Canada's largest energy company Suncor Energy Inc. (SU,SU.TO) reported Tuesday a profit for the fourth quarter compared to a loss last year, helped by higher upstream production and refined product sales volumes due to the merger with Petro-Canada as well as higher price realizations. The company's net earnings for the fourth quarter was C$457 million or C$0.29 per share, compared to a net loss of C$215 million or C$0.24 per share in the previous year. The company noted that the three and twelve month amounts ending December 31, 2009 reflect results of the post-merger Suncor from August 1, 2009 together with results of legacy Suncor only from January 1 through July 31, 2009. The comparative figures reflect solely the 2008 results of legacy Suncor.
Operating earnings surged to C$323 million or C$0.21 per share, from C$14 million or C$0.02 per share in the same quarter a year ago. Rick George, president and chief executive officer said, "We started the year confronting one of the most challenging global economic downturns of the past century, but today Suncor is a larger, stronger and more financially flexible company as we continue to realize some significant synergies following the merger with Petro-Canada. We've made gains on achieving safe, reliable and cost-effective energy production across all our operations in 2009, which we intend to build on in 2010."
Operating expenses increased from the prior year, due to the merger with Petro-Canada and the increased production at the company's legacy oil sands operations, increased royalty expense due to the higher benchmark crude oil prices, and a fire at one of its upgraders in December 2009. According to the company, the fire had impacted overall production during the fourth quarter by about 30 thousand barrels per day. Total upstream production for the quarter averaged 638,200 barrels of oil equivalent or boe per day, including an additional production of 325,600 boe per day, as a result of the merger. Upstream production from Suncor's legacy oil sands and natural gas operations averaged 312,600 boe per day, up from 279,400 boe per day in the comparable quarter a year ago. Oil Sands production during the quarter, excluding proportionate production share from the Syncrude joint venture, was an average 278,900 barrels per day, higher than the prior-year production of 243,800 bpd. Suncor said its production from natural gas business averaged 764 million cubic feet equivalent or mmcfe per day and production from Suncor's legacy natural gas operations for the quarter averaged 202 mmcfe per day, compared to 213 mmcfe per day in the year-ago quarter. East Coast Canada production contributed an average 63,600 bpd for the quarter, while production from International segment averaged 129 thousand bpd. The company noted that sales of refined petroleum products for the quarter averaged 82.9 million litres per day, which included 52.7 million litres per day resulting from the merger. Suncor's legacy refining and marketing operations averaged 30.2 million litres per day, compared to 31.5 million litres per day in the same period last year. For the quarter, cash flow from operations was C$1.129 billion, significantly up from C$231 million in the prior-year quarter.
For the full year, net earnings dropped to C$1.146 billion or C$0.96 per share from C$2.137 billion or C$2.29 per share in the previous year. After completion of the merger with Petro-Canada, Suncor said its total upstream production during the final five months of 2009 averaged 635,200 boe per day, including additional production of 311,100 boe per day resulting from the merger. Looking ahead to full year 2010, the company expects total production, before targeted divestitures, of 644 thousand boe per day and anticipates total production, related to targeted divestitures, of 75 thousand boe per day. In November 2009, the company's board had approved a C$5.5 billion capital spending plan for 2010, of which C$1.5 billion will be directed toward growth project funding and C$4 billion in spending is targeted to sustaining existing operations. On December 31, Suncor had agreed to sell substantially all of its oil and gas producing assets in the United States Rockies for C$517 million or US$494 million. The sale is expected to close in March 2010. SU.TO closed Monday's regular trading at C$34.84 on the Toronto Stock Exchange. For the last on year, the shares have been trading between C$21.15 and C$40.79.
SU ended on Monday at $32.73 on the NYSE.
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