Canadian Oil Sands 2016 Budget Demonstrates Syncrude Has Entered a New Era of Lower Cost Operations

CALGARY, AB--(Marketwired - December 01, 2015) - Canadian Oil Sands Limited (TSX: COS) (OTCQX: COSWF)

Unless otherwise noted: All figures are based on Canadian Oil Sands' 36.74 per cent working interest in the Syncrude joint venture; all financial figures are in Canadian dollars and have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP").

Canadian Oil Sands Limited ("COS") today announced its budget for 2016, demonstrating Syncrude's competitiveness and resilience in a lower oil price environment; operating and capital costs in 2016 will be down significantly from prior years while still enabling production growth.

"Syncrude's ability to reduce costs and respond to the lower oil price environment is exceeding market expectations. They proved it in 2015 with $1.3 billion, gross to Syncrude, in cost savings. They proved it with the execution of the major projects, which were completed in 2015 under budget and on schedule," said Ryan Kubik, President and Chief Executive Officer of Canadian Oil Sands.

Based on the 2016 Budget, COS expects to generate $338 million of free cash flow, and every USD $10 per barrel increase in the annual oil price raises our estimated free cash flow by about $300 million. Even under a USD $45 per barrel WTI oil price assumption, COS can fully fund all costs, including capital expenditures and the current dividend. COS offers one of the best ways to benefit from a recovery in oil prices, as COS' share price has historically demonstrated a 98 per cent correlation to crude oil prices.

"Syncrude's success in reducing its cost structure is exceeding market expectations. The positive implications to the business going forward are just starting to be appreciated and will have lasting value. Now, our shareholders can capture the value of an improved Syncrude business," added Mr. Kubik.

COS has scheduled a conference call for December 1 at 8:00 am ET to discuss the budget highlights and the longer term view of its business.

Highlights of the 2016 Budget:

• The production estimate range for COS is 35 million to 40 million barrels (95 million to 110 million barrels gross to Syncrude). COS' budget assumes production of 38.6 million barrels (105 million barrels gross to Syncrude), approximately 10 per cent higher than 2015 estimated production.
• Capital expenditures are estimated at $295 million, or $7.64 per barrel based on production of 38.6 million barrels.
• Operating expenses are estimated to total $1.4 billion, or $37.14 per barrel, including purchased energy costs of $3.16 per barrel.
• Cash flow from operations is estimated to total $633 million, or $1.31 per share, based on a WTI crude oil price assumption of USD $50 per barrel, a foreign exchange rate of $0.75 (CAD:USD), and a discount for Synthetic Crude Oil (SCO) to Canadian dollar WTI of $2.00 per barrel. Under the 2016 Budget assumptions, cash flow from operations in 2016 is more than sufficient to fund estimated capital expenditures and the current dividend.

2016 Budget Summary
Net to COS, millions of Canadian dollars, except per barrel and per share amounts
Sales, net of crude oil purchases and transportation		2,495
Operating expenses		1,433
Development expenses		87
Crown royalties		146
Other*		196
Cash flow from operations		633
	Cash flow from operations per share	1.31
Regular maintenance capital expenditures		285
Capitalized interest		10
Total capital expenditures		295
Budget Assumptions
Syncrude production (mmbbls)		105
Canadian Oil Sands sales (mmbbls)		38.6
West Texas Intermediate (USD/bbl)		50.00
Premium (Discount) to average CAD WTI prices (CAD/bbl)		(2.00)
Foreign exchange rate (CAD:USD)		0.75
AECO natural gas (CAD/GJ)		2.50
*Other includes Interest Expense, Administration, Insurance, Reclamation and Other, and Current Taxes