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.
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.