Husky Energy reports Q2 profit, revenue and production up from year ago

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CALGARY – Husky Energy Inc. (TSX:HSE), which is preparing to start up its Sunrise oilsands project, posted a modest increase in second-quarter profits on Thursday.

“Our continued investment in longer-wavelength projects such as heavy oil thermals, resource plays and oil sands provide steady production and more predictable cash flow to support our growth projects in the Asia Pacific and the Atlantic Regions,” said CEO Asim Ghosh.

“Our new thermal developments are delivering well above their nameplate designs and production was further boosted this quarter by strong performance from our resource plays and the start up of the Liwan gas project.”

The first phase of Husky’s Sunrise oilsands project is on track to start up later this year. The process will be gradual, ramping up to full capacity of 60,000 barrels per day over 18 to 24 months.

Last month, Husky said the cost of the central plant at Sunrise is coming in higher than expected.

However, on a conference call Thursday, Husky provided no new details on how much higher costs could climb, as a final estimate has not been completed.

Chief operating officer Rob Peabody said Husky was working with its contractors to nail down a final figure.

He added that technologies such as vacuum insulated tubing and “walking” drilling rigs will help lower costs over the life of the project once it’s started up.

Sunrise Phase 1 was most recently projected to cost $2.7 billion. It will use steam-assisted gravity drainage, or SAGD, technology to extract the bitumen.

Sunrise is part of a joint-venture with BP PLC, which also includes interests in U.S. refineries. A refinery in Toledo, Ohio is being primed to handle bitumen from Sunrise.

Husky earned $628 million or 63 cents per diluted share in the quarter ended June 30, up from $605 million or 59 cents per diluted share a year ago as production increased about eight per cent.

Adjusted net earnings of 69 cents per share were in line with analyst expectations.

Revenue, net of royalties, totalled $6.31 billion, up from nearly $6 billion in the same period last year.

Production averaged 334,000 barrels of oil equivalent per day, up from 310,000 boepd a year ago, while the average realized oil price was $90.33 per barrel, compared with $77.98 in the second quarter of 2013.

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