Realizing the Gold Standard 90.0 Sustaining Capital - Downstream Sustaining Capital - Upstream 75.0 Operating Costs - U.S. Refineries Transportation - Edmonton to Ohio 60.0 Transportation - Sunrise to Edmonton CAD/bbl…
Takeaways Sunrise and Lloydminster thermals key to transition to a low sustaining capital business Physical integration maximizes margin capture Suite of competitively advantaged assets Running room to grow profitably 10
Integrated Thermal Advantage: Sunrise Value Chain
Sunrise Configuration 12
Sunrise Steady Ramp Up 100 14,000 90 Husky Sunrise Plant 1A Actual Production vs. Plan 11,350 bbls/d 80 12,000 (Sept 22, 2015) Steam Rate (% of Capacity) Bitumen Production (bbl/d) 70 10,000 60 8,000 50 6,000 40…
Checking the Boxes Source Water No surface water used a Once-Through Steady steam ramp-up Steam Generator Plants 1A and 1B delivered a (OTSG) Combination of gas lift and Startup ESPs used on startup a Emulsion Rates Faster…
Sunrise In The Right Neighbourhood Significant delineation Vast well-based data Room to grow 15
Current Efficiencies Walking rig improving sustaining pad 310 m design Original pad design Smaller well pad footprint 105 m Multi-phase metering Drilling Days Per Well Comparison to Peers* 10.0 9.0 Peer Average 7.1 Days…
Additional Efficiencies For Phase 1 De-bottlenecking opportunities expected to surpass nameplate capacity New sustaining pads provide ability to increase production 17
Sunrise Phase 2: A Bright Future Regulatory approval for up to 200,000 bbls/d Build on success and lessons learned from Phase 1 Modular development approach Scale of resource/opportunity to bring forward production Leveraging…
Production Ahead of Plan Sunrise Type Curve and Production Data Production rates performing 2000 ahead of plan Expect average production rates 1600 of 1,200 bbls/d per well pair Oil Rate Per Pair, bbl/day Type curve estimate…
Sunrise Development Site development reflects numerous high quality analogs Significant project experience across the team Superior reservoir characteristics Metric Sunrise Comments Average for Phase 1 Oil saturation 78% main…
Optimal Well Placement Optimal well placement key to Well Effectiveness Dogleg Severity (Target 85%) (Target < 3) project success Targeted metrics carefully monitored during drilling process Gamma 65 API DLS 3 Exceptional wellbore…
Building Ideal Steam Chambers Deliberate ramp up developing ideal steam chambers Minimizing steam breakthroughs to reduce re-drilling Targeting better than industry average results 24
Real Time Monitoring and Response Tight operational control along each well enhancing results Continuous temperature monitoring along each well Use of high quality instrumentation 25
Efficiency Opportunities New subsurface technologies to reduce SORs and enhance oil recovery, under test now or planned for the near future. Near Term Opportunity Reduce Recovery SOR Factor Sidetrack re-entry wells (Husky patent…
Takeaways Sunrise is ahead of plan Efficiencies are being implemented Opportunities to further reduce costs Capturing incremental value from every barrel Future developments being evaluated
Integrated Thermal Advantage: Lloyd Thermal Value Chain
Heavy Oil Transformation Non-Thermal Production Thermal Production Op Cost/bbl1 20 10 F & D/bbl1 18-20 10-12 Sustaining Cost/bbl1 18-20 5-7 Project…
Proven Thermal Formula: Reservoir Certainty Husky Lands Wells Evaluated Existing Thermals New 2016 Thermals Alberta Saskatchewan
Proven Thermal Formula: Unmatched Land/Infrastructure Position Alberta Saskatchewan
Proven Thermal Formula: Assembly Line Approach Engineer once, build many times Time and cost efficiencies / modular approach Low execution risk Edam and Vawn Well Pad Modules
Proven Thermal Formula: Putting The Pieces Together Seasoned construction expertise In-house construction and fabrication management team Peak construction staff of 250 In-Shop Fabrication Building efficiently Most…
Proven Thermal Formula: Operating Efficiencies Efficiencies driven by: Proximity to Lloydminster Minimal onsite workforce required Duplication of parts and plants Rush PikesLake Peak South Sandall Rush Lake
Room to Run Current/ Barrels Forecast Net Produced 35,000 bbls/d of Lloyd heavy oil Thermal Project First Oil Date Production Rate* (bbls/d) (mm /bbls) thermal production to be added by the Pikes Peak 1984 4,400 74.0 end of…
