An anonymous director reports
SHERRITT REPORTS THIRD-QUARTER 2011 RESULTS
Sherritt International Corp. has released its third quarter 2011 results.
- Net earnings for third quarter 2011 were up 102 per cent to $45.5-million (16
cents per share, basic), compared with net earnings of $22.5-million (seven cents per
share, basic) for third quarter 2010.
- Sales volumes for third quarter 2011 (Sherritt's share) totalled 9.4
million pounds of nickel, 1.1 million pounds of cobalt, 9.1 million
tonnes of thermal coal, 1.1 million barrels of oil and 159 gigawatt hours of
electricity.
- Cash, cash equivalents and short-term investments were $586.6-million at
Sept. 30, 2011, including $18.2-million (50-per-cent basis) held by the Moa
joint venture. Cash held by the Ambatovy project is included in
investment in an associate and was $12.1-million (40-per-cent basis) as at
Sept. 30, 2011.
- Operating cash flow for third quarter 2011 was $95.8-million, compared with $91.3-million in third quarter 2010.
- Spending on capital and intangibles relating to existing operations
totalled $36.8-million for third quarter 2011 (excluding accruals and
capital leases), unchanged compared with third quarter 2010. Spending on
capital in the Ambatovy project was $322.7-million (100-per-cent basis) for
third quarter 2011, 60 per cent higher than the prior year period.
- Primary construction of the Ambatovy project is complete with all 56
major process plant modules turned over to commissioning teams. All
areas of the project are either in precommissioning, commissioning or
start-up. Two of the three power plant units are operating reliably and
provide sufficient power for commissioning activities and start-up. The
start-up sequencing has begun on the first systems of the pressure acid
leach circuits, including the first autoclave and the ammonia storage
facility. Commissioning is complete on many ancillary operations and
systems including the acid plants, air separation plant and limestone
plant. The project is scheduled to produce first metal in first quarter
2012.
- At Sept. 30, 2011, total available liquidity was approximately $1.0-billion. During third quarter 2011, the borrowing under the $2.1-billion (U.S.) (100-per-cent basis) Ambatovy joint venture senior project financing was
completed. Total long-term debt at Sept. 30, 2011, was $1.6-billion,
including approximately $800-million related to non-recourse Ambatovy
partner loans to Sherritt.
SUMMARY FINANCIAL DATA
(In millions of dollars unless otherwise noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Revenue $466.4 $412.7 $1,441.5 $1,185.4
EBITDA (1) 148.5 135.8 470.8 387.7
Earnings from operations and
associate 89.7 72.4 311.7 242.8
Net earnings 45.5 22.5 169.2 102.1
Basic earnings per share ($ per
share) 0.16 0.07 0.58 0.35
Diluted earnings per share ($ per
share) 0.15 0.07 0.57 0.35
Net working capital (2) 1,031.7 1,045.5 1,031.7 1,045.5
Spending on capital and
intangibles (3) 36.8 36.8 86.3 106.5
Total assets 6,367.6 6,020.2 6,367.6 6,020.2
Shareholder equity 3,764.4 3,561.5 3,764.4 3,561.5
Long-term debt to total assets (%) 26 25 26 25
Notes
(1) For additional information see the non-IFRS (international financial
reporting standards) measure -- EBITDA (earnings before interest, taxes,
depreciation and amortization) section on the company's
website.
(2) Net working capital is calculated as total current assets less total
current liabilities.
(3) Spending on capital does not include accruals and does not include
spending on the Ambatovy project.
SUMMARY SALES DATA
(Units as noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Sales volumes
Nickel (thousands of pounds,
50-per-cent basis) 9,421 9,800 27,922 27,462
Cobalt (thousands of pounds,
50-per-cent basis) 1,052 1,067 3,121 2,989
Thermal coal -- prairie operations
(millions of tonnes) 8.1 8.1 23.5 25.0
Thermal coal -- mountain operations
(millions of tonnes) (1) 1.0 1.0 3.1 2.1
Oil (boepd, net working interest
production) 11,982 10,911 12,250 11,913
Electricity (GWh, 33-1/3-per-cent
basis) 159 176 461 519
Average realized prices
Nickel ($ per pound) $9.81 $9.87 $10.70 $9.88
Cobalt ($ per pound) 15.50 18.61 16.42 19.20
Thermal coal -- prairie operations
($/tonne) 16.20 14.32 16.19 14.41
Thermal coal -- mountain operations
($/tonne) 102.39 88.41 98.03 83.71
Oil ($/boe) 69.62 50.51 66.81 51.58
Electricity ($/MWh) 40.66 42.92 40.49 42.59
Note
(1) Prior to July 1, 2010, the corporation proportionately consolidated its
50-per-cent interest in the entity that owned the Coal Valley and Obed Mountain
mines.
