Suncor Energy Inc., Canada’s largest oil producer, said profit shrank 69 percent to the lowest in six quarters because of costs to scale back development at its Joslyn bitumen mining project.
Net income fell to C$211 million ($194 million), or 14 cents a share, in the second quarter from C$680 million, or 45 cents, a year earlier, the Calgary-based company said today after the close of trading in a statement distributed by Marketwired. Suncor booked an after-tax charge of C$718 million associated with the Joslyn project, a venture with France’s Total SA.
Oil-sands developers have struggled with rising costs in northern Alberta because of labor shortages and distance from equipment suppliers. Total said in May it would delay a final investment decision at Joslyn, while Imperial Oil Ltd. last year boosted the cost of its Kearl project by 18 percent.
“We continue to focus squarely on profitable growth,” said Chief Executive Officer Steve Williams in the statement. “This means we’re disciplined with our capital and invest wisely in high-return projects.”
Suncor said it will continue to work with Total to find ways to develop the project.
Suncor also cut its spending plan to C$6.8 billion from a previous target of C$7.8 billion this year in a bid to further reduce costs and invest in the most profitable projects, the company said.