CALGARY - Canadian Oil Sands Ltd. (TSX:COS) posted a big drop in profit for the first three months of the year as unplanned outages at the Syncrude oilsands mine took a bite out of production.
Net income during the first quarter was $177 million, or 37 cents per share, down from $318 million, or 66 cents per share during the same period a year earlier, the company said Tuesday.
That missed the average analyst estimate of 41 cents per share, according to Thomson Reuters.
Syncrude produced an average of 260,400 barrels per day, down from 294,800 during the same 2012 quarter.
Sales during the quarter were $828 million, versus $956 million during the first three months of last year.
"Syncrude production was lower than expected this quarter, as we experienced several unplanned outages in extraction and upgrading. Syncrude has performed the maintenance required to address the extraction issues and is investigating the root cause of the hydrotreating outages in the upgrader," CEO Marcel Coutu said in a release
Although it looks like the problems have been resolved, Coutu said the company has reduced its 2013 production outlook by about five per cent to between 100 million to 110 million barrels.
Coutu said despite the lower output, Canadian Oil Sands should still be able to fund its capital program and maintain its 35-cent-per-share dividend.
Canadian Oil Sands (TSX:COS) is best known for its 37 per cent stake in the massive Syncrude Canada oilsands mine north of Fort McMurray, Alta. It's one of the oldest and largest projects of its kind.
Bitumen from Syncrude is upgraded into a more valuable product called synthetic crude oil, which refineries can easily handle.
Synthetic crude sold at an average price of $96 per barrel during the first quarter — a premium to the U.S. light oil benchmark, West Texas Intermediate, which was at around $94.
Newer oilsands mines, such as Imperial Oil's Kearl project, have decided to forego building multibillion-dollar oilsands upgrader in favour of selling bitumen into the market.
Syncrude's other owners include Imperial Oil Ltd. (TSX:IMO), Nexen, Suncor Energy Inc. (TSX:SU), China's Sinopec, Mocal Energy Ltd. and Murphy Oil Co. Ltd.
Nexen was acquired by China National Offshore Oil Co. for $15 billion earlier this year, meaning 16 per cent of Syncrude is owned by Chinese state-owned interests.