Husky reports $71M Q1 profit
CALGARY Husky Energy says the company will continue to delay reinstating its dividend because of uncertainty in the oil markets and recently slumping world crude prices.
Some analysts had predicted the Calgary-based energy company would use the release of its first-quarter results Friday to reinstate the dividend it cancelled in late 2015 because of low oil prices. Prices started to rise late last year but have been volatile in recent weeks, hitting a five-month low of US$43.76 on Friday.
However, chief executive Rob Peabody said while Husky has its net debt under control and is generating enough free cash flow, it’s unclear whether commodity prices going forward will support a sustainable dividend.
“There’s uncertainty around whether an extension of the OPEC (Organization of Petroleum Exporting Countries) cuts, if in fact they are extended, will be enough to offset the impact of growing U.S. shale production,” Peabody said. “In short, the market’s not yet stable or in balance.”
Peabody said he’s also concerned about whether President Donald Trump’s administration will erect trade barriers to Canadian oil exports to the U.S.
Benchmark West Texas Intermediate oil prices have fallen from just under US$55 per barrel to just over US$46 in the past month.
In a report earlier this week, GMP FirstEnergy commodity analyst Martin King said oil prices “continue to trend sideways” as traders are confused over whether oil inventories in the U.S. and around the world will tighten and lead to higher oil prices.
Husky said Friday it earned $71 million, or six cents per share, in the first quarter on higher commodity prices and improved refining margins, versus a loss of $458 million or 47 cents per share a year ago. Gross revenue totalled $4.58 billion, up from $2.68 billion a year ago.
Husky realized $41.58 per barrel of oil equivalent ( boe) in the first quarter, up from $25.02 per boe a year earlier.
The higher prices helped make up for a dip in production, which fell 2.1 per cent to an average of 334,000 boe per day, Reuters reported.
Average realized U.S. refining margins at Husky, which owns one refinery in Ohio and holds a 50 per cent joint venture partnership on another with BP Plc, more than doubled to $8.33 per barrel in the quarter.
The two companies also share ownership of the Sunrise oil sands project in northern Alberta. The plant has been ramping up to full production capacity at a slower rate than initially expected, but Husky said volumes are at 40,000 barrels per day, in line with the most recent forecasts.