CALGARY, Alberta, April 21 - Husky Energy Inc (HSE.TO) plans to spin off its Southeast Asian assets, including the huge Liwan gas field, into a separate company to boost its share value once it sees some economic stability, the company's chief executive said on Tuesday.
The new company would be listed on an Asian stock exchange, have its own management and board, and require little capital from Husky, CEO John Lau said after the Canadian oil producer and refiner's annual meeting.
The Asian properties owned by Husky, the energy company controlled by Hong Kong tycoon Li Ka-shing, have low costs and a strong partner in China's state oil firm CNOOC Ltd (0883.HK), Lau said.
"I think that the flotation, or IPO, will have a huge response from the market," he said.
Husky's only producing project in Southeast Asia is its stake in CNOOC's 12,200 barrel per day Wenchang field in the South China Sea. It and CNOOC are also jointly developing the Madura BD field in Indonesia's Madura Strait, with expected gross reserves of about 515 billion cubic feet of natural gas. Production there is slated to begin in 2012.
However the jewel among its Southeast Asian properties is the massive Liwan natural gas field in the South China Sea, 250 kilometers (155 miles) southeast of Hong Kong.
Liwan, discovered in 2006, is estimated to contain between 4 trillion and 6 trillion cubic feet of natural gas. The field could produce 1 billion cubic feet or more a day of gas to be sold into the Chinese market.
CNOOC has the right to buy 51 percent of the field. However some questioned whether CNOOC would look to acquire full control of the assets should Husky spin them off.
"I think this would be really well received by investors ... China has an insatiable appetite for energy," said William Lacey, an analyst at FirstEnergy Capital. "My question is whether CNOOC would preempt the process. Here's something that right offshore, right next to market and CNOOC has shown it's prepared to pay up for assets."
Husky shares jumped more than 3 percent after Lau's comments before falling back. They ended up 50 Canadian cents, or 1.8 percent, to C$29.10 on the Toronto Stock Exchange.
Lau did not say when Husky planned to complete the spinoff. He told reporters the company is already working on the tax and regulatory issues that would arise from the transaction and would expect to be able to detail reserves and development plans by year's end.
The timing of the deal is not yet fixed, but when economic conditions stabilize "we will be the first ones to take advantage of the market", Lau told reporters.
Lau said Husky itself would see no big drop in its reserves as a result of the spinoff because most of its reserves in Asia are not yet classified as proved or probable.
($1=$1.24 Canadian)
The new company would be listed on an Asian stock exchange, have its own management and board, and require little capital from Husky, CEO John Lau said after the Canadian oil producer and refiner's annual meeting.
The Asian properties owned by Husky, the energy company controlled by Hong Kong tycoon Li Ka-shing, have low costs and a strong partner in China's state oil firm CNOOC Ltd (0883.HK), Lau said.
"I think that the flotation, or IPO, will have a huge response from the market," he said.
Husky's only producing project in Southeast Asia is its stake in CNOOC's 12,200 barrel per day Wenchang field in the South China Sea. It and CNOOC are also jointly developing the Madura BD field in Indonesia's Madura Strait, with expected gross reserves of about 515 billion cubic feet of natural gas. Production there is slated to begin in 2012.
However the jewel among its Southeast Asian properties is the massive Liwan natural gas field in the South China Sea, 250 kilometers (155 miles) southeast of Hong Kong.
Liwan, discovered in 2006, is estimated to contain between 4 trillion and 6 trillion cubic feet of natural gas. The field could produce 1 billion cubic feet or more a day of gas to be sold into the Chinese market.
CNOOC has the right to buy 51 percent of the field. However some questioned whether CNOOC would look to acquire full control of the assets should Husky spin them off.
"I think this would be really well received by investors ... China has an insatiable appetite for energy," said William Lacey, an analyst at FirstEnergy Capital. "My question is whether CNOOC would preempt the process. Here's something that right offshore, right next to market and CNOOC has shown it's prepared to pay up for assets."
Husky shares jumped more than 3 percent after Lau's comments before falling back. They ended up 50 Canadian cents, or 1.8 percent, to C$29.10 on the Toronto Stock Exchange.
Lau did not say when Husky planned to complete the spinoff. He told reporters the company is already working on the tax and regulatory issues that would arise from the transaction and would expect to be able to detail reserves and development plans by year's end.
The timing of the deal is not yet fixed, but when economic conditions stabilize "we will be the first ones to take advantage of the market", Lau told reporters.
Lau said Husky itself would see no big drop in its reserves as a result of the spinoff because most of its reserves in Asia are not yet classified as proved or probable.
($1=$1.24 Canadian)
