Suncor Plans C$2 Billion Buyback After Dropping Voyageur Project

Suncor Energy Inc. (SU), Canada’s largest energy company by market value, said it will buy back as much as C$2 billion ($1.98 billion) of shares and boost its dividend after scrapping plans for the Voyageur oil project.

Suncor will raise its quarterly dividend 54 percent to 20 cents a share, the Calgary-based company said today in a statement. The company was expected to boost the dividend to 15 cents, according to the forecast projected by Bloomberg. Suncor has returned a combined C$2.5 billion to shareholders since Sept. 2011 by repurchasing shares, it said.

Chief Executive Officer Steve Williams has been cutting costs by halting or delaying projects, including the C$11.6 billion Voyageur upgrader. The project, which would have converted heavy bitumen to a synthetic light crude, was abandoned last month amid rising competition from U.S. oil supplies.

In Australia, Woodside Petroleum Ltd. (WPL), that country’s second-largest oil producer, will return about $520 million to investors in dividends after dropping plans to build a liquefied natural gas project estimated to cost $45 billion, the company said earlier this month.

The decision to halt Voyageur was a “positive signal management is placing greater scrutiny on shareholder returns, and free cash visibility is enhanced over coming years,” Chris Feltin and Brian Bagnell, analysts at Macquarie Capital Markets, wrote in a March 28 note to clients.

Suncor said last month it expected to report a first- quarter cost related to Voyageur that would reduce net income by C$140 million. It is scheduled to report earnings later today.

To contact the reporters on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net; James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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