No Day, Ed, one day soon, we will profit from the CO-DEVELOPMENT agreements of last year with all these folks ( almost all a few anywys of the near dozens). It's not nice to fool MOTHER NATURE:
Athabasca Oil Sands Trust -
Athabasca Oil Sands Trust third quarter results; Syncrude results
Athabasca Oil Sands Trust AOS.UN
Shares issued 29,750,000 1999-10-25 close $22.4
Monday Oct 25 1999
Mr. Walter O'Donaghue reports
The board of directors of Athabasca Oil Sands Investments Inc. has declared a distribution of 20 cents per trust unit to be paid for the third quarter. The distribution will be paid on Nov. 15, 1999, to unitholders of record on Nov. 8, 1999. The distribution is a reflection of strong operating results achieved during the third quarter combined with a return to higher oil prices.
The board noted that in addition to achieving strong operating results, excellent progress continues on the Syncrude joint venture's expansion plans. The second mining train at the North Mine was commissioned in July, as was the power generation plant for the Aurora expansion project which is nearing 85-per-cent completion. Capital expenditures of $19-million (Athabasca share) for the quarter continue the pace set in the first half of the year and bring the year-to-date total to a record $65-million. In addition, subsequent to quarter end, Syncrude received approval from the Alberta Energy and Utilities Board for the expansion of the Mildred Lake upgrading facility to 175 million barrels per year.
"We are very pleased to resume distributions," says chairman Walter O'Donoghue. "The strong operating results being delivered by the Syncrude project when combined with robust oil prices have provided Athabasca with cash available for distributions despite record capital expenditures of $65-million."
Athabasca's third quarter revenues of $75-million were 83 per cent higher than the same period last year due to a 50-per-cent improvement in crude oil prices and a 19-per-cent increase in sales volumes. Third quarter sales of 27,700 barrels per day are 4,500 above last year's results largely due to plant maintenance in 1998. Year-to-date sales volumes of 26,300 barrels per day are 2,400 barrels ahead of last year's results and are on track for record volumes in excess of 26,500 barrels per day. Syncrude Sweet Blend (SSB) prices averaged $31.05 per barrel at the plant gate in the quarter, up 50 per cent from the $20.98 per barrel realized in the third quarter of 1998 and bring the year-to-date average to $25.23 per barrel. Including the effects of currency hedging, Athabasca's average price received in the quarter was $29.54 per barrel.
Cash flow from operations before the change in non-cash working capital was $40-million for the three months ended Sept. 30, 1999, compared with $11-million for the same period in 1998, and up $18-million from the second quarter of 1999. The increase in revenues as a result of higher volumes and higher prices more than offset increases in administration expenses and Crown royalties. Athabasca's earnings surged to $33-million, a new quarterly record and a 528-per-cent improvement over the $5-million earned in the same period in 1998.
The Syncrude joint venture continues to achieve excellent operating results during 1999. Steady, reliable plant operation has resulted in record volumes on a year-to-date basis at record low operating costs. Operating costs of $11.96 per barrel in the quarter bring the average for the first nine months of 1999 down to $12.26 per barrel, compared with $13.94 per barrel for the first nine months of 1998. Building on these strong operating results, 1999 volumes are budgeted at 83 million barrels at a cost of $12.35 per barrel. Projected volume increases will come from the recently completed second mining train in the North Mine, full utilization of the completed debottleneck 1 project, and start-up of the vacuum distillation unit in October. Reflecting these targets, and provided that oil prices are sustained near current levels, Athabasca expects to be able to maintain distributions at or above the current level for the fourth quarter.
Results from operations
Athabasca's third quarter 1999 SSB revenues were $75-million, $34-million or 83 per cent higher than the same period last year, due to a 50-per-cent improvement in crude oil prices and a 19-per-cent increase in production volumes. A new record was set for Syncrude's year-to-date production as volumes of 26,311 barrels per day were 2,400 barrels ahead of last year's results to Sept. 30. Third quarter sales volumes of approximately 27,700 barrels per day are up 4,500 barrels per day from 1998, largely as a result of smooth and reliable facility operations this year. Last year's results for the first three quarters were negatively impacted by an unscheduled maintenance program on one of the two large fluid cokers.
