Suncor lowers expectations for 2017
As part of their second quarter earnings release this week, Suncor warned that costs are expected to be higher than previously anticipated for the full year 2017, while expectations for oil prices have been significantly reduced.
Capital expenditures are now expected to be in the $5.4 to $5.6 billion range, $400 million higher than previous guidance due to the Syncrude fire last March, maintenance turnarounds and cost escalation at Fort Hills.
Production guidance at Syncrude was lowered to 240,000 to 270,000 bbl/day (gross), a decline of 9,300 bbl/day from Q1 estimates. Suncor owns 53.75% of the Syncrude facility, which has a nameplate capacity of about 350,000 bbl/day. The company now says Syncrude should return to normal operation sometime until August.
Operating costs at Syncrude were revised higher by $6/bbl, now expected to be $42 to $45 per barrel of upgraded synthetic crude. To partially offset that increase, Suncor says operating costs at its base oil sands operations will fall by $1/bbl to a range of $23 to $26 per barrel.
Lower production out of Syncrude has not dampened Suncor's full year production outlook. The company says it can make up the 5,000 bbl/day shortfall through higher production from its non-oil sands operations.
Expectations for oil prices were also revised lower. Suncor now expects Brent, West Texas Intermediate (WTI) and Western Canadian Select (WCS) to average US$49, US$47 and US$35 a barrel respectively for the full year 2017, a downward revision of US$4, US$5 and US$3/bbl.
Including sustaining capital costs and dividend payouts, Suncor says it can breakeven at about US$37 WTI.