Great, I pick at $37.95, a part of SYNCRUDE( see .com ) a Unit Trust that pays like a 10% of share price in Disve and Earnings combined that is a fall based upon these Facts THAT I LIKE in my read: COS.UN-t ( 21.74 % ownership of SYNCRUDE )
Stockwatch
ShortcutsMenu SymbolsBulletinsCompanyParticipantInsidersAccountStatusNewWindow
Canadian Oil Sands Trust - News Release
Canadian Oil Sands Q2 earnings slip
Canadian Oil Sands Trust COS
Shares issued 56,947,362 Jul 23 2002 close $ 37.38
Tuesday July 23 2002 News Release
Mr. Marcel Coutu reports
CANADIAN OIL SANDS TRUST ANNOUNCES SECOND QUARTER RESULTS
Canadian Oil Sands Trust has released its second quarter results, including a distribution of 50 cents per trust unit. This maintains a stable level of distribution from the previous two quarters, despite the lower cash flow in this second quarter resulting from the scheduled maintenance shutdown of one of Syncrude's two cokers.
Cash flow from operations for the second quarter of 2002 was $19.3-million, or 34 cents per unit, compared with $49.2-million, or 87 cents per unit, in the second quarter of 2001. The trust's net income was $36.8-million, or 65 cents per unit, in the second quarter of 2002 compared with $42.0-million, or 73 cents per unit, in 2001. Net income for the second quarter incorporates non-cash foreign exchange gains on the U.S.-dollar-denominated debt of $28.1-million and $7.9-million, in 2002 and 2001, respectively. Distributable income for the second quarter of 2002 was $28.7-million, or 50 cents per unit, compared with $42.6-million, or 75 cents per unit, in the same quarter of 2001. Current results were adversely impacted by increased operating expenses related to a maintenance turnaround, a 14.2-per-cent decrease in sales volumes and a 4.1-per-cent-lower realized crude oil price, after the impact of hedging, offset by a decrease in Crown royalty expenses quarter-over-quarter. Capital spending totalled $92.5-million for the three-month period ended June 30, 2002, compared with $24.7-million during the same period a year ago, largely reflecting expenditures related to the stage 3 expansion.
For the six months ended June 30, 2002, Canadian Oil Sands generated cash flow from operations of $83.4-million, or $1.46 per unit, compared with $112.1-million, or $1.97 per unit, for the same period of 2001. Net income for the six months ended June 30 was $86.9-million, or $1.53 per unit, compared with $79.1-million, or $1.39 per unit, in 2001. The six-month results were negatively impacted by coker turnaround costs, a 9.1-per-cent-lower realized crude oil price, after hedging, and 9.4-per-cent-lower sales volumes compared with the same period in 2001. Reductions in operating costs and Crown royalty expenses helped offset this negative impact on cash flow and net income.
"Our results for the quarter clearly reflect the scheduled maintenance turnaround in May," said Marcel Coutu, Canadian Oil Sands Trust's president and chief executive officer. "While the refurbishment of the coker is now complete and we look forward to strong production levels for the last half of the year, the turnaround took longer than expected, and consequently, we are revising our production estimate for the year from an average of 50,000 barrels per day to 49,400 barrels per day."
Corporate
On June 19, 2002, Canadian Oil Sands Trust and EnCana Corp. agreed to terminate the administrative services agreement on or before Dec. 31, 2002. The trust will reorganize its management structure to replace the services that were provided under the agreement and develop its staff complement accordingly. Under a separate marketing contract, EnCana will continue to sell all of the trust's Syncrude sweet blend production together with other marketing and advisory services. As part of this restructuring, the trust will redeem the $4.4-million in preferred shares currently held by EnCana.
EnCana's entitlement under the agreement to nominate two directors to the board of the trust also ceases. EnCana's prior board nominees were Nancy Laird and Wesley Twiss. Ms. Laird resigned her position on the board effective June 30, 2002. The trust extends its thanks to Ms. Laird for her dedicated service. Mr. Twiss has agreed to continue on the board as an independent director and also to act as chairman of the audit committee.
Joining the Canadian Oil Sands board, following his election on April 25, is the Donald F. Mazankowski. Mr. Mazankowski's experience in the public and private sectors, combined with his strong business acumen, will be valuable to the trust. The trust also regretfully advises that Bryce W. Douglas, for personal reasons, has resigned from the board effective June 20, 2002. The company would like to thank Mr. Douglas and recognize his long and dedicated service to the trust, which dates back to its inception in 1995. The board now is composed of seven independent directors, plus the president and CEO.
