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Investor Day June 2016 – Husky Energy Inc.

Husky Energy Inc. · Jun 1, 2016 · 84 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Investor Day June 2016 – Husky Energy Inc. – slide 1
    Investor Day June 1, 2016
  2. Investor Day June 2016 – Husky Energy Inc. – slide 2
    Agenda Strategic Update 9:00 Strategy Update Asim Ghosh Financial Plan Jon McKenzie Portfolio Overview Rob Peabody Portfolio Overview 9:30 Introduction Rob Peabody Oil Sands John Myer Heavy Oil Ed Connolly Downstream Bob Baird…
  3. Investor Day June 2016 – Husky Energy Inc. – slide 3
    Strategy Update Asim Ghosh
  4. Investor Day June 2016 – Husky Energy Inc. – slide 4
    Business Strategy on Course Diverse portfolio Focused integration Transition to a low sustaining capital business
  5. Investor Day June 2016 – Husky Energy Inc. – slide 5
    Portfolio Transformation Oil Sands Lloyd Heavy Oil Thermals Downstream Western Canada Atlantic Region Asia Pacific Region
  6. Investor Day June 2016 – Husky Energy Inc. – slide 6
    Pathway to Growing Higher Quality Production Operating Costs (/boe) Total Sustaining and Proved Reserves (mmboe) Maintenance Capital (Bn) 16 3.0 1,400 12 1.5 1,200 8 0.0 1,000 12 '12 Q1 16 '16 Historical 16F '16F 12 '12…
  7. Investor Day June 2016 – Husky Energy Inc. – slide 7
    Leading Break-Even Performance Lower Earnings Break-Even Cash Flow Break-Even Before Dividends 360 mboe/d 70 80 US /bbl WTI Oil Price US/bbl 60 60 180 50 40 40 20 23% 28% 40% 0 30 0 14 15 16E BP SU CVX…
  8. Investor Day June 2016 – Husky Energy Inc. – slide 8
    Doing More With Less Sustaining and maintenance billions capital lowered by 20% from 2015 3.0 Significant opportunities to further lower sustaining costs 2.0 1.0 15 '15 16F '16F 17F '17F Sustaining and Maintenance…
  9. Investor Day June 2016 – Husky Energy Inc. – slide 9
    Structural Changes Greatly Improving Resiliency . . . Capital spending of 2.2Bn balanced to billions cash flow from operations1 at 30 US WTI price planning assumption 3.0 800 million in cash flow for every 10 increase in WTI Q1…
  10. Investor Day June 2016 – Husky Energy Inc. – slide 10
    . . . And Generating Free Cash Flow billions 5.0 US70 WTI US60 WTI 4.0 Potential FCF1,2 US50 WTI 3.0 US40 WTI US30 WTI 2.0 1.0 15 '15 16F '16F 17F '17F Sustaining and Maintenance Capital 1. Free cash flow, as…
  11. Investor Day June 2016 – Husky Energy Inc. – slide 11
    Stronger and More Resilient Business Business strategy on course billions US70 WTI Structural changes leading to 5.0 free cash flow US60 WTI Strong balance sheet 4.0 Potential FCF US50 WTI Diverse portfolio of high quality…
  12. Investor Day June 2016 – Husky Energy Inc. – slide 12
    Financial Plan Jon McKenzie
  13. Investor Day June 2016 – Husky Energy Inc. – slide 13
    Sound Financial Plan Strong balance sheet Net Debt to Trailing Cash Flow from Operations1,2 Enhancing financial flexibility 4.0 Times Lowering cost structure to enhance free cash flow profile 3.0 Capital efficient investment…
  14. Investor Day June 2016 – Husky Energy Inc. – slide 14
    Strengthening the Balance Sheet Capex balanced to cash flow Net Debt from operations 8.0 billions No new net debt in the near term Target…
  15. Investor Day June 2016 – Husky Energy Inc. – slide 15
