February 2, 2011 / 8:09 AM / 7 years ago

UPDATE 3-Suncor profit triples as oil sands output rises

* Q4 EPS C$0.87 vs analysts' estimate of C$0.51

* Operating EPS C$0.60 vs estimated C$0.51

* Refining profits more than double

* Q4 production averaged 625,600 boe a day

* Shares up 0.3 pct (Adds details and comments; updates shares)

By Scott Haggett

CALGARY, Alberta, Feb 2 (Reuters) - Suncor Energy Inc (SU.TO), Canada's biggest energy company, said on Wednesday its quarterly profit almost tripled due to increased production in the Alberta oil sands, higher prices and a strong performance from its refining division.

The results pushed Suncor shares as high as C$42.90, their loftiest level in more than two years, before they fell back back to C$41.74, up 0.3 percent.

The shares have risen 19 percent over the past 12 months., continuing an upward trend for the stock as the company completes its integration of Petro-Canada's assets, following its C$22.7 billion ($22.9 billion) acquisition of its rival in 2009.

"The story is really about execution and rebuilding faith following the challenges they had last year," said Andrew Potter, an analyst at CIBC World Markets. "They're showing that they're right on track and putting a lot of resources ... into rebuilding credibility."

Suncor's operations in the northern Alberta oil sands, which hold the biggest crude reserves outside the Middle East, have run smoothly since the company's upgrading plants there were hit with three fires in late 2009 and early 2010, which spurred Suncor to improve the reliability of the units.

The improvements allowed it to capture full benefit from rising oil prices, which averaged $85.24 in the fourth quarter, up 12 percent from a year earlier.

"It was ... a record quarter for us in the oil sands business in terms of productivity and reliability," Rick George, Suncor's chief executive, said on a conference call.

The company, which signed a deal late last year with French oil major Total (TOTF.PA) to jointly develop several oil sands projects, posted net income C$1.35 billion, or 87 Canadian cents a share, for the fourth quarter, up from C$457 million, or 29 Canadian cents a share, a year earlier.

Operating earnings, which exclude most one-time items, rose nearly threefold to C$946 million, or 60 Canadian cents a share, from C$342 million, or 22 Canadian cents.

Analysts, on average, had forecast operating earnings of 51 Canadian cents a share, according to Thomson Reuters I/B/E/S.

The company said operating earnings from its refining and marketing business more than doubled to C$372 million in the quarter as the profitability of refining crude oil into gasoline and other products improved.

Despite the strong results, George said Suncor has no plans to buy any U.S. refineries now up for sale.

"I do not see us buying a refinery on tide water and getting into that game," he said. "(We have) no interest right now in expanding our refining business by buying other refining assets."

Cash flow, a glimpse into a company's ability to fund development, almost doubled to C$2.14 billion, or C$1.37 a share, from C$1.13 billion, or 72 Canadian cents a share, in the fourth quarter of 2009.

Total upstream production averaged 625,600 barrels of oil equivalent a day, down from 638,200 barrels of oil equivalent a day, in the fourth quarter of 2009 as the company sold surplus properties following the Petro-Canada acquisition.

Oil sands production, excluding Suncor's share of production from the Syncrude Canada joint venture, rose 17 percent to 325,900 barrels a day as a result of the improved upgrader performance and higher bitumen supply from all of its oil sands assets.

The company said it wasn't able to get all of that production to market in the quarter due to disruptions on the Enbridge Inc (ENB.TO) pipeline network. During the quarter Suncor stored just under 15,000 barrels per day of its oil sands output.

$1=$0.99 Canadian Additional reporting by Fareha Khan and Isheeta Sanghi; editing by Rob Wilson and Peter Galloway

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