Syncrude operations
Syncrude's production in the second quarter of 2002 totalled 16.2 million barrels compared with 19.1 million barrels in the same quarter of 2001. Production was down for the quarter due to a scheduled turnaround. The turnaround involved maintenance, repair and design improvements on more than a dozen units in the upgrading area, including one of Syncrude's two cokers. Syncrude advanced its planned shutdown of Coker 8-1 to May 5 from May 17 when a hot spot that was being monitored developed a hole. Subsequent inspections revealed some internal damage, which caused a significant change in the scope of the repair work. As a result of the additional work on the coker, as well as the heavy gas oil hydrotreater unit, the overall shutdown duration was extended from the originally budgeted 35 days to 51 days. The work was successfully completed in the second quarter, including modifications to improve future performance. All of the upgrading units are now back in service and Syncrude is operating at full production rates of 250,000 to 260,000 barrels per day.
Due to the extended coker turnaround, Syncrude's unit operating costs rose to an average of $28.86 per barrel during the second quarter of 2002 compared with $21.02 per barrel recorded during the same quarter of 2001. The increase in unit operating costs is attributable to lower production volumes, which added $4.39 per barrel, and higher than anticipated maintenance and turnaround costs of $4.98 per barrel. The increase in the unit operating cost was offset somewhat by lower natural gas costs totalling $1.86 per barrel.
Stage 3 expansion
The stage 3 expansion continues to progress well with 88 per cent of the detailed engineering for the second Aurora mining train complete and 65 per cent of the detailed engineering for the upgrader expansion complete as of the end of June. Main construction activity of the upgrader expansion will commence once 80 per cent of the detailed engineering is complete, which is expected to be this fall. The construction of the primary separation vessel (PSV) at Aurora was completed in June, approximately one month ahead of schedule. Work also continues on site preparation, underground piping and erection of the coker plant support structure. To June 30, 2002, Syncrude had expended $1.1-billion related to the stage 3 expansion. The stage 3 expansion is estimated to cost between $4.7-billion to $5.1-billion.
Premium distribution reinvestment and optional cash payment plan
Canadian Oil Sands Trust implemented a premium distribution, distribution reinvestment and optional unit purchase plan (DRIP) in January, 2002. The DRIP provides unitholders with the option of reinvesting their distributions to receive new units at 95 per cent of the average market price, or the alternative of receiving up to 102 per cent of the declared distribution.
The DRIP has been very successful with unitholder participation reaching 35.6 per cent for the trust's distribution paid on May 31, 2002. Of the 35.6 per cent, 6.9 percentage points are attributable to the election to receive units instead of cash, while the premium cash distribution option accounted for 28.7 percentage points. The average volume weighted price was $41.15 per unit. In the second quarter of 2002, the plan added $10.3-million of new equity for a total of $16.4-million to date in 2002. These funds improve the balance sheet of Canadian Oil Sands, and will help finance the stage 3 expansion.
Unit distributions
A quarterly distribution of 50 cents per unit will be paid on Aug. 30, 2002, to unitholders of record on July 31, 2002. Eligible unitholders who wish to participate in the DRIP for the quarterly distribution must file their election form with Computershare Trust Company of Canada at the number or address noted on the enrolment forms on or before July 30, 2002.
The income tax status of this distribution will be determined subsequent to the Dec. 2002, year-end and will be reported to unitholders prior to the end of February, 2003. The income tax liability of each unitholder will depend on the unitholder's specific circumstances, and accordingly, each unitholder should obtain independent advice regarding their specific income tax consequences.
Outlook
Crude oil prices have risen significantly during the first half of 2002, due to a recovering North American economy and the heightened risk of Middle East supply disruptions. Although natural gas prices also have risen, the trust has mitigated this cost by hedging approximately 60 per cent of its gas requirements from April 1, 2002, to March 30, 2003, at $3.63 per thousand cubic feet.
