2020 Guidance December 2, 2019 - Husky Energy
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2020 Guidance
December 2, 2019
1
2020 Guidance Highlights
Capital Plan Drives Improved Margins and Free Cash Flow1 Growth
Capital Spending $3.2 – $3.4B
• Improved safety and reliability
• ~$100M capex reduction from 2019 Investor Day
plan; reductions focused in Western Canada and Offshore
conventional heavy oil business Integrated 43%
Corridor
• $500 million reduction over 2020-2021 55%
• Year-over-year production growth of ~4%
Corporate 2%
• Take-away and processing capacity for all
Upstream Production Downstream Capacity
North American heavy production (no need for rail) 295 – 310 mboe/day 355 mbbls/day
• Capex program and dividend fully funded under
pricing assumption of flat $55 US WTI and
Offshore
NYMEX 3:2:1 of $18 21%
Integrated Heavy Light
• 2020 capital plan leads to significant free cash flow Corridor Capacity Capacity
55% 45%
generation in 2021 79%
• Bias towards shareholder returns via
sustainable dividend increases
Husky Energy Inc. 1 See Slide Notes & Advisories 2
Husky’s Value Proposition
Improving Safety, Reliability Strengthening Resilience, Increasing Total
& ESG Performance Preserving Upside Shareholder Returns
• Actions underway to be • Integrated Corridor largely • Strong free cash flow
global top-quartile in removes differential growth
process safety by end exposure • FCF inflection point in ’21
of ’22 • Refining and export capacity • ~$2B in FCF ’20-’21 at flat
• No major incidents in ’19 for 100% of oil production $55 US WTI
• Achieved 50% reduction in • High-netback1 Offshore • Sustainable dividend with
Tier 1 Process Safety Events business pathway to further growth
since ’18
• Paid ~$11/share since 2008
• Lowering earnings
• ESG performance and • Current yield of ~5% ($500M/yr)
break-even2 oil price
disclosure • Project portfolio improving
• Current $42 US WTI, target of
• Aligning with global reporting
$38 US WTI in ’23 margins and cost structure
frameworks
• Setting clear targets • Strong and competitive • Projects must meet hurdle of
balance sheet >10% IRR at $45 US WTI
• 1.1x net debt to trailing FFO3
Husky Energy Inc. 1, 2, 3 See Slide Notes & Advisories 3
2019 Milestones Safely Delivered
Major Projects Remain on Track
2019 Guidance Status
Capital spending* $3.3-$3.5 billion On Track
Production 290-305 mboe/day On Track
Thermals & Oil Sands 129-135 mbbls/day On Track
Conventional heavy oil 29-31 mbbls/day On Track
Western Canada segment 70-72 mboe/day Lower
Asia Pacific 44-47 mboe/day On Track
Atlantic 18-20 mbbls/day Lower
Capacity Timing/ West White Rose Project:
2019 Deliverables (Husky W.I.) Completion
Status
Final Quadrant Completed
Turnarounds
Upstream Q2 ’19 ✓ Completed
Downstream Q2 ’19 ✓ Completed
White Rose infill wells online +6-8,000 bbls/day Q2 ’19 ✓ Completed
White Rose drill centres online Q3 ’19 ✓ Completed
Dee Valley thermal project 10,000 bbls/day Q3 ’19 ✓ Completed
Lima crude oil flexibility project 40,000 bbls/day YE ’19 ✓ Completed
Liuhua 29-1 initial pipeline laying Q3 ’19 ✓ Completed
Prince George Refinery sale Q4 ’19 ✓ Completed
Superior Refinery rebuild start 45,000 bbls/day Q4 ’19 ✓ Completed
Retail/commercial strategic review In progress
* Excludes Superior rebuild capital 10,000 bbls/day Dee Valley Thermal Project
Husky Energy Inc.
