CALGARY – Husky Energy Inc. (TSX:HSE) has tapped into a new booming energy market, selling one million barrels of crude from its White Rose offshore field east of Newfoundland to Indian Oil Corp.
Chief operating officer Rob Peabody told analysts and reporters on Wednesday that it was India’s first purchase of Canadian crude and that White Rose’s light oil has been approved for Indian refineries.
The company’s chief executive officer, Asim Ghosh, added that the fourth-quarter sale to India “did open up a potentially very large new market for us.”
The opportunity will likely grow once TransCanada Corp.’s (TSX:TRP) $12-billion Energy East pipeline between Alberta and New Brunswick starts up, Ghosh said.
He said the cost of sending crude from Western Canada to India via the Atlantic Ocean doesn’t differ much from the Pacific route, which would use proposed pipelines through B.C. such as Enbridge Inc.’s (TSX:ENG) Northern Gateway or Kinder Morgan’s Trans Mountain expansion.
“Once Energy East is up, India becomes a cost competitive destination for Canadian crude.”
Ghosh wouldn’t say whether Husky has committed to ship oilsands crude on Energy East, but that it aims to use a “cocktail” of different pipelines to get to different markets.
Meanwhile, Husky, controlled by Hong Kong billionaire Li Ka-shing, said it’s preparing to start up its massive, multibillion-dollar Liwan offshore natural gas platform in the South China Sea. It’s the largest project in the company’s history.
“It was a long and active typhoon season in the South China Sea, so we had to wait on weather for many weeks to install the final subsea equipment. You may have heard the saying that a pessimist complains about the wind, an optimist expects a change, but a realist adjusts the sails. So we took the realist path and worked around the conditions,” said Ghosh.
Peabody said it’s been seven years since Liwan was discovered.
“That’s a remarkably brief window in the offshore industry, considering all the steps involved, including initial appraisal, the design of the facilities, testing, regulatory approvals, construction and commissioning,” he said.
“When production is achieved shortly, it will flow directly into the fastest growing energy market in the world.”
Husky’s Sunrise oilsands project is also nearing completion, with start-up expected in the second half of 2014.
Also Wednesday, Husky posted a dip in profits during the last three months of 2013 compared to the same period a year earlier, but beat market expectations.
Adjusted quarterly earnings were $412 million, down from $487 million a year earlier.
On a per-share basis, the adjusted earnings of 42 cents beat the average analyst estimate of 38 cents per share, according to Thomson Reuters.
Daily production was 308,000 barrels of oil equivalent per day, down from 319,000 during the same 2012 quarter.
Revenues, net of royalties, were $5.9 billion, up from $5.7 billion a year earlier.
Net earnings dropped to $177 million, or 18 cents per share, from $474 million, or 48 cents per share. That included an after-tax impairment charge of $204 million related to its natural gas properties in Western Canada.
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