This is the first time any of my blogs have covered Husky Energy.But I have seen it at $20 a share 18 months ago and in September at a low of $8.48 per share.In between it has made quite a few changes.However it just had a very average third quarter.But it has made a number of changes that show it should be ready for a better performance in Q4 and even better in 2020.For example, the Royal Bank has a short term price target of $12 per share.This blog sees that HSE may not be at $12 until the summer of 2020 but it will be there.
Third Quarter Results
Revenue was down about 8% over Q3 in 2018.And more importantly net earnings were down by almost 50%.While funds from operations was down 30% to $1 billion from $1.3 billion in Q3 2018.Capital spending was $878 million for the quarter and guidance remains unchanged at $3-3.5 billion for the year. So the quarter as a whole was not remarkable but the important point here is that Husky Energy is building for 2020.
Husky tells us that their Dee Valley thermal bitumen project came in ahead of schedule and under budget,And they began the final tie-in for their Lima Refinery crude oil project.They also recived permits to commence the Superior Refinery rebuild and lastly they sold their Prince George refinery.The Sea Rose floating production vehicle is up to full rates,the Liuhua 29-1 project in China is 65% complete and the White Rose project is 55% complete.
Summary
Husky tells investors that they will meet their guidance for capital expenditures for 2019; they will invest a total of $3-$3.5billion.And the third quarter had capital expenditures of $868 million.It is true that operational performance was down in the third quarter and may be down slightly in Q4 also.But Husky is definitely loading up for 2020 they are working on or have completed 6 major projects and sold the Prince George Refinery.Both overall upstream production and downstream throughput increased slightly over Q3 in 2018 and are expected to increase further in Q4.With new output coming onstream in 2020 from Dee Valley,White Rose and from China.These increases should be enough to send HSE to $12 in early 2020 and stay in this range into the summer. https://huskyenergy.com/http://www.cppib.com/en/
