CALGARY, Alberta (Reuters) - Suncor Energy Inc SU.TO, Canada’s largest oil and gas company and the dominant producer from the country’s oil sands, no longer considers itself to be a high-cost producer after slashing costs to cope with low oil prices.
The company late on Wednesday reported a weaker-than-expected operating profit of C$175 million ($144.8 million), or 12 Canadian cents per share, 90 percent lower than the same quarter in 2014 as oil prices dropped by half.
Yet even as profits dropped, the company said its cash operating costs in the oil sands, usually considered one of world’s most expensive regions to operate, had dropped 20 percent from the year-prior quarter, offering a comfortable profit even with current oil prices of below $60 per barrel.
“I hope it’s starting to become clear,” Suncor Chief Executive Williams told reporters following the company’s annual meeting in Calgary. “Our cash operating is less than 23 U.S dollars. ... We’re working hard to get our costs down and it’s becoming clearer that oil sands are not the marginal supplier.”
Suncor is the second-straight oil sands producer to report a big drop in operating costs because of reduced spending, job cuts, cheaper supply costs and low natural gas prices. Cenovus Energy Inc CVE.TO said on Wednesday cash costs for its northern Alberta operations had dropped 31 percent.
Suncor said it is on track to meet its target of up to C$800 million in costs cuts within one year instead of two. And after laying off 1,000 employees and contractors from its operations, Williams said the company cut a further 200 jobs from its offices in Calgary and Toronto during the quarter.
Suncor shares, which have dropped 5.5 percent over the past year, were down 1.2 percent to C$39.49 by late afternoon on the Toronto Stock Exchange.
(Corrects figure for cost cuts in sixth paragraph to C$800 million from C$1 billion.)
Reporting by Scott Haggett; Editing by Richard Chang