Canadian Oil Sands Trust Fourth Quarter Report 2009 1 Canadian Oil Sands Trust announces 2009 fourth quarter results All financial figures are unaudited and in Canadian dollars unless otherwise noted.
TSX - COS.UN
Calgary, Alberta (January 28, 2010) – Canadian Oil Sands Trust (“Canadian Oil Sands”, the “Trust” or
“we”) today announced cash from operating activities of $328 million ($0.68 per Trust Unit (“Unit”)) for the
fourth quarter of 2009 compared with cash from operating activities of $466 million ($0.97 per Unit) for the
same period last year. The decrease reflects increases in non-cash working capital and higher Crown
royalties, partially offset by higher revenues.
For the year ended December 31, 2009 cash from operating activities decreased to $547 million ($1.13
per Unit) from $2,241 million ($4.66 per Unit) in 2008. The decrease reflects the significant decline in
crude oil prices in 2009 versus 2008, as well as lower production and increases in non-cash working
capital, partially offset by lower Crown royalties.
In the fourth quarter of 2009, the Trust reported net income of $96 million ($0.20 per Unit) compared with
net income of $124 million ($0.26 per Unit) recorded in the same period of 2008. Excluding impairment
charges on the Trust’s Arctic assets, net income in the fourth quarter of 2009 was $244 million ($0.50 per
Unit), reflecting higher sales volumes, oil prices and foreign exchange gains, partially offset by higher
Crown royalties. On an annual basis, net income totaled $432 million ($0.89 per Unit) in 2009, down from
$1,523 million ($3.17 per Unit) in 2008. The decline primarily reflects lower crude oil prices and
production, partially offset by lower Crown royalties.
The Trust has declared a quarterly distribution amount of $0.35 per Unit for Unitholders of record on
February 18, 2010, payable on February 26, 2010.
Net debt at the end of 2009 was $1,041 million, similar to net debt of $979 million at the end of 2008. The
Trust continues to maintain a strong financial position with net debt to total capitalization of 21 per cent.
“Unplanned downtime and maintenance exceeded our budgeted allowance during 2009, impacting both
production and costs,” said Marcel Coutu, President and Chief Executive Officer. “Although 2009
production was 12 per cent below our budget, we once again demonstrated that the plant can run at
Canadian Oil Sands Trust Fourth Quarter Report 2009 1 robust rates with December production running at 360,000 barrels per day. Syncrude’s priority is to
improve operational reliability to achieve design capacity rates more consistently.”
Sales volumes in 2009 averaged 103,000 barrels per day compared with 106,000 barrels per day in
2008. Production in 2009 was impacted by: turnaround and modification work on Syncrude’s Coker 8-3
complex; bitumen constraints; and reliability issues in the mining and upgrading processes, including
circulation issues with Coker 8-1 and unplanned repairs to the vacuum distillation unit. Production in 2008
was impacted by planned turnarounds of Cokers 8-2 and 8-1, bitumen production constraints and a
disruption in operations during the first quarter.
Following repairs to the vacuum distillation unit during November 2009, production ramped up
significantly, resulting in fourth quarter 2009 sales volumes averaging 119,000 barrels per day. By
comparison, sales volumes in 2008 averaged 110,000 barrels per day during the fourth quarter.
Operating costs in 2009 were $35.29 per barrel, virtually the same as 2008 costs of $35.26 per barrel.
Operating costs in both years reflect coker turnarounds and unplanned maintenance.
Capital expenditures in 2009 were $409 million compared with $281 million in 2008. Expenditures in both
years relate mainly to sustaining capital, as Syncrude currently is not incurring meaningful expansion-
related capital to grow productive capacity. In 2009, the expenditures related to the Syncrude Emissions
Reduction project, equipment purchases to improve bitumen production, modifications to the Coker 8-3
complex, construction of tailings facilities, and other infrastructure projects.