REVIEW OF OPERATIONS -- METALS
(Units as noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Production
Mixed sulphides (tonnes,
50-per-cent basis) 4,872 4,734 14,647 14,077
Nickel (tonnes,
50-per-cent basis) 4,395 4,522 12,689 12,527
Cobalt (tonnes,
50-per-cent basis) 489 489 1,408 1,361
Fertilizers (tonnes) 58,083 56,301 173,249 173,205
Sales
Nickel (thousands of pounds,
50-per-cent basis) 9,421 9,800 27,922 27,462
Cobalt (thousands of pounds,
50-per-cent basis) 1,052 1,067 3,121 2,989
Fertilizers (tonnes) 15,055 26,001 103,400 137,758
Reference prices
Nickel (U.S. dollars per pound) $10.00 $9.62 $11.04 $9.61
Cobalt (U.S. dollars per pound) (1) 16.13 18.10 17.16 19.18
Realized prices
Nickel ($ per pound) 9.81 9.87 10.70 9.88
Cobalt ($ per pound) 15.50 18.61 16.42 19.20
Unit operating costs
(U.S. dollars per pound)
Mining, processing and refining
costs 6.28 4.86 6.06 5.02
Third party feed costs 0.11 0.21 0.17 0.30
Cobalt byproduct credits (loss) (1.76) (1.95) (1.87) (2.02)
Other (loss) (0.17) 0.25 (0.11) 0.01
Net direct cash costs of
nickel (2) 4.46 3.37 4.25 3.31
Sulphur (U.S. dollars per tonne) 260.82 160.30 234.67 139.95
Sulphuric acid
(U.S. dollars per tonne) 191.87 133.28 187.92 132.76
Revenue (millions of dollars)
Nickel 92.4 96.7 298.8 271.3
Cobalt 16.3 19.9 51.2 57.4
Fertilizers, other 14.2 11.2 62.7 53.3
Total revenue 122.9 127.8 412.7 382.0
EBITDA (millions of dollars) (3) 44.4 56.4 164.7 157.3
Earnings from operations and
associate (millions of dollars) 35.7 50.0 143.2 133.2
Spending on capital (millions
of dollars) 8.0 12.7 23.3 25.9
Notes
(1) Average metal bulletin -- low-grade cobalt published price.
(2) Net direct cash costs of nickel after cobalt and other byproduct
credits.
(3) For additional information see the non-IFRS measure -- EBITDA section
on the company's website.
Mixed sulphides production for third quarter 2011 was 3 per cent (276 tonnes, 100-per-cent basis) higher than third quarter 2010, reflecting the impact of continuing process improvements. Finished nickel production was 3 per cent (254 tonnes, 100-per-cent basis) lower than the prior year period due to a lower nickel-to-cobalt ratio in the feed as well the impact of maintenance activities at the refinery. Finished cobalt production was unchanged when compared with third quarter 2010.
Third quarter 2011 nickel and cobalt sales volumes were 4 per cent (379 tonnes, 50-per-cent basis) and 1 per cent (15 tonnes, 50-per-cent basis) lower, respectively, than the prior year period due to the timing of shipments. Nickel sales were also impacted by lower production in the period.
The average nickel reference price in third quarter 2011 was 4 per cent (38 U.S. cents per pound) higher than the prior year period due mainly to relatively stronger demand. The average cobalt reference price was 11 per cent ($1.97 (U.S.) per pound) lower than third quarter 2010, due to lower demand.
The net direct cash cost of nickel for third quarter 2011 was 32 per cent ($1.09 (U.S.) per pound) higher than the prior year period due to the impact of higher commodity input prices, including a 63-per-cent increase in the cost of sulphur, a 44-per-cent increase in the cost of sulphuric acid and a lower cobalt byproduct credit resulting from the lower cobalt reference price. These impacts were only partially offset by lower third party feed costs and higher fertilizer byproduct credits.
Spending on capital in third quarter 2011 for the Moa joint venture was 37 per cent ($4.7-million, 50-per-cent basis) lower than the prior year period due to the timing of expenditures.
