Suncor profit eroded by costs of scaling back Joslyn development
JEREMY VAN LOON
CALGARY, Alberta (Bloomberg) -- Suncor Energy’s spending on scaling back its Joslyn oil-sands mining project led Canada’s largest oil producer to post a 69% profit slump to the lowest in six quarters.
Net income fell to C$211 million ($194 million), or 14 cents a share, in the second quarter from C$680 million, or 45 cents, a year earlier, the Calgary-based company said July 30 after the close of trading. Suncor booked an after-tax charge of C$718 million associated with the Joslyn project, a venture with France’s Total SA.
Oil-sands developers have struggled with rising costs in northern Alberta because of labor shortages and distance from equipment suppliers. Total said in May it would delay a final investment decision at Joslyn, while Imperial Oil Ltd. last year boosted the cost of its Kearl project by 18%.
“We continue to focus squarely on profitable growth,” said CEO Steve Williams in the earnings statement. “This means we’re disciplined with our capital and invest wisely in high-return projects.”
Suncor said it will continue to work with Total to find ways to develop the project.
Suncor also cut its spending plan to C$6.8 billion from a previous target of C$7.8 billion this year in a bid to further reduce costs and invest in the most profitable projects, the company said.