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Canadian Oil Sands Banking On The Syncrude Project

|Includes:Canadian Oil Sands Ltd. (COSWF)

Canadian Oil Sands (TSX:COS) (OTCQX:COSWF) has a 36.74% interest in the Syncrude project in northern Alberta. The Company is the largest stakeholder in this project. Syncrude Canada Ltd. operates and administers the Syncrude Project. For Canadian Oil Sands, Syncrude's high-quality crude oil resource affords a strong, long-life cash producing asset base. Syncrude's upgrading facility changes bitumen into a light, sweet crude oil.

The Syncrude Project ownership also consist of Imperial Oil Resources (25%); Suncor Energy Ventures Partnership (12%); Sinopec Oil Sands Partnership (9.03%); Nexen Oil Sands Partnership (7.23%), Mocal Energy Limited (5%), and Murphy Oil Company Ltd. (5%).

In 1964, the Syncrude consortium established with the directive to research the economic and technical feasibility of mining oil from the Athabasca oil sands. In 2011, Syncrude started a significant capital projects program. This program is geared at maintaining and enhancing its operations and improving environmental performance. These projects are scheduled to be mostly completed by 2015.

Recently, Mr. Ryan Kubik, Canadian Oil Sands President/CEO, said, "Higher production and crude oil prices contributed to a 30 per cent increase in cash flow from operations in the first quarter of 2014 compared with last year's first quarter. Syncrude has also made significant progress on our major projects. Our Mildred Lake Mine Train Replacement project reached 85 per cent completion and our estimated cost has come down by $300 million gross to Syncrude. The project is well on track to be in service by the end of the year."

Syncrude has a broad undeveloped, top-tier bitumen mining resource and its next development is to extend the North Mine (the Mildred Lake Extension (MLX) project). Pending regulatory approval, the work is scheduled to start towards the end of the decade.

For Q1 2014, Canadian Oil Sands' cash flow from operations was $357 million ($0.74 per Share) versus cash flow from operations of $275 million ($0.57 per Share) in Q1 2013. The main drivers of this increased cash flow were greater sales volumes, a higher realized selling price, as well as lower current taxes.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: COSWF