Ambatovy
Ambatovy project expenditures for third quarter 2011 were $329.2-million (U.S.) (100-per-cent basis) and cumulative capital spending on the project at Sept. 30, 2011, was $5.1-billion (U.S.) (100-per-cent basis). During third quarter 2011, a total of $211.2-million (100-per-cent basis) in financing was provided by the Ambatovy joint venture partners; Sherritt's 40-per-cent share ($84.5-million) was financed directly from cash on hand. In addition, $138.9-million (U.S.) was drawn on the senior project finance facility during third quarter 2011.
Primary construction of the project is complete with all 56 major process plant modules turned over to commissioning teams. All areas of the project are either in precommissioning, commissioning or start-up. As of Sept. 30, 2011, approximately 70 per cent of the construction personnel have been demobilized from the project, including approximately 4,300 people in third quarter 2011. During the staged start-up of the project, demobilization will continue as precommissioning, commissioning, testing, reworking and site cleanup are completed. Full production rates require the operation of two of the three power plant units. As of mid-October, two of the three power plant units were operating reliably and provide sufficient power for commissioning activities and start-up. Commissioning of the third and final coal-fired boiler is under way and it is expected to be operational during the fourth quarter. Supplemental diesel power generation (30 megawatts in total) is being installed to provide additional assurance of reliable power availability for plant operations. When complete, total generation capacity of the plant site will be approximately 163 megawatts and will exceed total power requirements at full production (60 to 75 megawatts). The start-up sequencing has begun on the first systems of the pressure acid leach circuits, including the first autoclave and the ammonia storage facility. Commissioning is also complete on many ancillary operations and systems including the acid plants, air separation plant and limestone plant. During third quarter 2011, the first sulphur shipment was received at the port, transported to the plant site and discharged to the stockpile. The first ammonia vessel is due to arrive at the port during the fourth quarter.
The project is designed to produce 60,000 tonnes (100-per-cent basis) of nickel and 5,600 tonnes (100-per-cent basis) of cobalt annually at capacity. The estimated project capital cost is $5.5-billion (U.S.) (100-per-cent basis), excluding financing charges, working capital and foreign exchange with production of first metal scheduled for first quarter 2012.
REVIEW OF OPERATIONS -- COAL
(Units as noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Production (millions of tonnes)
Prairie operations 7.7 8.4 22.9 24.4
Mountain operations (1) 1.0 1.1 3.1 2.1
Sales (millions of tonnes)
Prairie operations 8.1 8.1 23.5 25.0
Mountain operations (1) 1.0 1.0 3.1 2.1
Realized prices ($/tonne)
Prairie operations (2) $16.20 $14.32 $16.19 $14.41
Mountain operations 102.39 88.41 98.03 83.71
Unit operating costs ($/tonne)
Prairie operations (3) 14.32 12.19 14.19 12.47
Mountain operations 83.94 72.97 81.44 72.76
Revenue (millions of dollars)
Prairie operations
Mining revenue 136.9 120.7 398.9 371.6
Coal royalties 7.6 10.7 29.1 31.7
Potash royalties 4.8 1.5 14.8 8.0
Mountain operations and other
assets (1) 97.9 84.9 304.4 174.4
Total revenue 247.2 217.8 747.2 585.7
EBITDA (millions of dollars) (4)
Prairie operations 27.8 29.4 88.0 85.4
Mountain operations and other
assets (1) 15.7 12.3 47.2 19.5
Total EBITDA 43.5 41.7 135.2 104.9
Earnings from operations
(millions of dollars) 14.0 12.2 56.1 53.6
Spending on capital
(millions of dollars)
Prairie operations 21.0 14.3 57.4 43.1
Mountain operations and other
assets (1) 5.5 5.3 17.8 12.6
Total spending on capital 26.5 19.6 75.2 55.7
Notes
(1) Prior to July 1, 2010, the corporation proportionately consolidated its
50-per-cent interest in the entity that owned the Coal Valley and Obed Mountain
mines.
(2) Prairie operations realized pricing excludes results of the char and
activated carbon businesses and royalties.
(3) Prairie operations unit operating costs exclude char and activated
carbon results.
(4) For additional information see the non-IFRS measure -- EBITDA section
on the company's website.
Third quarter 2011 production volumes at prairie operations were 8 per cent (700,000 tonnes) lower than the prior year period mainly due to lower demand at a contract mine, where the mine's main customer removed two generating units from service in first quarter 2011. In September, 2011, the customer began commercial operations of a new 495-megawatt (gross) generation unit that is considered one of the most advanced facilities of its kind in the world. The coal supply for this new unit is expected to offset the majority of the impact on coal demand from the closure of the two older generating units. Production volumes at mountain operations were 11 per cent (100,000 tonnes) lower than third quarter 2010, reflecting the impact of dragline repair and increased overburden removal at the Obed Mountain mine. The focus on preparatory activities in the third quarter is expected to permit higher production levels in the last quarter of the year.
