19-06-00 Husky Oil and Renaissance Energy, both of Calgary, announced that they have entered into a definitive agreement to merge through a plan of arrangement. The new company, to be called Husky Energy, will be one of Canada's largest integrated oil and gas companies with an exceptional growth profile, a strong cash-generating asset base, and the financial flexibility to pursue strategic projects.

Under the terms of arrangement:
- The Husky Oil shareholders have agreed to acquire for cash up to 27.8 mm shares of Renaissance, on a pro rata basis from the Renaissance shareholders, at a price of C$ 18.00 per share (the "Cash Option"). The maximum purchase under the Cash Option is C$ 500 mm.
- All Renaissance shareholders who do not elect to receive the Cash Option will receive one (1) common share of Husky Energy for each Renaissance share held.
- All Renaissance shareholders (including those who elect to receive the Cash Option) will receive a special return of capital of C$ 2.50 per share from Husky Energy.

Based on an agreed ownership split in Husky Energy of 65 % for Husky Oil shareholders and 35 % for Renaissance shareholders, a total of 429 mm Husky Energy common shares will be outstanding following completion of the transaction and upon the ultimate exercise of Renaissance in-the-money options.
Assuming the maximum purchase under the Cash Option, Husky oil shareholders will own approximately 71.5 % of the Husky Energy shares. The transaction will be accounted for as a purchase by Husky of Renaissance under the purchase method in accordance with Canadian GAAP.
Based upon an estimated current trading range of 15.0x forward earnings for Husky Energy's peer group of Canadian integrated oil and gas companies, Husky Energy would have a pro- forma market capitalisation of C$ 7.2 bn and debt of C$ 3.3 bn for an enterprise value of C$ 10.5 bn.
Based on these assumptions, the estimated total consideration of approximately C$ 19.40 per Renaissance share represents a premium of 28 % over Renaissance's 10-day average closing price prior to announcement of C$ 15.18 per share. Of this amount Renaissance shareholders will receive a total of C$ 5.83 in cash per share assuming the C$ 500 mm is prorated over all Renaissance shares outstanding.
Husky Energy will establish an annual dividend of C$ 0.36 per share, payable quarterly. It is a condition to closing that Husky Energy common shares will be listed on The Toronto Stock Exchange.

The merger will create one of the largest integrated oil and gas companies in Canada. Total annual production will be approximately 252,000 bpd of oil equivalent and total proven and probable reserves will be in excess of 1.43 bn barrels of oil equivalent based on 10:1 gas to boe conversion. It will be the second largest Canadian integrated oil and gas producer in terms of production and reserves and the fourth largest downstream retailer.
Based on annualised Q1 2000 pro-forma results, Husky Energy would generate revenues in excess of C$ 5 bn, earnings exceeding C$ 485 mm and cash flow of approximately C$ 1.55 bn in 2000. Q1 2000 liquids production averaged 181.5 mbbls/d and natural gas production averaged 635.0 mm cfpd. Husky Energy is well positioned to report higher production in 2001 with the start-up of the Terra Nova project and continued growth in its core areas.
Mr. John C.S. Lau, CEO of Husky Oil, said, "This is a win-win for both companies and a major step in realising future growth potential. The complimentary nature of our respective assets creates a more diversified, balanced and high quality growth-orientated platform. We will be well positioned to realise the full profit-generating potential of our high growth opportunities in heavy oil, oil sands, and offshore east coast. We will also be well positioned to expand our international projects, including in Asia. We have high regard for Renaissance, its achievements, and its people. Our combined presence and focus will create a company that will benefit from current and emerging trends across the industry. We are excited about the announcement and our future".
Mr. Ronald G. Green, Chairman of the Board and acting CEO of Renaissance, said, "This announcement is good news for Renaissance and its stakeholders. We have indicated publicly for some time that a merger was one way in which we might pursue the objectives of the strategic repositioning process we initiated a number of months ago. We have concluded that this combination is the best means of achieving our goals. The transition instantly moves us into several new medium and long-term upstream operating areas as well as midstream/downstream activities. It provides greater balance in our risk and asset profile. It provides value to our shareholders now and, more importantly, for years to come through their participation in the future growth and success of a new company with established long-term assets. I am delighted that our shareholders and personnel will have this unique opportunity. That is why our board and management have recommended approval of this transaction."

