UPDATE 3-Husky boosts profit, dividend as oil soars

(Adds increased dividend)

CALGARY, Alberta, April 21 (Reuters) - First-quarter profit at Husky Energy Inc (HSE.TO: Quote, Profile, Research) jumped 36 percent despite a big drop in production as crude oil prices surged to record levels, Canada's No. 3 oil explorer and refiner said on Monday.

Husky also boosted its quarterly dividend 21 percent to 40 Canadian cents a share, giving investors including major shareholder Li Ka-shing, the Hong Kong billionaire, rewards from the high commodity prices and mounting cash.

Its net income climbed to C$887 million ($882 million), or C$1.04 a share, from year-earlier C$650 million, or 77 Canadian cents a share.

The earnings beat the average forecast among analysts polled by Reuters Estimates by 2 Canadian cents .

Cash flow, an indicator of the company's ability to pay for new projects and drilling, rose 16 percent to C$1.54 billion, or C$1.82 a share, from C$1.32 billion, or C$1.56 a share.

Revenue rose 6.9 percent to C$5.09 billion.

Canadian petroleum producers are benefiting from oil prices that averaged a record $97.82 a barrel over the quarter -- more than two-thirds above the average of a year earlier -- as well as from a natural gas price rebound following a long downturn.

Husky is known for oil and gas production in Western Canada, off Newfoundland and in Southeast Asia.