CALGARY - Oil and gas producer Husky Energy has posted strong third-quarter profits thanks to increased production and higher sales of refined products. Net earnings for the three months ended Sept. 30 were $156 million, or 36 cents a share, up 13 per cent from $138 million, or 41 cents a share, in the year-earlier quarter.

"Our increased net earnings, cash flow and revenue resulted from higher upstream production, strong upgrading operations and sales growth in the refined products segment."

The decline in profits compared with the preceding quarter was caused by "lower prices for natural gas, lower upgrading differentials and lower pipeline and commodity marketing income," the company said.

"These negative factors were partially offset by higher prices for and production of crude oil, higher sales volume of refined product, lower depletion, depreciation and amortization expense and lower interest expense."

For the first nine months of the year, earnings rose 181 per cent to $652 million, $1.53 a share, from $232 million, 76 cents a share, in the same period of 2000.

Nine-month cash flow surged to $1.7 billion from $798 million, as sales rose to $5 billion from $3.3 billion.

Husky Energy (TSE:HSE) slipped 10 cents to $17.80 in early trading Tuesday on the Toronto Stock Exchange.