Suncor may revive stalled projects

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http://www.calgaryherald.com/bus ... /2079772/story.html
Suncor may revive stalled projects

CEO says cost savings pave way for developments

" U, b: N4 U. `5 a, y( |& ICALGARY - Suncor Energy could be ready to start bringing delayed oilsands developments off its list of shelved projects, company CEO Rick George said in Toronto on Wednesday.

3 k5 X; j& ]6 N  QSpeaking to the Economic Club of Canada, George said the company's merger with Petro-Canada resulted in bigger than expected cost savings that could accelerate the pace of developing new oilsands projects that include the $20-billion Fort Hills mine as well as the multibillion-dollar Voyageur expansion.
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! X  N& Y' ]3 A! f& V6 s- y2 O# a"Perhaps the biggest opportunity we see with this merger is an improved ability to invest --and overwhelmingly, right here in Canada," George said in his speech. "That means many of the growth projects Suncor and Petro-Canada put on hold last year could again be in play much sooner than if the merger had not gone ahead."
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When it was announced in March, the merger of Petro-Canada and Suncor created Canada's largest integrated energy company with assets spanning Canada and the globe, including a dominant position in Alberta's oilsands, the East Coast offshore and smaller operations in the North Sea, Libya and Syria.
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0 }- q) e- p6 E( HSpeculation has been building that Suncor will jettison most of the international assets to focus on a long queue of oilsands projects at home, which analysts said will put a distinctly Canadian stamp on the planet's newest oil supermajor.
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"That would be a welcome sign, for sure," said Justin Bouchard, an oilsands analyst with Raymond James in Calgary.
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Suncor is expected to unveil its new strategy in mid-November.
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  b4 I/ O4 J; \+ sBouchard said he expects in situ projects such as Firebag phases three and four to go ahead quickly, along with Petro-Canada's MacKay River thermal expansion. Along with divestitures of natural gas and international assets, Bouchard said it's possible Suncor might be willing to part with some of the larger oilsands mining properties, including Fort Hills, if it can get a good price.

Companies like Total, which unsuccessfully tried to take over Fort Hills partner UTS Energy earlier this spring, is reputed to be looking at further oilsands acquisitions.

& w' L: M+ `: L" D$ `  J- i* E"It'll be interesting to see if they (Suncor) sell any oilsands assets," Bouchard said. "But it's all speculation until we see what Rick George and company will do."
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In his remarks, George said the new-look Suncor is on track to realize about $1.3 billion in cost savings, about 30 per cent higher than the $1 billion it targeted when the deal was announced in March. Last month it slashed more than 1,000 positions in one of the biggest layoffs the oil-patch has seen since the 1980s.
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1 {  L# {. F- B* F9 K7 gIn response to the global economic crisis, Suncor had no choice but to "retrench and regroup" while it shelved growth projects and slashed capital spending, George added. "These were difficult decisions, but they were necessary to protect the long-term value of our assets," he added.

Also on Wednesday, Suncor announced lower September oilsands production numbers--the company produced about 302,000 barrels per day (bpd) last month compared with 312,000 bpd in August due to scheduled maintenance at its Fort McMurray plant site. The numbers do not include its share of Syncrude Canada production gained in the merger, which amounted to a little less than 25,000 bpd in the second quarter.
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Despite the drop, the company is aiming for full-year oilsands production of 300,000 bpd, which averaged 295,000 bpd to the end of September excluding volumes attributed to Petro-Canada.

In a morning note, Dragan Trajkov, an oil and gas analyst with Salman Partners in Calgary, said Suncor would have to produce about 315,000 bpd for the rest of the year to reach the target. "We forecast average production in 2009 of 297,000 bpd, which is in line with this morning's results."

Had it been operating as a single outfit in the second quarter, the merged company would have produced about 550,000 bpd and 819 million cubic feet per day of gas.

# r- r( l) `! r! X1 sEven with lower second-quarter commodity prices, the merged company would have made net profits of $345 million on revenues of $6.6 billion, according to a pro-forma income statement released ahead of the company's third quarter results next month.

Suncor's shares gained 29 cents on the Toronto Stock Exchange on Wednesday to finish at $36.74.