UPDATE 2-Canadian Oil Sands sets 35 pct lower capex budget for 2016
* Sets 2016 capex target of C$295 mln
* Expects C$338 mln free cash flow next year
* Assumes production of 38.6 mln barrels (Adds CEO comments, details, background)
By Sneha Banerjee
Dec 1 (Reuters) - Canadian Oil Sands Ltd set a 2016 capital expenditure budget that was 35 percent lower than what it expected to spend this year, becoming the latest North American energy company to further tighten its belt as oil prices slump.
Canadian Oil Sands said lower production costs at the Syncrude oil sands project - Canada's largest single-source producer of synthetic oil - helped it cut its capex target to C$295 million ($221 million) for 2016 from C$451 million estimated for 2015.
The company, which owns about 37 percent of the Syncrude project, is facing a hostile bid from Suncor Energy Inc, which holds 12 percent of the project.
Canadian Oil Sands will explore options that give its shareholders a "fair value" for its assets, which is not offered by Suncor's bid, Chief Executive Ryan Kubik said on a conference call on Tuesday.
"Syncrude's ability to reduce costs and respond to the lower oil price environment is exceeding market expectations," Kubik said in a statement. Continued...