(Reuters) - Suncor Energy Inc’s (SU.TO) first-quarter operating profit beat analyst expectations, boosted by higher oil sands production and better profitability in refining and marketing.
The quarterly results are the company’s first since its March decision to scrap its partially built Voyageur upgrader, part of a joint venture with French oil major Total SA (TOTF.PA).
Canada’s largest oil and gas company’s first-quarter operating profit was C$1.367 billion ($1.35 billion), or C$0.90 per share, compared with C$1.318 billion, or C$0.84 per share, in the year-ago period.
The results beat the average analyst forecasts of 75 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Quarterly net profit was C$1.094 billion, or C$0.72 per share, compared with a profit of C$1.446 billion, or C$0.93 per share, a year ago.
Suncor’s cash flow from operations, a glimpse of its ability to pay for new projects, fell 5 percent to C$2.284 billion, or C$1.50 per share, from C$2.415 billion, or C$1.55 a year ago.
Production from its oil sands operations rose 17 percent to 357,800 barrels per day, while total upstream output from its operations in North America, the North Sea and north Africa was 6 percent higher at 596,100 barrels of oil equivalent per day.
Chief Executive Steve Williams said Suncor’s refineries contributed “to record quarterly earnings in the refining and marketing segment.”
Williams also said Suncor’s downstream business more than offset the impact of low price realizations on its oil Sands production.
Total refinery utilization was 96 percent in the first quarter, compared to 92 percent in the year-ago period. Total refinery crude throughput averaged 443,000 barrels per day during the first quarter, up about 6 percent.
Suncor worried that the synthetic crude produced in the Voyageur upgrader from mined bitumen would be uncompetitive with new light oil supplies from shale deposits like the Bakken field in North Dakota, Saskatchewan and Montana.
Cancelling the upgrader also frees up cash it can use to support its flagging stock price through dividend hikes and share buybacks. Suncor shares have dropped 9.2 percent over the past 12 months while the Toronto Stock Exchange’s main index has been flat over that period and investors are pressing the company to increase returns.
($1 = 1.0140 Canadian dollars)
Reporting by Sakthi Prasad in Bangalore and Scott Haggett in Calgary, Alberta; Editing by Matt Driskill