Suncor Energy Posts Quarterly Loss on Voyageur Project Writedown

Written by: Tsveta van Son
February 6, 2013

On 5 February 2012, Suncor Energy (TSE:SU, NYSE:SU), Canada’s largest oil company, reported its first quarterly loss in three and a half years, with the fourth quarter results largely attributed to the writedown of its Voyageur oil sands upgrading project. The news however had little impact on Suncor’s share price which closed marginally higher in Toronto.

**Suncor Posts Quarterly Net Loss**
Suncor reported that its net loss in the quarter ended December 31 was C$562 million (£360 million), or 37 cents per common share, compared with a net income of C$1.43 billion, or 91 cents per common share reported in the fourth quarter of 2011. Operating earnings declined 30 percent to C$1 billion.
The company also disclosed that it faced a potential bill of C$1.2 billion from the Canadian tax authorities, and said that while it had filed an objection, it would still be required to make a minimum payment of C$600 million which would remain on account until the dispute was resolved.

Despite the results, Suncor’s share price closed 0.64 percent higher to C$34.38 in Toronto, and was up 0.35 percent at $34.65 in afterhours trading on the NYSE on February 5. Reuters reported that Suncor’s share price has fallen 1.5 percent over the past 12 months compared with a 10 percent decline in the Toronto Stock Exchange’s energy index over the same period.

**Voyager Project Outlook**
In its quarterly statement, Calgary-based Suncor noted that its reported net loss included an after-tax impairment charge of C$1.49 billion for the Voyageur upgrader project. The company also noted that the facility, which would convert bitumen mined from oil sands into refinery-ready synthetic crude, might not go ahead.

“Suncor’s view is that the economic outlook for the Voyageur upgrader project is challenged,” the company said in its quarterly statement, adding that it was continuing to work with its partners toward determining the outcome of the project. Suncor is building the Voyageur project together with a unit of France’s Total SA (EPA:FP, NYSE:TOT). Reuters reported that in November, Suncor conceded that the facility’s profitability had been challenged by the flood of light oil coming from the Bakken field in North Dakota.

Bloomberg quoted UBS (NYSE:UBS) analyst George Toriola as seeing the Voyageur project as “likely to struggle to generate economic returns.”
!m[Suncor Share Price Little Changed On Q4 Results](/uploads/story/1372/thumbs/pic1_inline.png)
**Output Results**
Suncor said that output from its oil sands operations rose five percent to an average of 342,800 barrels per day. Total production from operations in Canada and the North Sea however fell 3.5 percent to 556,500 barrels of oil equivalent per day partly on account of an extended maintenance shutdown of the Hebron project offshore Newfoundland and Labrador.
Bloomberg reported that Suncor’s CEO Steve Williams had been evaluating Suncor’s expansion plans, with the company looking to reduce costs. Yet, Suncor announced a C$7.3 billion capital and exploration budget for 2013, with about C$3.3 billion of the capital likely to be directed toward growth projects.
**Suncor’s share price closed 0.64 percent up at C$34.38 in Toronto on 5 February 2013. On the NYSE, Suncor’s share price was 0.35 percent higher at $34.65 as of 7:56 p.m. EST on February 5.**

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