Started Up, Reached Nameplate Capacity 4
Improving Safety & Reliability
Target to Become Global Top-Quartile Process Safety Performer By End Of 2022
Lost Time Injury Frequency (per 200,000 exposure hours)
• Actions delivering: 0.15
• No major incidents in 2019 0.12
– 45%
• Improved LTI frequency by 45% YTD 0.09
• Reduction in Tier 1 Process Safety 0.06
Events by 50% 0.03
0.00
2017 2018 2019 YTD
Reportable Hydrocarbon Spill Volume (m3) Tier 1 Process Safety Events
15
600
500 12
400
– 68% 9
300 – 50%
6
200
100 3
0 0
Husky Energy Inc. 2017 2018 2019 YTD 2017 2018 2019 YTD 5
Safety & Reliability: What Good Looks Like
Systematic & In Control
Operational and technical requirements:
• Are documented, correct, well understood and practiced
• Have clear accountabilities
• Have defined competencies that can be documented
• Verified over time
Systematic
Documented Accountable Competent Verified and In
Control
Level 3 Level 4 Level 5
Leadership & HRO principles
Husky Energy Inc. 6
ESG Priorities
Improving Performance and Reporting Transparency
Environment Governance
Air Emissions Management Compensation Drivers
• Reduced overall methane emissions • Safety / Environmental performance
by 45% from ’14-’18 = 400,000 cars over 1 year • Return On Capital In Use1
• ~50,000 tonnes of CO2 captured YTD • Total shareholder returns
• Grade ‘B’ from CDP
Social
Water Use & Availability
• Recycling 88% of water at Sunrise and Tucker Community & Indigenous Engagement
• Lima Refinery water recycle project
• Economic inclusion: $70 million in contracts
• Grade ‘B-’ from CDP Water Security Program with Indigenous vendors YTD
• ~45% increase in Indigenous procurement
Land Use & Reclamation since ’16
• Husky named as one of Canada’s best
• Pioneered area-based closure approach
places to work by Indeed Canada for the
• 2,145 assets retired YTD (wells, pipelines, third year in a row
facilities)
• Conducted operating community perception
• 520,890 trees planted post-asset retirement YTD surveys to enhance community engagement
• 1,576 acres reclaimed YTD
Good ESG Performance Improves Business Performance
Husky Energy Inc. 1 See Slide Notes & Advisories 7
2020 Plan
Reduced Capital in 2020-2021; Free Cash Flow Inflection Point in 2021
Funds from Operations1,2 Free Cash Flow Paced Production4
Cash Flow from Operating Activities (FFO less capital expenditures) 350 mboe/day
2.0 $B ~10%
5.0 $B
Cumulative 300 ~4%
4.0 ~13% Free Cash Flow
’20F-’21F
~$2B
~7% at $55 US WTI
1.5 250
3.0
200
2.0 '19F '20F '21F
'19F '20F '21F 1.0
Reduced Capital Expenditures3 Downstream Throughput
0.5 400 mboe/day
3.5 $B ~$100M reduction
vs. I-Day
350 ~5.5%
3.0 ~$400M reduction ~5%
vs. I-Day
0.0 300
'19F '20F '21F
2.5
250
2.0
200
'19F '20F '21F
'19F '20F '21F
Husky Energy Inc. 1, 2, 3, 4 See Slide Notes & Advisories 8
Lower Spending, Production Growth Driving FCF
Free Cash Flow Improvement Bridge (’20-’21) Upstream Operating Costs ($Cdn/bbl)
$B 16
14
12
10
2019F 2020F 2021F
Earnings Break-Even Price (US/bbl WTI)
45
40
35
30
2019F 2020F 2021F
Husky Energy Inc. 9
2020 Capital Spending
Capital Plan Leading to Improved Margins and Free Cash Flow Growth
• Less spending in Western Canada Capital Spending $3.2 – $3.4B
resource plays and conventional heavy
oil projects compared to 2019 Investor Integrated Corridor Offshore1
Day plan Thermal ($1.75 – $1.90B) ($1.35 – $1.45B )
54%
• Capital expenditures in the U.S.
