July 23, 2008 / 9:57 PM / 10 years ago

Soaring energy prices boost Husky profit 89 percent

CALGARY, Alberta (Reuters) - Husky Energy Inc’s (HSE.TO) second-quarter profit surged a better-than-expected 89 percent as Canada’s No. 3 oil producer and refiner reaped rewards from sky-high oil and gas prices, it said Wednesday.

However, Husky said it now expects its oil and gas production to be up to 7 percent below its previous forecast for the year due to operational problems offshore Newfoundland and in the Alberta oil sands.

The company, controlled by Hong Kong billionaire Li Ka-shing, earned C$1.36 billion ($1.35 billion), or C$1.61 a share, up from year-earlier C$721 million, or 85 Canadian cents a share.

That beat an average forecast among analysts polled by Reuters Estimates by 5 Canadian cents a share.

Cash flow, a glimpse into an oil company’s ability to fund development, rose 66 percent to C$2.1 billion, or C$2.46 a share, from C$1.3 billion, or C$1.48 a share.

Revenue was C$7.2 billion, up 128 percent.

Husky and its rivals were buoyed in the quarter by oil prices that soared 90 percent to a record quarterly average of $123.80 a barrel. Natural gas prices in Canada also surged, averaging C$9.68 per gigajoule, a 44 percent gain from 2007.

The company sold its own crude for an average C$106 a barrel, nearly double the price of a year earlier. It sold its gas for C$9.14 per thousand cubic feet, up 32 percent.

Husky is best known for its extensive heavy oil production and processing holdings as well as its Western Canadian chain of Husky and Mohawk-brand gas stations.

It has expanded its refining business with ownership of two U.S. Midwest refineries.

Chief Executive John Lau said those facilities, in Lima and Toledo, Ohio, contributed to Husky’s record quarterly results.

At Lima, the company has completed an engineering evaluation to determine how to boost its capacity to process heavier oil and will now choose the best approach to reconfigure the plant, it said.

Husky and its 50-50 partner in the Toledo refinery, BP Plc (BP.L) plan to retool that plant to process crude derived from Husky’s Sunrise oil sands project in Alberta.

In the quarter, Husky produced 359,100 barrels of oil equivalent a day, down 5.3 percent from 379,100 the year before.

It said it now expects production for the year to be 5 percent to 7 percent below its previous target of 385,000 to 410,000 barrels of oil equivalent a day.

It blamed the shortfall on severe ice conditions off Canada’s East Coast, which suspended output at the White Rose offshore field in the first half of the year, and a slow increase in volumes at the Tucker oil sands project.

Husky shares fell 84 Canadian cents to C$40.51 on the Toronto Stock Exchange. Li interests own about 70 percent of the company.

($1=$1.01 Canadian)

Reporting by Jeffrey Jones and Scott Haggett; editing by Rob Wilson

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