Husky Energy said Tuesday it has reached an agreement for the sale of select assets in southwest Saskatchewan for $595 million to Whitecap Resources.
“Today’s announcement is another step in the transition of our Western Canada portfolio into a more focused and efficient business,” said CEO Asim Ghosh. “Over the past two months we have made significant progress on three major divestiture initiatives that will materially strengthen our balance sheet and further our transition into a low sustaining capital business.”
For the past six years, Husky said it has been transitioning its Western Canada business from a legacy basin to one with fewer, more material resource plays.
Work to progress the planned sale of several other packages in Western Canada continues.
Improving Capital Efficiencies
According to Husky Energy, the sale of the southwest Saskatchewan assets and the continued transformation of the Western Canada business are expected to deliver financial efficiencies, allowing capital to be more effectively deployed toward higher-return projects in the Company’s portfolio.
The company said these efficiencies include reductions to: Ongoing sustaining and maintenance capital requirements; Overall corporate operating costs; Future abandonment liabilities; and Administrative costs associated with the assets.
The divested assets currently produce approximately 11,600 barrels of oil equivalent per day.
This is Husky’s third asset sale agreement this year. Husky agreed to sell a 65 percent ownership interest in select midstream assets in April for $1.7 billion, while retaining 35 percent ownership in a newly formed limited partnership and remaining the operator. Earlier this month, the Company reached an agreement under which it will realize $163 million in cash proceeds from the sale of royalty assets in Western Canada.
Proceeds from these transactions will be used to further strengthen the balance sheet, the company said.
The sale is subject to regulatory approval.