Canadian Oil Sands fourth-quarter profit tumbles, cuts dividend

Thu Jan 29, 2015 5:23pm EST
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By Nia Williams and Scott Haggett

CALGARY, Alberta (Reuters) - Canadian Oil Sands Ltd COS.TO, the largest-interest owner in the Syncrude oil sands project, slashed its dividend and further reduced 2015 capital spending on Thursday as fourth-quarter profit dropped 87 percent due to lower oil prices.

The company cut its dividend to 5 Canadian cents a share for the first quarter of 2015, down from 20 Canadian cents.

It was the second dividend cut in less than two months after a 43 percent reduction in December, triggered by benchmark crude oil price CLc1 slumping by more than half since last June.

Canadian Oil Sands said net income in the quarter was C$25 million ($19.8 million), or 5 Canadian cents per share, down from C$192 million, or 40 Canadian cents, in the year-prior quarter.

The company plans to further reduce its capital budget to C$451 million, down from C$564 million announced in December and sharply lower than the estimated C$1.1 billion spent in 2014.

It has identified potential savings of C$260 to C$400 million, about 10 to 15 percent, in operating, development and capital costs.

"While the potential cost savings announced today are substantial, Syncrude is continuing to examine the longer-term opportunities to achieve a sustainable, lower cost structure," said Chief Executive Ryan Kubik.

The Syncrude mining and upgrading project in northern Alberta is a joint-venture of seven partners - Canadian Oil Sands, Imperial Oil (IMO.TO: Quote), Mocal Energy, Murphy Oil (MUR.N: Quote), Nexen, Sinopec (0386.HK: Quote) and Suncor Energy (SU.TO: Quote).   Continued...