Suncor Energy releases first quarter results

    All financial figures are unaudited and in Canadian dollars unless noted
    otherwise. Certain financial measures referred to in this document are
    not prescribed by Canadian generally accepted accounting principles
    (GAAP). For a description of these measures, see Non-GAAP Financial
    Measures in Suncor's 2009 first quarter Management's Discussion and
    Analysis (MD&A). This document makes reference to barrels of oil
    equivalent (boe). A boe conversion ratio of six thousand cubic feet of
    natural gas: one barrel of crude oil is based on an energy equivalency
    conversion method primarily applicable at the burner tip and does not
    represent a value equivalency at the wellhead. Accordingly, boe measures
    may be misleading, particularly if used in isolation.

    CALGARY, April 23 /CNW/ - Suncor Energy Inc. today reported a first
quarter 2009 net loss of $189 million ($0.20 per common share), compared to
net earnings of $708 million ($0.77 per common share) in the first quarter of
2008. Excluding unrealized foreign exchange impacts on the company's U.S.
dollar denominated long-term debt, mark-to-market accounting losses on
commodity derivatives, and costs related to start-up or deferral of growth
projects, first quarter 2009 earnings were $227 million ($0.24 per common
share), compared to $805 million ($0.87 per common share) in the first quarter
of 2008. Cash flow from operations was $479 million in the first quarter of
2009, compared to $1.161 billion in the first quarter of 2008.
    The decrease in earnings was primarily due to lower price realizations,
as benchmark commodity prices were significantly weaker in the first quarter
of 2009 compared to the same period in 2008. This was partially offset by
increased margins in our downstream business segment and reduced oil sands
royalty expenses.
    "If you back out the effects of accounting impacts from mark-to-market
and foreign exchange losses, and the non-structural charges for deferred
growth projects, you'll see that from an operational perspective we had a
solid quarter, while financial performance was reflective of current economic
conditions," said Rick George, president and chief executive officer.
"Downstream margins were strong and we reported record quarterly production in
the upstream."
    Suncor's total upstream production averaged 314,500 barrels of oil
equivalent (boe) per day during the first quarter of 2009, compared to 286,200
boe per day in the first quarter of 2008. Higher production primarily reflects
improved operational efficiency at the company's oil sands operations, as well
as additional volumes processed on a fee-for-service contract for
Petro-Canada, which came into effect on January 1, 2009.
    Oil sands production contributed an average 278,000 barrels per day (bpd)
in the first quarter of 2009, compared to first quarter 2008 production of
248,000 bpd. Natural gas production averaged 219 million cubic feet equivalent
(mmcfe) per day in the first quarter of 2009, compared to 229 mmcfe per day in
the first quarter of 2008.
    "Over the past year, we've made concerted efforts and significant
investments targeting improved reliability and increased efficiency at our oil
sands operations," said George. "This quarter's production numbers are a real
testament to this work and should position us well for good results in 2009,
particularly if crude prices hold up."
    Oil sands cash operating costs averaged $33.70 per barrel in the first
quarter of 2009, compared to $31.55 per barrel during the first quarter of
2008. The increase in cash operating costs per barrel was primarily due to an
increase in operational expenses, partially offset by lower energy input costs
and reduced third-party bitumen purchases.

