Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

The Market is speaking

[autofocus111]

HSE price is holding up nicely after the initial knee-jerk drop.in repsonse to the announcement of the MEG takeover attempt. The market appears to like the move. If multiple bidders don;t in fact step up, a minor bump up in the offer (like SU did with it's initial hostile offer for COS) may very well end up sealing the deal.

[Scottie99]

This post has been removed in accordance with Community Policy

[Olympic]

I suspect the initial drop was a result of an unexpected shift in HSE's strategy, together with the uncertain nature of a hostile acquisition. For years HSE banged the drum of a large, secure company during the oil slump.  We heard Peabody confirm in presentations/conference calls the value of being an integrated company, with diverse portfolios and up-mid-down stream assets.  Not

[Scottie99]

This post has been removed in accordance with Community Policy

[oilandgasmick]

Yes, of course a major shareholder is going to predict a bidding war--they would be foolish if they didn't. There is no advantage right now in saying "yes, this is probably the best we can do so let's jump on it." when the bid doesn't expire until 2019. These MEG shareholders who think that they are going to get 15-19 bucks are daydream believers. The debt load of 3.3B for

[mrbb]

my sentiment as well. American E&P have and are exiting canada.  SU and CNQ are the real big oilsand players who likely want to stay with surface mining and don't want anymore SAGD, CVE blew their brain out on COP,  Devon is still on their way out of canada, i doubt SU want to enter another bidding war after COS experience, CNQ got their fill with CVE's pelican lake and more

[oilandgasmick]

Thanks for the good post mrbb- you obviously know a lot more about the oil sands and SAGD than many other investors. I did not mention CNQ in my post but yes obviously with the big acquistion of assets they made there is no need for any more in the immediate future. Some HSE investors have bailed because of the new debt and the exposure to differentials but as you have said, the deal is accretive

[autofocus111]

@oilandgasmick "exposure to differentials"  Can you elaborate? I reviewed the HSE-MEG proposed acquisition presentation slides and from what I can tell, the combined company will be roughly balanced upstream-downstream with ~400mbbls/day oil production and 375mbbls/day combined processing / firm transport capacity.

[oilandgasmick]

Yes, there is definitely some confusion as to what that exposure to differentials would be. I am reading that that upstream-downstream would beroughly balanced but also seeing articles that have indicated that HSE shareholders are unhappy with differential exposure so if its just 25K barrels per day exposure then no big deal but I haven't seen much in terms of quantification. As I often say

[autofocus111]

@oilandgasnick I prefer to hear it directly from the horse's mouth rather than any analyst. See slide 12 in the MEG acuisition presentation at the lonk below, and 2018 guidance figures in the 2nd link.. • Highly integrated: combined 375 mbbls/day of heavy oil refining, upgrading and transport capacity and 7.2 million barrels of combined storage capacity in Western Canada and PADD II

[oilandgasmick]

Well, the conclusion I come to is that HSE has excess refining capacity that they are going to use for newly acquired Meg production meaning that most of the acquired production would not be subject to the differentials. Hence all the talk of synergy which tends to be an overused word but in this case may actually be true. If this is the case then and MEG is also accretive to earnings then the

[autofocus111]

HSE has not just excess refining capacity but also spare pipeline capacity. They stated at the last earnings call that for exaclty this reason they are able to benefit from a wide WCS-WTI differential. It's possible they are even buying part of MEG's output that has no contracted pipeline capacity. By acquiring MEG now, they can effectively and permanently 'lock-in' the advantage

[not4anymore]

IMO, HSE has transitioned into an excellent investment; with MEG even better!

[oilandgasmick]

Yes, it looks like about 93% of the new entity's production will not be subject to the differential. The next few weeks will be interesting. If a White Knight emerges it will probably be in the next 30 days because I can't see something being tabled in the X-mas season. The HSE integrated model has always been underrated by the investment community. Now it will gain more attention.

[Eigen337]

This post has been removed in accordance with Community Policy

[mrbb]

you have a major mental disorder and spewing nonsense.   record bitumen production means d!ck without upgrading. Raw bitumen is priced at 53 US cents per barrel. Meanwhile, husky is selling their east coast oil at $1.5 over brent price per barrel. This is real pricing as of closing October 4, 2018.  Only idiot spending billion $$ in captial and get 53 cents/barrel for its product

[mrbb]

On Oct 25, Peabody said the discounts are expected to last for two to three years until export pipeline capacity is expanded. He predicted heavy oil producers will start to shut down wells to relieve the glut of oil. https://globalnews.ca/news/4596018/husky-energy-downstream-output-meg-hostile-takeover/   On Oct 5, I said "Differential will be wide for another 2+ years" Read

[autofocus111]

@Scottie And what has the largest MEG shareholder said about the offer huh? The most boisterous voice does not always decide what happens for all the parties concerned.

[Scottie99]

This post has been removed in accordance with Community Policy

[autofocus111]

@Scottie99 Since you don't know who MEG's largest shareholder is, let me enlighten you. So now that you know, what do you think CNOOC is thinking about the offer? I am going to go out on a limb and say they'll be more than happy to take an offer that is even marginally higher than the initial one.  https://business.financialpost.com/commodities/energy/huskys-takeover-offer-for

[Scottie99]

This post has been removed in accordance with Community Policy