    Enhancing Financial Flexibility Maintaining strong investment Current Credit Ratings grade credit rating Moody's S&P* DBRS* Rating Baa2 BBB+ A (low) Ratings confirmed in * Negative outlook agency reviews Maturities Schedule…
  16. Investor Day June 2016 – Husky Energy Inc. – slide 16
    Lowering Cost Structure to Enhance Free Cash Flow Profile Upstream Operating and Administration Costs* 20% sustaining and maintenance 22 /boe reductions 18 Steady improvements in operating costs across the portfolio 14 Ongoing…
  17. Investor Day June 2016 – Husky Energy Inc. – slide 17
    Capital Efficient Investment Options Illustrative Growth Capital Profile1 Disciplined and paced investment billions approach High return organic portfolio 3 2 Upstream Sustaining Capital 1 Downstream Sustaining…
  18. Investor Day June 2016 – Husky Energy Inc. – slide 18
    2016 Guidance Status Metric 2016 Q1 16 Capital Expenditure 2.1 2.3Bn 410MM Sustaining and Maintenance 2.5Bn Annual Capex 315,000 345,000 boe/d Production 341,300 boe/d (excluding dispositions) Low Sustaining Capital 40% 32%…
  19. Investor Day June 2016 – Husky Energy Inc. – slide 19
    Sound Financial Plan Strong balance sheet Net Debt to Trailing Cash Flow from Operations Enhancing financial flexibility 4.0 Times Lowering cost structure to enhance free cash flow profile 3.0 Capital efficient investment…
  20. Investor Day June 2016 – Husky Energy Inc. – slide 20
    Portfolio Overview Rob Peabody
  21. Investor Day June 2016 – Husky Energy Inc. – slide 21
    Improving Process Safety and Operational Reliability Critical & Serious Incidents 6.0 per 200K hours worked Critical and serious incidents down 94% Total Recordable Incident Rate down 45% 4.0 2.0 0.0 '10 '11 '12 '13 '14…
  22. Investor Day June 2016 – Husky Energy Inc. – slide 22
    Diverse Portfolio of High Quality Growth Projects Large asset base profitable Capex 16F (2.1-2.3 Billion) at low oil prices Lloyd Value Chain Optionality for short, mid and Oil Sands Value Chain Other Downstream long cycle…
  23. Investor Day June 2016 – Husky Energy Inc. – slide 23
    0 20 40 60 80 North Amethyst-Hibernia 4. 3. 2. 1. Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Rainbow NGL Oil Portfolio1 Edam West Thermal (WTI US…
  24. Investor Day June 2016 – Husky Energy Inc. – slide 24
    1,2 IRR 10% 0% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 4. 3. 2. 1. Tucker Colony Sustaining Pad - Thermal Edam West Thermal Edam East Thermal Vawn Thermal BD (Madura) North Amethyst - Hibernia…
  25. Investor Day June 2016 – Husky Energy Inc. – slide 25
    Focused Diversity Minimizing Risk Geographic and product diversity Large asset base, profitable at low oil prices Modest capital required for growth Upstream Production Mix (16E) Products Geography Light/Med/NGL Asia 19%…
  26. Investor Day June 2016 – Husky Energy Inc. – slide 26
    Integrated Portfolio Rob Peabody
  27. Investor Day June 2016 – Husky Energy Inc. – slide 27
    Midstream Transaction Strategic Value Creation Husky to retain 35% ownership and operatorship 1,900 kilometres of pipeline in Lloyd region 4.1 million barrels of oil storage at Hardisty and Lloyd Other ancillary assets Well-funded…
  28. Investor Day June 2016 – Husky Energy Inc. – slide 28
    Focused Integration Enhancing Returns Integrated Value Chains Maintaining heavy oil integration /bbl 60 Managing price differential risk Full cycle cost of refined products: 57/bbl 45 Full cycle cost of refined products:…
