Suncor Energy Repositioning Gas Business
Suncor Energy Inc. of Calgary said it will reposition its gas
business to achieve at least a 10% return on capital within five
years. Suncor intends to build competitive operating areas, improve
base business efficiency and create new, low-capital businesses.
The company has already made progress on its strategy to develop
competitive operating positions with changes to its property and
asset portfolio. "We've taken decisive action to develop a
gas-focused portfolio with our ongoing divestment program. In 2000,
the sale of non-core oil properties is anticipated to generate more
than $250 million in proceeds, including the sale of our Burnt Lake
heavy oil assets," said Dave Byler, executive vice president of
Suncor's gas business.
Suncor's first step is to reduce expenses by $18 to $20 million
a year and achieve an operating and administrative cost of
$5.75/BOE in 2001. As part of this effort, the workforce of 265
employees will be reduced by about 85 positions before year-end.
Job losses will affect those working in Suncor's Calgary office and
in its field operations across Western Canada.
Suncor's first-quarter earnings rose to a record $105 million,
up from $11 million in the first quarter of 1999. The improvement
was primarily a result of increased commodity prices, record oil
sands production and higher downstream refining margins.
During the first quarter, cash flow from operations was a record
$269 million, compared with $93 million in the first quarter of
1999. Revenue for the quarter was $779 million compared with $469
million during the same period in 1999. Cash flow and revenue rose
mainly as a result of the same factors that affected earnings.
Partially offsetting the benefits of higher crude prices was a $51
million loss during the quarter as a result of Suncor's hedging
program. This compares with a $10 million hedging gain in the first
quarter of 1999.
Total production of conventional and synthetic crude oil,
natural gas and natural gas liquids reached a record 148,600 Boe/d,
an increase from the 1999 first quarter average of 133,900 Boe/d.
The increase was due to an average quarterly production record at
Oil Sands of 114,800 barrels per day, which was partially offset by
lower conventional production.
Suncor last week also confirmed its previously announced
two-for-one stock split will proceed with a record date of May 10.
Certificates representing additional common shares will be mailed
May 15. Shareholders should retain existing certificates.
Joe Fisher, Houston
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