OTTAWA (dpa-AFX) - Canadian Oil Sands Ltd. (COS.TO) said Thursday that it plans to invest $1.46 billion at the Syncrude project in 2012. The company is the largest owner of the Syncrude Canada Ltd. oil sands joint venture project in northern Alberta.
Announcing its budget for 2012, the company said that the investment will support its strong base of production and implement technologies to accelerate reclamation of tailings, a by-product of the bitumen extraction process.
Canadian Oil Sands has a 37 percent stake in the Syncrude oil sands mining and synthetic crude producing venture. Syncrude's other partners are Imperial Oil Ltd (IMO, IMO.TO), Suncor Energy Inc. (SU), Nexen Inc (NXY, NXY.TO), China Petroleum & Chemical Corp. (SNP), Murphy Oil Corp. (MUR) and JX Holdings Inc.'s (JXHLY.PK) unit Mocal Energy.
Canadian Oil Sands noted that about C$974 million will be directed to discrete, major infrastructure projects that should position Syncrude for 10 to 20 years of production while improving operational efficiency and environmental performance.
The company projects 2012 production for Syncrude to be 106 million to 117 million barrels, or 39 million to 43 million barrels net to Canadian Oil Sands. The production outlook incorporates a turnaround of Coker 8-3 in the first half of 2012.
In addition, the company forecasts sales for the year to total C$3.68 billion.
Canadian Oil Sands said that it plans to maintain its dividend, at least at the current level in 2012, based on the assumptions in its outlook for the year and support from cash balances as necessary. The company added that it looks forward to the completion of its mine train projects in 2014 and correspondingly higher free cash flow, assuming continued strength in oil prices, to support dividend growth.
Marcel Coutu, President and Chief Executive Officer of Canadian Oil Sands said, 'Syncrude's focus remains on improving capacity utilization, which offers the best opportunity to add significant value in the near term.'
Coutu added, 'We are disappointed with the pace of utilization improvement at Syncrude; however, we continue to believe a strong foundation for operational excellence under the leadership of ExxonMobil and Imperial Oil is being established that should support more predictable and robust production rates over the long term.'
COS.TO closed Wednesday's trading at C$20.35, down C$0.85 or 4.01 percent on a volume of 3.57 million shares.
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