Downstream exclude Superior rebuild Lloyd Thermals
Asia
& Tucker Pacific
capital 54% 24%
• Superior rebuild costs anticipated to 13%
be in the range of $450-$525 million Atlantic
5%
5% Downstream 76%
Cdn; expected to be substantially 28%
covered by insurance Sunrise
Conventional heavy oil
& Western Canada
Husky Energy Inc. 1 See Slide Notes & Advisories 10Balance Sheet Strength & 2020 Funding Plan
Capex Program & Dividend Fully Funded at $55 US WTI + $18 NYMEX 3:2:1
• Strong and competitive balance sheet • More than $500 million in flexibility1
• Not including potential retail sale proceeds
• Q3 ’19 net debt to 12 months trailing funds
from operations of 1.1 times • Bias towards shareholders returns via
$60 WTI
sustainable dividend increases
Net Debt to 12 Months Trailing FFO (Q3 ’19) 2020 Sources and Uses of Cash
3.0 times 5.0 $B
Debt
4.0 FFO at Flexibility
Capacity
$55 WTI2
2.0 WTI Planned
3.0 Growth
Capital3
2.0 Dividend
FFO
1.0
Sustaining
1.0 Capital4
0.0 0.0
A Husky B C D
Peer Group: Cenovus, CNRL, Imperial, Suncor
Sources Uses
Husky Energy Inc. 1,2,3,4 See Slide Notes & Advisories 112020 Production & Throughput
Low Cost Producer of Refined Products; High-Netback Offshore Production
• Growing higher margin thermal and Downstream
Capacity
Asia Pacific production
400 boe/day Product
Superior
• Lower contribution from less economic (Offline) Sales
350 Upstream
Western Canada conventional heavy oil Pet Chems
Production & Other
and resource plays 300 Atlantic Light Oil
Synthetic
• 2020 plan assumes curtailments of Offshore &
Asia
250 Distillates Asphalt
5,000 bbls/day in first half of year
Western
200 Canada ULSD /
• Lima Refinery crude oil flexibility project Jet
can process up to 40,000 bbls/day of heavy 150 Fuel
Thermal,
• Lloydminster Upgrader diesel upgrading Oil Sands & Blended
100 Conventional
program on track to add ~4,000 bbls/day Heavy Heavy Oil
Gasoline
of diesel capacity in 2020 50
• High weighting of in-demand diesel, asphalt, -
jet fuel and petrochemical feedstocks
Husky Energy Inc. 122020 Project Delivery Well Advanced & On Track
Upcoming Milestones
Capacity Timing/
2020 (Husky W.I.) Completion
Current Status
Lloyd Upgrader diesel capacity increase 6,000 –> 9,800 bbls/day Q2 50% complete
Spruce Lake Central thermal project 10,000 bbls/day Mid-Year 88% complete
Spruce Lake North thermal project 10,000 bbls/day ~YE 48% complete
Liuhua 29-1 project construction 45 mmcf/day gas Q4 70% complete
1,800 bbls/day liquids
Capacity Timing/
2021+ (Husky W.I.) Completion
Current Status
Superior Refinery rebuild 45,000 bbls/day YE ’21 In progress
Spruce Lake East thermal project 10,000 bbls/day ~YE ’21 11% complete
MDA-MBH & MDK fields 10,000 boe/day ’21 In progress
West White Rose Project 52,500 bbls/day1 ~YE ’22 55% complete
Edam Central thermal project 10,000 bbls/day ’22 3% complete
Dee Valley 2 thermal project 10,000 bbls/day ’23 In planning
Husky Energy Inc. 1 See Slide Notes & Advisories 13Technology & Innovation
Improving Safety, Reliability, Cost Efficiency & Reducing Our Environmental Footprint
AI, Analytics & Machine Learning Reducing Our Footprint, Finding Efficiencies Innovative Partnerships
• AI pilot program for steam optimization at • CO2 capture pilot projects at Pikes Peak • Natural Resources Consortium (IBM Watson)
Sandall showing positive results with steam- South captured ~5,000 tonnes of CO2 • Microsoft Azure Cloud services: cloud hyper-
oil ratios1 reduced to 2.5; further from Q4 ’15 to Q2 ’18; expanded project scaling technology to manage infrastructure
improvements targeted to be commissioned in Q4 ’19 and application requirements in real-time