    Growth update

    On March 23, 2009, Suncor and Petro-Canada (TSX:PCA) (NYSE:  PCZ) announced
that they have agreed to merge the two companies. Upon completion of the
transaction, which will require shareholder approval, regulatory approval, as
well as a review by the Canadian Competition Bureau, the combined entity is
expected to operate corporately and trade under the Suncor name while
maintaining the strong brand presence and customer loyalty of Petro-Canada in
refined products. The transaction is anticipated to close in the third quarter
of 2009.
    "This merger creates a made-in-Canada energy leader with the assets, cost
structure and financial strength to compete globally," said George, who will
continue in the role of president and chief executive officer with the merged
company. "The combined portfolio boasts the largest oil sands resource
position, a strong Canadian downstream brand, solid conventional exploration
and production assets, and low-cost production from Canada's east coast and
    While merger review and approval processes continue, work is ongoing on
two significant capital projects at Suncor's oil sands operations.
Construction of the Firebag sulphur plant, previously targeted for completion
in the second quarter of 2009, is now scheduled for completion early in the
third quarter of 2009, with the delay due to the delivery schedule of modules
from key vendors. The project cost is expected to exceed the upper end of the
original cost range (approximately $375 million) with a final estimated cost
in excess of $400 million as a result of the increased cost of major
equipment. When complete, the plant is expected to support sulphur emissions
reductions for existing and planned in-situ developments.
    In addition, the company is nearing completion of its Steepbank
extraction plant. This plant, which is targeted for completion in the third
quarter of 2009, is expected to provide improved reliability and productivity
for the company's oil sands mining and extraction assets.
    Suncor does not anticipate an update to growth project plans until after
the close of the proposed merger with Petro-Canada. At that time, all capital
projects from both companies are expected to be reviewed with a view to
directing capital investment toward projects with the strongest near-term cash
flow potential, highest anticipated return on capital and lowest risk.


    Suncor's outlook provides management's targets for 2009 in certain key
areas of the company's business. Outlook forecasts are subject to change and
do not reflect the proposed merger with Petro-Canada.

                          Three Month Actuals     2009
                          Ended March 31, 2009    Full Year Outlook
    Oil Sands

    Production (bpd)(1)   278,000                 300,000 (+5%/-10%)
      Diesel              9%                      11%
      Sweet               45%                     39%
      Sour                42%                     48%
      Bitumen             4%                      2%
    Realization on crude
     sales basket(2)      WTI at Cushing less     WTI at Cushing less
                          Cdn$1.33 per barrel     Cdn$4.50 to Cdn$5.50 per
    Cash operating
     costs(3)             $33.70 per barrel       $33.00 to $38.00 per
    Natural Gas

       (mmcf equivalent
       per day)           219                     210 (+5%/-5%)
      Natural gas         91%                     92%
      Liquids             9%                      8%

    (1) Includes 23,000 bpd in the first three months of 2009 processed by
        Suncor for Petro-Canada for which Suncor receives a processing fee.
        Volumes received under this arrangement are not included as purchases
        for financial statement presentation.

    (2) Excludes the impact of hedging activities.

    (3) Cash operating cost estimates are based on the following assumptions:
        (i) production volumes and sales mix as described in the table above;
        and (ii) a natural gas price of $7.10 per gigajoule ($7.50 per mcf)
        at AECO. This goal also includes costs incurred for third-party
        bitumen processing, but does not include costs related to deferral of
        growth projects. Cash operating costs per barrel are not prescribed
        by Canadian generally accepted accounting principles (GAAP). This
        non-GAAP financial measure does not have any standardized meaning and
        therefore is unlikely to be comparable to similar measures presented
        by other companies. Suncor includes this non-GAAP financial measure
        because investors may use this information to analyze operating
        performance. This information should not be considered in isolation
        or as a substitute for measures of performance prepared in accordance
        with GAAP. See Non-GAAP Financial Measures on page 17 of Suncor's
        2009 first quarter report.

    (4) Production target includes natural gas liquids (NGL) and crude oil
        converted into mmcf equivalent at a ratio of one barrel of NGL/crude
        oil: six thousand cubic feet of natural gas. This conversion ratio is
        based on an energy equivalency conversion method primarily applicable
        at the burner tip and does not represent a value equivalency at the
        wellhead. This mmcf equivalent may be misleading, particularly if
        used in isolation.

