Suncor released its 2020 corporate guidance today which focuses on
driving its $2 billion of incremental free funds flow target by
2023, achieving its 2030 sustainability targets, and reflects the
company’s recent 800 MW cogeneration investment announcement. The
capital program is expected to be between $5.4 and $6.0 billion
with flat investment in oil related projects year over year.
Upstream production is expected to be between 800,000 to 840,000
barrels of oil equivalent per day (boe/d), an approximately 5%
production increase compared to 2019 midpoint guidance.
“During 2019, we've demonstrated the value of our asset
integration and flexibility through our focus on value over
volumes, optimizing our product mix and transferring production
quotas among our assets. This unique competitive advantage means
we’re able to realize the highest value possible for our produced
barrels, even during a period of production curtailment,” said Mark
Little, president and chief executive officer. “Looking forward to
2020, we will continue to focus on value over volume, investing in
high-return projects that are largely independent of pipeline
constraints and commodity price volatility, to deliver on our $2
billion incremental free funds flow target by 2023. These
initiatives continue to position our company as financially and
environmentally sustainable by driving long-term value creation,
increasing shareholder returns, and lowering the carbon intensity
of our production.”
The impact of the Government of Alberta’s mandatory production
curtailment is factored into Suncor’s 2020 guidance which
incorporates the utilization of crude by rail special production
allowances. Although there continues to be considerable
uncertainty on the impact and duration of the curtailment, the
lower end of Suncor’s production guidance assumes curtailment
remains in place at current levels for the full 2020 calendar year,
while the upper end reflects an uncurtailed environment. Fort Hills
and Syncrude remain adversely impacted due to the continued,
disproportionate effect of curtailment as it is applied on a 2018
production basis when neither asset was operating at nameplate
capacity.
Cash operating costs per barrel is impacted by the Government of
Alberta’s continued mandatory production curtailments and the
associated optimization of production quotas, which focuses on
higher value but higher cost production. Suncor's expected Oil
Sands operations cash operating costs per barrel are $24.00 -
$26.50 (US $18.25 - $20.15) reflecting lower 2020 planned
maintenance. Fort Hills cash operating costs per barrel are
expected to be $23.00 - $27.00 (US $17.50 - $20.50). Syncrude cash
operating costs per barrel are expected to be $35.00 - $38.00 (US
$26.60 - $28.90).
Oil related capital is flat year over year, while oil production
is expected to increase by 5% over 2019 midpoint guidance. Capital
for previously sanctioned E&P step-out developments will
increase by approximately $100 million over 2019 to $1.1 billion,
and is inclusive of the Terra Nova asset life extension. The
capital increase in 2020 is predominantly associated with projects
driving the $2 billion of incremental free funds flow target by
2023 – the anticipated incremental capital spend on such projects
in 2020 include $300 million for the newly sanctioned cogeneration
facility, $150 million for additional investment in digital
technology initiatives, and $50 million in connection with the
completion of the Syncrude bi-directional pipelines.
Suncor has sanctioned the Forty Mile Wind Power Project in
southern Alberta. This 200 MW renewable power project has an
estimated total capital spend of $300 million, with 25% of the
capital spent in 2019 and the remainder to be spent over the next
two years. This unique investment approach in renewable energy is
expected to generate double-digit, sustainable economic returns
through power generation and retaining the generated carbon credits
for utilization in the core business. This project is part of
Suncor’s sustainability strategy, making meaningful progress toward
the greenhouse gas intensity reduction target of 30% by 2030.
The capital program is approximately 50% allocated to planned
asset sustainment and maintenance activities to ensure continued
safe, reliable and efficient operations. The remaining 2020 capital
program has a continued focus on low capital intensity,
value-creating projects including the cogeneration facility;
continued implementation of autonomous haul trucks; completion of
the Syncrude bi-directional pipelines; investment in renewable wind
power development; and digital technology adoption.
Suncor's corporate guidance provides management's outlook
for 2020 in certain key areas of the company's business. Users of
this forward-looking information are cautioned that actual results
may vary materially from the targets disclosed. Readers are
cautioned against placing undue reliance on this guidance.
