Commitment to Safe and Reliable Operations Husky Operational Integrity Management System (HOIMS) Pipeline Incident Rate Critical & Serious Incident Rate 0.5 per 200K hours worked per 1,000 km 4 3.3 3.0 0.4 3 2.4 0.3 2 1.4…
Taking Action on Safety Board of Directors: Management compensation tightly linked to safety performance Company: New Safety SVP to report directly to CEO Full assessment of processes and culture HRG Results tracked and…
Husky Energy Inc. May 2018
Agenda Integrated Corridor Downstream Jeffrey Rinker, SVP, Downstream Delivering Our Plan Rob Peabody, CEO Thermal / Sunrise Update Andrew Dahlin, SVP, Heavy Oil & Oil Sands ESG Priorities Carmen Lee, VP, Oil Sands Janet…
Rob Peabody President & Chief Executive Officer Husky Energy Inc. May 2018
Value Proposition Resilient and Well Positioned to Capture Upside Production and throughput growth from a large inventory of low cost projects = returns-focused growth Returns- Focused Low and improving earnings and cash Growth…
Resilience to Unpredictable Commodity Prices Setting Husky Apart Resilience through: Net Debt to Trailing FFO1 (Q1 18) 4 times Strong balance sheet Integrated model 3 Growing high netback, fixed-price 2 business in Asia…
Tight Integration Largely Eliminates Differentials Setting Husky Apart Resilience through: xx Strong balance sheet Integrated model Growing high netback, fixed-price business in Asia High weighting of low sustaining capital…
Growing High Netback Business in Asia Setting Husky Apart Asia Pacific Production Growth Resilience through: 70 mboe/day 60 Strong balance sheet 50 40 Integrated model 30 20 10 Growing high netback, fixed-price 0 business…
Growing Proportion of Low Sustaining Capital Projects Setting Husky Apart Total Sustaining Capital1 Resilience through: Downstream 3 B Upstream Strong balance sheet 2 Integrated model 1 Growing high netback, fixed-price 0…
Low Break Evens, And Going Lower Setting Husky Apart Resilience through: Earnings Break-Even Oil Price1 44 US WTI/bbl Strong balance sheet 22 Earnings Break Even Integrated model 42 (US WTI per barrel) 37 Growing high netback,…
Setting Husky Apart Resilience through: Production Mix Commodity Price Exposure 100% Strong balance sheet W. Canada Oil and Gas Exposed to Market Pricing 90% Offshore Liquids Receives World Oil Pricing 80% Integrated model 70%…
Two Businesses Built-in Sustainable Competitive Advantages Integrated Corridor Offshore Resource Plays Thermal Asia Pacific Downstream Atlantic Husky Energy Inc. May 2018 15
Becoming A Low-Cost Producer Structural Transformation Has Reduced Complexity, Driven Efficiencies Proportion of Production Below 11/boe Operating Cost Actions Divested of non-core, higher cost assets 21% Added lower cost…
Results of Strategy Execution Improved Competitive Position vs Global Peer Set (2014-2017) Upstream Operating Costs WTI Price Required To Break-Even 2014 2014 50 US/boe US/boe 2017 120 2017 40 100 30 80 60 20 40 10 20 0 0…
Delivered First Year of Five-Year Plan All 2017 Targets Met or Exceeded Integrated Corridor 2017 Key Metrics I-Day 2017F Status Delivery Thermal 22% year-over-year production increase Production (mboe/day) 320 335 323 a Sanctioned…
Updated Five-Year Plan (2018-2022) On Track, Using Flat 60 US WTI Prices 18-22F Funds From Key Metrics 18F 22F CAGR1 Operations CAGR 18-22F 6% Funds from operations (FFO) 4B 5B 6% 5.5 B Free cash flow (FCF) 1B 1.4B 9% 5.0…
Updated Five-Year Plan On Track, With Improvements Production Growth Free Cash Flow Upstream Operating CAGR 18-22F 7% CAGR 18-22F 9% Costs 18-22F 15% 450 mbbls/day 2.0 16 /bbl B 400 1.5 12 350 1.0 300 8 0.5 250 200 0.0…
Oil Price Sensitivity Resilient and Well Positioned to Capture Upside Funds From Operations In Escalating Price Environment 7 B 6 5 80 US WTI 70 US WTI 4 60 US WTI 3 2 1 Sustaining Capital & Dividends (Common and…