Husky Oil contributes certain unique assets to the new company:
- Husky Oil has significant heavy oil and infrastructure operations in the Lloydminster region along the Alberta and Saskatchewan border, including medium-heavy oil production currently in excess of 54,000 bpd and 1,200 miles of pipelines with current throughput nearing 500,000 bpd. In addition, Husky has a heavy oil upgrader which is producing 62,000 bpd of synthetic crude operating in conjunction with a 25,000 bpd asphalt refinery. Almost 30 % of Renaissance's crude oil production is within this region, creating the opportunity for significant synergies.
- Husky Oil produces approximately 260 mm cfpd of natural gas production and has a substantial interest in natural gas processing infrastructure including 72 % working interest in the 430 mm cfpd Ram River plant and 11 % working interest in the 115 mm cfpd Caroline plant. This will complement Renaissance's approximately 400 mm cfpd of largely shallow gas production. On a combined basis, the new company will be the 6th largest natural gas producer in Canada with estimated production of 660 mm cfpd.
- Husky Oil's position as a leading operator and landowner in the Jeanne d'Arc basin offshore Newfoundland will provide for significant medium and long-term growth. The Terra Nova oil field (12.5 % working interest) will begin production in 2001, and Husky Oil's 72.5 % working interest in the White Rose oil field is expected to commence production beginning in 2003-2004.
- Husky Oil also has a large midstream and downstream component, contributing 36 % and 14 % respectively, to its operating profit in 1999.
Husky Oil generated C$ 232 mm EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) from midstream and downstream assets in 1999 that include the Lloydminster Upgrader and an integrated refining/asphalt business, as well as a network of 597 branded service stations.

Husky Energy will be led by an experienced board of directors and management team drawn from both companies. Composition of the board will reflect the levels of ownership in the new company. Mr. Canning Fok, Co-chairman of Husky Oil, will serve as Chairman. Mr. Ronald G. Greene, current Chairman and acting CEO of Renaissance, will serve on the board of Husky Energy. Mr. John C.S. Lau, currently CEO of Husky Oil, will assume the same position in the new company.
Mr. Lau has served as Husky Oil's CEO since July 1993. Under his stewardship, Husky Oil has increased its revenues, cash flow and earnings significantly while at the same time investing to position the company for future growth.
The agreement is subject to normal closing conditions, including the receipt of court, regulatory and Renaissance shareholder approvals. It also provides for a break fee of C$ 82 mm if the agreement is terminated under certain circumstances.
It is anticipated that the Information Circular will be mailed to Renaissance shareholders by mid-July. The meeting ofRenaissance shareholders is expected to be held in late August with an effective date to occur shortly thereafter.
Merrill Lynch has acted as exclusive financial advisor to Husky Oil in this transaction. RBC Dominion Securities has acted as exclusive financial advisor to Renaissance and has provided an opinion that the proposed merger is fair, from a financial point of view, to the shareholders of Renaissance.
The securities offered by Husky Energy will not be and have not been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or any applicable exemption from registration requirements.
Renaissance will file an information circular with the US Securities and Exchange Commission ("SEC") in connection with the proposed arrangement. The information circular will contain important information which investors should read carefully before they make any decision with respect to the proposed arrangement transaction.
In light of Husky Oil's status as a privately-held company, background information on Husky Oil, its activities, performance and other information surrounding the proposed transaction is attached or is available through the company.

