April 27, 2011 / 12:37 PM / in 6 years

UPDATE 3-Husky Energy advances projects as profit soars

* Q1 adj EPS C$0.71 vs est C$0.52

* Q1 EPS C$0.70 vs C$0.41 year ago

* Production up 5 pct to 310,400 boed

* Shares rise 0.77 pct to C$28.71 in Toronto (Adds CEO comments)

By Jeffrey Jones

CALGARY, Alberta, April 27 (Reuters) - Husky Energy Inc (HSE.TO) said on Wednesday it will finalize development plans for big energy projects in the South China Sea and off Canada’s East Woast this year as it reported a 70 percent jump in first-quarter profit.

Chief Executive Asim Ghosh, who took the helm at Husky last year, also said the company has no plans to move away from its integrated structure as he concentrates on three producing ventures in Canada and Asia.

Husky, controlled by Hong Kong billionaire Li Ka-shing, operates refineries in Western Canada and Ohio. Its Toledo refinery, a joint venture with BP Plc (BP.L), reaped rewards in the quarter from deep discounts on its main feedstock, Canadian heavy oil.

“Having control of that value chain allows us to play the shifting movements in value so that we come out at the end with a balanced financial position, and I think the results of this quarter demonstrated precisely that,” Ghosh said at the annual meeting.

The company is known for its dominant position in Canadian heavy oil producing and processing, and for its Husky and Mohawk gasoline filling stations in Western Canada.

It expects to sanction the C$5 billion ($5.2 billion) Liwan gas project in he South China Sea in 2011, Ghosh said.

The company and its partner, Chinese state-owned CNOOC Ltd (0883.HK), are conducting a final review of the development plan and first production from the huge field is expected in 2013. Husky will sell the gasoline under long-term contracts linked to oil prices.

At the expanding White Rose oil field off Newfoundland, Husky is weighing whether to install a fixed drilling platform, said Ghosh.

Late last year, Husky and BP sanctioned the C$2.45 billion Sunrise oil sands project in Alberta. The first 60,000 barrel a day phase is due to start up in 2014.

In the first quarter, Husky’s profit gained due to high benchmark oil prices and a 5 percent rise in production. The results were held back by a fire at its Western Canadian heavy oil upgrader, which halved output there.

Heavy oil prices were also pressured by a glut of supply, a carry-over from 2010 when Enbridge Inc (ENB.TO) pipelines ruptured in the United States.

The upgrader outage prevented the company from benefiting from the wide price spreads, the company said.

First-quarter earnings jumped to C$626 million, or 70 Canadian cents a share, from C$368 million, or 41 Canadian cents, a year ago.

Adjusted earnings rose to C$637 million, or 71 Canadian cents a share, from C$358 million, or 42 Canadian cents, topping analysts’ average estimate for 52 Canadian cents, according to Thomson Reuters I/B/E/S.

Husky’s cash flow -- a glimpse into Husky’s ability to fund growth plans -- rose 36 percent to C$1.16 billion, or C$1.30 a share, from C$854 million, or C$1 a share, a year earlier.

Production rose about 5 percent to 310,400 barrels of oil equivalent a day, helped by this year’s C$860 million acquisition of oil and gas properties from Exxon Mobil Corp (XOM.N).

Husky shares rose 22 Canadian cents to C$28.71 on the Toronto Stock Exchange. They are down about 4 percent in the past year.

Li-controlled companies including Hutchison Whampoa Ltd 0013.HK and Cheung Kong (Holdings) Ltd (0001.HK) control about 72 percent of Husky.

$1=$0.96 Canadian Additional reporting Gowri Jayakumar, editing by Frank McGurty

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