CALGARY, ALBERTA–(Marketwired – Oct. 30, 2014) – Canadian Oil Sands Limited (TSX:COS)(OTCQX:COSWF) –
All financial figures are unaudited and in Canadian dollars unless otherwise noted.
“We have achieved substantial completion on construction of the $3.9 billion Mildred Lake Mine Train Replacement, on time and under budget, and are now in the commissioning and start-up phase,” said Ryan Kubik, President and Chief Executive Officer. “This signals that Syncrude’s major capital projects are winding down and the associated financing risk is coming out of the business.”
Mr. Kubik adds: “After many years of engineering and construction, we are looking forward to the successful integration of the new Mildred Lake Train asset and its industry-leading technology into Syncrude’s operation.”
Highlights for the three months ended September 30, 2014:
- Cash flow from operations for the quarter was $302 million ($0.62 per Share) compared with $340 million ($0.70 per Share) in the same quarter of 2013 as a result of lower realized selling prices and higher operating expenses partially offset by higher sales volumes.
- Net income of $87 million ($0.18 per Share) was recorded for the quarter compared with $246 million ($0.51 per Share) in the third quarter of 2013. The decrease in net income was primarily a result of foreign exchange losses in 2014 as opposed to foreign exchange gains in 2013, as well as lower sales, net of crude oil purchases and transportation expense.
- Sales volumes for the quarter averaged 87,787 barrels per day, compared with 84,250 barrels per day in the comparative 2013 quarter.
- Operating expenses were $385 million in the third quarter of 2014 compared with $357 million the same quarter of 2013. The increase in third quarter operating expenses over the comparative quarter was due mainly to higher natural gas prices and additional maintenance associated with outages on sulphur processing units. On a per barrel basis, operating expenses in the third quarter of 2014 were $47.73 compared with $46.15 during the same period of 2013, reflecting the higher overall operating expenses, partially offset by higher sales volumes.
- The Mildred Lake Mine Train Replacement project reached an estimated 99 per cent completion and is on schedule to be in service by the end of this year.
- The Centrifuge Tailings Management project reached an estimated 90 per cent completion and is on schedule to be in service during the first half of 2015.
- COS declared a quarterly dividend of $0.35 per Share, payable on November 28, 2014 to shareholders of record on November 21, 2014.
| Highlights |
|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
|
2014 |
|
|
2013 |
|
2014 |
|
|
2013 |
| Cash flow from operations1($ millions) |
$ |
302 |
|
$ |
340 |
$ |
899 |
|
$ |
956 |
|
Per Share1($/Share) |
$ |
0.62 |
|
$ |
0.70 |
$ |
1.86 |
|
$ |
1.97 |
|
| Net income ($ millions) |
$ |
87 |
|
$ |
246 |
$ |
435 |
|
$ |
642 |
|
Per Share, Basic and Diluted ($/Share) |
$ |
0.18 |
|
$ |
0.51 |
$ |
0.90 |
|
$ |
1.32 |
| Sales volumes2 |
|
|
|
|
|
|
|
|
|
|
|
Total (mmbbls) |
|
8.1 |
|
|
7.8 |
|
24.6 |
|
|
25.5 |
|
Daily average (bbls) |
|
87,787 |
|
|
84,250 |
|
89,980 |
|
|
93,301 |
|
| Realized SCO selling price ($/bbl) |
$ |
102.58 |
|
$ |
112.55 |
$ |
106.49 |
|
$ |
102.83 |
|
| West Texas Intermediate (“WTI”) (average $US/bbl) |
$ |
97.25 |
|
$ |
105.81 |
$ |
99.62 |
|
$ |
98.20 |
|
| SCO premium (discount) to WTI (weighted average $/bbl) |
$ |
(3.14 |
) |
$ |
2.51 |
$ |
(2.28 |
) |
$ |
2.74 |
|
| Average foreign exchange rate ($US/$Cdn) |
$ |
0.92 |
|
$ |
0.96 |
$ |
0.91 |
|
$ |
0.98 |
|
| Operating expenses ($ millions) |
$ |
385 |
|
$ |
357 |
$ |
1,248 |
|
$ |
1,106 |
|
Per barrel ($/bbl) |
$ |
47.73 |
|
$ |
46.15 |
$ |
50.81 |
|
$ |
43.43 |
|
| Capital expenditures ($ millions) |
$ |
222 |
|
$ |
413 |
$ |
760 |
|
$ |
1,050 |
|
| Dividends ($ millions) |
$ |
170 |
|
$ |
170 |
$ |
509 |
|
$ |
509 |
|
Per Share ($/Share) |
$ |
0.35 |
|
$ |
0.35 |
$ |
1.05 |
|
$ |
1.05 |
| 1 |
Cash 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”). |
| 2 |
The 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:
- We have reduced the top end of the forecast annual Syncrude production range by two million barrels for an updated range of 95 to 100 million barrels with a single point estimate of 97 million barrels. This reflects actual results to date and assumes an efficient start-up of the Mildred Lake mine trains in the fourth quarter.
- Offsetting the impact of the lower production estimate is an increase in the forecast annual realized SCO selling price. This reflects the strong realized SCO selling price in the third quarter, partially offset by the recent declines in the price of oil.
- We have increased our estimate of 2014 Crown royalties by $103 million, as heavy oil differentials have narrowed in the second half of 2014, resulting in higher estimated deemed bitumen values used to calculate Crown royalties.
- Our revised 2014 Outlook for cash flow from operations remains at approximately $1.3 billion and net debt at September 30, 2014 was $1.7 billion. We anticipate that net debt will end the year at similar levels in the upper end of our $1 billion to $2 billion net debt targeted range. With spending on major capital projects coming to an end, COS is positioned to fully fund its business in this current environment of lower crude oil prices. We will continue to assess dividend levels in the context of crude oil prices, Syncrude operations and our objective of targeting net debt in the range of $1 billion to $2 billion, while aiming to absorb short-term market volatility over several quarters.
Canadian Oil Sands expects to release its 2015 budget in early December. The specific date and conference call details will be provided in a future press release.
More information on the outlook is provided in our MD&A and the October 30, 2014 guidance document, which is available on our web site at www.cdnoilsands.com under “Investor Centre”.
The 2014 Outlook contains forward-looking information and users are cautioned that the actual amounts may vary from the estimates disclosed. Please refer to the “Forward-Looking Information Advisory” in the MD&A section of this report for the risks and assumptions underlying this forward-looking information.