Value Proposition Resilient and Well Positioned to Capture Upside 18-22F Key Metrics 18F 22F CAGR Production and throughput growth from Funds from operations (FFO)1 4B 5B 6% a large inventory of low cost projects =…
ESG Performance and Reporting Measuring Performance and Improving Disclosures Business resilience Water use and availability Innovation and advanced Air emissions management, technology including carbon Energy use Land use and…
Environmental, Social and Governance Janet Annesley SVP, Corporate Affairs Husky Energy Inc. May 2018 24
Environmental, Social and Governance Huskys Top 12 Material Topics Safety and Economic Environment Social Governance Reliability Talent Management Business Asset Integrity & Water Use & Business Ethics & Culture of Resilience…
Environmental, Social and Governance Steam-Oil Ratio Reduction 10 SOR Sunrise 2017 Carbon Disclosure Project Tucker 8 B score on Climate and Water 6 Questionnaires, compared to average C 4 for energy industry peers 2 This good…
Environmental, Social and Governance Diverse, inclusive workplace Husky employee community service grants Building Indigenous capacity: Recognizing rights and reconciliation Providing student scholarships, mentoring, summer…
Jeff Hart Acting Chief Financial Officer
Price Planning Assumptions 2017 vs. 2018 Five-Year Plan / Stress Case Benchmark Prices 2017 Base Case 2018 2019 2020 2021 WTI (US bbl) 55.00 60.00 60.00 60.00 Chicago 3:2:1 (/bbl US) 16.00 16.00 16.00 16.00 Heavy crude differential…
Financial Framework Sustainable Model Through the Cycles With Free Cash Flow Upside FFO Sources and Uses at Various Oil Prices (US WTI)1 Maintain balance sheet strength 7.0 B 2022 Portfolio Invest in portfolio to: 80 WTI 6.0…
Asset Transformation Driving Gains in FFO (17-18) YoY Increase: 55% Due to Asset Improvement, 45% Due to External Factors Key Drivers Bridging 2017 2018 Funds From Operations Growth 4.5 B Factors Within Our Control External Factors…
Funds from Operations 2018-2022 Nature of Two Businesses Provides Stable Growth in Funds From Operations Integrated Corridor FFO1: Funds From Operations at 60 US WTI Upstream: 1.1B 1.9B 6.0 B Downstream: 1.8B 2.0B 5.0 Offshore…
Spending Priorities Strong Balance Sheet No Need to Reduce Leverage 1.…
Balance Sheet Low Leverage, Ample Liquidity Illustrative 2x Net Debt to FFO Debt Capacity at US35 WTI Net debt 3.2 billion, including 2.3 billion in cash 6.0 times 4.2 billion in unused credit facilities 4.0 1.0 4.8 Total debt to…
Spending Priorities Sustaining Capital Keeping Production Flat, Ensuring Assets in Good Working Order 1.…
Sustaining Capital Calculation Sustaining Capital Calculation 18F 22F Average Upstream Upstream production (mboe/day) 310-320 410-420 Sustaining Capital per boe 18F-22F 11 3.0 B mboe/day 450 Average decline rate 17% 17%…
Spending Priorities Base Dividend and Sustaining Capital Covered at 35 US WTI Today 1.…
Spending Priorities Growth Investment Reduces Cost Structure Annual Average 1.…
Capex Program Drives Improving Cost Structure Lowering Operating Costs and Break-Even Oil Price New investment hurdle rate of 10% IRR at 45 US WTI and/or 2.00 per mcf AECO Investment options in both the Integrated Corridor and…
Spending Priorities 3.3B of Cumulative Free Cash Flow After Dividends Generated at Price Planning Assumptions 7.0 B 1.…
Allocation of Discretionary Free Cash Flow Various Options Accelerate Growth Return to Shareholders Inorganic Growth Dividend Growth Needs to be on-strategy Base dividend can be funded at Need to fit within financial framework…
Financial Framework Sustainable Model Through the Cycles With Free Cash Flow Upside FFO Sources and Uses at Various Oil Prices (US WTI) Maintain balance sheet strength 7.0 B 2022 Portfolio Invest in portfolio to: 80 WTI 6.0…
