Canadian Oil Sands Trust

Canadian Oil Sands Trust

December 09, 2008 23:59 ET

Canadian Oil Sands Provides 2009 Budget

CALGARY, ALBERTA--(Marketwire - December 9, 2008) - (TSX:COS.UN) - Canadian Oil Sands Trust (the "Trust" or "Canadian Oil Sands" or "we") today announced our Budget for 2009. Unless otherwise noted, all figures are based on Canadian Oil Sands' 36.74 per cent working interest in the Syncrude joint venture and all financial figures are in Canadian dollars.


Synthetic crude oil production


Annual total 42.3 million barrels (range of

40 to 44 million barrels)


Daily average 115,800 barrels per day



Operating costs $30.72 per barrel



Cash from operating activities $1.70 per Trust Unit



Capital Expenditures $440 million



Key assumptions:


WTI Crude Oil (US$ per barrel) $50.00


Premium (Discount) to Cdn$ WTI

(Cdn$/bbl) ($4.00)


AECO Natural Gas (Cdn$/GJ) $6.00


Foreign Exchange Rate (US$/Cdn$) $0.825


The 2009 Budget reflects the following main factors:

- A production estimate that incorporates a turnaround of Coker 8-3 in

the second quarter of the year, a turnaround of the LC-Finer in the

third quarter, a turnaround of the vacuum unit with the timing not

yet determined, and an allowance for some unplanned outages. The

production range reflects the upside and downside in volumes Syncrude

could experience, depending on operational reliability. We believe

the main factor limiting production in 2009 is constrained bitumen

supply as a result of reduced reliability in the mining and

extraction processes, which Syncrude is working to solve.

- Amended Crown royalty terms for the Syncrude project, which are based

on 25 per cent of plant gate bitumen revenue less Syncrude operating,

non-production and allowed capital costs relating to bitumen

production, plus recapture of upgrader growth capital. See Canadian

Oil Sands' press release dated November 18, 2008 for more


- A capital expenditure budget of $440 million, or about $10.40 per

barrel. Approximately $290 million of the budget is allocated for

maintenance of business and other, with the remaining $150 million

allocated for the Syncrude emissions reduction ("SER") project. The

SER project is a multi-year environmental project that is designed to

reduce sulphur compound emissions by approximately 60 per cent from

current approved levels when completed.

Changes in certain factors and market conditions could potentially impact this Budget. In particular, cash from operating activities is highly sensitive to crude oil prices and US/Canadian dollar foreign exchange rates. Every US$1.00 per barrel change in the WTI crude oil price impacts cash from operating activities by $0.08 per Trust unit while every $0.01 US/Cdn change in the exchange rate impacts cash from operating activities by $0.05 per Trust unit. More information on the Trust's 2009 Budget, including a sensitivity analysis of other key factors affecting the Budget, is provided in our 2009 guidance document, which is available on the Trust's web site at under "investor". Canadian Oil Sands intends to continue providing quarterly updates to its guidance.

"Syncrude's focus continues to be on improving operational reliability. We are realizing the benefits of Imperial Oil and ExxonMobil's assistance, most notably in improved upgrader throughput and better energy efficiency. Production gains are anticipated in 2009 over 2008 with the objective of reaching our design capacity of 350,000 barrels per day, gross to Syncrude, in 2010," said Marcel Coutu, Canadian Oil Sands' President and Chief Executive Officer.

Canadian Oil Sands' financial plan for 2009 is based on maintaining a strong balance sheet with an immediate objective of preserving our liquidity position and financial flexibility in light of tight credit market conditions. The Trust has about $500 million in debt maturities in 2009, which it plans to refinance through draws on its $840 million of available credit facilities, or by terming out in the debt capital markets. Distributions during this period likely will more closely reflect our discretionary cash from operating activities. Once the credit markets have stabilized, the Trust will continue with its plan of reaching $1.6 billion in net debt by the end of 2010.

Mr. Coutu added: "The Trust is in a strong financial position with low debt, the potential for growing volumes by reaching the design capacity of existing infrastructure and low expansion capital commitments. Our strong balance sheet is an important asset as we manage our business through this low crude oil price cycle."

Located near Fort McMurray, Alberta, Syncrude Canada operates large oil-sands mines and an upgrading facility that produces a light, sweet crude oil on behalf of its joint venture owners, which include Canadian Oil Sands Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas.

Canadian Oil Sands provides a pure investment opportunity in the Syncrude Project through its 36.74 per cent working interest. The Trust is an open-ended investment trust managed by Canadian Oil Sands Limited and has approximately 481.5 million units outstanding, trading on the Toronto Stock Exchange under the symbol COS.UN.

Advisory: in the interest of providing Canadian Oil Sands Trust ("Canadian Oil Sands" or the "Trust") unitholders and potential investors with information regarding the Trust, including management's assessment of the Trust's future plans and operations, certain statements throughout this release contain "forward-looking statements" under applicable securities law. Forward-looking statements in this release include, but are not limited to, statements with respect to: the expected production in 2009; the expected operating costs for 2009; the amount of cash from operating activities in 2009; the reduced capital spending; the capital forecast for 2009; the type of maintenance that will be required in 2009; energy costs for 2009; WTI prices and foreign exchange rates in 2009; plans to resolve bitumen production and extraction issues over the next year; estimates of Crown royalties for 2009; plans to reach design capacity in 2010; the timing and financing with respect to the $500 million of debt maturing in 2009; plans relating to distributions and in particular the expectation that our distributions will more closely reflect discretionary cash from operating activities; expected cost and reduction in sulphur emissions relating to the SER project; and the plans to reach a net debt target of $1.6 billion by the end of 2010. 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 release include, but are not limited to: operating constraints due to weather, especially as it relates to bitumen production; general operational issues relating to a complex, integrated mining and upgrading facility; labour and cost pressures in the oil sands industry and in the Fort McMurray area in particular; the regulatory changes that impact oil and gas operations; the nature of the regulations imposed by the federal government on income trusts; general economic, business and market conditions, especially in the current credit market environment; commodity prices; 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. The 2009 Budget reflects various assumptions, which are outlined in the guidance document dated December 9, 2008. Furthermore, the forward-looking statements contained in this release are made as of the date of this release, and 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 release are expressly qualified by this cautionary statement. The information was approved by management on December 9, 2008 and circumstances after this date may change the outcomes or results achieved.

Canadian Oil Sands Limited

Marcel Coutu, President & Chief Executive Officer

Units Listed - Symbol: COS.UN

Toronto Stock Exchange

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