707 - 8th Avenue S.W., Box 6525, Station D, Calgary, Alberta, Canada T2P 3G7 Telephone: (403) 298-6111 Facsimile: (403) 750-5010 Website: http://www.huskyenergy.ca, e-mail: [email protected]Husky Energy Inc. is a publicly traded integrated energy and energy-related company that trades on The Toronto Stock Exchange under the symbol HSE. 2000 / THIRD QUARTER REPORT & NEWS RELEASE — NOVEMBER 2, 2000
24
Embed
Husky Energy Inc. is a publicly traded integrated energy ...€¦ · FINANCIAL SUMMARY (unaudited) Three Months Ended Nine Months Ended September 30, September 30, % (Millions of
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
(1) Operating profit is total revenue less operating expenses. Operating expenses exclude general corporate expense, foreign exchange, interest expense and income taxes.
(2) Corporate services includes corporate administrative costs, depreciation of corporate assets, other income and expenses, interest, foreign exchange and income taxes.
(3) Excludes acquisition of Renaissance Energy Ltd. in the amount of $3,463,000.(4) This information should be considered part of the Financial Statements included herein.
HUSKY ENERGY INC. Page 8
THIRD QUARTER OPERATING REPORT
SEGMENTED OPERATIONAL INFORMATION
Three Months Ended Nine Months EndedSeptember 30, September 30, %
(unaudited) 2000 1999 2000 1999 Change
UpstreamProduction (before royalties)
Light and medium crude oil and NGLs (Mbbls/day) 66.5 26.9 45.4 26.3 73%
Related income taxes 10,300 (4,439) 21,610 (23,974)
Return on capital securities (b) (7,538) (7,723) (22,100) (22,156)
Related income taxes 3,260 3,480 9,810 9,970
Full cost accounting (c) 6,235 7,120 18,922 19,495
Related income taxes (2,806) (2,373) (8,500) (8,773)
Accounting for post retirement benefits (d) 165 (218) 475 (642)
Related income taxes (73) 99 (233) 290
Net earnings under U.S. GAAP $ 117,639 $ 30,569 $ 188,208 $ 71,364
Earnings before taxes under U.S. GAAP $ 217,640 $ 59,609 $ 363,653 $ 133,133
Basic earnings per share under U.S. GAAP $ 0.36 $ 0.11 $ 0.65 $ 0.26
Diluted earnings per share under U.S. GAAP $ 0.35 $ 0.11 $ 0.64 $ 0.26
HUSKY ENERGY INC. Page 18
CONSOLIDATED FINANCIAL STATEMENTS
Under U.S. GAAP, the Company would present interest on
subordinated shareholders’ loans and dividends on Class C
shares under the heading costs and expenses on the
Consolidated Statement of Earnings.
The increases or decreases noted above refer to the
following differences between U.S. GAAP and Canadian
GAAP:
(a) The Company has deferred unrealized gains and
losses on translation of foreign denominated long
term monetary items which are amortized over the
remaining lives of the items. Under U.S. GAAP, gains
or losses on translation of foreign denominated long
term monetary items are credited or charged to
earnings immediately.
(b) The Company records the capital securities as a
component of equity and the return thereon as a
charge to retained earnings. Under U.S. GAAP, the
capital securities, the accrued return thereon and
costs of the issue would be classified outside of
shareholders’ equity and the related return would be
charged to earnings.
(c) The Company performs a cost recovery ceiling test
for each cost centre which limits net capitalized costs
to the undiscounted estimated future net revenue
from proved oil and gas reserves plus the cost of
unproved properties less impairment, using year end
prices or average prices in that year if appropriate. In
addition, the aggregate value of all cost centres is
further limited by including financing costs,
administration expenses, future removal and site
restoration costs and income taxes. Under U.S. GAAP,
companies using the full cost method of accounting
for oil and gas producing activities perform a ceiling
test on each cost centre using discounted estimated
future net revenue from proved oil and gas reserves
using a discount factor of 10 percent. Prices used in
the U.S. GAAP ceiling tests performed for this
reconciliation were those in effect at the applicable
period end. Financing and administration costs are
excluded from the calculation under U.S. GAAP.