Syncrude’s total recordable injury rate for 2009 was 0.36 compared with a rate of 0.59 for 2008. While the
recordable injury rate declined, the fatality that occurred in November 2009 marred the improvement in
our overall safety performance. An investigation into the fatality is underway to determine what occurred
and to prevent a similar tragedy in the future. Syncrude is committed to protecting and promoting the
safety and well being of its employees and contractors. Investment in training, awareness activities, and
other initiatives is continuing in order to foster further improvements in workplace safety.
Canadian Oil Sands Trust Fourth Quarter Report 2009 2
CANADIAN OIL SANDS TRUST Highlights
Three Months Ended Twelve Months Ended December 31 December 31
(millions of Canadian dollars, except per Trust unit and per barrel volume amounts) 2009 2008 2009 2008
Net Income $ 96 $ 124 $ 432 $ 1,523 Per Trust unit- Basic $ 0.20 $ 0.26 $ 0.89 $ 3.17 Per Trust unit- Diluted $ 0.20 $ 0.26 $ 0.89 $ 3.16
Cash from (used in) Operating Activities $ 328 $ 466 $ 547 $ 2,241 Per Trust unit $ 0.68 $ 0.97 $ 1.13 $ 4.66
Unitholder Distributions $ 169 $ 361 $ 435 $ 1,804 Per Trust unit $ 0.35 $ 0.75 $ 0.90 $ 3.75
Sales Volumes (1)
Total (MMbbls) 10.9 10.1 37.6 38.8 Daily average (bbls) 119,287 110,197 103,129 105,986
Operating Costs ($/bbl) $ 30.18 $ 32.10 $ 35.29 $ 35.26
Net Realized SCO Selling Price ($/bbl) $ 78.67 $ 69.40 $ 69.47 $ 106.91
West Texas Intermediate (average $US/bbl) (2) $ 76.13 $ 59.08 $ 62.09 $ 99.75
(1) The Trust's sales volumes differ from its production volumes due to changes in inventory, which are primarily in-transit pipeline volumes, and are net of purchased crude oil volumes.
(2) Pricing obtained from Bloomberg.
2010 Outlook
Canadian Oil Sands is estimating Syncrude production of 115 million barrels with a range of 110 to 120
million barrels for 2010. While our annual production estimate remains unchanged from the Outlook
provided on October 28, 2009, we expect first quarter production will be impacted by unplanned outages
in the upgrader during January and an advancement of the planned LC finer turnaround into the first
quarter. We expect this lost production will be recaptured later in the year, as outages were factored into
our annual production estimate.
Canadian Oil Sands’ operating costs are estimated at $1,480 million, or $35 per barrel, with capital
expenditures of $541 million, mainly related to sustaining the Syncrude operation.
We are estimating 2010 cash from operating activities of $1,013 million, or $2.09 per Unit. After
deducting capital expenditures, we are estimating $472 million of remaining cash from operating
activities, or $0.97 per Unit.
Distributions paid in 2010 are expected to be 100 per cent taxable as other income. The actual taxability
of 2010 distributions will be determined and reported to Unitholders prior to the end of the first quarter of
2011.
Canadian Oil Sands Trust Fourth Quarter Report 2009 3 More information on the Trust’s outlook is provided in the Management’s Discussion and Analysis section
of this report and the January 28, 2010 guidance document, which is available on the Trust’s web site at
www.cos-trust.com under “Investor”.
Canadian Oil Sands speaks with Canadians about the oil sands
Marcel Coutu, President and Chief Executive Officer of Canadian Oil Sands, was in Halifax, Nova Scotia and St. John’s, Newfoundland on January 13th and 14th to speak with Canadians about the oil sands. Mr.
Coutu provided frank insights into how the oil sands are meeting the challenge of improving their
environmental performance, the impact of the oil sands on the economy of Canada and local
communities, and what all this means to Canadians. To read a copy of his speech and view video clips,
please visit www.OilSandsNow.ca.
