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FOR: HUSKY ENERGY INC.

TSX SYMBOL:
 HSE

Husky Energy Reports 2005 First Quarter Results

Mar 31, 2005 - 12:00 ET

CALGARY--(CCNMatthews - April 18) - Husky Energy Inc. reported net earnings 
of $384 million or $0.91 per share (diluted) in the first quarter of 2005, 
compared with $255 million or $0.60 per share (diluted) in the same quarter 
of 2004, an increase of 51 percent. Cash flow from operations in the first 
quarter was $816 million or $1.93 per share (diluted), compared with $576 
million or $1.36 per share (diluted) in the same quarter of 2004. Sales and 
operating revenues, net of royalties, were $2.2 billion in the first quarter 
of 2005, compared with $2.0 billion in the first quarter of 2004. The strong 
financial results for the quarter were mainly due to strong commodity prices.

"We are pleased with Husky's solid first quarter results, as they demonstrate 
the continued financial and operational strength of the Company," said Mr. 
John C.S. Lau, President and Chief Executive Officer, Husky Energy Inc. 
"Husky's upstream performance was further enhanced by record first quarter 
earnings in our midstream and refined products business segments."

Total production in the first quarter of 2005 averaged 319,600 barrels of oil 
equivalent (boe) per day, compared with 324,400 boe per day in the first 
quarter of 2004. Total crude oil and natural gas liquids production was 
206,900 barrels (bbls) per day, compared with 212,100 bbls per day in the 
first quarter of 2004. Natural gas production was 676.2 million cubic feet 
(mmcf) per day, compared with 673.6 mmcf per day in the same period last 
year. The Terra Nova FPSO continued to experience operational issues in the 
quarter. Production for the Terra Nova oil field averaged net to Husky 13,700 
bbls which is 3,900 bbls per day lower than the volume produced in the first 
quarter of 2004.

Husky's capital expenditures in the first quarter of 2005 were $694 million, 
compared with $589 million in the first quarter of 2004. Husky's planned 
capital expenditures for 2005 remain at $2.5 billion, including $460 million 
for its East Coast projects.

The White Rose offshore project achieved another milestone during this 
quarter. On March 22, a naming ceremony was held in Busan, South Korea for 
the first of two shuttle tankers that will transport oil to market from the 
White Rose oil field off the coast of Newfoundland and Labrador, Canada.

"The White Rose project remains on schedule to achieve first oil in late 2005 
or early 2006," said Mr. Lau. "At peak production, the White Rose oil field 
will produce approximately 92,000 bbls per day and will add approximately 
67,500 barrels per day of light oil production to Husky."

Husky's exploration program in the Northwest Territories showed promising 
results. The first well, Summit Creek B-44, which Husky has 29.5 percent 
working interest, was tested in two separate zones at a combined rate of 
nearly 10,000 barrels of oil equivalent per day. The next steps at this 
location may include a summer seismic program and further exploration and 
delineation. The second well, Sah Cho L-71, showed non-commercial 
hydrocarbons in the zone tested and requires further evaluation.

In China, the Wenchang oil field produced 46,000 bbls per day in the first 
quarter 2005, 18,500 bbls net to Husky. In 2005 we expect to drill three 
development wells and preparation is underway to drill two exploration wells 
adjacent to the current producing structures.

At the Tucker thermal project, construction began on the central plant 
facility, and a drilling program for 30 horizontal well pairs is expected to 
commence in the second quarter. Conceptual studies have also commenced for 
the Sunrise thermal project, and regulatory approval is expected by the end 
of 2005.

Regarding the Midstream and Refined products business segments, significant 
construction activity continues to take place on the Lloydminster ethanol 
project, with completion of the 130-million litre per year plant for mid-
2006. Husky is targeting to become the largest ethanol producer in Western 
Canada. At the Prince George refinery, construction on the Clean Fuels 
project is now approximately 50 percent complete.

/T/

    <<
    Management's Discussion and Analysis

                        Summary of Quarterly Results
    -------------------------------------------------------------------------
    Financial Summary(1)                        Three months ended
    (millions of dollars, except      March 31   Dec. 31  Sept. 30   June 30
     per share amounts and ratios)        2005      2004      2004      2004
    -------------------------------------------------------------------------
    Sales and operating revenues,
     net of royalties                  $ 2,201   $ 2,018   $ 2,191   $ 2,210
    Segmented earnings
      Upstream                         $   239   $   112   $   161   $   204
      Midstream                            169        77        50        53
      Refined Products                      18        (3)       18        21
      Corporate and eliminations           (42)       39        68       (49)
    -------------------------------------------------------------------------
    Net earnings                       $   384   $   225   $   297   $   229
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Per share
        - Basic                        $  0.91   $  0.53   $  0.70   $  0.54
        - Diluted                         0.91      0.53      0.70      0.54
    Cash flow from operations              816       469       571       581
      Per share
        - Basic                           1.93      1.11      1.34      1.37
        - Diluted                         1.93      1.11      1.34      1.37
    Dividends declared per common share   0.12      0.12      0.12      0.12
    Special dividend per common share        -      0.54         -         -
    Total assets                        13,690    13,240    12,901    12,542
    Total long-term debt including
     current portion                     2,290     2,103     2,096     2,229
    Return on equity(2) (percent)         18.3      17.0      17.7      16.8
    Return on average capital
     employed(2) (percent)                13.9      13.0      13.4      12.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Financial Summary(1)                        Three months ended
    (millions of dollars, except      March 31   Dec. 31  Sept. 30   June 30
     per share amounts and ratios)        2004      2003      2003      2003
    -------------------------------------------------------------------------
    Sales and operating revenues,
     net of royalties                  $ 2,021   $ 1,800   $ 1,871   $ 1,769
    Segmented earnings
      Upstream                         $   236   $   169   $   215   $   374
      Midstream                             60        46        41        49
      Refined Products                       5         6        22         3
      Corporate and eliminations           (46)       31       (42)       31
    -------------------------------------------------------------------------
    Net earnings                       $   255   $   252   $   236   $   457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Per share
        - Basic                        $  0.60   $  0.60   $  0.56   $  1.09
        - Diluted                         0.60      0.59      0.56      1.09
    Cash flow from operations              576       561       597       533
      Per share
        - Basic                           1.36      1.33      1.42      1.27
        - Diluted                         1.36      1.32      1.42      1.27
    Dividends declared per common share   0.10      0.10      0.10      0.09
    Special dividend per common share        -         -      1.00         -
    Total assets                        12,317    11,949    11,771    11,389
    Total long-term debt including
     current portion                     1,993     1,989     2,279     2,300
    Return on equity(2) (percent)         21.8      26.4      27.2      25.5
    Return on average capital
     employed(2) (percent)                16.2      18.9      19.0      18.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2004 and 2003 amounts as restated. Refer to Note 3 to the
        Consolidated Financial Statements.
    (2) Calculated for the twelve months ended for the periods shown.



    -------------------------------------------------------------------------
    Daily Production,                           Three months ended
     before Royalties                  March     Dec.   Sept.   June   March
                                          31      31      30      30      31
                                        2005    2004    2004    2004    2004
    -------------------------------------------------------------------------
    Crude oil and NGL    (mbbls/day)
      Western Canada
        Light crude oil & NGL           31.9    32.9    33.1    32.9    32.9
        Medium crude oil                32.4    33.7    34.5    35.6    36.1
        Heavy crude oil                110.4   113.8   108.8   107.4   105.6
    -------------------------------------------------------------------------
                                       174.7   180.4   176.4   175.9   174.6
      East Coast Canada
        Terra Nova - light crude oil    13.7    10.1    11.5    15.7    17.6
      China
        Wenchang - light crude oil      18.5    17.9    20.2    20.6    19.9
    -------------------------------------------------------------------------
                                       206.9   208.4   208.1   212.2   212.1
    -------------------------------------------------------------------------
    Natural gas           (mmcf/day)   676.2   697.4   700.4   685.4   673.6
    -------------------------------------------------------------------------
    Total                 (mboe/day)   319.6   324.6   324.8   326.4   324.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/

Crude oil and natural gas production in the first quarter of 2005 was 319.6 
mboe/day compared with 324.6 mboe/day in the previous quarter and 324.4 
mboe/day in the first quarter of 2004. Production in the first quarter of 
2005 compared with the previous quarter was lower primarily as a result of 
higher natural gas reservoir declines. As a result of new natural gas wells 
tied-in throughout the first quarter, the average rate for natural gas 
production reached 695 mmcf/day in March compared with 676 mmcf/day for the 
quarter. Natural gas tie-ins during the second quarter of 2005 are expected 
to bring production into our forecast range.

                    Business Development

In each business segment we are executing our strategic plan both in respect 
of existing operations and for our transition into new areas of sustainable 
growth.