• Field trials underway using AI to accelerate • Husky Diluent Reduction pilot program • Cognitive automation: used to rapidly automate
reservoir opportunity screening reduced diluent volumes at Sunrise by and fulfill service requests
• Advanced analytics for preventative ~50%, above the targeted goal of 45%;
now under evaluation for Downstream • Multiple technology partners for subsurface
maintenance at the Lima Refinery
applications workflow optimization and automation
• Accelerated well planning and execution
• Drones for pipeline and wellsite • Canadian Oil Sands Innovation Alliance (COSIA)
using AI to reduce time, cost and risk
inspections beyond visual line-of-sight • Clean Resource Innovation Network (CRIN)
• Robotics process automation of data (co-chair of Consortium for Digital
analysis and repetitive administrative tasks • Sprint Robotics Consortium (robotics for
Innovation and Transformation)
inspection and maintenance)
Husky Energy Inc. 1 See Slide Notes & Advisories 14Husky’s Value Proposition
Improving Safety, Reliability Strengthening Resilience, Increasing Total
& ESG Performance Preserving Upside Shareholder Returns
• Actions underway to be • Integrated Corridor largely • Strong free cash flow
global top-quartile in removes differential growth
process safety by end exposure
of ’22 • Sustainable dividend with
• High-netback Offshore pathway to further growth
• ESG performance and business
disclosure • Project portfolio improving
• Lowering earnings margins and cost structure
break-even oil price
• Strong and competitive
balance sheet
Free Cash Flow of >$2 billion in ’20-’21
Husky Energy Inc. 15Q&A
16Appendix
17Capital & Production Guidance
Capital Guidance ($ millions)1 Production and Throughput Guidance
Total Capital Investment 3,200 - 3,400 Total Upstream Production2 (mboe/day) 295 - 310
Integrated Corridor 1,750 - 1,900
Thermal and Oil Sands 1,050 - 1,100 Total Crude Oil and Liquids (mbbls/day) 215 - 230
Conventional Heavy & Western Canada segment 225 - 250 Thermal & Oil Sands 138 - 146
Downstream (excludes Superior rebuild capital) 475 - 550 Conventional Heavy 30 - 33
Offshore 1,350 - 1,450 Western Canada segment 18 - 20
Atlantic 1,075 - 1,150 Atlantic Light Oil 17 - 19
Asia Pacific 275 - 300 Asia Pacific NGLs 9 - 11
Corporate Capital 50 - 75 Total Natural Gas (mmcf/day) 480 - 500
Western Canada segment 270 - 280
Other Expenditures ($ millions) not included above Asia Pacific 210 - 220
Superior Refinery (excludes insurance proceeds) 450 - 525
Capitalized Interest ~200 Total Downstream Throughput (mbbls/day) 320 - 340
Husky Energy Inc. 1,2 See Slide Notes and Advisories 18Planning Assumptions
Pricing Assumptions (2020-2021)
Cash Flow Sensitivity3 ($MM)
Brent crude oil ($US/bbl) $60
WTI at Cushing ($US/bbl) $55 Chicago 3:2:1 Crack Spread
Heavy crude differential ($US/bbl) ($20) ($1.00/bbl US)
NYMEX 3:2:1 crack ($US/bbl) $18
AECO natural gas ($CAD/mcf) $1.60 WTI Crude Oil
$US / $CAD exchange rate $0.75 ($1.00/bbl US)
Operating Costs1 Exchange Rate
($0.01 $US per $Cdn)
Total Upstream Operating Costs ($/boe) 14 - 15
Thermal & Oil Sands 11.75 - 12.50 AECO (NIT) Natural Gas Price
($0.20/mmbtu US)
Conventional Heavy 30 - 33
Western Canada segment 11 - 11.50
Atlantic 33 - 35 Heavy / Light Differential
Asia Pacific 6.10 - 6.50 ($1.00/bbl US)
(200) (100) 0 100 200
Downstream Operating Costs ($/bbl)
Lloydminster Upgrader2 9 - 10
Lima Refinery 7-8 Decrease in Benchmark
Increase in Benchmark
Husky Energy Inc. 1,2,3 See Slide Notes and Advisories 19Turnaround Schedule
Quarterly Production
Turnaround Schedule Estimated Duration
