About This Report

To the Management of Husky Energy Inc:

We have been engaged by the management of Husky Energy Inc. (Husky Energy) to undertake a limited assurance engagement, in respect of the year ended December 31, 2017, on certain quantitative performance information disclosed in Husky Energy‘s ESG Report 2018 (the Report) as described below.

Selected Indicators and Applicable Criteria

The scope of our limited assurance engagement, as agreed with management, comprises the following performance information (the Selected Indicators):

• Total Energy Use (gigajoules)
• Scope 1 GHG Emissions (tonnes of CO₂e)
• Scope 2 GHG Emissions (tonnes of CO₂e)
• Fresh Water Withdrawal (million cubic metres)

The Selected Indicators, contained within the Report and indicated with the footnote “11” in the Performance Data section, have been determined by management on the basis of Husky Energy‘s assessment of the material issues contributing to Husky Energy‘s sustainability performance and most relevant to their stakeholders.

There are no mandatory requirements for the preparation, publication or review of sustainability performance metrics. As such, Husky Energy applies its own internal reporting guidelines and definitions for sustainability reporting in preparing the Selected Indicators which can be found in the About this Report section and relevant footnotes in the Report.

Management’s Responsibilities

Management is responsible for the preparation and presentation of the Selected Indicators in accordance with Husky Energy‘s internal reporting guidelines and definitions for sustainability reporting, current as at the date of our report. Management is also responsible for determining Husky Energy‘s objectives in respect of sustainability performance and reporting, including the identification of stakeholders and material issues, and for establishing and maintaining appropriate performance management and internal control systems from which the reported performance information is derived.

Our Responsibility

Our responsibility in relation to the Selected Indicators is to perform a limited assurance engagement and to express a conclusion based on the work performed. We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000 Revised) and International Standard on Assurance Engagements 3410 Assurance Engagements on Greenhouse Gas Statements (ISAE 3410), issued by the International Auditing and Assurance Standards Board. ISAE 3000 and ISAE 3410 require that we plan and perform our procedures to obtain limited assurance about whether the Selected Indicators are presented fairly, in accordance with the applicable criteria, in all material respects. The firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The engagement was conducted by a multidisciplinary team which included professionals with suitable skills and experience in both assurance and in the applicable subject matter including environmental and greenhouse gas accounting.

Assurance Approach

We planned and performed our work to obtain all of the evidence, information and explanations we considered necessary in order to form our conclusion as set out below. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of the Selected Indicators, and applying analytical and other evidence gathering procedures to the Selected Indicators, as appropriate. Our procedures included:

• Inquiries of management to gain an understanding of Husky Energy‘s processes for determining the material issues for Husky Energy‘s key stakeholder groups;
• Inquiries with relevant staff at the corporate and business unit level to understand the data collection and reporting processes for the Selected Indicators;
• Where relevant, performing walkthroughs of data collection and reporting processes for the Selected Indicators;
• Comparing the reported data for the Selected Indicators to underlying data sources;
• Inquiries of management regarding key assumptions and, where relevant, the re-performance of  calculations; and,
• Reviewing the presentation of the Selected Indicators in the Report to determine whether they are consistent with our overall knowledge of, and experience with, the sustainability performance of Husky Energy.

The extent of evidence gathering procedures performed in a limited assurance engagement is less than that for a reasonable assurance engagement, and therefore a lower level of assurance is obtained.

Our assurance report is provided solely to Husky Energy in accordance with the terms of our engagement. Our work has been undertaken so that we might report to Husky Energy on those matters we have been engaged to report upon in this assurance report, and for no other purpose. We do not accept or assume responsibility to anyone other than Husky Energy for our work, for this assurance report, or for the conclusions we have reached.

Inherent Limitations

Non-financial information, such as that supporting the Selected Indicators, is subject to more inherent limitations than financial information, given the more qualitative characteristics of the subject matter and the methods used for determining such information. The absence of a significant body of established practice on which to draw allows for the selection of different but acceptable measurement techniques which can result in materially different measurements and can impact comparability. The nature and methods used to determine such information, as well as the measurement criteria may change over time.