/T/


    Upstream
    -------------------------------------------------------------------------
    Gross Production                  Three                 Three       Year
                                     months                months      ended
                                      ended                 ended   December
                                   March 31   Forecast   March 31         31
                                       2005       2005       2004       2004
    -------------------------------------------------------------------------
    Crude oil & NGL       (mbbls/day)
      Light crude oil & NGL            64.1    64 - 71       70.4       66.2
      Medium crude oil                 32.4    32 - 36       36.1       35.0
      Heavy crude oil                 110.4  112 - 120      105.6      108.9
    -------------------------------------------------------------------------
                                      206.9  208 - 227      212.1      210.1
    Natural gas            (mmcf/day) 676.2  700 - 740      673.6      689.2
    Total barrels of oil
     equivalent            (mboe/day) 319.6  325 - 350      324.4      325.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/

2005 will be a year of continued exploitation of our producing asset base in 
the Western Canada Sedimentary Basin ("WCSB"), with a particular focus on 
heavy crude oil and natural gas production. Our properties throughout the 
WCSB form the foundation of our upstream business. Although the WCSB is 
considered to be mature, with production declines typically over 20 percent 
per annum, this resource base will continue to provide cash flow at 
favourable costs necessary to fund our growth portfolio, subject to 
variability based on commodity prices. With continued commensurate capital 
expenditures, the WCSB asset base will generally provide predictable 
production. Production replacement in the south and east central region of 
the WCSB is expected to be maintained with small overall declines. In the 
north and western regions of the basin and in the Lloydminster heavy oil 
area, production replacement is expected to be greater than 100 percent. In 
addition, we expect to continue to realize additional value from managing our 
operating costs in the WCSB through consolidation via strategic acquisitions 
and divestitures and improvements in production technology and practice.

Our major construction projects with significant long-term potential are 
currently in various planning stages and will move our production profile to 
a new level.

At March 31, 2005, we had invested just over $2 billion in projects offshore 
Canada's East Coast, in the Alberta oil sands and offshore Indonesia, which 
upon completion, will begin to deliver this potential. These projects are 
summarized below:

/T/


    -------------------------------------------------------------------------
                                      Productive    Working
    Project                           Capacity(1)   Interest     Schedule
    -------------------------------------------------------------------------
    White Rose  Offshore East Coast  68 mbbls/day    72.5%   Late 2005 - 2006
    Tucker      Oil Sands            30 mbbls/day     100%        2006 - 2007
    Sunrise     Oil Sands(2)         50 mbbls/day     100%        2009 - 2010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Husky interest.
    (2) Sunrise will be developed in phases; ultimate planned rate is
        200 mbbls/day.

/T/ 

In addition to these projects, exploration and development programs in the 
WCSB are expected to increase production of natural gas from both shallow gas 
step-out drilling and drilling in the Deep Basin of Alberta and in the 
foothills region of Alberta and northeastern British Columbia for high 
potential natural gas targets. Our exploration program will also target 
prospects in the basins off of Newfoundland and Labrador, in the Central 
Mackenzie Valley area of the Northwest Territories, offshore China and in the 
Madura Strait in Indonesia.

East Coast

At Marystown, Newfoundland and Labrador, the installation and commissioning 
of the topsides facilities onboard the SeaRose FPSO floating production 
storage and offloading vessel ("SeaRose") is continuing. The first four of 42 
topsides systems have been turned over to us as complete. All systems will be 
tested after full integration. The crewmembers of the SeaRose FPSO are 
currently in training. The production and gas injection flowlines are being 
constructed in Le Trait, France and are expected to be installed this summer.

At the White Rose field, a horizontal production well and a water injection 
well were drilled during the first quarter of 2005. These wells bring the 
total number of development wells drilled to eight. We are also preparing to 
drill a number of delineation wells in proximity to the White Rose structure.

Tucker

During the first quarter of 2005, Husky completed preparations for the 
commencement of drilling operations in early April. This included completing 
construction of two drilling pads, moving in drilling equipment, installing a 
100 person camp and completing three additional stratigraphic test wells. A 
baseline three-dimensional seismic survey was also completed. Facility work 
continues to progress in accordance with the construction schedule and all 
long lead-time components have been ordered.

Sunrise

During the first quarter of 2005, Husky prepared responses to supplemental 
questions from regulators and other stakeholders with regard to the 
application for project approval, which was submitted to the regulators in 
August 2004. Discussions with key stakeholders are ongoing. The conceptual 
design phase for the Sunrise project has commenced.

Exploration Programs

-   Western Canada

During the first quarter of 2005 we drilled 135 exploratory wells (108 net) 
resulting in 96 (72 net) natural gas completions and 25 (22 net) oil 
completions.

Exploration activity was concentrated in the Bivouac, Ekwan and Titan areas 
of northeastern British Columbia where 12 horizontal exploration wells were 
drilled following up on natural gas discoveries made in this region in 
previous years. Infrastructure capacity in the area will be expanded to 
handle 40 mmcf/day of natural gas. Our working interest in these areas 
averages approximately 90 percent.

Near Moose Mountain in the southern Alberta foothills, a previous natural gas 
discovery was completed and flow tested at restricted rates in excess of 6 
mmcf/day. This well will be tied-in during the fourth quarter of 2005 and 
based on the test data, is expected to produce at a rate of approximately 14 
mmcf/day. Our working interest in this well is 43.5 percent. This area 
continues to be prospective and further exploration is being considered.

-   Northwest Territories

During the first quarter of 2005 in the Central Mackenzie Valley we 
participated in the completion and testing of the Summit Creek B-44 
exploratory well that was drilled in the winter of 2004 and the drilling of 
the Sah Cho L-71 exploratory well, in which we have working interests of 
29.4775 percent and 32.5 percent, respectively.

The Summit Creek B-44 well confirmed several productive intervals in a 180 
metre hydrocarbon bearing column. Two intervals were perforated and tested at 
combined rates of approximately 20 mmcf/day of natural gas and in excess of 6 
mbbls/day of light oil and condensate.

Preliminary testing of the Sah Cho L-71 well, which was drilled on a separate 
structure from B-44, did not establish the presence of commercial 
hydrocarbons and the well was cased and suspended pending further evaluation.

The Summit Creek B-44 discovery represents the first in this area since 
Norman Wells was discovered in 1920. The working interest owners have 
accumulated over a million gross acres, covering the majority of the central 
extent of the play. Based on existing seismic data several additional 
prospects have been identified and further seismic is currently being 
contemplated for this summer.

-   East Coast

We are planning to drill an exploratory well in the South Whale Basin with 
the Rowan Gorilla VI jack-up rig. The well will test a structure at the Lewis 
Hill prospect and will spud toward the end of the second quarter of 2005.

-   China

In China we are progressing toward final selection of a shallow water jack-up 
rig for at least two exploratory wells, with a possible third option well, in 
the Gulf of Beibu. In addition, we are in the final stages of selecting a 
deep water rig for an exploratory well on Block 29/26 in the South China Sea. 
At the Wenchang oil field, preparation is underway to drill two exploratory 
wells to test anomalies adjacent to the producing structures. These wells 
will be operated by the China National Offshore Oil Corporation.

-   Indonesia

In Indonesia, where we recently increased our interest in the Madura Strait 
production sharing contract area, work is progressing toward establishing a 
natural gas contract for the two natural gas fields yet to be developed. In 
addition, we have commenced seismic studies on the Madura exploration areas.

Midstream

Husky Lloydminster Upgrader

The debottleneck projects are on schedule to increase the plant's throughput 
capacity from 77 mbbls/day to 82 mbbls/day of synthetic crude oil and 
diluent. Completion is expected for mid 2006 following a scheduled plant 
turnaround. The projects are expected to cost approximately $60 million.

Refined Products

Prince George Refinery

The refinery is currently being modified to produce low sulphur fuels. The 
project is in the construction phase. Production of desulphurized gasoline 
and diesel is expected to commence in July 2005 and March 2006, respectively. 
The project is expected to cost approximately $93 million.

Lloydminster Ethanol Plant

At Lloydminster, Saskatchewan we are constructing a 130 million litre per 
year ethanol plant. The project is in the construction phase and is scheduled 
for completion in early 2006. The project is expected to cost approximately 
$110 million.

Minnedosa Ethanol Plant

At Minnedosa, Manitoba we are currently considering plans to increase the 
capacity of the existing plant from 10 million litres to 130 million litres 
per year.

                    Business Environment

Husky's financial results are significantly influenced by its business 
environment. Risks include, but are not limited to:

-   crude oil and natural gas prices

-   cost to find, develop, produce and deliver crude oil and natural gas

-   demand for and ability to deliver natural gas

-   the exchange rate between the Canadian and U.S. dollars

-   refined petroleum products margins

-   demand for Husky's pipeline capacity

-   demand for refined petroleum products

-   government regulations

-   cost of capital

/T/


    -------------------------------------------------------------------------
    Average Benchmark Prices and                Three months ended
     U.S. Exchange Rate                March     Dec.   Sept.   June   March
                                          31      31      30      30      31
                                        2005    2004    2004    2004    2004
    -------------------------------------------------------------------------
    WTI crude oil(1)    (U.S. $/bbl)  $49.84  $48.28  $43.88  $38.32  $35.15
    Canadian par light
     crude 0.3% sulphur ($/bbl)        62.02   58.01   56.61   50.99   46.00
    Lloyd @
     Lloydminster
     heavy crude oil    ($/bbl)        22.62   25.31   35.47   28.09   26.12
    NYMEX natural
     gas(1)             (U.S. $/mmbtu)  6.27    7.11    5.76    5.97    5.69
    NIT natural gas     ($/GJ)          6.34    6.72    6.32    6.45    6.26
    WTI/Lloyd crude
     blend differential (U.S. $/bbl)   19.57   19.82   12.86   11.82   10.12
    U.S./Canadian dollar
     exchange rate      (U.S. $)       0.815   0.819   0.765   0.736   0.759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prices quoted are near-month contract prices for settlement during
        the next month.

