Husky met its three primary 2016 business objectives: further strengthening its balance sheet, lowering its cost structure and advancing its deep portfolio of projects and investment opportunities. Each new dollar invested in production further improves Husky’s cost structure, margin capture and ability to generate free cash flow.
Earnings and Funds from Operations
In 2016, WTI prices averaged about $43 US a barrel, compared to about $49 US a barrel the year before. Net earnings were approximately $922 million, compared to a loss of about $3.9 billion in 2015, which included an approximate impact of $4 billion related to the write down of legacy Western Canada assets. Funds from operations were approximately $2.2 billion.
Production and Throughputs
Production averaged 321,000 barrels of oil equivalent per day (boe/day), including the disposition of about 32,000 boe/day in Western Canada. Dispositions were largely offset by growing thermal bitumen production and increased volumes from the Liwan Gas Project.
Downstream throughputs averaged 310,000 barrels per day, with planned turnarounds completed at several facilities.
Husky’s total proved reserves before royalties at the end of 2016 were 1.2 billion barrels of oil equivalent (boe) and probable reserves were 1.6 billion boe. The average five-year proved reserves replacement ratio, including acquisitions and dispositions, was 121 percent, excluding economic factors and 109 percent including economic factors.
The 2016 proved reserves replacement ratio was 92 percent, not including economic factors or acquisitions or dispositions. Including economic factors, the ratio was 88 percent.
Taking acquisitions and dispositions into account, the proved reserves replacement ratio for 2016 was 19 percent, excluding economic factors. Including economic factors it was 15 percent.
Additions and revisions of 104 million boe reflected additions from Lloyd thermal projects, the Tucker Thermal Project and the Liwan Gas Project. Dispositions net of acquisitions totaled a reduction of 86 million boe of proved reserves in Western Canada.