Dec 1 (Reuters) – Canadian Oil Sands Ltd set a capital expenditure target of C$295 million ($221 million) for 2016, down about 35 percent from the estimated budget for 2015, saying the Syncrude oil sands project would help raise output at lower costs.
The company, which is facing a hostile bid from Suncor Energy Inc, set a capital budget of C$451 million for 2015 in January.
Canadian Oil Sands owns 37 percent in the Syncrude project, while Suncor holds 12 percent.
"Syncrude's ability to reduce costs and respond to the lower oil price environment is exceeding market expectations," Canadian Oil Sands Chief Executive Ryan Kubik said in a statement on Tuesday.
He said gross cost savings from Syncrude were C$1.3 billion in 2015. Kubik said the execution of major projects "were completed in 2015 under budget and on schedule."
Canadian Oil Sands said it expected to generate C$338 million of free cash flow, based on the 2016 budget and even if West Texas Intermediate prices remained under $45 per barrel, the company could "fully fund all costs, including capital expenditures and the current dividend."
Suncor launched a hostile bid for Canadian Oil Sands in October. If the bid succeeds, Suncor would gain control of nearly half of the Syncrude project, Canada's largest single-source producer of synthetic oil.
($1 = C$1.33)
(Reporting by Sneha Banerjee in Bengaluru; Editing by Kirti Pandey)
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