nord discovery area in the Flemish Pass.

Husky is building on the $1.3 billion in cost savings realized since 2010 with additional supply, procurement and operating efficiencies. The Company is on track to achieve its $400-600 million target in cost savings this year, with approximately $575 million locked in to date. This, combined with the transition to low sustaining capital projects and business efficiency initiatives, is expected to lead to greater resiliency.

Maintenance

Upstream

• The planned turnaround of the partner-operated Terra Nova FPSO concluded early in July.
• An 18-day turnaround on the SeaRose FPSO vessel is set to begin in August 2015.
• Third-party turnarounds and outages in Western Canada are anticipated to continue.

Downstream

• The Lloydminster Upgrader shut down for unscheduled maintenance in late June for an estimated six to eight weeks.