Changing down: Canadian Oil Sands Trust
Canadian Oil Sands plays it safe
Canadian Oil Sands Trust saw third quarter earnings surge on record oil prices in the period, but slashed its quarterly distribution as part of measures to insulate the company from recent turmoil on financial markets.
Canadian Oil Sands reported net earnings of C$604 million (US$479.4 million), or $1.25 per unit, in the third quarter, compared with $361 million, or 75 cents per unit, in the same period last year.
The quarterly distribution to unitholders due on 14 November was cut by 40% to 75 cents per unit to bolster the company’s balance sheet, chief executive Marcel Coutu said.
Nevertheless, Coutu said, the fundamentals of the company’s Syncrude oil sands project were “among the very best” in the industry.
He said current marginal operating costs at the project were about C$35 per barrel.
Cash from operating activities almost doubled to C$921 million from C$484 million previously.
Quarterly revenues rose to C$1.546 billion from C$1.04 billion previously. Year-to-date revenues rose to C$3.78 billion from C$2.63 billion in 2007.
Capital expenditure was C$94 million in the third quarter compared with C$45 million a year ago. Year-to-date capital expenditure was C$195 million from C$128 million in 2007. However, Canadian Oil Sands said its capital outlay had fallen since 2006, when it wrapped up the Syncrude Stage 3 expansion and the changes reflected short term fluctuations depending on the timing of maintenance work.
The company reported a 7% fall in sales volumes in the quarter compared with the same quarter of last year, averaging 116,700 barrels per day in the recent period. It blamed the shortfall on scheduled maintenance of one of the coker’s at syncrude. It said the restart of the affected unit had also been delayed until next week to allow repairs to an associated compressor, but said this was not expected to affect full-year production outlook of 106 million bpd.
The trust said it would maintain its production outlook for the full year at Syncrude of between 103 million and 109 million barrels of oil.
For the year to date, net income surged to C$1.4 billion, or C$2.91 per unit, from C$228 million, or 48 cents per unit in the first nine months of 2007.