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article imageSuncor blames net loss in 4th quarter of 2018 on price discounts

By Karen Graham     Feb 6, 2019 in Business
Suncor Energy Inc. is blaming a net loss in the last three months of 2018 primarily on steep price discounts for western Canadian oil, including the upgraded synthetic crude it produces at its oil sands mining operations.
“Suncor generated funds from operations of $2 billion in the fourth quarter as our integrated downstream business and market access helped to mitigate upstream crude price volatility, including the further widening of the differentials for Canadian crude,” said CEO Steve Williams, in a statement Wednesday.
Suncor's operating earnings totaled $580 million or 36 cents per share, versus $1.31 billion or 79 cents in the year-earlier period. This was well below analyst expectations of $724 million, according to Thomas Reuters Eikon. But Suncor still hiked its dividend, announcing a 17 percent increase to 42 cents per share.
Calgary-based Suncor said the company had a net loss of $280 million or 18 cents per share in the fourth quarter of 2018, compared to a net profit of $1.38 billion or 84 cents in the same period of 2017, reports the Financial Post.
But even with its net loss, Suncor says the numbers were inflated by accounting for inventory valuations and includes a $637-million non-cash foreign exchange loss on U.S. dollar-denominated debt. Also included was a non‑cash impairment loss on one of the company’s equity investments.
File photo: Aerial view of the Syncrude oil sands extraction facility with the Suncor extraction fac...
File photo: Aerial view of the Syncrude oil sands extraction facility with the Suncor extraction facility in the background, in Alberta Province, Canada on October 23, 2009.
Mark Ralston, AFP/File
Alberta's plan to draw-down surplus oil working too good
Alberta Premier Rachael Notley's plan to get surplus crude oil moving by having producers cut back on production has really worked well, almost too well. The reduced local price discounts have gotten so low that shipping crude by rail into the U.S. is no longer financially sustainable, CEO Steve Williams said in Wednesday's earnings conference call.
Williams also mentioned that the production cuts have led to a lessening in investor confidence in Canada. This is also the same issue brought up by Imperial Oil CEO Rich Kruger last week. Kruger called the move a "drastic, dramatic manipulation in the market" that has made crude-by-rail shipments uneconomic.
Suncor shares had been lower after reporting its 4th-quarter loss; as its Q4 average realized price for raw bitumen was just C$7.96/bbl vs. C$42.80/bbl in the year-ago quarter, and its average realized price for upgraded synthetic crude was C$46.07/bbl vs. C$70.55/bbl, according to Seeking Alpha.
More about Suncor Energy, price discounts, fourthquarter earnings, crudebyrail, Dividend
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