NGI The Weekly Gas Market Report / NGI All News Access

Suncor Energy Repositioning Gas Business

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

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus