Husky Energy sheds $1.7B assets, while Precision Drilling reports loss

Husky Energy said it is selling 65 per cent of its ownership interest in some midstream assets in the
Lloydminster region of Alberta and Saskatchewan for $1.7 billion in cash. 

Husky said after the sale to Cheung Kong Infrastructure Holdings Ltd. and Power Assets Holdings Ltd. it will retain a 35 per cent interest in the assets and remain the operator. 

The assets include about 1,900 kilometres of pipeline in the Lloydminster region, 4.1 million barrels of oil storage capacity at Hardisty and Lloydminster, and other ancillary assets.

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Husky, one of Canada's largest integrated oil companies, said a new limited partnership is to be formed, with Power Assets holding a 48.75 per cent interest, Husky retaining 35 per cent and Cheung Kong Infrastructure with a 16.25 per cent. 

The announcement came as the company reported its net loss soared to $458 million, or 47 cents per diluted share, in the first quarter compared with a loss of $69 million, or nine cents per share, in same prior-year period.

Factors cited by the company included a $50-million after tax related to its hedging program and an income tax expense of $75 million related to prior years.

In a statement released Monday after markets closed, Husky said its new partners are aligned with expanding its heavy oil business.

"(They) have the funding capacity to build the midstream infrastructure requirements associated with the planned construction of additional Lloyd thermal projects in Saskatchewan and Alberta," the company said. 

Andy Hunter, deputy managing director of CKI, described the deal as an attractive one for his company which "meets our stringent investment criteria and offers highly predictable revenues and cash flow."

"The Cheung Kong Group has had investments in Canada for around 40 years and finds Canada to have a very good business environment. We will continue to study oil and gas related infrastructure projects and other suitable investment opportunities in Canada in the future," Hunter added.

Precision Drilling reports losses

Precision Drilling Corp., meanwhile, has reported a loss of $19.9 million in its latest quarter compared with a profit of $24.0 million last year.

The oilfield services company said the loss amounted to seven cents per share for the quarter ended March 31 compared with a profit of eight cents in the same quarter last year. 

Revenue this quarter totalled $301.7 million, down from $512.1 million in the first quarter of 2015, mainly due to lower drilling activity in the U.S., Canada and internationally.

The company said revenue from its contract drilling services and completion and production services segments both fell by 39 per cent and 57 per cent, respectively. During the quarter, Precision Drilling said it received $23 million in one-time contract cancellation payments in connection with five contracts. 

The company said it has been hit by a total of nine contract cancellations since the start of the downturn, which began in late 2014.

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