Husky announces record profits

LIMA - Husky Energy's announcement on second-quarter earnings confirmed what most of us suspected - these are good days to own an oil company.

The Canadian energy company, owner of the Lima Refinery, saw profits soar by a better-than-expected 89 percent in the second quarter of the year. That translates to earnings of $1.35 billion, compared to $721 million earned in the same quarter last year.

The record profits come at a time when oil prices closed in on $140 a barrel and pump prices rose just as quickly. Husky President and Chief Executive Officer John C.S. Lau said Thursday those factors, along with a strong showing by the company's Lima and Toledo refineries, helped push the company forward.

"Husky achieved record results in the second quarter of 2008 in terms of earnings, cash flow and revenue in a strong commodity price environment," said John C.S. Lau. "In the second quarter, our U.S. refining facilities also contributed to our strong results. In addition, excellent progress was made in the development of our major growth projects and we continued to strengthen our financial position."

Those profits come despite reported drops in the company's oil and gas production, most resulting from maintenance and weather conditions at its Canadian East Coast operations. Current operational problems offshore Newfoundland and in the Alberta oil sands pushed the company to reduce forecasts for the year by 7 percent, Lau said.

The Lima Refinery drew a mention in the report. The company recently completed the conceptual stage of the reconfiguration for the Lima Refinery to process heavier feedstocks. Lau confirmed plans to retool the Lima plant to refine heavy crude, as opposed to the bitumen it originally had considered sending to Lima. The company's Toledo refinery will now receive the bitumen feedstock.

Among industry analysts present during a Thursday afternoon conference call with Lau, the most important number was the company's cash flow, the figure that foretells a company's ability to fund development. Husky's cash flow rose 66 percent to about $2 billion, up from $1.3 billion last year.

In the second quarter of 2008, total production averaged 359,100 barrels of oil equivalent per day, compared with 379,100 barrels of oil equivalent per day in the second quarter of 2007, a reduction of 5 percent. Total crude oil and natural gas liquids production was 256,100 barrels per day, compared with 276,500 barrels per day in 2007, according to the company report,