NEWS RELEASE TRANSMITTED BY Marketwire



FOR: HUSKY ENERGY INC.

TSX SYMBOL:
 HSE

Husky Energy Reports 2004 Fourth Quarter Results

Dec 31, 2004 - 12:00 ET

CALGARY--(CCNMatthews - Jan. 17) - Husky Energy Inc. had net earnings of 
$1.01 billion or $2.36 per share (diluted) in 2004, compared with $1.33 
billion or $3.25 per share (diluted) in 2003. Cash flow from operations in 
2004 was $2,223 million or $5.16 per share (diluted), compared with $2,459 
million or $5.76 per share (diluted) in 2003. The difference in the financial 
performance between 2004 and 2003 is primarily due to the Company's hedging 
program, the strong Canadian dollar relative to the U.S. dollar, and one-time 
non-recurring tax rate reductions.

 /T/


    <<
                                              Year ended December 31

         ($ million) (loss (gain))                   2004       2003
         ------------------------------------------------------------
         Net earnings                              $1,006     $1,334
         Net hedging impact                           376         17
         Net foreign exchange                         (80)      (174)
         Non-recurring tax rate adjustments           (40)      (161)
         ------------------------------------------------------------
                                                   $1,262     $1,016
         ------------------------------------------------------------
         ------------------------------------------------------------

/T/ 

"Husky achieved strong operational and financial results for the year and 
made good progress on its major projects," said Mr. John C.S. Lau, President 
& Chief Executive Officer, Husky Energy Inc. "Notwithstanding higher 
commodity prices, the financial results were negatively impacted by our crude 
oil hedging program, which expired at the end of 2004 and by a stronger 
Canadian dollar, which reduced the benefit of higher oil prices."

Production for the year averaged 325,000 barrels of oil equivalent per day, 
compared with 312,500 barrels of oil equivalent per day during 2003. Total 
crude oil and natural gas liquids production for 2004 was 210,100 barrels per 
day, compared with 210,700 barrels per day during 2003. Natural gas 
production was 689.2 million cubic feet per day, up 13 percent from 610.6 
million cubic feet per day for 2003.

For the fourth quarter of 2004, Husky's net earnings were $218 million or 
$0.52 per share (diluted), compared with $236 million or $0.59 per share 
(diluted) in the fourth quarter of 2003. Cash flow from operations was $476 
million or $1.10 per share (diluted) in the fourth quarter of 2004, compared 
with $568 million or $1.32 per share (diluted) in the fourth quarter of 2003.

Production for the fourth quarter of 2004 averaged 324,600 barrels of oil 
equivalent per day, compared with 327,000 barrels of oil equivalent per day 
in the fourth quarter of 2003. Total crude oil and natural gas liquids 
production for the fourth quarter was 208,400 barrels per day, compared with 
217,700 barrels per day for the same period in 2003. Natural gas production 
for the fourth quarter of 2004 averaged 697.4 million cubic feet per day, 
compared with 655.7 million cubic feet per day for the same quarter in 2003.

Husky's proved oil and gas reserves are estimated in accordance with the 
regulations and guidance of the U.S. Securities and Exchange Commission 
("SEC"), which, among other things, requires reserves to be evaluated using 
the prices in effect on the day the reserves are estimated. As a result of 
several market factors, prices for heavy crude oil were $12.27 per barrel on 
December 31, 2004 and averaged $25.91 per barrel in the fourth quarter of 
2004. This reserve issue does not have an impact on the company's financial 
statements as the reserve estimates are calculated at $26.77 per barrel for 
heavy crude oil, using escalated pricing in accordance with Canadian 
generally accepted accounting principles. For a more complete discussion of 
this issue refer to "Oil and Gas Reserves" on page 13 of this news release.

Husky announced in July the commencement of its Tucker oil sands project, a 
30,000 barrels per day project near Cold Lake, Alberta. The central plant 
facilities contract is on a lump sum basis and covers 60 percent of the total 
project cost. Husky expects to commission the facility in the second half of 
2006. The Company also filed, in August, an application with the Alberta 
government for approval of its 200,000 barrel per day Sunrise oil sands 
project in the Athabasca region.

On Canada's East Coast, Husky continued the development of its White Rose 
project and is on target to achieve first oil in late 2005 or early 2006. 
Internationally, Husky signed a seventh petroleum contract with the China 
National Offshore Oil Corporation and plans to drill three wells in the South 
China Sea in 2005. Husky also plans to pursue its development in Indonesia, 
where the Company increased its interest to 100 percent in a production 
sharing contract in the Madura Strait, Indonesia.

Husky is proceeding with the upgrade to its Prince George oil refinery, which 
will allow the refinery to produce low sulphur gasoline and diesel fuel that 
meet the Government of Canada's new fuel specifications. Husky also commenced 
construction at Lloydminster Saskatchewan of a 130 million litre per year 
ethanol facility to meet the growing demand for this environmentally friendly 
fuel additive.

In December 2004, Husky announced its 2005 capital expenditure program of 
$2.5 billion, with $2.1 billion allocated to the upstream segment. Upstream 
activities will focus on oil and natural gas exploration activities in 
Western Canada, in the Northwest Territories, development of heavy oil and 
oil sands properties in Alberta, and commissioning of the White Rose floating 
production, storage and offloading ("FPSO") vessel. International activities 
include the planned drilling of three exploratory wells and additional 
seismic programs in the South China Sea and East China Sea.

"We anticipate achieving first oil at our White Rose offshore oil field as 
well as continued growth in heavy oil and natural gas production in Western 
Canada," said Mr. Lau. "We will continue to be mindful of the impact of 
strong forecasted commodity prices and to fluctuations in the exchange rate. 
Husky is looking forward to having a strong year in 2005."

 /T/


    Highlights
    ----------

    Financial Summary(1)
    -------------------------------------------------------
                                 Three months ended

    (millions of dollars,   Dec.    Sept.    June    March
     except per share        31       30       30       31
     amounts and ratios)   2004     2004     2004     2004
    -------------------------------------------------------
    Sales and operating
     revenues, net of
     royalties(2)       $ 2,018  $ 2,191  $ 2,210  $ 2,021
    Segmented earnings
      Upstream          $   112  $   161  $   204  $   236
      Midstream              77       50       53       60
      Refined Products       (3)      18       21        5
      Corporate and
       eliminations          32       57      (39)     (38)
    -------------------------------------------------------
    Net earnings        $   218  $   286  $   239  $   263
    -------------------------------------------------------
    -------------------------------------------------------
      Per share
       - Basic          $  0.53  $  0.70  $  0.54  $  0.60
       - Diluted           0.52     0.70     0.54     0.60
    Dividends declared
     per common share      0.12     0.12     0.12     0.10
    Special dividend per
     common share          0.54        -        -        -
    Return on equity(3)
     (percent)             16.2     16.7     16.1     20.5
    Return on average
     capital employed(3)
     (percent)             12.8     13.1     12.6     15.9
    -------------------------------------------------------
    -------------------------------------------------------


    -------------------------------------------------------------------------
                                 Three months ended              Year ended

    (millions of dollars,   Dec.    Sept.    June    March      Dec.     Dec.
     except per share        31       30       30       31       31       31
     amounts and ratios)   2003     2003     2003     2003     2004     2003
    -------------------------------------------------------------------------
    Sales and operating
     revenues, net of
     royalties(2)       $ 1,800  $ 1,871  $ 1,769  $ 2,218  $ 8,440  $ 7,658
    Segmented earnings
      Upstream          $   169  $   215  $   374  $   309  $   713  $ 1,067
      Midstream              46       41       49       49      240      185
      Refined Products        6       22        3        1       41       32
      Corporate and
       eliminations          15      (29)      15       49       12       50
    -------------------------------------------------------------------------
    Net earnings        $   236  $   249  $   441  $   408  $ 1,006  $ 1,334
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Per share
       - Basic          $  0.60  $  0.56  $  1.09  $  1.01  $  2.37  $  3.26
       - Diluted           0.59     0.56     1.09     1.01     2.36     3.25
    Dividends declared
     per common share      0.10     0.10     0.09     0.09     0.46     0.38
    Special dividend per
     common share             -     1.00        -        -     0.54     1.00
    Return on equity(3)
     (percent)             24.1     25.2     23.6     21.7     16.2     24.1
    Return on average
     capital employed(3)
     (percent)             18.1     18.5     17.6     15.8     12.8     18.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2003 amounts as restated. Refer to note 3 to the consolidated
        financial statements.
    (2) The three months ended September 30, 2004, June 30, 2004 and
        March 31, 2004 have been reclassified for hedging losses included as
        a consolidated expense.
    (3) Calculated for the twelve months ended for the periods shown.



    Production, before Royalties
    -------------------------------------------------------------------------
                                                 Three months ended

                                         Dec.   Sept.   June   March     Dec.
                                          31      30      30      31      31
                                        2004    2004    2004    2004    2003
    -------------------------------------------------------------------------
    Crude oil & NGL      (mbbls/day)
      Western Canada
        Light crude oil
         & NGL                          32.9    33.1    32.9    32.9    34.7
        Medium crude oil                33.7    34.5    35.6    36.1    37.9
        Heavy crude oil                113.8   108.8   107.4   105.6   107.8
    -------------------------------------------------------------------------
                                       180.4   176.4   175.9   174.6   180.4
      East Coast Canada
        Terra Nova -
         light crude oil                10.1    11.5    15.7    17.6    17.8
      China
        Wenchang -
         light crude oil                17.9    20.2    20.6    19.9    19.5
    -------------------------------------------------------------------------
                                       208.4   208.1   212.2   212.1   217.7
    -------------------------------------------------------------------------
    Natural gas          (mmcf/day)    697.4   700.4   685.4   673.6   655.7
    -------------------------------------------------------------------------
    Total                (mboe/day)    324.6   324.8   326.4   324.4   327.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Fourth Quarter of 2004 Compared with the Third Quarter of 2004

Total production from our properties in Western Canada in the fourth quarter 
of 2004 averaged 296.6 mboe per day, up one percent from 293.1 mboe per day 
in the third quarter of 2004.

Natural gas production during the fourth quarter declined marginally compared 
with the third quarter of 2004, averaging 697.4 mmcf per day. During the 
fourth quarter, 40 mmcf per day of natural gas production was added while 
natural reservoir declines amounted to 43 mmcf per day.

Total crude oil and NGL production in Western Canada in the fourth quarter of 
2004 was 180.4 mbbls per day, up two percent from 176.4 mbbls per day in the 
previous quarter. The higher crude oil production during the fourth quarter 
of 2004 was due to the addition of 12.9 mbbls per day resulting mainly from 
higher heavy crude oil primary production in the Lloydminster area, partially 
offset by natural reservoir declines.

Our share of production from the Terra Nova oil field averaged 10.1 mbbls of 
crude oil per day in the fourth quarter of 2004. Production operations at 
Terra Nova were interrupted throughout the fourth quarter due to operational 
issues.

