July 29, 2008 / 9:31 PM / in 10 years

Canadian Oil Sands profit surges with oil prices

CALGARY, Alberta (Reuters) - Canadian Oil Sands Trust COS_u.TO, owner of the biggest stake in Syncrude Canada Ltd, surged back into the black in the second quarter as oil prices jumped to a record, it said on Tuesday.

Canadian Oil Sands, which has a 37 percent interest in Syncrude, the world’s biggest oil sands mining and synthetic crude operation, also raised its quarterly distribution by 25 percent to C$1.25 a unit, despite reporting lower production and rising operating costs.

The increase follows a 33 percent hike at the end of the first quarter.

The trust earned C$497 million ($483 million), or C$1.04 a unit, up from a year-earlier loss of C$395 million, or 82 Canadian cents a unit.

Analysts surveyed by Reuters Estimates had expected, on average, the company to earn 94 Canadian cents a unit.

Cash flow, used to fund distributions to unitholders, rose 27 percent to C$413 million, or 86 Canadian cents per unit, from C$324 million, or 68 Canadian cents.

Revenue was C$1.18 billion, up 71 percent from C$690 million.

Production net to the trust averaged 97,744 barrels a day, down 1 percent from the second quarter of 2007, as Syncrude shut down part of its upgrading operations for scheduled maintenance.

Canadian Oil Sands and other producers of the unconventional crude in northern Alberta reaped rewards from crude prices that soared 90 percent to a record quarterly average of $123.80 a barrel.

The company sold its crude for an average C$131.32 a barrel, up 71 percent from year-earlier C$76.81. Operating costs were C$41.92 a barrel, up 39 percent from C$30.13.

It estimated Syncrude’s overall production will total about 106 million barrels this year, or 39 million net to its interest. That is down slightly from an April outlook.

Canadian Oil Sands also increased its annual average cost estimate to C$35.46 a barrel.

Canadian Oil Sands units rose 15 Canadian cents to C$49.06 on the Toronto Stock Exchange, representing a 27 percent increase so fall this year. It released its results after the market closed.

The other Syncrude partners are Imperial Oil Ltd (IMO.TO), Petro-Canada PCA.TO, ConocoPhillips (COP.N), Nexen Inc NXY.TO, Nippon Oil Corp 5001.T unit Mocal Energy Ltd and Murphy Oil Corp (MUR.N).

($1=$1.02 Canadian)

Reporting by Jeffrey Jones and Scott Haggett; editing by Rob Wilson

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