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Husky Energy Beats Analyst Estimates — Is it a Buy?

Canadian integrated oil major Husky Energy (TSX:HSE) delivered some impressive financial results for the fourth quarter and full year 2013 on Thursday. Despite fourth quarter 2013 adjusted net earnings sliding 18% compared to the same quarter in 2012 to $412 million or 42 cents per share, Husky still beat the analyst consensus forecast of 38 cents per share.

These strong results can be attributed to higher average crude prices, which over 2013 were up by 4% in comparison to 2012. The company’s strategic growth plan or three pillars strategy implemented in 2010 also continues to boost operational results.

Average daily crude production for 2013 shot up 3% in comparison to 2012, while Husky’s 2013 average operational netback per barrel of oil produced – a key measure of profitability – jumped 7% in comparison to the previous year.

The stronger operational performance also boosted cash flow — an important measure of an oil company’s ability to fund new projects and drilling – which in comparison to 2012 spiked 4% to $5.2 billion or $5.31 per share.

Solid project pipeline will continue to boost operational performance
I expect Husky’s solid financial performance to continue over the short-term with the company set to bring a range of projects online throughout 2014 and 2015.

Not only is its flagship Liwan gas project in Indonesia remain on schedule, but the Sunrise heavy oil project in Canada is expected to commence production in the second half 2014, boosting production by 70,000 barrels of crude per day.

The Rush Lake thermal oil project also remains on track with first oil expected by the second half of 2015 and is expected to produce 10,000 barrels of heavy crude per day. Another two Canadian heavy oil projects were also sanctioned at Adam East and Vawn, which are expected to start production in 2016 and produce around 10,000 barrels of heavy crude a day each.

Husky also brought a new well online in the offshore Atlantic Ocean White Rose field, which is now contributing average daily production of 14,000 barrels a day. And further drilling is set to be undertaken in the White Rose field throughout 2014.

The successful initiation of these projects over the next two years will significantly boost production. And in an environment with higher crude prices, Husky’s revenue and ultimately bottom line will continue to grow, leaving the company well positioned to continue rewarding investors.

Thanks to these solid financial and operating results, Husky rewarded investors by confirming its final quarterly dividend of 30 cents per share, giving Husky a particularly attractive dividend yield of 3.6% for the year.

Foolish bottom line
It was only a short-time ago that many investors, analysts and market pundits had written Husky off on the back of continuing sluggish operational and financial performances. But clearly the company’s growth strategy is now delivering dividends for investors and will continue to do so for the foreseeable future.

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Fool contributor Matt Smith does not own shares of any companies mentioned.

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