CALGARY (CP) -- Western Oil Sands Inc. [TSX:WTO] is forecasting a profit of C$140 million next year despite scheduled maintenance that will idle the massive Athabasca Oil Sands Project plant for 40 to 45 days.
The Calgary-based energy company said Wednesday its share of production will average 30,000 barrels of oil per day for the year.
The Athabasca project ''has made great strides in improving plant reliability and availability, resulting in our ability to exceed design rate capacity with production averaging approximately 165,000 barrels per day for successive quarters in 2005,'' CEO Jim Houck said in a statement.
''Moving forward, our focus will be on optimizing these assets in order to increase reliability, availability and profitability and on executing the first expansion phase in the most cost-effective manner possible.''
The guidance for earnings per share of 87 cents fell short of the average analyst forecast of C$1.35 a share, based on 15 estimates ranging from 75 cents to C$2.07, according to Thomson Financial.
On the Toronto stock market Wednesday afternoon, Western Oil Sands shares were down 13 cents at C$26.87.
The company said cash flow from operations is expected to total about C$270 million.
Peters and Co. analyst Wilf Gobert said the maintenance turnaround means the Athabasca project will likely run at an average of 150,000 barrels per day next year, below its capacity of 155,000 to 165,000.
''The production number was fine. More or less what you'd expect,'' Gobert said.
Western Oil Sands holds a 20% undivided interest in the Athabasca Oil Sands Project, along with partners Shell Canada Ltd. [TSX:SHC] at 60% and Chevron Canada Ltd. at 20%.
The company said it's looking to next year, when the company and its partners plan to go ahead with the first of three phases of project expansion.
Western expects production from the first expansion phase to come on stream at the end of 2009, with full production starting in 2010. The objective is to achieve production of 100,000 to 120,000 barrels per day, attributable to Western, over the next eight to 10 years.
The firm's projected capital spending for 2006 is about C$233 million, including C$71 million for the Athabasca operations.
The guidance is based on a West Texas Intermediate oil price of $52 per barrel, a natural gas price of C$11.53 per thousand cubic feet and a Canadian dollar worth 82 cents.
For the three months ended Sept. 30, Western Oil Sands earned C$79.4 million or 50 cents per share, up from C$42.4 million or 27 cents per share a year ago.
Quarterly revenue rose to C$185.7 million from C$104.1 million.
Last month, Western Oil Sands hedged its prices for about one-fifth of its anticipated production from the Athabasca oilsands project between 2007 and 2009 to back its share of spending on a planned expansion at the oil operation.
The company said it has entered into put options setting a minimum weighted average price of $52.42 per barrel for 20,000 barrels per day of synthetic crude oil production.
The future-pricing program sets average prices at $52.50 a barrel for 2007, $54.25 for 2008 and $50.50 for 2009.
''The problem is they give away the upside when you have these high prices,'' Gobert said.
(c) The Canadian Press 2005
