(Adds details on Access pipeline, quotes)
By Nia Williams
CALGARY, Alberta, Oct 28 (Reuters) - Canadian oil sands
producer MEG Energy Corp MEG.TO reported a quarterly loss but
lower operating costs on Wednesday and announced a deeper cut to
its 2015 capital spending budget, sending its shares almost 13
percent higher.
The company reduced its 2015 capital program for a second
time to C$280 million ($212.49 million) from C$305 million. It
originally had planned spending of C$1.2 billion this year.
Calgary-based MEG also said it had laid off 30 percent of
its workforce over the past year and is prioritizing efforts to
sell part or all of its 50 percent share in Alberta's Access
Pipeline system to help repay debt.
The 345-kilometer (214-mile) Access system includes a
400,000-barrel-per-day pipeline carrying diluted bitumen to
Edmonton and a 90,000-bpd line taking diluent from Edmonton to
MEG's Christina Lake operations.
The other half of the system is owned by Devon NEC Corp, a
division of U.S.-based Devon Energy Corp (N:DVN) DVN.N .
MEG Chief Executive Bill McCaffrey declined to give an
estimate on when the stake in the pipeline would be sold, but
said the company was "very, very active" on it.
"It's definitely the primary focus of the corporation right
now," McCaffrey said in an earnings call.
MEG said average realized bitumen prices fell 52.3 percent
to C$31.03 per barrel in the third quarter from a year earlier.
The company lowered cash costs to a breakeven U.S. crude
price of $42 a barrel to $45 a barrel, down from $45 to $50
earlier this year. U.S. crude CLc1 was last trading at $44.97
a barrel.
MEG posted an operating loss of C$87 million, or 39 Canadian
cents per share, compared with a profit of C$87 million, or 39
Canadian cents per share, a year earlier.
Analysts on average had expected a loss of 30 Canadian cents
per share, according to Thomson Reuters I/B/E/S.
Net operating costs averaged C$9.10 a barrel compared with
C$10.31 a barrel in the third quarter of 2014.
"The capex guidance reduction is not due to reduced
activity, it's just down to lower operating costs," FirstEnergy (N:FE)
Capital analyst Mike Dunn said.
The company said it faced higher transportation and interest
costs and an increase in depletion and depreciation expenses.
Despite the weak results, MEG's quarterly production reached
a record 82,768 bpd, up 8 percent from a year earlier.
The poor quarterly performance was largely expected after a
torrid three months in which the outright price of Canadian
heavy crude at one point dropped to just above $20 per barrel -
the lowest in at least a decade.
MEG shares were last up 12.9 percent to C$10.83 on the
Toronto Stock Exchange.
($1 = 1.3177 Canadian dollars)