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MARK RALSTON/The Globe and Mail

Canadian Oil Sands Trust , which holds the largest stake in the Syncrude Canada Ltd. partnership, said Thursday its fourth-quarter profit fell 23 per cent despite strengthening oil prices as it wrote down the value of some Arctic gas fields.

The trust said its net income fell to $96-million, or 20 cents per unit, from $124-million, or 26 cents, in the fourth quarter of 2008.

The drop came as the trust wrote down the value of Arctic gas fields it acquired for $198-million in 2006 as a hedge against natural gas prices by $148-million. Without the charge, net income would have been $244-million, or 50 cents per unit, beating analysts' average profit estimate of 47 cents a unit.

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The profit drop comes despite oil prices that rose from the year-prior quarter, when commodity prices plunged as the economic crisis took hold. Benchmark North American oil prices averaged $76.13 (U.S.) in the quarter, up 29 per cent from the fourth quarter of 2008.

Cash from operating activities, used to pay distributions to unitholders, fell 30 per cent to $328-million (Canadian), or 68 cents a unit, from $466-million, or 97 cents.

The trust, which owns a 37 per cent share in the Syncrude oil sands project, said its share of production from the site north of Fort McMurray, Alta., rose 8 per cent to 119,287 barrels a day. It sold its synthetic crude for an average price of $78.67 a barrel, up 13 per cent from a year earlier.

Operating costs for the project during the quarter fell 6 per cent to $30.18 a barrel from $32.10.

The trust also said it expects Syncrude's 2010 production to be around 115 million barrels, or about 315,000 bpd, unchanged from an outlook released in October. However it warned that unplanned maintenance this month at the project's upgrader, which converts tarry bitumen into refinery-ready synthetic crude, and a planned turnaround would lower first-quarter output.

Canadian Oil Sands Trust's revenue for the quarter rose 17 per cent to $895-million.

For the year, net income fell 72 per cent to $432-million, or 89 cents per unit, from $1.52-billion, or $3.16.

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Cash from operating activities fell 76 per cent from 2008 to $547-million, or $1.13 a unit, from $2.24-billion or $4.66 per unit.

The trust's share of Syncrude's 2009 production fell 2.7 per cent from the prior year to 103,129 barrels per day.

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