OREANDA-NEWS. Husky Energy recorded a four percent increase in cash flow from operations in 2013 during a period of significant commodity price volatility, supported by a steady increase in production, strong operational performance and a focused integration strategy.

"From the acceleration of our heavy oil thermal program to new oil discoveries in the Atlantic Region, we have laid the groundwork to support our future growth objectives," said CEO Asim Ghosh. "We are building momentum as we put the final touches on the Liwan Gas Project and prepare to start up the Sunrise Energy Project in the second half of this year."

The 3,500 barrels per day (bbls/day) Sandall heavy oil thermal project has achieved first oil. The Company continues to advance towards its accelerated heavy oil thermal production target of 55,000 bbls/day in 2016 and recently sanctioned two 10,000 bbls/day thermal developments at Edam East and Vawn.

In the Asia Pacific Region, commissioning is underway at the Liwan Gas Project following the successful installation of deepwater flowlines in the South China Sea, approximately 300 kilometres southeast of the Hong Kong Special Administrative Region.

Cash flow from operations for the year rose to USD 5.2 billion, up from \\$5.0 billion in 2012. Net earnings were \\$1.8 billion, reflecting a non-cash impairment charge of USD 204 million after tax on dry gas properties in Western Canada. Excluding the impairment, net operating earnings were \\$2 billion, comparable to 2012. The impairment was driven by a decrease in gas price forecasts in future years.

Annual Upstream production was within guidance at 312,000 barrels of oil equivalent per day (boe/day), up from 301,500 boe/day in 2012. This included growth in heavy oil thermal production and liquids-rich gas play activity, offset by a continuing reduction in dry gas production.

The Company continued to add more proved reserves compared to production in 2013 from crude oil and liquids-rich natural gas. The reserve replacement ratio for 2013, excluding economic factors, was 166 percent (164 percent including economic factors). At year-end, Husky had total proved reserves before royalties of 1.3 billion boe, probable reserves of 1.9 billion boe and best estimate contingent resources of 13.2 billion boe.

Reserves growth has consistently outpaced production, with an average proved reserves replacement ratio (excluding economic factors) over the past three years of 172 percent. Including economic factors, the average proved three-year reserves replacement ratio was 154 percent, ahead of the five-year average target of 140 percent per year.