January 30, 2008 / 10:47 PM / in 10 years

UPDATE 2-Canadian Oil Sands profit jumps on prices, output

(Adds details, background)

CALGARY, Alberta, Jan 30 (Reuters) - Canadian Oil Sands Trust COS_u.TO, which owns the biggest stake in the Syncrude Canada oil sands venture, quadrupled its profit in the fourth quarter on surging oil prices and increased volumes, following the operation’s expansion, it said on Wednesday.

It also boosted its quarterly cash payout by 36 percent to 75 Canadian cents a trust unit.

Canadian Oil Sands said it earned C$515 million ($515 million), or C$1.07 a unit, up from a year-earlier C$128 million, or 27 Canadian cents a unit.

The trust had been expected to report a per-unit profit of 63 Canadian cents, the average forecast among analysts polled by Reuters Estimates.

Canadian Oil Sands Trust has a 37 percent stake in Syncrude, Canada’s biggest oil sands firm, capable of producing 350,000 barrels of synthetic crude daily.

The trust said on Tuesday that bitter winter weather in the Fort McMurray region of northern Alberta had frozen instruments at the oil sands project, halting production.

Cash flow, used to fund monthly distributions to investors, fell 11 percent to C$367 million, or 77 Canadian cents a unit, from C$412 million, or 88 Canadian cents a unit, in the year-earlier quarter.

Without changes in non-cash working capital, cash from operations would have risen, the company said.

Revenue rose 36 percent to C$1.01 billion amid the sharp run-up in oil prices during the quarter toward $100 a barrel

Canadian Oil Sands did not give an indication of how close the operation is to signing a royalty deal with the Alberta government.

On Tuesday, Suncor Energy Inc (SU.TO) and the government struck a deal that essentially breaks a royalty contract it had which ran through 2015.

Under that deal, Suncor will pay up to 20 percent more in royalties over the period.

Syncrude, the only other oil sands producer with a royalty contract, is the holdout. Government officials have explained that discussions are taking longer because the joint venture has several owners.

Canadian Oil Sands’ share of production averaged 116,386 barrels a day in the quarter, up 5.6 percent from 110,185 bpd in the fourth quarter of 2006.

It sold its oil for an average price of C$88.73 a barrel, up 37 percent from C$63.71 a year earlier.

The trust said operating costs were C$27.38 a barrel, up 14 percent from the fourth quarter of 2006.

Canadian Oil Sands units fell 29 Canadian cents to C$36.02 on the Toronto Stock Exchange, representing a 19 percent gain in the past year. It released its results after the market closed.

The other partners in Syncrude Canada, located north of Fort McMurray, 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 Canadian Reporting by Jeffrey Jones; Editing by Rob Wilson

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