Husky Energy profit jumps 40% on higher oil prices

Husky Energy beat analyst expectations Thursday with a 40 per cent jump in second-quarter profits, driven by higher oil prices and stronger U.S. refining margins.

The energy company, majority-owned by Hong Kong billionaire Li Ka-Shing, said Thursday it earned $605 million or 59 cents per share.

A year earlier, when offshore operations in Newfoundland and Labrador were undergoing maintenance, Husky earned $431 million, or 43 cents per share.

Stripped of one-time items, Husky's adjusted earnings were $610 million, or 62 cents per share, besting the average analyst estimate of 57 cents per share, according to estimates compiled by Thomson Reuters.

Revenues, net of royalties, were just under $6 billion, compared with $5.6 billion a year earlier.

Higher oil prices

Husky garnered an average price of $77.98 per barrel for its products during the quarter, compared to $71.61 a year earlier.

U.S. refining margins for the quarter were US$20.24 per barrel, up substantially from $14.79 during the same 2012 quarter. Husky has interests in two Ohio refineries alongside its partner, BP.

Production was equivalent to 310,000 barrels of oil per day, up from 282,000. Flooding in southern Alberta during late June had some impact on production.

Husky expects to meet its 2013 production targets, although planned maintenance downtime during the second half of the year are expected to crimp volumes.

Find off East Coast

Last month, Norwegian energy giant Statoil announced a new oil discovery off Canada's East Coast, in which Husky owns a 35 per cent interest.

The partners found light, high-quality oil at its Harpoon exploration prospect in the Flemish Pass Basin, in the deep waters off Newfoundland and Labrador.

Harpoon is about 10 kilometres southeast of its Mizzen discovery, in which Husky also holds 35 per cent.

The company also said natural gas from Husky's massive Liwan platform 300 kilometres southeast of Hong Kong is on track to start producing late this year or early next.

The 30,000-tonne above-sea structure has been installed in the South China Sea. On a conference call with analysts earlier this year, CEO Asim Ghosh likened the installation to putting the Palliser Hotel in downtown Calgary to the top of the Calgary tower.

Work is continuing on connecting nine wells to deepwater facilities and finishing 79 kilometres of pipelines to the platform.

Some 3,000 people are working in and around the platform, Ghosh said Thursday.

"If you can imagine it's like a well-practised orchestra, which has so far been hitting all the right notes," he said.

"They're supported by a veritable armada of vessels including tugs, barges, supply and deepwater ships finishing up the facilities that will connect the wells and pipe to the platform."

Oilsands near completion

The first phase of Husky's Sunrise oilsands project is about 70 per cent complete. The $2.5-billion, 60,000-barrel-per-day project is slated to start up in 2014.

Husky stock was up 57 cents or 1.93 per cent to $30.15 at the close of trading in Toronto.