* Profits, shares at Suncor, Canadian Natural, Husky rise
* Penn West net drops on year-ago gain
* Strong oil prices spur gains
* Canadian Natural expects higher oil production (Adds comments and details; closes shares; adds Penn West results)
By Scott Haggett
CALGARY, Alberta, Nov 3 (Reuters) - High oil prices and rising oil sands production bolstered quarterly profits at Suncor Energy Inc (SU.TO) and Canadian Natural Resources Ltd (CNQ.TO), Canada's two largest oil companies, while output at Husky Energy Inc's (HSE.TO) offshore fields rose.
Earnings reports from the three companies on Thursday sparked a jump in their share prices, with Canadian Natural surging nearly 8 percent on production gains and a rosy outlook for 2012 output.
Most of Canada's big oil producers have reported stronger third-quarter results, shrugging off the European debt crisis as oil prices strengthened and refining margins remained high.
"Things were looking pretty ugly in September but for the quarter as a whole crude prices were really strong and that showed up in the results," said Michael Dunn, an analyst at FirstEnergy Capital.
"Refining profitability has been strong and upstream numbers ... have been decent as well. Overall it's been a decent quarter relative to what people were expecting."
The average third-quarter price for West Texas Intermediate oil, the North American benchmark, was up 18 percent from the year-before quarter at $89.62 a barrel, while the European Brent standard price was up 46 percent at $112.09.
Canada's oil sands, the world's third-largest crude source, are the subject of intense environmental debate in the United States as Washington decides whether to allow the massive Keystone XL pipeline to Texas from the northern Alberta sands to proceed.
The resource is Canada's most lucrative export, and makes up a major part of U.S. oil supply, competing with domestic oil and crude from the Middle East and elsewhere.
Suncor's oil sands production volumes rose 6.5 percent, averaging a record 326,600 barrels a day, helping it post a profit that surged well beyond expectations.
Suncor reported net income of C$1.29 billion ($1.28 billion), or 82 Canadian cents a share, up from C$1.22 billion, or 78 Canadian cents, in the third quarter of 2010.
Operating income, which excludes most one-time items, nearly tripled to C$1.79 billion, or C$1.14 a share, from C$617 million, or 39 Canadian cents a share.
The operating result was well above the average analyst forecast of 77 Canadian cents, as compiled by Thomson Reuters I/B/E/S.
However, the company's overall production fell 14 percent as it waits to restart Libyan operations shut down during that country's civil war, and because output from the Buzzard field in the North Sea dropped due to maintenance work.
The company plans a 2012 capital budget of about C$7.5 billion, up from C$6.7 billion, with spending ramping up in subsequent years as it begins work on its Fort Hills oil sands project, a joint venture with Total SA (TOTF.PA).
Suncor shares rose C$1.41, or 4.4 percent to C$33.20 on Thursday on the Toronto Stock Exchange.
Shares of Canadian Natural rose C$3.25, or 9.3 percent, to C$38.23 in Toronto after it said third-quarter profit rose 40 percent, topping analyst expectations, and promised big production gains next year.
The company's third-quarter net income rose to C$836 million, or 76 Canadian cents a share, from C$596 million, or 54 Canadian cents, in the third quarter of 2010.
Earnings from operations, which exclude most unusual items, rose 25.5 percent to C$719 million, or 65 Canadians cents, exceeding the average analyst forecast of 53 Canadian cents, according to Thomson Reuters I/B/E/S.
Production averaged 612,575 boepd, down 1.4 percent from the year-before quarter due to a January fire that shut down its 110,000 bpd Horizon oil sands project.
Horizon restarted in August and was operating at normal levels a month later.
The company said it expects to spend C$7.2 billion next year to boost production to between 675,000 and 726,000 boepd, targeting a 24 percent increase in crude oil and natural gas liquids output over 2011 levels.
"The outlook is very, very bright," said Lanny Pendill, an an analyst with Edward Jones. "This company has very visible growth, it's levered to oil prices and they're great operators with a solid balance sheet."
Husky's third-quarter profit doubled to C$521 million, or 53 Canadian cents a share, from C$261 million, or 30 Canadian cents a share, a year earlier.
On an adjusted basis, it earned C$503 million, or 53 Canadian cents a share.
Husky, controlled by Hong Kong billionaire Li Ka-shing, said production before royalties averaged 309,100 boepd, compared with 288,700 in the year-before quarter due to improved output from its White Rose field off the coast of Newfoundland and higher natural gas production in Western Canada.
Husky produces oil and gas in Canada and Southeast Asia, operates refineries in British Columbia and Ohio, and has a 82,000 bpd oil sands upgrader in Saskatchewan.
It refineries and upgrader processed 310,000 bpd in the quarter, up 24 percent from the year-prior quarter.
Husky also warned that its 2012 production would be cut by 12,000 barrels per day because of a four-week maintenance shutdown.
Husky's Toronto-listed shares rose 61 Canadian cents, or 2.4 percent, to C$25.80.
Penn West Petroleum Ltd PWT.TO, one of Western Canada's largest conventional oil and gas producers, said on Thursday its third-quarter net income dropped by half from the year-prior quarter, which included a C$368 million gain.
Net income fell to C$138 million or 29 Canadian cents a share, from C$304 million, or 66 Canadian cents.
The company said it sees full-year production averaging 162,000-164,000 boepd, and expects to produce between 174,000 and 177,000 boepd by year end.
Penn West shares rose 32 Canadian cents, or 1.7 percent, to C$18.62 on Thursday on the Toronto Stock Exchange
$1=$1.01 Canadian Additional reporting by Aftab Ahmed, Maneesha Tiwari, Abhiram Nandakumar and Bhaswati Mukhopadhyay in Bangalore; editing by Peter Galloway and Rob Wilson