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Canadian Press: Western Oil Sands posts Q2 loss of $9.2M after year-ago profit

Canadian Press: Western Oil Sands posts Q2 loss of $9.2M after year-ago profit

Wednesday, July 28, 2004

CALGARY (CP) – Western Oil Sands Inc. is reporting a second-quarter loss of $9.2 million due to increased expenses and a foreign-exchange loss.

The loss at Western Oil Sands, whose sole holding is a 20 per cent stake in the Athabasca oilsands project operated by Shell Canada, came to 17 cents a share in the quarter ended June 30, the Calgary-based firm (TSX:WTO) reported Wednesday.

That compared with a profit of $1.2 million, or three cents a share, in the year-earlier quarter.

The company had a $13.5-million foreign-exchange loss, compared with a $7-million gain last year, and paid $16 million in debt interest during the quarter, versus only $5.5 million last year.

As well, Western Oil Sands’ operating expenses, royalties and purchased feedstocks and transportation expenses grew.

Quarterly revenue jumped to $148.8 million from $24.9 million as the company started reporting operations on a commercial basis at the beginning of 2004.

Western Oil Sands said the Athabasca oilsands project “made significant progress during the second quarter” as production volumes reached a new high of 152,200 barrels a day in June, representing 98 per cent of the design capacity of 155,000 barrels per day. During the entire quarter, production averaged about 142,000.

The company said planned and unplanned maintenance affected quarterly volumes but average production increased 4.4 per cent over the previous quarter.

“While these results are encouraging, additional operational challenges are not unexpected as the project continues to progress toward sustained production design rates,” the company said.

Entering the third quarter, the project was producing “well in excess” of 155,000 barrels a day, but a mechanical failure caused a partial shutdown for two weeks.

Western Oil Sands announced earlier in the week that chief executive Guy Turcotte plans to step aside by early next year to become chairman. The company’s board is searching for a replacement.

The Athabasca oilsands project is 60 per cent owned by Shell Canada, 20 per cent by Western Oil Sands and 20 per cent by Chevron Canada.

© Copyright 2004 The Canadian Press

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