Husky Energy Inc. (HUSKF.PK)

Q2 2010 Earnings Call

July 28, 2010 11:00 AM ET

Executives

Patrick Aherene - Manager of 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

At this time, I'd like to turn the conference over to Patrick Aherene, Manager of Investor Relations. Please go ahead.

Patrick Aherene

Good morning everybody. Thanks for joining us today to talk about our 2010 second quarter. With me in the room today are our new CEO, Asim Ghosh; our CFO, Alister Cowan; our COO, Rob Peabody; and our Vice President of Midstream and Refined Products, Terrance Kutryk.

Today, Asim's going to provide an overview of Husky's strategic direction. And then, Alister will talk about the Company's second quarter performance. Rob will provide an update on the upstream operations, and Terrance will conclude with talking about the Midstream and Downstream activities.

Please note that in today's call there will be some forward-looking information, and actual results may differ materially from the expected results because of various risk factors and assumptions, which we've described in our quarterly release and in our annual filings, and those are available on SEDAR, EDGAR and on our website.

I'll now turn the call over to Asim.

Asim Ghosh

Good morning and thank you for taking the time to join us. I've met a couple of you people before, but I'm sure most of you will be new and sorry for meeting over the telephone, but nice to meet you anyway. I think in the circumstances, given that really I'm newer in the chair. Before I get into a discussion of the second quarter results, it might be worth our while for me to pull up us back and look at the bigger picture from my fresh eyes, so to speak, viewpoint.

I've been in the position actually for less than two months as we speak, but I've been a Board member since May 2009. And I guess what I am going to say today reflects the cumulative learnings over that more intense two months and the Board vantage viewpoint since last May 2009. So, let me start with a look at basically what I'd call, in the non-financial sense, our balance sheet.

And the first thing that strikes me, and I actually sent this to a couple of you whom I've had the opportunity to meet, is the one thing that sticks out when you look at Husky compared to any of our peers, is the completely outstanding resource base that we've got. It's a country to country across a range of types of resources, different levels of maturity, and I'll build on that scene in a minute.

But the simplest quantification I can give of that is that if I take last year's production rate, we got something in excess of 60 years worth of discovered, recoverable resource, and I stress the word recoverable resource, not total resource, available to this company. The second point I just touched on actually deeply is that resource base is very diverse. And therefore, we don't have an exposure to market cycles and market fabs in any single type of play.

We are not an oil sands company. We are not an offshore company. We are not a resource company. We are all of the above. So, that's the second thing that hits me. And then, in the context of portfolio management really what I'd say is conventional assets in Western Canada and our heavy oil assets in the Lloyd complex are basically what I would consider as the company's bread and butter, are providing a solid, sustainable foundation of cash flow.

Then, looking to the growth part of the assets, we have three tremendous pillars. One is our absolutely unenviable position in the oil sands, ranging all the way from technologies to be discovered to capitalize in [Solesky] but we're seeing now types of the top tier resource in Sunrise. Then we got continued growth on our East Coast where we have a very, very strong position. But while this is already delivered, with further investment it still has material long-life and, in fact, upside ahead of it. And finally, of course, we've got our growth opportunity in Southeast Asia.

So that's it for the portfolio part of it. The second part I want to highlight is that sticks out to anybody coming in fresh into this company is a very defined, strong profit culture which has a number of elements that I'll speak to in a minute. But the corporate cultures are intangibles. They cannot be put down on a piece of paper. They evolve over decades, and in this case, they've evolved like seven decades.

So, we got a very talented and dedicated employee base, and the backbone of a company is its middle management. And this company has got middle management that has been with the company for decades that has the depth of knowledge of the business and the commitment to the business. And I'll drill on another very strong part of the culture in my next section.

Secondly, there's a very strong safety culture, and Rob will expand on this later. And we are not talking of this because safety happens to be sort of very top of mind right now. It is something that hit me as soon as I joined this company and got on the Board and actually got on the health and safety committee. So that in itself was symbolic to you that a new director comes in and he gets to the health and safety committee. So it is not something that is flattish for us.

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