In the South China Sea, our share of production from the Wenchang oil field 
averaged 17.9 mbbls of crude oil per day during the fourth quarter of 2004, 
an 11 percent decrease from 20.2 mbbls per day in the previous quarter due to 
natural reservoir declines and remedial operations conducted on several wells 
in December 2004. 

Exploration

Western Canada

During the fourth quarter of 2004, 72 net exploratory wells were drilled in 
the Western Canada Sedimentary Basin, resulting in 23 net oil wells and 46 
net natural gas wells.

During the fourth quarter, four natural gas wells were completed at Reilly in 
the Alberta foothills. These wells were tested at total rates between 10 and 
15 mmcf per day per well. Our average working interest in these wells is 40 
percent.

In the Lynx/Copton area in the Alberta foothills we drilled two natural gas 
wells that will be completed and on stream in the first quarter of 2005. Our 
working interest is 70 percent in both wells.

At Moose Mountain, also in the Alberta foothills, we are in the process of 
completing a natural gas discovery with a working interest of 43.5 percent.

In the northern areas of Alberta and British Columbia and the Deep Basin area 
in Alberta, our winter drilling program is underway and we expect to have 10 
drilling rigs active during the first quarter of 2005. A significant part of 
our program will focus in the Ekwan/Bivouac/Titan areas in northeastern 
British Columbia and will continue our successful Jean Marie/Mississippian 
exploration program from last year.

Northwest Territories

During winter 2005, we will participate in one exploration well in the 
central Mackenzie region and complete the Summit Creek discovery that was 
drilled during the winter in 2004.

East Coast Canada

During the fourth quarter of 2004, we acquired three new exploration licenses 
in the Jeanne d'Arc Basin comprising 560,000 acres and entailing a $47 
million work commitment.

Offshore China

During the fourth quarter of 2004, tenders were requested for shallow and 
deep water drilling rigs to drill three exploration wells in 2005. The rig 
bids are currently being evaluated. 

Major Projects

Oil Sands

Tucker, Alberta

At Tucker, construction of the well pads is progressing and water supply 
wells confirmed adequate water capacity. During the fourth quarter, major 
equipment orders were placed for the new facilities and drilling rigs were 
secured.

Sunrise, Alberta

During the fourth quarter of 2004, review of the project application by the 
Alberta Energy and Utilities Board and Alberta Environment progressed and we 
expect to receive queries early in 2005. We have now finalized plans for a 
40-well program for winter 2005.

White Rose

At the White Rose oil field, offshore Newfoundland and Labrador, the first 
well in the central glory hole was drilled, a water injection well that will 
augment the pressure in the reservoir. A total of six development wells (one 
production well, one gas injection well and four water injection wells) have 
been drilled to date. Currently construction is underway on the production 
and gas injection flowlines that will connect the subsea well head equipment 
to the floating production, storage and offloading vessel.

Commissioning of the topsides facilities on the floating production, storage 
and offloading vessel is progressing.

Two shuttle tankers that will be leased are currently being constructed in 
Korea.

Husky Lloydminster Upgrader

The major debottleneck program underway at the Husky Lloydminster Upgrader 
has now identified various projects to enable throughput to increase from 
77,000 barrels per day to 82,000 barrels per day. The debottleneck program is 
expected to be completed by mid 2006.

Lloydminster Ethanol Plant

During the fourth quarter of 2004, detailed engineering design phase work 
progressed and site preparation was completed. The plant is expected to be 
completed in early 2006 and will have a design rate capacity to produce 130 
million litres per year.

Prince George Refinery

The Prince George refinery is currently undergoing a major upgrade that will 
reduce the sulphur content in gasoline and diesel fuels to meet new 
Government of Canada fuel specifications and increase overall capacity by 10 
percent. We currently expect the gasoline desulphurization work to be 
complete by August 2005 and the diesel desulphurization work to be complete 
by March 2006.

Western Canada

During the fourth quarter of 2004, we commissioned the Western Canada Select 
project at our Hardisty terminal. This will combine crude oil production of 
four major producers to produce a new heavy sour crude blend. During December 
we shipped a total 2.1 million barrels of oil to markets in the United 
States.

 /T/


    Production versus 2004 Forecast
    -------------------------------------------------------------------------
                                                        Year ended
                                                           Dec. 31  Forecast
                                                              2004      2004
    -------------------------------------------------------------------------
    Crude oil & NGL                    (mbbls/day)
      Light crude oil & NGL                                   66.2     67-76
      Medium crude oil                                        35.0     35-40
      Heavy crude oil                                        108.9   105-115
    -------------------------------------------------------------------------
                                                             210.1   207-231
    Natural gas                        (mmcf/day)            689.2   670-710
    Total barrels of oil equivalent    (mboe/day)            325.0   320-350
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Average Benchmark Prices and U.S. Exchange Rate
    -------------------------------------------------------------------------
                                               Three months ended

                                     Dec.    Sept.    June    March      Dec.
                                      31       30       30       31       31
                                    2004     2004     2004     2004     2003
    -------------------------------------------------------------------------
    WTI crude
     oil(1)         (U.S. $/bbl) $ 48.28  $ 43.88  $ 38.32  $ 35.15  $ 31.18
    Canadian par
     light crude
     0.3% sulphur   ($/bbl)        58.01    56.61    50.99    46.00    39.95
    NYMEX natural
     gas(1)         (U.S. $/mmbtu)  7.11     5.76     5.97     5.69     4.58
    NIT natural gas ($/GJ)          6.72     6.32     6.45     6.26     5.30
    WTI/Lloyd crude
     blend
     differential   (U.S. $/bbl)   19.82    12.86    11.82    10.12    10.37
    U.S./Canadian
     dollar
     exchange rate  (U.S. $)       0.819    0.765    0.736    0.759    0.760
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prices quoted are near-month contract prices for settlement during
        the next month.

/T/



SENSITIVITY ANALYSIS

The following table is indicative of the relative effect of changes in 
certain key variables on pre-tax cash flow and net earnings. The analysis is 
based on business conditions and production volumes during the fourth quarter 
of 2004. Each separate item in the sensitivity analysis shows the effect of 
an increase in that variable only; all other variables are held constant. 
While these sensitivities are applicable for the period and magnitude of 
changes on which they are based, they may not be applicable in other periods, 
under other economic circumstances or greater magnitudes of change.

/T/


    Sensitivity Analysis

    -------------------------------------------------------------------------
                                              Effect on
                                               Pre-tax          Effect on
    Item                   Increase          Cash Flow       Net Earnings
    -------------------------------------------------------------------------
                                            ($    ($/share)   ($    ($/share)
                                         millions)   (4)   millions)   (4)

    WTI benchmark crude
     oil price
      Excluding
       commodity hedges    U.S. $1.00/bbl      81     0.19       55     0.13
      Including commodity
       hedges              U.S. $1.00/bbl      42     0.10       28     0.07
    NYMEX benchmark
     natural gas price(1)
      Excluding commodity
       hedges              U.S. $0.20/mmbtu    38     0.09       25     0.06
      Including commodity
       hedges              U.S. $0.20/mmbtu    38     0.09       25     0.06
    Light/heavy crude oil
     differential(2)       Cdn. $1.00/bbl     (33)   (0.08)     (22)   (0.05)
    Light oil margins      Cdn. $0.005/litre   15     0.04       10     0.02
    Asphalt margins        Cdn. $1.00/bbl       8     0.02        5     0.01
    Exchange rate
     (U.S. $/Cdn. $)(3)
      Including commodity
       hedges              U.S. $0.01         (50)   (0.12)     (35)   (0.08)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes decrease in earnings related to natural gas consumption.
    (2) Includes impact of upstream and upgrading operations only.
    (3) Assumes no foreign exchange gains or losses on U.S. dollar
        denominated long-term debt and other monetary items. The impact of
        the Canadian dollar strengthening by U.S. $0.01 would be an increase
        of $10 million in net earnings based on December 31, 2004 U.S. dollar
        denominated debt levels.
    (4) Based on December 31, 2004 common shares outstanding of
        423.7 million.



    Results of Operations
    ---------------------

    UPSTREAM

    Upstream Earnings Summary(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    (millions of dollars)                    2004     2003     2004     2003
    -------------------------------------------------------------------------
    Gross revenues                        $ 1,099  $   859  $ 4,392  $ 3,796
    Royalties                                 174      126      711      584
    Hedging                                   203       11      561       26
    -------------------------------------------------------------------------
    Net revenues                              722      722    3,120    3,186
    Operating and administrative expenses     247      227      967      873
    Depletion, depreciation and
     amortization                             283      263    1,077      918
    Income taxes                               80       63      363      328
    -------------------------------------------------------------------------
    Earnings                              $   112  $   169  $   713  $ 1,067
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2003 amounts as restated.  Refer to note 3 to the consolidated
        financial statements.

/T/



Fourth Quarter

Lower upstream earnings in the fourth quarter of 2004 compared with the 
fourth quarter of 2003 were primarily the result of the following factors:

-  hedging losses of $6.79 per boe during the fourth quarter of 2004

   compared with $0.37 per boe during the fourth quarter of 2003

-  higher royalties during the fourth quarter of 2004 due to the higher

   commodity prices compared with the same period in 2003

-  lower production volume of light and medium crude oil

-  higher unit operating costs during the fourth quarter of 2004

   resulting from increased level of field servicing compared with same

   period in 2003

-  higher depletion, depreciation and amortization per boe due to a

   higher capital base in the fourth quarter of 2004

-  higher income taxes

which were partially offset by:

-  higher crude oil and natural gas prices

-  higher production volume of heavy crude oil and natural gas 

Twelve Months

Lower upstream earnings in 2004 compared with 2003 resulted from primarily 
the same factors as those affecting the fourth quarter of 2004.

Depletion, Depreciation and Amortization

Total depreciation, depletion and amortization expense per boe during the 
fourth quarter of 2004 was $9.51 per boe compared with $8.74 per boe during 
the fourth quarter of 2003. The increase was due to a higher depletable 
capital base in the fourth quarter of 2004. This reflects the trend of 
increasing capital requirements for exploitation in the Western Canada 
Sedimentary Basin, particularly for shallow natural gas reservoirs and mature 
crude oil fields under secondary and tertiary recovery schemes.

