Calgary-based Husky Energy reported Thursday it had a net loss of $1.37 billion in 2019 compared with net earnings of $1.457 billion in 2018.

In the company’s fourth quarter, its net loss was $2.341 billion compared with net earnings of $216 million in the fourth quarter of 2018.

In the fourth quarter, Husky recognized asset impairment and other charges of $2.3 billion (after tax), largely related to long-term price assumptions and reductions in the company’s long-term capital expenditure plans, it said.

“Total non-cash asset impairments and other charges were $2.3 billion (after tax) in the fourth quarter of 2019. These were primarily related to the Company’s upstream assets in North America, including the Sunrise Energy Project and the Atlantic and Western Canada segments, and were largely due to lower long-term commodity price assumptions and a reduction in future capital spending,” said Husky.

“The reduction in future capital spending has the effect of reducing reserves, which in turn reduces asset values. Other charges included exploration-related write-downs and asset de-recognition at the Lima Refinery associated with redundant equipment following the completion of the crude oil flexibility project.”

Husky Energy said it generated funds from operations of $3.3 billion in 2019, including $469 million in the fourth quarter. Cash flow from operating activities, including changes in non-cash working capital, was $3 billion in 2019, including $866 million in the fourth quarter.

It said fourth quarter operating results were negatively impacted by several factors, including:

  • Lower U.S. crack spreads and an extended shutdown of the Lima Refinery to complete the crude oil flexibility project;
  • Lower Infrastructure and Marketing margins compared to Q4 2018, primarily due to narrower location differentials, and an outage on the Keystone pipeline in November, which impacted Husky’s ability to capture the differential; and
  • Severance costs related to staff reductions.

“We delivered on critical milestones during the year, including our top priority of improved safety performance,” said CEO Rob Peabod in a news release. “We met our production and capital guidance, achieved first oil at the 10,000 barrel-per-day Dee Valley thermal bitumen project and have completed the safe startup of the Lima Refinery crude oil flexibility project.”