CALGARY – Lower production due in part to unexpected repair work at Canada’s newest oilsands mine was offset by near-record high production at one of its oldest in the third quarter, Imperial Oil (TSX:IMO) reported Friday.
The Calgary-based company said its Kearl mine project averaged 159,000 barrels per day of bitumen in the three months ended Sept. 30, down 12 per cent from 181,000 bpd in the same period last year.
Two financial analysts said in notes to investors that Imperial detected cracks in a component of its ore crusher unit during planned maintenance and had to extend downtime to make repairs. Imperial spokeswoman Killeen Kelly initially refused comment but later confirmed that cracks were found in a crusher chain and it had to be replaced.
Kearl was built in two 110,000-bpd phases with the second phase starting production in mid-2015. The first phase, which began ramping up in 2013, was shut down for several weeks in late 2014 due to what Imperial said were mechanical issues that caused vibrations in its ore crusher unit. It’s unclear whether the latest issues were in the first or second phase of the project.
Meanwhile, production at 38-year-old Syncrude Canada, in which Imperial holds a 25 per cent stake, delivered 85,000 bpd, up from 59,000 barrels in the year-earlier period, due to improved reliability.
Imperial warned Friday that if low average prices for bitumen through the first nine months of 2016 persist until year-end, it could be forced to temporarily remove 2.6 billion barrels from proved reserves at Kearl under U.S. Securities and Exchange Commission rules. That’s more than half of the project’s total proved reserves of 4.6 billion barrels.
It said it doesn’t expect a reserve writedown to affect operations or the outlook for future production volumes.
A $716-million gain on the sale of its 497 service stations in the third quarter helped Imperial achieve a $1-billion quarterly profit for the first time since the second quarter of 2014, the company said. It sold the stations for a total of $2.8 billion to five fuel distributors.
Net income more than doubled to $1.003 billion, or $1.18 per diluted share, for the third quarter — up from $479 million, or 56 cents per diluted share, in the same quarter last year.
Revenue for the three months ended Sept. 30 was $7.44 billion, up from $7.16 billion in the third quarter of 2015.
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Note to readers: This is a corrected story. A previous version said revenue in the third quarter of 2015 was $7.15 million.