Capital Expenditures (C$ millions) (1) |
|
2020 Full
Year Outlook December 2, 2019 |
% Economic
Investment (2) |
Upstream Oil
Sands |
3,550 – 3,800 |
35 |
% |
Upstream E&P |
1,000 – 1,150 |
95 |
% |
Total Upstream |
4,550 –
4,950 |
50 |
% |
Downstream |
700 –
800 |
30 |
% |
Corporate |
150 – 250 |
65 |
% |
Total |
5,400 – 6,000 |
50 |
% |
|
- Capital expenditures exclude capitalized interest of
approximately $155 million.
- Balance of capital expenditures represents Asset Sustainment
and Maintenance capital expenditures. For definitions of Economic
Investment and Asset Sustainment and Maintenance capital
expenditures, see the Capital Investment Update section of Suncor’s
Management's Discussion and Analysis dated October 30, 2019 (the
“MD&A”).
|
|
|
2020 Full Year Outlook |
|
December 2, 2019 |
Production & Refinery Utilization |
|
|
|
Suncor Total Production (boe/d) (1) |
800,000 – 840,000 |
Oil Sands operations (bbls/d)(2) |
420,000 – 455,000 |
Synthetic Crude Oil (bbls/d) |
305,000 – 325,000 |
Bitumen (bbls/d) |
115,000 – 130,000 |
Fort Hills (bbls/d) Suncor working interest of 54.11% |
85,000 – 95,000 |
Syncrude (bbls/d) Suncor working interest of 58.74% |
170,000 – 185,000 |
Exploration & Production (boe/d) (1) |
100,000 – 115,000 |
|
|
Suncor Refinery Throughput (bbls/d) |
440,000 – 460,000 |
Suncor Refinery Utilization (3) |
95% – 99% |
Refined Product Sales (bbls/d) |
530,000 – 560,000 |
|
- At the time of publication, production in Libya continues to be
affected by political unrest and therefore no forward looking
production for Libya is factored into the Exploration and
Production and Suncor Total Production guidance. Production ranges
for Oil Sands operations, Fort Hills, Syncrude and Exploration and
Production are not intended to add to equal Suncor Total
Production.
- Oil Sands operations production includes synthetic crude oil,
diesel, and bitumen and excludes Fort Hills PFT bitumen and
Syncrude synthetic crude oil production. These ranges reflect the
integrated upgrading and bitumen production performance
risk.
- Refinery utilization is based on the following crude processing
capacities: Montreal - 137,000 bbls/d; Sarnia - 85,000 bbls/d;
Edmonton – 142,000 bbls/d; and Commerce City - 98,000 bbls/d.
|
For an updated Investor Relations presentation and the third
quarter Investor Relations deck, see
suncor.com/investor-centre.
Legal Advisory – Forward-Looking
Information
This news release contains certain forward-looking information
and forward-looking statements (collectively referred to herein as
"forward-looking statements") within the meaning of applicable
Canadian and U.S. securities laws. Forward-looking statements in
this news release include references to: Suncor's $2 billion
incremental free funds flow target, including the projects that are
expected to drive Suncor towards this target; the expectation that
Suncor's capital spending program will be between $5.4 and $6.0
billion (and expectations of where that spending will be directed);
Suncor's expectations around production, including planned average
upstream production of 800,000 - 840,000 boe/d and planned ranges
for Oil Sands operations (420,000 – 455,000 bbls/d), made up of
Synthetic Crude Oil (305,000 – 325,000 bbls/d) and Bitumen (115,000
– 130,000 bbls/d), Suncor's working interest in Fort Hills (85,000
– 95,000 bbls/d), Suncor's working interest in Syncrude (170,000 –
185,000 bbls/d) and Exploration and Production (100,000 – 115,000
boe/d); Suncor's expected Oil Sands operations cash operating
costs, projected to be in the range of $24.00 - $26.50 (US $18.25
– $20.15) per barrel; expected Fort Hills cash operating
costs, projected to be in the range of $23.00 – $27.00 (US $17.50 –
$20.50) per barrel; expected Syncrude cash operating costs,
projected to be in the range of $35.00 – $38.00 (US $26.60 –
$28.90) per barrel; Suncor's expected Refinery Throughputs (440,000
– 460,000 bbls/d) and Utilization (95% – 99%); Suncor's expected
Refined Product Sales (530,000 – 560,000 bbls/d); the expected
impact of the Government of Alberta mandatory production
curtailments; Suncor’s focus on maintaining capital discipline and
ensuring safe and reliable operations while growing the free funds
flow of our business; the expectations that the 2020 capital
program will be approximately 50% allocated to planned asset
sustainment and maintenance activities with the remaining 2020
