Actionable news
0
All posts from Actionable news
Actionable news in SU: SUNCOR ENERGY Inc,

Suncor Energy reports first quarter 2016 results

CALGARY, ALBERTA, Apr 27, 2016 (Marketwired via COMTEX) -- Unless otherwise noted, all financial figures are unaudited, presented in Canadian dollars (Cdn$), and have been prepared in accordance with International Financial Reporting Standards (IFRS), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board. Production volumes are presented on a working interest basis, before royalties, unless noted otherwise. Certain financial measures referred to in this document (cash flow from operations, operating (loss) earnings and Oil Sands operations cash operating costs) are not prescribed by Canadian generally accepted accounting principles (GAAP). See the Non-GAAP Financial Measures section of this news release. References to Oil Sands operations production and cash operating costs exclude Suncor's interest in Syncrude's operations.

"Suncor's ability to generate cash flow from operations, combined with the strength of our balance sheet, allowed us to maintain our dividend and continue investing in long-term profitable growth projects, even in the poor price environment we saw in the first quarter," said Steve Williams, president and chief executive officer. "We continue to capitalize on opportunities, such as increasing our investment in the Syncrude asset, to generate long-term value for our shareholders."

Highlights of the first quarter of 2016 include:

--  Cash flow from operations of $682 million ($0.45 per common share).
--  Operating losses were $500 million ($0.33 per common share), driven by
    low commodity prices, wider bitumen differentials to Western Canadian
    Select (WCS), weak benchmark refining margins and a Refining and
    Marketing first-in, first-out (FIFO) loss of $192 million. Net earnings
    were $257 million ($0.17 per common share).
--  Acquired Canadian Oil Sands Limited (COS) on February 5, 2016, adding
    128,500 barrels per day (bbls/d) of synthetic crude oil capacity.
--  Record production from both Firebag and MacKay River, combined with
    strong upgrader reliability, resulted in record Oil Sands operations
    production of 453,000 bbls/d.
--  Achieved cash operating costs per barrel in Oil Sands operations of
    $24.25, a 15% reduction versus the prior year quarter, due to lower
    costs, driven by the company's cost reduction initiatives, and increased
    production.
--  Refinery utilization averaged 91% and Refining operating expenses
    decreased to $5.10 per barrel (bbl), helping to offset weakness in
    distillate demand and benchmark cracking margins.
--  Subsequent to quarter end, Suncor entered into an agreement to acquire
    an additional 5% interest in Syncrude for $937 million. The acquisition
    will increase Suncor's working interest in Syncrude to 53.74%.


Financial Results

Suncor recorded first quarter 2016 operating losses of $500 million ($0.33 per common share) and cash flow from operations of $682 million ($0.45 per common share), compared to operating earnings and cash flow from operations of $175 million ($0.12 per common share) and $1.475 billion ($1.02 per common share), respectively, in the prior year quarter. This reflected the 31% decline in the WTI benchmark price, a 43% decline in the WCS benchmark price, combined with a wider bitumen to WCS differential, as well as a decrease of approximately 40% in benchmark crack spreads, when compared to the first quarter of 2015. Highlights of the first quarter included record Oil Sands operations production, the lowest Oil Sands operations cash operating costs per barrel achieved since 2007 and overall refinery utilization in excess of 90%.

Net earnings were $257 million ($0.17 per common share) for the first quarter of 2016, compared with a net loss of $341 million ($0.24 per common share) for the prior year quarter. Net earnings for the first quarter of 2016 were impacted by the same factors that influenced operating losses described above and also included the impact of a non-cash after-tax foreign exchange gain on the revaluation of U.S. dollar denominated debt of $885 million, compared to an after-tax foreign exchange loss of $940 million in the prior year quarter. Net earnings in the first quarter of 2016 also included $38 million (after tax) for the COS acquisition and integration costs and $90 million (after tax) of non-cash mark to market losses related to interest rate derivatives for future debt issuance. During the first quarter of 2015, the company recognized a tax recovery of $406 million following a decrease in the tax rate in the United Kingdom (U.K.) on oil and gas profits. The net loss in the prior year quarter also included after-tax restructuring costs of $57 million and after-tax insurance proceeds of $75 million.

Operating Results

Suncor's total upstream production was 691,400 barrels of oil equivalent per day (boe/d) in the first quarter of 2016, compared with 602,400 boe/d in the prior year quarter, with the increase due primarily to an additional 36.74% working interest in Syncrude associated with the COS acquisition on February 5, 2016, and increased Oil Sands operations production.

Oil Sands operations production was 453,000 bbls/d in the first quarter of 2016, compared to 440,400 bbls/d in the prior year quarter, primarily due to increased In Situ production in the first quarter of 2016. Production highlights included 322,300 bbls/d of SCO due to strong upgrader reliability, and record production at both Firebag and MacKay River of 199,000 bbls/d and 36,800 bbls/d, respectively. Oil Sands operations production in the second quarter of 2016 is expected to decrease as a result of a planned turnaround of Upgrader 2, which began at the end of the first quarter of 2016.

Cash operating costs per barrel for Oil Sands operations decreased in the first quarter of 2016 to an average of $24.25/bbl, compared to $28.40/bbl in the prior year quarter, due to lower costs as a result of the company's cost reduction initiatives, increased production and lower natural gas prices.

"Our cost reduction initiatives are continuing to drive efficiencies across our operations" said Williams. "Record Oil Sands operations production and our focus on sustainable cost savings have allowed us to achieve the lowest Oil Sands operations cash operating costs per barrel since 2007."

Suncor's share of Syncrude production increased to an average of 112,800 bbls/d in the first quarter of 2016, compared to prior year quarterly production of 35,200 bbls/d. The increase is predominantly due to the COS acquisition. Quarter-over-quarter...


More