Husky Energy Positioned to Grow Profits
Husky Energy (HSE.TO) is positioned to increase free cash flow as a result of the structural changes that have taken root across the business while significantly lowering its cost base.
“Husky has been transformed over the past six years,” said CEO Asim Ghosh. “We now have an oil price earnings break-even that is amongst the lowest in the oil industry and have significantly reduced our sustaining and maintenance capital requirements.
“In addition, the steps we have taken to reduce our debt will result in a balance sheet that will be amongst the strongest in our industry.”
Industry Leading Earnings Break Even
In 2010, Husky began its transformation, which included increasing the percentage of higher quality barrels in its production base. This includes investing in projects that have lower operating costs and improved margins, have a longer life, require less capital to maintain production, and reduce cash flow variability through integrated value chains.
By the end of 2016, more than 40 percent of production will come from these types of projects, up from just eight percent in 2010.
The transition to higher quality production has resulted in:
An annualized earnings break-even of sub-$40 US WTI, amongst the lowest in the industry.
A reduction in sustaining and maintenance costs of more than 20 percent. These costs are expected to be further lowered with the ongoing transformation of the Western Canada portfolio and further additions of higher quality production.
More: Free Cash Flow Growth
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