Sales volumes at both prairie operations and mountain operations for third quarter 2011 were unchanged relative to third quarter 2010.
Realized pricing in prairie operations (excluding royalties, activated carbon and char) for third quarter 2011 was 13 per cent ($1.88 per tonne) higher than in the prior year period primarily due to higher contract revenue on lower sales volume at a contract mine and the sale of stockpile inventory from Bienfait to Boundary Dam's main customer. Realized pricing in mountain operations in third quarter 2011 was 16 per cent ($13.98 per tonne) higher than the prior year period due to stronger export thermal coal pricing, partially offset by the impact of a stronger Canadian dollar relative to the U.S. dollar.
Unit operating costs at prairie operations were 17 per cent ($2.13 per tonne) higher than third quarter 2010, due to the impact of lower production at a contract mine. Unit operating costs at mountain operations were 15 per cent ($10.97 per tonne) higher than in the prior year period due to lower production volumes at the Obed Mountain mine and higher loading equipment costs at the Coal Valley mine.
Total royalties for third quarter 2011 were 2 per cent ($200,000) higher than third quarter 2010, primarily due to the impact of higher potash market prices and production volumes.
Spending on capital in prairie operations in third quarter 2011 was 47 per cent ($6.7-million) higher than third quarter 2010, due to a scheduled tub replacement at the Paintearth mine and the timing of mining equipment lease additions at the Boundary Dam mine. Capital spending in mountain operations for third quarter 2011 was largely consistent with spending in the prior year period.
REVIEW OF OPERATIONS -- OIL AND GAS
(Units as noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Production (boepd) (1)
Gross working interest -- Cuba (2),
(3) 20,756 20,622 20,843 21,288
Net working interest (4)
Cuba -- cost recovery 3,501 4,655 3,809 3,991
Cuba -- profit oil 7,764 5,559 7,665 7,078
Cuba -- total 11,265 10,214 11,474 11,069
Spain 354 336 422 481
Pakistan 363 361 354 363
Total net working interest 11,982 10,911 12,250 11,913
Reference prices (U.S. dollars
per bbl)
U.S. Gulf Coast fuel oil No. 6 $98.55 $66.69 $94.45 $68.56
Brent crude 114.47 77.49 112.73 77.47
Realized prices
Cuba ($/bbl) 70.36 51.06 67.06 51.77
Spain ($/bbl) 111.21 79.07 109.81 79.78
Pakistan ($/boe) 8.15 8.31 8.01 8.34
Weighted average ($/boe) 69.62 50.51 66.81 51.58
Unit operating costs
Cuba ($/bbl) 12.65 10.34 11.59 10.53
Spain ($/bbl) 84.22 47.84 46.75 32.75
Pakistan ($/boe) 2.49 1.90 2.98 2.05
Weighted average ($/boe) 14.45 11.22 12.55 11.17
Revenue (millions of dollars) 78.5 53.2 230.5 176.3
EBITDA (millions of dollars) (5) 60.8 38.5 181.2 131.0
Earnings from operations
(millions of dollars) 43.4 14.4 132.2 71.4
Spending on capital (millions
of dollars) 16.6 11.6 50.3 41.4
Notes
(1) Oil production is stated in barrels per day (bpd). Natural gas
production is stated in barrels of oil equivalent per day (boepd),
which is converted at 6,000 cubic feet per barrel.
(2) In Cuba, the oil and gas segment delivers all of its gross working
interest oil production to Union Cubapetroleo (Cupet) at the time of production.
Gross working interest oil production excludes production from wells
for which commerciality has not been established in accordance with
production-sharing contracts.
(3) Gross working interest oil production is allocated between oil and gas
and Cupet in accordance with production-sharing contracts. The
corporation's share, referred to as net working interest oil
production, includes: (i) cost-recovery oil (based upon the
recoverable capital and operating costs incurred by oil and gas under
each production-sharing contract) and (ii) a percentage of profit oil
(gross working interest production remaining after cost-recovery oil is
allocated to oil and gas). Cost-recovery pools for each production-sharing
contract include cumulative recoverable costs, subject to
certification by Cupet, less cumulative proceeds from cost-recovery oil
allocated to oil and gas. Cost-recovery revenue equals capital and
operating costs eligible for recovery under the production-sharing
contracts.