Canadian Oil Sands Trust Fourth Quarter Report 2009 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following Management’s Discussion and Analysis (“MD&A”) was prepared as of January 28, 2010
and should be read in conjunction with the unaudited interim consolidated financial statements of
Canadian Oil Sands Trust (“Canadian Oil Sands” or the “Trust”) for the three and twelve months ended
December 31, 2009 and December 31, 2008, and the audited consolidated financial statements and
MD&A of the Trust for the year ended December 31, 2008 and the Trust’s Annual Information Form
(“AIF”) dated March 13, 2009. Additional information on the Trust, including its AIF, is available on
SEDAR at www.sedar.com or on the Trust’s website at www.cos-trust.com.
ADVISORY- in the interest of providing the Trust’s Unitholders and potential investors with information regarding the Trust, including management’s assessment of the Trust’s future production and cost estimates, plans and operations, certain statements throughout this MD&A and the related press release contain “forward-looking statements” under applicable securities law. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to expectations regarding the impact on future costs as a result of the economic downturn; the cost estimate for the Sulphur Emissions Reduction project and the expectation that the Sulphur Emissions Reduction project will significantly reduce total sulphur dioxide and other emissions; the completion date for the Sulphur Emissions Reduction project; future distributions and any increase or decrease from current payment amounts; the Trust’s plans with regard to its net debt level by the end of 2010; plans regarding crude oil hedges and currency hedges in the future; the expected production, revenues and operating costs for 2010; the belief that operational reliability will improve over time and with that improvement that operating costs will be reduced; the expected level of sustaining capital for the next few years and longer term; the expectations regarding capital expenditures and operating costs; the plans regarding conversion to a corporate structure and the timing of seeking Unitholder approval; the plans and expected impact of adopting International Financial Reporting Standards; the expected impact of any current and future environmental legislation, including without limitation, regulations relating to tailings; the expectation that there will not be any material funding increases relative to Syncrude’s future reclamation costs or pension funding for the next year; the expected realized selling price, which includes the anticipated differential to WTI, to be received in 2010 for Canadian Oil Sands’ product; the potential amount payable in respect of any future income tax liability; the plans regarding future expansions of the Syncrude project and in particular all plans regarding future development; the level of energy consumption in 2010 and beyond; capital expenditures for 2010; the level of natural gas consumption in 2010 and beyond; the expected price for crude oil and natural gas in 2010, and the anticipated impact that certain factors such as natural gas and oil prices, foreign exchange and operating costs have on the Trust’s cash from operating activities and net income. You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Trust believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this MD&A include, but are not limited to: the impacts of regulatory changes especially as such relate to royalties, taxation, and environmental charges; the impact of technology on operations and processes and how new complex technology may not perform as expected; skilled labour shortages and the productivity achieved from labour in the Fort McMurray area; the supply and demand metrics for oil and natural gas; the impact that pipeline capacity and refinery demand have on prices for our products; the unanimous joint venture owner approval for major expansions; the variances of stock market activities generally; global economic environment/volatility of markets; normal risks associated with litigation, general economic, business and market conditions; regulatory change, and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust. You are cautioned that the foregoing list of important factors is not exhaustive. No assurance can be given that the final legislation implementing the federal tax changes regarding income trusts will not be further changed in a manner which adversely affects the Trust and its Unitholders. Furthermore, the forward-looking statements contained in this MD&A are made as of the date of this MD&A, and unless required by law, the Trust does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.
Canadian Oil Sands Trust Fourth Quarter Report 2009 5
REVIEW OF SYNCRUDE OPERATIONS
During the fourth quarter of 2009, crude oil production from the Syncrude Joint Venture (“Syncrude”)
totaled 30.1 million barrels, or 327,000 barrels per day, compared with 28.4 million barrels, or 308,000
barrels per day, during the same period of 2008. Net to the Trust, production totaled 11.1 million barrels
in the fourth quarter of 2009 compared with 10.4 million barrels in 2008, based on our 36.74 per cent
working interest.
