February 3, 2011 / 11:23 AM / 7 years ago

UPDATE 2-MEG Energy swings to Q4 profit on lower costs

2 Min Read

* Q4 EPS C$0.24 vs loss C$0.11/shr last year

* Helped by increased production, lower operating costs

* Q4 production averaged 27,744 barrels of bitumen per day

(Adds details, background)

Feb 3 (Reuters) - Canadian oil sands developer MEG Energy Corp (MEG.TO) swung to a quarterly profit, helped mainly by a more than four-fold rise in production and lower operating costs.

Calgary, Alberta-based MEG Energy said October-December net income was C$46.5 million, or 24 Canadian cents a share, compared with a net loss of C$16 million, or 11 Canadian cents a share, in the year-ago quarter.

The company, which debuted on the Toronto Stock Exchange in August last year, said during the quarter, there was an unrealized gain of C$35.3 million for the translation of debt, compared with C$18.5 million a year ago. Revenue, net of royalties, rose 10-fold to C$246.3 million.

Fourth-quarter production averaged 27,744 barrels of bitumen per day, about 10 percent above the nominal design capacity of the facilities, the company said in a statement.

Operating costs fell to C$14.22 per barrel from C$52.04 per barrel year ago.

The company forecast production to average 25,000-27,000 barrels per day in 2011.

MEG Energy expects to spend about C$900 million in 2011, with majority being invested in expanding its bitumen production capacity to 260,000 barrels per day by 2020.

The company said during the quarter, Phase 2 of its flagship Christina Lake project in Alberta commenced operations, and production averaged 5,933 barrels of bitumen per day.

Shares of the company closed at C$46.69 on Wednesday on the Toronto Stock Exchange. They have gained 33 percent in value over the past six months. (Reporting by Isheeta Sanghi in Bangalore; Editing by Sriraj Kalluvila)

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