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Husky Quarterly Profit Falls on Lower Prices as Output Rises

May 7 (Bloomberg) -- Husky Energy Inc., the Canadian energy producer controlled by Hong Kong billionaire Li Ka-Shing, said first-quarter profit fell 9.5 percent on lower prices for crude oil, gas liquids and bitumen.

Net income declined to C$535 million ($533 million) or 54 cents a share, from C$591 million, or 60 cents, a year earlier, the Calgary-based company said in a statement today. Adjusted for one-time items including foreign currency exchange and stock-based compensation, per-share profit was 3 cents more than the 53-cent average of 11 analysts’ estimates compiled by Bloomberg.

Husky posted a “modest” beat of analyst expectations on operating earnings, Greg Pardy, a Toronto-based analyst at RBC Capital Markets, said in a note today. Margins of C$33.17 per barrels of oil equivalent were 5.5 percent lower than he expected, Pardy wrote in the note.

The company’s average realized price for oil, gas liquids and bitumen fell 22 percent to C$68.32 a barrel from the year earlier, according to the statement. The price of Western Canada Select, the Canadian heavy crude benchmark, fell 12 percent from a year earlier to average $66.99 a barrel in the quarter, according to data compiled by Bloomberg.

Higher Output

As Husky seeks to increase oil production 5 percent to 8 percent in each of the next four years, the company is boosting the amount of western Canadian crude it can process at refineries in the U.S. Midwest. Husky benefits from lower costs of Canadian heavy crude at its refineries and upgrader, which converts it into light oil.

Output averaged the equivalent of 321,000 barrels of crude a day from 320,000 a year earlier. Sales fell 2.8 percent to C$5.6 billion, from C$5.77 billion last year.

Husky, which is 70 percent owned by Li according to data compiled by Bloomberg, released results before the start of regular trading on North American markets. The shares fell 0.6 percent to C$29.75 at the close in Toronto. They have one buy, 16 hold and three sell recommendations from analysts.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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