The difference in the financial performance between the first quarter 2004 and the first quarter 2003 is primarily due to the stronger Canadian dollar relative to the U.S. dollar on our realized commodity prices and U.S. dollar denominated debt translation. As mentioned in Husky Energy's Annual Report, the decline in the U.S. dollar compared with other major currencies is less favorable to the Company because oil and gas prices are largely denominated in U.S. dollars. On a quarter to quarter comparison, the Canadian dollar strengthened to, on average, U.S. $0.759 from U.S. $0.663, an increase of 14 percent. Regarding the U.S. dollar denominated debt translation, the first quarter of 2004 included a net loss of $9 million or $0.02 per share, compared with a net gain of $92 million or $0.22 per share in the first quarter of 2003.
"Husky's results in the first quarter of 2004 showed the impact of a stronger Canadian dollar compared with the first quarter of 2003. This impact offset the increase in the WTI benchmark oil price and compounded the effect of a lower NYMEX natural gas price," said John C.S. Lau, President & Chief Executive Officer of Husky Energy.
Total production in the first quarter of 2004 averaged 324,400 barrels of oil equivalent (boe) per day, a four percent increase compared with 312,100 boe per day in the first quarter of 2003. Total crude oil and natural gas liquids production was 212,100 barrels (bbls) per day, compared with 213,500 bbls per day in the first quarter of 2003. Natural gas production was 674 million cubic feet (mmcf) per day, a 14 percent increase from 591 mmcf per day in the same period last year.
Husky's capital expenditures in the first quarter of 2004 were $582 million, compared with $500 million in the first quarter of 2003. Husky's planned capital expenditures for 2004 remain at $2.1 billion, including $585 million for the East Coast projects.
The Company continued to make good progress on its major projects during this quarter. The White Rose offshore project has reached another milestone. The SeaRose FPSO, the project's floating production, storage and offloading vessel, arrived in Marystown, Newfoundland and Labrador after a 55-day voyage from South Korea. "With the arrival of the SeaRose FPSO, we now look forward to the final phase of construction leading to first oil production in late 2005 or early 2006," Mr. Lau said.
In the oil sands, the Company has applied for provincial government approval for the 30,000 bbls per day Tucker project and submitted public disclosure documents for the 200,000 bbls per day Sunrise project to the Alberta Energy and Utilities Board.
Internationally, the first of three new development wells at the Wenchang oil field in the South China Sea was brought on stream in March.
During the first quarter of 2004, Husky announced that it is proceeding with the engineering and design work for the construction of a 130 million litre per year ethanol production facility at Lloydminster, Saskatchewan. The Company is also proceeding with plans to upgrade the Prince George, B.C. light oil refinery to meet low sulphur fuel specifications and expand production. Both projects are expected to be on stream in 2005.
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