Husky Energy Inc. (HSE.T), Canada's third-largest integrated energy company, said earnings rose to C$320 million or 38 Canadian cents a share, in the fourth quarter, as cost cutting offset weaker commodity prices and low refining margins.
On an adjusted basis, the Calgary-based company, known for its oil and gas exploration in western Canada, the North Sea and east Asia, and its retail gas station chain across Canada, earned C$334 million, or 39 Canadian cents a share, below analyst expectations of 53 Canadian cents a share.
Husky shares declined 28 Canadian cents, or 1%, to C$26.66 in recent trading in Toronto.
In the year-earlier quarter, Husky's profit was C$231 million, or 27 Canadian cents a share, on a net basis and C$360 million, or 42 Canadian cents a share, on an adjusted basis.
Revenue fell to C$3.61 billion on average production of 291,500 barrels of oil equivalent a day from C$4.7 billion on production of 358,400 barrels of oil equivalent a year earlier. The lower production was mainly due to steeper declines in its White Rose field and delays in bringing its North Amethyst production online; both are offshore fields off Canada's eastern coast. Husky plans to produce between an average of 306,000 and 330,000 barrel of oil equivalents per day in 2010.
Cash flow was C$657 million, or 77 Canadian cents a share, in the latest quarter, compared with C$330 million, or 39 Canadian cents a share, a year earlier.
Husky's refining business suffered like most companies with downstream operations, as a glut of supply and low demand have squeezed margins. Husky took a C$43 million loss on its U.S. refining and marketing business during the quarter--U.S. benchmark refining crack spreads declined to an average of $8.43 per barrel last year, compared with $11.17 a year earlier.
Husky was one of the a handful of companies to recently announce plans to move ahead with development Canada's oil sands region after many projects had been postponed. Husky said it will move ahead with the first phase of its Sunrise oil sands joint venture with BP PLC (BP) in the Athabasca oil sands after finding C$1.5 billion in cost savings from a redesign of the project plans. The first phase, expected to produce 60,000 barrels a day, will cost C$2.5 billion and will take four years to construct.
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