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New Husky head 'not here to stand still'

Wednesday, June 30, 2010

Ghosh says his goal is growth, including acquisitions, as he rolls up his sleeves for turnaround

NATHAN VANDERKLIPPE

CALGARY -- After years of stagnant growth, Husky Energy Inc. is counting on a new chief executive officer to lead it out of the shadows of the energy industry.

Nearly two decades after John Lau took over the reins at a then-struggling Husky, a new leader at the Calgary-based oil and gas giant is promising to increase oil production, reshape the company's holdings and pursue major acquisitions.

"We're not here to stand still," said Asim Ghosh, who took over the top seat at Husky at the beginning of June, and delivered his first media interviews Tuesday.

"I'm not a maintenance manager. It's not what I'm good at ... I like building things."

It won't be easy to achieve.

After a decade that saw both its oil output and reserves languish - changed little from their levels in the early 2000s - Mr. Ghosh arrives to a Husky that has lost the faith of many investors.

It has failed to reach the 500,000 barrels per day of production once promised by Mr. Lau - in 2009 it produced 306,500 barrels of oil equivalent - and its shares are mired below their level in late 2008, when capital markets and oil prices crashed.

It currently trades at a cash-flow multiple a third lower than other Canadian oil and gas companies, according to figures published by RBC analyst Greg Pardy.

But Mr. Ghosh's arrival, after his predecessor John Lau spent 17 years at Husky's helm, has begun to stir expectations of better days.

Mr. Pardy, for example, came away from talking to Mr. Ghosh convinced that "steps will be undertaken in the near term to restore Husky's operating momentum and strategic direction."

On Tuesday, the new chief executive officer was complimentary toward his predecessor. Mr. Lau, he said, "has done a terrific job of creating something out of nothing. And I guess my job is to take it one step further. And a material step further."

Part of that will include working to make short-term improvements - under its current plans, Husky will not show growth before 2014, analysts have said. That will likely mean ending Husky's acquisition drought.

The company has not made a major asset purchase since 2003.

"Husky has had its history of both defining and more incremental acquisitions, and we are certainly open to both," Mr. Ghosh said.

He did not, however, commit to attaining 500,000 barrels per day.

"The goal is growth," Mr. Ghosh said. "Whether the figure is 400, 450 or 500 (thousand barrels per day), we will cross that bridge when we come to it."

The company will look for "strategic contiguity" in its purchases, Mr. Ghosh said, meaning assets that fit with Husky's expertise and current geographical holdings.

The company's production spans the gamut of heavy oil, oil sands and offshore East Coast oil. Heavy oil is Husky's "bread and butter," but the company plans to "switch gears" in that area as it uses new technologies on old resources, Mr. Ghosh said.

Husky's current assets give it 60 years of production at 2009 rates, he said, and both the oil sands and the Atlantic offshore will remain its two main capital-consuming pillars.

Husky is "deeply committed to the oil sands" and continues to see its refining assets as "strategic" for the company.

Mr. Ghosh, 62, said the duration of his tenure at Husky is unclear, but he does not expect it to be short.

"I like to get my teeth into things and have an impact," he said.

"This is not going to be a year or two or three."

In Mr. Ghosh's last post, he spent nearly a decade shepherding Indian telecom company Hutchison Essar - now Vodafone Essar - through massive growth before Li Ka-shing sold his 67-per-cent interest. The Hong Kong billionaire has a similarly large stake in Husky, but Mr. Ghosh declined to discuss the goals Mr. Li has for this company.

"I can tell you one thing: he is categorical that, rumours to the contrary, this company is not for sale."

Husky has the benefit of shareholders with a long-term perspective, Mr. Ghosh said, and his own personal history has demonstrated a commitment to confronting tricky problems.

He recalled the time, as a university engineering student, that he and a friend attempted to fix up a single-cylinder 1920s-vintage Villiers motorcycle.

They took apart the engine, but "we couldn't put it back together again, because the piston wouldn't go back in. So we took an old Dodge truck piston from the flea market," Mr. Ghosh said. "We machined it down to the right specs and got it working."

Asked what bearing that experience might have on his time at Husky, he didn't hesitate: "I have to tell you that what turns me on is anything that works with petroleum."

HUSKY ENERGY (HSE)

Close: $25.31, down 89¢

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Asim Ghosh

Experience

Managing director and CEO of Vodafone Essar Ltd.

VP of Carling O'Keefe.

Founding CEO of Pepsi Foods' startup operations in India.

Chaired the National Telecom Committee of the Confederation of Indian Industries and the

Cellular Operators Association of India.

Appointed to the board of Husky in 2009.

EDUCATION

MBA, Wharton School at the University of Pennsylvania

Electrical engineering degree, Indian Institute of Technology.

Source: Husky Energy