/T/ 

Commodity Price Risk

Our earnings depend largely on the profitability of our upstream business 
segment which is significantly affected by fluctuations in oil and gas 
prices. Commodity prices have been, and are expected to continue to be, 
volatile due to a number of factors beyond our control.

Crude Oil

The prices received for our crude oil and NGL are related to the price of 
crude oil in world markets. Prices for heavy crude oil and other lesser 
quality crudes trade at a discount or differential to light crude oil.

Natural Gas

The price of natural gas in North America is affected by regional supply and 
demand factors, particularly those affecting the United States such as 
weather conditions, pipeline delivery capacity, production disruptions, the 
availability of alternative sources of less costly energy supply, inventory 
levels and general industry activity levels. Periodic imbalances between 
supply and demand for natural gas are common and result in volatile pricing.

Upgrading Differential

The profitability of our heavy oil upgrading operations is dependent upon the 
amount by which revenues from the synthetic crude oil produced exceed the 
costs of the heavy oil feedstock plus the related operating costs. An 
increase in the price of blended heavy crude oil feedstock that is not 
accompanied by an equivalent increase in the sales price of synthetic crude 
oil would reduce the profitability of our upgrading operations. We have 
significant crude oil production that trades at a discount to light crude 
oil, and any negative effect of a narrower heavy/light crude oil differential 
on upgrading operations would be more than offset by a positive effect on 
revenues in the upstream segment from heavy crude oil production.

Refined Products Margins

The margins realized by Husky for refined products are affected by crude oil 
price fluctuations, which affect refinery feedstock costs, and third-party 
light oil refined product purchases. Our ability to maintain refined products 
margins in an environment of higher feedstock costs is contingent upon the 
ability to pass on higher costs to our customers.

Integration

Our production of light, medium and heavy crude oil and natural gas and the 
efficient operation of our upgrader, refineries and other infrastructure 
provide opportunities to take advantage of any fluctuation in commodity 
prices while assisting in managing commodity price volatility. Although we 
are predominantly an oil and gas producer, the nature of our integrated 
organization is such that the upstream business segment's output provides 
input to the midstream and refined products segments.

Foreign Exchange Risk

Our results are affected by the exchange rate between the Canadian and U.S. 
dollars. The majority of our revenues are received in U.S. dollars or from 
the sale of oil and gas commodities that receive prices determined by 
reference to U.S. benchmark prices. The majority of Husky's expenditures are 
in Canadian dollars. An increase in the value of the Canadian dollar relative 
to the U.S. dollar will decrease the revenues received from the sale of oil 
and gas commodities and correspondingly a decrease in the value of the 
Canadian dollar relative to the U.S. dollar will increase the revenues 
received from the sale of oil and gas commodities. In addition, a change in 
the value of the Canadian dollar against the U.S. dollar will result in an 
increase or decrease in Husky's U.S. dollar denominated debt, as expressed in 
Canadian dollars, as well as in the related interest expense. At March 31, 
2005, 73 percent or $1.7 billion of our long-term debt was denominated in 
U.S. dollars. The Cdn/U.S. exchange rate at the end of the first quarter of 
2005 was $1.2096. The percentage of our long-term debt exposed to the 
Cdn/U.S. exchange rate decreases to 56 percent when the cross currency swaps 
are included. Refer to the section "Financial and Derivative Instruments."

Interest Rates

We maintain a portion of our debt in floating rate facilities which are 
exposed to interest rate fluctuations. We will occasionally fix our floating 
rate debt or create a variable rate for our fixed rate debt using derivative 
financial instruments. Refer to the section "Financial and Derivative 
Instruments".

Environmental Regulations

Most aspects of Husky's business are subject to environmental laws and 
regulations. Similar to other companies in the oil and gas industry, we incur 
costs for preventive and corrective actions. Changes to regulations could 
have an adverse effect on our results of operations and financial condition.

International Operations

In addition to commodity price risk, Husky's international upstream 
operations may be affected by a variety of factors including political and 
economic developments, exchange controls, currency fluctuations, royalty and 
tax increases, import and export regulations and other foreign laws or 
policies affecting foreign trade or investment.

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 first quarter 
of 2005. 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              U.S. $1.00/bbl      80      0.19        55      0.13
    NYMEX benchmark
     natural gas
     price(1)           U.S. $0.20/mmbtu    35      0.08        23      0.05
    Light/heavy
     crude oil
     differential(2)    Cdn $1.00/bbl      (28)    (0.07)      (18)    (0.04)
    Light oil
     margins            Cdn $0.005/litre    15      0.04        10      0.02
    Asphalt margins     Cdn $1.00/bbl        6      0.02         4      0.01
    Exchange rate
     (U.S. $/Cdn $)(3)  U.S. $0.01         (53)    (0.12)      (37)    (0.09)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 $13 million in net earnings based on March 31, 2005 U.S. dollar
        denominated debt levels.
    (4) Based on March 31, 2005 common shares outstanding of 423.9 million.


    Results of Operations

    Upstream
    -------------------------------------------------------------------------
    Upstream Earnings Summary                                Three months
                                                            ended March 31
    (millions of dollars)                                     2005      2004
    -------------------------------------------------------------------------
    Gross revenues                                         $ 1,040   $ 1,013
    Royalties                                                  152       158
    Hedging                                                      -        74
    -------------------------------------------------------------------------
    Net revenues                                               888       781
    Operating and administration expenses                      240       225
    Depletion, depreciation and amortization                   273       254
    Income taxes                                               136        66
    -------------------------------------------------------------------------
    Earnings                                               $   239   $   236
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Net Revenue Variance Analysis    Crude oil   Natural
    (millions of dollars)                & NGL       gas     Other     Total
    -------------------------------------------------------------------------
    Three months ended March 31, 2004  $   469   $   297   $    15   $   781
      Price changes                         61        (1)        -        60
      Volume changes                       (31)       (3)        -       (34)
      Royalties                             (5)       11         -         6
      Hedging                               78        (4)        -        74
      Processing and sulphur                 -         -         1         1
    -------------------------------------------------------------------------
    Three months ended March 31, 2005  $   572   $   300   $    16   $   888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

Upstream earnings were $3 million higher in the first quarter of 2005 than in 
the first quarter of 2004 as a result of the following factors:

-   higher light and medium crude oil prices

-   hedging diverted $74 million in the first quarter of 2004; first

quarter of 2005 commodity prices were not hedged

partially offset by:

-   lower sales volume of light and medium crude oil

-   lower heavy crude oil prices

-   higher unit operating costs

-   higher unit depletion, depreciation and amortization

-   higher income taxes primarily due to a tax benefit recorded in the

first quarter of 2004 and also due to higher earnings in the first

quarter of 2005

Unit Operating Costs

Unit operating costs were eight percent higher in the first quarter of 2005 
compared with the same period in 2004 due to increased natural gas 
compression costs and higher natural gas well count.

Unit Depletion, Depreciation and Amortization

Unit depletion, depreciation and amortization expense increased 10 percent in 
the first quarter of 2005 compared with the same period in 2004. The increase 
resulted from a higher capital base in 2005 as a result of the increased 
requirement for production maintenance capital for our properties in the 
Western Canada Sedimentary Basin, offshore operations requiring a higher 
proportion of capital and higher capital costs associated with purchase of 
reserves in place. This was partially offset in the first quarter of 2005 by 
higher proved reserves in the Canadian cost centre.

/T/


    -------------------------------------------------------------------------
    Average Sales Prices                                      Three months
                                                             ended March 31
                                                             2005      2004
    -------------------------------------------------------------------------
    Crude Oil                            ($/bbl)
      Light crude oil & NGL                                $ 56.43   $ 41.84
      Medium crude oil                                       36.50     32.97
      Heavy crude oil                                        22.53     26.38
      Total average                                          35.22     32.42
    Natural Gas                          ($/mcf)
      Average                                                 6.07      6.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Effective Royalty Rates(1)                                Three months
                                                             ended March 31
    Percentage of upstream sales revenues                    2005      2004
    -------------------------------------------------------------------------
    Crude oil & NGL                                            12%       12%
    Natural gas                                                19%       22%
    Total                                                      15%       16%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Before commodity hedging.


    -------------------------------------------------------------------------
    Upstream Revenue Mix(1)                                   Three months
                                                             ended March 31
    Percentage of upstream sales revenues, after royalties   2005      2004
    -------------------------------------------------------------------------
    Light crude oil & NGL                                      32%       27%
    Medium crude oil                                           10%       11%
    Heavy crude oil                                            23%       27%
    Natural gas                                                35%       35%
    -------------------------------------------------------------------------
                                                              100%      100%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Before commodity hedging.


