Sherritt revenue down as Cuba oil production, power output drop

Canadian mining and energy firm Sherritt International reported a drop in Cuban oil production and electricity generation in Q3, in what it described as an "active" quarter in which it started drilling on block 10.

The company said third-quarter NWI output, of 8,719b/d, was down 20.9% year-on-year but that it was in line with guidance for the full year. Sherritt cited natural reservoir declines.

Oil revenue was Cdn$27.3mn (US$20.4mn), down from Cdn$38.5mn in 3Q15. Unit operating costs, on a GWI basis, increased to Cdn$9.31/b from Cdn$9.04/b in 3Q15.

Oil-price recovery in Q3, the firm said, was the main factor in growth in adjusted Ebitda to Cdn$11.1mn from Cdn$8.9mn in second quarter, despite lower production.

The company still envisages capex of US$27mn this year. The first well to be drilled on Cuba's block 10 was spud in August and drilling, it said, will continue throughout December, with first results expected by year end.

Drilling costs account for about US$14mn of total capex for the year. Future capital spending is discretionary depending on the results of the well, Sherritt said in a results report.

ELECTRIC POWER

The company generated 226GWh of electricity during the quarter, down from 242GWh during the same period last year. Electricity revenue dropped to Cdn$14.4mn from Cdn$14.5mn a year earlier.

Sherritt said: "Production in the third quarter of 2016 is down 7% from its comparable quarter last year due to an increase in planned maintenance activities which reduced operating runtime. Production on a nine month basis is consistent with the same period last year. Average realized prices are also consistent."

REVENUE, NET LOSS

Overall revenue, which include sales from its nickel and cobalt and fertilizer operations, was Cdn$58.5mn, down 24%. But the company trimmed its net losses to Cdn$121mn from Cdn$210mn in the same period of last year.

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