Our Conclusion

Based on the procedures performed, nothing has come to our attention that causes us to believe that for the year ended December 31, 2017, the Selected Indicators, as described above and disclosed in the Husky Energy ESG Report 2018, have not been prepared and presented, in all material respects, in accordance with Husky Energy‘s internal reporting guidelines and definitions for sustainability reporting as at the date of our report.

Chartered Professional Accountants, Licensed Public Accountants

July 13, 2018
Vancouver, Canada

Forward-Looking Statements and Information

Certain statements in this document, including “financial outlook”, are forward-looking statements and information (collectively “forward-looking statements”), within the meaning of applicable Canadian securities legislation, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. The forward-looking statements contained in this document are forward-looking and not historical facts.

Some of the forward-looking statements may be identified by statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “will continue”, “is anticipated”, “is targeting”, “estimated”, “intend”, “plan”, “projection”, “forecast”, “guidance”, “could”, “may”, “would”, “aim”, “vision”, “goals”, “objective”, “target”, “schedules” and “outlook”). In particular, forward-looking statements in this document include, but are not limited to, references to: the Company’s general strategic plans and growth strategies; expected total daily production volumes from the Westhazel, Edam Central, Rush Lake 2, Dee Valley, Spruce Lake North and Spruce Lake Central Lloyd thermal bitumen projects; expected timing of ramp up of production and expected 2018 production volumes from the Tucker Thermal Project; expected timing of first production from Liuhua 29-1; expected timing of first oil from the West White Rose Project; anticipated benefits from, and expected timing of start-up and design capacity of, Husky’s hydrogen diluent reduction pilot program at the Sunrise Energy Project; anticipated benefits from, and expected timing of construction of, a landfill at a former sulphur handling facility near Whitecourt, Alberta; anticipated benefits from an agreement between Husky and a Calgary company relating to the reuse of sulphur from the base of a former sulphur pad at the Ram River gas plant; plans to install additional compressors in 2018 to further gas conservation efforts; anticipated timing of deployment of, and benefits from, methane and GHG emission reduction pilot projects, including at Ansell and some of the Company’s CHOPS operations; planned changes to executive compensation and employee bonus program, and timing of implementing these changes; anticipated benefits from, and expected timing of commissioning and design capacity of, Husky’s second CO₂ capture pilot project at Pikes Peak South Lloyd thermal project; and anticipated benefits from a crude oil flexibility project underway at the Company’s Lima Refinery.

In addition, statements relating to “reserves” are deemed to be forward-looking statements as they involve the implied assessment based on certain estimates and assumptions that the reserves described can be profitably produced in the future. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary from reserve and production estimates.

Certain of the information in this report is “financial outlook” within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding the Company’s reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that this financial outlook may not be appropriate for other purposes.

Although the Company believes that the expectations reflected by the forward-looking statements presented in this document are reasonable, the Company’s forward-looking statements have been based on assumptions and factors concerning future events that may prove to be inaccurate. Those assumptions and factors are based on information currently available to the Company about itself and the businesses in which it operates. Information used in developing forward-looking statements has been acquired from various sources, including third party consultants, suppliers and regulators, among others.

Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to the Company.

The Company’s Annual Information Form for the year ended December 31, 2017 and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com and the EDGAR website www.sec.gov) describe risks, material assumptions and other factors that could influence actual results and are incorporated herein by reference.

New factors emerge from time to time and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company’s course of action would depend upon management’s assessment of the future considering all information available to it at the relevant time. Any forward-looking statement speaks only as of the date on which such statement is made and, except as required by applicable securities laws, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Non-GAAP Measures

This document contains certain terms which do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore unlikely to be comparable to similar measures presented by other issuers. None of these measures is used to enhance the Company’s reported financial performance or position. The non-GAAP measures included in this document are: funds from operations, free cash flow, and WTI price required to break even. These non-GAAP measures are considered to be useful as complementary measures in assessing Husky’s financial performance, efficiency and liquidity.

