Suncor Cuts Spending After Surprise Loss on Asset Writedowns
(Bloomberg) -- Suncor Energy Inc. will cut spending by about 10 percent this year after posting a surprise quarterly loss amid writedowns on the value of Canadian, Libyan and offshore assets.
The oil-sands producer lowered its capital spending plan to between C$6 billion ($4.4 billion) and C$6.5 billion from a November estimate of C$6.7 billion to C$7.3 billion, it said in a statement Wednesday after markets closed. The reduction comes partly from deferring maintenance at its Firebag oil-sands operations to 2017 from this year.
The Canadian oil giant has lowered costs and delayed projects to weather collapsing prices that are making many bitumen mining operations in northern Alberta unprofitable. The 2016 spending cuts come after the company eliminated about 1,700 jobs and slashed its budget last year.
“We have surpassed the reliability and cost reduction targets we established in early 2015,” Chief Executive Officer Steve Williams said in the statement. The company expects to lower costs further even with job reductions “nearing an end,” Williams said during a conference call on Thursday.
Suncor rose as much as 3.9 percent, and traded 1.1 percent higher at C$31.89 as of 11:23 a.m. in Toronto. West Texas Intermediate also rose in New York trading.
The company reported a fourth-quarter loss of C$2 billion, or C$1.38 a share, compared with net income of C$84 million, or 6 cents, a year earlier. Excluding one-time items, per-share profit fell short of the 7 Canadian-cent average of 15 analysts’ estimates compiled by Bloomberg.
Suncor reported after-tax impairments of C$1.6 billion, including charges of C$798 million for some offshore assets because of lower crude prices, C$415 million for its Libyan assets and C$290 million for the Joslyn oil-sands venture. Its unrealized foreign exchange loss on U.S. dollar denominated debt was C$382 million.
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