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CALGARY - Canadian Oil Sands Trust (TSX:COS) bumped up its quarterly distribution by 40 per cent on Wednesday even as it reported a sharp drop in quarterly earnings.
The trust declared a quarterly distribution of 35 cents per unit, payable on Nov. 30, up from the current payout of 25 cents per unit.
The distribution increase reflects a recent increase in crude oil prices, and higher production volumes from Syncrude, which averaged 312,000 barrels per day during the third quarter, said chief executive Marcel Coutu.
"Now that the heavy maintenance planned for 2009 is essentially behind us, production should remain strong for the rest of the year," Coutu stated.
When the trust converts into a corporation in late 2010 or early 2011, when a new federal tax on income trusts is set to come into effect, Coutu said his company plans to keep paying a dividend that tracks crude prices and operating performance.
"Simply put, dividend amounts will likely vary, similar to our history of distribution payments," he said.
The largest partner in the Syncrude Canada Ltd. oilsands development said it earned $247 million, or 51 cents per unit, for the quarter ended Sept. 30 compared with $604 million, or $1.25 per unit in the same 2008 period.
Revenues plunged from $1.46 billion to $809 million.
Cash from operating activities during the quarter was $213 million, or 44 cents per unit, compared to $921 million, or $1.91 per unit, reflecting a drop in crude oil prices, but partially offset by lower Crown royalties.
Canadian Oil Sands Trust holds a 37 per cent stake in the Syncrude partnership.
The others include Imperial Oil Ltd. (TSX:IMO) with 25 per cent stake, Suncor Energy Inc. (TSX:SU) with 12 per cent stake, ConocoPhillips (NYSE:COP) with nine per cent, Nexen Inc. with seven per cent (TSX:NXY).
ConocoPhillips is looking to sell off its stake in Syncrude as part of a $10-billion divestiture package aimed at paying down debt, the U.S. company's chief executive told analysts earlier Wednesday.
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