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An increase in crude oil production and refining during the second quarter helped to boost Suncor’s operating profit for the period to US$950 million (C$1.253 billion) despite the negative effect of lower benchmark oil prices, the company said in its second-quarter financial report.
Net profit rose to more than US$2 billion in Q2 versus US$740 million in Q1—nearly tripling.
The company’s overall production of hydrocarbons reached 803,900 barrels of oil equivalent daily during the last quarter despite the production cuts introduced by the previous government of Alberta last December as a means of arresting a major slump in the price of local crude.
Suncor revised down its full-year capex plans to between US$3.73 billion (C$4.9 billion) and US$4.1 billion (C$5.4 billion) from between US$3.73 billion and US$4.26 billion citing its continued capital discipline.
Suncor is the largest oil company in the Canadian oil sands patch and it was a vocal opponent of the Alberta government’s decision to impose mandatory production cuts on local oil companies to stabilize prices.
“Our position is that government intervention in the market would send the wrong signals to the investment community regarding doing business in Alberta and Canada. And we really do need to take a long-term view and allow the market to operate as it should,” the company said last year when the government first announced plans for a direct intervention in the industry.
However, unlike pure-play producers in the oil sands, Suncor benefits from low prices as they mean feedstocks for its refining operations is cheaper. Even in production, however, Suncor argued that the cuts were having negative consequences: the gap between Western Canadian Select and West Texas Intermediate closed soon after the cuts were announced, denting Alberta producers’ profits as oil-by-rail became more expensive, in some cases, prohibitively.
“The differential corrected and overcorrected very quickly and the unintended consequence of that is the potential, the economics are seriously damaged and a lot of the rail movements are stopping or have stopped,” CEO Steve Williams said at the time.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.