Husky Energy CEO Discusses Q3 2010 Results - Earnings Call Transcript
Husky Energy, Inc. (
)
Q3 2010 Earnings Call
November 4, 2010 12:00 p.m. ET
Executives
Rob Mcinnis – IR
Asim Ghosh - CEO
Alister Cowen – CFO
Rob Peabody – COO
Terrance Kutryk - VP of Midstream and Refined Products
Analysts
Andrew Potter - CIBC World Markets
Mark Polak - Scotia Capital
Greg Pardy - RBC Capital Market
Mike Dunn - First Energy Capital
Andrew Fairbanks - Bank of America
George Toriolia - UBS Securities
Presentation
Operator
»
Husky Energy Inc Q2 2010 Earnings Call Transcript
»
Husky Energy Inc. Q1 2010 Earnings Call Transcript
»
Plains All American CEO Discusses Q3 2010 Results - Earnings Call Transcript
Hello, this is the conference call operator. Welcome to the Husky Energy third quarter 2010 conference call and webcast. As a reminder, all participates are on a listen only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions)
At this time, I'd like to turn the conference over to Rob Mcinnis, Investor Relations. Please go ahead.
Rob
Mcinnis
Thank you. Good morning everyone, and thank you for joining us today to discuss our 2010 third quarter results.
I’d like to take a second to introduce myself, my name is Rob Mcinnis, and I am the Manager of Investor Relations for Husky Energy. With me today are our CEO, Asim Ghosh; CFO, Alister Cowan; COO, Rob Peabody; and Vice President of Midstream and Refined Products, Terrance Kutryk.
In today’s, Asim's will provide an overview of Husky's strategic direction. Alister will discuss the Company's performance, and Rob will provide an update on the Upstream operations, while Terrance will provide an update on the Midstream and Downstream activities.
Please note that today's comments contain some forward-looking information, actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our quarterly release and in our annual filings, which are available on SEDAR, EDGAR and on our website.
I'll now turn the call over to Asim.
Asim Ghosh
Good morning and thanks for being [inaudible]. I guess before I get into the quarter I just want to recap very briefly to what we said when we released our second quarter results which was my first call with you guys.
I’ll basically, the simple theme I spelled out at that time was where I saw Husky was, we were long on long-term opportunities, but we needed to speaking to collect the facts that we were short of short-term opportunities.
In summary of the long-term opportunities we are extremely well positioned for the long-term whether our growth, which I identified as the Oil Sands, Canada’s Offshore East Coast properties and Southeast Asia. But we recognize that we needed to take action to stabilize our production in the short-term and that’s what comes through both organic and inorganic.
And if I now were to summarize the quarter, I would basically say from our perspective, we executed a solid quarter and delivered on the early milestones on the plan we chartered out for you. So, just get into some of the actions that we did take, so I’ll start with the acquisitions.
Again, I’ll refresh your memory on something that I said. I believe it was during the quarterly call, it might have been at subsequent analyst meetings, but we are not, as we execute our acquisition plan, interested in trading dollars for balance. In other words, I’m not interested in just getting production for the sake of headline production. We are interested in financially accretive production, acquisitions and offline attractive rate of return. And I believe [inaudible]. i.e. the way we can leverage our existing infrastructure, our existing human resources, and set the company up to the reposition of the rest of Canada with the results placed.
So to that point, we had announced that signed a purchase agreement in September to acquire natural gas properties in west central Alberta, which has about 65 million cubic feet per day of natural gas production, about 11,000 boe/pd. It’s adjacent to our – it is part of our whole perimeter gas operation, where we actually have an existing gas line. So both in terms of metrics and in terms of the basic quality of criteria we set out, it’s acquisition, banked on strategy.
I am unfortunately not in a position to comment on the purchase price, but I can assure you [inaudible] a rigorous set of criteria by evaluating these acquisitions. And this acquisition will earn us returns on part of some of the best gases those place that are out there. So it’s a underline theme of financial discipline that I hope you will continue to hear from us as we roll this canvas out.
Now, we are not done on this theme, by the way. We are looking at some other opportunities and we will move forward on those in a discipline manner, provided always that there meet our rigorous criteria, which I just outlined.
Now, the second thing is on the inorganic part. We talked of a measure of the reprioritizing our capital to meet our strategic needs both of shorter term production and of the [inaudible] critical mass as we inquisition the rest of Canada for results placed, so to that, we did increase our capital expenditure for the year from 3.1 billion to 4 billion.
A significant portion of that increase has been targeted at simulating projects that can deliver near-term production and the terms in excess of our RAC, and really by near-term I mean stuff that we will see results from the next 12 to 18 months, not in the next – I’m categorizing as 2 to 5 years as medium term, anything past 5 years as long-term. So really, I’m talking step backs in the next 12 to 18 months.
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