/T/


    Operating Statistics

    Production, before Royalties
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
                                             2004     2003     2004     2003
    -------------------------------------------------------------------------
    Light crude oil & NGL     (mbbls/day)    60.9     72.0     66.2     71.6
    Medium crude oil          (mbbls/day)    33.7     37.9     35.0     39.2
    Heavy crude oil           (mbbls/day)   113.8    107.8    108.9     99.9
    -------------------------------------------------------------------------
    Total crude oil & NGL     (mbbls/day)   208.4    217.7    210.1    210.7
    Natural gas               (mmcf/day)    697.4    655.7    689.2    610.6
    Barrels of oil
     equivalent (6:1)         (mboe/day)    324.6    327.0    325.0    312.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Operating Netbacks

    Western Canada

    Light Crude Oil Netbacks(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 51.15  $ 35.48  $ 46.12  $ 39.91
    Royalties                                7.89     6.38     7.76     7.28
    Operating costs                         10.10    10.90     8.94     9.27
    -------------------------------------------------------------------------
    Netback                               $ 33.16  $ 18.20  $ 29.42  $ 23.36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Medium Crude Oil Netbacks(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 35.43  $ 27.36  $ 36.20  $ 31.57
    Royalties                                5.24     4.54     6.10     5.28
    Operating costs                         10.11     9.47    10.07     9.53
    -------------------------------------------------------------------------
    Netback                               $ 20.08  $ 13.35  $ 20.03  $ 16.76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes associated co-products converted to boe.



    Heavy Crude Oil Netbacks(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 25.91  $ 20.99  $ 28.73  $ 25.98
    Royalties                                3.33     2.02     3.38     2.76
    Operating costs                          8.83     8.52     9.33     9.09
    -------------------------------------------------------------------------
    Netback                               $ 13.75  $ 10.45  $ 16.02  $ 14.13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Natural Gas Netbacks(2)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per mcfge                                2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $  6.63  $  4.90  $  6.25  $  5.79
    Royalties                                1.40     0.98     1.44     1.29
    Operating costs                          0.94     0.78     0.89     0.79
    -------------------------------------------------------------------------
    Netback                               $  4.29  $  3.14  $  3.92  $  3.71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Total Western Canada Upstream Netbacks(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 35.10  $ 26.56  $ 35.01  $ 31.58
    Royalties                                5.99     4.30     6.22     5.48
    Operating costs                          7.91     7.40     7.85     7.56
    -------------------------------------------------------------------------
    Netback                               $ 21.20  $ 14.86  $ 20.94  $ 18.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Terra Nova Crude Oil Netbacks
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 52.07  $ 38.21  $ 47.87  $ 38.91
    Royalties                                2.51     0.95     1.80     0.81
    Operating costs                          4.06     2.67     3.28     3.16
    -------------------------------------------------------------------------
    Netback                               $ 45.50  $ 34.59  $ 42.79  $ 34.94
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Wenchang Crude Oil Netbacks
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 44.89  $ 40.27  $ 47.66  $ 41.45
    Royalties                                4.77     5.13     4.91     3.80
    Operating costs                          2.50     2.71     2.16     1.94
    -------------------------------------------------------------------------
    Netback                               $ 37.62  $ 32.43  $ 40.59  $ 35.71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Total Upstream Segment Netbacks(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    Per boe                                  2004     2003     2004     2003
    -------------------------------------------------------------------------
    Sales revenues before hedging         $ 36.17  $ 28.01  $ 36.34  $ 32.69
    Royalties                                5.82     4.17     5.96     5.11
    Operating costs                          7.50     6.87     7.32     6.92
    -------------------------------------------------------------------------
    Netback                               $ 22.85  $ 16.97  $ 23.06  $ 20.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes associated co-products converted to boe.
    (2) Includes associated co-products converted to mcfge.



    MIDSTREAM

    Upgrading Earnings Summary
    -------------------------------------------------------------------------
                                            Three months         Year ended
    (millions of dollars, except         ended December 31      December 31
     where indicated)                        2004     2003     2004     2003
    -------------------------------------------------------------------------
    Gross margin                          $   122  $    78  $   383  $   313
    Operating costs                            54       45      214      205
    Other recoveries                           (1)       -       (5)      (4)
    Depreciation and amortization               5        5       19       20
    Income taxes                               18       10       43       21
    -------------------------------------------------------------------------
    Earnings                              $    46  $    18  $   112  $    71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Upgrader throughput(1)  (mbbls/day)    60.0     69.8     64.6     72.5
      Synthetic crude oil
       sales                  (mbbls/day)    52.5     62.2     53.7     63.6
      Upgrading differential  ($/bbl)     $ 25.72  $ 13.40  $ 17.79  $ 12.88
      Unit margin             ($/bbl)     $ 25.37  $ 13.60  $ 19.48  $ 13.51
      Unit operating cost(2)  ($/bbl)     $  9.94  $  7.03  $  9.07  $  7.77
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Throughput includes diluent returned to the field.
    (2) Based on throughput.

/T/



Fourth Quarter

Upgrading earnings increased in the fourth quarter of 2004 compared with the 
fourth quarter of 2003 primarily due to the following factors:

-  a $12.32 per barrel increase in the upgrading differential

which was partially offset by:

-  lower upgrader throughput during the fourth quarter of 2004

-  higher unit operating costs, which were primarily related to energy

   costs

-  higher income taxes 

Twelve Months

Higher upgrader earnings in 2004 compared with 2003 resulted from primarily 
the same factors as those affecting the fourth quarter.

/T/


    Infrastructure and Marketing Earnings Summary
    -------------------------------------------------------------------------
                                            Three months         Year ended
    (millions of dollars, except         ended December 31      December 31
     where indicated)                        2004     2003     2004     2003
    -------------------------------------------------------------------------
    Gross margin
     - pipeline                           $    19  $    15  $    84  $    66
     - other infrastructure and marketing      33       36      136      141
    -------------------------------------------------------------------------
                                               52       51      220      207
    Other expenses                              1        1        8        8
    Depreciation and amortization               5        6       21       21
    Income taxes                               15       16       63       64
    -------------------------------------------------------------------------
    Earnings                              $    31  $    28  $   128  $   114
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Aggregate pipeline
       throughput             (mbbls/day)     479      502      492      484
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Fourth Quarter

Higher infrastructure and marketing earnings in the fourth quarter of 2004 
compared with the fourth quarter of 2003 were primarily the result of the 
following factors:

-  higher heavy crude oil pipeline tariffs and handling income

which was partially offset by:

-  lower Lloyd blend marketing margins 

Twelve Months

Higher infrastructure and marketing earnings in 2004 compared with 2003 
resulted from primarily the same factors as those affecting the fourth 
quarter of 2004 except that during 2004 Lloyd blend marketing margins 
contributed to the overall increase in earnings and natural gas marketing 
margins were lower.

 /T/

    REFINED PRODUCTS

    Refined Products Earnings Summary(1)
    -------------------------------------------------------------------------
                                            Three months         Year ended
    (millions of dollars, except         ended December 31      December 31
     where indicated)                        2004     2003     2004     2003
    -------------------------------------------------------------------------
    Gross margin
     - fuel sales                         $     7  $    16  $    93  $    71
     - ancillary sales                          8        7       30       28
     - asphalt sales                           10       16       51       51
    -------------------------------------------------------------------------
                                               25       39      174      150
    Operating and other expenses               18       23       71       74
    Depreciation and amortization              11        6       38       26
    Income taxes                               (1)       4       24       18
    -------------------------------------------------------------------------
    Earnings (loss)                       $    (3) $     6  $    41  $    32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Number of fuel outlets                                    531      552
      Light oil sales (million litres/day)    8.1      8.2      8.4      8.2
      Light oil sales
       per outlet     (thousand litres/day)  12.0     11.0     11.7     10.8
      Prince George
       refinery
       throughput     (mbbls/day)             8.6     11.5      9.8     10.3
      Asphalt sales   (mbbls/day)            20.8     19.7     22.8     22.0
      Lloydminster
       refinery
       throughput     (mbbls/day)            26.1     26.1     25.3     25.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2003 amounts as restated. Refer to note 3 to the consolidated
        financial statements.

/T/ 

Fourth Quarter

Lower refined product earnings in the fourth quarter of 2004 compared with 
the fourth quarter of 2003 were primarily the result of the following 
factors:

-  lower light oil product margins

-  lower asphalt product margins

-  higher depreciation

which were partially offset by:

-  lower operating costs

-  lower income taxes 

Twelve Months

Higher refined product earnings in 2004 compared with 2003 were primarily the 
result of the following factors:

-  higher light oil product margins

-  higher restaurant and food store income

which were partially offset by:

-  lower asphalt products margins

 /T/

    CORPORATE
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    (millions of dollars)                    2004     2003     2004     2003
    -------------------------------------------------------------------------
    Intersegment eliminations - net       $   (11) $   (11) $    14  $   (14)
    Administration expenses                    11       10       27       22
    Stock-based compensation                   22        -       67        -
    Accretion                                   -        -        2        -
    Other - net                                 3        1        8        3
    Depreciation and amortization              (2)      13       24       36
    Interest - net                              6       16       33       73
    Foreign exchange                          (46)     (43)     (99)    (215)
    Income taxes                              (15)      (1)     (88)      45
    -------------------------------------------------------------------------
    Earnings                              $    32  $    15  $    12  $    50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Foreign Exchange
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    (millions of dollars)                    2004     2003     2004     2003
    -------------------------------------------------------------------------
    (Gain) loss on translation of
     U.S. dollar denominated
     long-term debt
      Realized                            $    (5) $    12  $   (10) $    11
      Unrealized                              (68)     (72)    (119)    (326)
    -------------------------------------------------------------------------
                                              (73)     (60)    (129)    (315)
    -------------------------------------------------------------------------
    Cross currency swaps
      Realized                                  -       32        -       32
      Unrealized                               19       (9)      27       41
    -------------------------------------------------------------------------
                                               19       23       27       73
    -------------------------------------------------------------------------
    Other (gains) losses                        8       (6)       3       27
    -------------------------------------------------------------------------
                                          $   (46) $   (43) $   (99) $  (215)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    U.S./Canadian dollar exchange rates:
      At beginning of period  (U.S. $)    $ 0.791  $ 0.741  $ 0.774  $ 0.633
      At end of period        (U.S. $)    $ 0.831  $ 0.774  $ 0.831  $ 0.774
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Fourth Quarter

Corporate earnings were higher in the fourth quarter of 2004 compared with 
the fourth quarter of 2003 primarily due to the following:

-  income tax recoveries in 2004

-  higher foreign exchange gains

-  lower depreciation and amortization

-  lower interest expense due to lower rates and higher capitalized

   interest

which were partially offset by:

-  stock-based compensation for which there is no corresponding amount in

   2003. The stock-based compensation in 2004 primarily resulted from

   amendments made to our stock option plan in June 2004 

Twelve Months

Corporate earnings were lower in 2004 compared with 2003 primarily due to the 
following:

-  lower foreign exchange gains

-  stock-based compensation

-  higher profit eliminations

-  higher general corporate expenses

which were partially offset by:

-  lower depreciation and amortization

-  lower interest expense due to lower rates and higher capitalized

   interest

-  higher income tax recoveries

 /T/


    CAPITAL EXPENDITURES
    -------------------------------------------------------------------------
                                            Three months         Year ended
                                         ended December 31      December 31
    (millions of dollars)                    2004     2003     2004     2003
    -------------------------------------------------------------------------
    Upstream
      Exploration
        Western Canada                    $    77  $    88  $   322  $   326
        East Coast Canada                       7        -       24       24
        International                           2        5       18       26
    -------------------------------------------------------------------------
                                               86       93      364      376
    -------------------------------------------------------------------------
      Development
        Western Canada                        356      284    1,211      869
        East Coast Canada                     160      194      515      533
        International                          62        -       67        -
    -------------------------------------------------------------------------
                                              578      478    1,793    1,402
    -------------------------------------------------------------------------
                                              664      571    2,157    1,778
    -------------------------------------------------------------------------
    Midstream
      Upgrader                                 24       10       62       25
      Infrastructure and Marketing             19        7       31       18
    -------------------------------------------------------------------------
                                               43       17       93       43
    -------------------------------------------------------------------------
    Refined Products                           53       30      106       58
    Corporate                                   4        9       23       23
    -------------------------------------------------------------------------
    Capital expenditures                      764      627    2,379    1,902
    Settlement of capital asset
     retirement obligations                   (12)     (10)     (30)     (34)
    -------------------------------------------------------------------------
    Capital expenditures per Consolidated
     Statements of Cash Flows             $   752  $   617  $ 2,349  $ 1,868
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital expenditures exclude capitalized costs related to asset
    retirement obligations incurred during the period and corporate
    acquisitions.