(4) Net working interest production (equivalent to net sales volume)
represents the corporation's share of gross working interest
production.
(5) For additional information see the non-IFRS measure -- EBITDA section
on the company's website.
Third quarter 2011 gross working interest production for the period was relatively unchanged from the prior year period. Net working interest production in Cuba was 10 per cent (1,051 bpd) higher for the same comparable periods due mainly to a 25-per-cent (1,154 bpd) decrease in cost-recovery volumes resulting from the impact of higher realized oil prices, partially offset by an increase in cost-recovery expenditures. Third quarter 2011 production in both Spain and Pakistan was largely unchanged from the prior year period.
Average realized prices in third quarter 2011 were significantly higher than third quarter 2010 in Cuba (38 per cent or $19.30 per bbl) and Spain (41 per cent or $32.14 per bbl), as the impact of stronger reference pricing more than offset the impact of a stronger Canadian dollar relative to the U.S. dollar.
Third quarter 2011 unit operating costs in Cuba were 22 per cent ($2.31 per bbl) higher than the prior year period as the impact of a stronger Canadian dollar relative to the U.S. dollar was more than offset by higher input prices. Unit operating costs in Spain were 76 per cent ($36.38 per bbl) higher than the prior year period primarily due to well workover costs incurred in third quarter 2011.
Spending on capital in third quarter 2011 was 43 per cent ($5.0-million) higher than in the prior year period due to increased drilling activity in the Puerto Escondido and Yumuri fields. In third quarter 2011, drilling on two development wells commenced and two development wells were completed. This compares with one development well commenced and two development wells completed in third quarter 2010.
REVIEW OF OPERATIONS -- POWER
(Units as noted)
Nine months ended
Sept. 30,
Q3 2011 Q3 2010 2011 2010
Electricity sold (GWh,
33-1/3-per-cent basis) 159 176 461 519
Realized price ($/MWh) $40.66 $42.92 $40.49 $42.59
Unit cash operating cost ($/MWh) 20.13 15.34 21.26 13.87
Net capacity factor (%) 68 76 66 72
Revenue (millions of dollars) 14.0 11.0 41.4 34.7
EBITDA (millions of dollars) (1) 6.4 7.5 17.7 22.3
Earnings from operations (millions
of dollars) 3.7 4.8 9.8 13.9
Spending on capital (millions
of dollars) 2.5 3.5 4.7 5.3
Spending on service concession
arrangements (millions of dollars) (2) 4.3 0.6 13.4 3.5
Notes
(1) For additional information see the non-IFRS measure -- EBITDA section
on the company's website.
(2) Costs incurred to maintain or enhance the Boca de Jaruco and Puerto
Escondido operating assets are expensed on the consolidated statements
of comprehensive income. As a result, maintenance and construction
activities at Boca de Jaruco, including the 150-megawatt Boca de Jaruco
combined cycle project, are expensed as incurred. The corporation
records an intangible asset and a corresponding construction revenue
amount to reflect the right to charge the Cuban government for the
future supply of electricity. The net result is a nil impact to net
earnings.
Electricity production for third quarter 2011 was 10 per cent (17 gigawatt hours, 33-1/3-per-cent basis) lower than third quarter 2010, due to continued gas supply shortages and scheduled maintenance. The gas turbine at Varadero that failed in second quarter 2011 is expected to be returned to service in fourth quarter 2011. Efforts to address the gas supply shortage continue, but to date, no efforts have provided viable solutions to the issue.
Third quarter 2011 unit cash operating costs were 31 per cent ($4.79 per megawatt hour) higher than third quarter 2010, due to higher repair and scheduled maintenance costs.
Spending on capital, including capitalized interest, and spending on service concession arrangements in third quarter 2011 were 66 per cent ($2.7-million, 33-1/3-per-cent basis) higher than in the prior year period primarily due to increased activity on the 150-megawatt Boca de Jaruco combined cycle project.
Cash, debt and financing
Cash, cash equivalents and short-term investments were $586.6-million at Sept. 30, 2011. Of the cash balance, $18.2-million (50-per-cent basis) was held by the Moa joint venture and is for the exclusive use of the joint venture. Cash held by the Ambatovy project is included in investment in an associate and was $12.1-million (40-per-cent basis) as at Sept. 30, 2011.
