MEG Energy shrinks losses as operating costs continue to fall
MEG Energy reported a smaller than expected loss in the third quarter, thanks to strong performance at Christina Lake and lower operating costs. Among the key highlights for Q3:
- Revenues rose 8% to $497 million.
- Q3 operating losses were reported at $88 million, comparable to a loss of $87 million Q3/2015.
- Net losses shrank to $109 million, down from a $146 million loss in Q2 and a $428 million loss for the same time last year.
TRANSPORTATION COSTS ARE UP
Transportation costs rose to $6.60 per barrel for the first 9 months of the year, up substantially from $4.64 a barrel for the same time last year. The company says it has booked additional capacity on the Flanagan South and Seaway pipelines, providing better access to Gulf Coast markets and improving the sale price for its bitumen blend. As a result, netbacks improved slightly to $16.74/bbl, up from $16.09 in the previous quarter.
UPDATE ON CHRISTINA LAKE
- Third quarter production averaged 83,404 bbl/day, up 1% from fro the same time last year.
- Non-energy operating costs fell to a record low of $5.32/bbl, down 11% from Q3/2015.
- Net operating costs fell to $7.76/bbl, down 15%.
- Steam-to-oil ratios at Christina Lake averaged 2.2 in Q3, down from 2.5 for the same time last year.
Full year production guidance remains unchanged at 80,000 to 83,000 bbl/day. Operating costs (ex-energy) are expected to come in at $5.75 to $6.50/bbl. The company's 2016 capital program revised lower to $140 million, down from its original budget of $328 million.