By Joe Carroll
Oct. 29 (Bloomberg) -- Suncor Energy Inc., the world's second-largest oil-sands producer, cut its production forecast by about 2 percent after equipment failures curbed third-quarter output and profit fell short of analysts' estimates.
The Calgary-based company reduced its 2008 oil-production target to 235,000 barrels a day from a June estimate of 240,000 to 250,000 barrels. Net income rose to C$815 million ($634 million), or 86 cents a share, from C$627 million, or 66 cents, Suncor said today in a statement. That's 25 cents below the average estimate of seven analysts surveyed by Bloomberg.
Suncor was unable to take full advantage of a 57 percent surge in crude prices during the July-to-September period because of unplanned shutdowns of plants that process and upgrade Alberta's oil-soaked sands, Chief Executive Officer Rick George said in the statement. The repairs are complete and the plants have resumed operations.
``With these issues behind us, we continue to target production of approximately 300,000 barrels per day by the end of the year as we work to realize the full value of our expanded oil sands production facilities,'' George said in the statement.
Last week, George slashed the company's 2009 capital budget by 33 percent and delayed work on the Voyageur project in Alberta, citing the 55 percent drop in oil prices from the record in July, and the collapse of world financial markets.
Suncor rose C$1.36, or 5.4 percent, to C$26.76 at 9:33 a.m. in trading on the Toronto Stock Exchange. Before today, the stock had declined 54 percent this year, on course for its worst annual performance in at least 14 years.
Oil-Sands Estimates
George, 58, has reduced his full-year 2008 estimate for oil-sands production three times because of mechanical failures and repairs. Operating costs topped C$50 a barrel during the second quarter, a 56 percent increase from a year earlier.
Suncor plans to spend C$6 billion next year, down from a September estimate of C$9 billion, and expects to maintain budgets of about C$6 billion a year through 2012, George said during an Oct. 23 conference call with investors. The company is spending an estimated C$7.5 billion this year.
Suncor's C$20.6 billion Voyageur plant that will process tar-like crude from northern Alberta into synthetic crude will open a year later than originally planned, George said last week. The company plans to focus instead on its Firebag project, which involves injecting steam into the ground to coax heavy crude to the surface.
Most of Suncor's operations extract oil-soaked sand from the ground with mechanical shovels and process the bitumen into synthetic oil for use by refiners making gasoline, diesel and other fuels.
Syncrude Canada Ltd., a joint venture led by Canadian Oil Sands Trust of Calgary, is the biggest oil-sands producer based on 2007 annual output.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
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