Canadian Oil Sands says its weathering weak market, recommending shareholders reject unsolicited bid from rival Suncor. Photo courtesy of Canadian Oil Sands
CALGARY, Alberta, Oct. 30 (UPI) -- While posting a heavy loss for the quarter, Canadian Oil Sands Ltd. said it was advising against what it considers an undervalued bid by rival Suncor.
Canadian Oil Sands, among the largest owners in the Syncrude joint venture production group in northern Alberta, said its operating expenses fell to around $5 per barrel, its net debt declined and capital expenses were down 62 percent to $63.5 million. The company said it's achieved around $750 million in cost reductions during the first nine months of the year.
"Canadian Oil Sands is demonstrating its ability to weather this period of low oil prices and even a modest improvement in oil prices will generate robust expansion of cash flow," President and Chief Executive Officer Ryan Kubik said in a statement.
Like its peers struggling through the market downturn, the company reported a net loss of $132 million for the quarter. Energy companies are reporting steep losses for the third quarter as the cycle of weak crude oil prices lingers.
Crude oil prices are low because supplies outweigh demand at a time when global economies, including Canada's, are showing signs of slowing down. Most producers, despite low prices, report increasing oil output for the year.
In early October, Canadian Oil Sands was the target of an unsolicited $3.2 billion offer from rival Suncor, which said the offer was "financially compelling."
In reporting its quarterly earnings, Canadian Oil Sands said its board of directors reviewed the offer and said it was not in the best interest of shareholders as it substantially undervalues the company.
"The board unanimously recommends shareholders reject this undervalued, opportunistic and exploitive bid," the company stated.