Suncor Energy Inc., Calgary, has cut its capital guidance for 2016 to $6-6.5 billion from $6.7-7.3 billion reported in November (OGJ Online, Nov. 18, 2015).
The additional reduction follows a net loss in 2015 of $1.995 billion, compared with earnings in 2014 of $2.699 billion.
During the fourth quarter, the company took a net loss of $2.007 billion, compared with earnings of $84 million in fourth-quarter 2014.
Suncor attributes the fourth-quarter loss to noncash asset writedowns, a result of the depressed commodity cycle and a foreign exchange loss on US dollar denominated debt.
In January, Suncor and Canadian Oil Sands Ltd. (COS) reached an agreement in which COS and its board support Suncor’s offer to purchase all of the shares of COS for 0.28 of a share of Suncor stock for each COS share (OGJ Online, Jan. 28, 2016). The deal was valued at $6.6 billion at the time of the agreement.
“We are pleased that the board of COS is supporting our offer,” said Steve Williams, Suncor president and chief executive officer.
Operations update
Companywide upstream production during the quarter was 582,000 boe/d, compared with 557,600 boe/d in the prior year quarter. Oil sands production in the quarter increased to 439,700 b/d, compared with 384,200 b/d in the prior year quarter.
In its previously announced guidance, Suncor said it expected a slight decline in oil sands output in 2016 due to “significant planned maintenance activities scheduled at various facilities,” including its first 5-year full turnaround at the U2 upgrader near Fort McMurray, Alta. and “major maintenance” at the Firebag in situ project (OGJ Online, Oct. 23, 2012).
The company during 2015 continued to focus on well pad construction to sustain existing production at Firebag and the MacKay River oil sands project, and completed debottlenecking activities at Firebag, increasing nameplate capacity to 203,000 b/d from 180,000 b/d.
The Fort Hills oil sands project, where Suncor boosted its stake by 10% in 2015 (OGJ Online, Sept. 21, 2015), remains on schedule with construction more than 50% complete at the end of the fourth quarter. Startup is expected in fourth-quarter 2017.
Construction of the Hebron heavy-oil project continued in the quarter, with production startup expected in late 2017. Effective Jan. 1, working interests in Hebron have been reset. As a result, Suncor’s working interest in the project decreased to 21% from 22.7%, with the company to be reimbursed for costs incurred to Dec. 31, 2015.
Development drilling at the Golden Eagle Area Development in the central North Sea continued through the quarter (OGJ Online, Nov. 3, 2014). Exploration drilling at the deepwater Shelburne basin offshore Nova Scotia commenced in the quarter and will continue during 2016 (OGJ Online, June 11, 2014).