  29. Investor Day June 2016 – Husky Energy Inc. – slide 29
    Oil Sands John Myer
  30. Investor Day June 2016 – Husky Energy Inc. – slide 30
    Successful Start Up Steady production gains Fully commissioned Plants 1A & 1B Toledo Refinery important link of Sunrise Value Chain Approved future development of 140,000 bbls/d (gross) Optimization opportunities
  31. Investor Day June 2016 – Husky Energy Inc. – slide 31
    Steady Production Growth Paced ramp-up Sunrise Oil Sands Daily Production vs. Forecast 45,000 bbls/d Lower temperature, lower pressure Forecast Production reservoir achieving expected results 30,000 Monthly Peak 55 well pairs on…
  32. Investor Day June 2016 – Husky Energy Inc. – slide 32
    Sunrise Dashboard Steam Oil Ratio Water Oil Ratio Times CSOR Times 20 20 Field CWOR ISOR 16 16 Field IWOR 12 12 8 8 4 4 0 0 Apr '15 May '15 Oct '15 Apr '16 Jul '15 Jun '15 Jan '16 Feb '15 Mar '15…
  33. Investor Day June 2016 – Husky Energy Inc. – slide 33
    Restart of Operations Wildfire prompted industry-wide response Safe and orderly shut down of Sunrise No damage to facilities Sunrise Energy Project
  34. Investor Day June 2016 – Husky Energy Inc. – slide 34
    Optimization Opportunities De-bottlenecking opportunities expected to surpass nameplate capacity Re-rating capacity of steam generators Learnings from start up will result in faster, more efficient new well starts Sustaining pads…
  35. Investor Day June 2016 – Husky Energy Inc. – slide 35
    Step Change in Sustaining Capital Efficiency Customized walking rig reduces sustaining 185 m pad size and cost New pad design Pad size decreased by 50% 90 m Small, modular facilities lead to lower costs 30% reduction in…
  36. Investor Day June 2016 – Husky Energy Inc. – slide 36
    Future Growth Potential Build on success and lessons learned Leveraging existing infrastructure Modular development approach to future phases (20,000 - 30,000 bbls/d) Regulatory approval for an additional 140,000 bbls/d Firebag…
  37. Investor Day June 2016 – Husky Energy Inc. – slide 37
    Heavy Oil Ed Connolly
  38. Investor Day June 2016 – Husky Energy Inc. – slide 38
    Tucker Thermal Project Enhancing project development Tucker Production Production has exceeded target of 20 mbbls/d 20,000 bbls/d by end of 16 15 Clearwater pad (Q4/15 5,000 bbls/d) 10 Colony formation (Q2/16 5,000 bbls/d) 5…
  39. Investor Day June 2016 – Husky Energy Inc. – slide 39
    Thermal Transformation Shifting from conventional CHOPS to Heavy Oil Production 160 proven thermal formula mbbls/d Thermal growth from 22,000 bbls/d in 10 120 to more than 100,000 bbls/d by end 16 80 10 developed projects at…
  40. Investor Day June 2016 – Husky Energy Inc. – slide 40
    Unmatched Land and Infrastructure Position 2.2 million net acres 1,900 kilometres of gathering system and pipelines Combination of fee-simple and Crown lands enhance the economics Detailed understanding of subsurface 3D and 2D…
  41. Investor Day June 2016 – Husky Energy Inc. – slide 41
    Thermal Efficiencies Thermal Production Improving capital efficiencies 100 mbbls/d 80 Cut and paste approach 60 Modular construction 40 20 Sequential build program 0 '11 '12 '13 '14 '15 '16E Lowering sustaining capital Tucker…
  42. Investor Day June 2016 – Husky Energy Inc. – slide 42
    Higher Quality Barrels Lloyd thermal production to exceed Lloyd Thermal Production 80,000 bbls/d by end of 16 100 mbbl/d In-flight projects to add 24,500 bbls/d of 80 nameplate capacity by the end of 16: 60 Edam East - 10,000…
