Canadian Oil Sands' 2013 Budget Focused on Advancing Major

Canadian Oil Sands' 2013 Budget Focused on Advancing Major Capital
Projects 
CALGARY, ALBERTA -- (Marketwire) -- 11/29/12 --  
Unless otherwise noted: All figures are based on Canadian Oil Sands'
36.74 per cent working interest in the Syncrude joint venture; all
financial figures are in Canadian dollars and have been prepared in
accordance with Canadian Generally Accepted Accounting Principles
("GAAP").  
Canadian Oil Sands Limited's (TSX:COS) (OTCQX:COSWF) (COS) budget for
2013 supports continued progress on Syncrude's multi-year major
capital projects program, which is scheduled to be largely complete
by the end of 2014. This program is directed at improving
environmental performance and maintaining a strong base of long-life
crude oil production.  
COS plans to invest about $1.3 billion at Syncrude in 2013.
Approximately 63 per cent, or $836 million, will be invested in major
projects to replace or relocate mining infrastructure and to develop
facilities to reclaim tailings, a by-product of the mining process.
About $393 million is directed to regular maintenance, which
represents smaller projects and annually occurring expenditures to
maintain production. The remaining $97 million reflects capitalized
interest.  
"Syncrude's major projects are advancing on-schedule and on-budget,
and our finance plan for these projects is in excellent shape. Our
balance sheet is stronger than we had anticipated exiting 2012," said
Marcel Coutu, President and Chief Executive Officer. "We intend to
maintain our current quarterly dividend of $0.35 per share through
2013 based on our healthy financial position and the assumptions
provided today in our 2013 budget."  
Major Projects Capital Allocation 


 
                                   Expected                                 
                                   Spend to   Expected   Expected           
                                   Dec. 31,   Spend in   Spend in           
($ billions, COS' 36.74% share)        2012       2013  2014-2015      Total
----------------------------------------------------------------------------
                                                                            
                                                                            
Mine Train                      
                                            
 Replacements/Relocations             $ 0.8      $ 0.6      $ 0.6      $ 2.0
                                                                            
Aurora North Tailings Management                                            
 (1)                                    0.2        0.1        0.0        0.3
                                                                            
Centrifuge Tailings Management          0.1        0.2        0.4        0.7
                                                                            
----------------------------------------------------------------------------
Total Major Projects Spending         $ 1.1      $ 0.9      $ 1.0      $ 3.0
----------------------------------------------------------------------------
(1) Aurora North Tailings Management expected spend in 2014 is approximately
$20 million (net 36.74% to COS).                                            
Total project costs include both capital costs and certain non-production   
costs. Costs exclude capitalized interest.                                  

 
Added Coutu: "We are looking forward to making significant progress
on Syncrude's major capital projects in 2013, which will greatly
reduce any perceived capital risk. Once this investment has been made
in our base operations, we are in the advantageous position of having
the infrastructure in place to produce strong, stable volumes of
fully upgraded, light crude oil for decades."  
2013 Objectives  
COS has established the following objectives for 2013:  


 
--  Aim to maintain a quarterly dividend of $0.35 per share in 2013, based
    on the assumptions outlined in the 2013 budget. 
--  Maintain a strong balance sheet while remaining unhedged on oil prices,
    thereby providing investors with the full potential of this commodity. 
--  Increase production by about three per cent, equivalent to three million
    barrels gross to Syncrude, over estimated 2012 production. 
--  Improve per barrel operating expenses in 2013 over 2012. 
--  Complete the Aurora North Tailings Management project. 
--  Achieve 90 per cent completion on the Aurora Mine Train Relocation. 
--  Achieve 75 per cent completion on the Mildred Lake Mine Train
    Replacement. 
--  Invest $25 million ($70 million gross to Syncrude) in research and
    development, directed at reducing operating expenses, improving
    reliability, enhancing environmental performance and realizing potential
    cost savings in environmental initiatives. 

