Apparently buying out Petro Can wasn't enough...!
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Suncor Posts Second Straight Loss After Oil Plunges
04/ 23/ 2009
By Gene Laverty
April 23 (Bloomberg) -- Suncor Energy Inc., the oil-sands producer that agreed last month to buy Petro-Canada, posted a second straight quarterly loss after the global recession dragged down crude prices.
The first-quarter loss was C$189 million ($153 million), or 20 cents a share, compared with net income of C$708 million, or 75 cents, a year earlier, Calgary-based Suncor said today in a statement. Excluding such items as costs related to currency fluctuations, per-share profit was 24 cents, 2 cents higher than the average of 13 analyst estimates compiled by Bloomberg.
Profit margins on extracting and processing bitumen from the tar-soaked bogs of western Canada dwindled as New York oil futures averaged $43.31 a barrel during the quarter, down 56 percent from a year earlier. Suncor agreed to acquire Petro- Canada in a C$19.3 billion deal that Chief Executive Officer Rick George said will yield expense savings and help the company shoulder high-cost oil-sands projects in northern Alberta.
“This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally,” George said in today’s statement.
Suncor rose C$1.02 to C$30.49 in Toronto Stock Exchange trading, climbing along with other oil producers as crude futures advanced. The stock has gained 29 percent this year.
Output Climbs
First-quarter oil and natural-gas production climbed 9.9 percent to the equivalent of 314,500 barrels of crude a day, led by a 12 percent gain from tar sands.
“It was a good demonstration of better reliability,” said Andrew Potter, an analyst at UBS AG in Calgary who rates Suncor shares “buy” and doesn’t own any. “That’s been a problem in 2008 and a big concern for investors,”
Cash operating costs for oil sands averaged C$33.70 a barrel in the first quarter, up from C$31.55 a year earlier.
Suncor posted a loss of C$215 million in the fourth quarter, it’s first since Philadelphia-based Sunoco Inc. sold its controlling stake in 1995.
George will remain CEO after completing the takeover of Petro-Canada, Suncor said in a separate statement. Petro-Canada CEO Ron Brenneman will be executive vice chairman. Bart Demosky, Suncor’s senior vice president of business services, will be chief financial officer. The transaction, the biggest merger in history in the Canadian oil industry, is scheduled to close in the third quarter.
In terms of oil-sands output, Suncor ranks behind only Syncrude Canada Ltd., a joint venture led by Canadian Oil Sands Trust. Alberta’s tar sands hold the world’s largest oil deposits outside Saudi Arabia, according to the Canadian Association of Petroleum Producers.
To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net.
Last Updated: April 23, 2009 16:06 EDT
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