April 29, 2010 / 11:41 AM / 8 years ago

UPDATE 3-Opti Canada sees deal on strategic review by year-end

* Q1 loss/shr C$0.18 vs loss/shr C$0.50 yr ago

* Revenue up 72 pct

* Exploring strategic alternatives including sale of co

* Expects deal on strategic review by Dec 2010 (Adds details, analyst comments, conference call details, updates shrare movement)

By Gowri Jayakumar

BANGALORE, April 29 (Reuters) - Opti Canada Inc OPC.TO said it expects to reach a deal on its strategic review by the end of the year, and that it remained committed to Nexen Inc’s NXY.TO Long Lake oil sands project, where it holds a 35 percent stake.

Chief Financial Officer Travis Beatty said on a conference call with analysts that he expects the transaction to be complete by December.

The company started reviewing its strategic options, including a possible sale of Opti, in November 2009.

“They would probably look at selling assets or selling down some of their working interest in Long Lake. I think those are probably the most likely alternatives,” Macquarie Research analyst Chris Feltin told Reuters on phone.

The oil sands project developer, which posted a narrower first-quarter loss, said it expects to breakeven on net field operating margin when the Long Lake project reaches about 25,000 to 30,000 barrels per day (bbl/d) of bitumen.

“That is probably optimistic,” the analyst said regarding Long Lake’s output. “That number, just based on their burn rate, probably needs to get closer to 40,000 bbl/d before getting into the black.”

Feltin added, “Opti’s debt burden means that they’re still going to have negative operating margins, because of the interest payment they’ve got, which is so high.”

Chief Executive Christopher Slubicki, however, said he expects field operating margins to improve in the coming months, helped by strong oil prices, increasing steam and bitumen production, plant reliability and better yield.

Net loss for the first quarter shrunk to C$50 million, or 18 Canadian cents a share, from C$97 million, or 50 Canadian cents, a year earlier.

Revenue was up 72 percent at C$50 million.

Analysts on average were expecting a loss of 14 Canadian cents, on revenue of C$36.3 million, according to Thomson Reuters I/B/E/S.

Shares of the Calgary, Alberta-based company were trading down 3 cents at C$2.26 Thursday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Roshni Menon)

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