Suncor increasing capital spending to $7.8B; oil production expected to rise 10%

CALGARY – Suncor Energy (TSX:SU) has announced a capital spending program of $7.8 billion for 2014, some $500 million more than it originally forecast for 2013.

Meanwhile, the Calgary-based integrated oil giant said Wednesday that it expects average production to increase by about 10 per cent to between 565,000 and 610,000 barrels of oil equivalent per day next year.

Suncor said oilsands production is expected to grow by better than 14 per cent, more than offsetting reduced production from its North America onshore business as a result of its natural gas divestiture in 2013.

About $4.2 billion of the 2014 capital spend is expected to go towards growth projects, with $1.9 billion of that earmarked for advancing oilsands projects, including the Fort Hills joint venture and near-term debottlenecking and expansion initiatives such as MacKay River 2.

Growth capital is also being allocated to exploration and production projects that include investment in Golden Eagle in the North Sea and development of East Coast Canada assets such as Hebron.

Refining and marketing growth capital of $220 million will largely be deployed on projects to support inland crude supply to the Montreal refinery.

“Our 2014 capital plan demonstrates our continued commitment to capital discipline,” president and CEO Steve Williams said.

“As evidenced by our debottlenecking initiatives and the recent Fort Hills project sanction, we will be diligent in pursuing only those projects we believe will deliver long-term shareholder value. This approach applies not only to how we view oilsands investments, but also to other opportunities in our rich suite of growth projects.”

Williams added that Suncor expects to drive it oilsands cash operating costs below $35 per barrel as the company continues to focus on reliability and cost management.