    Operating Netbacks

    Western Canada
    -------------------------------------------------------------------------
    Light Crude Oil Netbacks(1)                               Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 50.83   $ 40.55
    Royalties                                                 5.01      7.19
    Operating costs                                           9.86      8.87
    -------------------------------------------------------------------------
    Netback                                                $ 35.96   $ 24.49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Medium Crude Oil Netbacks(1)                              Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 36.42   $ 33.05
    Royalties                                                 6.41      5.62
    Operating costs                                          10.53      9.63
    -------------------------------------------------------------------------
    Netback                                                $ 19.48   $ 17.80
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Heavy Crude Oil Netbacks(1)                               Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 22.70   $ 26.52
    Royalties                                                 2.19      2.79
    Operating costs                                           9.24      9.38
    -------------------------------------------------------------------------
    Netback                                                $ 11.27   $ 14.35
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Natural Gas Netbacks(2)                                   Three months
                                                             ended March 31
    Per mcfge                                                2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $  6.17   $  6.00
    Royalties                                                 1.39      1.34
    Operating costs                                           0.95      0.79
    -------------------------------------------------------------------------
    Netback                                                $  3.83   $  3.87
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Total Western Canada Upstream Netbacks(1)                 Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 32.95   $ 32.65
    Royalties                                                 5.34      5.67
    Operating costs                                           8.11      7.62
    -------------------------------------------------------------------------
    Netback                                                $ 19.50   $ 19.36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes associated co-products converted to boe.
    (2) Includes associated co-products converted to mcfge.


    -------------------------------------------------------------------------
    Terra Nova Crude Oil Netbacks                             Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 60.73   $ 43.29
    Royalties                                                 3.02      1.08
    Operating costs                                           3.93      2.79
    -------------------------------------------------------------------------
    Netback                                                $ 53.78   $ 39.42
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Wenchang Crude Oil Netbacks                               Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 58.94   $ 41.18
    Royalties                                                 5.43      4.19
    Operating costs                                           2.38      2.18
    -------------------------------------------------------------------------
    Netback                                                $ 51.13   $ 34.81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Total Upstream Segment Netbacks(1)                        Three months
                                                             ended March 31
    Per boe                                                  2005      2004
    -------------------------------------------------------------------------
    Sales revenues                                         $ 35.65   $ 33.76
    Royalties                                                 5.25      5.33
    Operating costs                                           7.60      7.03
    -------------------------------------------------------------------------
    Netback                                                $ 22.80   $ 21.40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes associated co-products converted to boe.



    Midstream
    -------------------------------------------------------------------------
    Upgrading Earnings Summary                                Three months
                                                             ended March 31
    (millions of dollars, except where indicated)            2005      2004
    -------------------------------------------------------------------------
    Gross margin                                           $   207   $    85
    Operating costs                                             50        52
    Other recoveries                                            (1)       (1)
    Depreciation and amortization                                5         5
    Income taxes                                                46         6
    -------------------------------------------------------------------------
    Earnings                                               $   107   $    23
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Upgrader throughput(1)             (mbbls/day)          72.1      70.4
      Synthetic crude oil sales          (mbbls/day)          63.9      58.2
      Upgrading differential             ($/bbl)           $ 32.09   $ 13.80
      Unit margin                        ($/bbl)           $ 35.91   $ 15.95
      Unit operating cost(2)             ($/bbl)           $  7.70   $  8.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Throughput includes diluent returned to the field.
    (2) Based on throughput.


    -------------------------------------------------------------------------
    Upgrading Earnings Variance Analysis
    (millions of dollars)
    -------------------------------------------------------------------------
    Three months ended March 31, 2004                                $    23
      Volume                                                               7
      Margin                                                             115
      Operating costs - energy related                                     1
      Operating costs - non-energy related                                 1
      Income taxes                                                       (40)
    -------------------------------------------------------------------------
    Three months ended March 31, 2005                                $   107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Upgrading earnings increased in the first quarter of 2005 by $84 million
compared with the first quarter of 2004 due to the following factors:

    -   wider upgrading differential
    -   higher sales volume of synthetic crude oil
    -   lower unit operating costs

    partially offset by:

    -   higher income taxes due to higher earnings

    -------------------------------------------------------------------------
    Infrastructure and Marketing Earnings Summary             Three months
                                                             ended March 31
    (millions of dollars, except where indicated)            2005      2004
    -------------------------------------------------------------------------
    Gross margin  - pipeline                               $    25   $    19
                  - other infrastructure and marketing          77        43
    -------------------------------------------------------------------------
                                                               102        62
    Other expenses                                               3         2
    Depreciation and amortization                                5         5
    Income taxes                                                32        18
    -------------------------------------------------------------------------
    Earnings                                               $    62   $    37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Aggregate pipeline throughput     (mbbls/day)            510       510
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Infrastructure and marketing earnings increased by $25 million in the
first quarter of 2005 compared with the first quarter of 2004 due the
following factors:

    -   higher marketing margins for crude oil and natural gas
    -   higher pipeline margins

    partially offset by:

    -   higher income taxes due to higher earnings

    Refined Products
    -------------------------------------------------------------------------
    Refined Products Earnings Summary                         Three months
                                                             ended March 31
    (millions of dollars, except where indicated)            2005      2004
    -------------------------------------------------------------------------
    Gross margin  - fuel sales                             $    29   $    23
                  - ancillary sales                              7         7
                  - asphalt sales                               19         4
    -------------------------------------------------------------------------
                                                                55        34
    Operating and other expenses                                17        17
    Depreciation and amortization                                9         9
    Income taxes                                                11         3
    -------------------------------------------------------------------------
    Earnings                                               $    18   $     5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Selected operating data:
      Number of fuel outlets                                   523       543
      Light oil sales               (million litres/day)       8.3       8.4
      Light oil sales per outlet    (thousand litres/day)     12.4      11.4
      Prince George refinery
       throughput                   (mbbls/day)               10.0      10.9
      Asphalt sales                 (mbbls/day)               17.7      18.4
      Lloydminster refinery
       throughput                   (mbbls/day)               27.1      24.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Refined products earnings increased by $13 million in the first quarter
of 2005 compared with the first quarter of 2004 due to the following factors:

    -   higher marketing margins for gasoline, distillates and asphalt
        products

    partially offset by:

    -   lower sales volume of motor fuels and asphalt products
    -   higher income taxes due to higher earnings

    Corporate
    -------------------------------------------------------------------------
    Corporate Summary(1)                                      Three months
                                                             ended March 31
    (millions of dollars)                                    2005      2004
    -------------------------------------------------------------------------
    Intersegment eliminations - net                        $    23   $    17
    Administration expenses                                      6         5
    Stock-based compensation                                    21         1
    Other - net                                                  3         2
    Depreciation and amortization                                6        10
    Interest on debt                                            35        34
    Interest capitalized                                       (24)      (17)
    Interest income                                             (1)        -
    Foreign exchange                                             7        12
    Income taxes                                               (34)      (18)
    -------------------------------------------------------------------------
    Loss                                                   $   (42)  $   (46)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2004 amounts as restated. Refer to Note 3 to the Consolidated
        Financial Statements.


    -------------------------------------------------------------------------
    Foreign Exchange Summary                                  Three months
                                                             ended March 31
    (millions of dollars)                                    2005      2004
    -------------------------------------------------------------------------
    (Gain) loss on translation of U.S. dollar
     denominated long-term debt
      Realized                                             $    (4)  $    (2)
      Unrealized                                                13        23
    -------------------------------------------------------------------------
                                                                 9        21
    Cross currency swaps                                        (2)       (5)
    Other gains                                                  -        (4)
    -------------------------------------------------------------------------
                                                           $     7   $    12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    U.S./Canadian dollar exchange rates:
      At beginning of period                                   U.S.      U.S.
                                                            $0.831    $0.774
      At end of period                                         U.S.      U.S.
                                                            $0.827    $0.763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

The corporate loss of $42 million in the first quarter of 2005 compared with 
$46 million in the first quarter of 2004 was due to the following factors:

-   stock-based compensation first marked to market in June 2004 under a

tandem plan; stock-based compensation recorded during the first

quarter of 2005 was $21 million

-   higher intersegment profit eliminated

partially offset by:

-   lower depreciation and amortization

-   higher capitalized interest resulting from the higher White Rose

project capital base

-   higher income tax recovery

Consolidated Income Taxes

On March 24, 2005, Bill C-43, an act to implement certain provisions of the 
federal budget tabled on February 23, 2005, received first reading in the 
House of Commons. However, Bill C-43 was not considered substantively enacted 
and as a result, no tax rate adjustments were recorded in our financial 
statements in the first quarter of 2005.

On March 31, 2004, Bill 27 - Alberta Corporate Tax Amendment Act, 2004 was 
substantively enacted and a non-recurring benefit of $40 million was recorded 
in the first quarter of 2004.

/T/


    -------------------------------------------------------------------------
                                                              Three months
                                                             ended March 31
    (millions of dollars)                                    2005      2004
    -------------------------------------------------------------------------
    Income taxes before tax amendments                     $   191   $   115
    Bill 27 - Alberta Corporate Tax Amendment Act, 2004          -        40
    -------------------------------------------------------------------------
    Income taxes as reported                               $   191   $    75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



               Liquidity and Capital Resources

Operating Activities

In the first quarter of 2005, cash generated from operating activities 
amounted to $729 million compared with $701 million in the first quarter of 
2004. Higher cash flow from earnings was almost entirely offset by increased 
non-cash working capital associated with operating activities, which was due 
primarily to reduced accounts payable and accrued liabilities.

Financing Activities

In the first quarter of 2005, cash used in financing activities amounted to 
$61 million compared with $78 million in the first quarter of 2004. During 
the first quarter of 2005, cash from net borrowings was offset by an increase 
in non-cash working capital associated with financing activities.