Production volumes in the fourth quarter of 2009 were impacted by unplanned maintenance in Syncrude’s
vacuum distillation unit. By comparison, production during the fourth quarter of 2008 was impacted by a
planned turnaround of Coker 8-2, which commenced in September 2008 and was completed in the first
week of November 2008.
In 2009, Syncrude produced 102.2 million barrels, or 280,000 barrels per day, compared with 105.8
million barrels, or 289,000 barrels per day in 2008. Net to the Trust, production totaled 37.5 million
barrels in 2009 compared with 38.9 million barrels in 2008. Syncrude’s 2009 production was negatively
affected by an extended turnaround and modification work on Coker 8-3 and related units, which began in
mid-March and was completed in early June. As well, unplanned outages in the mining operations, coke
circulation difficulties in Coker 8-1, maintenance on the vacuum distillation unit, and first quarter bitumen
constraints reduced 2009 production. By comparison, production in 2008 was impacted by the planned
turnarounds of Coker 8-2 and Coker 8-1, bitumen production constraints and a disruption in several
operating units during the first quarter.
Syncrude’s facilities have the design capability to produce approximately 375,000 barrels per day when
operating at full capacity under optimal conditions and with no downtime for maintenance or turnarounds.
Under normal operating conditions, scheduled downtime is required for maintenance and turnaround
activities and unscheduled downtime will occur as a result of operational and mechanical problems,
unanticipated repairs and other slowdowns. When allowances for such downtime are included, the daily
design productive capacity of Syncrude’s facilities is approximately 350,000 barrels per day on average
and is referred to as “barrels per calendar day”. All references to Syncrude’s productive capacity in this
report refer to barrels per calendar day, unless stated otherwise.
Operating costs were $30.18 per barrel in the fourth quarter of 2009, down $1.92 per barrel from the
same quarter of 2008. Annual operating costs for 2009 were $35.29 per barrel, essentially flat in
comparison with 2008 operating costs of $35.26 per barrel (see the “Operating costs” section of this
MD&A for further discussion).
Canadian Oil Sands Trust Fourth Quarter Report 2009 6 The Trust’s production volumes differ from its sales volumes due to changes in inventory, which are
primarily in-transit pipeline volumes. The impact of Syncrude’s 2009 operations on Canadian Oil Sands’
financial results is more fully discussed later in this MD&A.
BUSINESS ENVIRONMENT
Prices for U.S. dollar West Texas Intermediate (“WTI”) oil continued to strengthen during the fourth
quarter of 2009, averaging U.S. $76.13 per barrel versus U.S. $57.32 per barrel for the first nine months
of 2009. Partially offsetting the oil price rise, the Canadian dollar increased to an average of $0.95
U.S./Cdn in the fourth quarter versus $0.85 U.S./Cdn for the first nine months of 2009. Compared to
2008, however, commodity prices during 2009 were substantially lower with U.S. dollar WTI prices
averaging $62.09 per barrel versus $99.75 per barrel in 2008.
The deterioration of economic conditions during late 2008 and early 2009 resulted in the deferral or
cancellation of several oil sands projects in the Fort McMurray region. With the improvement in market
conditions in more recent months, announcements have been made that indicate development of some of
these projects is expected to resume. While it is reasonable to expect any continued industry slowdown
to contribute to lower costs over time through more competitive access to labour and materials, we have
yet to experience material declines in production costs. A significant portion of costs in the oil sands
industry are associated with labour, and these costs respond much slower to changing market conditions,
particularly as industry-wide labour agreements exist that stipulated wage increases in 2009. We
continue to believe the most significant factor in achieving cost reductions at Syncrude is better
operational reliability.
