CALGARY: Husky Energy’s fourth-quarter profit nearly tripled as production and oil prices rose, the company said, but the results lagged estimates due to higher-than-expected exploration expenses and taxes.

Husky, one of Canada’s largest producers of heavy crude oil, also warned that weakness in pricing for heavy crude grades as well as volatile refining margins have become a factor in 2012.

Still, the company’s integrated structure, which in recent years was bolstered by the addition of two refineries in Ohio, has meant that weak pricing for heavy oil production can be counteracted in the processing of the crude, Chief Executive Asim Ghosh said.

Husky is a dominant producer of heavy crude in Western Canada and also runs an 82,000 barrel a day plant that upgrades it into refinery-ready light oil.

This month, discounts for Canadian heavy and light synthetic oil have widened to the largest in several years as industry-wide production has surged against a backdrop of limited pipeline capacity for export. Heavy crude has sold for as much as $35.50 a barrel under benchmark West Texas Intermediate this week, about double the discount of a month ago.

“We firmly believe in the merits of a balanced portfolio and internal hedges,” Ghosh said. “I think that diversification of the portfolio has proven to be a moderating factor in our results over the past year, and as we get more and more focused on creating those balances, we just want to (protect) the company from such volatilities.”

Husky, controlled by Hong Kong billionaire Li Ka-shing, said net income jumped to C$408 million ($410 million), or 42 Canadian cents a share, from C$139 million, or 16 Canadian cents, a year earlier. Excluding unusual items, the company earned C$481 million, or 50 Canadian cents a share.

The adjusted result lagged the average analyst estimate for the measure of 55 Canadian cents, according to Thomson Reuters I/B/E/S. Cash flow, a key indicator of a company’s ability to pay for new projects, climbed 75 per cent to C$1.2 billion, or C$1.24 a share, from C$685 million, or 80 Canadian cents a share.

Production rose 14 per cent to 318,900 barrels of oil equivalent per day, with strong gains from Husky’s offshore fields in the North Atlantic off Newfoundland: North Amethyst and White Rose.