February 5, 2015 / 11:06 AM / 4 years ago

Higher bitumen sales help MEG Energy post operating profit

(Reuters) - Canadian oil sands producer MEG Energy Corp (MEG.TO) reported a fourth-quarter operating profit, compared with a loss a year earlier, helped by an increase in bitumen sales and lower costs.

MEG’s results were also helped by a 32 percent rise in average bitumen realization to C$50.48 ($40.30) per barrel.

Canadian crude prices have benefited due to increased crude-by-rail and capacity of pipelines, which have helped stop a glut of crude building up in Alberta.

In December, Enbridge Inc (ENB.TO) opened its 600,000 barrel-per-day Flanagan South pipeline, which links up with the Seaway Twin pipeline in Cushing, Oklahoma, to provide a direct route to the world’s largest refining complex on the U.S. Gulf Coast.

Cash operating netback, the net revenue received by MEG after adjusting for operating and transportation costs, rose to C$35.56 per barrel from C$23.78 per barrel.

Net operating costs averaged C$10.13 per barrel, compared with C$11.22 per barrel, helped by lower non-energy costs.

MEG, whose main operations are in the southern Athabasca oil sands region of Alberta, said its operating cash flow, a key indicator of its ability to fund new projects, rose to C$134 million ($107 million) in the quarter ended Dec. 31, from C$23 million a year earlier.

The company, which has committed capacity of up to 100,000 barrels-per-day on Enbridge’s new Flanagan South pipeline, said bitumen sales almost doubled to 35, 990 barrels of oil equivalent per day (boepd), compared with 70,116 boepd.

The company’s net operating income was C$8 million, or 8 Canadian cents per share, in the fourth quarter, compared with a loss of C$33 million, or 15 Canadian cents per share, a year earlier.

Revenue rose to 76 percent to C$615 million.

Reporting by Nia Williams in Calgary, Anet Josline Pinto and Anannya Pramanick in Bengaluru; Editing by Maju Samuel

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