 
2013 Budget Highlights  


 
--  COS' production outlook for Syncrude is 105 million to 115 million
    barrels (39 to 42 million barrels net to COS). The single point
    production estimate is 110 million barrels (40.4 million barrels net to
    COS). The production outlook incorporates a planned turnaround of Coker
    8-1 in the second half of 2013. 
--  Sales, net of crude oil purchases and transportation expense, are
    anticipated to total $3,233 million, based on a WTI crude oil price
    assumption of US$85 per barrel, a foreign exchange rate of $1.00
    U.S./Cdn, and a discount for Syncrude Crude Oil (SCO) to Cdn WTI of $5
    per barrel. 
--  Operating expenses are anticipated to total $1,482 million to produce
    Syncrude's blend of fully upgraded SCO. On a per barrel basis, operating
    expenses are estimated to be $36.67, which includes purchased energy
    costs of $4.40. 
--  Cash flow from operations is estimated at $1,045 million ($2.16 per
    share). 
--  Cash balances will be used to fund 2013 capital spending and to support
    dividends, resulting in an expected net debt level of about $1.3 billion
    at year-end 2013. 
--  Allowable deductible costs for royalty purposes in 2013 are anticipated
    to exceed deemed bitumen revenues. As a result, COS expects to pay
    minimum royalties at one per cent of gross deemed bitumen revenues in
    2013. In addition, we will continue to accrue the transition royalty and
    upgrader growth capital recapture payments.  
--  COS estimates current taxes of approximately $350 million in 2013. COS
    expects deductions for capital expenditures made in 2012 and 2013 will
    be available in 2014 and beyond, resulting in lower taxes in subsequent
    years, based on the assumptions outlined in the 2013 budget.  

 
2013 Budget Summary  


 
----------------------------------------------------------------------------
(millions of Canadian dollars, except volume and per barrel                 
 amounts)                                                                   
----------------------------------------------------------------------------
Syncrude production (mmbbls)                                             110
Canadian Oil Sands sales (mmbbls)                                       40.4
Sales, net of crude oil purchases and transportation                   3,233
Operating expenses                                                     1,482
Operating expenses per barrel                                          36.67
Crown royalties                                                          113
Cash flow from operations                                              1,045
Total capital expendit
ures                                             1,326
----------------------------------------------------------------------------
Business environment assumptions                                            
West Texas Intermediate (U.S.$/bbl)                                    85.00
Premium (Discount) to average Cdn$ WTI prices (Cdn$/bbl)               -5.00
Foreign exchange rate (U.S.$/Cdn$)                                      1.00
AECO natural gas (Cdn$/GJ)                                              3.50
----------------------------------------------------------------------------

 
The 2013 budget may be impacted by a variety of factors. Some of the
more significant variables include, without limitation: 


 
--  Crude oil prices: Canadian Oil Sands' 2013 production is currently
    unhedged. Accordingly, COS' cash flow from operations is highly
    sensitive to changes in crude oil prices and foreign exchange rates.
    Every US$1.00 per barrel change in the annual WTI crude oil price
    impacts cash flow from operations by about $30 million, or $0.06 per
    share. 
--  Syncrude operational reliability and production: Timing of unit
    turnarounds and maintenance are not always precisely scheduled and
    unplanned outages may occur. In addition to the impact on production,
    unplanned maintenance costs can affect operating expenses. Every two
    million barrel change in Syncrude annual production impacts cash flow
    from operations by about $44 million, or $0.09 per share. 
--  Given the sensitivity of earnings and cash flow to conditions such as
    oil prices and differentials, exchange rates, production levels and
    operating and capital costs, the corporation may need to adjust
    dividends in 2013 if the operating environment as projected in the
    budget does not prevail. 

