CALGARY – Top oilsands executives say they’re looking past swings in crude prices and focusing instead on what’s within their control.
“The truth is no one knows” where prices are heading, Rich Kruger, CEO of Imperial Oil Ltd. (TSX:IMO), said Thursday at the company’s annual meeting.
“At Imperial, we are approaching our business as if we may be in for a sustained period of lower prices,” he said. And if the market improves, “all the better.”
During the first quarter, U.S. benchmark crude hovered around US$50 a barrel — about half of what it was a year earlier. In recent weeks, the price has been edging up closer to US$60, though few in the oilpatch are jumping for joy at this point.
Buckling down for a prolonged slump is “more of a management approach than it is a forecast or prediction about what the future may be,” said Kruger.
Unlike many of its peers, Imperial has not resorted to layoffs.
But Kruger said Imperial is being more choosy about where it’s spending its capital, scrutinizing expenses and leaning on suppliers and contractors to improve costs and productivity.
Imperial, majority owned by U.S. heavyweight ExxonMobil Corp., posted first-quarter profits that were down 55 per cent from a year ago, at $421 million.
Meanwhile, Suncor Energy Inc. (TSX:SU) CEO Steve Williams said he’s not “overly concerned” with crude prices in the short term.
“Suncor has no impact on global pricing and I’d rather concentrate my efforts on the things which we can control.”
Canada’s largest oilsands producer has cut 1,200 jobs this year, or 200 more than announced in January, when it slashed $1 billion from its 2015 budget.
It’s focused on further driving down costs and avoiding operational upsets that can take an oilsands project off-line for weeks.
Suncor says it’s doing well on both counts — oilsands cash operating expenses are down 20 per cent and Williams says oilsands operations ran “almost flawlessly” in the first quarter.
Suncor posted a $341-million net loss for the first three months of 2015. In the same period a year earlier, it turned a net profit of about $1.49 billion.
Both Suncor and Imperial have interests in the massive Syncrude Canada oilsands mine north of Fort McMurray, Alta., which has seen a litany of unplanned outages in recent years.
Both Williams and Kruger stressed the importance of improving performance at Syncrude, but neither would say whether there’s any interest in taking on a bigger stake in the project. There has been speculation that with its depressed share price, Canadian Oil Sands Ltd. (TSX:COS), whose only major asset is its 37 per cent Syncrude interest, might be ripe for a takeover.
Canadian Oil Sands CEO Ryan Kubik also declined to comment on the takeover speculation, but said he doesn’t see the company needing to reduce its Syncrude stake to bolster finances.
Canadian Oil Sands posted a first-quarter net loss of $186 million, reversing its net profit of $172 million in the same year-earlier period.
During the quarter, output at Syncrude was 293,700 barrels per day compared with 292,500 barrels in the first quarter of 2014.
Kubik told shareholders oil prices will rise eventually, as more investment will be needed to meeting growing global demand.
But Canadian Oil Sands has taken steps, such as a steep cut to its dividend earlier this year, to make sure it can sustain several years of low prices, said Kubik.
“It’s almost plan for the worst and hope for the best.”
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