    The 2009 outlook is based on Suncor's current estimates, projections,
assumptions and year-to-date performance for the 2009 fiscal year and is
subject to change. Assumptions are based on management's experience and
perception of historical trends, current conditions, anticipated future
developments and other factors believed to be relevant. Assumptions of the
2009 outlook include implementing reliability and operational efficiency
initiatives which we expect to minimize unplanned maintenance in 2009.
    Factors that could potentially impact Suncor's operations and financial
performance in 2009 include:

    -   Bitumen supply. Ore grade quality, unplanned mine equipment and
        extraction plant maintenance, tailings storage and in-situ reservoir
        performance could impact 2009 production targets. Production could
        also be impacted by the availability of third-party bitumen.

    -   Performance of recently commissioned upgrading facilities. Production
        rates while new equipment is being lined out are difficult to predict
        and can be impacted by unplanned maintenance.

    -   Unplanned maintenance. Production estimates could be impacted if
        unplanned work is required at any of our mining, production,
        upgrading, refining or pipeline assets.

    -   Crude oil hedges. Suncor has hedging agreements for approximately 60%
        of targeted production in 2009 and for 50,000 bpd in 2010. For
        further details of our hedging activities, see page 12 in Suncor's
        first quarter MD&A.

    For additional information on risk factors that could cause actual
results to differ, please see page 19 of Suncor's 2008 Annual Report.

