The first quarter 2013 realized selling price averaged $96 per barrel compared with $97 per barrel in the 2012 first quarter, reflecting a lower WTI oil price largely offset by an improvement in the SCO differential to WTI.
Current taxes increased in the first quarter of 2013 primarily because tax pools and the deferral of partnership income sheltered 2012 income from current taxes.
Crown royalties decreased in the first quarter of 2013, reflecting increases in deductible capital expenditures and lower bitumen volumes and prices.
Net Income
Net income decreased to $177 million, or $0.37 per Share, in the first quarter of 2013 from $318 million, or $0.66 per Share, in the first quarter of 2012, primarily reflecting lower sales volumes, partially offset by lower Crown royalties and lower taxes. The Corporation also realized a foreign exchange loss, primarily as a result of revaluations of its U.S. dollar- denominated debt, as opposed to a gain in the first quarter of 2012.
The following table shows the components of net income per barrel of SCO:
Three Months Ended March 31($ per barrel)(1) 2013 2012 Change----------------------------------------------------------------------------Sales net of crude oil purchases and transportation expense $ 96.16 $ 97.29 $ (1.13)Operating expense (41.20) (32.58) (8.62)Crown royalties (2.69) (9.71) 7.02---------------------------------------------------------------------------- $ 52.27 $ 55.00 $ (2.73)--------------------------------------------------------------------------------------------------------------------------------------------------------Development expense(2) $ (2.97) $ (2.53) $ (0.44)Administration and insurance expenses (1.78) (0.82) (0.96)Depreciation and depletion expense (14.19) (9.65) (4.54)Net finance expense (1.58) (1.19) (0.39)Foreign exchange gain (loss) (3.21) 1.65 (4.86)Tax expense (7.95) (10.13) 2.18---------------------------------------------------------------------------- $ (31.68) $ (22.67) $ (9.01)----------------------------------------------------------------------------Net income per barrel $ 20.59 $ 32.33 $ (11.74)--------------------------------------------------------------------------------------------------------------------------------------------------------Sales volumes (mmbbls)(3) 8.6 9.8 (1.2)--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Unless otherwise specified, the per barrel measures in this MD&A have been derived by dividing the relevant item by sales volumes in the period.(2) Previously referred to as non-production expenses.(3) Sales volumes, net of purchased crude oil volumes.
Sales Net of Crude Oil Purchases and Transportation Expense
Three Months Ended March 31($ millions, except where otherwise noted) 2013 2012(4) Change----------------------------------------------------------------------------Sales(1) $ 961 $ 1,074 $ (113)Crude oil purchases (124) (107) (17)Transportation expense (9) (11) 2---------------------------------------------------------------------------- $ 828 $ 956 $ (128)--------------------------------------------------------------------------------------------------------------------------------------------------------Sales volumes(2) Total (mmbbls) 8.6 9.8 (1.2) Daily average (bbls) 95,683 108,108 (12,425)--------------------------------------------------------------------------------------------------------------------------------------------------------Realized SCO selling price(3) $ 96.11 $ 97.07 $ (0.96) (average $Cdn/bbl)West Texas Intermediate ("WTI") $ 94.36 $ 103.03 $ (8.67) (average $US/bbl)SCO premium (discount) to WTI $ 0.88 $ (5.89) $ 6.77 (weighted average $Cdn/bbl)Average foreign exchange rate $ 0.99 $ 1.00 $ (0.01) ($US/$Cdn)--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Sales include sales of purchased crude oil and sulphur.(2) Sales volumes, net of purchased crude oil volumes.(3) SCO sales net of crude oil purchases and transportation expense divided by sales volumes, net of purchased crude oil volumes.(4) During the fourth quarter of 2012, the Corporation completed a review of the presentation of crude oil purchase and sales transactions and determined that certain transactions previously reported on a gross basis (sales presented gross of crude oil purchases and transportation expense) are more appropriately reflected on a net basis (crude oil purchases and/or transportation expense are netted against sales). Prior period comparative amounts have been reclassified for comparability with the current period presentation. The impact is as follows: Three months ended March 31, 2012($ millions) Increase (decrease)----------------------------------------------------------------------------Sales $ (63)Crude oil purchases (64)Transportation expense 1----------------------------------------------------------------------------Sales net of crude oil purchases and transportation expense $ -----------------------------------------------------------------------------
