IN THE NEWS / Low Oil Prices Hurt Suncor Energy's Earnings
Fort McMurray Today
Low oil prices hurt Suncor's earnings
Higher production at Suncor Energy's oilsands plant has cushioned the blow of lower world crude oil prices.
Suncor's production hit a new record in 1998, averaging 93,600 barrels per day. Cash costs were also down, averaging $12.75 per barrel, down from $14.75 per barrel in 1997.
Unaudited consolidated earnings for 1998 were $188 million compared with 1997 earnings of $223 million.
Suncor president and CEO Rick George said the $35-million decrease was primarily due to lower crude oil prices, the impact of which was partially offset by record production, a lower Canadian dollar, lower costs and Suncor's crude oil hedging program.
"Unfortunately, lower crude oil prices prevented us from achieving our sixth consecutive year of earnings growth," George said in a news release.
"The good news is that we still came through with solid results, record production, higher cash flow and significant process on our growth plans."
He said Suncor is well-positioned for 1999 and has pre-sold about 20 per cent of its 1999 crude production at $20 US per barrel.
Suncor's production target for 1999 is 105,000 barrels per day at a cash cost per barrel of about $12.50.
The company reported its oilsands earnings declined to $35 million in the fourth quarter, down from $58 million over the same period in 1997.
George said the lower earnings were due to higher cash costs reflected in the start-up of new Steepbank mine.
Production for the last three months of 1998 averaged 94,700 barrels per day, with cash costs of $13.25 -- 25 cents higher than during the same period in 1997.
Suncor's revenue for 1998 was $2.1 billion compared to $2.2 billion for 1997.
Over at Syncrude Canada, a new production record was set with an average of 210,000 barrels shipped per day at a unit cost of $13.57 per barrel.
That's Syncrude's lowest unit cost ever. The previous best was $13.69 in 1995.
In 1997, the average shipment was 207,000 barrels per day -- a total of 75.7 million barrels for the year -- at a unit cost of $13.78.
Shipping 76.7 million barrels represents the 17th year in Syncrude's 20 years of operation that a new production record has been set, said a news release.
Syncrude's won't be releasing its 1998 financial information until mid-May.
Reporting year-end financial results before the annual report was issued was "confusing" the investment marketplace, said Syncrude spokesman Peter Marshall.
He added the delay in reporting revenues and earnings isn't related the low oil prices.
"If you go back over the last several quarterly results that we have put out, we haven't been reporting revenue. We haven't been reporting revenues for some time."
Syncrude is owned by AEC Oil Sands, LP; AEC Oil Sands Ltd. Partnership; Athabasca Oil Sands Investment Inc.; Canadian Occidental Petroleum Ltd.; Gulf Canada Resources Ltd.; Imperial Oil Resources; Mocal Energy Ltd.; Murphy Oil Canada Ltd. and Petro-Canada.
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