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HomeNewsHusky Energy reports $7 billion third quarter loss ahead of Cenovus merger

Husky Energy reports $7 billion third quarter loss ahead of Cenovus merger

Husky Energy Inc. will be focusing on continuing safe operations and ramping up production following the completion of turnarounds at both the Lloydminster Upgrader and the Cold Lake Tucker thermal project.

The company reported a $7 billion loss this past quarter as they head into a friendly takeover deal with Cenovus Energy Inc. The loss was impacted by after tax impairment charges of $6.7 billion.

“This was related to lower long-term commodity prices, reduced capital investment and higher discount rates based on recent market indicators,” explains CFO Jeff Hart.

Revenues were $3.33 billion, down from $5.29 billion in the same quarter last year. Meanwhile, funds from operation were recorded at $148 million, down from $1.02 billion in the same quarter in 2019. CEO Rob Peabody says while oil prices have been improving, Husky was impacted by lagging U.S. refineries, turnarounds at several facilities and the tax impairment.

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Peabody adds the startup of several projects will increase funds from operations and stabilize the company in the future. Some projects include the Spruce Lake Central which achieved first oil in August and produced about 5,000 bpd (barrels per day) in the third quarter as it ramps up to full production.

“Following the turnaround, we have increased our diesel capacity from 6,000 bpd to nearly 10,000 bpd. We also saw strong demand for asphalt this quarter which allowed us to run the Lloydminster refinery at full rate.”

The total upstream production for the quarter averaged at 258,400 barrels of oil equivalent per day which was up from 246,500 in the previous quarter. Downstream throughput averaged 300,100 bbls/day, compared to 281,300 bbls/day in the second quarter of 2020.

Commenting on the Cenovus Energy merger, Peabody says consolidation played a major factor in the deal.

“The desire to create a resilient integrated energy leader with a real low cost upstream platform and really extensive midstream and downstream network to allow for it to be totally integrated was a real strong driver for both companies.”

He adds Husky Energy says regular operations will continue over the next few months as the merger deal is expected to close in the first quarter of 2021.

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