Suncor profit cut by 69% on oilsands writeoffs

Suncor Energy Inc.said Wednesday its net income during the second quarter dropped by more than two thirds as it took some $1.2 billion in charges related to its holdings in the oilsands and in Libya.

"We continue to focus squarely on profitable growth. This means we're disciplined with our capital and invest wisely in high-return projects," said CEO Steve Williams.

"This prudent approach and our cash generating ability have enabled us to increase our quarterly dividend to shareholders."

Net income was $211 million, or 14 cents per share, down 69 per cent from$680 million, or 45 cents per share, a year earlier.

Operating earnings up

But operating earnings, which strip out the effects of unusual items, were stronger at $1.14 billion, compared to $934 million during the second quarter of 2013.

On a per-share basis, operating earnings were 77 cents per share, missing the average analyst estimate of 97 cents per share, according to Thomson Reuters.

Cash flow from operations was $2.4 billion, or $1.64 per share, compared to $2.25 billion, or $1.49 per share.

The company took a $718-million charge related to a decision to shelve the Joslyn oilsands mine, which would have been operated by the Canadian unit of France's Total SA. The partners decided the project would not be economically feasible in today's environment.

It was one of several stalled projects in the oilsandsas partners balk at investing capital when there is no clear route to market for their oil. The Northern Gateway pipeline to the B.C. coast still faces numerous hurdles and a decision on the Keystone option to the U.S. been repeatedly postponed.

Suncor also took a $297-million charge in Libya, which has been rocked by political unrest, and a $223-million charge on oilsands assets that no longer fit with Suncor's strategy.

Production in the oilsands averaged 378,000 barrels per day during the quarter, up from 276,000 barrels a year earlier.

Company-wide output averaged 518,400 barrels per day, compared to 500,100 during the same 2013 quarter.

Cash operating costs in the oilsands were down about 27 per cent.

And the firm has also lowered its capital spending target for this year to $6.8 billion from $7.8 billion.