(Reuters) - Canadian oil sands producer MEG Energy Corp (MEG.TO) forecast a strong second half as it expects production to begin at the next phase of its flagship project in the fourth quarter.
The company said production in phase 2B of the Christina Lake project in Alberta would exceed initial estimates of 35,000 barrels of oil per day (bopd).
The project currently produces 22,000 bopd in Phase 2.
MEG has been boosting production when new routes open up to transport heavier Canadian crude to the lucrative U.S. market.
The company is also expanding capacity at its Access Pipeline, which connects the Christina Lake project to Edmonton in Alberta. Combined with its Stonefell Terminal in Edmonton, a 900,000-barrel-storage facility expected to go online in the fourth quarter, MEG can access markets in east Canada and U.S. Midwest.
Production rose 6 percent to 32,144 bopd in the second quarter.
The rise in production, coupled with higher realized prices for bitumen, pushed up operating profit by 23 percent to C$13.6 million ($13.25 million), or 6 Canadian cents per share.
The realized price for each barrel of bitumen rose 18.4 percent to C$53.98 in the quarter, MEG Energy said.
Cash flow from operations, a key indicator of a company’s ability to pay for new projects, rose 32 percent to C$79.2 million as differentials between the U.S. benchmark crude and Canadian heavy crude narrowed.
Net loss widened to C$62.31 million, or 28 Canadian cents per share, due to a foreign exchange loss on its U.S. dollar-denominated debt.
MEG took a C$82.4 million pretax charge on its U.S. dollar-denominated debt as the Canadian dollar decreased in value, the company said.
Reporting by Krithika Krishnamurthy in Bangalore