02/04/2015 10:13 EST | Updated 04/06/2015 05:59 EDT

Steep drop in crude prices drags down Suncor's fourth-quarter earnings

CALGARY - The steep drop in crude prices was evident in the fourth-quarter earnings of Suncor Energy Inc., Canada's biggest oil and gas company.

The Calgary-based oilsands giant (TSX:SU) says its net earnings shrank to $84 million, down 81 per cent from the $443 million it posted a year earlier.

Operating earnings, which remove some one-time items, were $386 million, or 27 cents per share, which missed the average analyst estimate of 35 cents a share, according Thomson Reuters.

During the same period a year ago, operating earnings were $973 million, or 66 cents per share.

Cash flow from operations fell to $1.49 billion from $2.35 billion.

The U.S. benchmark price for crude has shrivelled to around US$50 a barrel, down from the US$107 mark it hit in June.

Suncor finished 2014 having spent $300 million less than its $6.8 billion forecast.

And the company is one of many in the oilpatch to have slashed its 2015 budget amid the crude doldrums. Last month, it slashed $1 billion from its 2015 budget, with this year's capital spending expected to come in at between $6.2 billion to $6.8 billion. It also announced it would be cutting 1,000 jobs — mainly contractors — from its total workforce of around 14,000.

"We have demonstrated our ability to spend within our means and plan on doing so through this downturn," said CEO Steve Williams in a release.

Some longer-term projects that have not been given the official green light from Suncor's board of directors are on hold.

But projects that are more advanced, like the massive Fort Hills oilsands mine north of Fort McMurray, Alta., and the Hebron development in offshore Newfoundland are still a go and expected to start up in 2017.

Suncor is putting about $1.6 billion toward Fort Hills this year. The project is proceeding as planned, with detailed engineering 65 per cent complete at the end of the fourth quarter, most procurement orders complete and some components starting to be delivered to site.

The company's quarterly dividend is staying steady at 28 cents a share.

Total output was down slightly at 557,600 barrels per day during the last three months of 2014, versus 558,100 in the prior year period. Oilsands output was down to 384,200 barrels a day from 409,600.

Cash operating costs in the oilsands fell to an average of $34.45 a barrel during the quarter, compared to $36.85.

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