CALGARY (CP) -- Canadian Oil Sands Trust [TSX:COS.UN] says its net income fell to C$128 million in the fourth quarter as its bottom line was hit by higher Crown royalties, higher operating expenses, and higher foreign exchange losses while production fell short of expectations due to equipment problems.
The trust, which is the largest partner in the Syncrude oilsands consortium, said Monday that net income amounted to 27 cents per unit in the fourth quarter of of 2006, down from $174 million or 38 cents per unit in the fourth quarter of 2005.
Syncrude production during the fourth quarter of 2006 totalled 27.8 million barrels, or approximately 302,700 barrels per day, compared to 20.8 million barrels, or approximately 226,000 barrels per day, in the fourth quarter of 2005.
The net realized selling price fell to C$63.71 per barrel in the fourth-quarter, down from C$72.07 in the year-earlier period.
The trust's operating costs in the fourth quarter of 2006 declined to C$23.60 per barrel, compared to C$25.54 in the same period last year.
The trust attributed the lower costs to lower natural gas prices, required for oilsands processing, offset by an increase in the value of Syncrude's employee compensation.
The higher production output was due to the completion of the Stage 3 expansion earlier in the year, offset primarily by an equipment outage in the fourth quarter of 2006.
Prior to the failure of Coker 8-2, Syncrude had expected that it would exit the fourth quarter producing 315,000 barrels per day but the problem reduced output to 255,000 bpd in December.
Coker 8-2 returned to operation in mid-January 2007.
Syncrude production in all of 2006 totalled 94.3 million barrels, or approximately 258,000 barrels per day, compared to 2005 production of 78.1 million barrels, or 214,000 barrels per day.
Canadian Oil Sands said Monday that Syncrude continues to focus on ramping up to full annual productive capacity of 128 million barrels on a sustained and reliable basis.
However, it may take time to achieve that level of output, the trust added.
The new Coker 8-3, another piece of equipment that wasn't affected by the unscheduled shutdown in December, has been producing at only 70 per cent of its capacity for the past several weeks, the trust said.
Syncrude does not believe the constraint is design related, the trust added, noting that production averaged 348,000 barrels per day during the month of October.
Cash from operating activities during the fourth quarter increased to $412 million, or 88 cents per unit, in the fourth quarter of 2006 up from C$281 million or 61 cents per unit for the fourth quarter of 2005.
For the full year ended Dec. 31, the trust's net income was C$834 million, or C$1.78 per diluted unit. That compares with 2005 net income of C$831 million, or C$1.80 per unit diluted. Cash from operating for 2006 was C$1.14 billion, up from C$949 million or C$2.07 per trust unit.
Included in Canadian Oil Sands Trust's guidance for 2007, is a Syncrude production estimate in a range of 105 million to 120 million barrels this year, or 39 to 44 million barrels net to the trust.
Operating costs are estimated to be C$25.83 per barrel with purchased energy costs accounting for C$7.08 per barrel of this amount.
Canadian Oil Sands units closed Monday at C$30.79, up 35 cents or 1.15 per cent on the Toronto Stock Exchange.
Copyright 2007 The Canadian Press
