(Reuters) - Husky Energy Inc (HSE.TO), Canada’s No. 3 integrated oil company, reported a smaller-than-expected quarterly loss on Friday as its focus on fewer, more efficient resource plays helped reduce production costs.
The strong results sent shares up 2.66 percent to C$15.83 on the Toronto Stock Exchange, even as the Calgary-based company rushed to clean up after oil spilled into a major western Canadian river on Thursday.
Production operating costs fell about 12 percent to $10.79 per barrel in the second quarter from a year earlier, as the company benefits from its six-year-long effort to transform its business by investing in projects with lower costs.
By year’s end, more than 40 percent of the company’s output is expected to come from low break-even projects, up from just 8 percent in 2010, when it began the turnaround, Husky said in June.
The company also has sold non-core assets, including royalty interests in Western Canada, for about C$1.2 billion.
Speaking on an analyst call, chief financial officer Jon McKenzie said the company had closed a few small asset sales in July but bulk of its deals were done for now.
“We said at the beginning of this program this wouldn’t be a fire sale,” he said. “If the market changes and allows us to further restructure, we’d consider it but the bulk of the heavy lifting is now behind us.”
Husky’s total production fell about 6 percent to 316,000 barrels of oil equivalent per day (boepd) in the three months ended June due to planned maintenance and the Fort McMurray wildfire in Alberta.
The company said its Sunrise Energy Project was running at roughly the same level as before the fire and said it expects annual production at the low end of its forecast 315,000-345,000 boepd.
Cash flow from operations more than halved to C$488 million in the latest quarter.
Husky reported a loss of C$196 million, or 20 Canadian cents per share, compared with a profit of C$120 million, or 10 Canadian cents per share, a year earlier.
Excluding items, the company’s loss was 9 Canadian cents per share, according to Thomson Reuters I/B/E/S. Analysts’ on average had estimated a loss of 21 Canadian cents per share.
Overall earnings break-even is expected to be sub-$40 WTI by the end of 2016, the company said. U.S. benchmark crude CLc1 was trading down 2.17 percent at $43.78 on Friday.
Reporting by Julie Gordon in Vancouver and Amrutha Gayathri in Bengaluru; Editing by Sriraj Kalluvila and Bill Trott