Production Rates | Forecast - Production | Capital Markets | Capital Expenditure

Suncor Talks 2016 Capital Spending and Production Outlook

Share Print Bookmark    |    Tuesday,November 17,2015

Suncor Energy released its 2016 corporate guidance today, which includes a flexible capital spending program of between $6.7 billion and $7.3 billion and average production of 525,000 to 565,000 barrels of oil equivalent per day.

The guidance includes projected Suncor oil sands cash operating costs per barrel (excluding Syncrude)⁽¹⁾ of $27.00 to $30.00, continuing a multi-year trend that has seen Suncor reduce its oil sands cash costs by over 25 per cent since 2011.

"Our oil sands production is expected to be slightly reduced in 2016, versus 2015 as a result of significant planned maintenance activities scheduled at various facilities, including our first five year full turnaround at the U2 upgrader and major maintenance at Firebag," said Steve Williams, Suncor president and chief executive officer. "We remain focused on achieving further reliability improvements across our operations. And, we'll continue to build upon the momentum gained in 2015 in reducing cash costs per barrel at our oil sands operations."

Approximately 55 per cent of the 2016 capital spending program has been allocated towards growth projects, the vast majority of which are in the Upstream segment. Approximately 45 per cent of Suncor's 2016 capital spend is expected to be directed towards sustaining capital investments that support safe, reliable and efficient operations.

Suncor's 2016 budget incorporates flexibility to respond quickly to any further deterioration in market conditions. Both capital and operating expenditures can be scaled back to ensure the company continues to live within its means.

"Our guidance reflects our ongoing commitment to capital discipline and operational excellence," said Williams. "Our focus on these areas has ensured we're well-positioned to invest in our base business and growth projects, even in a lower for longer oil price environment."

Suncor's corporate guidance provides management's outlook for 2016 in certain key areas of the company's business. Users of this forward-looking information are cautioned that actual results may vary materially from the targets disclosed. Readers are cautioned against placing undue reliance on this guidance.

Assumptions for the Oil Sands and Syncrude 2016 production outlook include those relating to reliability and operational efficiency initiatives that the company expects will minimize unplanned maintenance in 2016. Assumptions for the Exploration and Production 2016 production outlook include those relating to reservoir performance, drilling results and facility reliability. Factors that could potentially impact Suncor's 2016 corporate guidance include, but are not limited to:

• Bitumen supply. Bitumen supply may be dependent on unplanned maintenance of mine equipment and extraction plants, bitumen ore grade quality, tailings storage and in situ reservoir performance.
• Third-party infrastructure. Production estimates could be negatively impacted by issues with third-party infrastructure, including pipeline or power disruptions that may result in the apportionment of capacity, pipeline or third-party facility shutdowns, which would affect the company's ability to produce or market its crude oil.
• Performance of recently commissioned facilities or well pads. Production rates while new equipment is being brought into service are difficult to predict and can be impacted by unplanned maintenance.
• Unplanned maintenance. Production estimates could be negatively impacted if unplanned work is required at any of our mining, extraction, upgrading, in situ processing, refining, natural gas processing, pipeline, or offshore assets.
• Planned maintenance events. Production estimates, including production mix, could be negatively impacted if planned maintenance events are affected by unexpected events or are not executed effectively. The successful execution of maintenance and start-up of operations for offshore assets, in particular, may be impacted by harsh weather conditions, particularly in the winter season.
• Commodity prices. Declines in commodity prices may alter our production outlook and/or reduce our capital expenditure plans.
• Foreign operations. Suncor's foreign operations and related assets are subject to a number of political, economic and socio-economic risks.