CALGARY, Alberta (Reuters) - Suncor Energy Inc (SU.TO) said on Tuesday its fourth-quarter earnings more than doubled as oil prices climbed and lower tax rates prompted a big one-time gain, but the profit still ran shy of estimates.
Suncor, which runs Canada’s second-largest oil sands operation, said net profit rose to C$963 million, or C$2.08 a share, in the quarter through December 31, compared with C$358 million, or 78 Canadian cents a share, a year earlier.
The company, which is readying a massive expansion of its oil sands operations near Fort McMurray, Alberta, benefited as oil prices surged in the quarter as global supplies tightened.
Suncor’s average price for its output of synthetic crude and other products surged 36 percent from the fourth quarter of 2006 to C$82.36 a barrel.
Excluding a C$360 million gain stemming from lower federal and provincial taxes and other items, Suncor said earnings were C$598 million, or C$1.29 a common share, for the quarter, up from C$378 million, or 82 Canadian cents a share, a year earlier.
The earnings were shy of the C$1.54 a share average profit estimate among analysts polled by Reuters Estimates.
“The variance is due...to higher than forecast cash costs and...lower than forecast downstream earnings,” Andrew Potter, an analyst at UBS Securities, wrote in a note to clients.
Output from Suncor’s oil sands operations fell 5.2 percent from the year before to 252,500 barrels a day due to operational problems. The company’s natural gas production rose 10 percent to 229 million cubic feet a day.
The company expects oil sands output this year to run between 275,000 and 300,000 barrels a day, less than some analysts had thought.
Its 2008 production will be hampered by a 30-day shutdown in the second or third quarter of its Upgrader 1, which converts the tar-like bitumen stripped from the sands into synthetic crude oil.
An expansion of its Upgrader 2 will be commissioned later this year, pushing output to 350,000 barrels a day in the fourth quarter.
The expansion will be followed by work on Suncor’s massive Voyageur project, which will boost production to 550,000 barrels by 2012.
Chief Executive Rick George said Suncor will soon release a detailed cost estimate for Voyageur. The company is looking to firm up its design and avoid the multibillion-dollar cost overruns that have so far plagued every major oil-sands project.
“When we do give a (cost estimate) it will be one we have some faith in and can meet,” George said on a conference call.
Suncor’s cash flow, the money that will pay for Voyageur and other projects, was C$1.1 billion, or C$2.39 a share, for the quarter, up 48 percent from C$746 million, or C$1.62 a share, for the same quarter of 2006.
Revenue for the quarter was C$4.96 billion, up 31 percent from C$3.79 billion in the year-earlier quarter.
For the year, Suncor’s profit dropped 4.7 percent to C$2.83 billion, or C$6.14 a share, a fall the company attributed to the cost of maintenance at its oil sands site and its refineries.
Suncor shares, which have dropped 21 percent since closing at a record C$111.84 on January 3, fell a further 27 Canadian cents on Tuesday to C$88.05 on the Toronto Stock Exchange.
Cash flow for 2007 was C$3.81 billion, down 16 percent from C$4.53 billion a year earlier, while annual revenue rose 13 percent to C$17.93 billion.
(Editing by Peter Galloway)
Additional reporting by Scott Anderson in Toronto and Ritsuko Ando in New York