Two players in Canada's oilsands — Suncor Energy Inc. and Nexen Inc. — both sounded warnings Thursday over rising costs of developing their projects.

Nexen Inc. said the projected cost for its Long Lake project in northern Alberta has risen to $5 billion from $4.6 billion, with Nexen's share about $2.5 billion. The company also said a $300 million contingency reserve — of which $150 million is to be covered by Nexen — has been set up to cover cost pressures. Nexen shares the Long Lake project with OPTI Canada Inc.

"The cost increase is disappointing," said Charlie Fischer, Nexen's president and CEO.

"However, the real value of the project lies in the production of synthetic crude oil for decades, where we enjoy an estimated $10 per barrel operating cost advantage over existing technologies."

Elsewhere, Suncor CEO Rick George said the company's long-term growth plans are on track, but he added that "we're continuing to see significant capital cost pressures across our business."

Suncor's plan to expand its production by 2012 to between 500,000 and 550,000 barrels a day.

However, lower production in the first quarter of this year means Suncor has pulled back its full-year plan to between 250,000 and 265,000 barrels. The company's original goal was between 260,000 and 270,000 barrels. In the first quarter, Suncor's production averaged over 283,000 barrels a day.

The companies issued the warnings as they both reported their first-quarter earnings.

Nexen said it made $121 million, or 46 cents a share, compared with a loss of $83 million, or 32 cents a share, a year earlier.  Nexen said a $277 million charge to cover a British tax rate increase hurt its earnings from last year.

Suncor Energy Inc. said it made $551 million, or $1.20 per common share, down from $713 million, or $1.56 per common share, last year when several one-time gains boosted its bottom line.

Shares of Suncor slipped $1.26 to close at $90.19 on the TSX, while Nexen shares fell $2.00 to $66.50.