Canadian oil sands producers pump out higher profit
By Jeffrey Jones
CALGARY, Alberta (Reuters) - Profit at Canada's big oil sands producers climbed in the first quarter as prices surged for oil, especially the heavier grades, allowing the industry to shake off the effects of economic meltdown.
Cenovus Energy Inc, in its first full quarter after being spun off by EnCana Corp, generated better-than-expected earnings, partly on a surge in output at Foster Creek, its biggest steam-driven oil sands project.
Imperial Oil Ltd, the country's No. 2 oil producer and refiner, reported a 65 percent jump in net income, as production from such oil sands projects as Cold Lake and Syncrude Canada Ltd held steady amid the stronger oil prices.
Canadian Oil Sands Trust, which has the largest interest in Syncrude, reported a fourfold jump in earnings and lifted its cash distribution by 43 percent.
However the trust, whose investors approved its transition to a corporation at year-end when the government phases out the tax-advantaged trust structure, said it increased the payout beyond its expected cash flow for the year in order to bolster debt in advance of the switch.
"That's in order to increase the (tax writeoffs) available to us after conversion," Marcel Coutu, Canadian Oil Sands' chief executive told unitholders at the trust's annual meeting. "That means the current level of distributions now may not be sustainable."
In the past several months, Cenovus, Imperial and other developers have launched new projects and expanded existing ones, after the recession halted most investments. Continued...