ScotiaMocatta Precious and Base Metal
client

HUSKY OIL OPERATIONS LIMITED
MICHICHI ALBERTA ASSET DIVESTITURE
Light Oil Opportunity


Opportunity Highlights

Scotia Waterous Inc. (“Scotia”), AltaCorp Capital Inc. (“AltaCorp”) and CIBC Capital Markets (“CIBC”), collectively the “Advisors”, have been retained by Husky Oil Operations Limited (“Husky” or the “Company”) as exclusive advisors to solicit and evaluate proposals for selected assets in the Michichi area of Alberta.

Large contiguous land position in active Central Alberta
  • Approximately 15,159 net hectares (~97% avg. W.I.)
  • Located in the Michichi area with significant recent activity targeting the prolific Banff light oil development
  • Land base allows for scalable development program over prospective acreage
  • Limited near-term expiries allowing for control of development pace
  • Potential to consolidate further lands in the area
  • Attractive LMR rating of 5.4
Large scale oil development project at Michichi
  • Proven light oil Banff play at Michichi
    • 71 potential locations high graded through 3D seismic and extensive geotechnical analysis with recently drilled high rate producing wells
    • Husky Banff production in the area has doubled in the past 2 years
    • OOIP of over 11 MMbbl per section based on Husky internal modelling
  • Ability to add production of ~3,500 boe/d based on Husky development plan
  • Recent development wells have outperformed prior wells and confirmed the geotechnical and development models
Operated, low-decline production base
  • Q3 2016 production of ~820 boe/d (57% liquids)
    • Low operating costs of $10/boe1, with target of less than $10/boe for full year 20172 including Husky internal development plan
  • Under 25% decline rate on existing production3 provides a solid base to support significant growth from future development
  • Banff type well EUR of 167 Mboe with capital cost of $1.7 million results in excellent type well economics at current commodity prices
100% owned and operated infrastructure
  • 100% owned and operated field gathering facilities with current licensed capacity of over 2,200 bbl/d of liquids and raw gas of 6.0 MMcf/d
  • Current utilization in Husky owned facilities of under 20% allows for significant near-term production growth with minimal infrastructure spending
  • Agreements in place for oil and gas processing with third party facilities
  • Control and scalability of infrastructure allows for additional growth in processing capacity

1. 2016 YTD average.
2. Husky estimates.
3. GLJ P+PDP.



Husky Michichi Offering Overview

The Michichi asset provides an opportunity to acquire a turnkey, light oil property with existing production and infrastructure and a substantial development program.

Husky Michichi Land Map Banff Light Oil Opportunity

Significant Cost Reductions1
Husky and offset operators have reduced costs on horizontal Banff drilling by ~40% in the past 5 years

Husky Michichi Land, Production and Reserves Summary

1. Based on publicly disclosed data (Frac Database).
2. Husky LOS and public data.
3. As evaluated by GLJ Petroleum Consultants (September 30, 2016).
4. Values may not add due to rounding.



Michichi Banff Overview
  • The Michichi area offers potential for high growth through an extensive Banff development program
  • Substantial inventory of well defined horizontal light oil locations at shallow depths (1,300 – 1,355 m)
  • Nearby operators include Marquee and CNRL
  • Current Banff working interest production of ~755 boe/d1 (~100% W.I.), with a decline rate under 25% per year2
  • Approximately 260 Banff penetrations with 68 horizontal Banff wells drilled (45 since beginning 2014) validating the play concept, reservoir quality, and future development potential
  • Recent development wells have outperformed prior wells and confirmed geotechnical and development models
  • Company lands are situated along trend within the most prolific and scalable Banff development in the region
  • 100% W.I. in two oil batteries with a combined capacity of ~1,400 bbl/d oil and 820 bbl/d water as well as Husky owned compression and firm capacity at offsetting batteries at gas plants
    • Provides optionality for increased development at a controlled pace

Asset Map and Area Activity3

All Banff Wells Recent Banff Activity (2014 - Present)
Historical Banff Production1 (boe/d) Area Type Well3,4 (boe/d)

1. Husky Lease Operating Statements.
2. GLJ P+PDP estimates.
3. Source: geoSCOUT / public data.
4. Husky internal estimates.


Process Overview


Process

It is the intention of Husky and the Advisors to conduct the process such that it minimizes any disruption to Husky’s operations. Interested parties should not contact Husky directly regarding any aspect of the process. All communications, enquiries and requests for information relating to the process should be directed to one of the Advisors listed herein.

Signed CAs should be forwarded by email to CIBC. Once a CA has been executed, confidential information will be made available to qualified parties via a Virtual Data Room (“VDR”). Process timeline will be communicated to the counterparties upon executing of a CA.



Key Contacts

Drew Ross
Managing Director
(403) 261-4226
drew.ross@scotiabank.com
Ian Huston
Director
(403) 218-3262
ian.huston@scotiabank.com
Jeff D. Bowron
Director
(403) 261-2377
jeff.bowron@scotiabank.com
Scotia Waterous Inc.
Suite 1800, Scotia Centre
700 - 2nd Street SW
Calgary, Alberta T2P 2W1
Main: (403) 265-8077
Fax: (403) 269-8355