    Legal Notice - Forward-Looking Information

    This news release contains certain forward-looking statements and other
information that are based on Suncor's current expectations, estimates,
projections and assumptions that were made by the company in light of its
experience and its perception of historical trends.
    All statements and other information that address expectations or
projections about the future, including statements about Suncor's strategy for
growth, expected and future expenditures, commodity prices, costs, schedules,
production volumes, operating and financial results and expected impact of
future commitments, are forward-looking statements. Some of the
forward-looking statements may be identified by words like "expects,"
"anticipates," "estimates," "plans," "scheduled," "intends," "believes,"
"projects," "indicates," "could," "focus," "vision," "goal," "outlook,"
"proposed," "target," "objective," and similar expressions. These statements
are not guarantees of future performance and involve a number of risks and
uncertainties, some that are similar to other oil and gas companies and some
that are unique to Suncor. Suncor's actual results may differ materially from
those expressed or implied by its forward-looking statements and readers are
cautioned not to place undue reliance on them
    Suncor's outlook includes a production range of +5%/-10% based on our
current expectations, estimates, projections and assumptions. Uncertainties in
the estimating process and the impact of future events may cause actual
results to differ, in some cases materially, from our estimates. Assumptions
are based on management's experience and perception of historical trends,
current conditions, anticipated future developments and other factors believed
to be relevant. For a description of assumptions and risk factors specifically
related to the 2009 outlook, see page 3 of our first quarter 2009 report to
    The risks, uncertainties and other factors that could influence actual
results include but are not limited to, market instability affecting Suncor's
ability to borrow in the capital debt markets at acceptable rates;
availability of third-party bitumen; success of hedging strategies,
maintaining a desirable debt to cash flow ratio; changes in the general
economic, market and business conditions; fluctuations in supply and demand
for Suncor's products; commodity prices, interest rates and currency exchange
rates; Suncor's ability to respond to changing markets and to receive timely
regulatory approvals; the successful and timely implementation of capital
projects including growth projects and regulatory projects (for example, the
emissions reduction modifications at our Firebag in-situ development); the
accuracy of cost estimates, some of which are provided at the conceptual or
other preliminary stage of projects and prior to commencement or conception of
the detailed engineering needed to reduce the margin of error and increase the
level of accuracy; the integrity and reliability of Suncor's capital assets;
the cumulative impact of other resource development; the cost of compliance
with current and future environmental laws; the accuracy of Suncor's reserve,
resource and future production estimates and its success at exploration and
development drilling and related activities; the maintenance of satisfactory
relationships with unions, employee associations and joint venture partners;
competitive actions of other companies, including increased competition from
other oil and gas companies or from companies that provide alternative sources
of energy; labour and material shortages; uncertainties resulting from
potential delays or changes in plans with respect to projects or capital
expenditures; actions by governmental authorities including the imposition of
taxes or changes to fees and royalties, changes in environmental and other
regulations (for example, the Government of Alberta's review of the unintended
consequences of the proposed Crown royalty regime, the Government of Canada's
current review of greenhouse gas emission regulations); the ability and
willingness of parties with whom we have material relationships to perform
their obligations to us; and the occurrence of unexpected events such as
fires, blowouts, freeze-ups, equipment failures and other similar events
affecting Suncor or other parties whose operations or assets directly or
indirectly affect Suncor. The foregoing important factors are not exhaustive.
    The forward-looking statements and information relating to the proposed
transaction between Suncor and Petro-Canada are based on certain key
expectations and assumptions made by us, including expectations and
assumptions concerning: the accuracy of reserve and resource estimates;
customer demand for the merged company's products; commodity prices and
interest and foreign exchange rates; planned synergies, capital efficiencies
and cost-savings; applicable royalty rates and tax laws; future production
rates; the sufficiency of budgeted capital expenditures in carrying out
planned activities; the availability and cost of labour and services; and the
receipt, in a timely manner, of regulatory, security holder and third party
approvals in respect of the proposed merger. In addition, forward-looking
statements and information concerning the anticipated completion of the
proposed transaction and the anticipated timing for completion of the
transaction are provided in reliance on certain assumptions that we believe
are reasonable at this time, including assumptions as to the time required to
prepare and mail the shareholder meeting materials; the timing of receipt of
the necessary regulatory, court and other third party approvals; and the time
necessary to satisfy the conditions to the closing of the transaction. These
dates may change for a number of reasons, including unforeseen delays in
preparing meeting materials, inability to secure necessary regulatory, court
or other third party approvals in the time assumed or the need for additional
time to satisfy the conditions to the completion of the transaction. As a
result of the foregoing, readers should not place undue reliance on the
forward-looking statements and information concerning these times. Although we
believe that the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance should not
be placed on the forward-looking statements and information because we can
give no assurance that they will prove to be correct.
    Since forward-looking statements and information relating to the proposed
transaction address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. There are risks also inherent in the nature of the proposed
transaction, including: failure to realize anticipated synergies or cost
savings; risks regarding the integration of the two entities; incorrect
assessments of the values of the other entity; and failure to obtain any
required regulatory and other third party approvals (or to do so in a timely
manner). The foregoing important factors are not exhaustive.
    Many of these risk factors are discussed in further detail throughout the
Management's Discussion and Analysis in Suncor's 2009 first quarter report and
in the company's Annual Information Form/Form 40-F on file with Canadian
securities commissions at and the United States Securities and
Exchange Commission (SEC) at Readers are also referred to the
risk factors described in other documents that Suncor files from time to time
with securities regulatory authorities. Copies of these documents are
available without charge from the company.

    Suncor Energy Inc. is an integrated energy company headquartered in
Calgary, Alberta. Suncor's oil sands business, located near Fort McMurray,
Alberta, extracts and upgrades oil sands and markets refinery feedstock and
diesel fuel, while operations throughout western Canada produce natural gas.
Suncor also operates a refining and marketing business which includes
refining, retail, pipeline and distribution operations in Ontario, Canada and
in Colorado and Wyoming in the United States. Suncor's common shares (symbol:
SU) are listed on the Toronto and New York stock exchanges.
    Suncor Energy (U.S.A.) Inc. is an authorized licensee of the Shell(R) and
Phillips 66(R) brand and marks in the state of Colorado. Sunoco in Canada is
separate and unrelated to Sunoco in the United States, which is owned by
Sunoco, Inc. of Philadelphia.

For further information:

For further information: For more information about Suncor Energy Inc.
please visit our web site at; For media inquiries, contact:
Shawn Davis (403) 920-8379

Organization Profile

Suncor Energy Inc.

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890