Canadian Oil Sands Trust Fourth Quarter Report 2009 7
SUMMARY OF QUARTERLY RESULTS
| 2009 2008 ($ millions, except per Trust Unit and volume amounts) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 | |||||
|---|---|---|---|---|---|
| Revenues (1) Net income (loss) Per Trust Unit, Basic & Diluted Cash from operating activities Per Trust Unit (2) Unitholder distributions Per Trust Unit Daily average sales volumes (bbls) (3) Net realized SCO selling price ($/bbl) (4) Operating costs ($/bbl) (5) | $ 8 63 $ 7 73 $ 467 $ 512 $ 9 6 $ 2 47 $ 46 $ 43 $ 0 .20 $ 0 .51 $ 0.10 $ 0.09 $ 3 28 $ 2 13 $ ( 44) $ 50 $ 0 .68 $ 0 .44 $ ( 0.09) $ 0.10 $ 1 69 $ 1 21 $ 73 $ 72 $ 0 .35 $ 0 .25 $ 0.15 $ 0.15 119,287 114,544 75,553 102,825 $ 7 8.67 $ 7 3.31 $ 67.92 $ 55.32 $ 3 0.18 $ 2 7.80 $ 50.23 $ 38.78 $ 4 .33 $ 2 .90 $ 3.09 $ 4.96 $ 7 6.13 $ 6 8.24 $ 59.79 $ 43.31 $ 0 .95 $ 0 .91 $ 0.86 $ 0.80 $ 0 .96 $ 0 .93 $ 0.86 $ 0.79 | $ 512 $ 43 $ 0.09 $ 50 $ 0.10 $ 72 $ 0.15 102,825 $ 55.32 $ 38.78 | $ 704 $ 1,381 $ 1,177 $ 907 $ 124 $ 604 $ 497 $ 298 $ 0.26 $ 1.25 $ 1.04 $ 0.62 $ 466 $ 921 $ 413 $ 441 $ 0.97 $ 1.91 $ 0.86 $ 0.92 $ 361 $ 602 $ 481 $ 360 $ 0.75 $ 1.25 $ 1.00 $ 0.75 110,197 116,656 97,744 99,181 $ 69.40 $ 127.55 $ 131.32 $ 100.41 $ 32.10 $ 32.15 $ 41.92 $ 35.93 $ 6.41 $ 7.86 $ 9.38 $ 7.30 $ 59.08 $ 118.22 $ 123.80 $ 97.82 $ 0.83 $ 0.96 $ 0.99 $ 1.00 $ 0.82 $ 0.94 $ 0.98 $ 0.97 | $ 1,381 $ 1,177 $ 907 $ 604 $ 497 $ 298 $ 1.25 $ 1.04 $ 0.62 $ 921 $ 413 $ 441 $ 1.91 $ 0.86 $ 0.92 $ 602 $ 481 $ 360 $ 1.25 $ 1.00 $ 0.75 116,656 97,744 99,181 $ 127.55 $ 131.32 $ 100.41 $ 32.15 $ 41.92 $ 35.93 | |
| Purchased natural gas price ($/GJ) | $ 4.96 | $ 7.30 | |||
| West Texas Intermediate (avg. US$/bbl) (6) Foreign exchange rates (US$/Cdn$): Average Quarter- end | $ 43.31 $ 0.80 $ 0.79 | $ 118.22 $ 123.80 $ 97.82 $ 0.96 $ 0.99 $ 1.00 $ 0.94 $ 0.98 $ 0.97 | |||
| (1) Revenues after crude oil purchases and transportation expense. (2) Cash from operating activities per Trust Unit is a non-GAAP measure that is derived from cash from operating activities reported on the Trust's Consolidated Statements of Cash Flows divided by the weighted-average number of Trust Units outstanding in the period, as used in the Trust's net income per Unit calculations. (3) Daily average sales volumes after crude oil purchases. (4) Net realized SCO selling price after foreign currency hedging. (5) Derived from operating costs, as reported on the Trust's Consolidated Statements of Income and Comprehensive Income, divided by the sales volumes during the period. (6) Pricing obtained from Bloomberg. |
During the last eight quarters, the following items have had a significant impact on the Trust’s financial
results:
Fluctuations in U.S. dollar WTI oil prices have impacted the Trust’s revenues, Crown royalties, �
net income and cash from operating activities;
Net income was reduced in the fourth quarter of 2009 by $148 million due to an impairment �
charge and goodwill write-down on the Arctic natural gas assets;
Planned and unplanned maintenance activities as well as turnarounds have impacted quarterly �
production volumes, sales revenues and operating costs;
� U.S. to Canadian dollar exchange rate fluctuations have resulted in foreign exchange gains and
losses on the revaluation of U.S. dollar denominated debt and have impacted commodity pricing;
and
Tax rate reductions substantively enacted in the first quarter of 2009 resulted in additional future �
income tax recoveries of $63 million.
