Suncor Boosts Bitumen Production, Beats Estimates

Suncor Energy Inc reported a net income of $1.12 billion (CAD 1.54 billion) for the third quarter, compared to a net loss of $441.23 million (CAD 609) million in the prior-year period.

Suncor’s adjusted operating earnings were $1.43 billion (CAD 1.98 billion) in the third quarter, compared to $1.85 billion (CAD 2.56 billion) in the prior-year quarter. The company attributed the decrease primarily to decreased crude oil price realizations reflecting a weaker business environment in the current quarter, as well as increased royalties and decreased sales volumes in exploration and production (E&P) due to asset divestments. This was partially offset by increased refining and marketing gross margins on a first-in, first-out (FIFO) basis due to the impacts of improving benchmark pricing through the quarter, increased sales volumes in the Oil Sands segment and lower income taxes, according to an earnings release Wednesday.

The Calgary-based company’s adjusted earnings per common share was $1.10 (CAD 1.52), which beat the Zacks Consensus Estimate of $0.88.

“We generated over [CAD] 3.6 billion in adjusted funds from operations and returned nearly [CAD] 1.0 billion to shareholders this quarter”, Suncor President and CEO Rich Kruger said. “Outside of planned maintenance activities, our upgrader and refinery utilizations were over 100 percent, highlighting our strong operating performance in the third quarter”.

The company’s total oil sands bitumen production increased in the quarter to 787 thousand barrels per day (Mbpd) from the prior-year quarter figure of 764.1 Mbpd, primarily due to the impact of significant planned turnaround activities at Syncrude in the third-quarter 2022 and continued strong performance from the company’s In Situ assets. This was partially offset by decreased bitumen production at Oil Sands Base as a result of planned turnaround activities, and at Fort Hills, where the impact of planned turnaround activities more than offset the company’s increased working interest, the company noted.

Suncor’s net synthetic crude oil (SCO) production increased to 469,300 barrels per day (bpd) in the third quarter, representing combined upgrader utilizations of 88 percent, compared to 405,100 bpd and 75 percent in the prior-year quarter, reflecting lower planned maintenance activities in the current period and over 100 percent utilizations outside of planned maintenance activities, according to the release.

Further, E&P production for the third quarter decreased compared to the same period in 2022, primarily due to international asset divestments, Suncor said. Refinery crude throughput was 463,200 bpd and refinery utilization was 99 percent, compared to 466,600 bpd and 100 percent in the prior-year quarter, “reflecting strong utilizations across all refineries in both periods”, the company said, adding that refined product sales of 574,100 bpd were comparable to 577,300 bpd in the prior-year quarter.

Suncor reported a successful first full plant turnaround at the Fort Hills oil sands mining project, and the asset safely ramped up to normal operating rates within the quarter. Significant planned turnaround activities at Upgrader 2 and planned maintenance activities at Firebag were also completed, and both assets have safely ramped up to normal operating rates, the company noted.

In October, Suncor agreed to purchase TotalEnergies EP Canada Ltd., which holds a 31.23 percent working interest in the Fort Hills oil sands mining project, for $1.07 billion (CAD 1.468 billion). Upon completion of the transaction, Suncor will own 100 percent of Fort Hills.

"I am pleased to be acquiring the remaining working interest in Fort Hills”, Kruger said. “This transaction adds 61,000 [bpd] of high-quality bitumen production capacity to our portfolio, advances our long-term strategy by securing bitumen supply to fill our Base Plant upgraders, and builds on our best-in-class integrated model. We will continue to maximize value through regional synergy opportunities across our oil sands asset base, adding long-term value for shareholders”.

Suncor also reported that the Terra Nova Asset Life Extension project has been completed, and commissioning activities at the Terra Nova Floating, Production, Storage and Offloading vessel are nearly finished. The company expects the asset to safely restart production in the fourth quarter. The Terra Nova field is located offshore approximately 217 miles southeast of Newfoundland and Labrador.

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