In the midst of a hostile takeover bid by Suncor Energy, Canadian Oil Sands Limited is puffing out its chest as it released its 2016 budget numbers.
It’s predicting operating expenses of $1.4 billion next year along with total capital expenditures of $295 million net to Canadian Oil Sands Limited.
In comparison the 2015 Budget saw a projected operating budget of $1.7 billion and capital spending pegged at $564 million.
COS, the majority stakeholder and operator of Syncrude says cost cutting measures have paid off and it’s about to enter a new era of low cost operations.
“Syncrude’s ability to reduce costs and respond to the lower oil price environment is exceeding market expectations,” said Ryan Kubik, President and Chief Executive Officer of COS. “They proved it in 2015 with $1.3 billion, gross to Sycrude, in cost savings. They proved it with the execution of the major projects, which were completed in 2015 under budget and on schedule.”
COS is estimating Syncrude to produce between 95 and 110 million barrels next year, 35 to 40 million of that would be net to Syncrude. The budget is based on production of 105 million barrels.
Operating expenses are estimated at $37.14 per barrel which includes energy costs, COS expects to generate $338 million of free cash flow and each USD $10 increase in the price of oil will raise cash flow levels by an estimated $300 million.
