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2Q 2019 Corporate Presentation – Husky Energy Inc.

Husky Energy Inc. · Jul 25, 2019 · 52 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. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 1
  2. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 2
    Husky’s Value Proposition Balancing Growth in Margins and Dividends • Safe and reliable operations • Production and throughput growth from a large inventory of higher margin projects = returns-focused growth • Improving earnings and…
  3. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 3
    Competitively Advantaged Business Model Integrated & Fixed Price Businesses Drive Stable Cash Flow While Preserving Upside Integrated Corridor (~80% Contribution) Upstream Downstream Production 2019 YTD 223 mboe/day Throughput…
  4. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 4
    2019 Five-Year Plan 0 100 200 300 400 500 \'19F \'20F \'21F \'22F \'23F \'19-\'23 Plan mboe/day $B 1, 2, 3, 4, 5 See Slide Notes and Advisories Free Cash Flow4 (FFO Less Capital Expenditures) $B 0 50 100 150 200 250…
  5. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 5
    Plan Execution Leads to Significant Margin Expansion 0.0 1.0 2.0 3.0 4.0 5.0 6.0 FFO / CFOA Uses FFO / CFOA Uses Free Cash Flow Planned Growth Capital Sustaining Capital $60 WTI Dividend Planned Growth Capital…
  6. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 6
    Maintain Balance Sheet Strength Funding Priorities < 2x Net Debt to FFO at $40 US WTI 1, 2 See Slide Notes and Advisories Plan Execution -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Net Debt Available Capacity Max Net…
  7. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 7
    Funding Priorities 1. Balance sheet strength 2. Sustaining capital 3. Dividend 4. Growth capital 5. Allocate discretionary free cash flow • Bias towards shareholder returns 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2019F 2020F 2021F…
  8. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 8
    Allocation Of Discretionary Free Cash Flow • Already strong, no need to de-lever • Aim to stay below 2x net debt to FFO at $40 US WTI Maintain Balance Sheet Strength Cumulative Free Cash Flow ’19F-’23F $8.7B • Limited…
  9. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 9
    Major Project Execution: Integrated Corridor & Offshore Five-Year Plan Milestones Construction Production 9
  10. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 10
    Innovation Gateway Driving New Technology Adoption Husky Diluent Reduction Program CO2 Carbon Capture Remote Fibre Optic Leak Detection Well Monitoring Well Optimizations Use iceberg photo Iceberg Management 10 Improving Safety,…
  11. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 11
    Safety & Operations Integrity
  12. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 12
    Increased Focus On Safety And Reliability What Good Looks Like We are systematic and in control when operational and technical requirements: • Are documented, correct, well understood and practiced • Have clear accountabilities •…
  13. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 13
    Upcoming Priorities Driving Towards World-Class Performance Lloydminster • SVP of Safety & Operations Integrity visiting assets to deepen understanding of Husky’s existing safety culture • Support the HRO implementation and…
  14. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 14
    Environmental, Social & Governance
  15. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 15
    Priority Topics Water Use & Availability Air Emissions Management, including GHGs Land Use & Reclamation Community & Indigenous People’s Engagement Business Ethics and Transparency Talent Management & Culture of Inclusion…
  16. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 16
    ESG Performance & Reporting ESG Performance & Reporting • Executive compensation more tightly aligned with safety performance • Enterprise Risk Management System • Evaluate suppliers against safety and environmental goals •…
  17. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 17
    Improving Performance & Disclosure How we rate
  18. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 18
    Integrated corridor
  19. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 19
    Integrated Manufacturing Process Basis For Increasing Margins • Safe and reliable operations • Large portfolio of low cost, repeatable upstream projects • Physical integration with optionality • Refineries in key markets • Brent…
  20. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 20
    Physically Integrated Corridor Optimizing Buy/Sell Decisions At Each Step Production Oil sands Heavy oil Light oil Natural gas Market Hubs Edmonton Hardisty Patoka Cushing Logistics Crude pipelines Gas pipelines Product…
  21. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 21
    Maximizing Full Value Chain Margin Capture Lloyd Thermals & Oil Sands • Long-life assets with a large resource • Modular, scalable designs • Low and improving operating costs and sustaining capital costs Western Canada •…
  22. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 22
    Integrated corrido Downstream
  23. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 23
    Physically Connected Assets Across North America Lloyd Upgrader • Capacity: 80 mbbls/day • Produces Husky Synthetic Crude (HSB) • Low operating costs Lloyd Complex U.S. Refining & Marketing Pipelines & Storage • 110,000 bbls/day…
  24. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 24
    Manufacturing Process Maximizes Margins Integrated Corridor Strategy Increasing Revenue Reducing Costs Improving Optionality
  25. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 25
    Matching Heavy Processing To Upstream Production Removing Exposure To The Heavy-Light Differential Heavy oil bitumen blend matched to Downstream heavy processing and pipeline takeaway capacity through 2021 • Lima crude oil…
  26. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 26
    Lloydminster Upgrader • Heavy crude capacity 80,000 bbls/day (Q2 2019 throughput of 73,400 bbls/day including the turnaround) • Operating cost of $8.08/bbl (Q2 2019) • Expansion in mid-2020 to 81,500 bbls/day • Diesel production…
  27. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 27
