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(Corrects subhead and paragraph 13 to show Husky's adjustedprofit missed analysts' estimates, not beat)
* 4th-qtr earnings C$0.48/share vs C$0.42 last year
* Adjusted earnings unchanged at C$0.50/share
* Production rises to 319,300 boe/d vs 318,900 boe/d
Feb 6 (Reuters) - Husky Energy Inc, Canada's No.3oil producer and refiner, reported a 16 percent rise infourth-quarter net profit as cheaper crude oil fattened refiningmargins.
Husky, along with compatriots Suncor Energy Inc andImperial Oil Ltd, has taken advantage of a wide gulfbetween the price of oil in the glutted North American interiorand expensive imported crude.
That spread has been building as booming production in bothCanada and the United States floods the market in the U.S.Midwest and Midcontinent regions, the major market for Canadiancrude.
Realized refining margins for the quarter averaged $16.24per barrel, compared with $14.80 a year earlier.
Husky, controlled by Hong Kong billionaire Li Ka-shing, inDecember forecast higher production for the current year, as itincreased oil production and cut back on natural gas.
The company said it expected to produce 310,000 to 330,000barrels of oil equivalent per day (boe/d) in 2013.
Husky, a dominant producer of heavy crude in Western Canada,is also known for its Husky and Mohawk-branded gas stations.
Production at its 60,000 barrel per day Sunrise oil sandsproject, a joint venture with BP Plc, in northern Albertais expected to begin in 2014.
Field facilities for the first phase of the project areabout three-quarters complete, the company said in a statement.
Husky said in December that the Sunrise project would costC$2.7 billion, 8 percent above its previous estimate.
With regulatory approvals in place for a total of 200,000bbls/day, development of the next phase of Sunrise is underwaywith early engineering work scheduled for completion in 2013,Husky said on Wednesday.
ADJUSTED PROFIT MISSES ESTIMATES
Husky said its net income rose to C$474 million ($474.9million), or 48 Canadian cents per share, in the quarter fromC$408 million, or 42 Canadian cents per share, a year earlier.
Adjusted earnings, which exclude most one-time items, wasunchanged at 50 Canadian cents per share, but missed analysts'average expectation of 56 Canadian cents per share, according toThomson Reuters I/B/E/S.
Cash flow, a key measure of the company's ability to pay fornew projects and drilling, rose 18 percent to C$1.41 billion, orC$1.44 per share.
Production averaged 319,300 barrels of oil equivalent perday (boe/d), almost flat from a year earlier.
Shares of Husky, which has a market value of C$30.55billion, closed at C$31.37 on Tuesday the Toronto StockExchange. ($1 = 0.9982 Canadian dollars) (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing byDon Sebastian, Ted Kerr and Roshni Menon)