Rob Symonds Chief Operating Officer 43
Integrated Corridor Optimizing the Entire Value Chain Reserves base (YE 17) 2.0 billion boe of proved & probable reserves Production of 230 mboe/day (Q1 18) Lloyd Upgrader Sunrise Thermal Lloyd & Tucker Thermal Asphalt Refinery…
Huskys Integrated Model Put To The Test Largely Shielded From Differentials; Stable Free Cash Flow Generator Difference in Funds from Operations Q1 18 vs. Q4 17 Differential widened by almost 100% quarter-over-quarter 200 M…
Lloyd Advantage Full Value Chain Netbacks Low cost thermal production Lloyd Value Chain (Q1 18) Low cost refining and upgrading Higher value, diverse basket of finished products1,2 Higher finished product yield (98%) Extensive…
Sunrise to Toledo One-Step Refining, No Upgrading Required Toledo high-TAN project added processing Sunrise Value Chain (Q1 18) capacity for all Sunrise crude Dilbit delivered directly to Toledo No upgrading cost, no volume lost…
Midstream Value Chain Crude Storage and Export Pipeline Capacity to U.S. Capturing Location Differentials 75,000 bbls/day capacity on existing Keystone Midstream Value Chain (Q1 18) 3.1 million barrels of storage at Hardisty…
Integrated Corridor Growing Higher Quality Production and Increasing Downstream Flexibility Heavy Oil & Bitumen Production (bbls/day) Integrated Corridor Upstream Production Profile 2018F 2022F 400 mboe/day Lloyd Thermal 77,000…
Integrated Corridor Cost Reduction and Margin Capture Initiatives Leading to Increased Cash Flow Western Canada Integrated Corridor Free Cash Flow Growth Three activity hubs share 6.0 B infrastructure Operating costs 25% lower…
Offshore Self-Funding Business With Synchronized Build-Harvest Cycles White Rose Field Liwan West White Rose BD Project Husky Energy Inc. May 2018 51
Offshore Leveraging Existing Infrastructure Drives Efficiencies West White Rose tieback to SeaRose FPSO 29-1 tieback to Liwan platform Madura Strait fields offshore Indonesia linked by existing East Java pipeline Shallow water…
Offshore High Netback, Stable Growth Offshore Growth Gas volumes growing steadily to 120 mboe/day 270 mmcf/day (2018-2022) Globally-priced liquids volumes rising to 100 75,000 bbls/day (2018-2026) 80 Offshore Free Cash Flow…
Innovation and Technology Growing Revenue, Improving Safety, Lowering Costs and Increasing Capital Efficiency Process Automation Diluent Reduction Pilot Geohazard Detection Geological Modelling Automation Production Optimization…
Innovation and Technology Unlocking Further Potential Through Machine Learning Source: Applied Energy, May 2015 Heavy Oil SAGD Optimization AI Pilot Machine Learning for Sea-state and Ice Drift Predictions Using analytics to…
Five-Year Plan Milestones Project Execution in the Integrated Corridor and Offshore Husky Energy Inc. May 2018 56
Husky Energy Inc. May 2018
Jeffrey Rinker SVP, Downstream
Maximizing Value From Every Barrel Downstream Maintain Downstream integration with Downstream Processing Capacity (2017-2022F) Upstream production 400 mbbls/day 54% 50% 45% 45% 45% Insulation from both location and quality…
Physically Connected Assets Across N. America Downstream Lloyd Complex U.S. Refining & Marketing Pipelines & Storage 110,000 bbls/day processing capacity 280,000 bbls/day processing capacity Five million barrels tank storage…
Matching Heavy Processing to Upstream Production Heavy Oil Blend vs Downstream Processing & Pipeline Capacity Heavy oil blend matched to Downstream 320 mbbls/day heavy processing and pipeline takeaway Heavy Oil Coverage Line 280…
Flexibility of Feedstock, Product Mix and Markets Downstream Connectivity Husky Energy Inc. May 2018 62
