Wildfires take toll on Suncor results

CALGARY — Suncor Energy Inc. posted a second-quarter loss following wildfires in May that ravaged the community of Fort McMurray, Alta. and forced the company to temporarily shut in its oilsands operations.

The company’s mining operations are located only a short distance north of Fort McMurray, and were among the operations most deeply affected by the blaze. Oilsands production slumped over the quarter to 177,500 barrels per day, compared with 423,800 barrels per day in the second quarter of 2015. Total production fell to 330,700 barrels per day of oil equivalent compared with 559,900 barrels of oil equivalent in 2015.

“The forest fires were without question a significant event that tested our mettle on many fronts,” Suncor CEO Steve Williams said in a conference call with investors.

Shutdowns blew a hole in the company’s cash flows over the quarter, which dropped to $916 million for the quarter, down from $2.15 billion in 2015.

The company reported a secondquarter net loss of $735 million, or 46 cents per share, compared with $729 million, or 50 cents per share, in the year prior.

Low oil prices continue to weigh on the company’s balance sheet, with prices sliding in recent days following high inventory data and a growing glut of refined products that has depressed refinery demand. The price for West Texas Intermediate, a North American benchmark crude, began trading Thursday morning at $41.71 when markets opened, a 14 per cent drop since June 30.

Suncor is one of the few major oil producers in Canada’s oilpatch that has aggressively pushed ahead with new acquisitions during the downturn, with the company now expecting to reach 800,000 barrels per day of production by 2019, a 40 per cent increase beginning 2015.

Over the past year it has spent $9 billion bulking up its asset base, including the $4.2 billion acquisition of Canadian Oil Sands that hiked its interest in oilsands producer Syncrude to 49 per cent. Suncor also assumed $2.2 billion in debt with the deal.

In the second quarter the company increased its Syncrude stake to 53.74 per cent after completing its purchase of Murphy Oil Co. Ltd., which owned a five per cent stake in the oilsands venture.

Williams also defended his company’s announcement Monday that it would attempt to reduce the emissions intensity at all of its operations by 30 per cent by 2030, a target that the executive acknowledged will pose a substantial challenge in coming years.

“Clearly our sustainability targets are ambitious,” he said.

Williams was one of a handful of oilsands executives who stood alongside Alberta Premier Rachel Notley in November when the province unveiled stringent new climate change regulations that included an economywide carbon tax and a 90 million tonne cap on annual oilsands emissions.

He has in the past departed from the typical talking points of many other executives in the oilpatch by supporting the notion of placing a price on carbon.

“We believe the best place for Suncor, the best place for Alberta, the best place for Canada to be, is at the leading edge of those conversations, and then we can start to form the world’s policy around how you manage climate change,” he said.

The company said its downstream business cushioned it somewhat from lower oil prices and production cuts in the quarter.

Operating losses for the quarter were $565 million, compared with $906 million in 2015.