April 22, 2008 / 9:12 PM / 10 years ago

Husky sets million-barrel petroleum target for 2020

(In U.S. dollars unless noted.)

By Scott Haggett

CALGARY, Alberta, April 22 (Reuters) - Husky Energy Inc (HSE.TO) plans to nearly triple its petroleum production to a million barrels a day within 12 years, its chief executive said on Tuesday, as it boosts output from Canada’s oil sands and expands its international reach.

John Lau, chief executive of Canada’s No. 3 oil exploration and production firm, said the target is within reach by 2020 as the company looks to ambitious drilling plans and new oil sands projects.

Acquisitions could also flesh out production. The company has as much as C$15 billion it could spend to acquire rival firms or new production, but as yet has no plans on where to spend the cash or how much it plans to pay.

“I’m looking for value,” Lau told reporters following the company’s annual meeting. “I don’t care if it’s C$5 (billion) or C$15 (billion) as long as its accretive,” to earnings.

Husky, controlled by Hong Kong magnate Li Ka-shing, produces oil and gas in Canada and Southeast Asia. It wholly owns refineries in British Columbia and Ohio, and has a half stake in a BP Plc (BP.L) refinery in Toledo, Ohio, it acquired earlier this year in return for 50 percent of its planned 200,000 barrel per day Sunrise oil sands project.

Husky’s oil and gas production, 350,100 barrels per day in the first quarter, will be augmented by new oil sands projects coming after its completes its Sunrise project and through new offshore drilling off Canada’s East Coast, Indonesia and China, as well as Greenland.

Lau said Husky may look for a partner for its proposed Saleski oil sands project on a property that could eventually produce 300,000 barrels a day. A partner hasn’t been identified but the chief executive said extending its partnership with BP was one of a number of possibilities.

“BP and Husky have a very good relationship...but they are one possible partner,” Lau said. “We’re not limited to BP.”

Growth will also come from Husky’s holding off the coast of China, where it and partner CNOOC Ltd (0883.HK) found the Liwan field, which contains as much as 6 trillion cubic feet natural gas.

Lau said developing the find could cost as much as $5 billion, a price that includes the cost of a pipeline to shore.

A drilling rig has been secured to firm up the Liwan find and to explore the company’s nearby holdings beginning in the fourth quarter of this year, Lau said.

Husky reported better than expected first-quarter earnings on Monday of C$887 million, a 36 percent increase from the year-earlier period as oil prices rose by more than two-thirds.

Lau told shareholders that strong oil prices augur a record year for the company and he expects 2008 revenue to top C$20 billion, well ahead of the C$15.52 billion in revenue Husky recorded last year.

Husky shares rose 96 Canadian cents to C$46.41 on the Toronto Stock Exchange on Tuesday. The stock has risen 15 percent over the past 12 months.

$1=$1.01 Canadian Reporting by Scott Haggett; Editing by Peter Galloway

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