Suncor cuts spending by 10% after posting $2bn loss on writedowns

Suncor Energy (TSX, NYSE:SU), Canada’s largest oil and gas producer, will reduce spending by about 10% this year after it posted Wednesday a surprise loss for the fourth quarter of 2015 triggered by writedowns on the value of Canadian, Libyan and offshore assets.

The Calgary-based company’s lowered its capital spending plan to between $6 billion and $6.5 billion from a November estimate of $6.7 billion to $7.3 billion. The cut comes partially from deferring maintenance at its Firebag oil sands operations to 2017 from this year.

In addition to the collapse in oil prices, Suncor’s bottom line was dragged down by almost $1.6 billion in impairment charges.

Suncor’s operating loss was $26-million, or 2 cents a share, versus operating earnings of $386-million, or 27 cents a share, in the year-ago period.

It fell short of market expectations of operating earnings of 10 cents a share, underlining how even the biggest oil sands producers are struggling to cope with slumping prices.

The company, which last month reached a $6.6 billion friendly deal with rival Canadian Oil Sands (TSX:COS) for its acquisition, also logged a $2-billion net loss, or $1.38 a common share. This was not only a result of the weak commodity price environment, but also of unrealized foreign exchange losses on U.S. dollar-denominated debt.

In the year-prior quarter, net earnings were $84-million, or 6 cents a share.

Canadian Oil Sands shareholders have until the end of the week to tender their shares to Suncor’s offer of 0.28 of a Suncor share for every Canadian Oil Sands share.

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