Expanding Finished Product Marketing Options Volume of Husky Product Prince George Refinery Lloyd Complex (Upgrader / Asphalt refinery) Marketed to the U.S. (16-18F) +35% Gasoline and Diesel Synthetic Crude / Asphalt / 300…
Largely Insulated From Canadian Pipeline Bottlenecks Flexibility to Adjust to Market Conditions Market Impact Husky Ability to Respond Continued growth of Canadian heavy Ability to export via nominated lines and long-term production…
Configured to Benefit From IMO 2020 Rule Flexibility to Adjust to Market Conditions Market Impact Husky Ability to Respond Decrease in global demand for bunker fuel Refining assets produce a high percentage of Increase in global…
Instructure Constraints Pressuring Midland Pricing Flexibility To Adjust to Market Conditions Market Impact Husky Ability to Respond Fast growing U.S. shale oil production Maintain flexibility to process U.S. light barrels Most…
Maximizing Value From Every Barrel Downstream Downstream Maintain Downstream integration with Upstream production Annual Average Free Cash Flow 1.5B 18-22F 3.0 B B 9.0 Insulation from both location and quality differentials…
Andrew Dahlin SVP, Heavy Oil and Oil Sands Carmen Lee Husky Energy Inc. May 2018 VP, Oil Sands
Tightly Integrated Growth Engine Heavy Oil and Oil Sands 170,000 bbls/day today, growing 40% to 240,000 bbls/day by 2022 Modular, scalable designs lowering operating costs and sustaining capital requirements Physically integrated…
0 1 2 3 5 6 7 8 4 CVE - Christina Lake. HSE - Rush Lake SOR MEG - Christina Lake HSE - Paradise Hill DVN - Jackfish Husky Energy Inc. May 2018 HSE - Edam East HSE - Sandall SU - Firebag CNQ - Kirby South…
Large Inventory of Low Cost Production Thermal Business Production Thermal Bitumen Production Growth (2018F-2022F) Timing of Project Capacity 225 mbbls/day (boe/day) First Oil Rush Lake 2 10,000 2018 Sunrise Phase 1,…
Long Track Record of Successful Execution Lloyd Thermal Business Strong land position Current Lloyd Thermal Bitumen Production 80 mbbls/day Replicating engineering design and Edam West construction process since 2015 Vawn 10…
Improving Capital Efficiency & Operating Costs Thermal Business Lloyd Thermal Project Capital Efficiency Improvements Thermal Production Operating Costs 30 /bbl Sunrise target 28,000 -…
Deep Inventory of Projects Lloyd Thermal Growth Plan to sanction two new projects every year Future Lloyd Thermal Production 140 mbbls/day Average capital efficiency of 25,000-30,000 per flowing barrel Future Lloyd Thermal…
Typical 10,000 Barrel Per Day Project Husky Energy Inc. May 2018 1 see Slide Notes and Advisories 75
Growing Inventory Through Land Consolidation Shared Infrastructure and Services Provide Efficiencies Spruce Lake area 35,000 bbls/day Husky Land Initial inventory of three future projects totalling 25,000 bbls/day of capacity…
Husky Energy Inc. May 2018
50,000 Barrels Per Day . . . And Growing Sunrise Energy Project Surpassed 50,000 bbls/day (gross) in March 2018 In The Right Neighbourhood 2018 year-end target of 60,000 bbls/day (gross) Target production per well pair: 800-900…
Sunrise Wells Amongst Best in Industry (Mar. 18) Oil Sands SAGD Production Per Well Pair (Q1 2018) 1,200 bbls/day 1,000 815 800 720 600 Industry average: 472 bbls/day per well 400 200 0 COP - Surmont SU - MacKay…
New Wells Driving Towards Full Plant Capacity Faster Ramp-Ups, Declining SORs Per Well Production Rate / Steam Oil Ratio Improving resource recovery 1,000 bbls/day ISOR 20 ESP installation on new wells Inflow control devices 800…
Unlocking Further Potential At Sunrise Next Steps Sunrise De-bottlenecking initiatives to create future capacity Development Leases Regulatory approvals in place for 200,000 bbls/day (gross) Targeting increased returns with…