  43. Investor Day June 2016 – Husky Energy Inc. – slide 43
    The Future of Lloyd Thermals Lloyd Thermal Project Inventory Current/ Forecast Barrels Four 10,000 bbls/day projects Status Project Name First Oil Date Net Production Rate* (bbls/d) Produced (mm/bbls) ready for sanction…
  44. Investor Day June 2016 – Husky Energy Inc. – slide 44
    0 100 120 20 40 60 80 Onshore OPEC Shallow water OPEC Eagle Ford Brent US/bbl Onshore non-OPEC Shallow water Nigeria Breakeven at 10% IRR1 Other L48 Canada Oil Sands Mid-Continent SCOOP Wolfcamp…
  45. Investor Day June 2016 – Husky Energy Inc. – slide 45
    Lloyd Thermals Globally Competitive Breakeven at 10% IRR1 120 Brent US/bbl 100 80 60 40 20 0 Deepwater other non-OPEC Shallow water Nigeria Bakken Three Forks Vertical Canada Oil Sands Wolfcamp…
  46. Investor Day June 2016 – Husky Energy Inc. – slide 46
    New Growth Engine Thermal low sustaining capital projects adding to overall higher quality production Vast resource potential Proven thermal development formula Improving capital efficiencies Heavy Oil Production Q1 10 Q4 14 16…
  47. Investor Day June 2016 – Husky Energy Inc. – slide 47
    Downstream Bob Baird
  48. Investor Day June 2016 – Husky Energy Inc. – slide 48
    Margin Business Stabilizing Cash Flow and Earnings Improving refinery flexibility and 140% % of Brent Pricing* pipeline capacity 120% Increasing storage capability 100% Diversified market access 80% capturing margins 60%…
  49. Investor Day June 2016 – Husky Energy Inc. – slide 49
    Competitively Advantaged Assets Hardisty Lloyd Upgrader Lloyd Asphalt Refinery (3.1 mmbbls storage/blending) (80,000 bbls/d) (29,000 bbls/d) Total throughputs 308,000 bbls/d in 15 Total refining and upgrading capacity of 335…
  50. Investor Day June 2016 – Husky Energy Inc. – slide 50
    Lloyd Asphalt Refinery Cash Flow Generation Strong cash flow contributor Maintaining Asphalt Margin 100 /bbl Annual EBITDA1 200 million 80 Margins 20/bbl 60 40 Operating costs 4/bbl 20 Reliable operations 0 Q1 '12 Q2 '12…
  51. Investor Day June 2016 – Husky Energy Inc. – slide 51
    Storage Terminals / Connectivity Provides Advantage Operator and equity owner of heavy oil pipeline system1 Opportunities for growth Strategically placed storage capacity Hardisty Terminal1: 3.1 million barrels Founding member and…
  52. Investor Day June 2016 – Husky Energy Inc. – slide 52
    Maximizing the Hydrocarbon Value Chain Physical integration capturing Integrated Value Chains full value Heavy Oil Light Oil (Thermal / Conventional) Sunrise Integrating Upstream production planning 12 mbbls/d 26 mbbls/d (Light)…
  53. Investor Day June 2016 – Husky Energy Inc. – slide 53
    Growing With Lloyd Thermals and Sunrise Two integrated value chains Midstream infrastructure expansion funding Sunrise Lloyd Thermals Lloyd Upgrader Asphalt Refinery Numerous high return Downstream projects Built-in home for…
  54. Investor Day June 2016 – Husky Energy Inc. – slide 54
    Q&A
  55. Investor Day June 2016 – Husky Energy Inc. – slide 55
    Break
  56. Investor Day June 2016 – Husky Energy Inc. – slide 56
    Portfolio Overview Rob Peabody
  57. Investor Day June 2016 – Husky Energy Inc. – slide 57