Takeaways Thermal Production Transition to low sustaining capital production Op Cost/bbl1 10 F & D/bbl1 10-12 Second-to none land and infrastructure position Sustaining Cost/bbl1 5-7 Project Life 15 yrs Significant thermal…
Integrated Thermal Advantage: Downstream
Barrel For Barrel (F16) 200 150 mbbls/d 100 50 0 Total Heavy Oil Production Heavy Oil Processing Capacity 38
Integrated Strategy: Capturing Incremental Value Improved flexibility of feedstock Increased product mix Expanded market access Improved realized pricing for onshore oil production Stability of corporate cash flows Heavy Oil…
Physical Integration Heavy Oil Pipelines & Upgrading & & Oil Sands Terminals Refining Alberta & Saskatchewan Pipeline System 2,000 km of pipeline Hardisty & Lloyd Oil Terminals 3.1 million bbls capacity 1.0 million bbls…
Pipelines Transporting Husky Products to Market About 2,000 km of pipeline in Alberta and Saskatchewan transports: Blended crude oil (LLB & WCB) from field to Hardisty, Upgrader and Refinery Diluent for blending heavy crude Husky…
Storage Terminals Optimizing Marketing Initiatives Hardisty Terminal Husky storage capacity: 3.1 million barrels Strategic importance: Founding member Connection to all major pipelines exiting Hardisty Operational and storage…
Committed Capacity for Feedstock and Product Feedstock transport Existing Keystone line connects Hardisty to Lima and Cushing USGC and Patoka on Enbridge Product delivery Ability to sell to most major markets in the U.S. and…
Optimizing Realized Prices Main Products Produced Crude sales Husky synthetic blend (HSB) Gasoline Diesel Jet fuel Asphalt Markets Accessed Ohio and region Gulf Coast East Coast U.S. 46
Focused Integration: Lima Refinery Feedstock Flexibility Product Flexibility Market Flexibility 2007 Actual Flow Brent: 61 mbbls/d Gasoline: 81 mbbls/d Chicago :110 mbbls/d NY Harbor : 0 mbbls/d WTI: 76 mbbls/d Distillate: 46 mbbls/d…
Takeaways Maximize prices received Capture margins by physically connecting Upstream and Downstream Diverse market access creates opportunities 48
Upgrader Design capacity: 46 mbbls/d (1996) Current capacity: 82 mbbls/d Upgrading is a key link between heavy oil production and conventional oil markets Variety of products: Husky Synthetic Blend (Q2 2015 - 55,000 bbls/d) Ultra…
Asphalt Refinery Largest producer of asphalt in Western Canada (29 mbbls/d) Refines / markets wide range of high quality paving and industrial asphalt products throughout North America High margin, low cost business Feedstocks…
Lima Refinery 160,000 bbls/d light refinery Located in one of the highest energy consumption regions in the U.S. (PADD II) Destination for 60,000 bbls/d of Husky Synthetic Blend Feedstocks Products Markets Light sweet crude…
Toledo Refinery 135,000-145,000 bbls/d on current crude slate (W.I. 50%) Located in one of the highest energy consumption regions in the U.S. (PADD II) Repositioning continues for Sunrise bitumen 50,000 bbls/d high-TAN heavy oil…
Downstream Value: Lloyd to Lima Downstream assets deliver 160.00 Historical Pricing Across the Value Chain refined product pricing for Husky heavy oil 140.00 Insulates upstream cash flow 120.00 volatility from heavy oil price…
Integration Capturing Full Value Integrated Barrel Pricing Relative to Brent 120% Refined Products Heavy Oil Price Brent Price 110% Refined pricing ranges from 100% discount of 9% to a Percentage of Brent Pricing 90% premium…
Takeaways Integration capturing full value Strategy is delivering improved flexibility of feedstock, increased product mix, expanded market access Top-tier assets and facilities in prime locations Higher quality returns and cash…
Wrap Up Sunrise and Lloydminster thermals key to transition to a low sustaining capital business Physical integration maximizes margin capture Suite of competitively advantaged assets Running room to grow profitably 57
Appendix
2015 Current Thermal Production Rush Lake SAGD over 30 m of 55 bottom water 2014 50 Sandall 2011 SAGD gas over oil Rush Lake Pilot over water 45 SAGD over 30 m of bottom water 2012 40 Paradise Hill First small-scale…
Advisories Cash Flow From Operations ( millions) 2015 1H 2014 2013 2012 2011 2010 GAAP Net earnings 311 1,258 1,829 2,022 2,224 947 Items not affecting cash: Accretion 61 134 125 97 79 57 Depletion, depreciation and amortization…
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