Husky and CNOOC Reach Agreement, PEH is Next?CALGARY, AB--(Marketwired - August 02, 2016) - Husky Energy's (TSX:
HSE) China subsidiary has signed a Heads of Agreement (HOA) with CNOOC Limited and relevant companies for the price adjustment of natural gas from the Liwan 3-1 and Liuhua 34-2 fields that would see the price set at $12.50-15.00 Cdn per thousand cubic feet (mcf) at current exchange rates.
"Long term fundamentals remain strong for natural gas demand in China. The price adjustment will allow Husky and CNOOC to maintain their market share in a competitive gas market," said CEO Asim Ghosh. "We reached this agreement in the spirit of the longstanding relationship between Husky and CNOOC that brought to life the first deepwater development offshore China."
Gross take-or-pay volumes from the fields remain unchanged in the range of 300-330 million cubic feet per day (mmcf/day). Liquids production, net to Husky, is also expected to remain in the range of 5,000-6,000 barrels per day. The price adjustment under the HOA is effective as of November 20, 2015 and the settlement of outstanding payments is calculated from that date.
"Husky and CNOOC plan to further deepen their cooperation and have undertaken to jointly create more value with the advancement of the Liuhua 29-1 gas field," said Ghosh.
Plans will get underway to finalize the commercial and development approach to tie the Liuhua 29-1 field into the Liwan infrastructure. Liuhua 29-1 gross gas sales volumes are expected to add approximately 80 mmcf/day.
Husky holds a 49 percent interest in the Production Sharing Contract (PSC) for the Liwan Gas Project and operates the deepwater infrastructure. CNOOC Limited holds a 51 percent interest in the PSC and operates the shallow water facilities and the onshore gas terminal.
Husky and CNOOC continue to advance a rich portfolio of opportunities in the Asia Pacific Region, including several shallow water natural gas and liquids developments offshore Indonesia.