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Husky Closes USD 435m Acquisition of Superior Refinery in Wisconsin, USA.

M2 EQUITYBITES-November 13, 2017-Husky Closes USD 435m Acquisition of Superior Refinery in Wisconsin, USA

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13 November 2017 - Canada-based integrated energy company Husky Energy (TSX: HSE) has closed the acquisition of Wisconsin, US-based Superior Refinery from Calumet Specialty Products Partners, LP to increase downstream crude processing capacity, the company said.

Superior was acquired for USD 435m in cash.

Huskey said it intends to fund the acquisition with cash on hand and existing credit facilities.

At close, pro forma net debt and debt metrics are expected to remain below two times net debt to funds from operations (12-month trailing).

The transaction includes the acquisition of the refinery's associated logistics, including two asphalt terminals, 3.6m barrels of crude and product storage and a fuels and asphalt marketing business.

Husky said acquiring Superior Refinery will increase its downstream crude processing capacity, keeping value-added processing in step with production.

This new asset is expected to immediately contribute to increased earnings and funds from operations.

The transaction accelerates Husky's strategy to capture full value from the company's heavy oil production from Western Canada.

With the addition of the Superior refinery, Husky's total downstream capacity will increase to approximately 395,000 barrels per day (bbls/day).

The transaction offers direct connectivity to the company's pipeline terminal in Hardisty, Alberta via the Enbridge Mainline, allows further margin capture from heavy/light oil differential, increases existing Husky storage assets in Superior and enhances US market access with total US refining capacity increasing to 275,000 bbls/day.

This acquisition of Superior is expected to accelerate Husky's asphalt strategy, adding immediate asphalt production and providing additional capacity once in-flight projects are completed in 2018. The move enhances the company's ability to capitalise on growing asphalt demand associated with increasing infrastructure spending across North America.

Superior brings Husky an operations team with an established base of customers. The asset is capable of processing Canadian heavy, or medium and light grades from Canada and the Bakken.

The Superior Refinery has a permitted throughput capacity of 50,000 bbls/day. It currently produces approximately 9,000 bbls/day of asphalt, 17,500 bbls/day of gasoline and 10,900 bbls/day of diesel, as well as heavy fuel oils.

Husky has approximately 5,200 employees and has average daily production of about 320,000 barrels of oil equivalent per day.

The company has two main areas of focus: integrated corridor includes natural gas, non-thermal oil, NGLs and thermal production from Western Canada, the Lloydminster upgrading and asphalt refining complex, the Husky Midstream Ltd. Partnership (35% working interest and operatorship), and the refineries in the US Midwest.

Its offshore business includes operations and exploration in the Asia Pacific region, primarily offshore China, Indonesia and Taiwan, and in the Atlantic, offshore Newfoundland and Labrador.

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Publication:M2 EquityBites (EQB)
Geographic Code:1CANA
Date:Nov 13, 2017
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