CALGARY, Alberta (Reuters) - Canadian Oil Sands Ltd COS.TO, the largest shareholder in the Syncrude Canada Ltd joint venture, said on Thursday it swung to a loss in the first quarter as oil prices dropped by more than half.
The company, which has a 37 percent stake in the Syncrude project, said its net loss was C$186 million ($154.1 million), or 38 Canadian cents per share, compared with a net profit of C$172 million, or 35 Canadian cents, in the first quarter of 2014.
Canadian Oil Sands said its loss came on sharply lower oil prices, as well as non-cash losses in U.S. dollar debt. It sold its synthetic crude for C$55.95 per barrel on average in the quarter, down from C$105.73.
As oil prices nosedived the company was able to reduce operating costs thanks to lower natural gas and diesel costs as well as cost-cutting initiatives.
Operating costs were C$35.71 per barrel, down 24 percent from C$46.91 per barrel in the year-earlier quarter. The company reduced its 2015 operating cost forecast to $39.48 a barrel from its previous estimate of $40.19 a barrel.
“With a further reduction in our cost estimates for 2015 and the wrap-up of investment in major capital projects, we expect Syncrude to spend about $1.7 billion less in 2015 than last year to run and maintain the operation,” said Chief Executive Officer Ryan Kubik.
The company expects an average 2015 WTI price of $55 a barrel and synthetic crude to trade at a discount of $4 a barrel.
Sales volumes from Canadian Oil Sand’s share of Syncrude’s synthetic crude oil averaged 107,300 barrels per day, up 1.9 percent from 105,300 bpd in the year-prior quarter.
The Syncrude project, which can produce 350,000 barrels per day, has a history of unplanned shutdowns caused by equipment malfunctions, particularly at its complex upgraders, which convert tar-like bitumen stripped from the oil sands into refinery-ready synthetic crude.
The other Syncrude partners are Imperial Oil Ltd (IMO.TO); Mocal Energy; Murphy Oil Corp (MUR.N); Nexen, a wholly owned subsidiary of China’s CNOOC Ltd (0883.HK); Sinopec (0386.HK) and Suncor Energy Inc (SU.TO).
Canadian Oil Sands shares closed at C$13.11 on the Toronto Stock Exchange on Thursday. The shares have fallen 43 percent over the past 12 months compared with a 25 percent drop in the exchange’s energy index.
Reporting by Scott Haggett; Editing by Richard Chang and Cynthia Osterman