Husky Energy Announces 2005 Third Quarter Results

Husky Energy Inc. reported net earnings of $556 million or $1.31 per share (diluted) in the third quarter of 2005, an 87 percent increase over net earnings of $297 million or $0.70 per share (diluted) in the third quarter of 2004. Included in net earnings for the third quarter of 2005 is a net charge of $54 million related to stock-based compensation and a net gain of $54 million related to U.S. dollar denominated debt translation. Cash flow from operations was $944 million or $2.23 per share (diluted) in the third quarter of 2005, a 65 percent increase compared with $571 million or $1.34 per share (diluted) in the third quarter of 2004. Sales and operating revenues net of royalties were $2.8 billion in the third quarter of 2005, a 26 percent increase compared with $2.2 billion in the third quarter of 2004.

"Our strong operating results in the third quarter of 2005, bolstered by continuing high commodity prices, should lead to a record year for the Company," said Mr. John C.S. Lau, President & Chief Executive Officer, Husky Energy Inc.

Production in the third quarter of 2005 was 303,200 barrels of oil equivalent per day, compared with 324,800 barrels of oil equivalent per day in the third quarter of 2004. Total crude oil and natural gas liquids production was 190,000 barrels per day, compared with 208,100 barrels per day in the third quarter of 2004. Natural gas production was 679.2 million cubic feet per day, compared with 700.4 million cubic feet per day in the third quarter of 2004.

"Production in crude oil and natural gas was slightly below our expectations due to continued wet weather in Western Canada and lengthy operational issues and a maintenance turnaround at Terra Nova," said Mr. Lau. "Overall, we expect our 2005 annual production to be below the range of our guidance by approximately four percent."

During the third quarter of 2005, Husky made good progress on its White Rose project. The SeaRose FPSO is currently undergoing offshore hook-up and commissioning at the White Rose oil field. First oil is anticipated before year-end and will add approximately 67,500 barrels per day of light oil production net to Husky when it attains full productive capacity.

At the White Rose oil field, Husky began drilling two delineation wells to further define reserves in the South and West Avalon Pools. In September, Husky commenced a 750-square-kilometre 3-D seismic program to assist in defining other potential prospects on several blocks in the Jeanne d'Arc Basin. During the quarter, an exploratory well was drilled at the Lewis Hill prospect in the South Whale Basin. The well was plugged and abandoned without testing.

In the Northwest Territories, Husky completed a 2-D seismic program on Block EL 397 containing the Summit Creek B-44 discovery and announced plans to drill two wells in the Summit Creek area in January 2006. One of the wells will assess the size of the pool discovered by Summit Creek B-44. The other exploration well will test a separate undrilled prospect.

In Central Alberta, Husky is continuing its expansion program to develop coal bed methane or natural gas from coal in the Horseshoe Canyon Formation. Husky and its joint venture partner plan to drill approximately 400 wells in the Fenn Rumsey area near Drumheller in 2006.

At Husky's Tucker oil sands project near Cold Lake, Alberta facility construction continues on schedule and is now 43 percent complete. Drilling of the 30 horizontal well pairs is on target. For Husky's Sunrise 200,000 barrels per day oil sands project near Fort McMurray, Alberta, Husky expects to receive regulatory approval by the end of 2005 or early 2006.

In the South China Sea, Husky drilled Wushi 17-1-1, an exploration well on Block 23/15 in the Beibu Gulf. Hydrocarbons were encountered in the Weizhou Formation at a depth of 2,397 metres. The well was sidetracked to determine the extent of the hydrocarbon zone and the results of the well are still being evaluated. Husky has identified several prospects in the Beibu Gulf and is currently drilling an exploration well on the adjacent Block 23/20.

At Husky's heavy oil Upgrader in Lloydminster, Saskatchewan, a major turnaround was completed. The Upgrader achieved a record of 4.3 million working hours without a lost time accident, which is approximately 9.5 years of operation. The turnaround resulted in the completion of major maintenance as well as the first half of the debottlenecking work that will increase capacity in 2006 to 82,000 barrels per day from 77,000 barrels per day.

Following the successful completion of the first phase of the Clean Fuels Project, Husky is now producing low sulphur gasoline at its Prince George Refinery. The second phase of the project will enable the Refinery to produce low sulphur diesel and increase overall capacity to 12,000 barrels per day from 10,000 barrels per day by mid 2006.

Husky's net earnings for the first nine months of 2005 were $1,334 million or $3.15 per share (diluted), a 71 percent increase over net earnings of $781 million or $1.84 per share (diluted) for the same period in 2004. Cash flow from operations in the first nine months of 2005 was $2,588 million or $6.11 per share (diluted), a 50 percent increase from $1,728 million or $4.07 per share (diluted) for the same period in 2004. Sales and operating revenues net of royalties in the first nine months of 2005 were $7.5 billion, compared with $6.4 billion in the same period of 2004.

Production in the first nine months of 2005 was 310,500 barrels of oil equivalent per day, compared with 325,200 barrels of oil equivalent per day for the same period in 2004. Total crude oil and natural gas liquids production was 196,900 barrels per day, compared with 210,800 barrels per day in the first nine months of 2004. Natural gas production was 681.6 million cubic feet per day, compared with 686.5 million cubic feet per day for the same period in 2004.
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