(Adds analyst comments, details)
By Jeffrey Jones
CALGARY, Alberta, Oct 21 (Reuters) - Husky Energy Inc’s (HSE.TO) third-quarter profit jumped 65 percent as oil prices hit a record before the global financial meltdown prompted a major pullback, the No. 2 Canadian oil producer and refiner by market value said on Tuesday.
Husky, controlled by Hong Kong billionaire Li Ka-shing, did not give an indication of spending plans for next year as the industry gets set to live within its newly reduced means. But it did not claw back any of its plans for the rest of 2008.
Kicking off the Canadian oil patch’s third-quarter reporting period, Husky said it earned C$1.27 billion ($1 billion), or C$1.50 a share, up from a year-earlier C$769 million, or 91 Canadian cents a share.
It had been expected to earn C$1.52 a share, according to a Reuters Estimates survey.
Cash flow, a glimpse into an oil company’s ability to fund drilling and other projects, was C$2 billion, or C$2.36 a share, up 41 percent from C$1.4 billion, or C$1.67 a share.
Revenue rose 77 percent to C$7.7 billion from C$4.4 billion.
Analysts expect strong third-quarter results from the sector after oil averaged $118.22 a barrel, up 57 percent from a year earlier, and Canadian natural gas averaged C$7.35 per gigajoule, up 49 percent.
However, investors now have their attention fixed on future prospects as the subsequent drop in oil prices and the credit crunch point to miserly 2009 spending budgets.
Some U.S. oil companies, including Chesapeake Energy Corp (CHK.N) and PetroQuest Energy Inc PQ.N have said they are cutting spending for the remainder of this year.
Husky Chief Executive John Lau said in a statement that the company’s strong earnings and cash flow allow it to fund capital spending while paying down debt and building up cash amid the economic uncertainty.
“The one thing they have is a really, really clean balance sheet. They’re really well positioned to be opportunistic, to undertake some programs where others might be more challenged,” FirstEnergy Capital Corp analyst William Lacey said.
Husky shares slipped 18 Canadian cents to C$35.32 on Tuesday on the Toronto Stock Exchange, a drop of 13.5 percent since the start of the third quarter. That compares with a 45 percent drop in the TSX energy subindex.
Lacey attributed that performance to Husky’s high dividend yield compared with its peers.
The company is known for its dominant position in Western Canadian heavy crude production and processing, and offshore operations on Canada’s East Coast and in the South China Sea. It has refineries in Canada and Ohio and sells gasoline under the Husky and Mohawk banners.
In the last quarter, Husky sold its oil for an average C$105.57 a barrel, up 73 percent from last year, and its gas fetched an average C$8.66 per thousand cubic feet, up 67 percent. Prices for its heavy crude more than doubled.
Production was 355,900 barrels of oil equivalent a day, down 4 percent from the third quarter of 2007 and in line with previous targets after the company cut gas drilling last year amid low prices and suffered a delay starting up a producing well at the White Rose project off Newfoundland.
$1=$1.21 Canadian Editing by Rob Wilson