Investing Activities

In the first quarter of 2005, cash used in investing activities amounted to 
$666 million compared with $594 million in the first quarter of 2004. Cash 
was used primarily for capital expenditures partially offset by proceeds from 
asset sales.

/T/


    Capital Expenditures
    -------------------------------------------------------------------------
    Capital Expenditures Summary(1)                           Three months
                                                             ended March 31
    (millions of dollars)                                    2005      2004
    -------------------------------------------------------------------------
    Upstream
      Exploration
        Western Canada                                     $   161   $   148
        East Coast Canada and Frontier                           4         6
        International                                            4         2
    -------------------------------------------------------------------------
                                                               169       156
    -------------------------------------------------------------------------
      Development
        Western Canada                                         371       331
        East Coast Canada                                      120        76
        International                                            2         -
    -------------------------------------------------------------------------
                                                               493       407
    -------------------------------------------------------------------------
                                                               662       563
    Midstream
      Upgrader                                                  17         8
      Infrastructure and Marketing                               6         3
    -------------------------------------------------------------------------
                                                                23        11
    -------------------------------------------------------------------------
    Refined Products                                             5        10
    Corporate                                                    4         5
    -------------------------------------------------------------------------
    Capital expenditures                                       694       589
    Settlement of asset retirement obligations                  (3)       (6)
    -------------------------------------------------------------------------
    Capital expenditures per Consolidated Statements
     of Cash Flows                                         $   691   $   583
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes capitalized costs related to asset retirement obligations
        incurred during the period and corporate acquisitions.

/T/



Upstream Capital Expenditures

Upstream capital expenditures totaled $662 million, 95 percent of total 
consolidated capital expenditures during the first quarter of 2005 compared 
with $563 million or 96 percent of the total, during the first quarter of 
2004.

/T/

    -------------------------------------------------------------------------
    Upstream Capital Expenditures                              Three months
                                                              ended March 31
    (millions of dollars)                                          2005
    -------------------------------------------------------------------------
    Western Canada Sedimentary Basin sustaining exploitation         $   397
    Western Canada foothills and Deep Basin exploration                   87
    Western Canada Oil Sands                                              48
    Eastern Canada Offshore and Northwest Territories                    124
    International exploration and development                              6
    -------------------------------------------------------------------------
                                                                     $   662
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

The remaining capital expenditures during the first quarter of 2005 amounting 
to $32 million were related primarily to the Lloydminster upgrader 
debottlenecking project, the Prince George refinery clean fuels project and 
the Lloydminster ethanol plant project.

/T/


    -------------------------------------------------------------------------
    Western Canada Wells Drilled(1)(2)              Three months
                                                   ended March 31
                                              2005                2004
                                        Gross      Net      Gross      Net
    -------------------------------------------------------------------------
    Exploration    Oil                      25        22         8         7
                   Gas                      96        72       108       100
                   Dry                      14        14        28        28
    -------------------------------------------------------------------------
                                           135       108       144       135
    -------------------------------------------------------------------------
    Development    Oil                      66        61       108        95
                   Gas                     231       221       290       275
                   Dry                      10        10        27        24
    -------------------------------------------------------------------------
                                           307       292       425       394
    -------------------------------------------------------------------------
    Total                                  442       400       569       529
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes stratigraphic test wells.
    (2) Includes non-operated wells.

/T/



Sources of Capital

Liquidity describes a company's ability to access cash. Companies operating 
in the upstream oil and gas industry require sufficient cash in order to fund 
capital programs necessary to maintain and increase production and proved 
developed reserves, to acquire strategic oil and gas assets, repay maturing 
debt and pay dividends. Husky's upstream capital programs are funded 
principally by cash provided from operating activities. During times of low 
oil and gas prices part of a capital program can generally be deferred. 
However, due to the long cycle times and the importance to future cash flow 
in maintaining our production, it may be necessary to utilize alternative 
sources of capital to continue our strategic investment plan during periods 
of low commodity prices. As a result we continually examine our options with 
respect to sources of long and short-term capital resources. In addition, 
from time to time we engage in hedging a portion of our production to protect 
cash flow.

/T/


    -------------------------------------------------------------------------
    Sources and Uses of Cash                                Three
                                                            months     Year
                                                            ended     ended
                                                           March 31  December
    (millions of dollars)                                    2005    31 2004
    -------------------------------------------------------------------------
    Cash sourced
      Cash flow from operations(1)                         $   816   $ 2,197
      Debt issue                                             1,455     2,200
      Asset sales                                               43        36
      Proceeds from exercise of stock options                    1        18
      Proceeds from monetization of financial instruments        -         8
    -------------------------------------------------------------------------
                                                             2,315     4,459
    -------------------------------------------------------------------------
    Cash used
      Capital expenditures                                     691     2,349
      Corporate acquisitions                                     -       102
      Debt repayment                                         1,243     1,959
      Special dividend on common shares                          -       229
      Ordinary dividends on common shares                       51       195
      Settlement of asset retirement obligations                 5        40
      Other                                                      -        24
    -------------------------------------------------------------------------
                                                             1,990     4,898
    -------------------------------------------------------------------------
    Net cash (deficiency)                                      325      (439)
    Increase (decrease) in non-cash working capital           (323)      443
    -------------------------------------------------------------------------
    Increase in cash and cash equivalents                        2         4
    Cash and cash equivalents - beginning of period              7         3
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period              $     9   $     7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Increase (decrease) in non-cash working capital
      Cash positive working capital change
        Accounts receivable decrease                       $     -   $   209
        Accounts payable and accrued liabilities increase        -       323
    -------------------------------------------------------------------------
                                                                 -       532
      Cash negative working capital change
        Accounts receivable increase                            45         -
        Inventory increase                                      54        77
        Prepaid expense increase                                11        12
        Accounts payable and accrued liabilities decrease      213         -
    -------------------------------------------------------------------------
                                                               323        89
    -------------------------------------------------------------------------
    Increase (decrease) in non-cash working capital        $  (323)  $   443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Cash flow from operations represents net earnings plus items not
        affecting cash, which include accretion, depletion, depreciation and
        amortization, future income taxes and foreign exchange.

/T/ 

Working capital is the amount by which current assets exceed current 
liabilities. At March 31, 2005, our working capital deficiency was $507 
million compared with $824 million at December 31, 2004. These working 
capital deficits are primarily the result of accounts payable related to 
capital expenditures for exploration and development. Settlement of these 
current liabilities is funded by cash provided by operating activities and to 
the extent necessary by bank borrowings. This position is a common 
characteristic of the oil and gas industry which, by the nature of its 
business, spends large amounts of capital.

/T/


    -------------------------------------------------------------------------
    Capital Structure                                   March 31, 2005
                                                   Outstanding      Available
    (millions of dollars)                        (U.S. $)  (Cdn $)   (Cdn $)
    -------------------------------------------------------------------------
    Short-term bank debt                         $     1   $    82   $    94
    Long-term bank debt
      Syndicated credit facility                       -       260       740
      Bilateral credit facilities                      -        50       100
      Medium-term notes                                -       300
      Capital securities                             225       272
      U.S. public notes                            1,050     1,270
      U.S. senior secured bonds                       99       120
      U.S. private placement notes                    15        18
    -------------------------------------------------------------------------
    Total short-term and long-term debt          $ 1,390   $ 2,372   $   934
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Common shares and retained earnings                    $ 6,536
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Financial Ratios                                          Three months
                                                             ended March 31
    (millions of dollars, except ratios)                     2005      2004
    -------------------------------------------------------------------------
    Cash flow - operating activities                       $   729   $   701
              - financing activities                       $   (61)  $   (78)
              - investing activities                       $  (666)  $  (594)
    Debt to capital employed (percent)                        26.6      25.8
    Corporate reinvestment ratio(1)(2)                         1.0       1.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Calculated for the twelve months ended for the periods shown.
    (2) Reinvestment ratio is based on net capital expenditures including
        corporate acquisitions.

    Contractual Obligations and Commercial Commitments

    -------------------------------------------------------------------------
    Contractual Obligations
                                    April -
    Payments due by period         December
     (millions of dollars) Total     2005    2006-2007  2008-2009 Thereafter
    -------------------------------------------------------------------------
    Long-term debt      $  2,290   $     35   $    366   $    786   $  1,103
    Operating leases         530         44        152        151        183
    Firm transportation
     agreements            1,008        160        375        262        211
    Unconditional
     purchase obligations  1,333        445        684         87        117
    Lease rentals            331         33         88         88        122
    Exploration work
     agreements               51         27         15          -          9
    Engineering and
     construction
     commitments             956        532        412         12          -
    -------------------------------------------------------------------------
                        $  6,499   $  1,276   $  2,092   $  1,386   $  1,745
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/

Off Balance Sheet Arrangements

We do not utilize off balance sheet arrangements with unconsolidated entities 
to enhance perceived liquidity.

We engage in the ordinary course of business in the securitization of 
accounts receivable. At March 31, 2005, our receivable securitization program 
was fully utilized at $350 million. The securitization agreement terminates 
on January 31, 2009. The accounts receivable are sold to an unrelated third 
party on a revolving basis. In accordance with the agreement we must provide 
a loss reserve to replace defaulted receivables.

