27
1 2020 Guidance December 2, 2019
1
2020 GuidanceDecember 2, 2019
Husky Energy Inc. 1 See Slide Notes & Advisories
Heavy Capacity
55%
2
2020 Guidance Highlights
Upstream Production295 – 310 mboe/day
• Improved safety and reliability
• ~$100M capex reduction from 2019 Investor Day
plan; reductions focused in Western Canada and
conventional heavy oil business
• $500 million reduction over 2020-2021
• Year-over-year production growth of ~4%
• Take-away and processing capacity for all
North American heavy production (no need for rail)
• Capex program and dividend fully funded under
pricing assumption of flat $55 US WTI and
NYMEX 3:2:1 of $18
• 2020 capital plan leads to significant free cash flow
generation in 2021
• Bias towards shareholder returns via
sustainable dividend increases
Corporate 2%
Capital Spending $3.2 – $3.4B
Capital Plan Drives Improved Margins and Free Cash Flow1 Growth
Downstream Capacity355 mbbls/day
Offshore
43%
Offshore
21%Integrated
Corridor
79%
Light
Capacity
45%
Integrated
Corridor
55%
Husky Energy Inc. 3
Husky’s Value Proposition
Improving Safety, Reliability
& ESG Performance
• Actions underway to be
global top-quartile in
process safety by end
of ’22
• No major incidents in ’19
• Achieved 50% reduction in
Tier 1 Process Safety Events
since ’18
• ESG performance and
disclosure
• Aligning with global reporting
frameworks
• Setting clear targets
Strengthening Resilience,
Preserving Upside
• Integrated Corridor largely
removes differential
exposure
• Refining and export capacity
for 100% of oil production
• High-netback1 Offshore
business
• Lowering earnings
break-even2 oil price
• Current $42 US WTI, target of
$38 US WTI in ’23
• Strong and competitive
balance sheet
• 1.1x net debt to trailing FFO3
Increasing Total
Shareholder Returns
• Strong free cash flow
growth
• FCF inflection point in ’21
• ~$2B in FCF ’20-’21 at flat
$55 US WTI
• Sustainable dividend with
pathway to further growth
• Paid ~$11/share since 2008
• Current yield of ~5% ($500M/yr)
• Project portfolio improving
margins and cost structure
• Projects must meet hurdle of
>10% IRR at $45 US WTI
1, 2, 3 See Slide Notes & Advisories
Husky Energy Inc.
2019 Milestones Safely Delivered
4
Major Projects Remain on Track
2019 DeliverablesCapacity
(Husky W.I.)
Timing/
CompletionStatus
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
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
West White Rose Project:
Final Quadrant Completed
✓
✓
✓
✓
✓
✓
✓
✓
✓
10,000 bbls/day Dee Valley Thermal Project
Started Up, Reached Nameplate Capacity
Husky Energy Inc. 5
Target to Become Global Top-Quartile Process Safety Performer By End Of 2022
Improving Safety & Reliability
• Actions delivering:
• No major incidents in 2019
• Improved LTI frequency by 45% YTD
• Reduction in Tier 1 Process Safety
Events by 50%
Lost Time Injury Frequency (per 200,000 exposure hours)
Tier 1 Process Safety Events
0.00
0.03
0.06
0.09
0.12
0.15
2017 2018 2019 YTD
0
3
6
9
12
15
2017 2018 2019 YTD
– 50%
– 45%
Reportable Hydrocarbon Spill Volume (m3)
0
100
200
300
400
500
600
2017 2018 2019 YTD
– 68%
Husky Energy Inc. 6
Safety & Reliability: What Good Looks LikeSystematic & 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
CompetentDocumented Accountable Verified
Systematic
and In
Control
Level 3 Level 4 Level 5
Leadership & HRO principles
Husky Energy Inc. 1 See Slide Notes & Advisories 7
Improving Performance and Reporting Transparency
ESG Priorities
Good ESG Performance Improves Business Performance
Environment
Social
Governance
• Pioneered area-based closure approach
• 2,145 assets retired YTD (wells, pipelines,
facilities)
• 520,890 trees planted post-asset retirement YTD
• 1,576 acres reclaimed YTD
• Economic inclusion: $70 million in contracts
with Indigenous vendors YTD
• ~45% increase in Indigenous procurement
since ’16
• Husky named as one of Canada’s best
places to work by Indeed Canada for the
third year in a row
• Conducted operating community perception
surveys to enhance community engagement
Community & Indigenous Engagement
• Safety / Environmental performance
• Return On Capital In Use1
• Total shareholder returns
Compensation Drivers
• Reduced overall methane emissions
by 45% from ’14-’18 = 400,000 cars over 1 year
• ~50,000 tonnes of CO2 captured YTD
• Grade ‘B’ from CDP
Air Emissions Management
• Recycling 88% of water at Sunrise and Tucker
• Lima Refinery water recycle project
• Grade ‘B-’ from CDP Water Security Program
Water Use & Availability
Land Use & Reclamation
Husky Energy Inc.
