CALGARY, Alberta—Suncor Energy Inc.,Canada's largest crude-oil producer, late Wednesday reported a fourth-quarter net loss of $2 billion Canadian dollars ($1.45 billion) and slashed its 2016 capital spending budget by hundreds of millions of dollars due to sharply lower oil prices.

In a glum omen for the rest of the Canadian energy industry, Suncor also posted an operating loss of C$26 million, or 2 Canadian cents a share, for the three months to Dec. 31, even as it boosted its quarterly oil and gas production by 4.3% on the year.

That was well below a consensus forecast for an operating profit of 10 Canadian cents share and the 27 Canadian cents a share it earned in the same quarter last year on an operating, or adjusted, basis that excludes one-time items.

The Calgary-based company's net loss of C$1.38 a share in the fourth quarter compared to a net profit of 6 Canadian cents a share in the year-earlier period and a net loss of 26 Canadian cents a share in the third quarter of 2015.

The average price realized from Suncor's oil-sands operations fell to C$41.55 per barrel in the fourth quarter, down from C$69.51 a barrel in the same period of 2014 and C$47.93 a barrel in the third quarter of 2015.

Suncor said its oil sands cash operating costs fell to C$28 per barrel in the fourth quarter, down from C$34.45 a barrel in the year-earlier period. It cited that focus on increased cost discipline as a sign of its ability to ride out the downturn in commodity prices.

"We are well positioned to weather the current low crude oil price environment," Chief Executive Steve Williams said in a statement.

Suncor is the first major Canadian energy producer to post earnings for the quarter, but its weak results are expected to be replicated by peers reporting later this month, including Cenovus Energy Inc. and Husky Energy Inc.

Canadian Natural Resources Ltd., the country's largest natural gas producer and one of its biggest large oil-sands operators, plans to report its fourth quarter results next month.

Reflecting a grim outlook for crude oil prices, Suncor slashed its spending plans for the year to a range of C$6 billion to C$6.5 billion, down from the C$6.7 billion to C$7.3 billion budget it had projected as recently as last November. It said the drop was due in part to a decision to defer planned maintenance activities at a large oil sands project in northern Alberta called Firebag until 2017.

Suncor said the reduction in its budget for the year would not impact its 2016 production forecast for 525,000 to 565,000 barrels of oil equivalent per day. In 2015, the company said its output for the year totaled 577,800 barrels of oil equivalent a day.

Production at Suncor rose to 582,900 barrels of oil equivalent per day in the most recent quarter, up from 557,600 barrels of oil equivalent a day in the fourth quarter of 2015. Output from oil sands rose 12.6% to 439,000 barrels per day, up from 384,200 a day in the year-earlier period.

Suncor's share of production from the Syncrude oil sands consortium fell to 30,900 barrels per day, down from 35,100 barrels a day in the fourth quarter of 2014. That stemmed from unplanned maintenance, a problem that has dogged Syncrude in recent years.

Mr. Williams said he expects Syncrude's performance will improve after his company boosts its ownership stake in the mining consortium as a result of a deal reached last month to take over smaller rival Canadian Oil Sands Ltd.

'Working with the operator, we can drive real improvements in Syncrude's performance with a larger ownership interest," the Suncor CEO said.

Canadian Oil Sands is the largest owner of the Syncrude mining consortium with a 36.7% stake. The takeover deal will give Suncor, which has a 12% stake in Syncrude, effective control over the seven-member consortium, whose mines are currently operated by the Canadian unit of Exxon Mobil Corp., which owns 25% of Syncrude through its Imperial Oil Ltd. subsidiary.

Following months of wrangling after it made an unsolicited offer for Canadian Oil Sands last October, Suncor won over that company's board with an increased bid to 0.28 of a share of its own stock for each share of Canadian Oil Sands.That was up from an initial offer of 0.25 of a share.

 

(END) Dow Jones Newswires

February 03, 2016 22:55 ET (03:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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