July 27, 2009 / 10:35 PM / 9 years ago

UPDATE 1-Canadian Oil Sands profit falls, but payout raised

* Distribution raised C$0.10 to C$0.25/unit

* Earnings fall 90 percent $0.10/unit

* Cuts Syncrude ‘09 output estimate to 104 mln bbls

* Better production performance seen in second half (In U.S. dollars unless noted)

CALGARY, Alberta, July 27 (Reuters) - Canadian Oil Sands Trust COS_u.TO, which holds the biggest stake in Syncrude Canada Ltd, said on Monday its second-quarter profit tumbled 90 percent as oil prices sank and output fell due to heavy maintenance at the world’s biggest oil sands venture.

But expectations of better production performance in the last half of this year prompted Canadian Oil Sands to raise its quarterly distribution by 10 Canadian cents a unit to 25 Canadian cents, it said.

The trust, which has a 37 percent stake in Syncrude, earned C$46 million ($43 million), or 10 Canadian cents a unit, down from year-earlier C$497 million, or C$1.04 a unit.

The results beat analysts’ average profit estimate of 1 Canadian cent per unit.

Cash from operating activities, used to pay distributions to unit holders, fell to negative C$44 million, or 9 Canadian cents a unit, from C$413 million, or 86 Canadian cents a unit, in the second quarter of last year.

The profit drop came as oil prices tumbled amid the recession and stockpiles rose. Oil averaged $59.79 a barrel in the quarter, down 52 percent from the year before.

Meanwhile, Syncrude conducted a longer-than-expected maintenance at the newest of its coker units, which turn the extra-heavy crude from the Alberta oil sands into refinery-ready synthetic oil. An older coker unit also ran at below-capacity rates, Canadian Oil Sands said.

“With this major work completed and mining operations on an improving trend from the bitumen constraints experienced in the last 12 months, we are looking forward to a strong second half of the year and progress towards achieving design capacity rates,” Canadian Oil Sands Chief Executive Marcel Coutu said.

The trust said its share of Syncrude’s production fell 22 percent to 76,000 barrels per day from 98,000 bpd.

Due to the drop in output, operating costs averaged C$50.23 per barrel, up about 20 percent from the year-prior period.

Canadian Oil Sands Trust said it has lowered its estimate for Syncrude’s overall output this year to 104 million barrels from 109 million to reflect the maintenance work, and raised its operating cost estimate for the year to C$35 a barrel.

The trust’s units rose 40 Canadian cents to C$27.04 on Monday on the Toronto Stock Exchange. The units have dropped 43 percent over the past 12 months, while the exchange’s main energy index has fallen 29 percent over the same period.

$1=$1.08 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson

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