The above items are discussed in greater detail later in this MD&A.
Quarterly variances in revenues, net income, and cash from operating activities are caused mainly by
fluctuations in crude oil prices, production and sales volumes, operating costs and natural gas prices. Net
income also is impacted by unrealized foreign exchange gains and losses, impairment charges and by
future income tax amounts. A large proportion of operating costs are fixed and, as such, per barrel
operating costs are variable to production volumes. While the supply/demand balance for crude oil
Canadian Oil Sands Trust Fourth Quarter Report 2009 8 affects selling prices, the impact of this equation is difficult to predict and quantify and has not displayed
significant seasonality. Natural gas prices are typically higher in winter months as heating demand rises,
but this seasonality is influenced by weather conditions and North American natural gas inventory levels.
In addition, production levels may not display seasonal patterns or trends. While maintenance and
turnaround activities are typically scheduled to avoid the winter months, the exact timing of unit
shutdowns cannot be precisely scheduled, and unplanned outages may occur.
Maintenance and turnaround activities impact both production volumes and operating costs. The costs
associated with these activities are expensed in the period they are incurred, which can lead to significant
increases in operating costs. The effect on per barrel operating costs of these maintenance activities is
amplified as the facility is generally producing at reduced rates when maintenance work is occurring.
REVIEW OF FINANCIAL RESULTS
In the fourth quarter of 2009, the Trust reported net income of $96 million, or $0.20 per Unit, compared
with $124 million, or $0.26 per Unit, recorded in the fourth quarter of 2008. Excluding after-tax
impairment charges of $148 million on the Trust’s Arctic assets, 2009 net income was $244 million or
$0.50 per Unit, reflecting higher sales volumes, oil prices and foreign exchange gains, partially offset by
higher Crown royalties.
On an annual basis, net income totaled $432 million, or $0.89 per Unit compared with $1,523 million, or
$3.17 per Unit, recorded in 2008. The decline in net income primarily reflects lower revenues, net of
lower Crown royalties in 2009.
Revenues after crude oil purchases and transportation costs totaled $863 million in the fourth quarter of
2009 versus $704 million in the fourth quarter of 2008. On an annual basis, revenues after crude oil
purchases and transportation costs totaled $2,615 million in 2009 versus $4,169 million in 2008. The
decrease in annual revenues was due mainly to lower crude oil prices as well as lower production and
sales volumes in 2009 (see “Revenues after Crude Oil Purchases and Transportation Expense” section of
this MD&A for further discussion).
Cash from operating activities was $328 million for the fourth quarter of 2009 versus $466 million for the
fourth quarter of 2008. The decrease in quarter-over-quarter cash from operating activities was due to
increases in non-cash working capital and Crown royalties, partially offset by higher revenues. On an
annual basis, cash from operating activities in 2009 decreased to $547 million versus $2,241 million for
2008. The decrease in the yearly cash from operating activities was due to the decrease in revenues and
increases in non-cash working capital, partially offset by lower Crown royalties.
