CALGARY, Alberta (Reuters) - First-quarter profit at Canadian Oil Sands Trust COS_u.TO, which has the biggest stake in the Syncrude Canada oil sands venture, rose nearly 14 percent as surging oil prices more than made up for lower production due to operational problems.
The trust, which owns 37 percent of Syncrude, the world's biggest oil sands mining and synthetic crude operation, also said on Monday it and its partners are studying prospects for a much larger expansion than previously expected.
Syncrude has said it would lift output to 500,000 barrels a day around 2016, but a recent boost in its oil sands resource tally has prompted evaluation of a bigger project, Canadian Oil Sands Chief Executive Marcel Coutu said.
A jump to as much as 700,000 barrels a day is possible, while maintaining a resource life of 50 years, he said.
The capacity after its last expansion, the C$8.4 billion Stage 3 project, is 350,000 barrels a day.
"It will depend a lot on: What kind of technologies are we going to select? Where are we going to implement them? Over what period of time? How can we most economically extract this resource?" Coutu told reporters after the annual meeting.
"It's going to take a year or so before we get really definitive."
In 2007, independent evaluators concluded the operation's northern Alberta leases could contain 12.7 billion barrels of oil sands resources, up from the last estimate of 9 billion.
Before a major project, the next push will be to lift output to today's capacity, which has proven tricky due to unplanned outages of equipment, such as coking units.
In the first quarter, Canadian Oil Sands earned C$298 million, or 62 Canadian cents a unit, up from year-earlier C$262 million, or 54 Canadian cents a unit.
That just beat the average profit forecast of 61 Canadian cents a unit among analysts polled by Reuters Estimates.
The trust also said it will boost its quarterly payout to investors by 33 percent to C$1 per unit, starting May 30.
Despite the production shortfall, cash flow, used to fund payouts to investors, more than doubled to C$441 million, or 75 Canadian cents a unit, from C$202 million, or 30 Canadian cents. Revenue rose 35 percent to C$907 million.
Canadian Oil Sands's share of Syncrude's output was 99,181 barrels a day, down 9 percent from a year earlier.
The lower production, due to bitterly cold weather that froze instruments and forced the plant to shut for almost a week last winter, pushed operating costs up 52 percent to C$35.93 a barrel.
Still, soaring oil prices shielded the results from much of the impact of operational mishaps. The trust's average oil prices rose by 47 percent to C$101.31 a barrel.
Meanwhile, Coutu declined to comment on Syncrude's talks with the Alberta government, aimed at moving to operation to the new royalty regime that takes effect in Alberta in 2009.
Syncrude and Suncor Energy (SU.TO) had contracts that locked in the old system until 2016. Suncor signed a new deal last January, but Syncrude is still in talks.
Canadian Oil Sands units, which have climbed 50 percent over the past 12 months, rose 91 Canadian cents to C$46.32 on the Toronto Stock Exchange on Monday.
Additional reporting by Scott Haggett; Editing by Rob Wilson