November 17, 2016 / 11:52 AM / a year ago

Suncor Energy expects higher production, lower spending in 2017

(Reuters) - Suncor Energy Inc, Canada’s largest oil and gas company, said it expected production to rise by more than 13 percent next year and spending to fall by more than C$1 billion ($746 million).

Petroleum storage tanks at the Suncor tar sands operations near Fort McMurray, Alberta, September 17, 2014. In 1967 Suncor helped pioneer the commercial development of Canada's oil sands, one of the largest petroleum resource basins in the world. Picture taken September 17, 2014. REUTERS/Todd Korol

Oil producers continue to keep a tight lid on spending to cope with a 60 percent fall in oil prices since mid-2014.

Suncor set a budget for capital spending of C$4.8 billion-C$5.2 billion for 2017 and forecast average production of 680,000-720,000 barrels of oil equivalent per day.

A fall in prices for oilfield services, combined with improved productivity and more efficient drilling practices are helping oil producers pump more oil, even as they curb spending.

The company forecast 2017 cash operating costs at its oil sands operations of C$24-C$27 per barrel, below its 2016 forecast of C$25.50-C$27.50.

Suncor forecast cash operating costs for Syncrude, a joint venture project majority owned by Suncor Energy, of C$32-C$35 per barrel, also below its 2016 forecast of C$37-C$39.

The company said on Thursday about 40 percent of the 2017 budget was allocated for exploration and development projects, including Fort Hills and Hebron.

The Fort Hills oil sands mining project is located in Alberta’s Athabasca region, about 90 kilometers north of Fort McMurray, and is expected to produce oil by the end of 2017.

The Hebron oil field, located offshore Newfoundland and Labrador, is also expected to produce oil by the end of 2017.

Up to Wednesday’s close, Suncor shares had risen 14.8 percent this year.

Reporting by John Benny and Arathy S Nair in Bengaluru; Editing by Martina D'Couto

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