BUSINESS

Suncor says production reaching new heights as it catches up after outages

08/01/2013 11:46 EDT | Updated 10/01/2013 05:12 EDT
CALGARY - Suncor Energy Inc. says maintenance downtime and pipeline outages had an impact on its second-quarter profits, but the company expects operations will "run reliably" for the rest of 2013.

"We anticipate the total production for the year will fall in the lower half of the guidance range," said chief executive Steve Williams in a conference call on Thursday.

"Obviously this implies strong production through the second half of the year, and that's exactly what we're expecting."

Canada's largest energy company posted its latest quarterly results on Wednesday, which included total production levels targeted in a range of 570,000 barrels of oil equivalent to 620,000 barrels for the year.

While oil sand production numbers for July are still being finalized, Williams expects the company will report a monthly record of about 390,000 barrels per day.

"Keep in mind we have accomplished this despite losing over a million barrels of production in the first half of the month due to a third party pipeline constraint," he said.

In July, Suncor's production was constrained when Enbridge made a precautionary shutdown of a regional pipeline system in northern Alberta.

The downtime was somewhat minimized by stored oil that Suncor had produced in the event of disruptions, though the company had already taken down operations and refineries for planned maintenance work earlier in the quarter.

On Wednesday, Suncor reported operating earnings of $934 million or 62 cents per share, falling short of average analyst estimates by a penny, according to Thomson Reuters.

A year earlier, Suncor (TSX:SU) posted operating earnings of $1.25 billion, or 80 cents per share.

Suncor also said Thursday its refinery in Montreal, which produces 130,000 barrel per day, will be able to take oil from Western Canada by the end of this year. The goal is to reach about 30,000 barrels per day depending on prices for Canadian and international crude, Williams said.

The company's net earnings, which include unusual or one-time items, were $680 million, or 45 cents per share, compared to net earnings of $324 million, or 21 cents per share, a year earlier when it took a $694-million writedown related to a Syrian natural gas project. The company pulled its employees out of the Middle Eastern country when civil war broke out.

Shares of the company were ahead 92 cents to $33.38 in late morning trading at the Toronto Stock Exchange.

Suncor is Canada's biggest energy company with a dominant position in Alberta's oilsands. In addition to huge mining operations north of Fort McMurray, Alta., it has steam-driven projects at Firebag and MacKay River.

In addition, Suncor has refineries in Edmonton, Montreal, Sarnia, Ont., and Commerce City, Colo. Those assets help shield Suncor from swings in commodity prices, as they translate into lower costs in that part of the business.

— with files from Canadian Press reporter David Friend in Toronto.