Canadian Oil Sands Trust Fourth Quarter Report 2009 9 Non-cash working capital decreased cash from operating activities by $38 million in the fourth quarter of
2009, primarily as a result of higher accounts receivable, reflecting higher oil production and prices for
December 2009 compared to September 2009. In the fourth quarter of 2008, non-cash working capital
increased cash from operating activities by $174 million, primarily as a result of lower accounts receivable
at December 31, 2008 relative to September 30, 2008.
On an annual basis, increases in non-cash working capital decreased cash from operating activities by
$207 million, primarily as a result of higher accounts receivable and higher inventory levels at December
31, 2009 relative to December 31, 2008. In 2008, non-cash working capital increased cash from
operating activities by $202 million, primarily as a result of lower accounts receivable at December 31,
2008 relative to December 31, 2007.
Non-cash working capital and changes therein can vary significantly on a period-by-period basis as a
result of the timing and settlements of accounts receivable and accounts payable balances, and are
impacted by a number of factors including changes in: revenue, operating expenses, Crown royalties,
capital expenditures, and inventory fluctuations.
Non-GAAP Financial Measures
In this MD&A we refer to financial measures that do not have any standardized meaning as prescribed by
Canadian Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial measures
include cash from operating activities on a per Unit basis, net debt, total capitalization and certain per
barrel measures. Non-GAAP financial measures provide additional information that we believe is
meaningful regarding the Trust’s operational performance, its liquidity and its capacity to fund
distributions, capital expenditures and other investing activities. Users are cautioned that non-GAAP
financial measures presented by the Trust may not be comparable with measures provided by other
entities.
Canadian Oil Sands Trust Fourth Quarter Report 2009 10
Net Income per Barrel
| Three Months Ended Twelve Months Ended December 31 December 31 ($ per bbl) 1 2009 2008 Variance 2009 2008 Variance | ||
|---|---|---|
| Revenues after crude oil purchases and transportation expense Operating costs Crown royalties | 78.67 69.43 9.24 69.47 107.47 (30.18) (32.10) 1.92 (35.29) (35.26) (8.47) (5.84) (2.63) (6.06) (15.44) | (38.00) (0.03) 9.38 (28.65) |
| 40.02 31.49 8.53 28.12 56.77 | ||
| (3.26) (2.36) (0.90) (3.75) (2.00) (0.75) (0.35) (0.40) (0.87) (0.61) (2.03) (1.80) (0.23) (2.45) (1.75) (23.78) (11.73) (12.05) (15.16) (11.46) (4.73) - (4.73) (1.38) - 2.10 (10.40) 12.50 4.28 (4.09) 1.16 7.33 (6.17) 2.67 2.39 | ||
| Non-production costs Administration and insurance Interest, net Depreciation, depletion and accretion 2 Goodwill impairment Foreign exchange gain (loss) Future income tax (expense) recovery and other | (1.75) (0.26) (0.70) (3.70) (1.38) 8.37 0.28 | |
| (31.29) (19.31) (11.98) (16.66) (17.52) | 0.86 (27.79) | |
| Net income per barrel | 8.73 12.18 (3.45) 11.46 39.25 | |
| 10.9 10.1 0.8 37.6 38.8 | ||
| Sales volumes (MMbbls) 3 | (1.2) | |
| 1 Unless otherwise specified, net income and other per barrel measures in this MD&A have been derived by dividing the relevant revenue or cost item by the sales volumes in the period. | ||
| 2 Includes impairment of Arctic assets. | ||
| 3 Sales volumes, net of purchased crude oil volumes. |
Revenues after Crude Oil Purchases and Transportation Expense
| Three Months Ended Twelve Months Ended December 31 December 31 ($ millions) 2009 2008 Variance 2009 2008 Variance | ||||
|---|---|---|---|---|
| Sales revenue 1 Crude oil purchases Transportation expense Currency hedging gains 1 Sales volumes (MMbbls) 2 | $ 894 $ 767 $ 127 $ 2,775 (24) (54) 30 (133) (8) (10) 2 (31) | $ 4,539 $ (1,764) (337) 204 (37) 6 | ||
