Husky Energy shares up on offshore China gas find

Husky Energy shares up on offshore China gas find

Shares in Husky Energy Inc. jumped more than 5 percent after the Canada’s No. 4 oil producer and refiner said it found what may be a massive natural gas field in the South China Sea.

Husky, which is majority-owned by interests controlled by Hong Kong tycoon Li Ka-shing, said late Wednesday a well it drilled with Chinese partner CNOOC Ltd. may have uncovered 4 trillion to 6 trillion cubic feet of gas.

That would put it among China’s biggest discoveries.

Shares in Husky were up $3.29 at C$66.49 on the Toronto Stock Exchange on the discovery, which Husky spokesman Colin Luciuk said has the potential to double the company’s current gas reserves.

Putting a value on the find, however, is all but impossible with no plan or timing for commercial production, Scotia Capital analyst Greg Pardy said in a research note.

“That said, Husky’s international exploration program has yielded fruit early on, and lays the foundation of production growth in the years ahead,” he wrote.

The well, called Liwan 3-1-1, is located 250 km (155 miles) south of Hong Kong.

CNOOC, China’s top offshore oil producer, has the right to take a 51 percent stake in the find. Its Hong Kong-listed shares jumped 5.7 percent on the day.

Luciuk said Husky is comfortable going public with the major resource estimate figure, despite the early stage of the process.

“The well logs lined up very well with the seismic. There were no surprises. They’ve done some pressure tests and other work,” he said. “And as a company we’re pretty conservative about the stuff they put out there.”

($1=$1.12 Canadian)

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