UPDATE 1-Imperial Oil profit dips as Kearl output disappoints
CALGARY, Alberta Jan 30 (Reuters) - Imperial Oil Ltd's Kearl oil sands project in northern Alberta produced less than half its capacity in the fourth quarter, the company said on Thursday, as harsh winter weather and equipment reliability problems hampered output.
In its quarterly earnings statement, Imperial said the C$12.9 billion Kearl mine, which began producing tar-like bitumen a year ago, produced 52,000 barrels per day, well below full capacity of 110,000 bpd.
Production did at times reach 100,000 bpd and Imperial said work to stabilize production at that level was progressing.
The Calgary, Alberta-based company, 69.6 percent owned by Exxon Mobil Corp, said net income dropped 2 percent to C$1.056 billion ($947 million) or C$1.24 a share, from C$1.076 billion, or C$1.26 a share, in the fourth quarter of 2012.
Strong downstream earnings from Imperial's refineries helped offset the impact of weaker-than-expected production, but analysts said concerns about Kearl were weighing on the share price.
Imperial shares were last down 0.7 percent at C$45.47 on the Toronto Stock Exchange.
"The Kearl project has been struggling. Volumes in November and December were less than October so that has been disappointing to investors," said Michael Dunn, analyst at FirstEnergy Capital in Calgary.
Including production from the Cold Lake oil sands project and its 25 percent share of output from the Syncrude Canada Ltd joint venture, Imperial produced 329,000 barrels of oil equivalent per day in the fourth quarter, up from 285,000 boepd in the same period a year earlier.
The company said higher volumes were the result of Kearl production ramping up and the acquisition of a 50 percent stake in Celtic Exploration Ltd last year.
Throughput at the company's three Canadian refineries averaged 387,000 bpd, down from 468,000 bpd in the fourth quarter of 2012 as a result of Imperial closing its Dartmouth, Nova Scotia, refinery.
Imperial Chief Executive Officer Rich Kruger said the Dartmouth closure helped deliver record quarterly downstream earnings of $625 million.
"Downstream businesses maximized value by increasing our refineries' access to price-advantaged Western Canadian crudes, discontinuing operations at our Dartmouth refinery and strengthening coast-to-coast retail operations," he said.
The company's refining business benefited from processing cheap Canadian light crude that traded at a discount to global crude benchmarks throughout the fourth quarter, while selling refined products linked to world prices.
Capital and exploration expenditures fell 13 percent to $1.567 billion in the fourth quarter from $1.793 billion a year earlier.