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Suncor turns to loss as wildfire shutdown drags on earnings
[VANCOUVER] Suncor Energy Inc, Canada's largest oil and gas company, reported a second-quarter loss on Wednesday, as it was hit by a significant decline in oil sand production due to the shut in of operations during the Fort McMurray wildfire.
The Calgary-based company posted an operating loss of C$565 million (S$581 million), or 36 Canadian cents per share. That was below the average analyst estimate of an operating loss of 26 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Suncor was forced to shut down its facilities north of Fort McMurray, Alberta in May as a massive wildfire tore through the region, forcing the evacuation of 90,000 residents. The blaze, expected to be Canada's costliest natural disaster, cut Canadian oil output by a million barrels a day.
Suncor said the fires reduced its second quarter oil sands production by some 20 million barrels.
"The forest fires in the Fort McMurray area significantly impacted the region," said chief executive Steve Williams in a statement. By mid-July, the company's oil sand assets had returned to normal production levels.
Alberta's vast oil sand deposits are the world's third-largest crude reserves, but are more expensive to produce than conventional oil because of their energy intensity and the high cost of labour in northern Canada.
The plunging oil price led to thousands of workers being laid off as producers slashed capital spending in the region, which is where Suncor mainly operates.
Suncor said it remains on track to achieve a C$750 million reduction to its original 2016 budget, even as it pushes ahead with its Fort Hills and Hebron growth projects.
It is also looking to divest non-core assets and said it started the sales process for its lubricant business in the second quarter.
Oil sands production fell to 177,500 barrels per day (bpd), compared to 423,800 bpd a year earlier, while cash operating costs for oil sands operations rose to US$46.80 per barrel, up 67 per cent from a year ago, Suncor said.
Suncor's total upstream production, meanwhile, fell to 330,700 barrels of oil equivalent per day (boe/d), from 559,900 boe/d a year ago.
The company reported a net loss of C$735 million, or 46 Canadian cents per share, in the quarter ended June 30.
That compared with a profit of C$729 million, or 50 Canadian cents per share, in the same quarter of last year.