The trust benefited from higher oil prices in 1999. SSB prices averaged $31.05 per barrel at the plant gate, up 50 per cent from the $20.98 per barrel received in the third quarter of 1998, and up 25 per cent from the prices received in the second quarter this year. Athabasca's average price received in the quarter, including the effects of currency hedging and marketing fees, was $29.54 per barrel, up from $19.24 per barrel a year earlier. Plant gate prices have averaged $25.23 year-to-date ($23.50 after currency hedging and fees), as compared with $20.92 and $19.63 respectively last year.
Operating expenses of $30-million are up slightly from $28-million in the second quarter, but on a per barrel basis were down to $11.96 per barrel. Year-to-date costs of $88-million are $2-million lower than those reported for the comparable period of 1998. This is largely due to cost saving initiatives and to the absence of a coker shutdown. On a per barrel basis, operating costs for the first three quarters are a record low $12.26 per barrel as compared with $13.94 for the comparable period last year.
Net income for the period increased to $33-million, a 528-per-cent improvement over the $5-million earned in the same period in 1998. On a year-to-date basis, net income increased to $50-million from $9-million.
Cash flows
Cash flow from operations before the change in non-cash working capital was $40-million for the three months ended Sept. 30, 1999, compared with $11-million for the same period in 1998, and up $18-million from the second quarter of 1999. Cash flow from operations was $68-million in the first three quarters of 1999, more than double last year's results. The increase in revenues as a result of higher volumes and higher prices more than offset increases in administration expenses and Crown royalties. The increase in administration and other expenses is a direct result of increased revenue and lower operating costs, as the administrative services fee is tied to these amounts. The increase in Crown royalty reflects an accrual of $0.6-million, as Athabasca expects to be paying a net profit royalty to the Crown as a result of the higher prices in the last half of the year.
Athabasca's share of net capital expenditures in the third quarter increased $3.5-million to $19-million as compared with the third quarter of 1998. On a year-to-date basis, capital expenditures total $65-million, which is $24-million higher than the comparable period last year. Good progress continued on all strategic projects during the quarter, with most projects ahead of schedule. Construction of the mining and extraction facilities at the Aurora project site continue to progress smoothly with start-up anticipated for May, 2000. Significant milestones were achieved in the major capital projects under way at Syncrude: second mining train in the North mine began operation during the quarter; work on the debottleneck II project continued (now 85-per-cent complete); intersite pipeline required to transport bitumen froth from Aurora now complete; and all major earthwork at the Aurora site has been completed.
During the quarter, the Alberta Energy and Utilities Board (AEUB) conducted a public hearing into the Syncrude owners' application for the expansion of the upgrading facility at Mildred Lake to 175 million barrels per year. Subsequent to quarter end, the AEUB notified Syncrude that an approval would be issued.
Distributable income
Distributable income is directly related to the royalty that the trust receives from Athabasca Oil Sands Investments Inc. The trust royalty is the net result of Syncrude operations, capital expenditures, administrative and financing costs associated with Athabasca, as well as changes in debt. Cash from operations of $40-million exceeded the capital expenditures for the quarter by $21-million, making up the $18-million shortfall realized to the end of June. On a year-to-date basis, cash from operations was $3-million greater than capital requirements enabling Athabasca to make a distribution from funds from operations.
Liquidity and capital resources
Working capital at Sept. 30, 1999, was approximately $37-million higher than at Dec. 31, 1998. This change reflects an increase in cash, short-term investments and inventory, and a decrease in other current liabilities partially offset by an increase in distribution payable and accounts payable. Athabasca's total long-term debt now stands at $109-million, a $0.3-million increase from the second quarter as a result of foreign exchange fluctuations. Both Athabasca's $100-million committed credit facility and a $10-million demand facility are currently undrawn.
