A truck carries oil sand at Suncor's facility near Fort McMurray, Alta. on Sept. 1.Victor R. Caivano/The Associated Press
Between beating market estimates for third-quarter profit and a marked improvement to its safety record, Suncor Energy Inc.’s SU-T new chief executive, Rich Kruger, feels confident about where the Calgary-based energy giant is headed under his watch.
The company on Wednesday night reported a net profit of $1.54-billion in the quarter ending Sept. 30, compared with a loss of $609-million a year ago. Suncor said its earnings work out to $1.19 a share, compared with a loss of 45 cents per share in the same three months of 2022.
Suncor’s poor performance stacked up against its oil-sands peers in recent years made it the target of activist U.S. hedge fund Elliott Investment Management LP. Pushing for a shakeup, Elliott in 2022 launched a campaign to oust several directors and explore a sale of Suncor’s Petro-Canada gas station chain.
But it was the company’s dismal safety record – including five workplace fatalities between December, 2020, and July, 2022 – that really roiled investors, and led to the resignation of then-CEO Mark Little last summer.
The challenge of turning Suncor around lured Mr. Kruger out of retirement. An oil and gas veteran who once ran Imperial Oil Ltd., he pledged to rehabilitate the company’s safety record, profitability and performance when he took the reins in April.
During an investor call Thursday morning, Mr. Kruger said he felt “really good” about Suncor’s operations, including its safety record.
Recordable injuries at Suncor are down 10 per cent from this time last year, and there have been zero life-threatening or life-altering injuries in 2023. Its downstream operations had no recordable injuries at all in the third quarter – the first injury-free quarter in the company’s history.
“We’ve had improvement in each and every business segment,” Mr. Kruger said Thursday, attributing the progress to “a very focused effort involving leadership, training, procedures, work-force engagement and technology.”
Alongside improved safety, Mr. Kruger wants greater efficiency to help reduce Suncor’s cost of per-barrel oil production.
And he has said that no area of the company will be spared a granular analysis to reach that goal.
Take its oil-sands mining operations. Suncor is buying up bigger, more efficient trucks to displace smaller, higher-cost vehicles – and each of those will be autonomous, or able to operate without a driver.
The company currently has 31 autonomous trucks operating at its Base Plant site. That number is expected to reach 91 by the end of 2024, making it the largest single mine fleet of autonomous ultra-class trucks globally, Mr. Kruger said.
Another efficiency measure is ensuring turnarounds are as cost-effective as possible.
A turnaround is the scheduled shutdown of an industrial plant to perform crucial maintenance. It’s a pricey endeavour. Suncor spends about $1.3-billion each year on large annual site turnarounds, or about 20 per cent of its total capital expenditures.
Mr. Kruger said that while Suncor still has more work to do to become best in class, the ultimate vision “is that turnaround performance should be a differentiating core competency for the company.”
Suncor has also cut its internal work force, with the total expected to hit 1,500 by year end. Those cuts and fewer hired contractors will result in annual cost reductions of $450-million starting in 2024, or about $50-million above the original target, he said.
“It certainly hasn’t been easy on our organization – on those that left the company, nor those that stayed. But however difficult, we recognize it was necessary for our competitiveness,” he said.
Mr. Kruger said Suncor will unveil a more detailed improvement strategy, including timelines and targets, at next year’s company investor day.