By Scott Haggett
CALGARY, Alberta (Reuters) - Shell Canada Ltd.
The 78 percent owned unit of Royal Dutch Shell
The boost in earnings came on a record performance from the company's refining unit, where earnings rose by 25 percent, to C$154 million as profit margins for gasoline, heating oil and other refined products rose.
"I was just astounded at how they did on the downstream side," said Martin Molyneaux, analyst with FirstEnergy Capital Corp. "I expected refining and marketing to be weak but they just put the ball right out of the park."
Shell Canada said the rise in profit from its three refineries and 2,100 service stations came despite higher operating costs and lower refinery utilization.
Costs also rose at the company's oil sands business. Output at the 60 percent owned Athabasca oil sands project in Alberta stopped for six days in March after a conveyor belt, said by the company to be the world's largest, tore in half.
Still, the Calgary-based company posted higher earnings from the oil sands unit, which consist of a strip mine north of Fort McMurray and an upgrading refinery near Edmonton, where the mined bitumen separated from the sand is converted to synthetic crude oil.
The company said oil sands production averaged 77,400 barrels a day, down 2 percent from the first quarter of 2005 because of the conveyor belt trouble.
However earnings from the unit rose 22 percent to C$120 million as the price received for its oil jumped 11 percent to average C$57.04 a barrel even as operating costs rose to C$37.43 a barrel, a 19 percent increase over the year earlier quarter.
Shell Canada said its oil sands operation will be closed
for about eight weeks, beginning in mid-May, for major
maintenance. Chevron Corp.
Shell Canada's cash flow, a key indicator of the firm's ability to pay for new projects and drilling, rose 13 percent to C$722 million from C$637 million. Sales rose 15 percent to C$3.45 billion.
Year-earlier results included $60 million in one-time gains.
The company's natural gas production business also increased its contribution to profit. With new production from the Tay field, Alberta's biggest gas find in a generation, output rose 1.4 percent to 424 million cubic feet a day, pushing earnings at the division to C$173 million, $37 million above last year's results.
Shell Canada is the country's third-largest petroleum exploration and refining firm by market value,
Shares in Shell Canada fell 81 Canadian cents to C$43.93 on the Toronto Stock Exchange. Shares in most Canadian energy companies were lower on Monday along with oil and natural gas prices.
($1=$1.14 Canadian)
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