Husky Energy Inc. recorded a 135 percent increase in net earnings and a 69 percent increase in cash flow from operations in 2011, driven by strong production growth, higher realized crude oil prices and improved upgrading and refining margins. Production for the year was at the high end of guidance at an average of 312,500 barrels of oil equivalent per day (boe/day), compared to 287,100 boe/day in 2010.
Results in the fourth quarter contributed to the momentum, with net earnings increasing 194 percent compared to the same period a year ago, as production grew 14 percent. Production in the fourth quarter averaged 318,900 boe/day.
"The positive results in the fourth quarter capped a solid year of performance for the Company," said CEO Asim Ghosh. "We were able to capitalize on improved crude oil prices and refining margins by increasing production and by maintaining high operational performance in our upgrading and refining facilities."
In addition to the strong financial performance, the Company achieved a number of key milestones in bringing forward major projects in its three growth pillars in the Asia Pacific Region, Oil Sands, and the Atlantic Region. The Liwan Gas Project in the South China Sea was sanctioned with significant progress made towards production; major construction and drilling activity commenced on the Sunrise Energy Project in the oil sands; and first production was achieved at the West White Rose satellite field offshore Newfoundland.
Key 2011 and fourth quarter highlights include:
Performance Targets Achieved
Annual average production of 312,500 boe/day was at the high end of the guidance range of 290,000 to 315,000 boe/day. In the fourth quarter production averaged 318,900 boe/day as a result of increased production at the North Amethyst field and additional volumes coming on stream from a pilot at the West White Rose field, both in the Atlantic Region.
"We are pleased with the progress we made to increase near-term production and our 2012 capital expenditure program is designed to build on that momentum," said Ghosh. "As we have previously indicated, production will be impacted in 2012 as a result of scheduled offstations for the SeaRose Floating Production Storage and Offloading (FPSO) vessel and for the Terra Nova FPSO. Our production growth will not be in a straight line as a result of such maintenance events and new major projects coming on stream, but overall, we remain comfortable with our target of compound annual growth of three to five percent through 2015."
Fourth-quarter earnings and cash flow were higher compared to the same quarter in 2010, driven by increased production, higher realized crude oil prices and stronger refining margins. This was partially offset by continued weakness in natural gas prices.
Average realized crude oil pricing in the fourth quarter was $88.97 per barrel, compared to $68.87 in the same period of 2010. U.S. refining market crack spreads were stronger in the quarter with the realized refining margin averaging U.S. $14.80 per barrel, compared to U.S. $10.97 per barrel a year ago. U.S. realized refining margins were significantly higher for the year as a whole, at U.S. $17.60 per barrel, compared to U.S. $7.29 per barrel in 2010.
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