Impact (boe/day)
Q1
BD Gas Project 2 weeks ~ 1,400
Q2
8 Thermal projects 1-2 weeks ~ 5,000
Sunrise 4 weeks (partial) ~ 7,000
Western Canada gas (Ansell and Kakwa) 3 weeks ~ 1,000
Liwan Gas Project 2 weeks ~ 2,000
BD Gas Project (Indonesia) 1 week ~ 500
Terra Nova FPSO offstation 6-7 months ~ 5,000
Husky Lloydminster Upgrader 6 weeks ~ 40,000 bbls/day
Q3
2 Thermal projects 1-2 weeks ~ 1,000
SeaRose FPSO 3 weeks ~ 4,500
Terra Nova FPSO offstation 6-7 months ~ 5,000
Q4
Tucker 4 weeks ~ 8,000
BD Gas Project 1 week ~ 500
Husky Energy Inc. 20Slide Notes
& Advisories
21Slide Notes
Slide 10
Slide 2
1. Capital expenditures in Asia Pacific excludes amounts related to the Husky-CNOOC
1. Free cash flow (FCF), as referred to throughout this presentation, is a non-GAAP Madura Ltd. joint venture which is accounted for under the equity method for interim
measure. Please see Advisories for further detail. financial statement purposes.
Slide 3 Slide 11
1. Netback, as referred to throughout this presentation, is a non-GAAP measure. Please 1. Flexibility, as used in this reference, refers to a target net debt level using 2x FFO at $40
see Advisories for further detail. US WTI, less the third quarter 2019 net debt.
2. Earnings break-even, as referred to throughout this presentation, is a non-GAAP 2. FFO forecast at $55 WTI for 2020 is calculated using the Benchmark Prices found in the
measure. Please see Advisories for further detail. Appendix.
3. Net debt to trailing funds from operations, as referred to throughout this presentation, is a 3. Planned growth capital is a non-GAAP measure. Please see Advisories for further detail.
non-GAAP measure. Please see Advisories for further detail.
4. Sustaining capital is a non-GAAP measure. Please see Advisories for further detail.
Slide 7
Slide 13
1. Return on Capital In Use is a non-GAAP measure. Please see Advisories for further
detail. 1. Expected net peak production rate.
Slide 8 Slide 14
1. Forward-looking financial results for 2020-2021 in this presentation are calculated using 1. Steam-oil ratio (SOR) represents the unit of steam required to generate a unit of produced
the Pricing Assumptions found in the Appendix, unless otherwise indicated. oil. Please see Advisories for further detail.
2. Funds from operations (FFO), as referred to throughout this presentation, is a non-GAAP Slide 18
measure. Please see Advisories for further detail. 1. Capital guidance includes exploration capital in each business unit, excludes asset
3. Capital spending, as referred to throughout this presentation, does not include capitalized retirement obligations and capitalized interest.
interest or capital expenditures related to the Husky-CNOOC Madura Ltd. joint venture, 2. Upstream production range assumes six months of 5,000 bbls/day of government-
which is accounted for under the equity method for financial statement purposes, or mandated curtailments.
capital expenditures for the rebuild of the Superior Refinery, unless otherwise indicated. Slide 19
4. Production, as referred to throughout this presentation, includes production related to the 1. Operating costs include energy and non-energy costs. Total Downstream operating costs
Husky-CNOOC Madura Ltd. joint venture, which is accounted for under the equity ($/bbl) exclude the Superior Refinery.
method for financial statement purposes unless otherwise indicated.
2. Includes planned six-week turnaround; Expected ~$1 per barrel impact
3. Cash flow sensitivity calculated independently by adjusting one pricing variable at a time,
based off the noted benchmark prices.
