- Second-quarter loss was C$735 million, or 46 cents a share
- Wildfires prompted shutdown of as much as 40% of Canada supply
Suncor Energy Inc. posted a loss in the second quarter after wildfires curtailed output from its oil-sands operations in northern Alberta, eclipsing a recovery of crude prices.
The loss was C$735 million ($558 million), or 46 cents a share, compared with net income of C$729 million, or 50 cents, in the year-earlier period, the company said in a statement Wednesday after the close of trading.
“The forest fires tested our mettle,” Chief Executive Officer Steve Williams said Thursday during a conference call with analysts.
The northern Alberta wildfire that broke out at the beginning of May prompted
the shutdown of as much as 1.4 million barrels a day of oil-sands production, about 40 percent of Canada’s supply. Suncor’s production sites that account for the bulk of the company’s upstream output -- the base plant, Firebag and MacKay River facilities -- were affected by the blaze. Syncrude, a joint venture controlled by Suncor, evacuated all but critical staff from its Mildred Lake and Aurora mines.
Canada’s top energy producer is doubling down on a bet that the oil sands will be a competitive source of crude as it increases its ownership of the Syncrude Canada mine and presses ahead with its Fort Hills bitumen project. The company plans to boost production 40 percent from 2015 levels to more than 800,000 barrels a day by 2019.
The company will consider acquisitions that add value for shareholders, especially in the oil sands, the North Sea and Canadian offshore, Williams said. The company has no plans for any “big” growth projects and doesn’t need to make purchases, he added.
The Fort Hills project was 60 percent complete at the end of the quarter, the company said. Suncor expects the mine to begin producing oil at the end of next year.
Suncor aims to make bitumen extraction an important -- and cost competitive -- source of crude for global markets. Operating costs to produce a barrel were C$46.80 in the second quarter, up from C$28 in the year-earlier quarter as the production fell during the fires and amid increased turnaround activity, the company said. For the full year, the company reiterated a target of between C$27 and C$30 a barrel.
Capital spending next year will decline “modestly” and the company is optimistic about the opportunities for cutting costs and reaching goals at Syncrude, Williams said.
Separately, Cenovus Energy Inc. also posted a loss in the quarter. The company said costs continue to fall, making Chief Executive Officer Brian Ferguson “optimistic about the potential” of resuming work on some of the oil-sands projects that have been deferred to reduce spending.
West Texas Intermediate oil has risen about 60 percent from a low this year in February as supply disruptions from Canada to Nigeria cut production. The U.S. benchmark grade settled at $41.14 a barrel on the New York Mercantile Exchange, he lowest level since April 19.
Suncor rose 1.5 percent to C$35.19 at the close in Toronto. The stock has slipped 1.5 percent this year, compared with a 15 percent gain for the S&P/TSX Composite Index Energy Sector Index. Cenovus rose 6.7 percent to C$18.67, the biggest gain since April.