Suncor profit rises with oil prices, targets cut

Thu Jul 24, 2008 4:46pm EDT
 
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By Scott Haggett

CALGARY, Alberta (Reuters) - Suncor Energy Inc (SU.TO: Quote), Canada's No. 2 oil sands producer, said on Thursday that record crude prices boosted second-quarter profit by 12 percent, even as production fell and it lowered its output targets.

Suncor said net income rose to C$829 million ($820.7 million), or 89 Canadian cents a share, from C$738 million, or 80 Canadian cents, a year earlier.

Excluding one-time items, Suncor's operating profit climbed 35 percent to C$821 million, or 88 Canadian cents a share, from C$607 million, or 66 Canadian cents.

The operating profit surpassed analysts' average forecast of 79 Canadian cents a share, according to Reuters Estimates.

Despite the higher than expected profit, which came as oil prices nearly doubled from the second-quarter of 2007, it was the lagging performance of the company's massive oil sands projects that captured attention and prompted an apology from the company's chief executive.

"We are not very happy with the production," CEO Rick George said on a conference call. "We do know we have disappointed. What I would say about it is this is temporary."

Suncor's oil sands project produced 174,600 barrels of oil a day in the quarter, down 14 percent from a year earlier as a maintenance shutdown dragged on longer than expected.

The weak performance prompted the company to cut its annual production forecast from its oil sands operations for the second time this year. It moved the target down to an average output of 240,000 to 250,000 barrels a day for 2008 from a previous forecast of 275,000 to 285,000 bpd.   Continued...