    Wells Drilled (1) (2)
    -------------------------------------------------------------------------
                           Three months                  Year ended
                        ended December 31                December 31
                         2004        2003           2004            2003
                     Gross   Net Gross   Net   Gross     Net   Gross     Net
    -------------------------------------------------------------------------
    Western Canada
      Exploration
       Oil              26    23     3     3      45      39      12      11
       Gas              81    46    45    32     234     180     147     124
       Dry               4     3     1     1      34      33      22      21
    -------------------------------------------------------------------------
                       111    72    49    36     313     252     181     156
    -------------------------------------------------------------------------
      Development
       Oil             156   131   120   116     552     499     520     490
       Gas             175   148   141   137     807     740     540     518
       Dry               6     5     5     5      57      53      60      57
    -------------------------------------------------------------------------
                       337   284   266   258   1,416   1,292   1,120   1,065
    -------------------------------------------------------------------------
                       448   356   315   294   1,729   1,544   1,301   1,221
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes stratigraphic test wells.
    (2) Includes non-operated wells.



    OIL AND GAS RESERVES

    Reserve Reconciliation
    -------------------------------------------------------------------------
                                   Canada
                           --------------------------------------------------
                                                                        East
                                        Western Canada                 Coast
                           --------------------------------------------------
                               Light
                               Crude    Medium     Heavy               Light
                                 Oil     Crude     Crude   Natural     Crude
                               & NGL       Oil       Oil       Gas       Oil
                             (mmbbls)  (mmbbls)  (mmbbls)     (bcf)  (mmbbls)
    -------------------------------------------------------------------------
    Proved reserves, before
     royalties
    Proved reserves at
     December 31, 2003           173        94       227     2,059        26
      Revision of previous
       estimate                    1         1      (114)      (23)       (1)
      Purchase of reserves
       in place                    1         -         -        23         -
      Sales of reserves
       in place                    -         -        (1)      (14)        -
      Discoveries and
       extensions                  8         4        33       376        27
      Production                 (12)      (13)      (40)     (252)       (5)
    -------------------------------------------------------------------------
    Proved reserves at
     December 31, 2004           171        86       105     2,169        47
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ---------------------------------------------------------------
                           International
                           -------------
                                                  Total
                           ----------------------------------------
                               Light     Crude
                               Crude       Oil   Natural
                                 Oil     & NGL       Gas
                             (mmbbls)  (mmbbls)     (bcf)   (mmboe)
    ---------------------------------------------------------------
    Proved reserves, before
     royalties
    Proved reserves at
     December 31, 2003            24       544     2,059       887
      Revision of previous
       estimate                    3      (110)      (23)     (114)
      Purchase of reserves
       in place                    -         1        23         5
      Sales of reserves
       in place                    -        (1)      (14)       (3)
      Discoveries and
       extensions                  -        72       376       135
      Production                  (7)      (77)     (252)     (119)
    ---------------------------------------------------------------
    Proved reserves at
     December 31, 2004            20       429     2,169       791
    ---------------------------------------------------------------
    ---------------------------------------------------------------

/T/ 

Our oil and gas reserves are estimated in accordance with the regulations and 
guidance of the U.S. Securities and Exchange Commission ("SEC"), which, among 
other things, requires reserves to be evaluated using prices in effect on the 
day the reserves are estimated. We have significant oil reserves that are 
heavy with an API gravity of 12-14 degrees. Heavy crude oil sells at a 
discount to light crude oils such as West Texas Intermediate, which has an 
API gravity of approximately 40 degrees, because it requires upgrading before 
it can be processed by conventional refineries. There is a finite capacity 
for upgrading in North America, which is often reached when heavy crude oil 
from other countries enters the North American market. Heavy crude oil 
requires blending with condensate or light synthetic crude oil ("diluent") in 
order for it to be transported in a pipeline. During the winter, heavy crude 
oil requires a higher proportion of diluent because of the cold temperatures 
and diluent prices are similar to light crude oil prices. Heavy crude oil is 
also processed into asphalt, which is typically in demand during the spring 
to fall paving months.

As a result of these factors, prices for heavy crude oil are historically low 
in December. During 2004 the price of heavy crude oil at Lloydminster 
averaged $28.75 per barrel but on December 31, 2004, the date our oil and gas 
reserves were evaluated, the calculated price of Lloydminster heavy crude oil 
was $12.27 per barrel while the price for Husky Synthetic Blend was just 
under $50.00 per barrel. Husky Synthetic Blend is produced in our upgrading 
facility in Lloydminster, which was constructed to capture the difference in 
value between heavy crude oil and high quality synthetic crude oil. At $12.27 
per barrel, 86 percent of our proved undeveloped heavy crude oil reserves in 
the Lloydminster area did not produce positive cash flow after the required 
capital investment and, in accordance with SEC regulation, were required to 
be subtracted as a negative revision from proved reserves until prices 
increase sufficiently to return those reserves to economic status. In 
addition, 39 percent of our proved developed reserves were uneconomic on 
December 31, 2004, and were included in the negative revision. The SEC 
requires oil and gas reserves to be economic at the well head and does not 
permit consideration of other economic factors such as our upgrading 
facility, which at December 31, 2004, produced cash netback of approximately 
$30.00 per barrel after royalties, lease operating costs, transportation and 
upgrading operating costs. When considering our upgrading, asphalt refining 
and other heavy oil infrastructure, our heavy oil production was economic to 
the Company at December 31, 2004. Notwithstanding the economics at December 
31, 2004, on January 10, 2005, the price of Lloydminster heavy crude oil had 
returned to $21.56 per barrel, a price sufficient to return 98 percent of the 
reserves subtracted by negative revision to the proved reserve category.

The following table shows our reserves after considering our upgrading 
capacity.

/T/


    -------------------------------------------------------------------------
                                                 Canada
                           --------------------------------------------------
                                                                        East
                                         Western Canada                Coast
                           --------------------------------------------------
                               Light
                               Crude    Medium     Heavy               Light
                                 Oil     Crude     Crude   Natural     Crude
                               & NGL       Oil       Oil       Gas      Oil
                             (mmbbls)  (mmbbls)  (mmbbls)     (bcf)  (mmbbls)
    -------------------------------------------------------------------------
    Proved reserves at
     December 31, 2004           171        86       105     2,169        47
    Heavy oil price
     revision at $12.27            -         -       120         3         -
    -------------------------------------------------------------------------
    Proved reserves
     excluding heavy oil
     revision at
     December 31, 2004           171        86       225     2,172        47
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ---------------------------------------------------------------
                           International
                           -------------
                                                  Total
                           ----------------------------------------
                               Light     Crude
                               Crude       Oil   Natural
                                 Oil     & NGL       Gas
                             (mmbbls)  (mmbbls)     (bcf)   (mmboe)
    ---------------------------------------------------------------
    Proved reserves at
     December 31, 2004            20       429     2,169       791
    Heavy oil price
     revision at $12.27            -       120         3       120
    ---------------------------------------------------------------
    Proved reserves
     excluding heavy oil
     revision at
     December 31, 2004            20       549     2,172       911
    ---------------------------------------------------------------
    ---------------------------------------------------------------

/T/ 

Notwithstanding negative revisions from low heavy oil prices at December 31, 
2004, during 2004 we added 146 million barrels of oil equivalent from 
discoveries, extensions, improved recovery, acquisitions and technical 
revisions. Reserves were added at White Rose, Lloydminster and in the 
foothills and Deep Basin of Alberta and northeast British Columbia.

These additions to crude oil reserves amounted to 83 million barrels and were 
primarily from the Lloydminster reservoir extensions from step-out drilling 
and improved recovery. At White Rose offshore Newfoundland and Labrador 23 
million barrels qualified as proved reserves.

These additions to natural gas reserves amounted to 379 billion cubic feet 
and were primarily related to our drilling program in the foothills and Deep 
Basin areas of Alberta and northeast British Columbia. Natural gas reserve 
additions also resulted from field extensions at Ekwan Sierra, Rainbow, Abbey 
in southwest Saskatchewan and areas throughout the Alberta foothills and Deep 
Basin. Negative technical revisions of previously estimated natural gas 
reserves were primarily related to reservoir performance.

/T/


    Finding and Development Costs - includes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands and acquisitions/divestitures)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Total capitalized costs ($ millions)  $ 3,600  $ 1,476  $ 1,130  $   994
    Proved reserve additions and
     revisions (mmboe)                        163       (9)      77       95
    Average cost per boe                  $ 22.15      n/a  $ 14.75  $ 10.49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Finding and Development Costs - excludes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands and acquisitions/divestitures)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Total capitalized costs ($ millions)  $ 3,600  $ 1,476  $ 1,130  $   994
    Proved reserve additions and
     revisions (mmboe)                        283      111       77       95
    Average cost per boe                  $ 12.73  $ 13.26  $ 14.75  $ 10.49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Production Replacement - includes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Production (mmboe)                        307      107      100      100
    Proved reserve additions and
     revisions (mmboe)                        163       (9)      77       95
    Production replacement ratio
     (excluding net acquisitions)
     (percent)                                 53       (8)      77       95
    Proved reserve additions and revisions
     (including net acquisitions) (mmboe)     185       (7)     111       81
    Production replacement ratio
     (including net acquisitions)
     (percent)                                 60       (7)     111       81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Production Replacement - excludes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Production (mmboe)                        307      107      100      100
    Proved reserve additions and
     revisions (mmboe)                        283      111       77       95
    Production replacement ratio
     (excluding net acquisitions)
     (percent)                                 92      104       77       95
    Proved reserve additions and revisions
     (including net acquisitions) (mmboe)     305      113      111       81
    Production replacement ratio
     (including net acquisitions)
    (percent)                                 100      106      111       81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Recycle Ratio

The recycle ratio measures the efficiency of Husky's capital program by 
comparing the cost of finding and developing proved reserves with the netback 
from production. The ratio is calculated by dividing the operating netback by 
the proved finding and development cost on a barrels of oil equivalent basis.