    Lima Crude Oil Flexibility Project Positioned To Process Up To 40,000 bbls/day Of Heavy Oil • 2018 major turnaround scope completed; peak capacity increased to 175,000 bbls/day • Project to be completed at end of 2019 • >85%…
  28. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 28
    Superior Refinery Rebuild • Same design and capacity • Modernizations and safety enhancements • Main areas of rebuilding: • Crude unit • Fluid Catalytic Cracking Unit (FCCU) • Asphalt tanks • Latest and most advanced emissions…
  29. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 29
    Integrated corridor upstream
  30. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 30
    250 Thermal Production Forecast Future Thermal Projects Dee Valley Producing Assets mbbls/day In-Flight & Future Projects Capacity Startup Thermal Bitumen (bbls/day) Dee Valley 10,000 2019 Spruce Lake Central 10,000 2020…
  31. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 31
    10 thermal projects producing ~80,000 bbls/day • Modular, scalable designs with standardized engineering & construction • Rush Lake 2 continues to perform above nameplate • Project break-evens of $30/bbl WTI Growth projects update:…
  32. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 32
    60,000 bbls/day Capacity (30,000 bbls/day Husky WI) • Potential to increase steam capacity by 123% • Cost reduction target of $10/bbl in ~2021 • Currently impacted by Alberta production quotas Target production per well pair: 800-900…
  33. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 33
    Production Capacity of 30,000 bbls/day • Operating costs of $7.91/bbl; operating netback of $47.25/bbl in Q2/19 Production of 24,000 bbls/day (Q2 2019) • Committed to reducing sustaining capital costs through pad and well spacing…
  34. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 34
    Deep Portfolio Of Resource Play Short Cycle Growth Projects Provide Optionality Wembley/Sinclair Condensate (Montney) 120 net sections Grande Prairie Kakwa Liquids-rich gas (Spirit River) 35 net sections Ansell Spirit River…
  35. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 35
    Natural Gas Production Fuels The Corridor’s Energy Needs Gas Marketing Strategy Yields Strong Realized Pricing Husky North America Gas Production YTD ’19 291 mmcf/day AECO (NIT) Lloyd Complex & Thermals Sunrise Tucker Empress…
  36. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 36
    Offshore
  37. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 37
    Offshore Business Atlantic • High netbacks with global oil pricing • Direct access to tidewater • Leveraging existing infrastructure • Defined growth into next decade • Exploration opportunities Asia Pacific • High netback…
  38. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 38
    Synchronized Build-Benefit Cycles Offshore Strategy Offshore Production Atlantic Asia Pacific
  39. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 39
    Atlantic Region High-Netback Production Economics enhanced through tiebacks to existing infrastructure • Defined growth for the next decade • Exploration upside opportunities White Rose Field • Integrity work on four water injection…
  40. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 40
    West White Rose – Large Cash Generator Once West White Rose is on stream: • Provides for improved drilling efficiency • Tie-backs of new discoveries to existing infrastructure • Reduced drilling costs • Low incremental operating…
  41. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 41
    41 Providing Further Stability To Funds From Operations Asia Pacific Near-Term Growth 51% China • Liuhua 29-1 field sanctioned, under construction • First gas late 2020 • Successful exploration well drilled on Block 15/33 in 2018…
  42. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 42
    Liuhua 29-1 51% Full Field Development Schematic • First gas around end of 2020 • Gas sales agreement in place: • 15+ year contract term • ~$9-10/mcf US floating price mechanism based on oil price planning assumptions post-2020…
  43. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 43
    Husky Block Gas Field Oil Field Gas Pipeline CNOOC Strategy Study Area Hong Kong Block 23/07 Block 22/11 Block 15/33 CNOOC Area A DW-1 Block 16/25 China Hainan Shenzhen CNOOC Area B South China Sea Exploration Areas –…
  44. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 44
    Husky’s Value Proposition • Safe and reliable operations • Production and throughput growth from a large inventory of higher margin projects = returns-focused growth • Improving earnings and cash break-evens • Strong growth in funds…
  45. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 45
    Appendix
  46. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 46
    2019 Guidance Summary Last Updated February 25, 2019 1,2,3,4,5 see Slide Notes and Advisories Capital Guidance1 ($ millions) Production Guidance Upstream Crude Oil and Liquids (mbbls/day) Thermal & Oil Sands 730 - 760 Thermal & Oil…
  47. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 47
    Price Planning Assumptions 2019 vs. 2018 Five-Year Plan / Stress Case Benchmark Prices – $40 Stress Case 2022 WTI (US $/bbl) 40.00 Chicago 3:2:1 (US $/bbl) 16.00 Heavy crude differential (US $/bbl) 20.00 AECO (Cdn $/mmbtu) 1.60…
  48. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 48
  49. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 49
  50. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 50
    Advisories “Operating margin less capital” is a non-GAAP measure that equals operating margin less capital expenditures. Operating Margin is presented to assist management and investors in analyzing operating performance of the Company…
  51. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 51
    Advisories Offshore Atlantic Asia Pacific Revenues purchases of crude oil and products production and operating expenses selling general and administrative expenses operating margin capital expenditures
  52. 2Q 2019 Corporate Presentation – Husky Energy Inc. – slide 52
    Advisories • “Net debt” is a non-GAAP measure that equals total debt less cash and cash equivalents. Total debt is calculated as long-term debt, long-term debt due within one year and short-term debt. Net debt is considered to be a…

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