CALGARY, ALBERTA–(Marketwired – July 31, 2014) – Canadian Oil Sands Limited (TSX:COS)(OTCQX:COSWF) –
All financial figures are unaudited and in Canadian dollars unless otherwise noted.
“This was a challenging quarter given overlapping outages on two of our three cokers; however, we are pleased that Syncrude executed the maintenance work safely and efficiently, with the final unit returning to service by early July,” said Ryan Kubik, President and Chief Executive Officer. “Syncrude is now focused on a return to more stable operations and the completion of the Mildred Lake Mine Train Replacement project, which remains on budget and is on track to start up in the fourth quarter of the year.”
Highlights for the three months ended June 30, 2014:
- Cash flow from operations for the quarter was $240 million ($0.50 per Share) compared with $340 million ($0.70 per Share) in the same quarter of 2013 as higher realized selling prices and lower current taxes partially offset the impact of lower sales volumes.
- Net income of $176 million ($0.36 per Share) was recorded for the quarter compared with $219 million ($0.45 per Share) in the second quarter of 2013. The decrease in net income reflects lower sales volumes and higher Crown royalties, partially offset by a higher realized selling price and foreign exchange gains on long-term debt in 2014 as opposed to foreign exchange losses in 2013.
- Sales volumes for the quarter averaged 77,064 barrels per day, down from 100,094 barrels per day in the comparative 2013 quarter due to an unplanned outage of Coker 8-1 and the planned turnaround of Coker 8-2.
- Operating expenses were $418 million in the second quarter of 2014 compared with $394 million the same quarter of 2013; the increase was due mainly to maintenance costs associated with the unplanned outage of Coker 8-1, higher natural gas prices, as well as an increase in the value of Syncrude’s long-term incentive plans. On a per barrel basis, operating expenses in the second quarter of 2014 increased to $59.64 from $43.23 during the same period of 2013, reflecting the impact of lower sales volumes on a high proportion of fixed operating expenses.
- The Mildred Lake Mine Train Replacement project reached an estimated 94 per cent completion and is on schedule to be in service during the fourth quarter of this year.
- The Centrifuge Tailings Management project reached an estimated 85 per cent completion and is on schedule to be in service during the first half of 2015.
- COS declared a quarterly dividend of $0.35 per Share, payable on August 29, 2014 to shareholders of record on August 22, 2014.
Highlights
|
Three Months Ended |
Six Months Ended |
|
June 30 |
June 30 |
|
2014 |
|
2013 |
2014 |
|
2013 |
|
|
|
|
|
|
|
| Cash flow from operations1($ millions) |
$ |
240 |
|
$ |
340 |
$ |
597 |
|
$ |
615 |
|
Per Share1($/Share) |
$ |
0.50 |
|
$ |
0.70 |
$ |
1.23 |
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
|
| Net income ($ millions) |
$ |
176 |
|
$ |
219 |
$ |
348 |
|
$ |
396 |
|
Per Share, Basic and Diluted ($/Share) |
$ |
0.36 |
|
$ |
0.45 |
$ |
0.72 |
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
| Sales volumes2 |
|
|
|
|
|
|
|
|
|
|
|
Total (mmbbls) |
|
7.0 |
|
|
9.1 |
|
16.5 |
|
|
17.7 |
|
Daily average (bbls) |
|
77,064 |
|
|
100,094 |
|
91,095 |
|
|
97,901 |
|
|
|
|
|
|
|
|
|
|
|
| Realized SCO selling price ($/bbl) |
$ |
112.04 |
|
$ |
100.90 |
$ |
108.40 |
|
$ |
98.56 |
|
|
|
|
|
|
|
|
|
|
|
| West Texas Intermediate (“WTI”) (average $US/bbl) |
$ |
102.99 |
|
$ |
94.17 |
$ |
100.84 |
|
$ |
94.26 |
|
|
|
|
|
|
|
|
|
|
|
| SCO premium (discount) to WTI (weighted average $/bbl) |
$ |
(0.37 |
) |
$ |
4.69 |
$ |
(1.85 |
) |
$ |
2.85 |
|
|
|
|
|
|
|
|
|
|
|
| Average foreign exchange rate ($US/$Cdn) |
$ |
0.92 |
|
$ |
0.98 |
$ |
0.91 |
|
$ |
0.98 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses ($ millions) |
$ |
418 |
|
$ |
394 |
$ |
863 |
|
$ |
749 |
|
Per barrel ($/bbl) |
$ |
59.64 |
|
$ |
43.23 |
$ |
52.33 |
|
$ |
42.24 |
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures ($ millions) |
$ |
321 |
|
$ |
369 |
$ |
538 |
|
$ |
637 |
|
|
|
|
|
|
|
|
|
|
|
| Dividends ($ millions) |
$ |
169 |
|
$ |
169 |
$ |
339 |
|
$ |
339 |
|
Per Share ($/Share) |
$ |
0.35 |
|
$ |
0.35 |
$ |
0.70 |
|
$ |
0.70 |
|
|
|
|
|
|
|
|
|
|
|
| 1Cash flow from operations and cash flow from operations per Share are additional GAAP financial measures and are defined in the “Additional GAAP Financial Measures” section of our Management’s Discussion and Analysis (“MD&A”). |
|
| 2The Corporation’s sales volumes differ from its production volumes due to changes in inventory, which are primarily in-transit pipeline volumes. Sales volumes are net of purchases. |
|
2014 Outlook
Canadian Oil Sands provides the following key estimates and assumptions for 2014:
- Our estimate of 2014 sales, net of crude oil purchases and transportation expense, has increased to $3,649 million, primarily reflecting a higher than expected realized selling price for the first six months of 2014.
- We have revised our Syncrude production range to 95 to 102 million barrels, reducing the top end by three million barrels to reflect actual results to the end of July, including outages on sulphur processing units. We are maintaining the single-point estimate of 100 million barrels (36.7 million barrels net to COS), which assumes Syncrude production averages about 310,000 barrels per day for the remainder of the year. That production rate is supported by the expectation of robust operating performance from Cokers 8-1 and 8-2, given their recently completed maintenance, and an efficient start-up of the Mildred Lake mine trains in the fourth quarter.
- Operating expenses are estimated at $1,680 million, or an average of $45.73 per barrel.
- Based on these assumptions, our estimated cash flow from operations has increased to $1.3 billion, or $2.76 per Share.
- We also expect net debt to remain within our targeted range of $1 billion to $2 billion at year end, coincident with the substantial completion of our major projects.
More information on the outlook is provided in our MD&A and the July 31, 2014 guidance document, which is available on our web site at www.cdnoilsands.com under “Investor Centre”.