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TORONTO (miningweekly.com) – Canada’s largest crude oil producer Suncor Energy late on Wednesday reported an 81% plunge in fourth-quarter profit amid multiyear low oil prices and lower-than-expected oil sands output, primarily owing to unplanned maintenance.
The TSX- and NYSE-listed oil producer reported net income of C$84-million, or C$0.06 a share, compared with C$443-million, or C$0.30 a share, a year earlier. The company booked a C$302-million after-tax foreign exchange loss on the revaluation of US-dollar denominated debt as a result of the weakening Canadian currency.
Companies that had spent billions of dollars expanding their operations in the Athabasca oil sands were caught on the back foot after the oil prices recently plummeted to five-year lows of around $45/bl – less than half the price it was just six months ago.
The lower oil prices, particularly if they continued to fall, would cause headaches for oil companies, threatening their bottom lines and discouraging future investment in the industry.
Calgary-based Suncor had last month slashed its workforce by about 1 000 contract-worker jobs and lopped $1-billion off its 2015 budget.
The company's average realised price for oil sands crude in the fourth quarter was C$69.51/bl, down from C$71.64/bl in the comparable period a year earlier.
Fourth-quarter operating earnings, which excluded special items, were $386-million, or $0.27 a share, down 60% year-on-year compared with $973-million, or C$0.66 a share, in the comparable period. This was, however, below the average Bay Street-analyst expectation of earning C$0.35 a share.
Gross revenue came in at $2.8-billion, down almost 18% from C$3.4-billion in the same quarter of 2013.
Suncor said it would move forward with developing the Fort Hills oil sands project, in Alberta’s Athabasca region, which the company owned with Total and Teck Resources. The company had allocated about $1.6-billion of its revised 2015 capital budget to the Fort Hills mining project.
Project activities were expected to focus on completing detailed engineering and ramping up procurement and construction across all areas.
The operation would start producing oil at the end of 2017, the company noted.
The company was, however, deferring some projects that had not yet been sanctioned, such as the second phase of its MacKay River oil sands project and the White Rose Extension project, offshore Newfoundland and Labrador.
“Our commitment to capital discipline has put us in a better position to weather the price downturn,” Suncor CEO Steve Williams said in a statement.
On Thursday, oil traded just above $50/bl after testing new lows since April 2009.
Suncor on Wednesday said it would maintain its quarterly dividend at $0.28 a share.
The company's TSX-listed stock gained 2.32%, rising to C$38.36 apiece on Thursday, as Western Texas Intermediate oil rallied 6.05% to lift the price to $51.38/bl.