Net debt, comprised of current and non-current portions of long-term debt less cash and cash equivalents, increased to $361 million at March 31, 2013 from $241 million at December 31, 2012, as existing cash balances were used to fund capital expenditures and dividend payments in excess of cash flow from operations. As a result, net debt-to-total net capitalization increased to seven per cent at March 31, 2013 from five per cent at December 31, 2012.
Shareholders' equity increased to $4,537 million at March 31, 2013 from $4,515 million at December 31, 2012, as net income exceeded dividends in the first quarter of 2013.
Canadian Oil Sands has a $1,500 million operating credit facility which expires on June 1, 2016 and a $40 million extendible revolving term credit facility which expires on June 30, 2014. No amounts were drawn against these facilities at March 31, 2013 or December 31, 2012.
The U.S. $300 million of Senior Notes, which mature in August 2013, were refinanced with a U.S. $700 million Senior Notes issuance on March 29, 2012.
The Senior Notes indentures and credit facility agreements contain certain covenants that restrict Canadian Oil Sands' ability to sell all or substantially all of its assets or change the nature of its business, and limit long-term debt-to-total capitalization to 55 per cent. Canadian Oil Sands is in compliance with its debt covenants, and with a long-term debt-to-total capitalization of 29 per cent at March 31, 2013, a significant increase in debt or decrease in equity would be required to negatively impact the Corporation's financial flexibility.
We expect cash levels to decrease over the next two years as we fund the major capital projects and repay our August, 2013 debt maturity. As a result, and based on the assumptions in our 2013 Outlook, our net debt levels are expected to rise to $1 billion to $2 billion by the end of 2014, coincident with reduced capital expenditure risk from the substantial completion of our major capital projects.
Shareholders' Capital and Trading Activity
The Corporation's shares trade on the Toronto Stock Exchange under the symbol COS. On March 31, 2013, the Corporation had a market capitalization of approximately $10.1 billion with 484.6 million shares outstanding and a closing price of $20.94 per Share. The following table summarizes the trading activity for the first quarter of 2013.
Canadian Oil Sands Limited - Trading Activity First Quarter January February March 2013 2013 2013 2013----------------------------------------------------------------------------Share price High $ 21.93 $ 21.93 $ 21.93 $ 21.76 Low $ 19.95 $ 19.95 $ 20.27 $ 20.60 Close $ 20.94 $ 20.99 $ 21.11 $ 20.94Volume of Shares traded (millions) 88.7 23.0 25.5 40.2Weighted average Shares outstanding (millions) 484.6 484.6 484.6 484.6--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in Accounting Policies
In June 2011, the International Accounting Standards Board ("IASB") amended International Accounting Standard ("IAS") 19, Employee Benefits, addressing the recognition and measurement of defined benefit pension expense and termination benefits and disclosures for all employee benefits. The key amendments are as follows:
-- Actuarial gains and losses, which are now referred to as re- measurements, are recognized immediately in "other comprehensive income" ("OCI"), eliminating the choice between immediate recognition through net income or OCI, or deferral using the corridor approach. This change does not impact Canadian Oil Sands as the Corporation previously recognized actuarial gains and losses immediately through OCI.-- The expected rate of return on plan assets is no longer calculated. Instead, the estimated rate of return on plan assets is now the same rate used to accrete the discounted accrued benefit obligation. The interest cost component of the pension expense, which previously represented accretion of the discounted accrued benefit obligation, now represents accretion of the net accrued benefit liability (the accrued benefit obligation net of the fair value of plan assets).-- The interest cost component of pension expense, which was previously presented within operating expenses, is now presented within net finance expense.
