(Reuters) - MEG Energy Corp (MEG.TO), which operates in Canada’s oil sands, reported a first-quarter profit, compared with a loss a year earlier, as it managed to keep production costs at record lows to help cushion the impact of a slump in oil prices.
MEG said cash flow used in operations, or negative cash flow, rose to C$131 million ($104 million) from C$30 million as realized bitumen prices more than halved.
The prolonged oil slump has forced oil producers, including MEG, to try and preserve cash and reduce debt by selling assets, laying off workers and cutting their dividend as well as capital spending.
MEG, whose key operations are in the Athabasca oil sands region of Alberta, said it was implementing a hedging program to increase the predictability of future cash flows.
The company said it continues to target average production of 80,000-83,000 barrels per day (bpd) this year.
Bitumen production fell about 7 percent to 76,640 bpd in the quarter due to a turnaround a quarter ahead of schedule at MEG’s Christina Lake facilities in northern Alberta.
However, its net operating costs decreased 19 percent to C$8.53 per barrel, in line with the record-low cost in the previous quarter.
That helped the company reported a net profit of C$131 million, or 58 Canadian cents per share, for the three months ended March 31. It had lost C$508 million, or C$2.27 per share, a year earlier.
Revenue fell 37.9 percent to C$290 million.
Reporting by Amrutha Gayathri in Bengaluru; Editing by Gopakumar Warrier and Savio D'Souza