Husky - Renaissance Combination 1999 - 2000
E Upstream Statistics Husky-Renaissance (Note: Gas converted to boe at 10:1)
Husky Renaissance 1999 Q1/00 2000E 1999 Q1/00 2000E
Production liquids (bpd) 68,600 84,600 88,400 91,534 96,906 96,000
gas (mm cfpd) 250.5 257.0 271.5 465.0 378.0 410.0
total (mm bpd) 93,650 110,300 115,550 138,034 134,706 137,000

Proved Reserves liquids (mm bbls) 250.1 360.0
gas (bn cf) 1,077 1,452
total (mm boe) 357.8 505.2

Probable Reserves liquids (mm bbls) 399.7 115.0
gas (bn cf) 268 258
total (mm boe) 426.5 140.8

Undev. Land (macres) 1,726 8,639 (W. Canada only)
Pro-forma 1999 Q1/00 2000E
Production liquids (bpd) 160,134 181,506 184,400
gas (mm cfpd) 715.5 635.0 681.5
total (mm bpd) 231,684 245,006 252,550

Proved Reserves liquids (mm bbls) 610.1
gas (bn cf) 2,529
total (mm boe) 863.0

Probable Reserves liquids (mm bbls) 514.7
gas (bn cf) 526
total (mm boe) 567.3

Undev. Land (mm acres) 10,365 (W. Canada only)

Midstream/Downstream Statistics
Husky Heavy oil upgrading capacity: 65,000 bpd
Refining capacity: 35,000 bpd
Pipeline throughput capacity: greater than 500,000 bpd
Branded Service Stations: 597 outlets

Financial Statistics (all figures in C$ mm)
Husky Renaissance Pro-forma, Adjusted 1999 Q1/00 1999 Q1/00 1999 Q1/00
Net Revenues 2,794 951 901 302 3,695 1,253
Earnings 43 40 69 59 198 122
Cash Flow from Ops. 517 191 548 208 1,029 390
EBITDA 567 219 637 228 1,189 444
Capex 706 135 267 380 973 515
Book Asset Value 4,816 4,989 4,438 4,745 8,798 9,219
Net Debt 1,437 1,316 1,178 1,352 2,986 3,040

Husky is a Canadian-based privately held integrated energy and energy related company headquartered in Calgary, Alberta. The Company's operations include the exploration for and development of crude oil and natural gas, as well as the production, purchase, transportation and marketing of crude oil, natural gas, natural gas liquids (NGLs), sulphur and petroleum coke, the co-generation of electrical and thermal energy, and the upgrading and refining of crude oil and marketing of refined petroleum products, including gasoline, alternative fuels and asphalt.
The Company has a balanced portfolio of assets, including properties that produce light, medium and heavy gravity crude oil, NGLs, natural gas and sulphur. Husky generally has a high degree of operational control in its upstream operations. The Company has extensive gathering and processing facilities in the Lloydminster area of Alberta and Saskatchewan and the Ram River and Rainbow Lake areas of Alberta and at December 31, 1999 was the operator of properties which accounted for approximately 82 % of its total working interest production.
The Company's net proved crude oil and NGLs reserve life is approximately 10 years and its net proved natural gas reserve life is approximately 13 years, based on 1999 reserves and production. Husky also has a substantial undeveloped land base in the Lloydminster area, offshore the east coast of Canada and in the Madura Strait area offshore Indonesia.

In addition, the Company believes that it is a financially disciplined operator with strong technical capabilities and operational experience, especially with respect to the development, production, transportation and upgrading of heavy crude oil. Husky also has extensive experience and expertise in enhanced crude oil recovery and horizontal drilling, as well as in natural gas exploration in the foothills along the Canadian Rocky Mountains.
The Company has a strong presence in crude oil, natural gas and sulphur marketing and has established marketing networks for refined petroleum products through independently operated Husky and Mohawk branded outlets and through direct marketing to end users.
The Company is a major participant in the oil and gas rich Jeanne d'Arc Basin in the Grand Banks off the east coast of Newfoundland. The Company is one of the largest working-interest owners in that offshore region based on landholdings and potential crude oil reserves. The Company holds a 12.5 % working interest in Terra Nova, the second largest oil field found to date in that region, a 72.5 % working interest in the White Rose oil field, plus 16 additional exploration and discovery licenses.
In 1999, approximately 50 % of the Company's operating profit was generated by its upstream operations, which include the exploration for and the development and production of crude oil, natural gas and NGLs. The Company's upstream operations are primarily in western Canada and offshore the east coast of Canada. The Company also has some international upstream operations in Indonesia and Libya.
The Company's 1999 gross production was 68.6 mm bpd of crude oil and NGLs and 250.5 mm cfpd of natural gas. Less than 1 % of Husky's total production of crude oil and NGLs was from international operations.
The Company's 1999 upstream revenues were derived from its production of heavy crude oil (37 %), light and medium crude oil and NGLs (29 %), and natural gas and natural gas related operations (34 %). As of December 31, 1999 the Company had total gross proved reserves of crude oil and NGLs and of natural gas of approximately 250 mm barrels and 1,077 bn cf, respectively.
In 1999, approximately 36 % of the Company's operating profit was generated by its midstream operations, which include upgrading of heavy crude oil feedstock into synthetic crude oil; pipeline transportation and processing of heavy crude oil, storage of crude oil, diluent and natural gas and co-generation of electrical and thermal energy and marketing of the Company's and other producer's crude oil, natural gas, natural gas liquids, sulphur and petroleum coke.

