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“We knew that the second quarter would be challenging. Certainly the most challenging in our modern history,” Suncor president and CEO Mark Little said on the company’s second quarter earnings call Thursday.
Little and other Suncor executives said the company is not expecting to take on more debt in the second half of the year but stopped short of detailing what the company would do with rising cashflows as oil prices improve. Little said it was too early to commit to a strategy amid volatility in crude markets and uncertainty about the coronavirus pandemic as economies re-open.
“Let’s see it before we decide what to do with that additional cash,” Little said.
We knew that the second quarter would be challenging. Certainly the most challenging in our modern history
Mark Little, Suncor president and CEO
Suncor reported a net loss of $614 million in the second quarter, compared with $2.7 billion in net earnings a year earlier.
During the pandemic, Suncor and its partners Teck Resources Ltd. and Total SA decided to shut down one of the two units at its 190,000-bpd Fort Hills oilsands mining project. Little said there is currently a debate among the partners about scaling production back up at the facility.
“There’s a substantial chance it’ll be back online by the end of the year,” Little said.
Phil Skolnick, analyst at Eight Capital, expects some producers“to ramp up production andfurther drive down the high fixed operating cost burden.”
Overall, Suncor financial and operating results were better than expected, National Bank Financial analyst Travis Wood wrote in a research note, raising its target price for the stock to $28 per share from $27. The stock was trading at $23.1, down nearly 3.4 per cent for the day.
“Through the remainder of the year, Suncor will continue to focus on costs, with incremental help from what should be a fully operating (Fort Hills mine) by year-end,” Skolnick said, adding that a new pipeline connecting its Syncrude project and its main oilsands mind would soon be complete and further boost productivity.
Financial Post
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