Canadian oil producer Husky Energy Inc (HSE.TO) reported a net profit of $186 million on Friday, helped by a gain on asset sales and the reversal of a $202 million impairment charge.

Excluding the one-time items, Husky posted a loss of $6 million, which was smaller than expected, helped by lower production costs and higher margins in its refining operations.

"Strong upstream production and U.S. downstream performance has delivered increased funds," Chief Executive Rob Peabody said on an earnings call. "We are continuing to lower our cost structure and expand our margins."

Husky, controlled by Hong Kong billionaire Li Ka-Shing, said overall exploration and production operating costs fell 4 per cent to $13.92 per barrel in the quarter.

Average realized U.S. refining margins more than doubled to US$9.86 per barrel from a year earlier.

The Calgary, Alberta-based company's average production fell 8.4 per cent to 327,000 barrels of oil equivalent per day.

The company reported a net profit of 19 cents per share. Excluding its one-time items, its loss was 1 cent per share, compared with the analysts' average estimate for a loss of 2 cents, according to Thomson Reuters I/B/E/S.

Peabody said the company has focused on fewer oil and gas plays in western Canada and expects to "do some modest portfolio tidy-up throughout this year."

"This has created a more streamlined capital efficient business with reduced reclamation obligations," he said.

Peabody also said production at the company's Tucker thermal oilsands project will ramp up toward 30,000 barrels per day (bpd) through 2018, from 21,000 bpd currently.

Husky is ramping up its operations off the Atlantic coast, including scheduling two more wells for its White Rose asset and two exploration wells for the Flemish Pass basin this year, Peabody said.

Reuters reported on Friday that Husky is weighing the sale of some of the eastern assets, though Peabody declined to comment on the matter.

Husky recorded a loss of $69 million, or 9 cents per share, in the year-earlier quarter.

The company's shares, which had soared 22.6 per cent in value in the 12 months to Thursday's close of $16.40, last traded at US$15.82.