Husky Energy boosts net profits 194 per cent in Q4 as production grows

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The Husky Energy towers in Calgary, Monday, Feb. 1, 2010. THE CANADIAN PRESS/Jeff McIntosh

CALGARY - Husky Energy Inc. reported a near-tripling in fourth-quarter profits on Thursday, and said it's in no rush to find a partner to help develop some of its natural gas lands in Alberta.

The major Calgary-based oil and gas producer (TSX:HSE) said its fourth quarter profits jumped 194 per cent to $408 million on higher production and a 35 per cent increase in revenues.

Meanwhile, executives told a conference call that no decision has been made on a joint-venture for its Ansell properties in the Cardium formation in central Alberta.

"While we're looking a joint venture process, one would only happen if it adds additional value to what we can do ourselves," said chief financial officer Alister Cowan.

"So clearly we're looking at that. No decisions have been made, and when we have something we'd obviously tell you about it."

Husky said last summer it was on the hunt for a potential link-up in Ansell, and that an open marketing process for a share of the asset was underway.

Ansell is what's called a "liquids-rich" play, meaning it contains natural gas liquids used in the plastics and petrochemical industries.

With North American natural gas prices the lowest they've been for several years, many companies have been gravitating towards areas rich in liquids. They tend to more closely track oil prices, which have been in the robust US$100-per-barrel range lately, than they do dry natural gas prices.

Husky is focusing little attention on dry natural gas these days, but it isn't shutting in wells that are currently producing it.

The company currently uses about a third of the natural gas it produces to fuel its refineries and steam-driven oilsands projects, and that will only increase over time as its Sunrise oilsands project comes on stream, said Cowan.

"But we do continually monitor the environment," he said.

"But at this price we don't have any plans to shut in gas on the basis that it's still cash-flow positive."

Earlier, Husky said its fourth-quarter earnings of $408 million amounted to 42 cents per share, compared to $139 million or 16 cents per share a year earlier.

Net revenues soared to more than $5.8 billion from nearly $4.3 billion.

The results missed analyst estimates of 55 cents per share and revenues of $6.3 billion, according to Thomson Reuters.

Production in the quarter grew 14 per cent to 318,900 oil equivalent barrels a day.

For the full year, Husky earned net profits of $2.2 billion, or $2.34 per share, compared with $947 million, or $1.05 a share in 2010. Annual revenues jumped to $23.4 billion from $17.1 billion.

"The results of the past year demonstrate the company is on course and producing the desired results," chief executive Asim Ghosh said on the conference call.

"And while we are pleased with the gains made, we do not by any stretch of the imagination believe it is time to declare victory. We recognize that the industry has had some help over the past year from strong oil prices, but there's a lot of work ahead and we remain on the task."

Husky, controlled by Hong Kong billionaire Li Ka-Shing, produces oil and gas in Western Canada, off Canada's east coast and in southeast Asia.

In December, Husky laid out a $4.7-billion budget for 2012, with large chunks of that capital going towards its Sunrise oilsands project, operations in southeast Asia and bread-and-butter oil and gas holdings in Western Canada.

The energy company plans to spend $610 million on Sunrise, part of a joint-venture with British oil giant BP PLC, as construction ramps up and its 2014 targeted startup date approaches. The first phase of Sunrise will produce 60,000 barrels per day and is expected to cost $2.5 billion.

Husky said Thursday the project is on schedule and that drilling costs are trending on budget. More than half of the 49 well pairs for the steam-assisted gravity drainage project are complete.

Just over $1 billion is earmarked for Husky's southeast Asia operations, with its Liwan field set to start production in 2013 or 2014.

Husky had contemplated spinning off its southeast Asian properties into a new publicly traded company, but ultimately decided in late 2010 to keep the high-growth assets in its portfolio.

Husky is also looking to boost its foundation in Western Canada, with $1 billion in capital expenditures planned for the Western Canadian Sedimentary Basin.

Husky also has interests in BP-operated refineries in the United States, and a chain of Husky-branded fuel retail outlets in Canada.

Shares in Husky rose 27 cents to $25.15 in Thursday afternoon trading on the Toronto Stock Exchange.