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Hate it or love it, when the going gets tough in Canada’s economy, there’s always oil. Collectively, Suncor Energy Inc., Imperial Oil Ltd. and Husky Energy Inc., Canada’s largest integrated oil companies, reported a profit haul on Thursday of more than $3.1-billion for the third quarter.
The three companies’ results were so good against a backdrop of general economic gloom, oil and gas price volatility, pipeline bottlenecks, rising costs, assorted controversies, that analysts were surprised and even ecstatic.
“Financials blow away The Street,” CIBC World Markets Inc.’s Andrew Potter said of Imperial’s $1.040-billion income, up from $859-million in the same period last year.
Mr. Potter also praised Suncor for reducing oil sands cash costs to the lowest level since 2009, leading to a profit of $1.555-billion, up from $1.287-billion last year, and record cash flow of $2.740-billion, up from $2.721 billion.
“Suncor reduced its cash cost guidance for 2012 from $37-$40 a barrel to $35.50-$37.50 a barrel (the first time we ever recall Suncor reducing cost guidance!)” Mr. Potter said in a report.
RBC Dominion Securities Inc. analyst Greg Pardy praised Husky for beating estimates.
“We expect Husky to outperform the broader energy group this morning given a headline beat,” said Mr. Pardy. Husky booked a profit of $526-million, up from $521-million last year.
They all did well. Husky stock was up 3.6%; Suncor was up 3.5%, and Imperial was up 3.1%.
How are they doing it?
Canada’s integrated companies, while getting hurt by low Canadian crude prices in their upstream units, are more than making up for them in their refineries, where cheap oil means they make bigger margins.
More broadly, they have made it a priority to run their businesses well, keep an eye on costs, emphasize safety and have a lot of experience with complex, diversified operations that come in handy to navigate unsteady times.
For the rest of this column, please go to the National Post website: http://business.financialpost.com/2012/11/01/oil-giants-impress-with-hefty-3-1b-profit-haul-despite-economic-gloom/