Suncor Energy Inc. said Thursday it plans to cut its workforce by 1,000 by mid-October through a combination of layoffs, retirements or discontinuation of contract positions that resulted from its merger with Petro-Canada Corp.

When the merger was announced in March, the Calgary-based companies said the combination would yield annual savings of C$300 million in operating expenses and C$1 billion in capital expenditures (see Daily GPI, March 24). The merger was completed Aug. 1, and CEO Rick George said the combined company is on track to meet or exceed those expectations.

Suncor has been reviewing its portfolio of potential growth projects to determine the best opportunities and optimal timing of projects to be developed based on expected rates of return, near-term cash flow potential and business risk, George said.

“One month after close, we are already seeing significant savings through integration of our product marketing logistics and economies of scale in our supply chain,” said George. “Unfortunately, bringing two large businesses together has also meant that some of the efficiencies are necessarily through workforce reductions. It’s been difficult, but we’ve said from the start that this would be the case and worked hard to keep employees informed and to move quickly to build the new organization.”

Most of the layoffs already have occurred, and “Suncor has committed to inform employees of their status, including movement into new jobs and confirmation of existing positions, by mid-September,” the company said.

Suncor and its UK subsidiary also are proposing that responsibility for managing the company’s international and offshore business be moved to Calgary from London. The proposal and resulting staffing decisions are subject to a consultation period of up to 90 days as required by UK law.

“With our new organization largely in place and our review of investment opportunities well under way, we expect to be in a position to begin translating strategy into action later this year,” said George. “In the mid- to longer-term, that will mean more investment in Canada’s economy than either Petro-Canada or Suncor could have accomplished individually. We expect the benefits of this merger to become increasingly clear to our shareholders, business partners and Canadians.”

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