Risk management
Athabasca's results from operations are affected by the exchange rate between the Canadian and U.S. dollars. To reduce the impact of exchange rate fluctuations on revenues, Athabasca has hedged its exposure by issuing U.S. dollar denominated debt and by entering into foreign exchange contracts. In the fourth quarter of 1996, Athabasca entered into foreign exchange contracts to sell U.S. dollars at exchange rates between 76.2 U.S. cents and 77.8 U.S. cents to $1 (Canadian) in the amounts of $84-million, $84-million and $96-million in 1999, 2000 and 2001 respectively. Of the $84-million from 1999, approximately $21-million remain outstanding at Sept. 30, 1999. Consequently, Athabasca's revenues have not benefited from the decline in the Canadian dollar, the impact of which has been offset by losses on the foreign exchange hedge. Based on the foreign exchange forward curve at Sept. 30, 1999, had these contracts been settled for cash, the pretax loss would have been about $30-million.
Outlook
Syncrude project targets call for a record 83 million barrels of production at an operating cost of approximately $12.35 per barrel in 1999. Capital expenditures are anticipated to total $725-million in 1999, an increase of $65-million from earlier estimates reflecting the advance of some capital expenditures from the year 2000. Athabasca's share of the projected volume target is 9.7 million barrels or an average of 26,700 barrels per day. Reflecting these targets, and provided that oil prices are sustained near current levels, Athabasca expects to maintain distributions at or above the current level for the fourth quarter.
STATEMENT OF EARNINGS
Three months ended Sept. 30
(thousands of dollars)
1999 1998
Revenues:
Syncrude Sweet
Blend $ 75,297 $ 41,095
Other 238 60
--------- ---------
75,535 41,155
--------- ---------
Expenses:
Operating 30,484 26,345
Administration and
other 1,566 685
Crown royalties 769 0
Finance charges 2,405 2,417
Depletion,
depreciation
and amortization 6,864 6,305
Dividends on
preferred shares
of subsidiary 90 90
--------- ---------
42,178 35,842
--------- ---------
Income before taxes 33,357 5,313
Capital and other
taxes 118 111
--------- ---------
Net income $ 33,239 $ 5,202
Unit distributions (5,950) 0
Net income per
trust unit $1.11 20 cents
STATEMENT OF EARNINGS
Nine months ended Sept. 30
(thousands of dollars)
1999 1998
Revenues:
Syncrude Sweet
Blend $ 168,788 $ 127,893
Other 590 333
--------- ---------
169,378 128,226
--------- ---------
Expenses:
Operating 88,049 90,833
Administration and
other 3,195 2,079
Crown royalties 851 0
Finance charges 7,482 7,055
Depletion,
depreciation
and amortization 19,552 19,195
Dividends on
preferred shares
of subsidiary 270 270
--------- ---------
119,399 119,432
--------- ---------
Income before taxes 49,979 8,794
Capital and other
taxes 350 237
--------- ---------
Net income $ 49,629 $ 8,557
Unit distributions (5,950) (1,350)
Net income per
trust unit $1.66 32 cents
Mr. Eric Newell of Syncrude also reports
For the third quarter, Syncrude's production has exceeded projections and Syncrude is 0.5 million barrels ahead of budgeted production for 1999 and well on its way to achieving the year-end goal of 83 million barrels of Syncrude sweet blend.
On Oct. 14, 1999, the Energy and Utilities Board issued its decision report on Syncrude's application for the $3-billion Mildred Lake upgrader expansion project. The report stated that the board is prepared, with the approval of the Lieutenant-Governor in Council, to approve the expansion project. The Mildred Lake upgrader expansion is the largest component in the suite of capital investments known as Syncrude 21.
Syncrude 21 comprises the largest single capital investment by a company in Western Canada. In addition to the Mildred Lake upgrader expansion, Syncrude 21 initiatives include the North mine, a two-stage debottleneck of the upgrading plant and the Aurora mine project. Syncrude 21 projects will be designed and constructed over the next 10 years and represent a more than $6-billion investment in the joint venture.
Third quarter shipments
Shipments of Syncrude sweet blend (SSB) totalled 20.9 million barrels for the quarter for an average of 227,000 barrels per day. This is up from 18.7 million (203,000 barrels per day) for the same period in 1998.
Total shipments for the year to date 1999 were 61.0 million barrels (223,000 barrels per day), more than five million barrels ahead of the 1998 shipment rate. The target production total for 1999 is 83 million barrels.
