Suncor cuts capital budget by $1 billion (Can.) and 1,000 jobs

Suncor Energy Inc., Calgary, is cutting $1 billion (Can.) from its 2015 capital spending program and reducing its workforce by 1,000 because of lower crude oil prices.

The company also plans to trim $600-800 million in operating expenses in the next 2 years.

The Suncor announcement on Jan. 13 follows budget reduction decisions this week by BlackPearl Resources Inc. (OGJ Online, Jan. 13, 2015) and Canadian Natural Resources Ltd. (OGJ Online, Jan. 12, 2015).

Suncor said the 1,000 job cuts will be “primarily through its contract workforce,” but did not provide specifics on reductions in Suncor employee positions. The company also announced a hiring freeze for roles “that are not critical to operations and safety.”

Cost reduction targets include deferral of some capital projects that have not yet been sanctioned, such as MacKay River 2 and the White Rose Extension.

Major construction projects, including Fort Hills in northern Alberta and Hebron in the Atlantic off eastern Canada, will move forward as planned and “are expected to provide strong returns when they come online in late 2017.”

The 2015 Suncor budget from November reached $7.8 billion (Can.), while the revised spending plan reached $6.8 billion (Can.).

Despite reduced spending and lower pricing assumptions in the company’s updated guidance for 2015, production guidance remains at 540,000-585,000 boe/d.

“Today’s spending reductions are consistent with our commitment to spend within our means and maintain a strong balance sheet,” said Steve Williams, Suncor president and chief executive officer.