WINNIPEG, Manitoba, Feb 6 (Reuters) - The prospect of heavy oil prices remaining low for the foreseeable future caused Suncor Energy, Canada’s second-largest crude producer, to take a C$2.8 billion ($2.11 billion) write-down on its newest oil sands site, its chief executive officer said.
The Fort Hills mine began producing in northern Alberta in 2018. Suncor announced the write-down on Wednesday when it reported a larger fourth-quarter loss due to impairment charges.
“When the price went down in 2014, I don’t think people realized that we literally were going to go (down) year over year over year,” Chief Executive Mark Little said Thursday on a conference call.
“We’re literally bouncing around, but trading sideways. When we look at the markets we think, ‘hey we’re sitting in this same range going forward for foreseeable future.’”
The impairment was necessary as Suncor adjusted its global oil price forecast down about $10 per barrel, he said.
West Texas Intermediate crude oil was trading Thursday around $51 per barrel, down 51% from its 2014 high, and off about 16% this year.
Suncor’s less optimistic view of heavy oil comes as Vancouver-based Teck Resources Ltd, one of Suncor’s partners in Fort Hills, awaits Canadian government approval for its proposed Frontier oil sands mine.
Teck Chief Executive Don Lindsay said last week that, regardless of the government decision, the company needs to see higher prices and other conditions to build the mine.
Spokespersons for Teck and France-based Total SA, another Suncor partner in Fort Hills, could not be immediately reached.
$1 = 1.3292 Canadian dollars Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by David Gregorio