Suncor's base plant with upgraders in the oil sands in Fort McMurray Alta., on Monday June 13, 2017.JASON FRANSON/The Canadian Press
Suncor Energy Inc.'s acquisition spree is paying off, bolstering production and helping to drive down costs as crude prices start to edge up above $50 (U.S.) a barrel.
Smoother operations at the troubled Syncrude Canada Ltd. bitumen mining and upgrading complex helped push Suncor's overall production to record levels and contributed to a strong third-quarter showing from Canada's dominant oil sands producer.
Suncor said big gains in its refining operations also helped drive net income in the three months ended Sept. 30 to $1.3-billion (Canadian) or 78 cents a share, up from $392-million or 24 cents in the year-ago period.
"We're seeing significant progress on all fronts," chief executive officer Steve Williams told analysts on Thursday. "We're seeing those sorts of [production] levels … across oil sands, not just Syncrude, continue into this month as well."
The results show Suncor is starting to reap rewards from its beefed-up Syncrude stake, two years after it launched a hostile $4.5-billion takeover of Canadian Oil Sands Ltd., previously the joint venture's largest owner. Suncor later picked up another slice of the project from Murphy Oil Corp.
Suncor shares rose more than 2 per cent after it reiterated plans Thursday to repurchase stock and hinted at a potential dividend hike next year, underlining confidence as the company wraps up spending on a series of big-ticket expansions.
Crude is set to flow later this year from the $14-billion Hebron project offshore Newfoundland and Labrador, in which Suncor has a 21-per-cent stake, as well as its $17-billion Fort Hills mine under construction about 90 kilometres north of Fort McMurray, Alta.
Speaking to analysts, Mr. Williams said little about its dispute with partner Total SA over spending at Fort Hills, only that a resolution is close and that the 194,000-barrel-a-day mine remains on track.
In the quarter, Suncor said company-wide production hit a new record, averaging 739,900 barrels of oil equivalent per day, up from 728,100 b/d a year earlier.
Oil sands production increased as maintenance work finished at the company's steam-driven Firebag project, climbing to 469,300 b/d from 433,700 barrels at the same time last year.
Suncor's share of Syncrude production fell to 159,100 b/d, from 183,800 barrels last year, owing to maintenance work following a fire at the plant earlier this year. As a result, Syncrude costs rose to $35 per barrel, from $27.65 a year ago.
Still, cash operating costs in the oil sands were the lowest in a decade, averaging $21.60 per barrel, as overall volumes increased.
Suncor, which has a 54-per-cent stake in Syncrude, said Doreen Cole, formerly vice-president of regional maintenance and reliability, will replace Mark Ward as the joint venture's top executive later this year.
The move gives Suncor added sway in a project with a long history of unplanned outages and missed production targets. Its other owners include Imperial Oil Ltd., China Petroleum & Chemical Corp., CNOOC Ltd. and Mocal Energy.
"Definitely the governance of Syncrude was a hindrance in some ways to the operations, so we've been working with the partners to sharpen up the ability for transparency between the various owners," Mr. Williams said. "That's progressed very well."
Suncor late on Wednesday also said it had received approval from Alberta's Energy Regulator for its plan to remediate mine tailings at its base operations as at its Millenium site.
The regulator had previously rejected Suncor's plan, saying it did not meet requirements under a new directive aimed at managing the clean up of toxic byproducts leftover from decades of mining.
Suncor says its new plan will facilitate the treatment of current tailings while decreasing the overall number of tailings ponds on site, but critics say it relies on unproven technology, posing risks to public safety and the environment.