Husky selling part interest in midstream assets for C$1.7 billion

Mon Apr 25, 2016 7:28pm EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - Oil and gas producer Husky Energy (HSE.TO: Quote) reported a first-quarter loss on Monday and said it has agreed to sell a partial interest in a package of Canadian midstream energy assets to two Hong Kong-based firms for C$1.7 billion ($1.34 billion) in cash.

Husky will retain 35 percent interest and remain operator of the assets, which are located in Alberta and Saskatchewan and consist of around 1,900 kilometers of pipeline, 4.1 million barrels of oil storage capacity and other ancillary assets.

The three companies will form a new limited partnership of which Husky will own 35 percent, Power Asset Holding Ltd 0006.HK will own 48.75 percent and Cheung Kong Infrastructure Holdings Ltd (1038.HK: Quote) will own 16.25 percent.

Cheung Kong Infrastructure, like Husky, is controlled by Hong Kong billionaire Li Ka-shing.

"We set a high bar for this transaction," said Husky chief executive Asim Ghosh. "It was important to realize full value for these assets and to maintain operatorship and preserve the tight integration between our heavy oil production, marketing and refining assets."

Husky is also marketing around 60,000 barrels per day (bpd) of non-core assets sales in western Canada and 2,000 bpd of royalty production.

In its earnings statement, the company reported larger-than-expected losses from a three-month period in which benchmark crude prices touched 13-year lows around $26 a barrel.

Husky said its net loss was C$458 million, or 47 Canadian cents per share, compared with earnings of C$191 million, or 19 Canadian cents, in the first quarter of 2015.   Continued...

Husky Energy's President and CEO Asim Ghosh addresses shareholders during the company's annual general meeting in Calgary, Alberta, May 7, 2014.  REUTERS/Todd Korol