Operations achievements
At the end of September Syncrude employees and contractors had achieved seven million hours worked without a lost time accident.
The second North mine hydrotransport system came on stream in July and has been operating above expectations. The system helped establish a new benchmark in hydrotransport volumes and has virtually eliminated the need for auxiliary production systems.
Syncrude's environmental performance reached a record in reduced energy consumption. The year-to-date energy consumption has dropped to 1.22 Mbtu per barrel of Syncrude sweet blend. This is below the 1999 target of 1.23 Mbtu per barrel and the previous best performance of 1.29 Mbtu reached in 1997. All SO(2) emissions during the quarter, and year to date, are well below licensed limits.
Third quarter operating results
Total expenditures for the quarter, which include production, general and administrative costs, research, certain financing costs and Syncrude 21 development expenditures, were $245.5-million, compared with $238.5-million for the same period in 1998. Direct operating expenditures were $220.2-million against $222.2-million last year.
On a per barrel basis, total unit costs for the last three months were $11.74 per barrel of SSB and $12.30 for the year to date. This compares with unit costs of $12.76 per barrel for the third quarter in 1998.
Year-to-date operating results
Total expenditures for the year to date ending September were $750-million in 1999 or $12.30 per barrel, compared with $795-million in 1998 or $14.21 per barrel. Direct operating expenses were $680-million versus $747-million for the same period in 1998.
Capital investment
Capital expenditures for the quarter were $162-million. Year-to-date capital expenditures were $556-million, compared with $341-million in 1998. Syncrude expects to spend approximately $700-million on capital programs in 1999.
Chairman's remarks
"This was a very strong quarter for Syncrude. The quarterly production of nearly 21 million barrels is particularly impressive when coupled with the low per barrel cost of $11.74," said Eric Newell, chairman and chief executive officer. "Syncrude employees and contractors have done an outstanding job of holding down costs during this past quarter and throughout 1999.
"Not only have we reduced costs to below $12 but Syncrude has surpassed the 1999 target of reducing energy consumption per barrel. We are also especially proud of achieving seven million hours of work without a lost time incident. These numbers represent the hours of both Syncrude employees and contractors working during one of the busiest quarters in our history.
"We are very pleased to receive the EUB's decision report on the Mildred Lake upgrader expansion project. Syncrude 21 will see Syncrude's production nearly double by 2007. Of the $3-billion to be invested in the upgrader expansion, $600-million is being invested in new technology which will further improve environmental performance. For example, by 2007, SO(2) emissions will decline by 5 per cent on a total basis and 70 per cent on a per barrel basis compared with 1990 levels."
Joint venture ownership
The Syncrude project is a joint venture operated by Syncrude Canada Ltd. and owned by AEC Oil Sands, L.P., AEC Oil Sands Limited Partnership, Athabasca Oil Sands Investments Inc., Canadian Occidental Petroleum Ltd., Canadian Oil Sands Investments Inc., Gulf Canada Resources Limited, Imperial Oil Resources, Mocal Energy Ltd., Murphy Oil Company Ltd., and Petro-Canada.
OPERATING RESULTS
Three months ended Sept. 30
1999 1998
Shipments of SSB
millions of barrels 20.9 18.7
Thousands of barrels
per day 227 203
----- -----
Direct operating
expenditures
millions of dollars 220.2 222.2
Unit cost
per barrel $10.53 $11.89
----- -----
Total expense
millions of dollars 245.5 238.5
Unit cost per barrel $11.74 $12.76
OPERATING RESULTS
Nine months ended Sept. 30
1999 1998
Shipments of SSB
millions of barrels 61.0 55.9
Thousands of barrels
per day 223 205
----- -----
Direct operating
expenditures
millions of dollars 680.1 747.1
Unit cost
per barrel $11.15 13.35
----- -----
Total expense
millions of dollars 750.2 794.9
Unit cost per barrel $12.30 $14.21
canada-stockwatch.com
Chucka-A Mine is a Beauiful thing to waste. OK, they OWN the Tailings that they worked out of the group, we have the LIMESTONES uncovered in rights, permits and or leases. So, cut a deal...they own the Dragline with the 2 Car Garage Sized Buckets. We need DIRT MOVED!
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