3 Min Read
(Adds Kearl details, analyst comment, updates stock price)
By Nia Williams
Feb 2 (Reuters) - Imperial Oil Ltd's Kearl oil sands project expansion will start ahead of schedule, the company said on Monday, in the latest sign that weak crude prices are failing to dent oil sands growth.
The company, majority-owned by Exxon Mobil Corp, also posted a 37 percent fall in quarterly profit, hurt by lower oil prices and weaker refining and marketing margins.
Imperial, Canada's second-largest integrated oil producer and refiner, said construction on the Kearl expansion in northern Alberta is essentially complete. The oil sands mining project will start up in the third quarter of 2015, roughly three months ahead of its previous forecast.
The Kearl expansion will eventually produce 110,000 barrels per day (bpd), doubling potential production capacity. However, Kearl Phase One has struggled to meet full output targets since it opened roughly two years ago.
Bitumen production from Kearl in the fourth quarter rose 27 percent from the same period a year earlier to average 66,000 bpd. Output was affected by the mine being shut for three weeks in November after a "vibration issue" was detected in the facility's ore-crushing unit.
Mike Dunn, an analyst at FirstEnergy Capital, said Imperial did not give an outlook on when the Kearl expansion will reach full capacity.
"Given that Phase One is still not running at nameplate capacity two plus years after start-up ... you would expect the ramp up of the expansion to capacity volumes would be much faster but we do not know," he said.
Imperial expects overall spending at about C$4 billion ($3.2 billion) in 2015, 29 percent less than in 2014.
It joins a list of Canadian and U.S. oil and gas producers that have scaled back capital spending plans for 2015, following a nearly 60 percent decline in oil prices since June.
Imperial's net income fell to C$671 million, or 79 Canadian cents per share, in the fourth quarter, from C$1.06 billion, or C$1.24 per share, a year earlier.
Profit was, however, higher than the 76 Canadian cents per share that analysts estimated.
Total production fell 4 percent to average 315,000 barrels of oil equivalent per day.
Synthetic crude selling prices fell 10.5 percent to an average of C$82.04 per barrel, while the average realized price for bitumen fell about 1.8 percent to C$52.37 per barrel.
Imperial shares were last up 4.4 percent at C$49.44 on the Toronto Stock Exchange. ($1 = C$1.27) (Reporting by Nia Williams in Calgary, Alberta; Additional reporting by Anet Josline Pinto; Editing by Kirti Pandey, Savio D'Souza and Jeffrey Benkoe)