 
2013 Cash Flow From Operations Sensitivities  
(after tax; COS anticipates recording approximately $350 million in
current taxes in 2013) 
An opposite change in each of these variables will result in the
opposite cash flow from operations impact 


 
----------------------------------------------------------------------------
                                                       $ Millions    $/Share
----------------------------------------------------------------------------
Syncrude operating expense decrease (Cdn $1.00/bbl)            30       0.06
Syncrude operating expense decrease (Cdn $50 million)          14       0.03
WTI crude oil price increase (U.S. $1.00/bbl)                  30       0.06
Syncrude production increase (2 million bbls)                  44       0.09
Canadian dollar weakening (U.S. $0.01/Cdn$)                    25       0.05
AECO natural gas price decrease (Cdn $0.50/GJ)                 16       0.03
----------------------------------------------------------------------------

 
More information on Canadian Oil Sands' 2013 Budget is provided in
our 2013 Guidance Document, which is available on COS' web site at
www.cdnoilsands.com under "Investor Centre". Canadian Oil Sands
intends to continue providing quarterly updates to its guidance.  
2013 Budget Conference Call  
A conference call and webcast will be held tomorrow, November 30,
2012 at 8:00 a.m. MT (10:00 a.m. ET).  
To participate, please dial (888) 231-8191 (toll-free in North
America) or (647) 427-7450 approximately 10 minutes prior to the
conference call. An archived recording of the call will be available
from approximately 11:00 a.m. MT on November 30 until midnight of
December 7, 2012 by dialing (855) 859-2056 or (403) 451-9481 and
entering conference password 70803185.  
A live and archived audio webcast of the conference call will also be
available on Canadian Oil Sands' website at www.cdnoilsands.com,
under the Presentations and Events section in the Investor Centre, or
via the following link:
 http://event.on24.com/r.htm?e=542350&s=1&k=B2B8C275990C46324C22634ED
6B9F160 
Canadian Oil Sands Limited  
Canadian Oil Sands is a pure investment opportunity in light, sweet
crude oil. Through our 36.74% interest in the Syncrude project, we
offer a solid, robust production stream of fully upgraded crude oil,
exposure to future crude oil prices, potential growth through
high-quality oil sands leases and an attractive dividend.  
For more information please visit our web site at:
www.cdnoilsands.com 
Ticker Symbols  
Toronto Stock Exchange: COS  
OCTQX: COSWF 
Forward-looking Information Advisory: In the interest of providing
Canadian Oil Sands Limited ("Canadian Oil Sands" or the
"Corporation") shareholders and potential investors with information
regarding the Corporation, including management's assessment of the
Corporation's future production and cost estimates, plans and
operations, certain statements throughout this release contain
"forward-looking information" under applicable securities law.  
Forward-looking statements are typically identified by words such as
"anticipate", "expect", "believe", "plan", "intend" or similar words
suggesting future outcomes. Forward-looking statements in this press
release include, but are not limited to, statements with respect to:
the expected amount of total major projects spending in 2013; the
expected amount of regular maintenance costs and capitalized interest
in 2013; the expectation that spending on the Syncrude major projects
will taper off after 2014; the intention to maintain the current
quarterly dividend of $0.35 per share through 2013 based on the
assumptions in the 2013 budget; future dividends and any increase or
decrease from current payment amounts; the expected amount of total
capital expenditures in 2013; the expected amount of 2012-2015 major
project spending for the mine train relocations/replacements, the
Aurora North composite tails plant and the Mildred Lake centrifuge
plant; the expected amount of total major project spending; the
belief that Syncrude's major projects will provide the necessary
infrastructure to produce crude oil for decades; the expectation that
2013 Syncrude production will increase by about three per cent over
estimated 2012 production; plans regarding crude oil hedges in the
future; the expectation that the Aurora North composite tails plant
will be complete in 2013; the expectation that the Aurora North mine
train relocations will be 90 per cent complete after 2013; the
expectation that the Mildred Lake mine train replacements will be 75
per cent complete after 2013; the expectation that the Corporation
will invest $25 million ($70 million gross to Syncrude) in research
and development in 2013; the expected 2013 single-point Syncrude
production estimate of 110 million barrels (40.4 million barrels net
to the Corporation) and the expected 2013 Syncrude production range
of 105 to 115 million barrels (39 to 42 million barrels net to the
Corporation); the timing of the turnaround of Coker 8-1; the expected