Husky Energy Inc. 22Advisories
Forward-Looking Statements and Information
Certain statements in this presentation are forward-looking statements and information (collectively “forward-looking statements”), within the meaning of the applicable Canadian securities
legislation, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. The forward-looking
statements contained in this presentation are forward-looking and not historical facts.
Some of the forward-looking statements may be identified by statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “will continue”, “is anticipated”, “is targeting”, “estimated”, “intend”, “plan”,
“projection”, “could”, “aim”, “vision”, “goals”, “objective”, “target”, “schedules” and “outlook”). In particular, forward-looking statements in this presentation include, but are not limited to,
references to:
• with respect to the business, operations and results of the Company generally: the Company’s general strategic plans and growth strategies and the results thereof; 2020 capital
expenditures broken down into Integrated Corridor, Offshore and Corporate; 2020 production guidance broken down into Integrated Corridor and Offshore and into crude oil and liquids
and natural gas; 2020 capital expenditures and dividend being fully funded from funds from operations; bias toward shareholder returns and dividend growth; safety and operations
integrity priorities and forecasts, including target to be global top-quartile in process safety by the end of 2022; target earnings break-even price for 2023; target net debt to trailing FFO;
forecast FCF for 2020 to 2021 and the allocation thereof; 2019 guidance for capital spending, production, net debt and operating costs; forecast FFO, cash flow from operating activities,
free cash flow, capital expenditures, operating costs; production and downstream capacity for 2019 to 2021; forecast earnings break-even prices for 2019 to 2021; 2020 sources and uses
of cash; and cash flow sensitivity;
• with respect to the Company's Downstream operating segment: 2020 estimated downstream capacity, broken down into heavy capacity and light capacity; anticipated costs and timing to
rebuild the Superior Refinery; the expected timing of, and capacity increase resulting from, the diesel upgrading program at the Lloyd Upgrader; 2020 refined products sales; and
anticipated timing and duration of turnarounds and the expected impacts on production resulting therefrom;
• with respect to the Company's heavy oil and thermal developments in the Integrated Corridor: estimated production capacity and expected timing of start-up at the Spruce Lake Central,
Spruce Lake North, Spruce Lake East, Edam Central and Dee Valley 2 thermal bitumen projects; and timing of planned turnarounds and production impacts therefrom;
• with respect to the Company's Offshore business in the Atlantic region, expected timing of first oil at the West White Rose Project and estimated production thereat; and
• with respect to the Company's Offshore business in the Asia Pacific region, expected timing of start-up at Liuhua 29-1 and the MDA-MBH & MDK fields and estimated production capacity
thereat.
Husky Energy Inc. 23Advisories Certain of the information in this presentation is “financial outlook” within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding the Company’s reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that this financial outlook may not be appropriate for other purposes. Although the Company believes that the expectations reflected by the forward-looking statements presented in this presentation are reasonable, the Company’s forward-looking statements have been based on assumptions and factors concerning future events that may prove to be inaccurate. Those assumptions and factors are based on information currently available to the Company about itself and the businesses in which it operates. Information used in developing forward-looking statements has been acquired from various sources including third party consultants, suppliers, regulators and other sources. Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to the Company. The Company’s Annual Information Form for the year ended December 31, 2018 and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com and the EDGAR website www.sec.gov) describe risks, material assumptions and other factors that could influence actual results and are incorporated herein by reference. New factors emerge from time to time and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company's course of action would depend upon management’s assessment of the future considering all information available to it at the relevant time. Any forward-looking statement speaks only as of the date on which such statement is made and, except as required by applicable securities laws, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Non-GAAP Measures This presentation contains certain terms which do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. None of these measures is used to enhance the Company's reported financial performance or position. With the exception of funds from operations and free cash flow, there are no comparable measures to these non-GAAP measures in accordance with IFRS. The following non-GAAP measures are considered to be useful as complementary measures in assessing Husky's financial performance, efficiency and liquidity: Husky Energy Inc. 24
Advisories
• “Free cash flow” or “FCF” is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, cash flow – operating activities as determined in accordance
with IFRS, as an indicator of financial performance. FCF is presented to assist management and investors in analyzing operating performance by the business in the stated period. FCF
equals funds from operations less capital expenditures.
