(Reuters) - Canada’s Husky Energy Inc (HSE.TO) cut its 2018 production forecast on Thursday, saying it would temporarily cut heavy oil output due to low prices and a slow ramp up at its offshore Indonesia project.
Earlier in the day, the oil producer and refiner reported an explosion at its 38,000 barrel per day (bpd) Superior, Wisonsin, refinery. Local media reports said at least 20 people were injured.
Shares of the company, which were trading slightly down, fell more than 5 percent following the incident.
Transport bottlenecks in Canada have widened Canadian oil’s discount compared to U.S. light crude. Husky said its differentials averaged C$30.69 per barrel in the first quarter, a 59 percent jump compared with last year.
Western Canadian Select (WCS) - the benchmark for heavy crude - has historically traded at a discount of $15 to West Texas Intermediate (WTI).
Husky, whose first-quarter profit beat analysts’ estimates, lowered its annual production forecast to 310,000 to 320,000 barrels of oil equivalent per day (boepd) from 320,000 to 335,000 boepd.
Husky’s profit beat market expectations by 2 cents despite first-quarter production falling more than 10 percent.
The widening gap between the price of WTI and WCS caused Husky’s income from its infrastructure and marketing segment to nearly double to C$138 million ($107.6 million) in the quarter.
Husky, which runs drilling and refining businesses in Canada, the United States and Asia, said its average U.S. refining margin rose to $8.51 per barrel from $7.08 per barrel a year ago.
“Husky remains the only heavy oil producer that we believe could be a (modest) net beneficiary from our expectation of persistently wide heavy oil differentials,” Raymond James analysts said.
The company’s net earnings rose to C$248 million, or 89 Canadian cents per share, in the three months ended March 31, from C$71 million, or 66 Canadian cents per share, a year earlier.
Excluding items, Husky earned 24 Canadian cents per share, beating analysts’ estimate of 22 Canadian cents per share, according to Thomson Reuters I/B/E/S.
The company’s average quarterly production fell to 300,400 barrels of oil equivalent per day (boepd) from 334,000 boepd a year earlier as it sold some of its assets in Western Canada in 2017.
($1 = 1.2826 Canadian dollars)
Reporting by John Benny in Bengaluru; Editing by Amrutha Gayathri and Arun Koyyur