Opti loss widens

Opti Canada Inc. (TSX:OPC), a partner in the Long Lake oil sands project in northern Alberta, reports a $152-million loss or 54 cents a share in the second quarter.

That compares with a loss of $9-million or four cents a share for the same 2009 period.

Revenues after royalties for the three months ended June 30 rose to $61-million from $34-million, the company reported Thursday.

Meanwhile, operating expenses increased to $53-million from $39-million.

In its financial report, Opti said it had a $48-million loss on hedging contracts for future oil delivery, reversing an $11-million gain for the same period in 2009.

In addition, the company booked a $104-million foreign exchange loss in the quarter on its U.S.-dollar debt, reversing a $171-million gain for the same year-ago period.

Opti Canada, which is carrying out a strategic review and could be sold in the future, uses proprietary technology to cut oil sands operating costs and produce sweet, synthetic crude oil from the Long Lake project.

Opti and its partner Nexen Inc. operate Long Lake using a so-called steam assisted gravity drainage system, which is far less costly than giant open-pit oil sands mining used at other oil sands operations such as Syncrude.

Under SAGD, steam is injected via pipeline underground to melt the thick bitumen deep in the earth. The liquid heavy oil is then pumped to the surface using a second collector pipeline.

“The Long Lake project has demonstrated strong plant performance and improving bitumen production throughout 2010 and we look forward to delivering a similar message in quarters to come,” said Chris Slubicki, Opti's president and CEO said in a release before stock markets opened.

Mr. Slubicki said the company also has “enormous growth potential beyond the Long Lake project.”

“Incorporating what we've learned from Phase 1, we plan to stage smaller SAGD projects in our next development, Kinosis. This will allow us to lower the intensity of our capital program, reduce our labour requirements, and give us better construction cost and execution control.

“Our strong plant performance and continuously improving production throughout ramp-up support our ongoing strategic alternatives review process.”