March2013

Albertaoilsandsproducersintheirownwords:thebitumenbubbleisgoodforbusiness
MillionsinprofitsforworldslargestcompaniesbutAlbertansfacingcuts. Albertansarefacingbigcutstohealthcare,education,citiesandtowns,seniorscareandchildrensservices. Meanwhile,ourlargestindustrytheoilsandsispostingrecordprofits. Thesocalledbitumenbubbletheexcuseusedbythegovernmentforcutsinthisweeksbudgetisactuallygreat newsforoilsandscompanies. ButAlbertansarentgettingtheirfairshareofthevalueofouroilandgasresources.Sowhileoilcompaniesrackup millionsevenbillionsinpureprofit,Albertansareleftwithcrowdedclassrooms,crowdedemergencyrooms,fewer longtermcarebedsforseniors,ashortageoffamilydoctors,anddwindlingservicesforchildren,peoplelivingwith disabilities,andfamilies.

Cheapbitumenisgoodforanyoneinvolvedinupgradingandrefining
Resultsforthesegmentcontinuedtobestrong,reflectinglowerfeedstockcostsforSuncorsinlandrefineriesand strongrefineryutilization. EffectiveJanuary1,2013,SuncorincreasedthenameplatecapacityoftheEdmontonrefineryto 140,000bbls/dfrom135,000bbls/d,duetodemonstratedreliabilityandcontinuousimprovementin operatingefficiency.1 Suncor2012FourthQuarterResults,releasedFebruary5,2013

Oilsandscompanieswithupgradersaredoingverywell
PricingforourhighqualitySCOblendaveragedadiscountofonly$2.50perbarrelrelativetoWTI, demonstratingthevalueofourupgrader.2 CanadianOilSands(Syncrude)2012FinalResults,ReleasedJanuary31,2013

1 2

Suncor2012FourthQuarterResultsReleasedFebruary5,2013.www.suncor.com/pdf/Suncor_Q4_2012_Report_en.pdf 2012FinancialResults,CanadianOilSands.ReleasedJanuary31,2013. http://www.cdnoilsands.com/files/FinancialReports/Q4%202012%20Quarterly%20Report%20%20FINAL.pdf

Oil Companies Profits

Alberta Federation of Labour 10654 101 Street, Edmonton, Alberta T5H 2S1 Telephone: 780-483-3021; Toll-free: 1-800-661-3995 http://www.afl.org

Page 1

March2013

Manyofthelargestoilcompaniesareverticallyintegrated,sotheirrefiningoperationsare makinghugeprofitsoffalowerpriceforbitumen.Theresgoodmoneyinupgradingand refiningbutnotforAlbertans!

Wereactuallyontrackforprobablyarecordfirstquarterintermsofrefiningcashflow,Mr. FergusonsaidinaninterviewonThursdayBrianFergusonsaidthedifferentialisactuallyabenefitto theoilgiantsdownstreambusinesses.3 CenovusCEOBrianFergusonInterviewwiththeGlobeandMail,February13,2013 Fourthquarterdownstreamearningswere$549million,thestrongestsinglequarterearningson record.Solidrefiningoperationsallowedustocapturestrongmidcontinentrefiningmargins.4 ImperialOil Earningsforthefullyear2012were$3,766million,thesecondhighestinourcompanyshistoryandup 12percentfrom2011.5 ImperialOil,2012FinancialResults

Thereisstillagoodprofitmarginforoilsandsoperatorsandtheyarerampingup productiondespitethedropinthepriceofbitumen
CashoperatingcostsforOilSandsoperationsaveraged$38.00/bblinthefourthquarterof2012, comparedto$39.00/bblinthefourthquarterof2011.Cashoperatingcostsperbarrelwerelowerdue tohigherproductionvolumesfromtherampupofFirebagvolumesandconsistenttotalcashoperating costs,ascomparedtothefourthquarterof2011. Suncor,fourthquarter2012results

Oilcompaniesaresayingthelackofmarketaccessdrivesdowntheprice.Arecompanies decreasingproductionasaresult?Theyrerampingitup;keepingthepricelow
InreleasingitsfourthquarterandyearendresultsonThursday,Cenovussaidaveragedailyoil productiongrewby23percentin2012and35percentintheoilsands.6 Cenovus,asquotedintheGlobeandMail,February13,2013 Recordannualandexitproductionvolumes,exceeding2012guidance.7 MEG,aCalgarybasedinsituoilsandsproducer, 15%ownedbyCNOOC,fundingpartnerfortheNorthernGatewaypipeline
3

HowCenovusiscopingwiththeCanadianoilpricediscount,GlobeandMail,February13,2013.http://www.theglobeandmail.com/globeinvestor/howcenovus iscopingwiththecanadianoilpricediscount/article8658473/ 4 ImperialOilannouncesestimatedfourthquarterfinancialandoperatingresults,February1,2013. http://www.imperialoil.ca/CanadaEnglish/about_media_releases_20130201.aspx 5 ImperialOilQ4NewsRelease,February1,2013.http://www.imperialoil.ca/CanadaEnglish/Files/Earnings_Release_Q4_2012.pdf 7 MEGFinalResults,2012.ReleasedJanuary31,2013.http://www.megenergy.com/newsroom/article/megenergyreportsrecordquarterlyannualandexitrate productionvolumes

Oil Companies Profits

Alberta Federation of Labour 10654 101 Street, Edmonton, Alberta T5H 2S1 Telephone: 780-483-3021; Toll-free: 1-800-661-3995 http://www.afl.org

Page 2

March2013

Evencompaniesthatarentverticallyintegratedaredoingjustfine;evenwiththelowprice ofbitumen
Annualproductionfor2012averaged28,773bpd,anincreaseof8%over2011volumesof26,605bpd, markingMEGsfourthconsecutiveyearofproductiongains.MEG,2012finalresults,releasedJanuary 31,2013 Recordquarterlyproductionandlowoperatingcostscontributetoverystrongfourthquarter netbacks. MEG,2012finalresults,releasedJanuary31,2013

Operationscostsperbarrelforinsituproducersareextremelylowthereisplentyofroom torequireupgradingforextraordinarilyprofitablecompanies
Netoperatingcostsforthefourthquarterof2012were$8.95perbarrel,expectedtobeamongthe lowestintheindustryfortheperiod.Comparablefourthquarter2011results,thebestinMEGshistory, were$8.50perbarrel.Thedifferenceinnetoperatingcostsisprimarilyduetolowerperbarrelpower salesandhighernonenergyoperatingcostsduringthefourthquarterof2012comparedtothefourth quarterof2011.Nonenergyoperatingcostsfor2012were$9.71perbarrel,beatingMEGs2012target of$10to$12perbarrel. MEG2012FinalResults,ReleasedJanuary31,2013
SP*cep445:kp*cope#458 File:G:\Communications\NEWS\AFL\2013\FactSheet_OilCompanies'Profits.docx March2013

Oil Companies Profits

Alberta Federation of Labour 10654 101 Street, Edmonton, Alberta T5H 2S1 Telephone: 780-483-3021; Toll-free: 1-800-661-3995 http://www.afl.org

Page 3