Suncor Energy to slash spending following $2-billion loss

Suncor Energy Inc. (TSE:SU, Mkt cap 45.56B, P/E 478.62, Div/yield 0.29/3.69, EPS 0.07, Shares 1.45B) has said it will cut spending by 10% in 2016 after it posted a $2 billion loss in the fourth quarter, the Financial Post reports.

Suncor Energy

Suncor Energy will cut spending by 10% in 2016 after it posted a $2 billion loss in the fourth quarter.

Back in November, Canada’s largest integrated energy company set an initial capital budget in the region of $6.7 billion and $7.3 billion. However, following the latest financials, Suncor now plans to spend between $6 billion and $6.5 billion through 2016.

“It’s not a crash diet, it’s a change in lifestyle,” Suncor Energy Inc. president and CEO Steve Williams said of the spending cut.

Williams stressed, however, that the reduction in planned spending doesn’t necessarily mean Suncor will lay off more staff, having already cut 1,700 positions over the course of 2015.

The action taken by Suncor to smooth out its bottom line is the result of the prolonged slump in oil prices. Suncor’s chief financial officer Alister Cowan is hopeful, however, that with credit ratings agencies having begun taking industry-wide action on oil producing companies, things could start to look up on that front.

“My hope is that they’re able to distinguish between companies that have and continue to demonstrate capital discipline and financial conservatism and those that have not,” Cowan said.

Williams added that despite oil prices falling further over the course of the fourth quarter of last year, the company was committed to protecting its dividend.

Suncor posted a $2 billion net loss in the fourth quarter, compared with net earnings of $87 million in the same quarter a year earlier.

Analysts noted $1.6 billion of that loss was from after-tax charges to its assets as a result of the oil price slump. The company also posted a $382-million foreign exchange loss.

Suncor Energy Inc. in a Calgary, Alberta based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production, and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Downstream Marketing. In addition, the Company explores, for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. The Company also transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. More from Reuters »

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