Page 10 - NorthAmOil Week 06

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Suncor loss widens on impairment charge
CANADA
The impairment charges were primarily attributed to lower heavy crude price projections for the Fort Hills oil sands project.
SUNCOR Energy has reported a wider quarterly loss compared to what it achieved a year ago, with the result affected by a one-time impair- ment charge.
The company posted a net loss of CAD2.3bn ($1.7bn), or CAD1.52 ($1.15) per common share, in the fourth quarter of 2019. Suncor reported non-cash asset impairment charges of CAD3.4bn ($2.6bn) after tax. A year ago, Sun- cor reported a net loss of CAD280mn ($211mn), or CAD0.18 ($0.14) per common share for the fourth quarter of 2018.
The impairment charges were primarily attributed to lower heavy crude price projec- tions for the Fort Hills oil sands project, as well as higher capital cost estimates for the West White Rose Project. Excluding one-off items, Suncor earned CAD0.51 ($0.38) per share in the fourth quarter of 2019, which still came in below ana- lyst expectations of CAD0.63 ($0.48) per share, according to IBES data from Refinitiv cited by Reuters.
A National Bank of Canada analyst, Travis Wood, said the one-time impairments
overshadowed an otherwise “in-line quarter”. Suncor reported synthetic crude oil (SCO) production of 300,000 barrels per day in the fourth quarter of 2019, as well as an upgrader utilisation rate of 86%, compared with SCO pro- duction of 273,400 bpd and upgrader utilisation of 79% in the same quarter of 2018. The com- pany said both these quarters had been affected
by maintenance.
Suncor’s total output rose to 115,900 barrels
of oil equivalent per day (boepd) in the fourth quarter of 2019, up year on year from 90,200 boepd. The company attributed the increase pri- marily to higher production in Eastern Canada, which rose to 69,600 bpd, from 47,900 bpd in the fourth quarter of 2018.
Suncor also noted that it is diversifying into renewables, having sanctioned the Forty Mile Wind Power Project. In a February 5 statement, the company said this project was expected to “drive value through sustainable low-carbon power generation and the retention of gener- ated carbon credits for utilisation in Suncor’s upstream business”.™
Shell boosts Permian production
PERMIAN BASIN
ROYAL Dutch Shell increased its production in the Permian Basin – the US’ most produc- tive shale region – to 250,000 barrels per day in December 2019. The super-major’s Permian output rose by more than 100,000 bpd in the past year.
Speaking at the Argus Americas Crude Sum- mit in Houston last week, Shell’s vice-president of Permian assets, Amir Gerges, said his com- pany planned to spend about $3bn per year on shale projects over the next five years.
“We continue to ramp up our production from our core acreage,” Gerges said.
Shell has a less of a focus on the Permian than US-based super-majors ExxonMobil and Chevron, both of which are aggressively pursu- ing growth in the basin. Chevron recently siad that its Permian output grew 36% in the fourth quarter of 2019 to 514,000 barrels of oil equiv- alent per day (boepd). ExxonMobil’s Permian production reached 294,000 bpd in the fourth quarter, up 54% year on year but unchanged on the previous quarter. However, ExxonMobil is planning to ramp up its Permian output more rapidly than its competitors, targeting 1mn boepd by 2024. Chevron, meanwhile, is aiming to produce 600,000 boepd in the basin by the end of 2020, and 900,000 boepd by the end of 2023.
Shell had also previously indicated that it might
seek to expand its presence in the Permian. However, Shell’s CEO, Ben van Beurden, said during the earnings call last week that the tim- ing was not right for making acquisitions. And with the Permian’s best acreage having already been snapped up, acquisitions of either acreage or competitors are realistically the only way to expand significantly in the basin currently.
Gerges said the Permian had 30 years of “tier one” high-quality drilling inventory, adding that the region would continue to drive US oil output growth. However, he also warned that the indus- try was facing challenges in the region, ranging from high levels of associated gas flaring to inad- equate infrastructure and “even today’s investor sentiments”.™
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w w w. N E W S B A S E . c o m Week 06 12•February•2020