Husky Energy Announces Significant Gas Discovery in South China Sea

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June 14, 2006

Mr. John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc., announced today that Husky Oil China Ltd., a wholly owned subsidiary of Husky Energy, has made a significant hydrocarbon discovery at Liwan 3-1-1, Block 29/26, in the South China Sea.

Liwan 3-1-1 was drilled in a water depth of 1,500 metres on Block 29/26 in the Pearl River Mouth Basin and is the first deep water discovery made offshore China. The block is located approximately 250 kilometres south of Hong Kong. The well was drilled on existing 2-D seismic data to a total depth of 3,843 metres on a large structure with 60 square kilometres of closure and encountered 56 metres of net gas pay on logs over two zones. The 2-D seismic interpretation prior to drilling the well indicated a direct hydrocarbon response at the Liwan 3-1-1 location, which Husky’s analysis indicates is present over a majority of the 60 square kilometre closure currently mapped. The porosity encountered in the pay zones averaged approximately 20 percent, based on Husky’s petrophysical interpretation. Liwan 3-1-1, which is the deepest water well drilled offshore China, confirms the existence of a new hydrocarbon province.

The Liwan 3-1-1 well will be sidetracked for further evaluation of the pay zone and Husky currently plans a 3-D seismic survey in the near future to assess a number of similar structures which have been identified on 2-D seismic data. Further drilling on the block will follow after the evaluation of the 3-D data. Based on our current interpretation of the 2-D seismic and the Liwan 3-1-1 well results, the discovery could contain a potential recoverable resource of four to six trillion cubic feet of natural gas and as such, would be one of the largest natural gas discoveries offshore China.

“We are very pleased with our exploration results and this discovery confirms our confidence in the significant undiscovered hydrocarbon potential in the South China Sea,” said Mr. Lau. “We look forward to evaluating this discovery and continuing our exploration efforts in China.”

Husky has been actively exploring offshore China, in collaboration with CNOOC (China National Offshore Oil Corporation) since 2002. Husky signed the Production Sharing Agreement for Block 29/26 in August 2004, with a commencement date of October 2004. Block 29/26 is 3,965 square kilometres in area and one of three exploration blocks currently held by Husky in the South China Sea. CNOOC has the right to participate in the development of any discovery for up to 51 percent working interest.

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