Suncor Energy Inc. of Calgary plans to reposition its gasbusiness to achieve at least a 10% return on capital within fiveyears. Suncor intends to build competitive operating areas, improvebase business efficiency and create new, low-capital businesses.

The company has already made progress on its strategy to developcompetitive operating positions with changes to its property andasset portfolio. “We’ve taken decisive action to develop agas-focused portfolio with our ongoing divestment program. In 2000,the sale of non-core oil properties is anticipated to generate morethan $250 million in proceeds, including the sale of our Burnt Lakeheavy oil assets,” said Dave Byler, executive vice president ofSuncor’s gas business.

Suncor’s first step in implementing the strategy is to reduceexpenses by $18 to $20 million a year and achieve an operating andadministrative cost of $5.75/BOE in 2001. As part of this effort,the workforce of 265 employees will be reduced by about 85positions before year-end. Job losses will affect those working inSuncor’s Calgary office and in its field operations across WesternCanada.

Suncor’s first-quarter earnings rose to a record $105 million,up from $11 million in the first quarter of 1999. The improvementwas primarily a result of increased commodity prices, record oilsands 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 of1999. Revenue for the quarter was $779 million compared with $469million during the same period in 1999. Cash flow and revenue rosemainly as a result of the same factors that affected earnings.Partially offsetting the benefits of higher crude prices was a $51million loss during the quarter as a result of Suncor’s hedgingprogram. This compares with a $10 million hedging gain in thefirst 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 atOil Sands of 114,800 barrels per day, which was partially offset bylower conventional production.

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