Offshore China

Husky is a major holder of exploration acreage offshore China. The Company has successfully joint ventured with the China National Offshore Oil Corporation (CNOOC), signing 11 production sharing contracts since 2001. CNOOC has the right to participate in the development of any discovery with up to a 51 percent working interest.

South China Sea

Wenchang

Husky’s first venture in China was the 2002 acquisition of a 40 percent interest in the Wenchang oil fields located in the western Pearl River Mouth Basin, approximately 400 kilometres southwest of Hong Kong and 100 kilometres east of Hainan Island. The Wenchang 13-1 and 13-2 fields are producing from 30 wells in 100 metres of water into a floating production, storage and offloading (FPSO) vessel stationed between fixed platforms.

The blended crude oil from the two fields averages approximately 35° API, similar to the Minas blend (Indonesian crude benchmark). Husky’s share of production is forecast to average 11,500 barrels per day by year-end.

Block 29/26 (Liwan)

The 29/26 block is located in the South China Sea approximately 300 kilometres southeast of Hong Kong and 65 kilometres southeast of the Panyu gas discovery. It covers approximately 2,230 square kilometres.

Delineation drilling was completed in 2009 through the drilling and testing of three wells. The deepwater drilling rig West Hercules spud the first appraisal well in November 2008. In August 2009, the West Hercules completed drilling and testing of the third appraisal well. The rig drilled the Liwan 3-1-4 well to a total vertical depth of 3,366 metres below sea level. The well was drilled and tested in a water depth of 1,450 metres.

The results from this well were consistent with those of the other appraisal wells, demonstrating both the quality and consistency of the reservoir. The appraisal program has delineated the field, increasing Husky’s understanding of the recoverable resource, and providing the necessary reservoir characterization to prepare the plan of development for Liwan field.

Husky is proceeding with the front end engineering design (FEED). Currently Husky expects the plan of development will be submitted to partner and regulatory authorities in early 2010. First gas production is targeted to be in the 2013 timeframe.

Block 63/05

In 2008 Husky acquired Block 63/05 in the Qiongdongnan Basin approximately 100 kilometres south of Hainan Island. This 1,777 square kilometres exploration block is located in an area with water depths of less than 120 metres. The block is close to existing and expanding markets, and further augments Husky’s strong lease-hold position in the South China Sea. Existing two dimensional seismic data has been interpreted and Husky plans to acquire new three dimensional seismic data in early 2010.

East China Sea

Block 04/35

The production sharing contract for this block in the East China Sea was signed in 2003. The block covers 4,835 square kilometres, with water depths of 50 to 75 metres. Contracting of a rig is at an advanced stage and Husky plans to drill a single commitment exploration well in early 2010.

Quick Facts

Wenchang

Working interest: 40%
2009 average production (Husky’s w.i.): 11.5 mbbls/day (year end forecast)