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Suncor Energy Inc. 2019

$2.6billion in dividends made 2019 the 17th consecutive year of annual dividend increases for Suncor

Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. The company develops one of the world's largest petroleum resource basins – Canada's Athabasca oil sands. The Company also explores for, acquires, develops, produces and markets crude oil in Canada and internationally, transports and refines crude oil, and markets petroleum and petrochemical products. Suncor also operates a renewable energy business and conducts energy trading activities such as the marketing and trading of crude oil, natural gas, byproducts, refined products, and power.

The company operates in four Segments: Oil Sands; Exploration & Production (E&P); Refining & Marketing (R & M) and Corporate, Energy trading and Elimination.

Suncor's Oil Sands segment recovers bitumen from mining and upgrades this production into SCO for refinery, diesel fuel, or blends the bitumen with diluent for direct sale to market.

Exploration and Production (E&P) includes offshore activity such as exploration and production of crude oil and natural gas.

Suncor's Refining and Marketing segment consists of Refining and Supply operations, which refine crude oil into a broad range of petroleum and petrochemical products, and Marketing operations, which sell refined petroleum products to retail, commercial and industrial customers.

The grouping Corporate, Energy Trading and Eliminations includes the company's investments in renewable energy projects.

According to the Annual Financial Report, operating revenue from the sale of crude oil, natural gas, natural gas liquids, purchased products and refined petroleum products amounted to $38.344 billion in 2019 and remained flat compared to $38.542 billion in 2018.

Suncor's consolidated operating earnings in 2019 were $4.358 billion, compared to $4.312 billion in 2018, to $3.188 billion in 2017 and an operating loss of $83 million in 2016. The increase of 1% in 2019 was primarily a result of improved western Canadian crude oil differentials, including a substantial narrowing of heavy crude and SCO differentials. This led to an increase in Oil Sands price realizations. Operating earnings in 2019 were also positively impacted by higher production at Syncrude, Fort Hills and Hebron throughout in 2019.

In 2019, Suncor achieved record funds from operations of $10.818 billion, compared to $10.172 billion in 2018, and marked the second consecutive year above $10 billion.

In 2019, cash flow provided by operating activities was $10.421 billion in 2019, compared to $10.580 billion in 2018, $8.966 billion in 2017 and $5.680 billion in 2016.

Operating earnings in 2019 were $4.358 billion, compared to $4.312 billion in 2018. Net earnings for 2019 were $2.899 billion, compared to $3.293 billion in 2018. In 2019, net earnings included non-cash asset impairment charges of $3.352 billion after-tax due to lower forecasted heavy oil prices for Fort Hills and higher capital cost estimates for the West White Rose Project.

Suncor returned $4.9 billion in dividends and share repurchases to shareholders in 2019, representing 45% of total funds from operations. In 2019, the company distributed $2.614 billion in dividends to shareholders, marking the 17th consecutive year of dividend increases for Suncor, and repurchased $2.274 billion of its own common shares during 2019. Since May 2017, the company has repurchased over 9% of its outstanding common shares.

Segmentally, operating revenues in Oil Sands increased by 13% to $17,430 million from $15,345 million in 2018. Operating earnings were $1.622 billion in 2019, compared to $885 million in 2018. The increase of 83% in operating earnings is due to improved western Canadian crude oil differentials. Net operating earnings were unfavourably impacted by higher operating costs, higher royalties and DD&A. Oil Sands had a net loss of $427 million in 2019, compared to net earnings of $945 million in 2018. In addition, 2019 net earnings included the impact of an impairment charge of $2.803 billion on the Fort Hills assets. Funds from operations for the Oil Sands segment were $6.061 billion in 2019, compared to $4.964 billion in 2018. Oil Sands operations production decreased to 412,800 bbls/d in 2019 from 418,300 bbls/d in 2018, primarily due to mandatory production curtailments.

Syncrude reached three billion barrels of production and achieved the second best year of production in the history of the asset. In 2019, Suncor's share of Syncrude production was 172,300 bbls/d with 85% utilization, compared to 144,200 bbls/d and 70% utilization in 2018. Syncrude cash operating costs per barrel decreased approximately 20%, to $37.95 in 2019, compared to 2018.

Fort Hills production increased to 85,300 bbls/d in 2019, compared to 66,100 bbls/d in the previous year. Fort Hills cash operating costs per barrel averaged $26.15 in 2019, compared to $31.20 in 2018.

Operating revenues in E&P operations decreased slightly to $3.070 million in 2019 compared to $3,217 million in 2018 and $2,911 million in 2017. E&P funds from operations increased to $2.143 billion from $1.779 billion in 2018, and operating earnings increased to $1,141 million, compared to $897 million in the previous year. Net earnings for the E&P segment increased by 24% to $1,005 million in 2019 from $808 million in 2017, due to the receipt of $264 million for insurance proceeds related to the company's assets in Libya.

E&P Canada production volumes increased to 59,900 boe/d in 2019 from 53,900 boe/d in 2018, due to increased production with Hebron. Production at Hebron averaged 23,500 bbls/d in 2019. E&P International production volumes averaged 46,900 boe/d in 2019, compared to 49,500 boe/d in 2018, with the increased production from Oda, which began production in 2019. First oil was achieved ahead of schedule at Oda, with production averaging 3,700 boe/d in 2019, and averaging 7,800 boe/d in the fourth quarter of 2019.

The R&M segment delivered record funds from operations of $3.863 billion and operating earnings of $2.912 billion in 2019, compared to funds from operations of $3.798 billion and operating earnings of $3.154 billion in 2018. Within this segment, Suncor delivered crude output of 438,900 bbls/d in 2019, compared to 430,800 bbls/d in 2018, driven by strong refinery utilization in 2019. Average refinery utilization was 95% in 2019, compared with 93% in 2018. Refined product sales were 539,400 bbls/d, with record volumes sold in the marketing channels in 2019, including a new annual record for Canadian retail sales.