• “Netback” is a common non-GAAP measure used in the oil and gas industry. This measure assists management and investors to evaluate the specific operating performance by product at
the oil and gas lease level. Netback is calculated as realized price less royalties, operating costs and transportation costs on a per unit basis.
• “Earnings break-even” reflects the estimated WTI oil price per barrel priced in US dollars required in order to generate a net income of Cdn$0 in the 12-month period ending December 31 of
the indicated year. This assumption is based on holding several variables constant throughout the applicable 12-month period, including foreign exchange rate, light-heavy oil differentials,
realized refining margins, forecast utilization of downstream facilities, estimated production levels and other factors consistent with normal oil and gas company operations. Earnings
breakeven is used to assess the impact of changes in WTI oil prices on the net earnings of the Company and could impact future investment decisions. Earnings break-even does not have
any standardized meaning and therefore should not be used to make comparisons to similar measures presented by other issuers.
• “Net debt to trailing FFO” is a non-GAAP measure that equals net debt divided by the 12-month trailing FFO. 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 to trailing FFO is considered to be a useful measure in assisting
management and investors to evaluate the Company’s financial strength.
• “Funds from operations” or “FFO” is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, “cash flow – operating activities” as determined in
accordance with IFRS, as an indicator of financial performance. FFO is presented to assist management and investors in analyzing operating performance of the Company in the stated
period. FFO equals cash flow – operating activities excluding change in non-cash working capital.
• “Return on capital in use” or ROCIU is a non-GAAP measure used by Husky to gauge the capital productivity of assets currently in production. ROCIU is used to assist in analyzing
shareholder value and return on capital. ROCIU equals net earnings plus after tax interest expense divided by the two-year average capital employed, less any capital invested in assets that
are not in use. Husky’s determination of ROCIU does not have any standardized meaning prescribed by IFRS and therefore is unlikely to be comparable to similar measures presented by
other issuers.
• “Growth capital” is a non-GAAP measure that represents expenditures which incrementally increase cash flow or earnings potential of assets, expand the capacity of current operations or
significantly extend the life of existing assets. This measure is used by the investment community to assess the extent of discretionary capital spending. For clarity, growth capital is equal to
total capital less sustaining capital.
Husky Energy Inc. 25Advisories “Sustaining capital” is a non-GAAP measure that represents the capital that is required by the business to maintain production and operations at existing levels. This includes the cost to drill, complete, equip and tie-in wells to existing infrastructure and maintenance for Downstream assets. Sustaining capital does not have any standardized meaning and therefore should not be used to make comparisons to similar measures presented by other issuers. All currency is expressed in Canadian dollars unless otherwise indicated. Disclosure of Oil and Gas Information Unless otherwise indicated: (i) projected production volumes provided are gross, which represents the total or the Company’s working interest share, as applicable, before deduction of royalties; and (ii) all Husky working interest production volumes provided are before deduction of royalties. The Company uses the term “barrels of oil equivalent” (or “boe”), which is consistent with other oil and gas companies’ disclosures, and is calculated on an energy equivalence basis applicable at the burner tip whereby one barrel of crude oil is equivalent to six thousand cubic feet of natural gas. The term boe is used to express the sum of the total company products in one unit that can be used for comparisons. Readers are cautioned that the term boe may be misleading, particularly if used in isolation. This measure is used for consistency with other oil and gas companies and does not represent value equivalency at the wellhead. The Company uses the term “steam-oil ratio”, which measures the average volume of steam required to produce a barrel of oil. This measure does not have any standardized meaning and should not be used to make comparisons to similar measures presented by other issuers. Husky Energy Inc. 26
Investor Relations Contacts
Dan Cuthbertson Director, Investor Relations
dan.cuthbertson@huskyenergy.com
Senior Manager, Investor Relations
Leo Villegas
leonidas.villegas@huskyenergy.com
Investor Relations Specialist
Jenna Pickering
jenna.pickering@huskyenergy.com
Contact us: www.huskyenergy.com investor.relations@huskyenergy.com 1-855-527-5005
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