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

Husky Energy cuts 2020 budget by $1-billion

[ALTEL]

Not looking good for my friends in Lloydminster


112020-03-12 17:52 ET - News Release

 

Mr. Rob Peabody reports

HUSKY ENERGY CUTS 2020 SPENDING BY $1 BILLION

Husky Energy Inc. is taking a series of actions to fortify its business in response to challenging global market conditions.

These initiatives reflect the Company's commitment to capital discipline, which includes maintaining the strength of its balance sheet while protecting value in an extended low commodity price environment. Husky's drive to improve process and occupational safety is unaffected and remains a top priority.

"Husky has three important advantages: a strong balance sheet, an Integrated Corridor which includes a sizeable downstream and midstream segment, and Offshore operations that include long-term gas contracts in the Asia Pacific region not linked to the price of oil," said CEO Rob Peabody.

Given current market conditions Husky will commence the safe and orderly reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices.

Strong Balance Sheet and Liquidity

Total liquidity is $4.9 billion, comprised of $1.4 billion in cash and $3.5 billion in unused credit facilities. In line with its committed credit facilities, Husky is required to maintain debt to capital of no more than 65%, and is well below this threshold with a ratio of 27% with no long-term debt maturities until 2022.

2020 Capital Program Reduced by $900 Million; Further Cost Reductions of $100 Million

[Scottie99]

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[oilandgasmick]

As always, thanks for your mature and thoughful opinions and thanks as well for your kind wishes towards the families of those affected by the budget cuts. Perhaps you can run for office in Lloydminster.

[lashing]

I dont know what people expect. This isdustry has been stretched. No one can survice on credit, barely come out and then see a massive drop like this and get ahead. I think we're 90 days from bankrupt for all smaller players. Yes ALL of them.  I lost my entire retirement nest egg so no bashing here. I deperately need rebound. However Alberta oil is like a divorce thats being going on for

[BramptonBradley]

Is it not possible for Husky to cherry pick from profitable operations out there that are in too much debt to survive this?

[Nakate]

I think this rout is going to be worst that 2008 for personal losses, the market hates retail making money and has all the tools to relieve honest investors of any gains and spare cash they can afford to invest. The industry motto is If they have money to invest they don't really need it do they. 

[oilandgasmick]

I am sorry to hear about this, I hate it when hard working people lose money hence my reaction to a few children who show up here on the threads to taunt honest people who have been hurt by this downturn. I might be wrong but I wouldn't sell HSE here. They have made some overdue moves today which should help the situation. Yes, I think you might be right about all the smaller players, it'

[onec007]

I find solace from this board well at least from some the people. I'm down HUGE not going to sugar coat it. I re-entered back in January so you can figure out what my average cost is and trust me this past month has been trying times (understatement). I thought about selling and taking a huge loss basically wiping out my entire savings but then the rational side of me keeps asking why did I

[believer123]

I've lost alot of money too and now I have to get rid of my car.  I think as shareholders we need to do something about this, the way this company has been spending money has been reckless and unreasonable the past year.  Why didn't they cut spending last year to save the SP?  

[Scottie99]

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[mrbb]

So you believe lks don't care because he is saved by the theft of hse's 65% of midstream assets?   First, it wasn't a theft since husky received close to a $1 billion for it and hse bond rating didn't get downgraded.  Secondly, take a look at other midstreamers IPL, PPL, KEY, ALA this week, their share price all cratered this week.  Meaning if hse still have all the

[Scottie99]

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[oilandgasmick]

Thanks MRBB-- now I see what this rage is all about. How childish --and its directed at people who had nothing to do with Twin Butte. On another note, I was watching BNN this morning and an analyst (forgot the name) said that the 4 survivors in the patch would be Su, Arx, Cnq and Cve with no mention of Husky. However, I would take note of the fact that CNQ has 20B of debt and CVE still has

[onec007]

Take it with a grain of salt... HSE is often misses in most conversation. They also failed to mentioned IMO and TOU. Not familiar with ARX so can't provide any context. Agreed CNQ is too heavily in debt but I think if they can rein in on their capex which was over $7 billion last year to more of their norm run rate of $4-5 billion they can free up cash to pay their debt. Think these cuts all

[oilandgasmick]

Companies that can survive and offer even a modest dividend will do alright because when the virus scare inevitably passes we are going to be in a very low interest rate world for years to come. The stimulus offers relief but the down side is that in the aftermath you need to take on the risk of equities to get any decent returns. I believe this is why the equity markets soared to such heights

[mrbb]

i had told many friends asking me what future will be like. I told them look at japan, 

[mrbb]

yep, could be IMO and TOU also don't use mainstream brokerage services too so bnn analysts don't sing their song either. I wonder what cnq gonna do with all the devon staff they inherit from the last takeover.  Cnq made a promise not toe lay off devon staff, that was one promise cnq made to devon. (devon is also an ethical company who try to look out for their employee). Luckily cnq

[oilandgasmick]

Gun violence in the USA and Mexico will kill around 40,000 people this year--much more than the virus will.

[pablo87]

My theory on why HSE share price is so depressed relative to others is that the company is not well understood AND is not given the benefit of the doubt. Relative to a Suncor for example, there is a need to provide more details and educate analysts but then the company is 70% owned by 1 shareholder so the tendency you would think would be to provide less info.  What kind of detail is needed?