    Western Canada and Offshore Portfolios Western Canada transformation Current resource play production of 40,000 boe/d Asia Pacific and Atlantic operations Current net offshore production capacity of 90,000 boe/d Ansell Liwan…
  58. Investor Day June 2016 – Husky Energy Inc. – slide 58
    Western Canada Rob Symonds
  59. Investor Day June 2016 – Husky Energy Inc. – slide 59
    Rejuvenating Western Canada Expected Gross Asset Description Proceeds Royalties1 1,700 boe/d 163MM Western Canada2 20,600 boe/d 900MM Total 22,300 boe/d 1.1Bn Expected Sales 11,000 boe/d In discussion 1. Transaction…
  60. Investor Day June 2016 – Husky Energy Inc. – slide 60
    Expanding Resource Play Production Expanding resource play production Western Canada Production Focus on high return, high 180 mboe/d productivity wells 90 Identifying further efficiencies Transitioning legacy asset base 0 '10…
  61. Investor Day June 2016 – Husky Energy Inc. – slide 61
    Ansell Opportunity Ansell Ansell Wilrich Hz Cumulative Production Current production 23,000 boe/d1 Flexible asset, room to grow 650 potential drilling opportunities2 Multiple formations Current priority Wilrich Driving costs…
  62. Investor Day June 2016 – Husky Energy Inc. – slide 62
    Asia Pacific Region Kevin Moore
  63. Investor Day June 2016 – Husky Energy Inc. – slide 63
    Asia Pacific Portfolio China Liwan Gas Project Wenchang oil field Liuhua 29-1 Offshore exploration Indonesia Madura Strait block Asia Pacific Operations BD liquids-rich gas, MDA-MBH, Asia Pacific Region Operating Netback1 MDK and…
  64. Investor Day June 2016 – Husky Energy Inc. – slide 64
    Offshore China Liwan Gas Project Sales Volumes 40 mboe/d Liwan 3-1 and Liuhua 34-2 fields on stream Take-or-pay contract 20 Liuhua 29-1 gas field (19) 0 Tie into the existing Liwan infrastructure '13 '14 '15 Q1' 16 Liwan…
  65. Investor Day June 2016 – Husky Energy Inc. – slide 65
    Indonesia: Madura Strait Developments Net production target of 100 mmcf/d (19) Five projects in flight BD liquids-rich gas (17) MDA-MBH in development phase (18-19) MDK in tender phase (18-19) MAC plan of development approved…
  66. Investor Day June 2016 – Husky Energy Inc. – slide 66
    BD Field Nearing Completion BD liquids-rich gas field (17) 40 mmcf/d and 2,400 bbls/d (net) Fixed-price contract of about US7.00/mmbtu with escalation factors Leased FPSO under construction (75% complete) Initial four development…
  67. Investor Day June 2016 – Husky Energy Inc. – slide 67
    Asia Pacific Exploration Indonesia Anugerah block 2D/3D seismic acquisition completed Data processing and analysis continue to be evaluated Offset operator set to drill in June Taiwan Deepwater exploration block 10,000 sq. kms…
  68. Investor Day June 2016 – Husky Energy Inc. – slide 68
    Future Opportunities in Asia Pacific Region Established track record of Actual and Forecast Production Profile successful exploration and growth 75 mboe/d Near term growth projects in flight 60 Liwan field expansion potential…
  69. Investor Day June 2016 – Husky Energy Inc. – slide 69
    Atlantic Region Malcolm Maclean
  70. Investor Day June 2016 – Husky Energy Inc. – slide 70
    Maintaining Steady High Netback Production White Rose (Jeanne d Arc Basin) Cumulative production of 260 million barrels over past 10 years Maintaining production through satellite extensions Further infill and step-out drilling…
  71. Investor Day June 2016 – Husky Energy Inc. – slide 71
