Husky Energy Increases 2010 Cash Flow to $3.5 Billion

Husky Energy Inc. recorded a 42 percent increase in 2010 cash flow compared to 2009. The Company reported a 58 percent improvement to fourth quarter cash flow compared to the same period of 2009. Net earnings in the quarter were higher by 19 percent compared to the third quarter 2010 on the strength of higher light oil crude prices, improved refining margins and settlement of the Terra Nova re-determination process.

‘‘2010 was a transitional year as we undertook a comprehensive portfolio review. From this, we developed and implemented a strategic plan setting out clear financial and operational milestones,’’ said CEO Asim Ghosh. ‘‘We successfully implemented near-term steps to stabilize production and accelerate value, while providing clear direction around our mid and long-term initiatives. We developed a comprehensive financing plan, allowing us to build on our momentum and provide the disciplined capital investment to develop our growth pillars: the Oil Sands, the Atlantic Region and South East Asia.’’

Key 2010 and fourth quarter highlights include:
Financial

• Cash flow from operations of $3.5 billion, or $4.16 per share (diluted) compared with $2.5 billion, or $2.95 per share
  in 2009.
• Net earnings for the year of $1.2 billion, or $1.38 per share (diluted), compared to $1.4 billion, or $1.67 per share
  in 2009.
• Cash flow from operations in the fourth quarter was $1,037 million, or $1.21 per share (diluted), compared with $657 million or $0.77 per share in the same period of 2009.
• Net earnings in the fourth quarter of $305 million, or $0.35 per share (diluted), compared to $320 million, or $0.38 per share in the same period of 2009.
• Increased capital spending, including acquisitions, to approximately $4.0 billion. 80 percent of the capital was directed at the Upstream business.
• Developed and executed on a comprehensive financing plan by:
  • Closing a common share offering in the fourth quarter, raising a total of $1.0 billion in equity capital.
  • Announcing the intention to allow common shareholders to elect to receive dividends in cash or common shares.

Foundation Business

• Production averaged 287,100 boe/day for the year.
• Increased capital allocated to low-cost, high-return projects to fuel near-term production growth.
• Increased 2010 second half drilling activity by 150 percent, with 665 wells drilled in Western Canada compared to 267 in the same period of 2009.
• Announced two asset acquisitions for $1.2 billion in Western Canada. The west central Alberta asset acquisition closed on November 30, 2010 and the ExxonMobil Canada Ltd. asset acquisition closed on February 4, 2011.
• Concluded the Terra Nova re-determination process, increasing Husky’s pooled interest in the field to 13 percent from 12.51 percent.

Growth Pillars

Oil Sands

• Sanctioned Phase I of the Sunrise Energy Project, a premier in-situ oil sands development in northern Alberta. First oil production is expected in 2014.
• Awarded contracts with a total value of approximately $1.7 billion for the Sunrise Energy Project for the engineering, procurement and construction of the central processing facilities and field facilities, as well as the drilling and completion of the injection and production wells.
• Arrangements for the transportation of diluent to the site and the movement of production to markets concluded.

Atlantic Region

• Achieved first oil from the North Amethyst field in May 2010.
• In the third quarter, a second production well was completed and the field now has two water injectors supporting the two production wells.
• Received regulatory approval for the West White Rose satellite pilot development. A two well pilot project is currently underway with first production expected in mid 2011.

South East Asia

• After a thorough strategic evaluation, retained the South East Asian assets.
• Signed a Heads of Agreement with China National Offshore Oil Corporation (CNOOC) specifying key principles of cooperation for funding and operating the Liwan deep water gas development and the shallow water facilities. First gas is anticipated in late 2013.
• Received a 20-year extension for the Madura Strait Production Sharing Contract (PSC) in Indonesia. A Plan
  of Development