Nfld. & Labrador

Husky may sell some of its assets in N.L. offshore oil industry: sources

Canadian oil and gas producer Husky Energy Inc is weighing paring down its stakes in some of its Eastern Canadian offshore assets, people familiar with the talks told Reuters.
Husky Energy has stakes in several projects in Newfoundland and Labrador's offshore oil industry. (The Canadian Press)

Canadian oil and gas producer Husky Energy Inc is weighing paring down its stakes in some of its Eastern Canadian offshore assets, in a move that could fetch as much as several billion dollars, people familiar with the talks have told the Reuters news service. 

But a Husky official in Newfoundland and Labrador told CBC News Friday the company does not comment on "speculation and rumour," and that the company has a strong commitment to the Atlantic region.

Husky is planning more development drilling in the White Rose field this year, and well as exploration drilling in a frontier region known as the Flemish Pass.

"We are also continuing to advance our work at West White Rose and will consider this project for sanction in 2017," the spokesperson wrote in an email to CBC News.

The company, which is controlled by Hong Kong billionaire Li Ka-shing, finds the assets less attractive in a low oil price environment, making it challenging to generate profits, the people said.

Husky could invest the sale proceeds in South America, Africa or Asia, the people added.

The sources cautioned that the talks are at an early stage and Husky may decide not to proceed with the divestitures if it does not get attractive offers.

When asked about the potential sale on the company's earnings call, chief executive Rob Peabody said Husky's Atlantic operations were an important part of its portfolio and declined to comment on what he said was speculation.

Husky's offshore assets include White Rose, seen as its crown jewel in the region, as well exploratory work in the Flemish Pass and the Terra Nova field.

Husky could potentially sell down stakes in Terra Nova, where it has a 13 per cent working interest, and in the Flemish Pass, but is also considering paring down ownership in White Rose, the people added.

Offshore projects started to fall out of favor with some producers during the energy downturn as they often require a greater investment, making it harder for companies to make the financial dynamics work.

Husky began producing oil from the Atlantic region in 2005.

Production averaged 34,300 barrels per day in the fourth quarter.

With files from Reuters