CALGARY – Suncor Energy Inc. (TSX:SU) says if it’s able to increase its stake in the Syncrude oilsands mine, operations at the sprawling development north of Fort McMurray, Alta., will run more smoothly.
“We believe that we can drive real improvements in Syncrude’s performance with a larger ownership interest,” CEO Steve Williams said in a release announcing Suncor’s third-quarter results late Wednesday.
Earlier this month, the oilsands giant launched a hostile takeover bid for Canadian Oil Sands Ltd. (TSX:COS), whose main asset is a 37 per cent stake in Syncrude. Suncor currently has a 12 per cent share of the mine, so a successful takeover would leave it owning just under half of it.
Canadian Oil Sands has rebuffed Suncor’s advances, accusing the would-be acquirer of being exploitative and opportunistic.
Syncrude has been dogged by operational woes over the years. Most recently, a fire in late August damaged pipes, power and communication lines, leading to reduced output during the third quarter.
“We have been disappointed with Syncrude’s performance for some time now,” said Williams.
“The asset ran at only 67 per cent of capacity during the third quarter, and about 70 per cent so far this year, in stark contrast to Suncor’s upgrading operations that have been consistently achieving above 90 per cent reliability this year.”
Suncor posted a third-quarter net loss of $376 million, a sharp reversal from the $919-million profit from the same period a year earlier.
However, stripped of one-time items, Suncor eked out operating earnings of $410 million, down from $1.3 billion during the third quarter of 2014.
Oil producers like Suncor have been squeezed by persistent weakness in crude prices, which have fallen to around $43 a barrel — down 60 per cent from the high point of last year.
During the quarter, oilsands cash operating costs per barrel decreased to $27 — the lowest Suncor has seen since 2007 — from $31.10 a year earlier.
Overall production rose to 566,100 barrels of oil equivalent per day from 519,300.
“Our focus on operational discipline continues to pay off,” said Williams. “We’re delivering on the reliability targets and cost reduction measures we established, leading to the lowest cash operating cost per barrel for oilsands operations in eight years – the results clearly demonstrate the impact this discipline has on Suncor’s performance.”
Canadian Oil Sands reports its earnings on Thursday afternoon.
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