Suncor Output Hits Record With Oil-Sands Unit at Full Speed

  • Production reaches 738,500 barrels a day in fourth quarter
  • Estimated cost of Fort Hills raised to as much as C$17 billion

Suncor Energy Inc.’s production rose to a record last quarter after the oil-sands giant took control of the Syncrude processing unit and put it at full throttle.

Canada’s biggest energy company produced 738,500 barrels of oil equivalent a day in the period, up from 582,900 in the previous quarter, according to an earnings report Wednesday. The jump was largely due to its increased stake in the Syncrude upgrader, which processes bitumen mined in northern Alberta into light crude, and to boosting the utilization of the unit to 102 percent of nominal capacity, from 73 percent a year earlier.

Suncor has slashed costs to weather the industry downturn and is now benefiting from a 76 percent rebound in oil prices over the past year as the Organization of Petroleum Exporting Countries and other major exporters curtail production.

The company’s output has risen after it completed the acquisition of Canadian Oil Sands Ltd. last year, boosting its stake in the 350,000 barrel-a-day Syncrude oil mine and upgrader. With the purchase complete, Suncor will switch focus from growth to paying back investors with a share buyback planned later this year and future increases in dividends, Chief Executive Officer Steve Williams said.

“You’ll see us sustainably increasing the dividend as we grow annual sales,” Williams said on a conference call Thursday. Along with share buybacks, “those two will be our priority through the next few years,” he said.

The quarterly dividend was raised to 32 Canadian cents per share, from 29, Suncor said Wednesday in a separate statement.

Investment Slowdown

The company doesn’t plan new major capital investments in the oil sands for the “foreseeable future,” while the “window” for mergers and acquisitions is starting to close, Williams said.

The company’s Fort Hills mine is scheduled for completion at the end of 2017. The project’s capacity was raised to 194,000 barrels a day from 180,000, and the estimated cost was raised to between C$16.5 billion and C$17 billion from between C$14 billion and C$16 billion.

Fourth-quarter net income was C$531 million, or 32 cents a share, compared with a loss of about C$2 billion, or C$1.38 a share, a year earlier, the Calgary-based producer said. Operating earnings of 38 cents per share beat the 30-cent average of 20 analysts’ estimates compiled by Bloomberg for profit excluding certain items.

Suncor rose as much as 4.6 percent on Thursday, the most since Nov. 30. The shares were up 2.6 percent to C$41.55 as of 2:35 p.m. in Toronto.

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