Funds from operations is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, “cash flow – operating activities” as determined in accordance with IFRS, as an indicator of financial performance. Funds from operations is presented in the Company’s financial reports to assist management and investors in analyzing operating performance of the Company in the stated period. Funds from operations equals cash flow – operating activities plus change in non-cash working capital.

Funds from operations has been restated in the second quarter of 2017 in order to be more comparable to similar non-GAAP measures presented by other companies. Changes from prior period presentation include the removal of adjustments for settlement of asset retirement obligations and deferred revenue. Prior periods have been restated to conform to current presentation.

Free cash flow is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, “cash flow – operating activities” as determined in accordance with IFRS, as an indicator of financial performance. Free cash flow is presented to assist management and investors in analyzing operating performance by the business in the stated period. Free cash flow equals funds from operations less capital expenditures.

The following table shows the reconciliation of cash flow – operating activities to funds from operations and free cash flow for the years ended December 31:

($ millions)	2017	2016	2015
Net earnings (loss)	786	922	(3,850)
Items not affecting cash:
Accretion	112	126	121
Depletion, depreciation, amortization and impairment	2,882	2,462	8,644
Inventory write-down to NRV	-	9	22
Exploration and evaluation expenses	6	86	242
Deferred income taxes	(359)	29	(1,827)
Foreign exchange loss (gain)	(4)	(4)	27
Stock-based compensation	45	33	(39)
Loss (gain) on sale of assets	(46)	(1,634)	(16)
Unrealized market to market loss (gain)	56	38	-
Share of equity investment loss (gain)	(61)	(15)	-
Other	16	24	5
Settlement of asset retirement obligations	(136)	(87)	(98)
Deferred revenue	(16)	209	102
Distribution from joint ventures	25	-	-
Change in non-cash working capital	398	(227)	427
Cash flow – operating activities	3,704	1,971	3,760
Change in non-cash working capital	(398)	227	(427)
Funds from operations	3,306	2,198	3,333
Capital expenditures	(2,220)	(1,705)
Free cash flow	1,086	493

WTI price required to break even reflects the estimated WTI oil price per barrel priced in US dollars required in order to generate a net income of Cdn$0 in the 12-month period ending December 31, 2017. This assumption is based on holding several variables constant throughout the period, including foreign exchange rate, light-heavy oil differentials, realized refining margins, forecast utilization of downstream facilities, estimated production levels and other factors consistent with normal oil and gas company operations. WTI price required to break even is used to assess the impact of changes in WTI oil prices on the net earnings of the Company and could impact future investment decisions. WTI price required to break even does not have any standardized meaning and therefore should not be used to make comparisons to similar measures presented by other issuers.

Disclosure of Oil and Gas Information

Unless otherwise indicated: (i) reserves estimates in this document have been prepared by internal qualified reserves evaluators in accordance with the Canadian Oil and Gas Evaluation Handbook, have an effective date of December 31 in the years indicated and represent the Company’s working interest share before royalties; (ii) projected and historical production volumes provided represent the Company’s working interest share before royalties; and (iii) historical production volumes provided are for the years ended December 31, 2017, 2016 and 2015, as applicable.

The Company uses the term barrels of oil equivalent (“boe”), which is consistent with other oil and gas companies’ disclosures, and is calculated on an energy equivalence basis applicable at the burner tip whereby one barrel of crude oil is equivalent to six thousand cubic feet of natural gas. The term boe is used to express the sum of the total company products in one unit that can be used for comparisons. Readers are cautioned that the term boe may be misleading, particularly if used in isolation. This measure is used for consistency with other oil and gas companies and does not represent value equivalency at the wellhead.

All currency is expressed in Canadian dollars, unless otherwise directed.