• 4 minutes Trump will meet with executives in the energy industry to discuss the impact of COVID-19
  • 8 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 11 minutes Why Trump Is Right to Re-Open the Economy
  • 13 minutes Its going to be an oil bloodbath
  • 9 mins Ten days ago Trump sent New York Hydroxychloroquine. Being administered to infected. Covid deaths dropped last few days. Fewer on ventilators. Hydroxychloroquine "Cause and Effect" ?
  • 30 mins US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 7 mins Russia's Rosneft Oil is screwed if they have to shut down production as a result of glut.
  • 13 hours Mr
  • 22 hours While China was covering up Covid-19 it went on an international buying spree for ventilators and masks. From Jan 7th until the end of February China bought 2.2 Billion masks !
  • 2 hours ‘If it saves a life’: Power cut to 1.5 million Californians
  • 10 hours Free market or Freeloading off the work of others?
  • 1 day What If ‘We’d Adopted A More Conventional Response To This Epidemic?’
  • 1 day How to Create a Pandemic
  • 12 hours Marine based energy generation
  • 17 hours Which producers will shut in first?
  • 1 day Real Death Toll In CCP Virus May Be 12X Official Toll

Breaking News:

WTI Slides On Huge Crude Inventory Build

Alt Text

The Largest Oil Market Intervention In History?

While the figures quoted in…

Alt Text

Is Optimism In Oil Markets Misplaced?

OPEC+ appears willing to cut…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Hong Kong Billionaire Loses $20 Billion In Canadian Oil Sands

While Aramco is signaling that the preparation for its long-awaited IPO is still underway, another big oil company may soon go private. Canada’s Husky Energy has suffered a more than 80-percent drop in its share price in the past decade, according to Bloomberg calculations, and analysts do not believe the outlook is particularly good if it remains a public company.

Oil price fluctuations, the fallout from the 2008 crisis, production cuts, and a failed takeover bid for MEG Energy are some of the reasons why Husky’s stock has lost so much of its value since 2008. For the majority shareholder in the company, a firm controlled by Hong Kong billionaire Li Ka-shing, this has meant a loss of as much as US$20 billion (C$26.5 billion). Li’s firm has a 69-percent stake in the company.

This, according to RBC Capital Markets analyst Greg Pardy, makes Husky a good candidate for going private. BNN Bloomberg quotes Pardy as saying in a note to clients “If ever there was a time for Husky to consider going private, we believe it is now.” The analyst noted that going private would make Husky more flexible “to differentiate its strategic direction and tactics as need be without public market scrutiny.”

Going private would not be a solution for all of the company’s problems, however, Pardy said. It would close the door to cash-raising through stock offerings, for example, and thus hurt its chances of growing through mergers and acquisitions. It would also make it tough for the majority shareholder to meet the debt obligations that will be maturing in the coming years.

Yet a privatization would, according to Pardy, help it “capture the gap” between its current share price and its net asset value, which the analyst calculates at a much higher level than its current stock price. Related: Presidential Candidates Take Aim At Major Oil Pipelines

Husky has some pretty attractive assets, including a natural gas field in the South China Sea along with its oil sands operations and its refining business in the United States. Its last financial statement beat expectations in the net profit section, too. Admittedly, this came largely on the back of higher oil prices resulting from the obligatory cuts instituted by the NDP government of Alberta and upheld by the new Conservative government. Still, a better-than-expected profit is good news.

On the bad news front, Husky also reported negative cash flow for the second quarter of the year and an increase in debt. The first-half free cash flow figure was positive but much lower than the figure for the first half of 2018.

“The beauty contest for energy producers these days revolves around free cash flow generation and distributions to shareholders … Admittedly, Husky is not a great fit in this world,” Pardy said in his note. Indeed, free cash flow has become the focus of attention for investors in the energy industry after the price crash of 2014 and few companies are delivering robustly on this metric.

It seems Husky is not particularly attractive for investors right now. Whether going public could help it improve its performance is uncertain, but it may increase its chances. The fact that its share jumped more than 5 percent following the release of Pardy’s note earlier this week suggests that privatization could be a good move.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage






Leave a comment
  • Andrew Doolittle on August 21 2019 said:
    Who in their right mind is going to lend Husky Energy a dime?
    Oilsand dollars were ten bucks a barrel less than a year from now...prices did not jump for "summer driving season"(went down actually) and are now plunging at retail in States like Ohio which already are massive energy producers and have been flr over a Century now. With interest rates this low and everyone buying gold I fail to see how anyone can be surprised by the price plunge that ks going on right nlw!

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News