0.0
0.5
1.0
1.5
2.0
'19F '20F '21F
2020 Plan
200
250
300
350
'19F '20F '21F
mboe/day
1, 2, 3, 4 See Slide Notes & Advisories
Free Cash Flow (FFO less capital expenditures)
$B
200
250
300
350
400
'19F '20F '21F
mboe/day
Paced Production4
Downstream Throughput
8
Cumulative
Free Cash Flow
’20F-’21F ~$2B at $55 US WTI
Reduced Capital in 2020-2021; Free Cash Flow Inflection Point in 2021
2.0
3.0
4.0
5.0
'19F '20F '21F
Funds from Operations1,2
Cash Flow from Operating Activities
2.0
2.5
3.0
3.5
'19F '20F '21F
Reduced Capital Expenditures3
$B
~7%
~$100M reduction
vs. I-Day
~$400M reductionvs. I-Day
$B
~13%
~4%
~10%
~5%
~5.5%
Husky Energy Inc. 9
Lower Spending, Production Growth Driving FCF
Free Cash Flow Improvement Bridge (’20-’21)
10
12
14
16
2019F 2020F 2021F
30
35
40
45
2019F 2020F 2021F
Upstream Operating Costs ($Cdn/bbl)
Earnings Break-Even Price (US/bbl WTI)
$B
Husky Energy Inc.
Thermal54%
13%
5%
10
Capital Plan Leading to Improved Margins and Free Cash Flow Growth
2020 Capital Spending
Atlantic76%
Asia Pacific
24%
Conventional heavy oil
& Western Canada
Downstream
28%
Integrated Corridor($1.75 – $1.90B)
Offshore1
($1.35 – $1.45B )
Capital Spending $3.2 – $3.4B
Lloyd Thermals
& Tucker
54%
1 See Slide Notes & Advisories
• Less spending in Western Canada
resource plays and conventional heavy
oil projects compared to 2019 Investor
Day plan
• Capital expenditures in the U.S.
Downstream exclude Superior rebuild
capital
• Superior rebuild costs anticipated to
be in the range of $450-$525 million
Cdn; expected to be substantially
covered by insurance Sunrise
5%
Husky Energy Inc. 1,2,3,4 See Slide Notes & Advisories
0.0
1.0
2.0
3.0
A Husky B C D
Net Debt to 12 Months Trailing FFO (Q3 ’19)
Peer Group: Cenovus, CNRL, Imperial, Suncor
11
Balance Sheet Strength & 2020 Funding Plan
$60 WTI
times
0.0
1.0
2.0
3.0
4.0
5.0
Planned
Growth
Capital3
FFO
Sustaining
Capital4
$B
Uses
2020 Sources and Uses of Cash
Sources
Dividend
Debt
CapacityFlexibilityFFO at
$55 WTI2
WTI
• Strong and competitive balance sheet
• Q3 ’19 net debt to 12 months trailing funds
from operations of 1.1 times
Capex Program & Dividend Fully Funded at $55 US WTI + $18 NYMEX 3:2:1
• More than $500 million in flexibility1
• Not including potential retail sale proceeds
• Bias towards shareholders returns via
sustainable dividend increases
Husky Energy Inc. 12
Low Cost Producer of Refined Products; High-Netback Offshore Production
2020 Production & Throughput
Downstream
Capacity
-
50
100
150
200
250
300
350
400
Thermal,
Oil Sands &
Conventional
Heavy
Western
Canada
Asia
Atlantic Light Oil
&
Distillates
Blended
Heavy Oil
Superior
(Offline)
Gasoline
ULSD /
Jet
Fuel
Synthetic
Pet Chems
& Other
Asphalt
boe/day
Upstream
Production
Product
Sales
Offshore
• Growing higher margin thermal and
Asia Pacific production
• Lower contribution from less economic
Western Canada conventional heavy oil
and resource plays
• 2020 plan assumes curtailments of
5,000 bbls/day in first half of year
• Lima Refinery crude oil flexibility project
can process up to 40,000 bbls/day of heavy
• Lloydminster Upgrader diesel upgrading
program on track to add ~4,000 bbls/day
of diesel capacity in 2020
• High weighting of in-demand diesel, asphalt,
jet fuel and petrochemical feedstocks
Husky Energy Inc.