The securitization program provides us with cost effective short-term funding 
for general corporate use. We account for these securitizations as asset 
sales. In the event the program is terminated our liquidity would not be 
substantially reduced.

              Transactions with Related Parties

Husky, in the ordinary course of business, was party to a lease agreement 
with Western Canadian Place Ltd. The terms of the lease provided for the 
lease of office space at Western Canadian Place, management services and 
operating costs at commercial rates. Effective July 13, 2004, Western 
Canadian Place Ltd. sold Western Canadian Place to an unrelated party. 
Western Canadian Place Ltd. is indirectly controlled by Husky's principal 
shareholders. During the first quarter of 2004, we paid approximately $5 
million for office space in Western Canadian Place.

We did not have any customers that constituted more than five percent of 
total sales and operating revenues during the first quarter of 2005.

/T/

                    Financial and Derivative Instruments

    Power Consumption

    At March 31, 2005, we had hedged power consumption as follows:

    -------------------------------------------------------------------------
    (millions of           Notional                              Unrecognized
     dollars, except       Volumes                                    Gain
     where indicated)        (MW)          Term            Price     (Loss)
    -------------------------------------------------------------------------
    Fixed price purchase      10.0   Apr. to Dec. 2005   $49.25/MWh   $  0.5
                              12.5   Apr. to Dec. 2005   $50.50/MWh      0.5
                              15.0   Apr. to Jun. 2005   $48.00/MWh      0.1
    -------------------------------------------------------------------------
                                                                      $  1.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

Foreign Currency Risk Management

At March 31, 2005, we had the following cross currency debt swaps in place:

-   U.S. $150 million at 7.125 percent swapped at $1.45 to $218 million

at 8.74 percent until November 15, 2006

-   U.S. $150 million at 6.250 percent swapped at $1.41 to $212 million

at 7.41 percent until June 15, 2012

At March 31, 2005 the cost of a U.S. dollar in Canadian currency was $1.2096.

In the first quarter of 2005, the cross currency swaps resulted in an offset 
to foreign exchange losses on translation of U.S. dollar denominated debt 
amounting to $2 million.

In addition, we entered into U.S. dollar forward contracts, which resulted in 
realized gains totalling approximately $1 million in the first quarter of 
2005.

Interest Rate Risk Management

In the first quarter of 2005, the interest rate risk management activities 
resulted in a decrease to interest expense of $5 million.

The cross currency swaps resulted in an addition to interest expense of $3 
million in the first quarter of 2005.

Husky has interest rate swaps on $200 million of long-term debt effective 
February 8, 2002 whereby 6.95 percent was swapped for CDOR + 175 bps until 
July 14, 2009. During the first quarter of 2005, these swaps resulted in an 
offset to interest expense amounting to $1 million.

Husky has interest rate swaps on U.S. $200 million of long-term debt 
effective February 12, 2002 whereby 7.55 percent was swapped for an average 
U.S. LIBOR + 194 bps until November 15, 2011. During the first quarter of 
2005, these swaps resulted in an offset to interest expense amounting to $2 
million.

Husky has interest rate swaps on U.S. $300 million of long-term debt 
effective June 18, 2004 whereby 6.15 percent was swapped for an average U.S. 
LIBOR + 63 bps until June 15, 2019. During the first quarter of 2005, these 
swaps resulted in an offset to interest expense amounting to $3 million.

The amortization of previous interest rate swap terminations resulted in an 
additional $2 million offset to interest expense in the first quarter of 
2005.

During the first quarter of 2005, we recognized a gain of $8 million from our 
long-dated forwards, which were unwound in 2004.

        Application of Critical Accounting Estimates

Certain of our accounting policies require that we make appropriate decisions 
with respect to the formulation of estimates and assumptions that affect the 
reported amounts of assets, liabilities, revenues and expenses. For a 
discussion about those accounting policies, please refer to our Management's 
Discussion and Analysis for the year ended December 31, 2004 available at 
www.sedar.com.

                  New Accounting Standards

Effective January 1, 2005, we retroactively reclassified the capital 
securities from equity to long-term debt in accordance with the Canadian 
Institute of Chartered Accountants handbook section 3860, "Financial 
Instruments - Disclosure and Presentation." As a result the return on capital 
securities is included in interest expense rather than as a charge to 
retained earnings.

/T/


                           Outstanding Share Data

    -------------------------------------------------------------------------
                                                            Three
                                                            months     Year
                                                            ended     ended
                                                           March 31  December
    (in thousands, except per share amounts)                 2005    31 2004
    -------------------------------------------------------------------------
    Share price(1) High                                   $  40.49  $  35.65
                   Low                                    $  32.30  $  22.73
                   Close at end of period                 $  36.33  $  34.25
    Average daily trading volume                               748       482
    Weighted average number of common shares outstanding
                   Basic                                   423,791   423,362
                   Diluted                                 423,791   424,303
    Issued and outstanding at end of period(2)
      Number of common shares                              423,850   423,736
      Number of stock options                                9,533     9,964
      Number of stock options exercisable                    1,127     1,417
      Number of warrants                                         -        25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Trading in the common shares of Husky Energy Inc. ("HSE") commenced
        on the Toronto Stock Exchange on August 28, 2000. The Company is
        represented in the S&P/TSX Composite, S&P/TSX Canadian Energy Sector
        and in the S&P/TSX 60 indices.
    (2) There were no significant issuances of common shares, stock options
        or any other securities convertible into, or exercisable or
        exchangeable for common shares during the period from March 31, 2005
        to April 15, 2005.

/T/

                   Additional Information

Management's Discussion and Analysis is our explanation of our financial 
performance for the period covered by the unaudited financial statements 
along with an analysis of our financial position and prospects. It should be 
read in conjunction with the unaudited Consolidated Financial Statements for 
the three months ended March 31, 2005 in this Quarterly Report and the 
audited Consolidated Financial Statements, Management's Discussion and 
Analysis and Annual Information Form for the year ended December 31, 2004 
filed March 18, 2005 on SEDAR at www.sedar.com. The unaudited Consolidated 
Financial Statements have been prepared in accordance with accounting 
principles generally accepted in Canada. All comparisons refer to the first 
quarter of 2005 compared with the first quarter of 2004, unless otherwise 
indicated. All dollar amounts are in millions of Canadian dollars, unless 
otherwise indicated. Unless otherwise indicated, all production volumes 
quoted are gross, which represent our working interest share before 
royalties. Prices quoted include or exclude the effect of hedging as 
indicated. Crude oil has been classified as the following: light crude oil 
has an API gravity of 30 degrees or more; medium crude oil has an API gravity 
of 21 degrees or more and less than 30 degrees; heavy crude oil has an API 
gravity of less than 21 degrees.

We use 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.

Non-GAAP Measures

Disclosure of Cash Flow from Operations

Management's Discussion and Analysis contains the term "cash flow from 
operations", which should not be considered an alternative to, or more 
meaningful than "cash flow from operating activities" as determined in 
accordance with generally accepted accounting principles as an indicator of 
our financial performance. Our determination of cash flow from operations may 
not be comparable to that reported by other companies. Cash flow from 
operations generated by each business segment represents a measurement of 
financial performance for which each reporting business segment is 
responsible. The items reported under the caption, "Corporate and 
eliminations", are required to reconcile to the consolidated total and are 
not considered to be attributable to a business segment.

The following table shows the reconciliation of cash flow from operations to 
cash flow - operating activities for the periods noted:

/T/


    -------------------------------------------------------------------------
                                                            Three
                                                            months     Year
                                                            ended     ended
                                                           March 31  December
    (millions of dollars)                                    2005    31 2004
    -------------------------------------------------------------------------
    Non-GAAP  Cash flow from operations                   $    816  $  2,197
              Settlement of asset retirement obligations        (5)      (40)
              Change in non-cash working capital               (82)      169
    -------------------------------------------------------------------------
    GAAP      Cash flow - operating activities            $    729  $  2,326
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/



Forward-looking Statements

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 our current expectations, 
estimates, projections and assumptions and were made by us in light of 
experience and perception of historical trends. 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. Some of our forward-looking statements may be 
identified by words like "expects", "anticipates", "plans", "intends", 
"believes", "projects", "could", "vision", "goal", "objective" and similar 
expressions. Our business is subject to risks and uncertainties, some of 
which are similar to other energy companies and some of which are unique to 
Husky. Our actual results may differ materially from those expressed or 
implied by our forward- looking statements as a result of known and unknown 
risks, uncertainties and other factors.