[oilandgasmick]

Pablo--When you say that "capex is burning a hole in Husky's pocket" you have hit the nail on the head. The World (even before the recent Saudi announcement) was simply producing too much oil and it was putting huge downward pressure on the WTI price. At the same time, HSE was spending a lot of money on CAPEX and probably wouldn't have turned cash flow positive until late 2021

[mrbb]

husky got caught up with the flavor of the month treadmill of increasing production for sake of increasing production because that's what the street analysts like to see from oil companies. In the last 3 years hse try to get out of that treadmill and find a sustainable business model like with more steady cashflow like mid and downstream.  That is why they spent money upgrading Lloyd

[oilandgasmick]

MRBB-- So now that HSE has drastically cut capex and assuming that the virus will pass--what do you see as the market's reaction?

[mrbb]

still need to know the direction of the dividend; same, reduce or elimination. A quick oil price recovery may not be so good as shale oil wouldn't get culled as much. A deep slump in oil price may hurt now but after shale frackers folded their cards, russia and saudi can dictate oil prices as they wish. 

[oilandgasmick]

I think its a foregone conclusion that they will cut the dividend next quarter, my guess is by 50% but that cut along with the capex reduction should ensure survival for the next few years. Thats alot better than the fate of many other energy companies. Let's face it, most of the smaller players are finished, I can't see how they can survive with the huge debt loads they are carrying. If

[autofocus111]

mrbb Dividend is as good as gone. One look at the cash flow sensitivitiy to WTI, 321Crack, and FX, and the current prices of these shows you that they barely have the cash flow to fund sustaining capex, let alone growth capex or dividend. Cutting expenditures significantly to the offshore projects (canda and asia) is likely not feasible. I think they announced the capex cut and held off on any

[pablo87]

What I want to know is what level of WTI will be needed to restore the dividend to 50 cents if it is in fact cut?

[pablo87]

Oilandgas, true - too much upstream capex, these CEO's don't have to grow but they WANT to..barriers to entry are too low (60+ producers in Permian???). In this context, you would think HSE would capex more non upstream, keep retail, buyback midstream but that's not what they've been doing. This $1B capex cut is a step in the right direction.

[oilandgasmick]

Hi Pablo: Please, just call me Mick, I'm a man of wealth and taste. Most of those Permian frackers are toast and good riddance to them--thanks for sinking the world energy markets with all of your unprofitable oil production but hey keep pumping to the max while the hedges last. Yes, I would think that the HSE retail outlets would be making decent coin with the lower feedstock prices but

[pablo87]

Mick, the thing with a company like MEG, the barriers to entry are high and getting higher in more ways than one. A company like TECK would be better off buying it than starting from scratch IMO - it sure seems to me there won't be anymore major oil sands projects...

[jyuuto32]

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[mrbb]

i don't have cable tv for over 10 years now.  BNN didn't help my investment portfolio anyway. BNN news clips on the web anyway. BNN analyst's darlings have always been these 4, SU, CNQ, baytex, and CVE.  Now that bte had fall off the table, now it is mostly su, cnq and cve. I didn't know bnn added a new one ARX.  I guess arx cover the LNG angle, can't have 100%

[Scottie99]

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[mrbb]

it's mighty brave of hse's BOD to double up their crime by 'stripping' 65% of midstream asset  in the midst of SEC investigation for 'reserve and accounting fraud' so you claimed.  you always spin the deal as a theft and never talk about how husky reduced their debt with the cash injection, and prevented a bond rating downgrade which only HSE and IMO avoided at

[Scottie99]

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[mrbb]

No where in any post of mine in this hse forum have i ask nor even hinted for your confidential krap info. So don't boast yourself on some make belief of what i like from u. I rather let readers here to judge your allegation and story line backed by .... nothing, and using the excuse of confidentiality for no show.  You must have sucked someone's d!ck to get the exclusive

[Scottie99]

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[Predator2018]

Scottie99,   LIBEL LAWSUIT IS USED FOR DEFMATION. DONT THNK YOU ARE ANONYMOUS AS STOCKHOUSE CAN BE SUBPOENAED TO PROVIDE YOUR DATA. DONT BE LIBELOUS AND BE FACTUAL. 

[Scottie99]

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[mrbb]

don't play sly, i 've called you much worse before. We've been at this since 2016  

[pablo87]

Very happy with management - they took immediate and meaningful action. Works out to ~C$10 per boe, they'll surely cut the dividend (no choice) which would be another $5 per boe. In this environment, the business model will prove its value.

[Seppelt]

The entire cut is in the Upstream business. The Downstream 475-550 is unchanged. This excludes Superior. This is showing the real advantage of integrated. I believe the Lima refinery should run at full capacity, no maintenance scheduled after recent upgrade. Lloydminster Upgrated was in the schedule for 2020, it will probably remain. Details have been removed from the website but I remember seeing

[onec007]

My thoughts exactly. Downstream will be once again that saves the integrated companies. I feel terrible for the people of Alberta and SK as these low oil prices will definitely impact jobs and the overall businesses there but it's definitely difficult times. Vermillion and other smaller players have been so focused on growing production and giving dividends instead of diversifying its business

[oilandgasmick]

Yes, good point. When analysts in Canada (not just USA) reviewed quarterly results they always made comments about "where is future growth coming from?" which put a lot of pressure on companies to expand when in fact, less was more in terms positive cash flow. They didn't have to spend all their cash and borrow more when decline rates were small compared to the frackers. In many

[firstworld]

Why would anyone feel terrible for poorly managed business or households who only build up debt failing to plan for the certain cyclical downs that energy always has? It all debt fueled out west and most are not strategic in any way ...HSE knows and have really long vision to unload the retail segment. Those legacy assets probably have BNs in ground contamination liabilities though somwill be