15) Contingencies
Crown royalties include Canadian Oil Sands' share of amounts due under the Syncrude Royalty Amending Agreement with the Alberta government. The Syncrude Royalty Amending Agreement requires that bitumen be valued by a formula that references the value of bitumen based on a Canadian heavy oil reference price adjusted to reflect quality and location differences between Syncrude's bitumen and the Canadian reference price bitumen. In addition, the agreement provides that a minimum bitumen value, or "floor price", may be imposed in circumstances where Canadian heavy oil prices are temporarily suppressed relative to North American heavy oil prices.
Canadian Oil Sands' share of the royalties recognized for the period from January 1, 2009 to March 31, 2013 reflect management's best estimate of both reasonable quality and transportation deductions and adjustments to reflect the "floor price." However, the Syncrude owners and the Alberta government are disputing the basis for the quality, transportation and "floor price" adjustments. Under alternate assumptions, Canadian Oil Sands' share of Crown royalties for this period could be as much as $60 million (on an after-tax basis) more than the amounts recognized.
The Syncrude owners and the Alberta government continue to discuss these matters, but if such discussions do not result in an agreed upon solution, either party may seek judicial determination of the matter. The cumulative impact, if any, of such discussions or judicial determination, as applicable, would be recognized and impact both net income and cash flow from operations accordingly.
16) Supplementary Information
a) Change in Non-Cash Working Capital Three Months Ended March 31($ millions) 2013 2012----------------------------------------------------------------------------Operating activities: Accounts receivable ("AR") $ (4) $ 51 Inventories (23) (7) Prepaid expenses 3 5 Accounts payable and accrued liabilities ("AP") 55 80 Current taxes 46 - Less: AP and AR changes reclassified to investing and other (24) (17)----------------------------------------------------------------------------Change in operating non-cash working capital $ 53 $ 112----------------------------------------------------------------------------Investing activities: Accounts payable and accrued liabilities $ 23 $ 18----------------------------------------------------------------------------Change in investing non-cash working capital $ 23 $ 18--------------------------------------------------------------------------------------------------------------------------------------------------------Change in total non-cash working capital $ 76 $ 130--------------------------------------------------------------------------------------------------------------------------------------------------------b) Income Taxes and Interest Paid Three Months Ended March 31($ millions) 2013 2012----------------------------------------------------------------------------Income taxes paid $ 44 $ ---------------------------------------------------------------------------------------------------------------------------------------------------------Interest paid $ 20 $ 23--------------------------------------------------------------------------------------------------------------------------------------------------------Income taxes paid and the portion of interest costs that is expensed are included within cash from operating activities on the Consolidated Statements of Cash Flows. The portion of interest costs that is capitalized as property, plant and equipment is included within cash used in investing activities on the Consolidated Statements of Cash Flows.
c) Cash Flow From Operations Per Share Three Months Ended March 31($ millions) 2013 2012----------------------------------------------------------------------------Cash Flow From Operations Per Share $ 0.57 $ 0.94--------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flow from operations per Share is calculated as cash flow from operations, which is cash from operating activities before changes in non-cash working capital, divided by the weighted-average number of outstanding Shares in the period.
17) Prior Period Comparative Amounts
During the fourth quarter of 2012, the Corporation completed a review of the presentation of crude oil purchase and sale transactions and it was determined that certain transactions previously reported on a gross basis (sales are presented gross of crude oil purchases and transportation expense) are more appropriately reflected on a net basis (crude oil purchases and transportation expense are netted against sales). Prior period comparative amounts have been reclassified to conform to the current period presentation. The impact is as follows:
Three Months Ended($ millions) March 31, 2012----------------------------------------------------------------------------Sales $ (63)Crude oil purchases and transportation expense (63)----------------------------------------------------------------------------Net income $ ---------------------------------------------------------------------------------------------------------------------------------------------------------
Canadian Oil Sands Limited
Marcel Coutu, President & Chief Executive Officer
Shares Listed - Symbol: COS
Toronto Stock Exchange
Contacts:
Canadian Oil Sands Limited
Siren Fisekci
Vice President, Investor & Corporate Relations
(403) 218-6228
Canadian Oil Sands Limited
Alison Trollope
Manager, Investor Relations
(403) 218-6231
Canadian Oil Sands Limited
2500 First Canadian Centre
350 - 7 Avenue S.W.
(403) 218-6200
(403) 218-6201 (FAX)
invest@cdnoilsands.com
www.cdnoilsands.com