The reader is cautioned not to place undue reliance on our forward- looking 
statements. 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 
our 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 our products

-   fluctuations in the cost of borrowing

-   our 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 we operate

-   our ability to receive timely regulatory approvals

-   the integrity and reliability of our capital assets

-   the cumulative impact of other resource development projects

-   the accuracy of our oil and gas reserve estimates, estimated

production levels and our 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 we have material

relationships to fulfill their obligations

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

ups, equipment failures and other similar events affecting us or

other parties, whose operations or assets directly or indirectly

affect us

 /T/

    CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated Balance Sheets
    -------------------------------------------------------------------------
                                                       March 31  December 31
    (millions of dollars)                                  2005         2004
    -------------------------------------------------------------------------
                                                     (unaudited)    (audited)
    Assets
    Current assets
      Cash and cash equivalents                        $      9     $      7
      Accounts receivable                                   491          446
      Inventories                                           328          274
      Prepaid expenses                                       62           52
    -------------------------------------------------------------------------
                                                            890          779

    Property, plant and equipment -
     (full cost accounting)                              20,052       19,451
      Less accumulated depletion, depreciation
       and amortization                                   7,524        7,258
    -------------------------------------------------------------------------
                                                         12,528       12,193
    Goodwill                                                160          160
    Other assets                                            112          108
    -------------------------------------------------------------------------
                                                       $ 13,690     $ 13,240
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities
      Bank operating loans                             $     82     $     49
      Accounts payable and accrued liabilities            1,263        1,498
      Long-term debt due within one year (note 5)            52           56
    -------------------------------------------------------------------------
                                                          1,397        1,603
    Long-term debt (notes 3, 5)                           2,238        2,047
    Other long-term liabilities (note 4)                    637          632
    Future income taxes                                   2,882        2,758
    Commitments and contingencies (note 6)
    Shareholders' equity
      Common shares (note 7)                              3,509        3,506
      Retained earnings                                   3,027        2,694
    -------------------------------------------------------------------------
                                                          6,536        6,200
    -------------------------------------------------------------------------
                                                       $ 13,690     $ 13,240
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Common shares outstanding (millions) (note 7)         423.9        423.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2004 amounts as restated.



    Consolidated Statements of Earnings
    -------------------------------------------------------------------------
                                                             Three months
    (millions of dollars, except per share amounts)         ended March 31
    (unaudited)                                            2005         2004
    -------------------------------------------------------------------------
    Sales and operating revenues, net of royalties     $  2,201     $  2,021
    Costs and expenses
      Cost of sales and operating expenses                1,258        1,351
      Selling and administration expenses                    29           25
      Stock-based compensation                               21            1
      Depletion, depreciation and amortization              298          283
      Interest - net (notes 3, 5)                            10           17
      Foreign exchange (notes 3, 5)                           7           12
      Other - net                                             3            2
    -------------------------------------------------------------------------
                                                          1,626        1,691
    -------------------------------------------------------------------------
    Earnings before income taxes                            575          330
    -------------------------------------------------------------------------
    Income taxes
      Current                                                67           60
      Future                                                124           15
    -------------------------------------------------------------------------
                                                            191           75
    -------------------------------------------------------------------------
    Net earnings                                       $    384     $    255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share (note 8)
      Basic                                            $   0.91     $   0.60
      Diluted                                          $   0.91     $   0.60

    Weighted average number of common shares
     outstanding (millions) (note 8)
      Basic                                               423.8        422.7
      Diluted                                             423.8        424.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Retained Earnings
    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
    (millions of dollars)(unaudited)                       2005         2004
    -------------------------------------------------------------------------
    Beginning of period                                $  2,694     $  2,156
    Net earnings                                            384          255
    Dividends on common shares                              (51)         (42)
    Stock-based compensation - retroactive adoption           -          (44)
    -------------------------------------------------------------------------
    End of period                                      $  3,027     $  2,325
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2004 amounts as restated.



    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
    (millions of dollars)(unaudited)                       2005         2004
    -------------------------------------------------------------------------
    Operating activities
      Net earnings                                     $    384     $    255
      Items not affecting cash
        Accretion (note 4)                                    8            6
        Depletion, depreciation and amortization            298          283
        Future income taxes                                 124           15
        Foreign exchange                                      7           16
        Other                                                (5)           1
      Settlement of asset retirement obligations             (5)          (6)
      Change in non-cash working capital (note 9)           (82)         131
    -------------------------------------------------------------------------
      Cash flow - operating activities                      729          701
    -------------------------------------------------------------------------
    Financing activities
      Bank operating loans financing - net                   33          (38)
      Long-term debt issue                                1,422           56
      Long-term debt repayment                           (1,243)         (73)
      Proceeds from exercise of stock options                 1           13
      Dividends on common shares                            (51)         (42)
      Change in non-cash working capital (note 9)          (223)           6
    -------------------------------------------------------------------------
      Cash flow - financing activities                      (61)         (78)
    -------------------------------------------------------------------------
    Available for investing                                 668          623
    -------------------------------------------------------------------------
    Investing activities
      Capital expenditures                                 (691)        (583)
      Asset sales                                            43            -
      Other                                                   -            2
      Change in non-cash working capital (note 9)           (18)         (13)
    -------------------------------------------------------------------------
      Cash flow - investing activities                     (666)        (594)
    -------------------------------------------------------------------------
    Increase in cash and cash equivalents                     2           29
    Cash and cash equivalents at beginning of period          7            3
    -------------------------------------------------------------------------
    Cash and cash equivalents at end of period         $      9     $     32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements. 2004 amounts as restated.



    Notes to the Consolidated Financial Statements

    Three months ended March 31, 2005 (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
                      2005      2004      2005      2004      2005      2004
    -------------------------------------------------------------------------
    Three months
     ended
     March 31(1)
    Sales and
     operating
     revenues,
     net of
     royalties    $    888  $    781  $    353  $    246  $  1,386  $  1,438
    Costs and
     expenses
      Operating,
       cost of sales,
       selling and
       general         240       225       195       212     1,287     1,378
      Depletion,
       depreciation
       and
       amortization    273       254         5         5         5         5
      Interest - net     -         -         -         -         -         -
      Foreign
       exchange          -         -         -         -         -         -
    -------------------------------------------------------------------------
                       513       479       200       217     1,292     1,383
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes             375       302       153        29        94        55
    Current income
     taxes              53        34        11         -        (7)       12
    Future income
     taxes              83        32        35         6        39         6
    -------------------------------------------------------------------------
    Net earnings
     (loss)       $    239  $    236  $    107  $     23  $     62  $     37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital
     employed -
     As at
     March 31     $  7,917  $  6,979  $    509  $    455  $    321  $    237
    Capital
     expenditures
     - Three
     months ended
     March 31     $    662  $    563  $     17  $      8  $      6  $      3
    Total assets
     - As at
     March 31     $ 11,567  $ 10,302  $    714  $    653  $    644  $    660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

                      2005      2004      2005      2004      2005      2004
    -------------------------------------------------------------------------
    Three months
     ended
     March 31(1)
    Sales and
     operating
     revenues,
     net of
     royalties    $    437  $    360  $   (863) $   (804) $  2,201  $  2,021
    Costs and
     expenses
      Operating,
       cost of sales
       selling and
       general         399       343      (810)     (779)    1,311     1,379
      Depletion,
       depreciation
       and
       amortization      9         9         6        10       298       283
      Interest - net     -         -        10        17        10        17
      Foreign
       exchange          -         -         7        12         7        12
    -------------------------------------------------------------------------
                       408       352      (787)     (740)    1,626     1,691
    -------------------------------------------------------------------------

    Earnings (loss)
     before income
     taxes              29         8       (76)      (64)      575       330
    Current income
     taxes              (1)        2        11        12        67        60
    Future income
     taxes              12         1       (45)      (30)      124        15
    -------------------------------------------------------------------------
    Net earnings
     (loss)       $     18  $      5  $    (42)  $   (46) $    384  $    255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital
     employed -
     As at
     March 31     $    372  $    297  $   (211) $   (103) $  8,908  $  7,865
    Capital
     expenditures
     - Three
     months ended
     March 31     $      5  $     10  $      4  $      5  $    694  $    589
    Total assets
     - As at
     March 31     $    647  $    578  $    118  $    124  $ 13,690  $ 12,317
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2004 amounts as restated. Refer to Note 5.
    (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, 2004, 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, 2004. Certain prior years' amounts have been reclassified to conform

with current presentation.

Note 3    Change in Accounting Policies

Financial Instruments

Effective January 1, 2005, the Company retroactively adopted the revised

recommendations of the Canadian Institute of Chartered Accountants

("CICA") section 3860, "Financial Instruments - Disclosure and

Presentation", on the classification of obligations that must or could be

settled with an entity's own equity instruments. The new recommendations

resulted in the Company's capital securities being classified as

liabilities instead of equity. The accrued return on the capital

securities and the issue costs are classified outside of shareholders'

equity. The return on the capital securities is a charge to earnings.

Note 5 discloses the impact of the adoption of the revised

recommendations of CICA section 3860 on the consolidated financial

statements.

Note 4    Other Long-term Liabilities

/T/


    Asset Retirement Obligations

    Changes to asset retirement obligations were as follows:

    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Asset retirement obligations at
     beginning of period                               $    509     $    432
    Liabilities incurred                                      3            6
    Liabilities disposed                                     (7)           -
    Liabilities settled                                      (5)          (5)
    Accretion                                                 8            6
    -------------------------------------------------------------------------
    Asset retirement obligations at end of period      $    508     $    439
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

At March 31, 2005, the estimated total undiscounted inflation adjusted

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 50 years into the

future. This amount has been discounted using credit adjusted risk free

rates ranging from 6.2 to 6.4 percent.