/T/


    Recycle Ratio - includes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Operating netback ($/boe)             $ 18.56  $ 20.94  $ 18.54  $ 16.04
    Proved finding and development
     cost ($/boe)                         $ 22.15      n/a  $ 14.75  $ 10.49
    Recycle ratio                            0.84      n/a     1.26     1.53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Recycle Ratio - excludes heavy oil revision
    -------------------------------------------------------------------------
    Western Canada (Excludes oil sands)
    Year ended December 31              2002-2004     2004     2003     2002
    -------------------------------------------------------------------------
    Operating netback ($/boe)             $ 18.56  $ 20.94  $ 18.54  $ 16.04
    Proved finding and development
     cost ($/boe)                         $ 12.73  $ 13.26  $ 14.75  $ 10.49
    Recycle ratio                            1.46     1.58     1.26     1.53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Forward-looking Statements
    --------------------------

/T/ 

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE 'SAFE HARBOR' PROVISIONS OF

THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This document contains certain forward-looking statements relating, but not 
limited, to Husky's operations, anticipated financial performance, business 
prospects and strategies and which are based on Husky's current expectations, 
estimates, projections and assumptions and were made by Husky in light of 
experience and perception of historical trends. Some of Husky's forward-
looking statements may be identified by words like "expects," "anticipates," 
"plans," "intends," "believes," "projects," "could," "vision," "goal," 
"objective" and similar expressions. Husky's business is subject to risks and 
uncertainties, some of which are similar to other energy companies and some 
of which are unique to Husky. All statements that address expectations or 
projections about the future, including statements about strategy for growth, 
expected expenditures, commodity prices, costs, schedules and production 
volumes, operating or financial results, are forward-looking statements.

The reader is cautioned not to place undue reliance on Husky's       forward-
looking statements. Husky's actual results may differ materially from those 
expressed or implied by Husky's forward-looking statements as a result of 
known and unknown risks, uncertainties and other factors. By their nature, 
forward-looking statements involve numerous assumptions, inherent risks and 
uncertainties, both general and specific, that contribute to the possibility 
that the predicted outcomes will not occur. The risks, uncertainties and 
other factors, many of which are beyond Husky's control, that could influence 
actual results include, but are not limited to:

-  fluctuations in commodity prices

-  changes in general economic, market and business conditions

-  fluctuations in supply and demand for Husky's products

-  fluctuations in the cost of borrowing

-  Husky's use of derivative financial instruments to hedge exposure to

   changes in commodity prices and fluctuations in interest rates and

   foreign currency exchange rates

-  political and economic developments, expropriations, royalty and tax

   increases, retroactive tax claims and changes to import and export

   regulations and other foreign laws and policies in the countries in

   which Husky operates

-  Husky's ability to receive timely regulatory approvals

-  the integrity and reliability of Husky's capital assets

-  the cumulative impact of other resource development projects

-  estimated production levels and Husky's success at exploration and

   development drilling and related activities

-  the maintenance of satisfactory relationships with unions, employee

   associations and joint venturers

-  competitive actions of other companies, including increased

   competition from other oil and gas companies or from companies that

   provide alternate sources of energy

-  the uncertainties resulting from potential delays or changes in plans

   with respect to exploration or development projects or capital

   expenditures

-  actions by governmental authorities, including changes in

   environmental and other regulations

-  the ability and willingness of parties with whom Husky has material

   relationships to fulfil their obligations

-  the occurrence of unexpected events such as fires, blowouts,

   freeze-ups, equipment failures and other similar events affecting

   Husky or other parties whose operations or assets directly or

   indirectly affect Husky 

Disclosure of Proved Oil and Gas Reserves and Other Oil and Gas

Information

The Company's disclosure of proved oil and gas reserves and other information 
about its oil and gas activities has been made based on reliance of an 
exemption granted by the Canadian Securities Administrators. The exemption 
permits the Company to make these disclosures in accordance with requirements 
in the United States. These requirements and, consequently, the information 
presented may differ from Canadian requirements under National Instrument 51-
101, "Standards of Disclosure for Oil and Gas Activities." The proved oil and 
gas reserves disclosed in the news release have been evaluated using the U.S. 
standards contained in Rule 4-10 of Regulation S-X of the Securities Exchange 
Act of 1934. The probable (and other classes) oil and gas reserves disclosed 
in this news release have been evaluated in accordance with the Society of 
Petroleum Engineers.

The Company uses the terms barrels of oil equivalent ("boe") and thousand 
cubic feet of gas equivalent ("mcfge"), which are calculated on an energy 
equivalence basis whereby one barrel of crude oil is equivalent to six 
thousand cubic feet of natural gas. Readers are cautioned that the terms boe 
and mcfge may be misleading, particularly if used in isolation. This measure 
is primarily applicable at the burner tip and does not represent value 
equivalence at the well head.

 Cautionary note to U.S. Investors - The United States Securities and 
Exchange Commission permits oil and gas companies, in their filings with the 
SEC, to disclose only proved reserves that a company has demonstrated by 
actual production or conclusive formation tests to be economically and 
legally producible under existing economic and operating conditions. The 
Company uses certain terms in this news release, such as probable (possible, 
recoverable, established, etc.) that the SEC's guidelines strictly prohibit 
from inclusion in filings with the SEC. 

Non-GAAP Measures

-----------------

Disclosure of Cash Flow from Operations

The fourth quarter report contains the term "cash flow from operations", 
which should not be considered an alternative to, or more meaningful than 
"cash flow - operating activities", as determined in accordance with 
generally accepted accounting principles as an indicator of the Company's 
financial performance. The Company's determination of cash flow from 
operations may not be comparable to that reported by other companies. Cash 
flow from operations equals net earnings plus items not affecting cash which 
include accretion, depletion, depreciation and amortization, future income 
taxes, foreign exchange and other non-cash items.

 /T/


    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                                                          December  December
                                                                31        31
    (millions of dollars)                                     2004      2003
    -------------------------------------------------------------------------
                                                        (unaudited) (audited)
    Assets
    Current assets
      Cash and cash equivalents                           $      7  $      3
      Accounts receivable                                      446       618
      Inventories                                              274       198
      Prepaid expenses                                          52        33
    -------------------------------------------------------------------------
                                                               779       852

    Property, plant and equipment - (full cost
     accounting) (notes 3, 4)                               19,451    16,957
      Less accumulated depletion, depreciation and
       amortization                                          7,258     6,095
    -------------------------------------------------------------------------
                                                            12,193    10,862
    Goodwill                                                   160       120
    Other assets                                               106       112
    -------------------------------------------------------------------------
                                                          $ 13,238  $ 11,946
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities
      Bank operating loans                                $     49  $     71
      Accounts payable and accrued liabilities               1,489     1,126
      Long-term debt due within one year (note 5)               56       259
    -------------------------------------------------------------------------
                                                             1,594     1,456
    Long-term debt (note 5)                                  1,776     1,439
    Other long-term liabilities (notes 3, 4)                   632       519
    Future income taxes (notes 4, 6)                         2,758     2,621
    Commitments and contingencies (note 7)
    Shareholders' equity
      Capital securities and accrued return                    278       298
      Common shares (notes 3, 8)                             3,506     3,457
      Retained earnings                                      2,694     2,156
    -------------------------------------------------------------------------
                                                             6,478     5,911
    -------------------------------------------------------------------------
                                                          $ 13,238  $ 11,946
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Common shares outstanding (millions) (note 8)            423.7     422.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2003 amounts as restated.



    CONSOLIDATED STATEMENTS OF EARNINGS
    -------------------------------------------------------------------------

                                         Three months         Year ended
     (millions of dollars, except      ended December 31      December 31
      per share amounts)                  2004      2003      2004      2003
    -------------------------------------------------------------------------
                                   (unaudited)(unaudited)(unaudited)(audited)
    Sales and operating revenues,
     net of royalties                 $  2,018  $  1,800  $  8,440  $  7,658
    Costs and expenses
      Cost of sales and operating
       expenses (notes 3, 4)             1,380     1,172     5,706     4,847
      Selling and administration
       expenses                             36        33       135       119
      Stock-based compensation
       (notes 3, 8)                         22         -        67         -
      Depletion, depreciation and
       amortization (notes 3, 4)           302       293     1,179     1,021
      Interest - net (note 5)                6        16        33        73
      Foreign exchange (note 5)            (46)      (43)      (99)     (215)
      Other - net                            3         1         8         3
    -------------------------------------------------------------------------
                                         1,703     1,472     7,029     5,848
    -------------------------------------------------------------------------
    Earnings before income taxes           315       328     1,411     1,810
    -------------------------------------------------------------------------
    Income taxes (note 6)
      Current                              102        22       302       147
      Future                                (5)       70       103       329
    -------------------------------------------------------------------------
                                            97        92       405       476
    -------------------------------------------------------------------------
    Net earnings                      $    218  $    236  $  1,006  $  1,334
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share (note 9)
      Basic                           $   0.53  $   0.60  $   2.37  $   3.26
      Diluted                         $   0.52  $   0.59  $   2.36  $   3.25
    Weighted average number
     of common shares outstanding
     (millions)(note 9)
      Basic                              423.7     421.7     423.4     419.5
      Diluted                            426.8     423.8     425.7     421.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    -------------------------------------------------------------------------
                                         Three months         Year ended
                                       ended December 31      December 31
    (millions of dollars)                 2004      2003      2004      2003
    -------------------------------------------------------------------------
                                   (unaudited)(unaudited)(unaudited)(audited)

    Beginning of period (note 4)      $  2,749  $  1,946  $  2,156  $  1,357
    Net earnings                           218       236     1,006     1,334
    Dividends on common shares
     - ordinary                            (51)      (42)     (195)     (160)
     - special                            (229)        -      (229)     (420)
    Return and foreign exchange on
     capital securities
     (net of related taxes)                  7        16         -        36
    Stock-based compensation
     - retroactive adoption (note 3)         -         -       (44)        -
    Asset retirement obligations
     - retroactive adoption (notes 3, 4)     -         -         -         9
    -------------------------------------------------------------------------
    End of period                     $  2,694  $  2,156  $  2,694  $  2,156
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2003 amounts as restated.



