Oil and gas producer sells some of its assets
Husky Energy Inc. has struck a $1.7-billion deal to sell part of its pipeline business along the AlbertaSaskatchewan border.
The Calgary-based oil and gas producer announced Monday it was selling a 65 per cent interest in the pipeline assets to Cheung Kong Infrastructure Holdings Ltd. and Power Assets Holding Ltd. The two companies, with energy infrastructure assets in China and a handful of other countries, are owned by Husky's controllingshareholder, Hong Kong billionaire Li Ka-shing.
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.
“We set a high bar for this transaction,” Husky chief executive Asim Ghosh said in a release. The company also released its first-quarter
(Cheung Kong Infrastructure Holdings Ltd. and Power Assets Holding Ltd.) have the funding capacity to build the midstream infrastructure requirements...
earnings Monday, in which Ghosh said the midstream asset sale would be used to strengthen the company's balance sheet.
Husky posted a $458 million net loss in the first quarter compared with net earnings of $191 million during the same period last year. Over the same period, the company's total oil and gas production has fallen as the rout in commodity prices persists.
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,” it 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.
Energy companies are selling assets, reducing spending and cutting workers as U.S. crude prices hover above US$40 a barrel almost two years into a slump.