December 13, 2018

Husky Energy Inc (HSE)

 

 

Husky Energy Inc (HSE) is foremost on most experts’ lists amongst the many Canadian energy companies.  The interesting thing about the founding of Husky is that it actually began in 1938 in Wyoming as the Husky Refining Company.  Although it is still an international company, Husky (HSE) is now based out of Calgary, Alberta.  The company’s three defined growth pillars are the Oil Sands, Atlantic Region and the Asia Pacific Region.  The Oil Sands properties are focused on the Sunrise Energy Project and the cutting-edge efficiency it is targeting.  Its Atlantic Region operations center around the White Rose Oil Field, and smaller interests in the Terra Nova field as well.  The Pacific wing of Husky came online in 1989, and the main goals of this area revolve around natural gas development in the South China Sea (about 300km southeast of Hong Kong).  While these three pillars of growth are of interest to investors looking for capital gains, it should be noted that these pillars rest of a bedrock profit-generator that his the greater western Canada region, and the consistent returns that it produces.

 

After its inception in 1938, Husky (HSE) began to grow as a resulted of the USA’s involvement in World War II.  In 1946 the company took the big step of moving its main refinery from Wyoming, to Lloydminster, Alberta in order to process heavy oil into asphalt and bunker fuel.  By 1949 Husky was issuing common shares in Canada.  It took until 1960 for the full Canadian transformation to take effect, and in that year Husky Oil acquired all the outstanding shares of their U.S. branch.  They energy giant would go on to sell the majority of its USA assets (including service stations) in 1984.  One piece of infrastructure that will irrevocably leave Husky’s stamp on Calgary and the rest of Canada to some degree is the massive Husky Tower that the company built in 1967 to honour Canada’s Centennial.  They later sold the tower and it was subsequently given the Calgary Tower mantra that it proudly wears to this day.

In its recent budget release Husky (HSE) recently announced that it would have a $4.7 billion capital expenditure budget for 2012.  This sum of money is mind-blowing for most of the energy companies on the TSX.  Now the issue becomes of just how efficient Husky can be with this large budget.  Husky CEO Asim Ghosh has this to say about 2011 and looking forward into 2012, “This has been a year of significant progress as we achieved a number of milestones in our growth plan, delivered a solid increase in production, strengthened reserves replacement and reported strong financial results. Our business strategy is on course and demonstrating its ability to deliver value to shareholders. Our 2012 program will build on that progress as we remain focused on execution” Husky (HSE) finished 2011 with an overall production of over 312,000 boe/d.

The fact that Husky is such a media darling gives my contrarian investing side a little bit of the shivers; however, I have to agree that it is an extremely attractive dividend investing option going forward.  The company has managed to maintain some decent growth, but it is a mature and stable energy producer that has a current divided ratio of 5%.  Oil prices would absolutely have to crash for the company to look at cutting that dividend number.  Right now Husky (HSE) is trading near $24.00 a share.  This is close to the middle of its overall 52-week trading range that has seen lows of $20.63 and highs of $30.58.  While there are many energy plays on the TSX, Husky’s Price-to-Earnings ratio of 10.36 really recommends the company’s management and efficiency.

 

Husky Energy Inc (HSE) Technical Analysis:

HSE trend analysis

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Husky Energy Inc (HSE) Stock Graph:

TSE HSE

Husky Energy Inc (HSE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
HSEHusky Energy Inc27.784.3286.960.17705286.159350