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Suncor reports a big loss in Q2 as forest fires cut output by 20 million barrels

Suncor reports a big loss in Q2 as forest fires cut output by 20 million barrels

As expected, Suncor Energy reported a sizeable loss in the second quarter, driven by production losses due to the Alberta wildfires, maintenance outages at both the Suncor and Syncrude upgraders and lower oil prices. Among the key highlights:

  • cash flow from operations was cut to $916 million
  • Q2 operating loss was $565 million (versus a $906 million profit for the previous year quarter)
  • net loss was reported at $735 million (versus a gain of $729 million in Q2/2015)
  • costs related to the evacuation and restart was $50 million (after tax), which was offset by a $180 million savings from shut-in operations.
SECOND QUARTER HIGHLIGHTS (COURTESY SUNCOR ENERGY)

SECOND QUARTER HIGHLIGHTS (COURTESY SUNCOR ENERGY)

Construction on Fort Hills was reported over 60% complete by the end of June. The wildfires halted construction for several weeks at the site but project start-up remains on track for late 2017.

Oil production and upgrader operations at both the Syncrude and Suncor base plants returned to normal by mid-July, more than 8 weeks after being shut-in due to the wildfire evacuations. The forest fires took 20 million barrels out of Suncor's second quarter production numbers.

  • total production for the quarter was 330,700 boe/day versus 559,900 boe/day for the previous year quarter
  • Suncor's oil sands production was 177,500 bbl/day, down from 423,800 bbl/day for Q2/2015
  • operating costs for the oil sands shot up to $46.80/bbl versus $28.00/bbl last year
  • exploration and production volumes increased to 117,600 boe/day, versus 111,200 boe/day.

Refinery utilization in Montreal, Sarnia and Commerce City declined to 87% due to the completion of planned maintenance turnarounds at each facility.

Second quarter numbers now include an additional 5% interest in the Syncrude operation, which Suncor purchased from Murphy Oil earlier this year. The purchase will add 17,500 bbl/day for Synthetic Crude Oil (SCO) production to Suncor's bottom line. Suncor's share of Syncrude is now almost 54%.

Full year 2016 guidance was updated in early June to reflect the impact of the wildfires and additional production volumes from Syncrude. Production from Suncor's oil sands operations is expected to average 375,000 to 395,000 bbl/day for the full year (excluding Syncrude's share). Operating costs are expected to remain in the $27 to $30/bbl range, despite the sharp increase in the second quarter. Syncrude's operating costs are expected to average $41 to $44/bbl, including upgrading.

Suncor says it remains on track to achieve $750 million in savings this year relative to its original 2016 capital budget. The company has also placed its Petro-Canada lubricants business for sale and expects a deal to close within the next 12 months. CEO Steve Williams says his company is ready  for "strategic growth opportunities" but doesn't see any major projects being sanctioned anytime soon.

How critical is Fort McMurray to Canada's general economy? StatsCan counts the ways

How critical is Fort McMurray to Canada's general economy? StatsCan counts the ways

US imports of Canadian crude oil continues to decline

US imports of Canadian crude oil continues to decline