UPDATE 2-Husky Energy profit rises as production increases

Thu Jul 24, 2014 1:34pm EDT

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(Adds details on Sunrise costs, executive quote)

July 24 (Reuters) - Canadian oil and gas producer Husky Energy Inc, controlled by Hong Kong billionaire Li Ka-shing, reported a 4 percent increase in second-quarter earnings on Thursday, helped by an 8 percent rise in production.

Canada's No.3 integrated oil company also said it continues to see "some cost pressure" at its C$2.7 billion ($2.5 billion)Sunrise Energy project in northern Alberta, but declined to provide a cost update until the specifics were nailed down.

"We have to finalize details with the contractor, so I can't give any update on that," said Bob Baird, downstream senior vice president, on a conference call, adding: "We are still seeing our return on the project meeting our original expectations."

Husky first said that costs could climb for phase one of Sunrise, which is set to start up later this year, at an investor day in June. The project, a joint venture with BP Plc , is set to produce some 60,000 barrels-per-day (bpd).

Shares of Husky, which produces oil and gas in Canada and Southeast Asia, were up 0.6 percent at C$34.30 around midday on the Toronto Stock Exchange, as second quarter earnings met analyst expectations.

The Calgary-based company said its net income rose to C$628 million ($586 million), or 63 Canadian cents per share, in the three months ended June 30 from C$605 million, or 59 Canadian cents per share, a year earlier.

Adjusted earnings of 69 Canadian cents per share matched the average forecast, according to Thomson Reuters I/B/E/S.

Production rose to 334,000 barrels of oil equivalent per day, while average realized prices for crude oil, natural gas liquids and bitumen rose to C$90.33 per barrel from C$77.98.

Husky also owns two refineries North America, holds a 50 percent interest in a third, and operates a heavy oil upgrader in Lloydminster, Saskatchewan. Throughput at its refineries and Lloydminster upgrader fell to 304,000 bpd from 317,000.

Cash flow from operations, a measure of the company's ability to pay for new projects, rose about 4 percent to C$1.5 billion, or C$1.52 per share. ($1 = 1.0746 Canadian Dollars) (Reporting by Julie Gordon in Vancouver and Ashutsoh Pandey in Bangalore; Editing by Ted Kerr)

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