Suncor Energy Inc. turned to a net loss of C$735 million in the second quarter, after forest fires in northern Alberta in May more than halved its oil sands production.
Suncor – which had posted a net profit of C$729 million in the second quarter last year – had to shut down facilities north of Fort McMurray due to the wildfires which cost Canada 1 million bpd of crude production. The output outage in Canada and disruptions to supplies in other parts of the world spurred a rally of crude prices in early May.
Suncor’s oil sands production in the second quarter was 177,500 bpd, compared to 423,800 bpd in the same period of 2015, the company said on Wednesday, adding that all oil sands assets had returned to normal production rates by mid-July.
In total, the forest fires reduced Suncor’s second-quarter oil sands production by some 20 million barrels and resulted in C$50 million in after-tax incremental costs related to evacuation and restart activities.
Operating loss came in at C$565 million, or a C$0.36 loss per common share, on the back of the oil sands production shutdown coupled with low benchmark prices for crude. Suncor had booked operating earnings of C$906 million for the second quarter of 2015.
Despite the production outages and the second-quarter loss, Suncor paid cash dividends of C$0.29 per common share, unchanged from the past three quarters.
In its strategy update, the company said it remained on track to achieve the C$750 million reduction to the 2016 capital budget. Suncor also plans to sell non-core assets and began a sale process for its lubricants business in the second quarter. The group expects that a deal may be reached within the next 12 months.
Suncor is also proceeding with the Fort Hills bitumen project, which was 60 percent completed at the end of the second quarter, and with the Hebron project in which it is a co-venturer together with ExxonMobil, Chevron, Statoil and Nalcor Energy.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com