Suncor Energy trimming capital spending by a further $400 million

WATCH ABOVE: With oil prices sitting at less than US$50 a barrel, there’s some bad news from two of Alberta’s biggest energy players. Cenovus Energy and Suncor Energy are both announcing job cuts. Global’s Gord Gillies has the details.

CALGARY — Suncor Energy is trimming its spending plans for this year by a further $400 million, while at the same time boosting its production targets and dividend.

The moves come as U.S. benchmark crude prices continue to languish below US$50 a barrel, dashing hopes in the oilpatch of a quick recovery. A year ago, crude was worth more than twice as much.

TIMELINE: Tracking the layoffs in Alberta’s oilpatch

The Calgary-based oilsands giant (TSX:SU) said late Wednesday its capital spending this year will be between $5.8 billion and $6.4 billion, as it re-evaluates “non-essential” projects as part of overall cost-cutting initiatives.

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It’s the second time in 2015 that Suncor has slashed its budget. In January it announced it would reduce its budget by $1 billion to between $6.2 billion and $6.8 billion.

As of April, 1,200 jobs have been cut at Suncor.

READ MORE: Suncor cutting 1,000 jobs, taking $1B out of 2015 budget amid oil rout

Meanwhile, Suncor hiked its production outlook by 10,000 barrels a day to a range of between 550,000 barrels and 595,000 barrels a day.

CEO Steve Williams said Suncor’s cash flow is strong enough to fund its capital requirements, while boosting its dividend by a penny to 29 cents a share and renewing is share buyback program.

Cash flow from operations was more than $2.1 billion during the quarter, down from $2.4 billion in the prior-year quarter.

Net earnings during the second quarter were $729 million, compared to $211 million a year earlier, when Suncor booked impairment charges.

Operating earnings, which strip out the effects of unusual items, were $906 million for the quarter, versus $1.14 billion during the same 2014 period.

The operating earnings amounted to 63 cents per share, compared to 77 cents.

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Suncor also noted cost reductions in the oilsands. Cash operating costs decreased during the second quarter to $28 a barrel from $34.10 a year earlier.

It said its $13.5-billion Fort Hills oilsands project remains on track to start producing oil in late 2017.