capital program having a continued focus on low capital intensity,
value-creating projects and that these projects are largely
independent of pipeline contraints and commodity price volatility
which will continue to position Suncor as financially and
environmentally sustainable by driving long term value creation,
increasing shareholder returns and lowering carbon intensity;
statements about Suncor's Forty Mile Wind Power Project, including
its estimated total capital spend and the timing thereof and the
anticipated economic returns of the project; the expectation of
continued safe, reliable and efficient operations; and the
expectation that capital for previously sanctioned E&P step-out
developments will increase by approximately $100 million over 2019.
In addition, all other statements and information about Suncor's
strategy for growth, expected and future expenditures or investment
decisions, commodity prices, costs, schedules, production volumes,
operating and financial results and the expected impact of future
commitments are forward-looking statements. Some of the
forward-looking statements may be identified by words like
"guidance", "outlook", "will", "expected", "estimated", "focus",
“planned”, “believe” and similar expressions.
Forward-looking statements are based on Suncor's current
expectations, estimates, projections and assumptions that were made
by the company in light of its information available at the time
the statement was made and consider Suncor's experience and its
perception of historical trends, including expectations and
assumptions concerning: the accuracy of reserves and resources
estimates; commodity prices and interest and foreign exchange
rates; the performance of assets and equipment; capital
efficiencies and cost-savings; applicable laws and government
policies; future production rates; the sufficiency of budgeted
capital expenditures in carrying out planned activities; the
availability and cost of labour, services and infrastructure; the
satisfaction by third parties of their obligations to Suncor; the
development and execution of projects; and the receipt, in a timely
manner, of regulatory and third-party approvals.
Forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties, some
that are similar to other oil and gas companies and some that are
unique to Suncor. Suncor's actual results may differ materially
from those expressed or implied by its forward- looking statements,
so readers are cautioned not to place undue reliance on them.
Assumptions for the Oil Sands operations, Syncrude and Fort
Hills 2020 production outlook include those relating to reliability
and operational efficiency initiatives that the company expects
will minimize unplanned maintenance in 2020. Assumptions for the
Exploration and Production 2020 production outlook include those
relating to reservoir performance, drilling results and facility
reliability. Factors that could potentially impact Suncor's 2020
corporate guidance include, but are not limited to:
- Bitumen supply. Bitumen supply may be dependent on unplanned
maintenance of mine equipment and extraction plants, bitumen ore
grade quality, tailings storage and in situ reservoir
performance.
- Third-party infrastructure. Production estimates could be
negatively impacted by issues with third- party infrastructure,
including pipeline or power disruptions, that may result in the
apportionment of capacity, pipeline or third-party facility
shutdowns, which would affect the company's ability to produce or
market its crude oil.
- Performance of recently commissioned facilities or well pads.
Production rates while new equipment is being brought into service
are difficult to predict and can be impacted by unplanned
maintenance.
- Unplanned maintenance. Production estimates could be negatively
impacted if unplanned work is required at any of our mining,
extraction, upgrading, in situ processing, refining, natural gas
processing, pipeline, or offshore assets.
- Planned maintenance events. Production estimates, including
production mix, could be negatively impacted if planned maintenance
events are affected by unexpected events or are not executed
effectively. The successful execution of maintenance and start-up
of operations for offshore assets, in particular, may be impacted
by harsh weather conditions, particularly in the winter
season.
