Suncor Plans Higher Spending of Up to $5.5 Billion Next Yearby
Company estimates production of 525,000 to 565,000 b/d
Oil-sands operatings costs per barrel seen at C$27-C$30
Suncor Energy Inc., Canada’s largest crude producer, plans to boost capital spending to as much as C$7.3 billion ($5.5 billion) next year to expand operations and increase efficiency.
The investment would be an increase from about C$6.3 billion this year, the average of 14 analysts’ estimates compiled by Bloomberg. The program is flexible, within a range starting at C$6.7 billion, to respond quickly to any further deterioration in market conditions, Suncor said Tuesday. Both capital and operating expenditures can be scaled back.
Suncor has announced 1,000 job cuts, lowered its 2015 capital budget by $1 billion and delayed projects to weather collapsing prices. The company, along with Canadian Natural Resources Ltd., Cenovus Energy Inc. and other competitors, has squeezed spending in the oil sands, one of the world’s most expensive reserves to develop.
“We’re well-positioned to invest in our base business and growth projects, even in a lower for longer oil price environment,” Chief Executive Officer Steve Williams said in the statement. “We remain focused on achieving further reliability improvements across our operations.”
The Calgary-based company estimates production of 525,000 to 565,000 barrels of oil equivalent a day next year, down from guidance of 550,000 to 595,000 barrels for 2015, due to maintenance work. Approximately 55 percent of the 2016 capital spending program has been allocated toward growth projects, Suncor said.
Oil-sands cash operating costs per barrel, excluding the Syncrude venture in northern Alberta, will be C$27 to C$30, “continuing a multi-year trend that has seen Suncor reduce its oil sands cash costs by over 25 percent since 2011,” the company said. The company’s share of Syncrude output will drop to 30,000 to 35,000 barrels a day in 2016, from 32,000 to 36,000 barrels this year.
Suncor has urged shareholders of Canadian Oil Sands Ltd., its partner in the Syncrude project, to accepts its C$4.7 billion ($3.5 billion) hostile takeover offer, while the target company’s board has rejected it.