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Husky Energy Case Study

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Competitor Analysis Husky Energy Husky is a Canadian integrated oil and gas producer, with operations in Canada and Asia. In recent years, they have improved completion of development plans. They suffer from poor netbacks in upstream operations and relatively low margins in their refining operations. One example of poor execution in oil sands growth is the Tucker oil sands project. The project was well over expected costs and incurred additional costs close to 50% higher than the industry average. Husky faces similar issues to Cenovus, as commodity prices and environmental regulations can have a significant impact on their growth and profitability. They also face a level of political risk as they operate in Asia as well as Canada. Husky’s oil sands operation provides potential long-term growth. Husky has a free cash flow yield of -1.36% which is …show more content…

They have excelled in return on invested capital, when compared to the industry averages. Imperial’s operations contain a combination of conventional and unconventional assets, which reduces risk of high operating cost fluctuations common with oil sands projects. They have a dividend yield below 1%, which is significantly below the industry average. Imperial’s own the largest oil sands operation located at Cold Lake and are continuing to develop their Kearl oil sands project. A distinct advantage for Imperial Oil is the large portion of shares outstanding being owned by ExxonMobil, which is considered a leader in capital allocation. This relationship can help to improve upon operations and optimal capital expenditure. Overall, Imperial Oil has impressive return on invested capital, but similarly to Husky currently have negative free cash flows. We believe they have relatively small growth in the near future and estimate a negative long-term EPS

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Energy Consultants, LLC is an energy solutions company that specializes in energy audits and can supply or assist consumers with selecting a renovation or construction contractor in the energy savings sector. EC offers specialized energy audits, cutting edge energy efficient materials such as insulated concrete forms, plant-based polyurethane rigid foam, cool roofing techniques, structural insulated panels, low emissivity windows and doors, high tech spray insulation, energy star appliances, ultra efficient heating and air conditioning systems and smart home automation devices to manage and control energy consumption. Our clients are residential homeowners ranging from the $100,000 to $5,000,000 in value. EC also offers free seminars that offer free tips on how homeowners can look for energy wasting devices throughout their home.

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The oil in Alberta is much thicker and is harder to to extract and to refine in to a lighter crude. If they move to a place where it is cheaper to extract the resource. (2) This ties into our second solution “Expand there operations to other locations e.g. Texas and/or Nova Scotia” Texas is a good location to extract both light crude and natural gas. This will be good for the company as they will extract oil far cheaper and that will lead to an increases in stock price.

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Return on invested capital has also a decreasing trend, with the value of 9.88% in the last 12 months. This is a very good indicator of bad profitability the company has right

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Suncor has the efficiency and innovation not met by most other companies in the same field. They are always thinking of new methods to extract the oils out of the sand more efficiently. Suncor currently generates more free cash flow then all its Canadian competition combined. “Suncor is the most profitable Oil Company in Canada making over 40 billion dollars in 2013 alone. They are ranked 1 in all of Canada followed by Imperial Oil Ltd. and then Husky Energy Inc.”.

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