Self-Funded Growth Lowering Overall Cost Structure and Sustaining Capital Requirements Heavy Oil & Oil Sands Production Growth (2018F-2022F) Funds from operations growing from 1.2 billion 250 mbbls/day in 2018 to 1.7 billion in 2022…
Gerald Alexander SVP, Western Canada Production Husky Energy Inc. May 2018
Transformation Complete Positioned for Growth Production Growth Profile Competitive stand-alone business mboe/day 140 Flexible short-cycle capital spending profile 100 2014 Annual Production of 134 mboe/day Minimal AECO exposure…
Western Canada Pre-Transformation Sharpened Focus Q4 2015 N.E. BC to Operating region S.E. SK Avg. operating cost 16.50/boe Avg. W.I. per well 60% Avg. production/well 8.5 boe/day Gross wellbores 31,000 Annual Sustaining…
Western Canada Post-2017 Sharpened Focus Q4 2015 Q1 2018 N.E. BC to Operating region 3 hubs S.E. SK Avg. operating cost 16.50/boe 12.20/boe Avg. W.I. per well 60% 80% Avg. production/well 8.5 boe/day 44 boe/day Gross…
Three Core Hubs Supporting Operating and Capital Efficiency Edson Spirit River and Duvernay Ansell: 170 net sections Kaybob: 30 net sections Grande Prairie Spirit River and Montney Kakwa: 40 net sections Wembley-Sinclair: 100…
Wembley-Montney Appraisal Complete, Moving to Development Wembley position within an established fairway 50 net developable sections in liquids-rich gas window Sinclair Multi-layer pad development potential First well…
Ansell Spirit River Building Towards Full Field Development 7-27 GP Development moving from Wilrich to full Spirit River Drilling to keep pace with capacity and egress 360 Spirit River potential drilling opportunities1,2 Cardium…
Driving Execution and Well Performance Top-Tier Wells Improving Wilrich Drilling Efficiency 40 Days Industry-competitive drilling efficiencies Peer Range Husky 30 Continuous program decreasing rig drill times and costs 20 Last…
Ansell Corser Gas Plant Controlling Infrastructure to Support Growth How we currently move our gas Edson Husky and third-party facilities Infrastructure constraints limit pace of growth Ansell Building our own solution Corser…
Minimal Exposure To AECO Market Optionality Gas Production Integration delivers value Exposed to AECO Pricing 20% Production offsets gas consumption 160 mmcf/day export capacity to U.S. markets Forward sales of gas volumes…
Transformation Complete Positioned for Growth Production Growth Profile Competitive stand-alone business 100 mboe/day Flexible short-cycle capital spending profile 90 Minimal AECO exposure 80 Montney Pivoting to liquids 70…
Trevor Pritchard SVP, Atlantic Bob Hinkel COO, Asia Pacific
Proven Track Record High Netback Production With Brent-Like Pricing White Rose producing since 2005 280-plus million barrels of oil recovered (as of April 20, 2018) High operating netback production receives Brent+ pricing 90.70…
Infill Wells Bridging to West White Rose Active Development Program Atlantic Production Profile 80 mbbls/day Progressing additional well interventions and Future Field Extension potential infill opportunities: Opportunities 70…
West White Rose Project Update 75,000 bbls/day peak production (52,500 bbls/day net to Husky) in 2025 Immediately earnings accretive due to royalty regime Low incremental operating costs due to existing infrastructure…
Exploration Short, Mid and Long Cycle Projects White Rose A-24 Near-term: Near-Field Exploration Success Northwest White Rose A-24 discovery in 2018 White SeaRose FPSO Rose A-78 Encountered 85+ metre oil-bearing sandstones…
Established Operator Asia Pacific Region Track record for large project delivery High operating netback production with gas sales contracts; liquids receive Brent-like prices Low level of investment required for growth over the…
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