Husky Energy weighs sale of some Eastern Canada assets

TORONTO/CALGARY: Canadian  oil and gas producer Husky  Energy Inc is mulling paring  down its stakes in some of its  Eastern Canadian offshore assets,  in a move that could fetch  several billion dollars, people familiar  with the talks told  Reuters.  The company, which is controlled  by Hong Kong billionaire  Li Ka-shing, finds the capital-intensive  assets less attractive in  a low oil price environment,  making it challenging to generate  profits, the people said.  Husky could invest the sale  proceeds in South America,  Africa or Asia, the people  added. The sources cautioned,  however, that the talks were at  an early stage and Husky might  not proceed with the divestitures  if it does not receive attractive  offers.  Asked about the potential  sales during the company´s  earnings call, Chief Executive  Rob Peabody said Husky´s Atlantic  operations were an important  part of its portfolio and  declined to comment on what  he said was speculation.  Offshore projects started to  fall out of favor with some producers  during the energy downturn  as they often require a  greater investment, making it  harder for companies to make  the financial dynamics work.  Husky´s offshore assets include  White Rose, seen as its  crown jewel in the region, as  well as Flemish Pass and Terra  Nova. Husky could potentially  sell down stakes in Terra Nova,  where it has a 13 percent working  interest, and Flemish Pass.  It is also considering paring  down ownership inWhite Rose,  the people added.  Suncor Energy Inc, operator  of Terra Nova, could be interested  in buying Husky´s stake if  it becomes available, one of the  people said. A Suncor  spokesman declined to comment.  Husky began producing oil  fromthe Atlantic region in 2005.  Production averaged 34,300 barrels  per day (bpd) in the fourth  quarter. Even if these sales materialize,  Husky may remain a  major player in the Atlantic region.  Husky has previously said  it will consider a sanction decision  for the West White Rose  field, a satellite of White Rose,  in 2017. The company is also  going aheadwith two infillwells  at White Rose this year and is  planning to drill two explorationwells  in the Flemish Pass,  where it is partnered with Norway’s  Statoil ASA.  Husky´s stake in the 600-million-  barrel Bay du Nord oil discovery  in Flemish Pass is a minority  one, with Statoil holding  the majority.  When asked about a potential  sale, Statoil spokesman Erik  Haaland said: "As a matter of  principle,we don´t comment on  speculations.  "Plans for the West White  Rose extension project are not  likely to be affected by any decision  to sell, the people said.  Husky´s partners onWhite Rose  are Suncor and Nalcor Energy.  Any move by Husky would  come fairly soon after Peabody  took over as its new chief executive  from former CEO Asim  Ghosh in December.  After suffering some losses  due to a two-year slump in  global oil prices, Husky embarked  on an aggressive plan to  sell assets in an effort to cut its  debt levels. Husky has been selling  conventional assets in western  Canada while boosting  heavy oil thermal production in  the region, ramping up its Sunrise  oil sands project and increasing  volumes from the  Liwan Gas Project offshore  China. The company has been  streamlining itswestern Canada  business to focus on fewer resource  plays.  In late 2015, it announced  plans to sell around 60,000 bpd  of non-core conventional oil  and gas production, and last  year unloaded about 32,000 bpd  of assets in western Canada.  In 2016, asset sales helped  the company sharply reduce its  debt to its current total of C$5.3  billion.—Reuters