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
                                          Three months        Year ended
                                       ended December 31      December 31
    (millions of dollars)                 2004      2003      2004      2003
    -------------------------------------------------------------------------
                                   (unaudited)(unaudited)(unaudited)(audited)

    Operating activities
      Net earnings                    $    218  $    236  $  1,006  $  1,334
      Items not affecting cash
        Accretion (notes 3, 4)               6         7        27        22
        Depletion, depreciation and
         amortization (notes 3, 4)         302       293     1,179     1,021
        Future income taxes                 (5)       70       103       329
        Foreign exchange                   (55)      (37)     (103)     (242)
        Other                               10        (1)       11        (5)
      Settlement of asset retirement
       obligations                         (16)      (10)      (40)      (34)
      Change in non-cash working capital
       (note 10)                           131       (41)      169       113
    -------------------------------------------------------------------------
      Cash flow - operating activities     591       517     2,352     2,538
    -------------------------------------------------------------------------
    Financing activities
      Bank operating loans
       financing - net                       2        71       (22)       71
      Long-term debt issue                 534       598     2,200       598
      Long-term debt repayment            (442)     (815)   (1,937)     (971)
      Settlement of cross currency swap      -       (32)        -       (32)
      Return on capital
       securities payment                    -         -       (26)      (29)
      Debt issue costs                       -         -        (5)        -
      Proceeds from exercise of
       stock options                         1        13        18        51
      Proceeds from monetization of
       financial instruments                 8         -         8        44
      Dividends on common shares          (280)      (42)     (424)     (580)
      Change in non-cash working
       capital (note 10)                   319      (191)      337        48
    -------------------------------------------------------------------------
      Cash flow - financing activities     142      (398)      149      (800)
    -------------------------------------------------------------------------
    Available for investing                733       119     2,501     1,738
    -------------------------------------------------------------------------
    Investing activities
      Capital expenditures                (752)     (617)   (2,349)   (1,868)
      Corporate acquisitions                 -      (809)     (102)     (809)
      Asset sales                            2       459        36       511
      Other                                 (9)        2       (19)        5
      Change in non-cash working
       capital (note 10)                    31       119       (63)      120
    -------------------------------------------------------------------------
      Cash flow - investing activities    (728)     (846)   (2,497)   (2,041)
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and cash equivalents                    5      (727)        4      (303)
    Cash and cash equivalents at
     beginning of period                     2       730         3       306
    -------------------------------------------------------------------------
    Cash and cash equivalents
     at end of period                 $      7  $      3  $      7  $      3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2003 amounts as restated.



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    ----------------------------------------------
    Year ended December 31, 2004 (unaudited)
    Except where indicated and per share amounts, all dollar amounts are in
    millions.

    Note 1    Segmented Financial Information

                            Upstream                    Midstream
    -------------------------------------------------------------------------
                                                          Infrastructure and
                                               Upgrading        Marketing
    -------------------------------------------------------------------------
                           2004     2003     2004     2003     2004     2003
    -------------------------------------------------------------------------
    Three months ended
     December 31(1)
    Sales and operating
     revenues, net of
     royalties          $   722  $   722  $   291  $   229  $ 1,455  $ 1,139
    Costs and expenses
      Operating, cost
       of sales, selling
       and general          247      227      222      196    1,404    1,089
      Depletion,
       depreciation and
       amortization         283      263        5        5        5        6
      Interest - net          -        -        -        -        -        -
      Foreign exchange        -        -        -        -        -        -
    -------------------------------------------------------------------------
                            530      490      227      201    1,409    1,095
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes                  192      232       64       28       46       44
      Current income
       taxes                 89        5        -        1        -       22
      Future income
       taxes                 (9)      58       18        9       15       (6)
    -------------------------------------------------------------------------
    Net earnings (loss) $   112  $   169  $    46  $    18  $    31  $    28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital expenditures
     - Three months
     ended December 31  $   664  $   571  $    24  $    10  $    19  $     7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Year ended
     December 31(1)
    Sales and operating
     revenues, net of
     royalties          $ 3,120  $ 3,186  $ 1,058  $ 1,013  $ 6,126  $ 4,946
    Costs and expenses
      Operating, cost
       of sales, selling
       and general          967      873      884      901    5,914    4,747
      Depletion,
       depreciation and
       amortization       1,077      918       19       20       21       21
      Interest - net          -        -        -        -        -        -
      Foreign exchange        -        -        -        -        -        -
    -------------------------------------------------------------------------
                          2,044    1,791      903      921    5,935    4,768
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes                1,076    1,395      155       92      191      178
      Current income
       taxes                211       95        -        1       31       27
      Future income
       taxes                152      233       43       20       32       37
    -------------------------------------------------------------------------
    Net earnings (loss) $   713  $ 1,067  $   112  $    71  $   128  $   114
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital employed
     - As at
     December 31        $ 7,747  $ 6,709  $   480  $   456  $   255  $   348
    Capital
     expenditures
     - Year ended
     December 31        $ 2,157  $ 1,778  $    62  $    25  $    31  $    18
    Total assets
     - As at
     December 31        $11,172  $ 9,949  $   708  $   650  $   599  $   702
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                            Corporate and
                        Refined Products   Eliminations(2)        Total
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                           2004     2003     2004     2003     2004     2003
    -------------------------------------------------------------------------
    Three months ended
     December 31(1)
    Sales and operating
     revenues, net of
     royalties          $   465  $   335  $  (915) $  (625) $ 2,018  $ 1,800
    Costs and expenses
      Operating, cost
       of sales, selling
       and general          458      319     (890)    (625)   1,441    1,206
      Depletion,
       depreciation and
       amortization          11        6       (2)      13      302      293
      Interest - net          -        -        6       16        6       16
      Foreign exchange        -        -      (46)     (43)     (46)     (43)
    -------------------------------------------------------------------------
                            469      325     (932)    (639)   1,703    1,472
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes                   (4)      10       17       14      315      328
      Current income
       taxes                  -      (13)      13        7      102       22
      Future income
       taxes                 (1)      17      (28)      (8)      (5)      70
    -------------------------------------------------------------------------
    Net earnings (loss) $    (3) $     6  $    32  $    15  $   218  $   236
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital expenditures
     - Three months
     ended December 31  $    53  $    30  $     4  $     9  $   764  $   627
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Year ended
     December 31(1)
    Sales and operating
     revenues, net of
     royalties          $ 1,797  $ 1,502  $(3,661) $(2,989) $ 8,440  $ 7,658
    Costs and expenses
      Operating, cost
       of sales, selling
       and general        1,694    1,426   (3,543)  (2,978)   5,916    4,969
      Depletion,
       depreciation and
       amortization          38       26       24       36    1,179    1,021
      Interest - net          -        -       33       73       33       73
      Foreign exchange        -        -      (99)    (215)     (99)    (215)
    -------------------------------------------------------------------------
                          1,732    1,452   (3,585)  (3,084)   7,029    5,848
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes                   65       50      (76)      95    1,411    1,810
      Current income
       taxes                 11        9       49       15      302      147
      Future income
       taxes                 13        9     (137)      30      103      329
    -------------------------------------------------------------------------
    Net earnings (loss) $    41  $    32  $    12  $    50  $ 1,006  $ 1,334
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital employed
     - As at
     December 31        $   354  $   315  $  (477) $  (148) $ 8,359  $ 7,680
    Capital
     expenditures
     - Year ended
     December 31        $   106  $    58  $    23  $    23  $ 2,379  $ 1,902
    Total assets
     - As at
     December 31        $   625  $   540  $   134  $   105  $13,238  $11,946
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2003 amounts as restated.
    (2) Eliminations relate to sales and operating revenues between segments
        recorded at transfer prices based on current market prices, and to
        unrealized intersegment profits in inventories.


/T/ 

Note 2    Significant Accounting Policies

The interim consolidated financial statements of Husky Energy Inc.

("Husky" or "the Company") have been prepared by management in accordance

with accounting principles generally accepted in Canada. The interim

consolidated financial statements have been prepared following the same

accounting policies and methods of computation as the consolidated

financial statements for the fiscal year ended December 31, 2003, except

as noted below. The interim consolidated financial statements should be

read in conjunction with the consolidated financial statements and the

notes thereto in the Company's annual report for the year ended

December 31, 2003. Certain prior years' amounts have been reclassified to

conform with current presentation.

Note 3    Change in Accounting Policies

a) Asset Retirement Obligations

Effective January 1, 2004, the Company retroactively adopted the Canadian

Institute of Chartered Accountants ("CICA") section 3110, "Asset

Retirement Obligations". The new recommendations require that the

recognition of the fair value of obligations associated with the

retirement of tangible long-lived assets be recorded in the period the

asset is put into use, with a corresponding increase to the carrying

amount of the related asset. The obligations recognized are legal

obligations. The liability is accreted over time for changes in the fair

value of the liability through charges to accretion which is included in

cost of sales and operating expenses. The costs capitalized to the

related assets are amortized to earnings in a manner consistent with the

depletion, depreciation and amortization of the underlying asset. Note 4

discloses the impact of the adoption of CICA section 3110 on the

financial statements.

b) Stock-based Compensation

Effective January 1, 2004, the Company adopted the recommendations of

CICA section 3870, "Stock-based Compensation and Other Stock-based

Payments", retroactively without restatement of prior periods. The

recommendations require the Company to record a compensation expense over

the vesting period based on the fair value of options granted to

employees and directors. This change resulted in a decrease to retained

earnings of $44 million, an increase to contributed surplus of

$21 million and an increase to share capital of $23 million.

Effective June 1, 2004, the Company amended its stock option plan to a

tandem plan that provides the stock option holder with the right to

exercise the stock option or surrender the option for a cash payment. The

change resulted in an increase to current liabilities of $34 million, a

decrease to contributed surplus of $16 million and an increase to stock-

based compensation expense of $18 million. A liability for expected cash

settlements is accrued over the vesting period of the stock options based

on the difference between the exercise price of the stock options and the

market price of the Company's common shares. The liability is revalued to

reflect changes in the market price of the Company's common shares and

the net change is recognized in earnings. When stock options are

surrendered for cash, the cash settlement paid reduces the outstanding

liability. When stock options are exercised for common shares,

consideration paid by the stock option holders and the previously

recognized liability associated with the stock options are recorded as

share capital.

c) Property, Plant and Equipment - Oil and Gas

Effective January 1, 2004, the Company adopted Accounting Guideline 16,

"Oil and Gas Accounting - Full Cost" ("AcG-16"), which replaces

Accounting Guideline 5, "Full Cost Accounting in the Oil and Gas

Industry". AcG-16 modifies how the ceiling test is performed and is

consistent with CICA section 3063, "Impairment of Long-lived Assets". The

recoverability of a cost centre is tested by comparing the carrying value

of the cost centre to the sum of the undiscounted cash flows expected

from the cost centre's use and eventual disposition. If the carrying

value is unrecoverable, the cost centre is written down to its fair value

using the expected present value approach. This approach incorporates

risks and uncertainties in the expected future cash flows, which are

discounted using a risk free rate. The adoption of AcG-16 had no effect

on the Company's financial results.

d) Impairment of Long-lived Assets

Effective January 1, 2004, the Company adopted CICA section 3063,

"Impairment of Long-lived Assets", which had no effect on the

consolidated financial statements.

e) Hedging Relationships

Effective January 1, 2004, the Company adopted Accounting Guideline 13,

"Hedging Relationships" ("AcG-13"), which establishes standards for the

documentation and effectiveness testing of hedging activities. The

adoption of AcG-13 had no effect on the Company's financial results.

f) Reclassification

Effective January 1, 2004, the Company adopted revised CICA section 1100,

"Generally Accepted Accounting Principles". Upon adoption, certain

transportation costs that were previously netted against revenue are now

being recorded as cost of sales. This change has been adopted

prospectively.

