(Reuters) - MEG Energy Corp MEG.TO, a major player in the Canadian oil sands, reported a bigger-than-expected quarterly loss on Thursday as a rise in production and record low operating costs failed to make up for a slump in crude prices.
MEG, whose main operations are in the Athabasca region of Alberta, said its cash flow from operations fell by about 93 percent to C$7 million ($5.3 million) in the second quarter as bitumen prices fell along with U.S. benchmark crude prices.
U.S. crude prices Clc1 averaged about 21 percent lower in the quarter compared with a year earlier.
MEG said its realized bitumen prices fell to C$30.93 per barrel in the quarter from C$44.54 in the same period of 2015.
However, the company’s net operating costs fell to a record low of C$7.43 per barrel from C$9.43, while bitumen production rose 16.5 percent to 83,127 barrels per day (bpd).
“Our second-quarter production levels have been close to record highs and we are currently seeing net operating costs of under C$7.50 to produce a barrel of oil,” Chief Executive Bill McCaffrey said in a statement.
MEG said it expected to invest up to C$30 million in growth projects later in the year, but kept intact its capital budget of C$170 million.
The company also reduced its non-energy operating cost estimate for 2016 to a range of C$6.00 to C$7.00 per barrel from C$6.75 to C$7.75.
Calgary-based MEG reported a net loss of C$146 million ($111.2 million), or 65 Canadian cents per share, for the three months ended June 30, compared with a profit of C$63 million, or 28 Canadian cents per share, a year earlier.
The company’s operating loss of 43 Canadian cents per share compared with analysts’ average estimate of 27 Canadian cents, according to Thomson Reuters I/B/E/S.
Revenue fell 7.6 percent to C$513 million.
Reporting by Amrutha Gayathri in Bengaluru; Editing by Sunil Nair and Ted Kerr