Husky sells nearly $2-billion in assets

By Geoff Lee

April 28, 2016 12:00 AM

Husky has sold select midstream assets mainly in the Lloydminster region to help it fund new Lloyd thermal projects with $1.7 billion in proceeds. The latest thermal project at Edam East is ramping up toward its 10,000 barrels per day target.

Husky Energy is selling select midstream assets in the Lloydminster Region for $1.7 billion along with a 65 per cent ownership stake to Cheung Kong Infrastructure Holdings Ltd. and Power Assets Holdings Ltd.
The transaction announced Monday includes approximately 1,900 kilometres of pipeline in the Lloydminster region, 4.1 million barrels of oil storage capacity at Hardisty and Lloydminster, and other ancillary assets.
Husky will have a 35 per cent ownership interest and will remain the asset operator.
“It was important to realize full value for these assets and to maintain operatorship and preserve the tight integration between our heavy oil production, marketing and refining assets,” Husky CEO Asim Ghosh said from Calgary.
“We sought partners who shared these objectives and who viewed these as top tier assets that provide considerable growth potential.”
Going forward, a new limited partnership will be formed of which Husky will own 35 per cent, Cheung Kong 16.25 per cent and Power Assets 48.75 per cent.
The sales comes as Husky reported a first quarter loss of $458 million due to several factors including $50 million to its hedging program a $21 million after tax loss and an income expense of $75 million.
Husky said its new partners are aligned with expanding the company’s heavy oil business and have the funding capacity to build the midstream infrastructure for the planned construction of additional Lloyd thermal projects in Saskatchewan and Alberta.
“This transaction unlocks significant value and supports our objective of strengthening the balance sheet,” said Ghosh.
Lloyd thermal production averaged approximately 56,300 barrels per day in the first quarter, compared to 45,500 bpd a year ago.
Husky’s latest Lloyd thermal project at Edam East was put on steam in March with first oil produced in mid-April as the project ramps up towards its 10,000 bpd target.
Steaming is expected to begin in early May at the 10,000 bpd Vawn thermal project in the Lloyd region.
A third development, the 4,500 bpd Edam West Lloyd thermal, is on schedule to achieve first oil in the third quarter.
Production continues to grow at the Tucker thermal project near Cold Lake with the Colony reservoir now on production.
Tucker volumes averaged about 16,200 bpd in line with expectations to reach about 20,000 bpd towards the end of 2016.

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