Husky Energy Inc. (HSE.TO) fell the most in nearly five months after posting what its chief executive officer called "tough and noisy" fourth-quarter results, which were hurt by a plunge in Canadian crude prices and a spill in its offshore operations.
Net earnings dropped 68 per cent from a year earlier, to $216 million, as falling crude and fuel prices led to lower profitability in its North American operations and pipeline constraints hurt Canadian light oil prices, weighing on its upgrading margins. Husky also was hurt by a longer-than-expected maintenance period at its Lima refinery and an oil spill that shut production from its SeaRose offshore vessel.
The shares closed down 7.51 per cent - or $1.20 - at $14.77 in Toronto. Calgary-based Husky had risen 13 per cent this year through Monday, compared with a 15 per cent gain for the S&P/TSX Energy Index.
In the current quarter, Husky is trying to manage through Alberta’s curtailment plan, which it objected to because its refining operations were benefiting from the cheaper feedstock.
The company still objects to the program and said it’s being asked to cut a few per cent more of its production in February and March than it was in January, without giving a specific figure, even though the government reduced the province-wide amount of output that’s being curtailed. Husky’s Alberta production is about 20 per cent less than it would be without the plan, executives said on a conference call.
The company said the curtailment has been a net negative, despite how it has increased Canadian heavy oil prices, as Husky was fully protected by its refining operations.
“It’s absolutely a net negative because we were completely capturing the full value of the value chain prior to curtailment,” Chief Executive Officer Rob Peabody said on a conference call. “And all that’s happened is we’re producing less barrels now.”
Advertisement