In the fourth quarter, the Company reclassified previously reported 2004

sales and operating revenues and operating expenses for hedging losses

that had been included as a consolidated operating expense. This change

had no impact on net earnings for each quarter.

Note 4    Asset Retirement Obligations

The Company retroactively adopted the new recommendations on the

recognition of the obligations to retire long-lived tangible assets. The

change was effective January 1, 2004 and the revision was applied

retroactively. The impact was as follows:

/T/

    Consolidated Balance Sheet - As at December 31, 2003
    -------------------------------------------------------------------------
                                                   As                  As
                                               Reported(1)  Change  Restated
    -------------------------------------------------------------------------
    Assets
      Net property, plant and equipment         $ 10,698  $    164  $ 10,862
    Liabilities and shareholders' equity
      Other long-term liabilities                    390       129       519
      Future income taxes                          2,608        13     2,621
      Retained earnings                            2,134        22     2,156
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Certain amounts have been reclassified to conform with current
        presentation.



    Consolidated Statement of Earnings - Year ended December 31, 2003
    -------------------------------------------------------------------------
                                                   As                  As
                                                Reported    Change  Restated
    -------------------------------------------------------------------------
    Depletion, depreciation and amortization    $  1,058  $    (37) $  1,021
    Accretion(1)                                       -        22        22
    Future income taxes                              327         2       329
    Net earnings                                   1,321        13     1,334
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Included in cost of sales and operating expenses.


    At December 31, 2004, the estimated total undiscounted amount required to
    settle the asset retirement obligations was $2.9 billion. These
    obligations will be settled based on the useful lives of the underlying
    assets, which currently extend up to 30 years into the future. This
    amount has been discounted using credit adjusted risk free rates ranging
    from 6.2 to 6.4 percent.


    Changes to asset retirement obligations were as follows:

    -------------------------------------------------------------------------
                                                               Year ended
                                                           December 31, 2004
    -------------------------------------------------------------------------
    Asset retirement obligations at beginning of year               $    432
    Liabilities incurred                                                  90
    Liabilities settled                                                  (40)
    Accretion                                                             27
    -------------------------------------------------------------------------
    Asset retirement obligations at December 31                     $    509
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Note 5    Long-term Debt

    -------------------------------------------------------------------------
                                                 December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
                            Maturity     Cdn. $ Amount       U.S. $ Amount
    -------------------------------------------------------------------------
    Long-term debt
      Syndicated credit
       facility                 2007  $     70  $      -  $      -  $      -
      Bilateral credit
       facilities             2006-7        40         -         -         -
      7.125% notes              2006       181       194       150       150
      6.25% notes               2012       481       517       400       400
      7.55% debentures          2016       241       258       200       200
      6.15% notes               2019       361         -       300         -
      Private placement
       notes                    2005        18        41        15        32
      8.45% senior secured
       bonds                 2005-12       140       188       117       145
      Medium-term notes       2007-9       300       500         -         -
    -------------------------------------------------------------------------
      Total long-term debt               1,832     1,698  $  1,182  $    927
                                                          -------------------
                                                          -------------------
      Amount due within one year           (56)     (259)
    ------------------------------------------------------
                                      $  1,776  $  1,439
    ------------------------------------------------------
    ------------------------------------------------------

/T/

During 2004, Husky increased its revolving syndicated credit facility

from $830 million to $950 million and added another revolving bilateral

credit facility of $50 million. At December 31, 2004, the Company had

borrowed $70 million under its $950 million revolving syndicated credit

facility and $40 million under its $150 million revolving bilateral

credit facilities. Interest rates under the revolving syndicated credit

facility vary based on Canadian prime, Bankers' Acceptance, U.S. LIBOR or

U.S. base rate, depending on the borrowing option selected, credit

ratings assigned by certain rating agencies to the Company's senior

unsecured debt and whether the facility is revolving or non-revolving.

The $150 million revolving bilateral credit facilities have substantially

the same terms as the revolving syndicated credit facility.

On June 18, 2004, the Company issued U.S. $300 million of 6.15 percent

notes due June 15, 2019, the second offering by Husky under a base shelf

prospectus dated June 6, 2002 filed with securities regulatory

authorities in Canada and the United States. This shelf prospectus

expired on July 7, 2004. The notes issued are redeemable at the option of

the Company at any time, subject to a make whole provision. Interest is

payable semi-annually. The notes are unsecured and unsubordinated and

rank equally with all of Husky's other unsecured and unsubordinated

indebtedness. Net proceeds from the issue were used to repay bank

indebtedness.

On August 12, 2004, the Company filed a base shelf prospectus with

securities regulatory authorities in Canada and the United States. The

prospectus permits Husky to offer for sale, from time to time, up to U.S.

$1 billion of debt securities during the 25 months from August 12, 2004.

/T/


    Interest - net consisted of:

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    Long-term debt                    $     26  $     30  $    106  $    129
    Short-term debt                          1         1         3         2
    -------------------------------------------------------------------------
                                            27        31       109       131
    Amount capitalized                     (21)      (15)      (75)      (52)
    -------------------------------------------------------------------------
                                             6        16        34        79
    Interest income                          -         -        (1)       (6)
    -------------------------------------------------------------------------
                                      $      6  $     16  $     33  $     73
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Foreign exchange consisted of:

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    Gain on translation of U.S. dollar
     denominated long-term debt       $    (73) $    (60) $   (129) $   (315)
    Cross currency swaps                    19        23        27        73
    Other (gains) losses                     8        (6)        3        27
    -------------------------------------------------------------------------
                                      $    (46) $    (43) $    (99) $   (215)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Note 6    Income Taxes

On May 11, 2004, Bill 27 - Alberta Corporate Tax Amendment Act, 2004

received royal assent in the Alberta Legislative Assembly. As a result, a

non-recurring benefit of $40 million was recorded in 2004. Also during

2004, a net tax benefit of $16 million related to the change in the

Company's stock option plan and other tax benefits net of adjustments was

recognized. Income tax expense for the year ended December 31, 2003

included a non-recurring adjustment to future income taxes of $20 million

resulting from a change in the Alberta corporate income tax rate.

Additionally, Bill C-48 amended the Income Tax Act (natural resources)

and resulted in a non-recurring tax benefit of $141 million. The resource

tax changes included a change in the federal tax rate, deductibility of

crown royalties and elimination of the resource allowance, to be phased

in over a five-year period.

Note 7    Commitments and Contingencies

The Company is involved in various claims and litigation arising in the

normal course of business. While the outcome of these matters is

uncertain and there can be no assurance that such matters will be

resolved in the Company's favour, the Company does not currently believe

that the outcome of adverse decisions in any pending or threatened

proceedings related to these and other matters or any amount which it may

be required to pay by reason thereof would have a material adverse impact

on its financial position, results of operations or liquidity.

Note 8    Share Capital

The Company's authorized share capital consists of an unlimited number of

no par value common and preferred shares.

Common Shares

/T/


    Changes to issued common shares were as follows:

    -------------------------------------------------------------------------
                                            Year ended December 31
                                           2004                  2003
    -------------------------------------------------------------------------
                                   Number of             Number of
                                    Shares      Amount    Shares      Amount
    -------------------------------------------------------------------------
    Balance at beginning of
     period                       422,175,742  $ 3,457  417,873,601  $ 3,406
    Stock-based compensation
     - adoption                             -       23            -        -
    Exercised - options and
     warrants                       1,560,672       26    4,302,141       51
    -------------------------------------------------------------------------
    Balance at December 31        423,736,414  $ 3,506  422,175,742  $ 3,457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Stock Options

    A summary of the status of the Company's stock option plan is presented
    below:

    -------------------------------------------------------------------------
                                            Year ended December 31
                                           2004                  2003
    -------------------------------------------------------------------------
                                                Weighted             Weighted
                                      Number of  Average  Number of   Average
                                       Options  Exercise   Options   Exercise
                                     (thousands)  Prices  (thousands)  Prices
    -------------------------------------------------------------------------
    Outstanding, beginning
     of period                           4,597  $  13.88     7,920  $  13.91
    Granted                              8,200  $  25.10       591  $  19.17
    Exercised for common shares         (1,350) $  13.11    (3,789) $  13.45
    Surrendered for cash                (1,269) $  13.32         -  $      -
    Forfeited                             (214) $  22.73      (125) $  14.71
    -------------------------------------------------------------------------
    Outstanding, December 31             9,964  $  22.61     4,597  $  13.88
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Options exercisable at
     December 31                         1,417  $  13.04     3,564  $  12.93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                          December 31, 2004
                               Outstanding Options        Options Exercisable
    -------------------------------------------------------------------------
                                                 Weighted
                                      Weighted    Average            Weighted
                           Number of  Average  Contractual Number of  Average
    Range of                Options   Exercise     Life     Options  Exercise
    Exercise Price        (thousands)  Prices     (years) (thousands)  Prices
    -------------------------------------------------------------------------
    $9.86 - $14.99             1,443  $  12.75       1.0     1,320  $  12.57
    $15.00 - $23.99              475  $  18.40       3.5        97  $  19.39
    $24.00 - $32.14            8,046  $  24.62       4.4         -  $      -
    -------------------------------------------------------------------------
                               9,964  $  22.61       3.9     1,417  $  13.04
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

A downward adjustment of $0.48 was made to the exercise price of all

outstanding stock options effective November 29, 2004, pursuant to the

terms of the stock option plan under which the options were issued as a

result of the special $0.54 per share dividend that was declared in

November 2004. 

Stock-based Compensation

Beginning January 1, 2004, stock-based compensation is being recognized

in earnings. As described in note 3 b), on June 1, 2004, the Company

modified its stock option plan to a tandem plan that provides the stock

option holder with the right to exercise the option or surrender the

option for a cash payment.

Prior to modification, the fair values of all common share options

granted were estimated on the date of grant using the Black-Scholes

option-pricing model. The grant date fair values and assumptions used

prior to June 1, 2004 were:

/T/


    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004    2003(1)     2004    2003(1)
    -------------------------------------------------------------------------
    Weighted average fair value
     per option                       $      -  $   4.29  $   5.67  $   4.00
    Risk-free interest rate (percent)        -       3.7       3.1       3.9
    Volatility (percent)                     -        19        21        23
    Expected life (years)                    -         5         5         5
    Expected annual dividend
     per share                        $      -  $   0.40  $   0.44  $   0.36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Options granted prior to September 3, 2003 were revalued as a result
        of the special $1.00 per share dividend paid in 2003.


