Newspaper article The Canadian Press

Canadian Oil Sands Slashes Dividend More Than Expected amid Crude Drop

Newspaper article The Canadian Press

Canadian Oil Sands Slashes Dividend More Than Expected amid Crude Drop

Article excerpt

Canadian Oil Sands slashes dividend

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CALGARY - Canadian Oil Sands Ltd. (TSX:COS), the biggest partner in the Syncrude Canada Ltd. oilsands project, is slashing its quarterly dividend to five cents a share from 35 as the outlook for crude prices deteriorates.

In December, Canadian Oil Sands signalled it would be cutting its quarterly payout to 20 cents in order to protect its balance sheet, but the picture has become gloomier since then.

At the time, oil prices were around US$67 a barrel. On Thursday, the March contract settled at US$44.53.

When it released its forecast in December, Canadian Oil Sands was planning based on US$75 oil for this year. Now it's expecting US$55. That's a sharp drop from crude's 2014 peak above US$107 a barrel in June.

"We entered the current period of low crude oil prices with a strong balance sheet, and by reducing our dividend and cutting costs at Syncrude, COS is well positioned to manage its business through a prolonged period of low oil prices and retain its long-term value," CEO Ryan Kubik said in a release.

"Syncrude has the flexibility to respond to market conditions without affecting projections for 2015 production."

Production at Syncrude is expected to range between 95 million and 110 million barrels in 2015 -- the same as its earlier forecast.

The dividend cut did not come as a surprise to John Stephenson, president and CEO of Stephenson & Company Capital Management.

"I'm kind of bearish on the name and I did expect a pretty severe cut," he said. …

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