A drop in production at its Fort McMurray, Alta., oilsands operation has prompted Suncor Energy (SU-T, SU-N) to lower its 2007 production forecast to 255,000-265,000 barrels per day (bpd) from a maximum forecast of 270,000 bpd.
The company, which pioneered the first commercially successful oilsands operation in 1967, produced an average of 248,200 bpd during the first quarter, dropping further in April to 240,000 bpd due to unexpected maintenance.
Suncor has also upped its cash operating cost target for the year to between $23.50 and $24.50 per barrel from between $21.50 and $22.50.
The company reported a cash cost of $26.30 per barrel for the first quarter compared with $19.05 last year, which Suncor blames on higher operating expenses paired with lower production volume.
Earnings in the first quarter came in at $551 million compared with $713 million for the same period the year before. After adjusting for unrealized foreign exchange gains and $205 million in insurance proceeds, Suncor recorded net earnings of $509 million for the first quarter of 2006.
The insurance proceeds came from a fire at the oilsands facility in January 2005, so the company’s net earnings actually increased.
Suncor attributes the increase to strong refining and retail margins in its downstream operations, lower Alberta Crown royalty expenses and lower effective income taxes.
For its upstream processing, the company produced an average of 283,100 barrels of oil equivalent per day compared with 300,300 for the same period last year.
Natural gas production was down slightly in the first quarter at 209 million cubic feet equivalent per day compared with 215 million during the same period last year.
Suncor is upgrading its oilsands operation so it can increase production to 350,000 bpd by 2008, ramping up to 550,000 bpd by 2012. At the end of May, the company will shut down the Upgrader 2 facility for about 50 days as part of the upgrade.
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