Suncor Energy profits soar, but miss street estimates

High oil prices and a jump in oil sands output helped push energy giant Suncor Energy Inc.'s fourth quarter profits up 28 per cent in 2000, the company announced Thursday. Suncor, best known for its northern Alberta oil sands mining and synthetic crude operation, is Canada's fourth largest integrated oil company.

Suncor's net fourth quarter earnings were $111 million, or 47 cents a share, up from $72 million or 29 cents a share from the year before.

Despite the profit increase, Suncor shares fell $1.95 to $32.80. A survey of analysts by Reuters came up with a consensus profit estimate of 55 cents a share.

"2000 has been an important transitional year for Suncor," said the company's president and CEO, Rick George. "We've worked hard to meet expectations while establishing the foundation for our growth strategy. We've achieved record earnings and cash flow from operations."

Canadian energy companies have been enjoying sky-high results thanks to crude oil prices which hovered at about $30 US a barrel for most of the second half of last year, while natural gas prices nearly doubled to over $7 per thousand cubic feet in the fourth quarter.

Suncor's oil and gas production averaged 141,100 barrels of oil equivalent (BOE) per day in 2000, compared to last year's production of 141,600 BOE per day. Oil sands production achieved a record average level of 113,900 barrels per day, an eight per cent increase over 1999.

Its natural gas production averaged 27,200 BOE per day in 2000, down from 36,000 BOE per day in 1999.

In its release, Suncor said progress on the $2.8-billion Project Millennium, an oil sands expansion in Fort McMurray, Alta, was on track and it expects its oil sands output to increase to 225,000 barrels a day by 2002.

"Project Millennium is the cornerstone of our future growth," said George. "I'm proud that despite the magnitude of Millennium, we've kept the project on track and achieved record production level," he said.

Several transactions affected earnings for the year, including a $80-million writedown of the Stuart oil shale project in Australia, restructuring costs and divestment gains in natural gas and Project Millennium startup costs.