(d) Prior to 1999, the Company expensed costs related to
medical and dental post retirement benefits as
incurred. Under U.S. GAAP, companies are required to
use the projected benefit method prorated based on
service.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, Husky Energy’s outstanding debt obligations were:
Facility (Millions of dollars) OutstandingBank Facilities $ 898$US Senior Secured Bonds* 269$US Senior Notes* 905Medium Term Notes 700
$ 2,772
* $US converted to Cdn$ at $1.5070 ($0.66)
At September 30, 2000, the Company had available bank facilities in excess of $600 million.
The Company’s average interest rate is currently approximately 7.3% and approximately 70% of the outstanding
debt is subject to fixed interest rates.
In July 2000, the Company repaid US $116 million of 10.6% senior notes from available bank lines to retire the
issue.
The Company’s investment grade public long-term debt ratings are as follows:
Canadian Dominion Moody’s StandardBond Rating Service Bond Rating Service Investor Service & Poor’s
BBB+ BBB(high) Baa3 BBBStable Outlook Stable Trend Stable Outlook Stable Outlook
COMMON SHARE INFORMATION
Share price* High $ 15.95Low $ 12.50Close @ September 29th $ 13.95
Average daily trading volume (thousands) 2,140Number of common shares outstanding @ November 2 (thousands)
Basic 415,804Fully diluted 428,717
* Trading in HSE commenced on The Toronto Stock Exchange on August 28, 2000. HSE is included in the S&P Global 1200, TSE 300
Composite, S&P/TSE 60, TSE 100 and Toronto 35 indices and is represented in the integrated oil subgroup in the TSE 300
Composite.
HUSKY ENERGY INC. Page 19
SUPPLEMENTARY DATA
Three months ended Nine months ended
(Thousands of dollars except per share amounts) September 30, 2000 September 30, 2000
Pro forma financial information
Income statement Sales and operating revenues, net of royalties $ 1,573,020 $ 4,186,839Costs and expenses
Cost of sales and operating expenses 969,274 2,589,982Selling and administrative expenses 24,236 81,105Depletion, depreciation and amortization 154,503 484,554Interest - net 39,112 134,513Foreign exchange and other, net 1,929 6,050
1,189,054 3,296,204Earnings before the following 383,966 890,635Current taxes 4,280 13,327Future taxes 153,596 339,737
Cash flow from Operations $ 535,465 $ 1,370,088Cash flow per share - basic $ 1.28 $ 3.27
- fully diluted $ 1.24 $ 3.18
Capital expenditures $ 137,237 $ 910,299
PRO FORMA CONDENSED COMBINED FINANCIAL AND OPERATING INFORMATION
The pro forma condensed combined financial information of Husky Energy Inc. (“Husky Energy”) has been
prepared by management in accordance with accounting principles generally accepted in Canada.
The pro forma information has been prepared from the unaudited statements of Husky Oil and Renaissance
Energy as at and for the nine months ended September 30, 2000. Accounting policies used in the preparation
of the pro forma information is in accordance with those disclosed in Husky Oil’s audited financial statements
for the year ended December 31, 1999. In the opinion of management, this pro forma information includes all
adjustments necessary for fair presentation.
The pro forma information is not necessarily indicative of results of operations that would have occurred in the
nine months ended September 30, 2000 had the proposed acquisition of Renaissance Energy been effected on
January 1, 2000. In preparing this pro forma information no adjustments have been made to reflect the
operating synergies and general and administrative cost savings that may result from combining the operations
of Husky Oil and Renaissance Energy.
HUSKY ENERGY INC. Page 20
SUPPLEMENTARY DATA
Three months ended Nine months ended
September 30, 2000 September 30, 2000
Pro forma operating information
Production (before royalties)Light and medium crude oil (Mbbls/day) 121.7 126.7Lloyd heavy crude oil (Mbbls/day) 54.9 52.3
176.6 179.0Natural gas (Mmcf/day) 603.7 622.6
Net wells drilledExploratory Oil 8 41
Gas 10 83Dry 4 65
22 189Development Oil 108 363
Gas 34 150Dry 5 46
147 559Total 169 748
HUSKY ENERGY INC. Page 21
SUPPLEMENTARY DATA
This release contains forward-looking statements, including references to drilling plans, construction activities, the submission ofdevelopment plans, seismic activity, refining margins, oil and gas production levels and the sources of growth thereof, results ofexploration activities, and dates by which certain areas may be developed or may come on-stream. These forward-lookingstatements are subject to numerous known and unknown risks and uncertainties and other factors which may cause actual results,levels of activity and numerous achievements to differ materially from those expressed or implied by such statements. Such factorsinclude, but not limited to: general economic, market and business conditions; industry capacity; competitive action by othercompanies; fluctuations in oil and gas prices; refining and marketing margins; the ability to produce and transport crude oil andnatural gas to markets; the results of exploration and development of drilling and related activities; fluctuation in foreign currencyexchange rates; the imprecision of reserve estimates; the ability of suppliers to meet commitments; actions by governmentalauthorities including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and otherregulations; risks attendant with oil and gas operations; and other factors, many of which are beyond the control of Husky. Husky’sactual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-lookingstatements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpireor occur, or if any of them do so, what benefits that Husky will derive therefrom.
