Canadian Oil Sands Trust Posts Lower 4Q Earnings
Canadian Oil Sands Trust announced cash from operating activities of $328 million ($0.68 per Trust Unit ("Unit")) for the fourth quarter of 2009 compared with cash from operating activities of $466 million ($0.97 per Unit) for the same period last year. The decrease reflects increases in non-cash working capital and higher Crown royalties, partially offset by higher revenues.
For the year ended December 31, 2009 cash from operating activities decreased to $547 million ($1.13 per Unit) from $2,241 million ($4.66 per Unit) in 2008. The decrease reflects the significant decline in crude oil prices in 2009 versus 2008, as well as lower production and increases in non-cash working capital, partially offset by lower Crown royalties.
In the fourth quarter of 2009, the Trust reported net income of $96 million ($0.20 per Unit) compared with net income of $124 million ($0.26 per Unit) recorded in the same period of 2008. Excluding impairment charges on the Trust's Arctic assets, net income in the fourth quarter of 2009 was $244 million ($0.50 per Unit), reflecting higher sales volumes, oil prices and foreign exchange gains, partially offset by higher Crown royalties. On an annual basis, net income totaled $432 million ($0.89 per Unit) in 2009, down from $1,523 million ($3.17 per Unit) in 2008. The decline primarily reflects lower crude oil prices and production, partially offset by lower Crown royalties.
The Trust has declared a quarterly distribution amount of $0.35 per Unit for Unitholders of record on February 18, 2010, payable on February 26, 2010.
Net debt at the end of 2009 was $1,041 million, similar to net debt of $979 million at the end of 2008. The Trust continues to maintain a strong financial position with net debt to total capitalization of 21 per cent.
"Unplanned downtime and maintenance exceeded our budgeted allowance during 2009, impacting both production and costs," said Marcel Coutu, President and Chief Executive Officer. "Although 2009 production was 12 per cent below our budget, we once again demonstrated that the plant can run at robust rates with December production running at 360,000 barrels per day. Syncrude's priority is to improve operational reliability to achieve design capacity rates more consistently."
Sales volumes in 2009 averaged 103,000 barrels per day compared with 106,000 barrels per day in 2008. Production in 2009 was impacted by: turnaround and modification work on Syncrude's Coker 8-3 complex; bitumen constraints; and reliability issues in the mining and upgrading processes, including circulation issues with Coker 8-1 and unplanned repairs to the vacuum distillation unit. Production in 2008 was impacted by planned turnarounds of Cokers 8-2 and 8-1, bitumen production constraints and a disruption in operations during the first quarter.
Following repairs to the vacuum distillation unit during November 2009, production ramped up significantly, resulting in fourth quarter 2009 sales volumes averaging 119,000 barrels per day. By comparison, sales volumes in 2008 averaged 110,000 barrels per day during the fourth quarter.
Operating costs in 2009 were $35.29 per barrel, virtually the same as 2008 costs of $35.26 per barrel. Operating costs in both years reflect coker turnarounds and unplanned maintenance.
Capital expenditures in 2009 were $409 million compared with $281 million in 2008. Expenditures in both years relate mainly to sustaining capital, as Syncrude currently is not incurring meaningful expansion-related capital to grow productive capacity. In 2009, the expenditures related to the Syncrude Emissions Reduction project, equipment purchases to improve bitumen production, modifications to the Coker 8-3 complex, construction of tailings facilities, and other infrastructure projects.
Syncrude's total recordable injury rate for 2009 was 0.36 compared with a rate of 0.59 for 2008. While the recordable injury rate declined, the fatality that occurred in November 2009 marred the improvement in our overall safety performance. An investigation into the fatality is underway to determine what occurred and to prevent a similar tragedy in the future. Syncrude is committed to protecting and promoting the safety and well being of its employees and contractors. Investment in training, awareness activities, and other initiatives is continuing in order to foster further improvements in workplace safety.
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