sales in 2013; the expected West Texas Intermediate ("WTI") price in
2013; the expected average discount for synthetic crude oil ("SCO")
to WTI in 2013; the expected foreign exchange rate in 2013; the
expected operating expenses and purchased energy costs in 2013; the
expected cash flow from operations and cash flow from operations per
share in 2013; all expectations regarding net debt; the expected
amount of Crown royalties in 2013; the expected amount of current 
taxes in 2013; the expectations regarding the amount of taxes after
2013; the expected natural gas prices in 2013; and the anticipated
impact of increases or decreases in oil prices, production, operating
expenses, foreign exchange rates and natural gas prices on the
Corporation's cash flow from operations.  
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 Corporation believes that the expectations represented
by such forward-looking statements are reasonable and reflect the
current views of the Corporation, there can be no assurance that such
expectations will prove to be correct.  
The factors or assumptions on which the forward-looking information
is based include, but are not limited to: the assumptions outlined in
the Corporation's 2012 and 2013 guidance document as posted on the
Corporation's website at www.cdnoilsands.com as of the date hereof
and as subsequently amended or replaced from time to time, including
without limitation, the assumptions as to production, operating
expenses and oil prices; the successful and timely implementation of
capital projects; Syncrude's major project spending plans; the
ability to obtain regulatory and Syncrude joint venture owner
approval; the Corporation's ability to either generate sufficient
cash flow from operations to meet its current and future obligations
or obtain external sources of debt and equity capital; the
continuation of assumed tax, royalty and regulatory regimes and the
accuracy of the estimates of the Corporation's reserves and resources
volumes.  
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 press release include, but are not
limited to: general operational issues relating to a complex,
integrated mining and upgrading facility; operating constraints due
to weather, especially as it relates to bitumen production; general
economic, business and market conditions; changes in commodity
prices; the unanimous joint venture owner approval for major
expansions; the impact that pipeline capacity and refinery demand
have on prices for the Corporation's product; the occurrence of
unexpected events such as fires, equipment failures and other similar
events; the impacts of legislative or regulatory changes, especially
as such relate to royalties, taxation, the environment and tailings;
unsuccessful and untimely implementation of planned turnarounds and
capital projects; the volatility of crude oil prices; the volatility
of the SCO to WTI differential and such other risks and uncertainties
described in the Corporation's Annual Information Form dated February
23, 2012 and in the reports and filings made with the securities
regulatory authorities from time to time by the Corporation, which
are available on the Corporation's profile on SEDAR at www.sedar.com
and on the Corporation's website at www.cdnoilsands.com.  
You are cautioned that the foregoing list of important factors is not
exhaustive. The 2013 Budget reflects various assumptions, which are
outlined in the guidance document dated November 29, 2012.
Furthermore, the forward-looking statements contained in this press
release are made as of the date of this press release, and unless
required by law, the Corporation 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 press
release are expressly qualified by this cautionary statement. The
information was approved by management on November 29, 2012 and
circumstances after this date may change the outcomes or results
achieved. 
Non-GAAP Financial Measures: In this press release we refer to
financial measures that do not have any standardized meaning as
prescribed by Canadian GAAP, such as cash flow from operations, cash
flow from operations on a per share basis, free cash flow, net debt
and certain per barrel measures. Please refer to Canadian Oil Sands'
Third Quarter 2012 Report, which is available on the Corporation's
profile on SEDAR at www.sedar.com and on the Corporation's website at
www.cdnoilsands.com for more information regarding non-GAAP financial
measures. Free cash flow is not discussed in our Third Quarter 2012
Report, but is discussed in this release. Free cash flow (cash flow
from operations less capital expenditures) is a non-GAAP financial
measure which we believe provides additional meaningful information
about the Corporation's liquidity and its capacity to fund dividends.
Contacts:
Canadian Oil Sands Limited
Siren Fisekci
VP, Investor & Corporate Relations
(403) 218-6228 
Canadian Oil Sands Limited
Alison Trollope
Manager Investor Relations
(403) 218-6231
www.cdnoilsands.com
 
 
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