Canada’s largest energy firm Suncor Energy’s (SU) chief financial officer – Alister Cowan – expects oil price to recover within three to four years. Hence, the firm has no intention to defer its profitable long-term developments.
Crude price has dropped almost 60% since last June. This is owing to plentiful supply of the commodity and lackluster global demand. Most of the analysts are not expecting crude price to recover soon. In this prolonged weak commodity pricing environment, most of the energy players like Royal Dutch Shell plc (RDS.A), ConocoPhillips (COP) and Chevron Corporation (CVX) have taken steps to reduce their headcount in order to significantly lower their operating costs and to survive in the unfavorable business scenario. Many drilling companies have cut their expected 2015 capital expenditure by 50%.
However, Alister Cowan announced that Suncor’s 2015 production will likely be 585,000 barrels of oil equivalent per day (Boe/day) much higher than the expected 2014 production range of 525,000−570,000 Boe/day. This is quite unexpected as the crude pricing environment has been extremely weak.
Moreover, Suncor believes that crude price will be trading at around $90–$100 per barrel in the coming three to four years. Hence, the company will go forward with Alberta based Fort Hills oil sands project and Newfoundland located offshore Hebron oil field developments. Both projects are expected to be online in 2017. The chief financial officer added that the company has sufficient cash balance in its balance sheet to support the projects.
Calgary, Alberta-based Suncor is Canada’s premier integrated energy company. Suncor's operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.
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