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Energy Summary for Oct. 27, 2016

2016-10-27 19:52 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery added 54 cents to $49.72 on the New York Merc, while Brent for December added 28 cents to $50.26 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.50 to WTI ($35.22), unchanged. Natural gas for December added five cents to $2.78. The TSX energy index added 3.67 points to close at 210.57.

Li Ka-Shing's Husky Energy Inc. (HSE) lost 35 cents to $14.91 on 5.51 million shares, after releasing underwhelming third quarter financials and appointing a new president and chief executive officer. On the surface, the financials looked outstanding, with Husky swinging to a profit of nearly $1.4-billion from a loss of about $4.1-billion a year earlier. Most of the profit, however, was thanks to a nearly $1.5-billion after-tax gain on asset sales, while last year's numbers were affected by a $3.82-billion impairment charge. Excluding unusual items, Husky lost 10 cents a share in the most recent quarter, worse than analysts' predictions of eight cents a share. Production of 301,000 barrels of oil equivalent a day was just under analysts' predictions of over 306,000 barrels a day, and cash flow of 48 cents a share was well below predictions of 57 cents a share. Husky still found plenty of reasons for back-patting. "... [We] have built a strong balance sheet, with net debt now in line with our target ... [and we] have achieved, ahead of schedule, our target of having more than 40 per cent of production generated by low-sustaining-capital projects by the end of 2016," cheered the current president and CEO, Asim Ghosh. Of course, net debt is still hefty at $4.1-billion, and although Husky been doing well at its low-capital projects -- notably its Lloydminster thermal projects and Sunrise oil sands asset in Western Canada -- its overall production is barely meeting guidance. The company has forecast production of 315,000 to 345,000 barrels a day this year. So far (up to Sept. 30), it has averaged just 319,000 barrels a day. Husky says it can still meet its guidance.

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