Husky Energy Inc.
Value Proposition ’17 - ’21F Returns-focused growth ’17 F ’21F • Key Metrics CAGR 320 – 335 390 – 400 Production (mboe/d) 4.8% Large inventory of low cost projects Funds from operations (FFO) 1 $3.2B 9% ~$4.8B 2 • Free cash flow (FCF) 1 $750M 12% ~$1.2B 2 Upstream operating cost/bbl $14.25 <$12 Low and improving earnings and • Downstream realized refining margins/bbl (CAD) $15.00 >$16 cash break-evens Earnings break-even oil price (US WTI) 3 $43.50 ~$37 Cash break-even oil price (US WTI) 3 $33.50 ~$32 Strong growth in funds from • ’17 - ’21F Ranges and Targets operations and free cash flow Sustaining capital 4 Avg. $1.9B Capital expenditures 5,6 Avg. $3.3B Resilient to volatile market • Five-year avg. proved reserve replacement ratio Target >130% conditions while preserving upside Net debt to FFO 7 <2x Husky Energy Inc. 1,2,3,4,5,6,7 see Slide Notes and Advisories 2
Husky Energy Inc. New Project Hurdle of >10% IRR at Flat $45 US WTI and/or Flat $2.50 AECO Returns-Focused Growth Spending Short to Medium Capital ’17 - ’21F Cycle $16B Capital Spend Of Planned 2/3 $20 $40 $60 $80 $0 Price Required to Generate 10% IRR Atlantic Infill Well (2) WTI US $45/bbl Atlantic Infill Well (2) (WTI US $/bbl) Oil Portfolio 1 Atlantic Infill Well (2) Atlantic Infill Well (2) Atlantic Infill Well (2) 1,2,3,4 see Slide Notes and Advisories Sunrise - Debottleneck 2 Tucker D West Project Inventory Sustaining Pad - Thermal Sunrise - Debottleneck 1 CHOPS - Optimization Rush Lake 2 (10 mb/d) Dee Valley (10 mb/d) Spruce Lk North (10 mb/d) Spruce Lk Central (10 mb/d) Heavy Oil - Horizontal Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Lloyd Thermal (10 mb/d) Sunrise - Debottleneck 3 Projects Included Plan Spending Period West White Rose Lloyd Thermal (5 mb/d) Lloyd Thermal (5 mb/d) Lloyd Thermal (5 mb/d) Lloyd Thermal (5 mb/d) Lloyd Thermal (5 mb/d) Lloyd Thermal (5 mb/d) Heavy Oil - Cold EOR Sunrise East - A (20 mb/d) Sunrise East - B (20 mb/d) Sunrise East - C (20 mb/d) Sunrise East - D (20 mb/d) Sunrise South - A (20 mb/d) Sunrise South - B (20 mb/d) Heavy Oil - CHOPS McMullen Thermal McMullen Thermal McMullen Thermal McMullen Thermal Canadian Gas Gas Portfolio 1,2 ($ Cdn.) Kakwa (Wilrich) Ansell (Wilrich) 4 Asia Pacific Gas ($/mmcf ) MDA (Madura) ($US) MBH (Madura) Liuhua 29-1 MDK (Madura) Madura Dry Gas WTI Oil Price $0 $2 $4 $6 $8 $10 Downstream Asphalt Expansion Portfolio 3 COF (Lima) (IRR) 10% 0% 3
Capital Investment Lowers Cost Structure Costs Down – Netbacks And Margins Up ↑ ↑ 15 $/boe 23% 17% Upstream Operating Netbacks Upstream Operating Costs ’17 - ’21F ’17 - ’21F 30 $/boe 20 13 10 '17F '18F '19F '20F '21F 2017 Operating Netback Asset Improvement Commodity Price Impact ↑ 12% Downstream Margins ’17 - ’21F 18 10 $/bbl '17F '18F '19F '20F '21F 14 10 '17F '18F '19F '20F '21F 2017 Margin Asset Improvement Commodity Price Impact Husky Energy Inc. 4
Capital Investment Lowers Cost Structure Improving Break-Even Oil Price and Sustaining Capital Requirements Break-Evens Sustaining Capital vs. Production 50 3.0 400 $US WTI $B Sustaining ’17 - ’21F ~$1.9B Capital mboe/d 45 Annual Average Upstream Sustaining ’17 - ’21F ~$11 40 Cost/Boe 1.5 300 Annual Average 35 Cash ~$32 (US WTI) Break-Even ’17 - ’21F 30 Annual Average 25 0.0 200 '17F '18F '19F '20F '21F '17F '18F '19F '20F '21F Earnings Break-Even Total Sustaining Capital Daily Production (mboe/d) Cash Break-Even Husky Energy Inc. 5
Capital Plan Fully Funded At $50 US WTI Flat Demonstrating Improving Asset Mix ↑ FFO Generation at Flat $50 US WTI >30% ’17 - ’21F 5 $B 4 3 2 1 0 '17F '18F '19F '20F '21F 1 1 2 Integrated Corridor FFO Offshore FFO Cash Capital less ARO Husky Energy Inc. 1, 2 see Slide Notes and Advisories 6
Today vs. 2021: What We Could Do at $35 US WTI As Assets Improve, Funds from Operations, Free Cash Flow and Debt Capacity Increase Today’s Portfolio 2021 Portfolio $35 US WTI $35 US WTI $12 US Chicago 3-2-1 Crack $12 US Chicago 3-2-1 Crack <2x <2x $2.1B $1.8B $1.9B $3.1B Net Debt / Net Debt / Sustaining Sustaining FFO FFO FFO FFO Capital Capital $0.1B $1.0B Discretionary Discretionary Husky Energy Inc. 7
Healthy Balance Sheet Net Debt to Trailing FFO 1 Net Debt 8 5 $B times Net debt of $ 3.0 billion (Q3’17) 4 6 3 4 2 2 1 0 0 Peers '15 '16 '17F '18-21 Husky A B C D E Debt Maturity Schedule Liquidity $1.4 $B $1.2 undrawn credit $1.0 $4.0B facilities $0.8 $0.6 $0.4 cash & cash $2.5B $0.2 equivalents $0.0 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '37 As at June 30, 2017 2 USD Bonds ($/US$) CAD Bonds ($) Preferred Shares ($) Husky Energy Inc. 1,2 see Slide Notes and Advisories 8
Building Our Financial Plan Growing Funds From Operations Covers All Spending Priorities FFO and Cash Capital Spending 5 $B Returns- Free Cash Flow Focused Improving 4 (After Other Capital) Growth Cost Other Capital 1 Structure and Margin 2022+ WWR 3 Capture 2022+ Non-WWR Plan Period Production Capital Re-Investment 2 and Dividend Growing Funds Flow and Free Cash Sustaining Capital 1 (Upstream & Downstream) 0 '17F '18F '19F '20F '21F Husky Energy Inc. 1 see Slide Notes and Advisories 9
Two Businesses Husky Energy Inc.
