By Chester Dawson
CALGARY, Alberta-- Canadian Oil Sands Ltd. on Thursday reported
a net loss in the first quarter and further cut its 2015 capital
spending plan to cope with a sharp drop in crude oil prices.
The largest owner of the Syncrude oil sands project in Alberta
lost 186 million Canadian dollars ($154.1 million), or 38 Canadian
cents per share, in the three months to March 31. That compared
with a net profit of C$172 million, or 35 Canadian cents a share,
in the year-earlier period.
Canadian Oil Sands blamed a nearly 50% decline in crude prices
and a weaker Canadian currency, which led to a C$160 million
foreign exchange loss on U.S. dollar denominated debt.
"There's no doubt that our business is very sensitive to the
price of oil," Chief Executive Ryan Kubik told shareholders at the
company's annual shareholder meeting, which was also held
Thursday.
The Calgary-based company said its average realized selling
price in the first quarter was C$55.95 a barrel, down from C$105.73
per barrel a year ago. As a result, cash flow fell 78% on the year
to C$76 million, or 16 Canadian cents per share, down from C$357
million, or 74 cents a share, in the year earlier period.
Cost-cutting initiatives pushed down operating expenses 24% on
the year to C$35.71 a barrel in the first three months, the company
said.
Canadian Oil Sands kept its full year production forecast for
Syncrude at 95 million to 110 million barrels, but trimmed its
capital spending budget for the year to C$429 million. That was
down from its previous announcement in January to spend C$451
million and an initial 2015 budget of C$564 million.
Earlier this year, Canadian Oil Sands slashed its dividend
payment 75% to five Canadian cents a share, citing the need to keep
its debt level in check. Mr. Kubik said the company's net debt
currently stands at C$2.2 billion and is poised to rise further
before declining later this year.
"We expect it's going to peak in the second quarter," he said,
noting the cost of servicing that debt load is almost C$5 a
barrel.
Canadian Oil Sands holds a 37% stake in Syncrude, with six other
companies owning the remainder, including the lead operator, Exxon
Mobil Corp. unit Imperial Oil Ltd., and Suncor Energy Inc.,
Canada's biggest oil and gas company.
Exxon and Suncor have been critical of the frequency of
unscheduled maintenance issues that have crimped output levels from
Syncrude's Mildred Lake and Aurora oil sands surface mines. Mr.
Kubik said reliability has been an issue at Syncrude but that those
concerns are being addressed.
"It's fair to say that production levels haven't met our
expectations in recent years. I believe, however, that Syncrude is
on the right track for sustainable, long-term production increases
with fewer unplanned outages," the CEO said.
Write to Chester Dawson at chester.dawson@wsj.com
Access Investor Kit for Suncor Energy, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CA8672241079
Access Investor Kit for Exxon Mobil Corporation
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30231G1022
Subscribe to WSJ: http://online.wsj.com?mod=djnwires