    If the Company had applied the fair value based method retroactively with
    restatement of prior periods for all options granted, the Company's net
    earnings available to common shareholders would have decreased by
    $14 million in 2003 for stock-based compensation. Basic earnings per
    share would have decreased from $3.26 to $3.23 and diluted earnings per
    share would have decreased from $3.25 to $3.21.


    Contributed Surplus

    Changes to contributed surplus were as follows:

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    Balance at beginning of period    $      -  $      -  $      -  $      -
    Stock-based compensation
     - adoption                              -         -        21         -
    Stock-based compensation cost            -         -         1         -
    Stock options exercised                  -         -        (6)        -
    Modification of stock option plan
     - June 1, 2004                          -         -       (16)        -
    -------------------------------------------------------------------------
    Balance at December 31            $      -  $      -  $      -  $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 9    Earnings per Common Share

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    Net earnings                      $    218  $    236  $  1,006  $  1,334
    Return and foreign exchange on
     capital securities (net of
     related taxes)                          7        16         -        36
    -------------------------------------------------------------------------
    Net earnings available to common
     shareholders                     $    225  $    252  $  1,006  $  1,370
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of common
     shares outstanding
      - Basic (millions)                 423.7     421.7     423.4     419.5
    Effect of dilutive stock options
     and warrants                          3.1       2.1       2.3       2.0
    -------------------------------------------------------------------------
    Weighted average number of common
     shares outstanding
      - Diluted (millions)               426.8     423.8     425.7     421.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
      - Basic                         $   0.53  $   0.60  $   2.37  $   3.26
      - Diluted                       $   0.52  $   0.59  $   2.36  $   3.25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Note 10    Cash Flows - Change in Non-cash Working Capital

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    a) Change in non-cash working
        capital was as follows:
       Decrease (increase) in non-cash
        working capital
         Accounts receivable          $    176  $    188  $    209  $     (7)
         Inventories                        12        36       (77)       28
         Prepaid expenses                    -        35       (12)      (10)
         Accounts payable and accrued
          liabilities                      293      (372)      323       270
    -------------------------------------------------------------------------
       Change in non-cash working
        capital                            481      (113)      443       281
       Relating to:
         Financing activities              319      (191)      337        48
         Investing activities               31       119       (63)      120
    -------------------------------------------------------------------------
         Operating activities         $    131  $    (41) $    169  $    113
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    b) Other cash flow information:
       Cash taxes paid                $     26  $      2  $    213  $     69
       Cash interest paid             $     39  $     49  $    116  $    134
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 11    Employee Future Benefits

    Total benefit costs recognized were as follows:

    -------------------------------------------------------------------------
                                         Three months          Year ended
                                       ended December 31      December 31
                                          2004      2003      2004      2003
    -------------------------------------------------------------------------
    Employer current service cost     $      4  $      3  $     16  $     15
    Interest cost                            2         1         8         8
    Expected return on plan assets          (1)       (1)       (7)       (6)
    Amortization of net actuarial losses     1         -         2         2
    -------------------------------------------------------------------------
                                      $      6  $      3  $     19  $     19
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 12 Financial Instruments and Risk Management

    Unrecognized gains (losses) on derivative instruments were as follows:

    -------------------------------------------------------------------------
                                                               December 31
                                                              2004      2003
    -------------------------------------------------------------------------
    Commodity price risk management
      Natural gas                                         $     (9) $     (8)
      Crude oil                                                  -      (109)
      Power consumption                                         (1)        2
    Interest rate risk management
      Interest rate swaps                                       52        31
    Foreign currency risk management
      Foreign exchange contracts                               (30)      (19)
      Foreign exchange forwards                                  -        15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Commodity Price Risk Management

Natural Gas Production

During 2004, the impact of the 2004 natural gas hedge program was a gain

of $8 million.

At December 31, 2004, the Company had hedged 7.5 mmcf of natural gas per

day at NYMEX from January to December 2005 at an average price of

U.S. $1.92 per mcf. During 2004, the impact was a loss of $9 million.

Crude Oil Production

The impact of the hedge program during 2004 was a before tax loss of

$560 million.

Power Consumption

At December 31, 2004, the Company had hedged power consumption of

197,100 MWh from January to December 2005 at an average fixed price of

$49.94 per MWh and 65,160 MWh from January to June 2005 at an average

fixed price of $48.00 per MWh. The impact of the hedge program during

2004 was a gain of $3 million.

Natural Gas Contracts

At December 31, 2004, the unrecognized gains (losses) on external

offsetting physical purchase and sale natural gas contracts were as

follows:

/T/

    -------------------------------------------------------------------------
                                                                 Unrecognized
                                                          Volumes     Gain
                                                           (mmcf)    (Loss)
    -------------------------------------------------------------------------
    Physical purchase contracts                             14,276  $     (2)
    Physical sale contracts                                (14,276) $      3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Interest Rate Risk Management

    The Company has interest rate swap arrangements whereby the fixed
    interest rate coupon on certain debt was swapped to floating rates with
    the following terms as at December 31, 2004:

    -------------------------------------------------------------------------
                            Swap             Swap             Swap Rate
    Debt                   Amount          Maturity           (percent)
    -------------------------------------------------------------------------
    6.95% medium-term
     notes                    $200       July 14, 2009        CDOR + 175 bps
    7.55% debentures     U.S. $200   November 15, 2011  U.S. LIBOR + 194 bps
    6.15% notes          U.S. $300       June 15, 2019   U.S. LIBOR + 63 bps
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    During 2004, the Company realized a gain of $22 million from interest
    rate risk management activities.


    Foreign Currency Risk Management

    At December 31, 2004, the Company had the following cross currency debt
    swaps:

    -------------------------------------------------------------------------
                       Swap                               Swap      Interest
    Debt              Amount   Canadian Equivalent      Maturity       Rate
    -------------------------------------------------------------------------
    7.125% notes    U.S. $150        $ 218        November 15, 2006    8.74%
    6.25% notes     U.S. $150        $ 212            June 15, 2012    7.41%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

During 2004, the Company recognized a $13 million loss from all foreign

currency risk management activities.

On November 10, 2004, the Company unwound its long-dated forwards

totalling U.S. $36 million, which resulted in a gain of $8 million that

has been deferred and will be recognized into income on the dates that

the underlying hedged transactions are to take place.

Sale of Accounts Receivable

In December 2004, the Company increased the ceiling on its securitization

program to sell, on a revolving basis, accounts receivable to a third

party from $250 million to $350 million. As at December 31, 2004,

$350 million in outstanding accounts receivable had been sold under the

program. The agreement includes a program fee. 

Note 13    Acquisition of Temple Exploration Inc.

Effective July 15, 2004, the Company acquired all of the issued and

outstanding shares of Temple Exploration Inc. ("Temple") for total cash

consideration of $102 million. The results of Temple are included in the

consolidated financial statements of the Company from the date of

acquisition.

The allocation of the aggregate purchase price based on the estimated

fair values of Temple's net assets acquired at July 15, 2004 was as

follows:

/T/

    -------------------------------------------------------------------------
    Net assets acquired
      Working capital                                               $    (17)
      Property, plant and equipment                                      138
      Goodwill (1)                                                        20
      Future income taxes                                                (39)
    -------------------------------------------------------------------------
                                                                    $    102
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Allocated to the Company's upstream segment and not deductible for
        income tax purposes. Refer to note 1, Segmented Financial
        Information.

/T/



Terms and Abbreviations

bbls                  barrels

bps                   basis points

mbbls                 thousand barrels

mbbls/day             thousand barrels per day

mmbbls                million barrels

mcf                   thousand cubic feet

mmcf                  million cubic feet

mmcf/day              million cubic feet per day

bcf                   billion cubic feet

tcf                   trillion cubic feet

boe                   barrels of oil equivalent

mboe                  thousand barrels of oil equivalent

mboe/day              thousand barrels of oil equivalent per day

mmboe                 million barrels of oil equivalent

mcfge                 thousand cubic feet of gas equivalent

GJ                    gigajoule

mmbtu                 million British Thermal Units

mmlt                  million long tons

MW                    megawatt

MWh                   megawatt hour

NGL                   natural gas liquids

WTI                   West Texas Intermediate

NYMEX                 New York Mercantile Exchange

NIT                   NOVA Inventory Transfer(1)

LIBOR                 London Interbank Offered Rate

CDOR                  Certificate of Deposit Offered Rate

SEDAR                 System for Electronic Document Analysis

                       and Retrieval

FPSO                  Floating production, storage and offloading vessel

OPEC                  Organization of Petroleum Exporting Countries

Capital Employed      Short- and long-term debt and shareholders' equity

Capital Expenditures  Includes capitalized administrative expenses

                       and capitalized interest but does not include

                       proceeds or other assets

Equity                Capital securities and accrued return, shares

                       and retained earnings

Total Debt            Long-term debt including current portion and bank

                       operating loans

hectare               1 hectare is equal to 2.47 acres

wildcat well          Exploratory well drilled in an area where no

                       production exists

feedstock             Raw materials which are processed into petroleum

                       products

(1) NOVA Inventory Transfer is an exchange or transfer of title of gas

    that has been received into the NOVA pipeline system but not yet

    delivered to a connecting pipeline.

Natural gas converted on the basis that six mcf equals one barrel of oil.

In this report, the terms "Husky Energy Inc.", "Husky" or "the Company"

mean Husky Energy Inc. and its subsidiaries and partnership interests on

a consolidated basis.

Husky Energy will host a conference call for analysts and investors on

Tuesday, January 18, 2005 at 4:15 p.m. Eastern time to discuss Husky's

fourth quarter results.

To participate, please dial 1 (800) 404-8949 beginning at 4:05 p.m.

Eastern time. Media are invited to participate in the call on a

listen-only basis by dialing 1 (800) 428-5596 beginning at 4:05 p.m.

Eastern time. Those who are unable to listen to the call live may listen

to a recording of the call by dialing 1 (800) 558-5253 one hour after the

completion of the call, approximately 6:15 p.m. Eastern time, then

dialing reservation number 21215863. The PostView will be available until

Thursday, February 17, 2005.




FOR FURTHER INFORMATION PLEASE CONTACT:

Husky Energy Inc.
Mr. Colin Luciuk
Manager, Investor Relations
(403) 750-4938

or

Husky Energy Inc.
707 - 8th Avenue S.W.
Box 6525, Station D
Calgary, Alberta, Canada
T2P 3G7
(403) 298-6111
FAX(403) 298-6515
Website: www.huskyenergy.ca
Email: Investor.Relations@huskyenergy.ca