Upstream, Downstream, One Voice

Husky Energy reaffirms commitment to full and fair offer for MEG Energy

Husky Energy has reaffirmed its commitment to the full and fair Offer to acquire MEG Energy as outlined on 2nd October 2018, and comments on MEG’s recent statements and third quarter results.

“MEG’s results reinforce our view that it has a quality asset base and a dedicated operating team, but it remains constrained by a highly levered balance sheet and lack of integration,” said CEO Rob Peabody. “MEG continues to deliver negative free cash flow, and its assertions it can reverse this trend in the future rely on continued high oil prices and narrow heavy oil differentials.”

MEG shareholders should be aware MEG’s stand-alone plan comes with a high level of risk.

“History shows production growth has not delivered value for MEG shareholders, and MEG’s new plan to double production by 2028 is more of the same,” Mr Peabody added. “Simply put, MEG cannot grow its way out of its problems. We are offering immediate value, while MEG once again asks its investors for patience.

“Our Offer represents an opportunity to participate in a stronger and more resilient combined company while receiving a premium and retaining material upside.”

Husky remains confident its Offer is and will remain, the best option to maximise value for MEG shareholders.

Husky encourages MEG shareholders to consider the following as they evaluate MEG’s future prospects.

MEG’s share price has increased significantly as a direct result of Husky’s Offer, while shares of MEG’s peers and heavy oil prices have fallen substantially over the same period. Absent the Offer, MEG shares would trade at a price well below current levels.

Husky’s integrated operations and committed export pipeline capacity result in greater value capture and reduced exposure to Canadian heavy oil prices. MEG shareholders will also gain exposure to Husky’s high-netback Offshore business and fixed-price contracts, providing more stability in funds from operations. The majority of Husky’s production achieves global pricing.

MEG shareholders will also participate in Husky’s dividend yield, which is currently 2.8%, with potential for future increases as free cash flow grows.