- Commodity prices. Declines in commodity prices may alter our
production outlook and/or reduce our capital expenditure
plans.
- Foreign operations. Suncor's foreign operations and related
assets are subject to a number of political, economic and
socio-economic risks.
- Government Action. This guidance reflects the production
curtailments imposed by the Government of Alberta. Further action
by the Government of Alberta regarding production curtailment may
impact Suncor’s corporate guidance and such impact may be
material.
The MD&A, together with Suncor's most recently filed Annual
Information Form, Form 40-F and Annual Report to Shareholders and
other documents Suncor files from time to time with securities
regulatory authorities describe the risks, uncertainties, material
assumptions and other factors that could influence actual results
and such factors are incorporated herein by reference. Copies of
these documents are available without charge from Suncor at 150 6th
Avenue S.W., Calgary, Alberta T2P 3E3; by email request to
invest@suncor.com; by calling 1-800-558-9071; or by referring to
suncor.com/FinancialReports or to the company's profile on SEDAR at
sedar.com or EDGAR at sec.gov. Except as required by applicable
securities laws, Suncor disclaims any intention or obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
Oil Sands operations cash operating costs, Fort Hills cash
operating costs, Syncrude cash operating costs and free funds flow
are not prescribed by Canadian generally accepted accounting
principles ("GAAP"). These non-GAAP financial measures are included
because management uses the information to analyze business
performance, including on a per barrel basis, as applicable, and it
may be useful to investors on the same basis. These non-GAAP
financial measures do not have any standardized meaning and,
therefore, are unlikely to be comparable to similar measures
presented by other companies. These non-GAAP financial measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. These
non-GAAP financial measures are defined in the Non-GAAP Financial
Measures Advisory section of the MD&A and, for the period ended
September 30, 2019, are reconciled to the comparable GAAP measure
in the MD&A. Oil Sands operations cash operating costs of
$24.00 - $26.50 (US $18.25 - $20.15) per barrel is based on the
assumptions that: (i) Suncor will produce 420,000 - 455,000 bbls/d
at Oil Sands operations (of which 305,000 - 325,000 bbls/d will be
synthetic crude oil and 115,000 – 130,000 will be bitumen); and
(ii) natural gas used at Suncor's Oil Sands operations (AECO - C
Spot ($CAD)) will be priced at an average of $1.60/GJ over 2020.
Fort Hills cash operating costs of $23.00 - $27.00 (US $17.50 -
$20.50) per barrel is based on the assumptions that: (i) Fort Hills
production (net to Suncor) will be 85,000 - 95,000 bbls/d; and (ii)
natural gas used at Fort Hills (AECO - C Spot ($CAD)) will be
priced at an average of $1.60/GJ over 2020. Syncrude cash operating
costs of $35.00 - $38.00 (US $26.60 - $28.90) per barrel is based
on the assumptions that: (i) Syncrude will produce 170,000 -
185,000 bbls/d of synthetic crude oil (net to Suncor); and (ii)
natural gas used at Syncrude (AECO - C Spot ($CAD)) will be priced
at an average of $1.60/GJ over 2020. The Syncrude cash operating
costs per barrel and Fort Hills cash operating costs per barrel
measures may not be fully comparable to similar information
calculated by other entities (including Suncor's Oil Sands
operations cash operating costs per barrel) due to differing
operations.
Suncor Energy is Canada's leading integrated energy company.
Suncor's operations include oil sands development and upgrading,
offshore oil and gas production, petroleum refining, and product
marketing under the Petro-Canada brand. A member of Dow Jones
Sustainability indexes, FTSE4Good and CDP, Suncor is working to
responsibly develop petroleum resources while also growing a
renewable energy portfolio. Suncor is listed on the UN Global
Compact 100 stock index. Suncor's common shares (symbol: SU) are
listed on the Toronto and New York stock exchanges.
For more information about Suncor, visit our web
site at suncor.com, follow us on Twitter @Suncor or
together.suncor.com
Media inquiries:833-296-4570media@suncor.com
Investor inquiries:800-558-9071invest@suncor.com
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