Husky Asia could be spun off by year end: CEO

By Jeffrey Jones

CALGARY, Alberta (BestGrowthStock) – The proposed spinoff of Husky Energy Inc’s (HSE.TO: ) Asian operations should be complete by the end of this year, assuming the plan hits no regulatory or tax roadblocks, the company’s outgoing chief executive said on Wednesday.

Husky, Canada’s No. 3 oil producer and refiner, is still working to decide what form the restructuring will take and what the implications are for shareholders, CEO John Lau said.

The deal is one of two major initiatives Husky aims to finalize this year as its new head takes the helm — the other being the sanctioning of the Sunrise oil sands project in Alberta, he told Reuters in an interview.

“The new CEO will be in place sometime this year, and then the spinoff will come at the end of the year,” Lau said.

Husky expects to have costs confirmed for Sunrise, a 50-50 joint venture with BP Plc (BP.L: ), around the middle of the year, after which the partners can make a go-ahead decision, he said.

Lau, 67, said earlier this year he will step down as CEO of Husky, which is majority owned by interests controlled by Hong Kong tycoon Li Ka-shing.

Rather than retiring, he will lead Husky’s Asian business that now has oil and gas holdings in Indonesia and the South China Sea, including a stake in the huge Liwan gas field, estimated to have reserves of up to 6 trillion cubic feet.

Husky aims to set up the business, which would be listed on an Asian exchange, so that it does not take capital from the rest of Husky’s operations, he said. The Asian operations are expected to need about $800 million a year in development costs over the next three years.

“Both companies will benefit. Once you have the IPO from the company of Husky Asia, the cash will be enough to support the whole project,” he said. “It’s the same as Sunrise. In the BP joint venture, their 50 percent, they’ve already provided cash and capital commitment to us.”

Husky had said it has shaved more than C$1 billion ($1 billion) off the development costs for Sunrise’s first 60,000 barrel a day phase after reworking the plans during the economic meltdown. Lau said costs for the steam-driven project are still well below the initial estimate of C$4 billion.

He dismissed some analysts’ concerns that the Asian spin-off will leave Husky without visible growth prospects between now and the start-up of Sunrise in 2014, saying its expanding White Rose oil project off the Newfoundland Coast will help bridge the gap.

Satellite fields like North Amethyst will keep output at 100,000 barrels a day net to the company, Lau said. He also pointed to conventional heavy oil prospects in Alberta.

Meanwhile, Lau said the board is still in the process of choosing his replacement, and would not say if one rumored candidate, Husky director Asim Ghosh, is a front-runner.

Ghosh is the former head of India’s Vodafone Essar Ltd, which was part of Li’s flagship company, Hutchison Whampoa Ltd (0013.HK: ), until it sold its stake in 2007.

Former jobs with the major shareholders are not necessarily a prerequisite to be Husky CEO, Lau said. Hutchison and other Li concerns control 72 percent of Husky.

“We have 72 percent ownership. If I make a mistake (in saying who will be CEO) I will be kicked by people 72 times,” he said. “The major shareholder is important but we have to think about the benefit for all shareholders.”

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(editing by Rob Wilson and Carol Bishopric)

Husky Asia could be spun off by year end: CEO