BOARD OF DIRECTORS C0-CHAIRMEN
Victor T. K. LiManaging DirectorCheung Kong (Holdings) Limitedand Deputy ChairmanHutchison Whampoa LimitedHong Kong
Canning K. N. Fok (1)
Group Managing Director Hutchison Whampoa LimitedHong Kong
DEPUTY CHAIRMAN
William Shurniak (2)
Chairman, ETSA Utilities and Powercor Australia Ltd.Australia
DIRECTORS
Martin J. G. Glynn (2)
President, Chief Executive Officer & DirectorHSBC Bank of CanadaVancouver
Ronald G. Greene (1)
Independent BusinessmanCalgary
Terence C. Y. HuiPresident & Chief Executive OfficerConcord Pacific Group Inc.Vancouver
Brent D. Kinney (3)
Independent BusinessmanDubai, United Arab Emirates
Holger Kluge (1), (3)
Retired PresidentCanadian Imperial Bank of CommercePersonal and Commercial BankToronto
BOARD OF DIRECTORS C0-CHAIRMEN
Poh Chan KohFinance Director, Harbour Plaza Hotel Management International Ltd.Hong Kong
Eva Lee Kwok (1)
Chairman & Chief Executive OfficerAmara International Investment Corp.VancouverDIRECTORS
Stanley T. L. Kwok (3)
President, Stanley Kwok Consultants; Director Amara International Investment Corp.Vancouver
John C. S. LauPresident & Chief Executive OfficerHusky Energy Inc.Calgary
Wilmot L. Matthews (2)
Independent BusinessmanToronto
Wayne E. ShawBarrister and Solicitor, Stikeman ElliottToronto
Frank J. Sixt (1)
Executive Director & Group Finance DirectorHutchison Whampoa LimitedHong Kong
James S. BlairSenior Vice President & Chief Operating Officer
James D. GirgulisVice PresidentLegal and Corporate Secretary
Donald R. Ingram Senior Vice PresidentMidstream and Refined Products
Neil D. McGeeVice President and Chief Financial Officer
OFFICERS/EXECUTIVES
Husky Oil Operations Limited
Richard M. AlexanderTreasurer
L. Geoffrey BarlowController
K. Wendell CarrollVice President Corporate AdministrationDIRECTORS
Robert S. CowardVice President Western Canada Production
J. Tom GrahamVice President Heavy Oil & Gas
Douglas A. Proll Vice President Finance and Business Development
Terence L. SharkeyVice President Drilling and Completions
David R. TaylorVice President Exploration
HUSKY ENERGY INC. Page 23
CORPORATE INFORMATION
AUDITORS
KPMG LLP
BANKERS
Canadian Imperial Bank of CommerceThe Toronto-Dominion BankRoyal Bank of CanadaBank of MontrealHSBC Bank CanadaChase Manhattan Bank of CanadaBank of Nova ScotiaBank of Tokyo - Mitsubishi (Canada)Bank of America (Canada)
STOCK EXCHANGE
Toronto Stock ExchangeTrading Symbol: HSE
TRANSFER AGENT & REGISTRAR
Computershare Investor Services Inc. Formerly Montreal Trust Company of CanadaSuite 600, 530 - 8th Avenue S.W.Calgary, Alberta, Canada T2P 3S8Telephone: (800) 558-0046
The Bank of Nova Scotia Trust Company of New YorkOne Liberty Plaza, 23rd FloorNew York, New York 10006U.S.A. (For Public Notes and $US Capital Securites)
HUSKY ENERGY INC. Page 24
THIRD QUARTER REPORT AND NEWS RELEASE
FOR FURTHER INFORMATION PLEASE CONTACT:
IInvestor Relations Kim Schoenroth Tel: (403) 750-1313 Fax: (403) 750-5010