Husky Falls as Close Call With Iceberg Suspends Operations

(Bloomberg) -- Husky Energy Inc. tumbled the most in two years after the Canadian energy company suspended operations on its SeaRose offshore vessel in the Atlantic, after receiving a reprimand for a close call with an iceberg.

An iceberg came with a quarter of a nautical mile of SeaRose on March 29, when it was laden with 340,000 barrels of crude and 84 workers, according to the Canada-Newfoundland and Labrador Offshore Petroleum Board. The board concluded that Husky has “serious issues” with its ice-management systems and organizational decision-making, and the company won’t be permitted to resume operations on the vessel until the body is confident the problems have been addressed.

Shares in the Calgary-based company tumbled 6.6 percent to C$17.80 at 9:42 a.m. in Toronto after falling 13 percent earlier, the biggest intraday drop since January 2016. Suspension of operations could affect Husky’s near-term free cash flow and may affect timing of the reinstatement of its dividend, analysts say.

Husky, the Calgary-based oil company controlled by Hong Kong billionaire Li Ka-Shing, said it will take all necessary steps to comply with the board’s order. The SeaRose floating production, storage and offloading vessel accounts for about 27,000 barrels of output a day.

“We could have and should have responded differently according to the pre-existing plan, and we will learn from this incident,” Chief Executive Officer Rob Peabody said in a statement.

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