This news is classified in: Traditional Energy Oil and Gas
Dec 1, 2015
Unless otherwise noted: All figures are based on Canadian Oil Sands' 36.74 per cent working interest in the Syncrude joint venture; all financial figures are in Canadian dollars and have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP").
Canadian Oil Sands Limited ("COS") today announced its budget for 2016, demonstrating Syncrude's competitiveness and resilience in a lower oil price environment; operating and capital costs in 2016 will be down significantly from prior years while still enabling production growth.
"Syncrude's ability to reduce costs and respond to the lower oil price environment is exceeding market expectations. They proved it in 2015 with $1.3 billion, gross to Syncrude, in cost savings. They proved it with the execution of the major projects, which were completed in 2015 under budget and on schedule," said Ryan Kubik, President and Chief Executive Officer of Canadian Oil Sands.
Based on the 2016 Budget, COS expects to generate $338 million of free cash flow, and every USD $10 per barrel increase in the annual oil price raises our estimated free cash flow by about $300 million. Even under a USD $45 per barrel WTI oil price assumption, COS can fully fund all costs, including capital expenditures and the current dividend. COS offers one of the best ways to benefit from a recovery in oil prices, as COS' share price has historically demonstrated a 98 per cent correlation to crude oil prices.
"Syncrude's success in reducing its cost structure is exceeding market expectations. The positive implications to the business going forward are just starting to be appreciated and will have lasting value. Now, our shareholders can capture the value of an improved Syncrude business," added Mr. Kubik.
COS has scheduled a conference call for December 1 at 8:00 am ET to discuss the budget highlights and the longer term view of its business.
