* Suncor beats estimates, cost savings double
* Canadian Natural beats Street, OKs oil sands project
* Husky boosts spending 29 percent
* TSX oil group jumps 3.4 percent as crude price rises
By Jeffrey Jones
CALGARY, Alberta, Nov 4 (Reuters) - Suncor Energy Inc (SU.TO) and Canadian Natural Resources Ltd (CNQ.TO) pumped out strong financial results and brightened outlooks on Thursday, helping to lift shares across Canada’s energy sector.
The third-quarter financial and operating gains at those companies, as well as a hefty spending increase announced by Husky Energy Inc (HSE.TO), came as oil prices surged, pushing the Toronto Stock Exchange’s energy subgroup .SPTTEN to its highest level in seven months.
The sector has experienced little movement in the past year as natural gas markets languished and companies suffered with mechanical problems, especially in northern Alberta’s oil sands.
U.S. benchmark oil prices jumped $1.80, or 2 percent, to settle at $86.49 a barrel on Thursday as the U.S. Federal Reserve’s new monetary stimulus plan to aid a flagging economy spurred investors’ risk appetite.
The TSX oil group jumped 3.4 percent to nearly 302 points, its highest level since April 5.
“Oil prices have risen quite a bit this week and you’ve got a little more appetite for the riskier assets — I would funnel both of those back to the U.S. dollar weakening further,” Edward Jones analyst Lanny Pendill said. “All of that has helped the flow into some of these names.”
In addition, the positive results from Suncor and Canadian Natural came against a backdrop of lingering pessimism, making the gains even more pronounced, Pendill said.
Suncor, the country’s largest oil producer and refiner, led the sector higher, reporting a 10 percent gain in earnings and higher-than-expected production despite slowdowns for maintenance at its Alberta oil sands operations. Suncor also disclosed a doubling of expected annual cost savings, to C$800 million, from its 2009 takeover of Petro-Canada.
In the third quarter, Suncor earned C$1.02 billion, or 65 Canadian cents a share, up from a year-earlier C$929 million, or 69 Canadian cents a share. Excluding unusual items, earnings were C$654 million, or 42 Canadian cents a share.
It had been expected to earn 36 Canadian cents a share, the average of analyst forecasts compiled by Thomson Reuters I/B/E/S.
Chief Executive Rick George said he expects returns on capital to improve over the next two years as Suncor dusts off many of the projects it had shelved during the financial crisis.
That is likely to include an C$11.6 billion project to build a third oil sands upgrader.
Suncor shares surged C$2.58, or 8 percent, to C$35.48, their highest level since early April.
Net income at Canadian Natural, the top independent oil explorer, fell 12 percent to C$580 million, or 53 Canadian cents a share, and adjusted earnings slipped 8 percent to C$606 million, or 55 Canadian cents a share.
But the result beat analysts’ expectations of 48 Canadian cents a share.
Canadian Natural gave the green light to its C$1.25 billion Kirby steam-driven oil sands project, and said it expects to make a go-ahead decision on expanding its Horizon oil sands mining development in the first quarter of 2011.
Horizon output averaged 83,809 barrels a day, down from 99,950 in the second quarter as it underwent maintenance work.
Canadian Natural shares jumped C$1.59, or 4 percent, to C$39.33.
Husky, the country’s third largest oil producer and refiner, said its profit fell 24 percent as it struggled with the impact of Enbridge Inc’s (ENB.TO) U.S. oil pipeline outages and took its heavy oil upgrader down for upkeep.
But the company raised its spending budget for the year by C$900 million to C$4 billion.
The extra money will go to projects that provide near-term gains, including those involving liquids-rich natural gas. Pendill said he believes that is what the company lacks.
It has been focused on long-term projects, including the Sunrise oil sands development in Alberta and Liwan gas field in the South China Sea.
Husky, controlled by Hong Kong billionaire Li Ka-shing, reported net income of C$257 million, or 30 Canadian cents a share, down from C$338 million, or 40 Canadian cents a share.
Adjusted earnings fell 20 percent to C$260 million, or 31 cents a share, close to the average forecast.
New Chief Executive Asim Ghosh told analysts that the company was still deciding whether to go ahead with previously announced plans to spin off its Asian division.
Husky shares rose 49 Canadian cents, or 2 percent, to C$38.99.
$1=$1.01 Canadian Additional reporting by Scott Haggett; editing by Peter Galloway