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2015-04-30 18:40:00

CANADA'S NET LOSS

CANADA'S NET LOSS

Suncor Energy Inc., Canada's largest crude-oil producer, on Wednesday reported a first-quarter net loss and a 90% decline in operating profit as a recent slump in global oil prices offset the company's effort to cut costs and boost production.

The company posted a loss of 341 million Canadian dollars ($283.5 million), or 24 Canadian cents a share, in the three months to March 31. That compared with a net profit of C$1.49 billion, or C$1.01 a share, in the same period a year earlier.

Suncor said that result was exacerbated by a C$940 million after-tax foreign exchange loss on U.S. dollar-denominated debt, reflecting the Canadian currency's weakening against the U.S. dollar.

Canada's oil-sands operators, who are among the most expensive crude producers in the world, have been hit hard by a sharp retreat in oil prices over the past six months down to multiyear lows. Cenovus Energy Inc., which also reported earnings on Wednesday, said it lost C$668 million in the first quarter.

Operators of oil-sands well and surface mines have continued to ramp up production volumes in line with long-term and multibillion-dollar investment plans. But the swoon in crude oil prices means they earn less per barrel.

Suncor said total production averaged 602,400 barrels of oil equivalent a day, up from 557,600 barrels a day in the previous quarter and 545,300 barrels a day in the first three months of 2014. Its oil-sands output hit 440,000 barrels a day, a 55,800-barrel-a-day quarterly gain and up 50,700 barrels a day on the year.

On an operating, or adjusted, basis excluding one-time items, the Calgary-based company posted quarterly earnings of C$175 million, or C$0.12 a share, down from C$1.79 billion, or C$1.22 a share, in the year-earlier period. That matched a consensus forecast, according to RBC Capital Markets.

Suncor said increased production and lower natural-gas prices slashed its operating cost per barrel by 20% on the year to C$28.40 in the first quarter. The company is ahead of schedule on previously announced plans to trim operating expenses by C$600 million to C$800 million this year, it said.

"We produced sufficient cash flow during the quarter to fully fund our sustaining capital and dividend, in addition to funding well over half of our growth capital," Steve Williams, Suncor's chief executive, said in a statement.

The company's capital spending budget for this year, which was revised downward in January, was left unchanged at a range of C$6.2 billion to C$6.8 billion.

Suncor said it would pay a quarterly dividend of 28 Canadian cents a share.

wsj.com

Tags: CANADA, SANCOR, OIL, PRICES