Note 5    Long-term Debt

/T/


    -------------------------------------------------------------------------
                            Maturity  March 31   Dec. 31  March 31   Dec. 31
                                          2005      2004      2005      2004
    -------------------------------------------------------------------------
                                           Cdn $ Amount       U.S. $ Amount
    Long-term debt
      Syndicated credit
       facility                 2008  $    260  $     70  $      -  $      -
      Bilateral credit
       facilities             2006-8        50        40         -         -
      7.125% notes              2006       181       181       150       150
      8.90% capital securities  2008       272       271       225       225
      6.25% notes               2012       484       481       400       400
      7.55% debentures          2016       242       241       200       200
      6.15% notes               2019       363       361       300       300
      Private placement notes   2005        18        18        15        15
      8.45% senior secured
       bonds                 2005-12       120       140        99       117
      Medium-term notes       2007-9       300       300         -         -
    -------------------------------------------------------------------------
    Total long-term debt                 2,290     2,103  $  1,389  $  1,407
                                                          --------- ---------
                                                          --------- ---------

    Amount due within one year             (52)      (56)
    -----------------------------------------------------
                                      $  2,238  $  2,047
    -----------------------------------------------------
    -----------------------------------------------------

    Interest - net consisted of:
    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Long-term debt                                     $     34     $     33
    Short-term debt                                           1            1
    -------------------------------------------------------------------------
                                                             35           34
    Amount capitalized                                      (24)         (17)
    -------------------------------------------------------------------------
                                                             11           17
    Interest income                                          (1)           -
    -------------------------------------------------------------------------
                                                       $     10     $     17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Foreign exchange consisted of:
    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Loss on translation of U.S. dollar denominated
     long-term debt                                    $      9     $     21
    Cross currency swaps                                     (2)          (5)
    Other gains                                               -           (4)
    -------------------------------------------------------------------------
                                                       $      7     $     12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Credit Facilities

    In March 2005, Husky increased its revolving syndicated credit facility
    from $950 million to $1 billion.

    Capital Securities

    The Company retroactively adopted CICA recommendations resulting in the
    Company's capital securities being classified as liabilities instead of
    equity. The revision was effective January 1, 2005 and resulted in the
    following changes to the Company's consolidated financial statements.

    Consolidated Balance Sheet - As at December 31, 2004
    -------------------------------------------------------------------------
                                       As Reported     Change    As Restated
    -------------------------------------------------------------------------
    Assets
      Other assets                        $    106     $      2     $    108
    Liabilities and Shareholders' Equity
      Accounts payable and accrued
       liabilities                           1,489            9        1,498
      Long-term debt                         1,776          271        2,047
      Capital securities and accrued return    278         (278)           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statement of Earnings - Three months ended March 31, 2004
    -------------------------------------------------------------------------
                                       As Reported     Change    As Restated
    -------------------------------------------------------------------------
    Interest - net                        $     10     $      7     $     17
    Foreign exchange                             8            4           12
    Future income taxes                         18           (3)          15
    Net earnings                               263           (8)         255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/

Note 6    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 7    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:

    -------------------------------------------------------------------------
                                        Three months ended March 31
                                      2005                      2004
    -------------------------------------------------------------------------
                               Number                    Number
                            of Shares       Amount    of Shares       Amount
    -------------------------------------------------------------------------
    Balance at beginning
     of period            423,736,414     $  3,506  422,175,742     $  3,457
    Stock-based
     compensation
     - adoption                     -            -            -           23
    Exercised - options
     and warrants             113,812            3    1,026,115           18
    -------------------------------------------------------------------------
    Balance at March 31   423,850,226     $  3,509  423,201,857     $  3,498
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Stock Options

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

    -------------------------------------------------------------------------
                                      Three months ended March 31
                                    2005                      2004
    -------------------------------------------------------------------------
                                          Weighted                  Weighted
                             Number        Average     Number        Average
                           of Options     Exercise   of Options     Exercise
                           (thousands)     Prices    (thousands)     Prices
    -------------------------------------------------------------------------
    Outstanding, beginning
     of period                  9,964     $  22.61        4,597     $  13.88
    Granted                        60     $  33.72           45     $  24.71
    Exercised for common
     shares                       (84)    $  12.44         (994)    $  13.02
    Surrendered for cash         (314)    $  13.43            -     $      -
    Forfeited                     (93)    $  24.99          (24)    $  18.33
    -------------------------------------------------------------------------
    Outstanding, March 31       9,533     $  23.05        3,624     $  14.22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Options exercisable at
     March 31                   1,127     $  13.31        2,671     $  13.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                 March 31, 2005
                                  Outstanding Options     Options Exercisable
    -------------------------------------------------------------------------
                                                 Weighted
                             Number    Weighted   Average   Number   Weighted
                               of       Average Contractual   of      Average
    Range of                 Options   Exercise    Life     Options  Exercise
    Exercise Price         (thousands)  Prices    (years) (thousands) Prices
    -------------------------------------------------------------------------
    $12.31 - $14.99            1,082  $  12.84         1     1,008  $  12.71
    $15.00 - $23.99              445  $  18.32         3       111  $  17.91
    $24.00 - $24.99            7,641  $  24.38         4         8  $  24.23
    $25.00 - $33.72              365  $  31.13         4         -  $      -
    -------------------------------------------------------------------------
                               9,533  $  23.05         4     1,127  $  13.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 8    Earnings per Common Share

    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Net earnings and net earnings available
     to common shareholders                            $    384     $    255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of common shares
     outstanding
      Basic (millions)                                    423.8        422.7
    Effect of dilutive stock options and warrants             -          2.0
    -------------------------------------------------------------------------
    Weighted average number of common shares
     outstanding
      Diluted (millions)                                  423.8        424.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
      Basic                                            $   0.91     $   0.60
      Diluted                                          $   0.91     $   0.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 9    Cash Flows - Change in Non-cash Working Capital
    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    a) Change in non-cash working capital was
       as follows:
       Decrease (increase) in non-cash working capital
         Accounts receivable                           $    (45)    $    (25)
         Inventories                                        (54)         (18)
         Prepaid expenses                                   (11)           6
         Accounts payable and accrued liabilities          (213)         161
    -------------------------------------------------------------------------
       Change in non-cash working capital                  (323)         124
       Relating to:
         Financing activities                              (223)           6
         Investing activities                               (18)         (13)
    -------------------------------------------------------------------------
         Operating activities                          $    (82)    $    131
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    b) Other cash flow information:
       Cash taxes paid                                 $     83     $     51
       Cash interest paid                              $     30     $     30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 10   Employee Future Benefits

    Total benefit costs recognized were as follows:

    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Employer current service cost                      $      1     $      3
    Interest cost                                             2            2
    Expected return on plan assets                           (2)          (2)
    Amortization of net actuarial losses                      1            1
    -------------------------------------------------------------------------
                                                       $      2     $      4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 11   Financial Instruments and Risk Management

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

    -------------------------------------------------------------------------
                                                       March 31      Dec. 31
                                                           2005         2004
    -------------------------------------------------------------------------
    Commodity price risk management
      Natural gas                                      $    (11)    $     (9)
      Power consumption                                       1           (1)
    Interest rate risk management
      Interest rate swaps                                    37           52
    Foreign currency risk management
      Foreign exchange contracts                            (36)         (30)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

Commodity Price Risk Management

Natural Gas Production

At March 31, 2005, the Company had hedged 7.5 mmcf of natural gas per day

at NYMEX for April to December 2005 at an average price of U.S. $1.92 per

mcf. During the first quarter of 2005, the impact was a loss of

$2 million.

Power Consumption

At March 31, 2005, the Company had hedged power consumption of

148,500 MWh from April to December 2005 at an average fixed price of

$49.94 per MWh and 32,760 MWh from April to June 2005 at an average fixed

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

quarter of 2005 was a loss of $0.3 million.

Natural Gas Contracts

At March 31, 2005, the unrecognized gains (losses) on external offsetting

physical purchase and sale natural gas contracts were as follows:

/T/


    -------------------------------------------------------------------------
                                                        Volumes  Unrecognized
                                                         (mmcf)   Gain (Loss)
    -------------------------------------------------------------------------
    Physical purchase contracts                          14,234     $     17
    Physical sale contracts                             (14,234)    $    (16)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

/T/ 

Interest Rate Risk Management

During the first quarter of 2005, the Company realized a gain of

$5 million from interest rate risk management activities.

Foreign Currency Risk Management

During the first quarter of 2005, the Company realized a $3 million loss

from all foreign currency risk management activities.

During the first quarter of 2005, Husky recognized a gain of $8 million

from its long-dated forwards, which were unwound in November 2004.

Sale of Accounts Receivable

The Company has a securitization program to sell, on a revolving basis,

accounts receivable to a third party up to $350 million. As at March 31,

2005, $350 million in outstanding accounts receivable had been sold under

the program.



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

Cash Flow from

 Operations        Earnings from operations plus non-cash charges before

               change in non-cash working capital

Equity             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 Inc. will host a conference call for analysts and investors on 
Tuesday, April 19, 2005 at 4:15 p.m. Eastern time to discuss Husky's first 
quarter results which will be released after market close on April 18, 2005. 
To participate, please dial 1-800-404-8949 beginning at 4:05 p.m. Eastern 
time. Mr. John C.S. Lau, President & Chief Executive Officer, Donald R. 
Ingram, Senior Vice President, Midstream & Refined Products and Neil D. 
McGee, Vice President & Chief Financial Officer will be participating in the 
call.

We appreciate your interest in Husky Energy and look forward to your 
participation in our conference call.

Those who are unable to listen to the call live may listen to a recording 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 
21231722. The PostView will be available until Thursday, May 19, 2005.

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.




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