Oil Sands Truth: Shut Down the Tar Sands

Suncor recording great profits

Higher Oil Sands, Downstream Earnings Benefit Suncor
by Allen Good | 02 Feb 11
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Suncor SU reported fourth-quarter net earnings of CAD 1.353 billion compared with CAD 457 million a year ago as profitability improved in both the upstream and downstream segments. Operating earnings improved in each of Suncor's production segments, with the oil sands registering the greatest improvement while natural gas operations continued to post losses. Production volumes for the fourth quarter averaged 625,600 barrels of oil equivalent a day, a decline from 638,200 for the fourth quarter of 2009 as a result of divestments during the year. Excluding divestments, Suncor saw production from continuing operations increase. Oil sands production continued to increase, thanks to improved reliability and higher bitumen supply. For the quarter, oil sands volumes rose to a record 325,900 per day compared with 278,900 in the fourth quarter of 2009 and 306,600 in the third quarter of 2010. We're encouraged by Suncor's continued improvement throughout the year in its oil sands operations after upgrader fires earlier in the year took a toll on production volumes and raised concerns about the company's operations. For the full year, oil sands production volumes fell to 283,000 barrels per day, slightly higher than previous management guidance, from 290,600 in 2009 as a result of the operational issues. In 2011, Suncor expects oil sands production volumes to average between 280,000 and 310,000 barrels per day.

International and offshore volumes from continuing operations during the quarter averaged 170,100 barrels of oil equivalent per day compared with 149,500 for the same period last year. Volumes gains were a result of increased production in Libya and the startup of operations in Syria. Full-year 2011 international volumes are expected to average between 110,000 and 120,000 barrels per day with offshore East Coast Canada production averaging between 58,000 and 65,000 barrels per day. Natural gas volumes continued to slide because of natural decline, with production from continuing operations falling to 429 million cubic feet per day in the fourth quarter from 461 a year ago. Suncor expects full-year volumes for 2011 to fall between 370 and 410 million cubic feet per day, but 220 million cubic feet per day of production is currently targeted for divestiture.

Suncor also benefited from substantial improvement in its downstream segment, which saw operating earnings for the quarter increase to CAD 389 million from CAD 134 million the year before. The improvement in earnings was largely the result of higher volumes and improved margins, which offset the effects of higher operating costs. For the full year, the downstream segment posted operating earnings of CAD 782 million compared with CAD 473 million in 2009. We expect Suncor should be able to continue to post strong year-over-year downstream earnings growth in the first quarter as North American refining margins remain strong.

http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid...

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