Canada’s largest energy firm Suncor Energy (SU) has followed suit of most energy sector companies, by announcing a cut in its 2015 budget owing to plummeting oil prices.
Revised 2015 Capital Guidance
The company has lowered full year capital spending to C$6.2 billion–C$6.8 billion, down C$1 billion from the prior guidance. About 50% of the total spending will be directed toward growth projects.
The company also plans a reduction of $600–$800 million in its sustainable operating expense, which will be spread over a period of 2 years.
Suncor has undertaken several cost reduction measures such as deferral of projects like the MacKay River 2 and the White Rose Extension that are yet to receive sanction, and lowering of discretionary spending.
The company intends to continue important projects like Fort Hills and Hebron which can take advantage of the current economic situation and provide promising returns when they come online in 2017.
Management at Suncor believes that the company is capable of withstanding the current depressed pricing market on the strength of its balance sheet and diversified operations. Cost management has been an ongoing task at Suncor but with crude prices remaining low the company plans to accelerate this task.
Workforce Reduction to Tackle Pricing Woes
Suncor also plans to lower its workforce by almost 1000 in 2015. The company plans to lower its contract workforce, reduce employee positions and stop hiring for positions that are not essential for operations and safety.
Production/Sales Guidance Unchanged
Production and sales guidance for 2015 have remained unchanged. The company anticipates an average per day production of 540,000–585,000 barrels of oil equivalent. Total Oil Sands Sales is expected in the range of 405–455 thousand bbl/d. Refined Product Sales is expected to be 500–550 thousand bbl/d.
Zacks Rank & Other Stock Picks
Suncor Energy currently carries a Zacks Rank #3 (Hold).
Better-ranked players from the energy sector include Cheniere Energy Partners LP. (CQP), Enbridge Energy Management LLC (EEQ) and Spectra Energy Partners, LP (SEP). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment