CALGARY, Alberta, Feb 5 (Reuters) - Husky Energy Inc's (HSE.TO) profit sank 79 percent in the fourth quarter due to the economic meltdown and a steep drop in crude prices, Canada's No. 2 oil producer and refiner said.
Husky, which is controlled by Hong Kong tycoon Li Ka-shing, earned C$232 million ($189 million), or 27 Canadian cents a share, down from year-earlier C$1.1 billion, or C$1.26 a share, the company reported late on Wednesday.
Adjusted to remove unusual items, Husky earned C$614 million, or 72 Canadian cents a share, down from C$709 million, or 84 Canadian cents cents a share.
The company had been expected to earn 52 Canadian cents a share, according to a Reuters Estimates compilation of analysts' forecasts.
Cash flow, a glimpse into an oil company's ability to fund its development projects, fell 76 percent to C$339 million, or 40 Canadian cents a share, from C$1.4 billion, or C$1.68 share.
Revenue was C$4.7 billion, down from C$4.8 billion.
Husky and its Canadian energy peers have been hit hard by falling oil prices and the global financial crisis, and many companies have delayed or canceled major projects, especially in Alberta's oil sands.
Husky said it and partner BP Plc (BP.L) are working to bring down costs for their C$10 billion Sunrise oil sands project and target a final go-ahead decision for the first half of 2010.
In the quarter, oil averaged $59.08 a barrel, down 35 percent from a year earlier, and a far cry from a record of more than $147 a barrel set in July. Canadian natural gas rose 9 percent to C$6.37 a gigajoule.
Husky said weak commodity prices cut returns in its exploration and production business as well as its refining arm, where it lowered the value of its inventory and reduced profit margins.
Production averaged 358,400 barrels of oil equivalent a day, down 2.5 percent from the fourth quarter of 2007, as natural gas output fell sharply.
Husky shares were down 93 Canadian cents at C$29 on the Toronto Stock Exchange. Interests controlled by Li Ka-shing, such as Hutchison Whampoa Ltd 0013.HK and Cheung Kong (Holdings) Ltd (0001.HK), own more than 70 percent of Husky.
$1=$1.23 Canadian Reporting by Jeffrey Jones; editing by Peter Galloway