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Canadian Oil Sands Reports Lower Earnings, Slashes Dividends

Earnings and dividends were down last week as Canadian oil and gas companies began releasing their latest round of quarterly financial reports.

Canadian Oil Sands, whose only asset is a 37% stake in the Syncrude tar sands/oil sands development, reported $25 million in profits, down 87% from the same quarter last year. “It cut its capital spending plans for 2015 and slashed its dividend by 86%, to five cents a share, to conserve cash,” CBC reports.

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With reports expected today from Imperial Oil and this Thursday from Suncor Energy, “the general tenor is not going to vary a lot,” said Judith Dwarkin, director of energy research with ITG Investment Research in Calgary. “Capital cuts, trying to maintain the cash flow.”

Cenovus Energy and Husky Energy, both of which issue their quarterly reports next week, “have oil sands operations that are steam-assisted instead of mined” and break even at an oil price of US$50 per barrel, Johnson writes. Since benchmark West Texas Intermediate crude averaged US$73.20 through the fourth quarter of 2014, “the earnings pain is mostly deferred until the first-quarter numbers come out in the spring.”