Total long-term debt at Sept. 30, 2011, was $1.6-billion, including approximately $800-million related to non-recourse Ambatovy partner loans to Sherritt.
At Sept. 30, 2011, the amount of credit available under various facilities was $500-million. During third quarter 2011, the borrowing under the $2.1-billion (U.S.) (100-per-cent basis) Ambatovy joint venture senior project financing was completed.
Outlook
Projections for Sherritt's production volumes, royalties and spending on capital for the year 2011 are shown in the associated table.
PROJECTIONS
(Units as noted)
2011
Production volumes
Mixed sulphides (tonnes) 38,850
Nickel (tonnes, 100-per-cent basis) 34,350
Cobalt (tonnes, 100-per-cent basis) 3,750
Coal -- prairie operations (millions of tonnes) 32
Coal -- mountain operations (millions of tonnes) 4.4
Oil -- Cuba (gross working interest, bpd) 20,700
Oil -- all operations (net working interest, boepd) 12,250
Electricity (GWh, 33-1/3-per-cent basis) 620
Royalties (millions of dollars)
Coal 39
Potash 17
Spending on capital (millions of dollars)
Metals -- Moa joint venture (50-per-cent basis) $45
Coal -- prairie operations 94
Coal -- mountain operations 44
Oil and gas -- Cuba (1) 62
Oil and gas -- other (1) 8
Power (33-1/3-per-cent basis) (2) 36
Total spending on capital (excluding Ambatovy) 289
Metals -- Ambatovy (millions of U.S. dollars,
100-per-cent basis) 1,000
Notes
(1) Exploration and evaluation spending incurred prior to the
technical feasibility and commercial viability of extracting the
resources is recorded as an intangible asset.
(2) Includes projected spending related to the 150-megawatt Boca
de Jaruco combined cycle project that is expensed as incurred and
is included in cost of sales on the consolidated statement of
comprehensive income.
In metals
- Moa joint venture guidance for full-year 2011 production of
mixed sulphides increased 1 per cent (550 tonnes, 100-per-cent basis), reflecting the
strong operating performance in the first nine months. Finished nickel
and cobalt production guidance for full-year 2011 is marginally higher
than previous estimates due to the performance in the first nine months
of the year. Guidance for spending on capital in the Moa joint venture
is 10 per cent ($5-million, 50-per-cent basis) lower than previously provided,
reflecting the deferral of spending to 2012. The Moa joint venture
partners continue to review options for the completion of the phase 2
expansion and construction of a sulphuric acid plant at Moa. Guidance
for spending on capital does not include any expansion-related
expenditure, other than capitalized interest.
- Ambatovy joint venture full-year 2011 capital spending
remains at $1.0-billion (U.S.).
- Sulawesi project projected spending for 2011 is expected to
be $9-million, due to permitting delays. Spending is being directed
toward the next phase of the resource drilling program and advancing
environmental and social baseline studies as well as project
prefeasibility work.
In coal
- Prairie operations guidance for full-year 2011 production is
3 per cent (one million tonnes) lower than previous guidance due to the impact of
adverse weather conditions in first half 2011 as well as the impact of
lower demand at a contract mine, which main customer removed two
generating units from service in first quarter 2011. Spending on capital
in prairie operations is 6 per cent ($6-million) lower than previous full-year
2011 guidance, largely due to projects in the first nine months of 2011
costing less than originally projected, as well as the timing of
expenditures.
- Mountain operations production guidance remains unchanged.
Spending on capital in mountain operations is projected to be 4 per cent ($2-million) lower than previous full-year 2011 guidance largely due to
projects in the first nine months of 2011 costing less than originally
projected.
In oil and gas
- Guidance relating to full-year 2011 gross working
interest oil production in Cuba increased 1 per cent (200 bpd), reflecting
better than expected performance from producing wells. Total net
working interest production for 2011 remains largely unchanged. Guidance
on spending on capital for 2011 in Cuba remains largely unchanged from
previous estimates. In total, eight development wells are planned for
2011.
In power
- Guidance for 2011 full-year production is 5 per cent (32 gigawatt hours, 33-1/3-per-cent
basis) higher than previous estimates, reflecting higher than expected
gas supply in third quarter 2011, and higher gas supply in fourth
quarter 2011 than previously anticipated. However, gas supply is
expected to continue to be insufficient for the facilities to operate at
full capacity. Full-year 2011 guidance for spending on capital, which is
primarily related to the 150-megawatt Boca de Jaruco combined cycle project,
remains largely unchanged from previous estimates.
We seek Safe Harbor.
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