Suncor earns $1.88 billion in Q2; takes restructuring charge related to layoffs

The man hired to turn around the flagging fortunes of Suncor Energy Inc. said Tuesday he believes the company has been too focused in recent years on the energy transition and must get back to an oil-centred business strategy.

CEO Rich Kruger, who took the reins at the Calgary-based energy giant this spring, told analysts on a conference call that the company’s board of directors agrees with him that a “revised direction and tone” at the company is necessary.

He said he believes Suncor has been neglecting “the business drivers of today” in pursuit of future-focused, clean and low-carbon energy pursuits.

“We have a bit of a disproportionate emphasis on the longer-term energy transition,” Kruger said, adding that while these pursuits are important, they are not what is going to make money for shareholders today.

“Today, we win by creating value through our large integrated asset base underpinned by oilsands.”

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Kruger, the former CEO of ExxonMobil’s Canadian subsidiary Imperial Oil Ltd., was lured out of retirement this year to lead a restructuring at Suncor in the wake of a spate of high-profile operational and financial challenges at the company.

On Tuesday, he said the company has already made “material progress” towards its new goal of focusing on the fundamentals. In June, Suncor announced it would reduce its employee head count by 20 per cent, or 1,500 people, by the end of the year in order to eliminate unnecessary or “unaffordable” work.

As of Aug. 1, 535 of these job reductions have already occurred, Kruger said, resulting in a cost reduction of about $125 million so far.

Suncor’s stated goal to refocus on its oilsands assets comes even as the company has publicly committed to achieving net-zero greenhouse gas emissions by 2050.

Suncor is also a member of the Pathways Alliance, a consortium of Canadian oilsands companies that have all made the net-zero commitment and have proposed working together to construct a massive carbon capture and storage transportation hub in northern Alberta to help reduce emissions from oilsands production.

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Last year, Suncor sold off its wind and solar power assets, getting out of the renewable energy business it had been involved in for more than two decades.

Suncor Energy Inc. says it earned $1.88 billion in the second quarter of 2023, down from approximately $4 billion in the same period last year when oil prices were higher.

The Calgary-based energy giant says it took a $275-million restructuring charge in the quarter related to the previously announced job cut plans.

As a result of this restructuring charge, Suncor said its adjusted funds from operations for the three months ended June 30, 2023, amounted to $2.7 billion or $2.03 per share, compared to $5.3 billion or $3.80 per share in the prior year’s quarter.

The company suffered a high-profile cybersecurity incident in June but says the breach did not have an effect on its financial results for the quarter.