The trust communicated its 2002 budget in its third quarter report on Oct. 23, 2001, and continues to provide quarterly updates. For the current forecast, the trust is reducing its production assumption for Syncrude from 85 million to 83 million barrels for 2002. This translates into average production for the trust of 49,400 barrels per day. The decrease in the production forecast is primarily the result of the extended time required to complete the coker maintenance turnaround. Increased costs related to the coker turnaround also have contributed to a slight increase in projected operating costs, with an annual forecast now of $335-million, up from the $325-million originally budgeted. The combination of a lower forecast for production and higher operating costs results in projected unit operating costs being revised upward to the $18.00 to $19.00 per barrel range for 2002 from the trust's previous level of $16.50 to $17.50 per barrel.
The trust is increasing its average 2002 forecast West Texas Intermediate oil price to $23.00 (U.S.) per barrel from the originally budgeted price of $22.00 (U.S.) per barrel. The natural gas estimate is being maintained at $4.50 per thousand cubic feet at AECO. The trust's U.S./Canadian currency exchange rate forecast remains unchanged at 63 U.S. cents for 2002. Despite the increase in anticipated stage 3 capital expenditures and reduced production volumes, the trust maintains strong financial liquidity, resulting from rising crude oil prices and an effective distribution reinvestment plan.
Following the second quarter, the trust's credit facilities were renewed by its bank syndicate as part of its annual review cycle. As part of such renewal, the trust reduced the amount available under such facilities by $10-million. The facilities, which total $480-million, remain undrawn at this point. The trust's Web site includes a guidance document to help communicate key performance criteria. The Web site address is www.cos-trust.com.
WARNING: The company relies upon litigation protection for "forward-looking" statements.
CONSOLIDATED STATEMENT OF
INCOME AND UNITHOLDERS' EQUITY
(In thousands of dollars)
Three months ended June 30
2002 2001
Revenues:
Syncrude
sweet blend $ 136,423 $ 168,292
Other income 1,897 525
----------- -----------
138,320 168,817
----------- -----------
Expenses:
Operating 101,274 90,860
Crown
royalties 1,432 20,882
Admin 3,529 3,289
Interest 11,954 3,320
Depletion
and
depreciation 10,670 15,850
Foreign
exchange (28,105) (7,875)
Large
corporations
tax and other 667 410
Dividends on
preferred
shares of
subsidiaries 80 127
----------- -----------
101,501 126,863
----------- -----------
Net income
for
the period $ 36,819 $ 41,954
=========== ===========
Unitholders'
equity,
beginning of
period
As previously
reported $ 795,732 $ 826,415
Prior period
adjustment
- -
----------- -----------
As restated 795,732 826,415
Net income
for the period 36,819 41,954
Merger costs - (38,700)
Special
distribution to
unitholders - (14,875)
Issue of
trust units 10,263 764
Unitholder
distributions (28,604) (42,584)
----------- -----------
Unitholders'
equity, end
of period $ 814,210 $ 772,974
----------- -----------
Net income per
trust unit
Basic $ 0.65 $ 0.73
Diluted $ 0.65 $ 0.73
CONSOLIDATED STATEMENT OF
INCOME AND UNITHOLDERS' EQUITY
(In thousands of dollars)
Six months ended June 30
2002 2001
Revenues:
Syncrude
sweet blend $ 293,092 $ 358,418
Other income 3,607 1,848
----------- -----------
296,699 360,266
----------- -----------
Expenses:
Operating 178,705 185,751
Crown
royalties 2,950 48,825
Admin 5,647 6,169
Interest 24,273 7,598
Depletion
and
depreciation 24,220 30,258
Foreign
exchange (27,382) 1,427
Large
corporations
tax and other 1,271 855
Dividends on
preferred
shares of
subsidiaries 163 254
----------- -----------
209,847 281,137
----------- -----------
Net income
for
the period $ 86,852 $ 79,129
=========== ===========
Unitholders'
equity,
beginning of
period
As previously
reported $ 804,951 $ 845,647
Prior period
adjustment
(36,886) (13,844)
----------- -----------
As restated 768,065 831,803
Net income
for the period 86,852 79,129
Merger costs - (38,700)
Special
distribution to
unitholders - (14,875)
Issue of
trust units 16,371 764
Unitholder
distributions (57,078) (85,147)
----------- -----------
Unitholders'
equity, end
of period $ 814,210 $ 772,974
----------- -----------
Net income per
trust unit
Basic $ 1.53 $ 1.39
Diluted $ 1.53 $ 1.39
stockwatch.com |
