This news release contains references to the non-GAAP financial measures “funds from operations”, “free cash flow”, “operating margin”, “net debt”, “net debt to trailing funds from operations” and “operating netback.” Please refer to “Non-GAAP Measures” at the end of this news release.
CALGARY, Alberta, Feb. 27, 2020 (GLOBE NEWSWIRE) — Husky Energy generated funds from operations of $3.3 billion in 2019, including $469 million in the fourth quarter. Cash flow from operating activities, including changes in non-cash working capital, was $3 billion in 2019, including $866 million in the fourth quarter.Fourth quarter operating results were negatively impacted by several factors, including:Lower U.S. crack spreads and an extended shutdown of the Lima Refinery to complete the crude oil flexibility projectLower Infrastructure and Marketing margins compared to Q4 2018, primarily due to narrower location differentials, and an outage on the Keystone pipeline in November, which impacted Husky’s ability to capture the differentialSeverance costs related to staff reductions“We delivered on critical milestones during the year, including our top priority of improved safety performance,” said CEO Rob Peabody. “We met our production and capital guidance, achieved first oil at the 10,000 barrel-per-day Dee Valley thermal bitumen project and have completed the safe startup of the Lima Refinery crude oil flexibility project.”In the fourth quarter, Husky recognized asset impairment and other charges of $2.3 billion (after tax), largely related to long-term price assumptions and reductions in the Company’s long-term capital expenditure plans.The Board of Directors has approved a quarterly dividend of $0.125 per common share for the three-month period ended December 31, 2019. The dividend will be payable on April 1, 2020 to shareholders of record at the close of business on March 17, 2020.2019 ACHIEVEMENTSNo major safety incidents, more than 50% reduction in lost-time injuries and Tier 1 process safety eventsProduction within guidance at 290,000 barrels of oil equivalent per day (boe/day)Capital expenditures within guidance at $3.4 billion, including the Superior Refinery rebuild capitalProject execution included the startup of the 10,000 barrel-per-day Dee Valley thermal bitumen project ahead of schedule, the completion of the Lima Refinery crude oil flexibility project and the sale of the Prince George RefineryAnnual average production from Lloydminster thermal bitumen projects, Sunrise and Tucker of 128,800 barrels per day (bbls/day), Husky working interest (W.I.), compared to annual average production of 124,200 bbls/day in 2018 (Husky W.I.); takes into account impacts of the government-mandated production quotas in AlbertaAverage gross natural gas and liquids production at the Liwan Gas Project of 73,200 boe/day (35,900 boe/day Husky W.I.)Completed fourth quadrant of the concrete gravity base at the West White Rose Project ahead of schedule; project now 57% complete with first oil planned for around the end of 2022Dividends declared during the year totalled $0.50 per common share. In 2019, the Company returned $503 million in cash payments to shareholders, up from $276 million in 2018FOURTH QUARTER RESULTSFunds from operations of $469 million, compared to $583 million in the year-ago period; reflects lower U.S. crack spreads, the extended shutdown at the Lima Refinery, lower Infrastructure and Marketing margins and $74 million related to employee severance. The operating margin at the Lima Refinery was negative $129 million, reflecting impacts from the shutdown to complete the crude oil flexibility projectCash flow from operating activities, including changes in non-cash working capital, of $866 million, compared to $1.3 billion in the fourth quarter of 2018Net loss of $2.3 billion, compared to net earnings of $216 million in Q4 2018, reflecting fourth quarter after-tax impairments. Net earnings excluding impairments, write-downs and the asset de-recognition were $5 millionCapital spending of $894 million, including Superior Refinery rebuild capital; primarily directed towards advancing the growing Saskatchewan thermal portfolio and progressing construction of the Liuhua 29-1 field offshore China and the West White Rose Project in the Atlantic regionNet debt of $3.7 billion, including proceeds from the sale of the Prince George Refinery; total liquidity (cash and unused credit facilities) of $5.7 billionOverall Upstream production of 311,300 boe/day, compared to 304,300 boe/day in Q4 2018; takes into account ongoing mandated production quotas in AlbertaDownstream throughput of 203,400 bbls/day, compared to 286,900 bbls/day in Q4 2018; reflects the extended shutdown of the Lima RefineryFOURTH QUARTER IMPAIRMENTS & OTHER IMPACTS Total non-cash asset impairments and other charges were $2.3 billion (after tax) in the fourth quarter of 2019. These were primarily related to the Company’s upstream assets in North America, including the Sunrise Energy Project and the Atlantic and Western Canada segments, and were largely due to lower long-term commodity price assumptions and a reduction in future capital spending. The reduction in future capital spending has the effect of reducing reserves, which in turn reduces asset values. Other charges included exploration-related write-downs and asset de-recognition at the Lima Refinery associated with redundant equipment following the completion of the crude oil flexibility project.RESULTSAverage realized pricing for Upstream production was $46.06 per boe compared to $25.47 per boe in the same period in 2018. Realized pricing for oil and liquids averaged $47.52 per barrel compared to $18.93 per barrel in Q4 2018, and natural gas pricing averaged $7.02 per thousand cubic feet (mcf), compared to $6.86 per mcf in the year-ago period.Upstream operating costs were $15.25 per boe compared to $13.75 per boe in Q4 2018, primarily due to higher energy and transportation costs, and lower production.Upstream operating netbacks averaged $27.48 per boe compared to $9.42 per boe in the year-ago period.Upgrader and refinery throughput was 203,400 bbls/day, compared to 286,900 bbls/day in the same period in 2018. This takes into account an extended turnaround at the Lima Refinery to complete the crude oil flexibility project.The Chicago 3:2:1 crack spread averaged $12.06 US per barrel compared to $13.38 US per barrel in Q4 2018. The average realized U.S. refining and marketing margin was $7.85 US per barrel of crude oil throughput, which reflects an unfavourable first-in, first-out (FIFO) pre-tax inventory valuation adjustment of $0.24 US per barrel. This compared to $9.12 US per barrel a year ago, which included an unfavourable FIFO pre-tax inventory valuation adjustment of $8.51 US per barrel.The Upgrader realized margin was $20.21 per barrel compared to $29.13 per barrel in the same period in 2018, which takes into account narrower light-heavy differentials.The operating margin in the Infrastructure and Marketing segment was $12 million compared to $175 million in Q4 2018, largely due to narrower location differentials and the outage in November on the Keystone pipeline.Q4 INTEGRATED CORRIDORAverage Upstream production of 241,600 boe/day, compared to 240,100 boe/day in Q4 2018Operating margin of $293 million, compared to $334 million in the fourth quarter of 2018Downstream throughput of 203,400 bbls/day, compared to 286,900 bbls/day in Q4 2018Thermal Production
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