Suncor Energy Swings to Loss on Impact of Wildfires, Low Oil Prices
July 27 2016 - 11:20PM
Dow Jones News
CALGARY, Alberta—Suncor Energy Inc., Canada's largest crude-oil
producer, blamed a second-quarter net loss on lower crude oil
prices and production cuts from wildfires in May that forced a
shutdown of its oil-sands operations.
Global energy producers have been hit hard by a slide in oil
prices below $50 a barrel, and many oil-sands operators in Western
Canada suffered an additional blow when out-of-control forest fires
forced them to suspend production for several weeks.
The Calgary company reported a net loss of 735 million Canadian
dollars ($559.3 million), or 46 Canadian cents a share, for the
three months to June 30, compared with a net profit of C$729
million, or 50 Canadian cents a share, in the year-earlier period.
That was exacerbated by charges for early repayment of debt and
losses on derivatives and U.S. dollar-denominated debt, Suncor said
Wednesday.
The massive wildfire in May forced the evacuation of the
business hub of Fort McMurray, Alberta, and led to the temporary
closure of Suncor's mainstay oil-sands mines and wells located to
the north of the town. No facilities were damaged by the blaze, but
the company said the disruption forced it to forgo production of
some 20 million barrels of oil until full operations resumed in
mid-July.
Restart costs of C$50 million were more than offset by cost
reductions during the shutdown of C$180 million, it said.
"The forest fires in the Fort McMurray area significantly
impacted the region," Steve Williams, Suncor's chief executive,
said in a statement. "We shut in our oil-sands production and
focused on the safe evacuation of employees, their families and the
community."
Suncor said its oil-sands output sank to 177,500 barrels of oil
a day in the April to June quarter, well below the 423,800 barrels
of oil a day produced a year ago and the 453,000 barrels a day
logged in the first quarter.
On an operating, or adjusted, basis that excludes one-time
items, Suncor lost C$565 million, or 36 Canadian cents a share for
the period, compared with a profit of C$906 million, or 63 Canadian
cents a share, in the second quarter of 2015. That was larger than
an average forecast of financial analysts for a loss of 25 Canadian
cents a share, according to RBC Dominion Securities.
Cash flow from operations in the April to June quarter came to
C$916 million, down from C$2.2 billion a year ago.
In addition to the oil-price slump and lost production, Suncor
said routine maintenance at a partial refining unit and higher
operating expenses from its increased stake in the Syncrude
oil-sands consortium contributed to weaker earnings.
The company boosted its ownership in Syncrude to 53.74% in the
first quarter after buying a 5% share held by Murphy Oil Corp. and
earlier acquiring Canadian Oil Sands Ltd., which owned 36.74% of
the oil-sands mining consortium.
Total production at Suncor fell to 330,700 barrels of oil
equivalent a day in the second quarter, down from 559,900 barrels
of oil equivalent a day in the year earlier period and 691,400
barrels of oil equivalent a day in the first three months of the
year.
The company left unchanged its latest full-year production
guidance of 585,000 to 620,000 barrels of oil equivalent a day. In
June, Suncor lowered its production forecast from a previous
estimate of 620,000 to 665,000 barrels of oil equivalent a day.
(END) Dow Jones Newswires
July 27, 2016 23:05 ET (03:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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