Headquartered in Calgary, Alberta, Husky Energy Inc. is one of Canada's largest energy and energy-related companies. The Company has over $21 billion in assets and employs approximately 4,100 employees.
2007 was another excellent year for Husky with annual net earnings of $3.2 billion up 18% over 2006. Cash flow from operations improved by 21% to $5.4 billion in 2007. Sales and Operating revenues, net of royalties, were $15.5 billion in 2007, an increase of 23% over 2006.
Since re-entering public markets in 2000, Husky’s shareholders have seen total returns of 715 percent. Husky has consistently increased its dividend payment with its current quarterly distribution of $0.33 per share. Since 2000, Husky has returned over $3.4 billion to its shareholders in ordinary and special dividends.
Husky owns a portfolio of high-margin production in Western Canada, Eastern Canada and Asia. Production ranges from shorter-term shallow oil and gas production in Eastern Alberta to longer-life, deep oil and gas production in Western Alberta, Northeast British Columbia, Southwest Saskatchewan as well as the East Coast of Canada. Husky also has significant holdings in the Alberta Oil Sands and Southeast Asia.
Husky's Tucker Oil Sands project was completed on-schedule and under budget during 2006, achieving first oil during November 2006. Tucker will ramp up production over the next two years to achieve peak production of 30,000 barrels of bitumen per day. Optimization strategies on the existing well pads will continue and new well pads are being planned to accelerate the ramp-up of production.
The front-end engineering design for the Sunrise project is complete. Discussions with regulatory authorities to amend our development application are proceeding. Corporate sanction is expected to be in 2008. Husky has reached an agreement in principle with BP to create an integrated North American oil sands business consisting of two 50/50 partnerships; for Sunrise, contributed and operated by Husky and for Toledo Refinery, contributed and operated by BP. The plan for the Sunrise Oil Sands Partnership with BP will proceed in three phases. The first phase will target 60 mbbls/day of bitumen production in 2012. Production is scheduled to reach 200 mbbls/day of bitumen in the 2015 to 2020 period. Preliminary field work is progressing.
In December 2007, Husky executed an agreement to purchase 110,000 contiguous acres of oil sands leases at McMullen, located in the west central Athabasca oil sands deposit, for $105 million. This land lies adjacent to oil sands leases that we currently hold. We will have a 100% working interest in these oil sands leases.
Husky holds a substantial position in offshore development and exploration opportunities offshore Canada’s East Coast. The Company is the largest owner of acreage in the Jeanne d'Arc Basin off Newfoundland and Labrador, and has 12.51 percent interest in the Terra Nova oil field and a 72.5 percent working interest in the White Rose oil field. Canada's East Coast White Rose project continues to perform better than expected achieving reservoir production capacity of 140,000 barrels per day during in 2007.
The Company made two significant discoveries near the producing White Rose field during 2006, in the Southwest and West Avalon pools. These discoveries have resulted in the addition of 138 million barrels of possible reserves to White Rose.
Offshore Greenland, Husky and Esso Exploration Greenland Limited (“Esso”) were awarded a joint interest in an exploration licence in West Disko Block 6 (2007/27), which covers an area of 13,213 square kilometres and is located approximately 30 kilometres offshore the west coast of Disko Island. Esso will act as operator of this block. In addition, Husky has an 87.5% interest in two exploration licences, Block 5 and Block 7, covering an area of 21,067 square kilometres that border on Licence 2007/27. Nunaoil A/S, Greenland’s National Oil Company, holds the remaining 12.5% interest in each of these three licences.
During 2006, Husky made a significant hydrocarbon discovery with contingent resources of 4 to 6 tcf of natural gas in the South China Sea, making it one of the largest discoveries offshore China. The company has seven exploration blocks offshore China, totaling 7.6 million acres.
In Indonesia, Husky completed the gas sale and purchase agreements for production from the Madura BD Field. Agreements with PT Parna Raya and PT Inti Alasindo Energy are each for 40 million cubic feet per day while the agreement with PT Perusahaan Gas Negara (Persero) Tbk is for 20 million cubic feet per day. The term of each agreement is 20 years commencing with first production, which is expected in 2011. Husky has submitted a plan of development to the Government of Indonesia for the Madura development and is in the process of negotiating an extension to the Madura Strait Production Sharing Contract. Contracting for front-end engineering design of offshore facilities and pipelines will commence shortly.
The Company is also active in the midstream and refined products oil and gas business, which allows it to be a fully integrated oil and gas producer and marketer. The midstream and refined products assets stabilize Husky’s cash flow and income.
In the Downstream segment, Husky has now completed its integration of the Lima refinery and has taken over all major operations effective February 1, 2008. At the Lima refinery, Husky has commenced its engineering studies to determine the optimal reconfiguration to process a heavier crude oil feedstock. In the fourth quarter of 2007, Husky completed construction and commenced production at the Minnedosa ethanol plant in Manitoba. The facility will produce annually 130 million litres of ethanol and 130,000 tonnes of Distillers Dried Grain with Solubles (DDGS), a high protein feed supplement. With the completion of the ethanol plants at Lloydminster and Manitoba, Husky is the largest producer and marketer of ethanol in Western Canada.
Canadian motorists and truckers are familiar with Husky’s readily identifiable truck stops and restaurants located on major highways and its retail network that extends from British Columbia and Yukon to Ontario. | 
