Canada’s largest oil and gas company said it would cut its capital program this year by 26% as it tries to outlast the plunge in crude prices.
Suncor Inc. will lower its capital program by C$1.5 billion ($1 billion) this year to between C$3.9 billion and C$4.5 billion, the company said in a statement. It will also reduce operating expenditures by C$1 billion from C$11.2 billion in 2019, and is adjusting refinery utilization because of the drop in fuel demand. The company is also delaying its target of C$2 billion of incremental free funds flow by two years to 2025.
Suncor’s cuts follow $4.4 billion in reductions already announced by other companies in the nation. Canada has been particularly hard hit by the oil crash, as pipeline constraints force steep price discounts even beyond the drop in global benchmark prices. Workers in the remote oil-sands region in Alberta are also bracing for potential outbreaks of the coronavirus.
“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” Mark Little, Suncor’s chief executive officer, said in the statement. “We are adjusting our spending and operational plans to be prepared in the event the current business environment persists for an extended period of time.”
The company’s full-year production outlook is 740,000 to 780,000 barrels a day, compared with about 743,000 in the first quarter. That includes an increase in bitumen output offset by lower production expected from Fort Hills, where the partners are reducing it to a one-train operation to increase cash flow, according to the statement.
The Syncrude annual coker turnaround is being deferred from the second quarter to the third, while MacKay River’s return to operations has been intentionally extended to May because of the virus and low prices. The company is also seeking options for its project to extend the life of the Terra Nova floating production vessel as Spain is no longer able to accommodate a dry dock slot.