Unexpected Shutdowns Send Suncor's Revenues Spiraling Downward
Suncor Energy Inc. reported 2007 net earnings of $2.832 billion ($6.14 per common share), compared to $2.971 billion ($6.47 per common share) in 2006. Excluding the effects of the reduction of federal and Alberta income tax rates, net insurance proceeds (relating to a January 2005 fire), unrealized foreign exchange gains on the company’s U.S. dollar denominated long-term debt and project start-up costs, 2007 net earnings were $2.239 billion ($4.86 per common share), compared to $2.350 billion ($5.12 per common share) in 2006. Cash flow from operations in 2007 was $3.805 billion, compared to $4.533 billion in 2006.
The decrease in net earnings primarily reflects the impact of scheduled and unscheduled maintenance that reduced crude oil production and increased operating expenses. The largest impacts on financial results were a scheduled 50-day maintenance shutdown to portions of Suncor’s oil sands operation to tie in new facilities related to a planned expansion and a scheduled 120-day shutdown to portions of the Sarnia refinery to tie in new sour crude processing facilities. These impacts were partly offset by higher benchmark crude oil prices. The decrease in cash flow from operations was due to the same factors that impacted net earnings as well as an increase in cash income taxes during 2007.
"Suncor’s goal in 2007 was to continue to build the financial and physical foundation for future growth and profitability,” said Rick George, president and chief executive officer. “And we’re on track to increase production capacity by 35% in 2008.”
“We plan on establishing new milestones for our company in 2008 and anticipate a record-setting year for production,” said George. “Safe, reliable, cost effective and environmentally responsible operations will be the focus.”
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