Rob ob Sy Symonds monds Chief Operating Officer
Integrated Corridor Unique and Physically Integrated Assets Production (Q3 ’17) • 248 mboe/d • 117 mboe/d thermal bitumen Lloyd Thermals • Sunrise 20 mboe/d Sunrise & Tucker Lloyd Upgrader Asphalt Refinery • Tucker 21 mboe/d • Lloyd 76 mboe/d Reserve Base (YE ’16) • 2.4 billion boe of proven and probable reserves Heavy Processing Capacity (Q3 ’17) • 160 mbbls/d Finished Products (Q3 ’17 ) • 54 mbbls/d of sweet synthetic oil • 16 mbbls/d of asphalt • 107 mbbls/d of diesel / distillates • 137 mbbls/d gasoline Hardisty & Lloyd Long-term Pipeline Storage Terminals Gathering System Capacity Lima Refinery Toledo Refinery Husky Energy Inc. 12
Strengthening the Corridor Heavy Oil & Bitumen Production (boe/day) Q3 '17 2021F Lloyd thermal 76,400 125,000 Tucker 21,100 30,000 Sunrise 20,200 37,000 Resource Non-thermal (heavy oil) 49,900 29,000 Plays Total 167,600 221,000 Thermal bitumen as % of total 70% 87% Thermal Western Canada Production (boe/day) Q3 '17 2021F Resource plays 30,000 50,000 Other W. Canada production 49,900 30,000 Total 79,900 80,000 Resource plays as % of total 38% 63% Downstream Throughputs Capacity (bbls/day) Downstream Q3 '17 2021F Heavy oil processing capacity 1 160,000 220,000 Light oil processing capacity 1 190,000 175,000 Total upgrading and refining capacity 1 350,000 395,000 Heavy capacity as % of total 46% 56% Husky Energy Inc. 1 see Slide Notes and Advisories 13
Lloyd Advantage Full Value Chain Netback Low cost thermal production • Low cost refining and upgrading • Higher value, more diverse basket of • finished products 1,2 Higher finished product yield (98%) • Extensive local market demand • Lloyd Value Chain Operating Netback (per bbl) Lloyd complex avg. realized price $64.98 Operating costs $14.10 Royalties $2.83 Transportation costs $2.81 Upstream Operating Lloyd complex avg. processing costs $7.41 Netback (Q3 ’17) Est. Lloyd Value Chain Operating Netback $37.83 Lloyd Thermal & Non-thermal and Tucker Thermal $22.46/bbl * All figures as Q3 2017. Includes Lloyd Thermal, Non-thermal and Tucker thermal production Husky Energy Inc. 1,2 see Slide Notes and Advisories 14
Sunrise to Toledo “One - Step” Refining, No Upgrading Required Toledo high-TAN project added processing • capacity for all Sunrise crude Dilbit delivered directly to Toledo • no upgrading cost, no volume lost • High finished product yield (~104% in Q3 ‘17 ) 1,2 • Sunrise Value Chain Operating Netback (per bbl) Toledo realized product price (Q3 '17) $77.82 Expected Sunrise op costs (at full capacity) ~ $12.00 Royalties ~ $0.50 Typical blending cost ~ $8.00 Typical transportation cost ~ $14.00 Illustrative Sunrise Upstream Operating Netback (Q3 ’17) Typical Midwest refining cost ~ $8.00 (at estimated full plant capacity) ~$19.63/bbl Illustrative Sunrise Value Chain Operating $35.32 Netback (Sunrise plant capacity of 60,000 bbls/day) Husky Energy Inc. 1,2 see Slide Notes and Advisories 15
Downstream Connectivity Reservoir to Refined Products Husky Energy Inc. 1 see Slide Notes and Advisories 16
Asia Pacific High operating netback production • $4.2B Asia-Pac FCF ’17 - ’21F $61.81 per boe operating netback (Q3 ’17) • Free Cash Flow Growth Fixed-price contracts at favorable prices 1.5 4.5 • $B $B Low level of investment required for • growth over the five-year plan ($0.9 B) 1.0 3.0 Defined growth for next 5 years • 0.5 1.5 240 mmcfe/day current production rising • to over 360 mmcfe /day in ’21 0.0 0.0 Mix of near, mid and long-term • development and exploration opportunities (0.5) (1.5) '17F '18F '19F '20F '21F $4.2 billion in FCF forecasted from Asia • Funds From Operations Capital Spending Cumulative FCF Pac over five-year plan Husky Energy Inc. 18
Recommend
More recommend
