December 3, 2010 / 3:09 AM / 8 years ago

UPDATE 1-Canadian Oil Sands sees higher 2011 production

* Sees production up about 5 pct from 2010

* Forecasts C$3.2 bln 2011 revenues

TORONTO, Dec 2 (Reuters) - Canadian Oil Sands Trust COS_u.TO, which has the biggest stake in Syncrude Canada Ltd, said on Thursday it expects higher production next year from the world’s largest oil sands mining project.

The trust, which owns a 36.74 per cent working interest in the Syncrude joint venture, said it was budgeting annual Syncrude production of 110 million barrels, or 301,400 barrels per day, with a range of 102 million to 115 million barrels for 2011.

This works out to 40.4 million barrels, or 110,700 barrels per day, for Canadian Oil Sands from the sprawling operation, located north of Fort McMurray, Alberta.

The production outlook for 2011 represents a five million barrel, or roughly five percent, increase over Canadian Oil Sands’ expected 2010 production.

“We expect to see fewer unplanned outages and a progressive improvement towards our ultimate goal of consistent production at design capacity,” Chief Executive Marcel Coutu said in a statement.

Revenues, net of crude oil purchases and transportation expense, are expected to be about C$3.2 billion ($3.2 billion) next year. The company estimates operating costs of around C$1.5 billion in 2011 — about C$1.3 billion in production costs and C$200 million in purchased energy.

Non-production costs are estimated to rise by around C$30 million over the 2010 outlook to C$145 million due to a higher 2011 capital program.

Capital costs are expected to total about C$930 million in 2011, with C$620 million of spending on major projects and C$310 million in regular maintenance and other projects.

Canadian Oil Sands is estimating cash from operating activities of about C$1.3 billion, or C$2.59 per share in 2011.

After deducting forecast capital expenditures, it see C$330 million in remaining cash from operating activities for the year, or 68 Canadian cents per share.

The trust, which will convert to a corporation at year-end, said its dividend policy would be similar to its previous approach to payouts, with dividends determined on a quarterly basis.

Canadian Oil Sands expects to declare a dividend in January of 20 Canadian cents per share.

The trust said it would aim to keep net debt at roughly the current level over the next few years. ($1=$1 Canadian) (Reporting by Jeffrey Hodgson; Editing by Clarence Fernandez)

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