Suncor Q4 operating profit falls 30 percent, writes down Voyageur

Wed Feb 6, 2013 12:06am EST
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CALGARY, Alberta (Reuters) - Suncor Energy Inc (SU.TO: Quote), Canada's largest oil company, posted a fourth-quarter loss on Wednesday as it wrote down the value of its Voyageur oil sands upgrading project just weeks before it is due to make a final decision on whether to build the facility.

Suncor took a C$1.49 billion ($1.49 billion) writedown on Voyageur and said the economic outlook for the facility, which would convert bitumen mined from the oil sands into refinery-ready synthetic crude, was "challenged" and it may not go ahead.

Suncor said it and partner Total SA (TOTF.PA: Quote) will make a decision on whether to complete construction on the upgrader by the end of March. It conceded last November that the facility's profitability had been challenged by the flood of light oil coming from the Bakken field in North Dakota.

"The partners have been considering options for the project, including the implications of cancellation or indefinite deferral," Suncor said in a statement.

The upgrader is the centerpiece of a C$20.6 billion expansion plan that includes two new oil sands mines. Suncor and its partners, Total and Teck Resources Ltd TCKb.TO, will decide whether to go ahead with Fort Hills, the first of the mining projects, by the end of June. No timing on the second mine has been made public.


With the writedown on the upgrader, Suncor reported a net loss of C$562 million, or 37 Canadian cents per share, compared with a profit C$1.43 billion, or 91 Canadian cents, in the same quarter a year ago.

Operating profit, which excludes most one-time items, fell 30 percent to C$1 billion, or 65 Canadian cents per share on lower oil prices and an extended maintenance shutdown of its operations off the coast of Newfoundland.

The operating result lagged the average analyst estimate of 76 Canadian cents, according to Thomson Reuters I/B/E/S.   Continued...