CALGARY — Husky Energy said Tuesday it fourth-quarter net income was dragged down by crude pipeline outages in the U.S. Midwest and by scheduled maintenance work at its East Coast offshore operations.
The Calgary-based energy producer, refiner and marketer said net income for the last three months of 2010 was $305 million, or 35 cents per share, down from $320 million, or 38 cents per share a year earlier.
Adjusted for one-time items, profits were $328 million, or 38 cents per share, versus $334 million, or 39 cents per share during the fourth quarter of 2009.
Analysts polled by Thomson Reuters were on average expecting earnings of 41 cents per share.
Revenues grew to $4.7 billion from $3.6 billion last year on higher light crude oil prices, taxes returning to normal levels and improved refining margins partially offset by a strengthening Canadian dollar.
Husky (TSX:HSE) chief financial officer Alister Cowan said a series disruptions on Enbridge Inc.’s U.S. pipeline system took a $17-million bite out of the company’s bottom line during the quarter.
“Overall the fourth quarter results were strong, considering that there were a number of offsetting external factors,” he told a conference call with analysts.
“We did have lingering effects of the Enbridge pipeline disruptions, which continue to have an impact, mainly with respect to higher heavy oil differentials.”
The Enbridge outages — brought on by high-profile pipeline leaks in Michigan and Illinois, and by the maintenance work that followed — meant Canadian crude producers had a tougher time getting their product to their most important market, the United States.
The supply glut north of the border meant the price of heavy crude produced in the oilsands lost value against its lighter counterpart.
Husky was able to avoid shutting down production by moving its crude into other pipelines, but its inventory stuck in transit increased by three million barrels during the quarter, Cowan said.
Overall production was 280,500 barrels of oil equivalent per day, a decline from 288,700 barrels per day in the third quarter. The drop was due to planned maintenance at its SeaRose facility off Canada’s East Coast.
Husky, controlled by Hong Kong billionaire Li Ka-Shing, produces oil and gas in western Canada, off Canada’s east coast and in southeast Asia.
In the oilsands it has a joint-venture with BP plc to develop the Sunrise leases. Production from the first 60,000 barrel-per-day phase of Sunrise is expected to start up in 2014.
Husky also has interests in BP-operated refineries in the United States, and a chain of Husky-branded fuel retail outlets in Canada.
Husky had contemplated spinning off its southeast Asian properties into a new publicly traded company, but ultimately decided late last year to keep the high-growth assets in its portfolio.
Since taking the helm of the Calgary-based company last summer, chief executive officer Asim Ghosh has been focused on growing Husky’s near-term production.
“We plan to increase our return on capital employed by five percentage points over the next five years by investing in higher return projects,” Ghosh said.
“Our plan focuses on increasing production, improving our reserve replacement ratio, containing our operating costs, and reducing our finding and development costs, while producing higher netbacks.”
Husky shares were off 32 cents to $27.66 on the Toronto Stock Exchange Tuesday.