2020 Project Delivery Well Advanced & On Track
13
Upcoming Milestones
2020 Capacity(Husky W.I.)
Timing/Completion
Current Status
Lloyd Upgrader diesel capacity increase 6,000 –> 9,800 bbls/day Q2 50% completeSpruce Lake Central thermal project 10,000 bbls/day Mid-Year 88% completeSpruce Lake North thermal project 10,000 bbls/day ~YE 48% completeLiuhua 29-1 project construction 45 mmcf/day gas
1,800 bbls/day liquidsQ4 70% complete
2021+ Capacity(Husky W.I.)
Timing/Completion
Current Status
Superior Refinery rebuild 45,000 bbls/day YE ’21 In progressSpruce Lake East thermal project 10,000 bbls/day ~YE ’21 11% completeMDA-MBH & MDK fields 10,000 boe/day ’21 In progressWest White Rose Project 52,500 bbls/day1 ~YE ’22 55% completeEdam Central thermal project 10,000 bbls/day ’22 3% completeDee Valley 2 thermal project 10,000 bbls/day ’23 In planning
1 See Slide Notes & Advisories
Husky Energy Inc. 1 See Slide Notes & Advisories 14
Technology & InnovationImproving Safety, Reliability, Cost Efficiency & Reducing Our Environmental Footprint
AI, Analytics & Machine Learning
• AI pilot program for steam optimization at
Sandall showing positive results with steam-
oil ratios1 reduced to 2.5; further
improvements targeted
• Field trials underway using AI to accelerate
reservoir opportunity screening
• Advanced analytics for preventative
maintenance at the Lima Refinery
• Accelerated well planning and execution
using AI to reduce time, cost and risk
• Robotics process automation of data
analysis and repetitive administrative tasks
• CO2 capture pilot projects at Pikes Peak
South captured ~5,000 tonnes of CO2
from Q4 ’15 to Q2 ’18; expanded project
to be commissioned in Q4 ’19
• Husky Diluent Reduction pilot program
reduced diluent volumes at Sunrise by
~50%, above the targeted goal of 45%;
now under evaluation for Downstream
applications
• Drones for pipeline and wellsite
inspections beyond visual line-of-sight
(co-chair of Consortium for Digital
Innovation and Transformation)
Innovative Partnerships
• Natural Resources Consortium (IBM Watson)
• Microsoft Azure Cloud services: cloud hyper-
scaling technology to manage infrastructure
and application requirements in real-time
• Cognitive automation: used to rapidly automate
and fulfill service requests
• Multiple technology partners for subsurface
workflow optimization and automation
• Canadian Oil Sands Innovation Alliance (COSIA)
• Clean Resource Innovation Network (CRIN)
• Sprint Robotics Consortium (robotics for
inspection and maintenance)
Reducing Our Footprint, Finding Efficiencies
Husky Energy Inc. 15
Husky’s Value Proposition
Free Cash Flow of >$2 billion in ’20-’21
Improving Safety, Reliability
& ESG Performance
• Actions underway to be
global top-quartile in
process safety by end
of ’22
• ESG performance and
disclosure
Strengthening Resilience,
Preserving Upside
• Integrated Corridor largely
removes differential
exposure
• High-netback Offshore
business
• Lowering earnings
break-even oil price
• Strong and competitive
balance sheet
Increasing Total
Shareholder Returns
• Strong free cash flow
growth
• Sustainable dividend with
pathway to further growth
• Project portfolio improving
margins and cost structure
16
Q&A
17
Appendix
Husky Energy Inc. 18
Capital & Production Guidance
1,2 See Slide Notes and Advisories
Capital Guidance ($ millions)1
Total Capital Investment 3,200 - 3,400
Integrated Corridor 1,750 - 1,900
Thermal and Oil Sands 1,050 - 1,100
Conventional Heavy & Western Canada segment 225 - 250
Downstream (excludes Superior rebuild capital) 475 - 550
Offshore 1,350 - 1,450
Atlantic 1,075 - 1,150
Asia Pacific 275 - 300
Corporate Capital 50 - 75
Other Expenditures ($ millions) not included above
Superior Refinery (excludes insurance proceeds) 450 - 525
Capitalized Interest ~200
Production and Throughput Guidance
Total Upstream Production2 (mboe/day) 295 - 310
Total Crude Oil and Liquids (mbbls/day) 215 - 230
Thermal & Oil Sands 138 - 146
Conventional Heavy 30 - 33
Western Canada segment 18 - 20
Atlantic Light Oil 17 - 19
Asia Pacific NGLs 9 - 11
Total Natural Gas (mmcf/day) 480 - 500
Western Canada segment 270 - 280
Asia Pacific 210 - 220
Total Downstream Throughput (mbbls/day) 320 - 340
Husky Energy Inc. 19
Planning Assumptions
Pricing Assumptions (2020-2021)
Brent crude oil ($US/bbl) $60
WTI at Cushing ($US/bbl) $55