    Near Term Satellite Developments Extending Life of Field Net production of 40,500 bbls/d (Q1/16) Atlantic Region Production 60 North Amethyst Hibernia formation mbbls/d Drilling under way Target net peak production of 5,000…
  72. Investor Day June 2016 – Husky Energy Inc. – slide 72
    Mid Term: West White Rose, Bridge to Flemish Pass West White Rose Extension pre-planning Two development options under evaluation Wellhead platform Subsea tieback SeaRose FPSO tieback Potential for new 40,000 bbls/d (net)…
  73. Investor Day June 2016 – Husky Energy Inc. – slide 73
    Long Term Opportunities Flemish Pass exploration Six wells drilled Appraisal program completed; results being evaluated Mizzen Jeanne dArc exploration opportunities under Harpoon evaluation Bay Du Nord Baccalieu White…
  74. Investor Day June 2016 – Husky Energy Inc. – slide 74
    Higher Quality Barrels Brent pricing Operating Costs 30 /bbl bbls/d 60 Tidewater access 25 50 Not constrained by North 20 40 American pipeline issues and 15 30 domestic supply discounts 10 20 5 10 Low operating costs 0 0…
  75. Investor Day June 2016 – Husky Energy Inc. – slide 75
    Q&A
  76. Investor Day June 2016 – Husky Energy Inc. – slide 76
    Concluding Remarks Asim Ghosh
  77. Investor Day June 2016 – Husky Energy Inc. – slide 77
    Pathway to Growing Higher Quality Production Operating Costs (/boe) Total Sustaining and Proved Reserves (mmboe) Maintenance Capital (Bn) 16 3.0 1,400 12 1.5 1,200 8 0.0 1,000 12 '12 Q1 16 '16 Historical 16F '16F 12 '12…
  78. Investor Day June 2016 – Husky Energy Inc. – slide 78
    Lowering Break-Even and Sustaining Capital billions Lower Earnings Break-Even 360 mboe/d 70 3.0 WTI Oil Price US/bbl 60 180 50 2.0 40 23% 28% 40% 0 30 1.0 14 '14 15 '15 '16F16E (EXIT) 15 '15 16F '16F 17F '17F…
  79. Investor Day June 2016 – Husky Energy Inc. – slide 79
    Poised For Free Cash Flow Generation US70 WTI 5.0 billions US60 WTI 4.0 US50 WTI Potential FCF US40 WTI 3.0 US30 WTI 2.0 1.0 15 '15 16F '16F 17F '17F Sustaining and Maintenance Capital
  80. Investor Day June 2016 – Husky Energy Inc. – slide 80
    Clean Bill of Health Net Debt to Trailing Cash Flow from Operations Current Credit Ratings 4.0 Moody's S&P* DBRS* Times Rating Baa2 BBB+ A (low) * Negative outlook 3.0 2.0 Target D/CF Range 1.0 - Husky - Cenovus Husky…
  81. Investor Day June 2016 – Husky Energy Inc. – slide 81
    0 20 40 60 80 North Amethyst-Hibernia 4. 3. 2. 1. Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Atlantic In Fill Well Rainbow NGL Oil Portfolio1 Edam West Thermal (WTI US…
  82. Investor Day June 2016 – Husky Energy Inc. – slide 82
    0 100 120 20 40 60 80 Onshore OPEC Shallow water OPEC Eagle Ford Brent US/bbl Onshore non-OPEC Breakeven at 10% IRR1 Shallow water Nigeria Other L48 Canada Oil Sands Mid-Continent SCOOP Wolfcamp…
  83. Investor Day June 2016 – Husky Energy Inc. – slide 83
    Capital Efficient Investment Options Indicative Growth Capital Profile1 billions 3 2 Upstream Sustaining Capital 1 Downstream Sustaining Capital - 0% CAGR 5% Assumed captial efficiency range: 25,000-35,000 per…
  84. Investor Day June 2016 – Husky Energy Inc. – slide 84
    Stronger and More Resilient Business Business strategy on course billions US70 WTI Structural changes leading to 5.0 free cash flow US60 WTI Strong balance sheet 4.0 Potential FCF US50 WTI Diverse portfolio of high quality…

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