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Husky Energy Quarterly Profit Rises on Higher Output, Prices

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July 25 (Bloomberg) -- Husky Energy Inc., the energy producer controlled by Hong Kong billionaire Li Ka-Shing, said second-quarter profit rose 40 percent as it produced more oil and saw higher margins on sales of crude and refined products.

Net income advanced to C$605 million ($587 million) or 59 cents a share, from C$431 million, or 43 cents, a year earlier, the Calgary-based company said in a statement today. Excluding foreign exchange and stock-based compensation expenses and gains related to financial instruments and inventory writedowns, per-share profit exceeded the 58-cent average of 10 analysts’ estimates compiled by Bloomberg.

Husky is among integrated energy companies that can lessen the effects of higher costs to supply its refineries with increased returns on oil output. Husky is seeking to boost equivalent oil production 5 to 8 percent in each of the next four years, helped by the Sunrise oil-sands project and Liwan offshore gas development in the South China Sea.

The financial results beat analyst expectations, while production missed forecasts on lower natural gas output, Randy Ollenberger, an analyst at BMO Capital Markets in Calgary, said in a note to clients today. The company beat estimates for operating cash flow “owing to the higher-than-expected throughput and margin capture by both the U.S. refining operations and the upgrading operations,” he said.

Total upstream production climbed 9.9 percent to 310,000 equivalent barrels of oil a day from the year-earlier quarter. Output at Husky’s refineries and upgrader fell 1.9 percent to 317,000 barrels a day.

Improved Margins

Spot prices for Western Canada Select, the heavy-oil benchmark that includes oil-sands crude, rose 5.4 percent to average $77.48 a barrel in the quarter from a year earlier, according to figures compiled by Bloomberg. U.S. refining margins averaged $20.24 a barrel, compared with $14.79 in the same period of 2012, the company said.

Husky is 70 percent controlled by Li, according to data compiled by Bloomberg. The shares rose 1.9 percent to C$30.15 at the close in Toronto . The company has four buy, 12 hold and one 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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