October 21, 2009 / 9:00 PM / 8 years ago

CORRECTED - UPDATE 2-Husky Energy profit drops on prices, production

(Fixes location of refinery to Lima, Ohio, in ninth paragraph)

* Q3 EPS C$0.40 vs forecast C$0.38

* Cash flow C$0.53/shr vs C$2.35/shr

* Production 276,200 boed vs 355,900 (Adds details)

CALGARY, Alberta, Oct 21 (Reuters) - Husky Energy Inc's (HSE.TO) quarterly profit fell 73 percent as oil and gas prices tumbled from year-earlier levels and production at its offshore Newfoundland oil fields declined, the Canadian oil producer and refiner said on Wednesday.

Husky, controlled by Hong Kong billionaire Li Ka-shing, earned C$338 million ($325 million), or 40 Canadian cents a share, in the third quarter, down from a year-earlier profit of C$1.27 billion, or C$1.50 a share.

The company had been expected to earn 38 Canadian cents a share, according to analysts polled by Thomson Reuters I/B/E/S.

Cash flow, a glimpse into an oil company's ability to fund its projects, fell 77 percent to C$452 million, or 53 Canadian cents a share, from C$2 billion, or C$2.35 a share.

Revenue was C$3.9 billion, down nearly 50 percent from C$7.72 billion.

Husky, known for its extensive Canadian heavy oil holdings, offshore oil projects and refinery interests in Ohio, is the first of Canada's large oil companies to report results for the third quarter, in which benchmark oil prices fell 42 percent from the year before and natural gas prices sank 62 percent.

Analysts expect the oil companies to report large drops in profit on a year-over-year basis, but are looking for some improvements compared with the second quarter.

Husky said production averaged 276,200 barrels of oil equivalent a day in the quarter, down 22 percent from the same period of 2008 as the Terra Nova and White Rose oil platforms in the North Atlantic off the province of Newfoundland and Labrador were temporarily closed for maintenance. It also restricted spending on its natural gas properties because of low prices for the fuel.

The company's refining and marketing arm, which includes a small refinery in northern British Columbia, a 160,000 bpd facility in Lima, Ohio, and a half interest in BP Plc's (BP.L) Toledo, Ohio, refinery, posted improved results over the third quarter of 2008.

Its Canadian refining operations earned C$59 million, up from C$10 million, while its U.S. segment had a C$10 million profit, up from year-earlier loss of C$35 million.

The increase in refining earnings came on higher margins for asphalt and improved reliability at its British Columbia facility, while U.S. margins rose and processing costs dropped.

Shares in Husky fell 17 Canadian cents to C$32.60 on the Toronto Stock Exchange on Wednesday. The stock has dropped 7.7 percent over the past 12 months.

$1=$1.04 Canadian Reporting by Scott Haggett; editing by Rob Wilson

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