Husky has announced 2008 net earnings of $3.8 billion or $4.42 per share (diluted), an increase of 17 percent from $3.2 billion or $3.79 per share (diluted) in 2007. Cash flow from operations increased to $6.0 billion or $7.03 per share (diluted) in 2008, a 10 percent increase compared with $5.4 billion or $6.39 per share (diluted) in 2007. Sales and operating revenues, net of royalties, were $24.7 billion for the year, an increase of 59 percent over the $15.5 billion in 2007.
"Husky's consistent focus on financial discipline, and project execution positioned the Company to perform well. Notwithstanding the impact of commodity prices and the deteriorating economic environment in the fourth quarter, Husky still posted a new record for earnings, cash flow and revenue," said John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. "2009 will be a challenging year for the industry. Husky has engineered steps to contain costs and optimize business operations."
Fourth Quarter Results
Financial performance in the fourth quarter was significantly affected by the economic environment and the decline in global commodity prices. These factors impacted the upstream business through lower realized prices and the U.S. downstream business through reductions in inventory values and lower refining crack spreads.
Husky's fourth quarter net earnings were $232 million or $0.27 per share (diluted), compared with $1.1 billion or $1.26 per share (diluted) in the same period of 2007. Adjusted Net Earnings in the fourth quarter amounted to $614 million or $0.72 per share (diluted), compared with $709 million or $0.84 per share (diluted) in the same quarter of 2007.
Cash flow from operations was $339 million or $0.40 per share (diluted) in the fourth quarter of 2008, compared with $1.4 billion or $1.68 per share (diluted) in the same period of 2007. Sales and operating revenues, net of royalties, were $4.7 billion in the fourth quarter of 2008, compared with $4.8 billion in the fourth quarter of 2007.
In the fourth quarter, total production averaged 358,400 barrels of oil equivalent per day, compared with 367,500 barrels of oil equivalent per day in the fourth quarter of 2007. Total crude oil and natural gas liquids production was 263,200 barrels per day, compared with 264,500 barrels per day in 2007. Natural gas production was 571 million cubic feet per day, compared with 618 million cubic feet per day in the same period of 2007. The decrease in natural gas production was mainly due to a strategic decision to reduce drilling in response to low natural gas prices.
Refining crack spread margins were very weak in the fourth quarter due to the economic downturn in the U.S. The main drivers of U.S. refining performance were 1) the 56 percent drop in crude oil price (WTI) which started the fourth quarter at U.S. $100.64 per barrel and fell 56 percent to U.S. $44.60 per barrel by year end, and 2) the delay between when crude is purchased and when refined products are produced and sold.
Husky has a solid balance sheet and is in a strong financial position. Total long-term debt including the current portion at December 31, 2008 was $1,957 million compared with $2,814 million at December 31, 2007. The total debt was partially offset by cash and cash equivalents of $913 million resulting in net debt of $1,044 million at December 31, 2008. Debt to cash flow from operations decreased to 0.3 times at the end of the year compared with 0.5 times at the 2007 year-end. The ratio of debt to capital employed improved to 12 percent at December 31, 2008 from 19 percent at December 31, 2007.
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