| 862 703 159 2,611 1 1 - 4 | 4,165 (1,554) 4 - | |||
| $ 863 $ 704 $ 159 $ 2,615 | $ 4,169 $ (1,554) | |||
| 10.9 10.1 0.8 37.6 | 38.8 (1.2) | |||
| 1 The sum of sales revenue and currency hedging gains equals Revenues on the Trust's Consolidated Statements of Income and Comprehensive Income. Sales revenue includes revenue from the sale of purchased crude oil and sulphur revenue. 2 Sales volumes, net of purchased crude oil volumes. ($ per barrel) | ||||
| Realized SCO selling price before hedging 3 Currency hedging gains Net realized SCO selling price | $ 78.59 $ 69.31 $ 9.28 $ 69.37 0.08 0.09 (0.01) 0.10 | $ 106.81 $ (37.44) 0.10 - | ||
| $ 78.67 $ 69.40 $ 9.27 $ 69.47 | $ 106.91 $ (37.44) | |||
| 3 SCO sales revenue | after crude oil purchases and transportation expense divided by sales volumes, net of purchased crude oil volum | es. |
The increase in sales revenue in the fourth quarter of 2009 versus 2008 primarily reflects a higher
realized selling price for our synthetic crude oil (“SCO”) as well as higher sales volumes. During the
fourth quarter of 2009, WTI averaged U.S. $76.13 per barrel compared to U.S. $59.08 per barrel in the
fourth quarter of 2008. The impact of the higher U.S. dollar WTI price in the fourth quarter of 2009 was
offset somewhat by a stronger Canadian dollar, which averaged $0.95 U.S./Cdn for the fourth quarter of
2009 versus $0.83 U.S./Cdn for the fourth quarter of 2008.
The decrease in sales revenue on an annual basis was due mainly to lower realized selling prices for
SCO and lower sales volumes in 2009. WTI prices averaged U.S. $62.09 per barrel in 2009 versus U.S.
Canadian Oil Sands Trust Fourth Quarter Report 2009 11 $99.75 per barrel in 2008. The impact of the lower 2009 U.S. dollar WTI price was offset somewhat by a
weaker Canadian dollar, which averaged $0.88 U.S./Cdn in 2009 versus $0.94 U.S./Cdn in 2008.
The Trust’s SCO price is also affected by the premium or discount realized relative to Canadian dollar
WTI (the “differential”). In the fourth quarter of 2009, the Trust realized a weighted-average SCO discount
of $1.69 per barrel versus a discount of $1.63 per barrel for the same period of 2008. In 2009, the Trust
realized a weighted-average SCO discount of $1.08 per barrel relative to the average Canadian dollar
WTI price versus a premium of $1.94 per barrel in 2008. The differential is dependent upon the supply
and demand for SCO and, accordingly, can change quickly depending upon the short-term supply and
demand dynamics in the market and pipeline availability for transporting crude oil.
The Trust’s fourth quarter sales volumes averaged 119,000 barrels per day and 110,000 barrels per day
in 2009 and 2008, respectively. On an annual basis, sales volumes averaged 103,000 barrels per day in
2009 versus an average of 106,000 barrels per day in 2008. Sales volumes for 2009 were impacted by
the same factors that impacted Syncrude production including a longer than expected planned turnaround
and modifications on the Coker 8-3 complex, reliability issues in mining and upgrading operations, and
constrained bitumen production during the first quarter. Sales volumes in 2008 were impacted by the
disruption of several operating units in January, the scheduled turnarounds of Coker 8-2 and Coker 8-1,
and bitumen production constraints.
From time to time the Trust purchases crude oil from third parties to support the sales of internally
produced SCO by fulfilling sales commitments with customers when there are shortfalls in Syncrude’s
production and by facilitating certain transportation arrangements and operations. The decrease in value
of crude oil purchases during 2009 was due to the decrease in commodity prices and purchased
volumes.
Canadian Oil Sands Trust Fourth Quarter Report 2009 12