Canadian Oil Sands Ltd. posted a big drop in profit for the first three months of the year as unplanned outages at the Syn crude oil sands operation took a bite out of production.
Net income during the first quarter was $177-million, or 37 cents per share, down from $318-million, or 66 cents per share, during the same period a year earlier, the company said Tuesday.
That missed the average analyst estimate of 41 cents per share, according to Thomson Reuters.
Syncrude produced an average of 260,400 barrels per day, down from 294,800 during the same 2012 quarter.
Sales during the quarter were $828-million, against $956-million during the first three months of last year.
"Syncrude production was lower than expected this quarter, as we experienced several unplanned outages in extraction and upgrading. Syncrude has performed the maintenance required to address the extraction issues and is investigating the root cause of the hydrotreating outages in the upgrader," chief executive officer Marcel Coutu said in a release.
Although it looks as though the problems have been resolved, Mr. Coutu said the company has reduced its 2013 production outlook by about 5 per cent to between 100 million to 110 million barrels.
Mr. Coutu said despite the lower output, Canadian Oil Sands should still be able to fund its capital program and maintain its 35 cent per-share dividend.
Canadian Oil Sands (TSX:COS) is best known for its 37 per cent stake in the massive Syncrude Canada oil sands mine north of Fort McMurray, Alta. It's one of the oldest and largest projects of its kind.
Bitumen from Syncrude is upgraded into a more valuable product called synthetic crude oil, which refineries can easily handle.
Newer oil sands mines, such as Imperial Oil's Kearl project, have decided to forgo building multibillion-dollar oil sands upgraders in favour of selling bitumen into the market.
Syncrude's other owners include Imperial Oil Ltd., Nexen, Suncor Energy Inc., China's Sinopec, Mocal Energy Ltd. and Murphy Oil Co. Ltd.
Nexen was acquired by China National Offshore Oil Co. for $15-billion earlier this year, meaning 16 per cent of Syncrude is owned by Chinese state-owned interests.