Husky Energy Inc. : UPDATE : Husky Energy 4Q Earnings Jump On Higher Output, Oil Prices
02/09/2012 | 01:06pm
(Adds executive comment on natural-gas strategy, volatility in Western Canada crude oil pricing.)
--4Q profit triples, but higher costs, low gas prices weigh on results
--CEO Ghosh says no plans to shut in natural-gas production
--Volatile Western Canada crude pricing to cause "lumpy" 2012 profits
By Edward Welsch
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Husky Energy Inc. (HSE.T) said its fourth-quarter earnings tripled on growth in production, higher crude-oil prices and improved refining margins.
Weak natural-gas prices partly offset the positive factors, Canada's fifth largest oil and gas producer by market capitalization said.
Calgary-based Husky's profits of C$408 million or 42 Canadian cents a share fell just short of analyst expectations due to higher-than-expected operating expenses, but were well above the C$139 million or 16 Canadian cents it earned a year earlier.
Despite continued weakness in natural-gas prices, Husky Chief Executive Asim Ghosh said the company had no plans to shut in natural-gas production, as he said Husky's operations are still profitable. The recent drop in natural-gas prices to below $2.50 per thousand cubic feet caused U.S. producers ConocoPhillips (>> ConocoPhillips) and Chesapeake Energy Corp. (>> Chesapeake Energy Corporation) to shut in production last month.
Ghosh also said the volatility in crude prices in Western Canada over the last several weeks would cause Husky's earnings to be "lumpy" in 2012, because the company may record lower production profits in the first quarter, but higher refining earnings in the second quarter. "You make less upstream, but your input costs go down downstream," Ghosh said.
The price of Canadian crude has dropped steeply compared with benchmark U.S. prices this year because of high Western Canadian production and constraints on pipeline and storage capacity in the U.S., Ghosh said.
Husky's fourth-quarter results reflect an impairment charge related to natural-gas properties in Western Canada and higher exploration and evaluation expenses. Excluding those factors, Husky said it would have earned C$532 million in the quarter.
Adjusted earnings of 50 Canadian cents a share compared with the Thomson Reuters mean estimate of 55 Canadian cents.
Husky said fourth-quarter cash flow about doubled to C$1.2 billion. Fourth-quarter output rose 14%.
-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com
(Carolyn King in Toronto contributed to this article.)