Heavy crude differential ($US/bbl) ($20)
NYMEX 3:2:1 crack ($US/bbl) $18
AECO natural gas ($CAD/mcf) $1.60
$US / $CAD exchange rate $0.75
Operating Costs1
Total Upstream Operating Costs ($/boe) 14 - 15
Thermal & Oil Sands 11.75 - 12.50
Conventional Heavy 30 - 33
Western Canada segment 11 - 11.50
Atlantic 33 - 35
Asia Pacific 6.10 - 6.50
Downstream Operating Costs ($/bbl)
Lloydminster Upgrader2 9 - 10
Lima Refinery 7 - 8
1,2,3 See Slide Notes and Advisories
(200) (100) 0 100 200
Decrease in BenchmarkIncrease in Benchmark
Cash Flow Sensitivity3 ($MM)
Chicago 3:2:1 Crack Spread
($1.00/bbl US)
WTI Crude Oil
($1.00/bbl US)
AECO (NIT) Natural Gas Price
($0.20/mmbtu US)
Heavy / Light Differential
($1.00/bbl US)
Exchange Rate
($0.01 $US per $Cdn)
Husky Energy Inc. 20
Turnaround Schedule
Turnaround Schedule Estimated DurationQuarterly Production
Impact (boe/day)
Q1BD 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
21
Slide Notes
& Advisories
Husky Energy Inc. 22
Slide Notes
Slide 2
1. Free cash flow (FCF), as referred to throughout this presentation, is a non-GAAP
measure. Please see Advisories for further detail.
Slide 3
1. Netback, as referred to throughout this presentation, is a non-GAAP measure. Please
see Advisories for further detail.
2. Earnings break-even, as referred to throughout this presentation, is a non-GAAP
measure. Please see Advisories for further detail.
3. Net debt to trailing funds from operations, as referred to throughout this presentation, is a
non-GAAP measure. Please see Advisories for further detail.
Slide 7
1. Return on Capital In Use is a non-GAAP measure. Please see Advisories for further
detail.
Slide 8
1. Forward-looking financial results for 2020-2021 in this presentation are calculated using
the Pricing Assumptions found in the Appendix, unless otherwise indicated.
2. Funds from operations (FFO), as referred to throughout this presentation, is a non-GAAP
measure. Please see Advisories for further detail.
3. Capital spending, as referred to throughout this presentation, does not include capitalized
interest or capital expenditures related to the Husky-CNOOC Madura Ltd. joint venture,
which is accounted for under the equity method for financial statement purposes, or
capital expenditures for the rebuild of the Superior Refinery, unless otherwise indicated.
4. Production, as referred to throughout this presentation, includes production related to the
Husky-CNOOC Madura Ltd. joint venture, which is accounted for under the equity
method for financial statement purposes unless otherwise indicated.
Slide 10
1. Capital expenditures in Asia Pacific excludes amounts related to the Husky-CNOOC
Madura Ltd. joint venture which is accounted for under the equity method for interim
financial statement purposes.
Slide 11
1. Flexibility, as used in this reference, refers to a target net debt level using 2x FFO at $40
US WTI, less the third quarter 2019 net debt.
2. FFO forecast at $55 WTI for 2020 is calculated using the Benchmark Prices found in the
Appendix.
3. Planned growth capital is a non-GAAP measure. Please see Advisories for further detail.
4. Sustaining capital is a non-GAAP measure. Please see Advisories for further detail.
Slide 13
1. Expected net peak production rate.
Slide 14
1. Steam-oil ratio (SOR) represents the unit of steam required to generate a unit of produced
oil. Please see Advisories for further detail.
Slide 18
1. Capital guidance includes exploration capital in each business unit, excludes asset
retirement obligations and capitalized interest.
2. Upstream production range assumes six months of 5,000 bbls/day of government-
mandated curtailments.
Slide 19
1. Operating costs include energy and non-energy costs. Total Downstream operating costs
($/bbl) exclude the Superior Refinery.
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. 23
Advisories
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. 24
Advisories
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. 25
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. 26
Advisories
“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. 27
Investor Relations Contacts
Director, Investor Relations
[email protected] Cuthbertson
Senior Manager, Investor Relations
[email protected] Villegas
Investor Relations Specialist
[email protected] Pickering
Contact us: www.huskyenergy.com [email protected] 1-855-527-5005