Husky owns and operates a heavy oil upgrading facility (the "Husky Lloydminster Upgrader") located in Lloydminster, Saskatchewan. In 1999, sales of synthetic crude oil totalled approximately 62 mm bpd. The facility converts heavy crude oil into a premium quality synthetic crude oil.
The Company's pipeline operations include the transportation of blended heavy crude oil and diluent through the Company's heavy oil pipeline systems, which, in total, include over 1,200 miles of pipeline and are capable of transporting in excess of 500 mm bpd. These systems transport blended heavy crude oil from the Cold Lake region of Alberta and from west central Saskatchewan to upgrading and refining facilities in Lloydminster, and to the Enbridge Pipeline system and Express Pipeline system at Hardisty, Alberta.
The Company's pipeline operations also include a synthetic crude oil pipeline from Lloydminster to Hardisty. The Company owns and operates 13 heavy crude oil processing facilities located throughout the Lloydminster area and 2 sand disposal caverns.
Husky has a 50 % interest in a 215 MW natural gas fired co-generation facility at the site of the Husky Lloydminster Upgrader. The plant was commissioned in December 1999. Electricity generated at the facility is sold to Saskatchewan Power Corporation under a 25 year agreement. Thermal energy (steam) is sold to the Husky Lloydminster Upgrader.

In April 2000, the Company commissioned a natural gas storage facility at Hussar, Alberta with working storage capacity of 15 bn cf. The midstream business group is also pursuing other infrastructure projects which are complementary to Husky's overall business endeavours.
These may include further investment in co-generation projects, natural gas storage projects, NGLs extraction facilities and sulphur processing plants. New venture business options are continually assessed and pursued. Selected projects would facilitate the Company's overall plans to increase the efficiency of operations and more fully capitalise on its asset base. Husky is also a major trader of both its own and third party crude oil, NGLs, natural gas, sulphur and petroleum coke.
In 1999, approximately 14 % of the Company's operating profit was generated by its downstream operations, which include refining of heavy and light crude oil, marketing of refined petroleum products, including asphalt and alternate fuels, and processing of grain primarily for ethanol production.
The Company sells and distributes motor fuels including ethanol blended fuels through 597 independently operated Husky and Mohawk branded petroleum outlets, including service stations, truck stops and bulk distribution facilities located from the west coast of Canada to the eastern border of Ontario, some of which include 24 hour restaurants, convenience stores, service bays, car washes, fast food sales, bank machines and propane sales.
A number of these outlets are equipped with the proprietary "Route Commander" cardlock system that enables commercial users to purchase products using a card system which electronically processes transactions and provides the user with detailed billing, sales tax and other information.

The Company distributed asphalt through 10 terminals located throughout western Canada. Most of the asphalt is used for paving and other industrial purposes. Husky's Pounder Emulsions division manufactures modified and conventional road application emulsions. The Company owns a 10 mm bpd light oil refinery in Prince George, British Columbia, a 25 mm bpd asphalt refinery in Lloydminster, Alberta and an ethanol plant in Minnedosa, Manitoba.