Suncor Energy Inc.'s chief executive officer says the oil sands exodus is not finished.
More international companies could cut their exposure to the high-cost region, presenting the Calgary-based oil sands producer with an opportunity to expand its holdings, including at its sprawling Fort Hills mine, Suncor CEO Steve Williams said on Thursday.
The comments follow a flurry of deals that have reshaped the sector. Global energy companies are shifting capital to more profitable areas as they seek to cut debt amassed when crude prices topped $100 (U.S.) a barrel. Speculation has gathered that Chevron Corp., BP PLC and French oil major Total SA could follow rivals Royal Dutch Shell PLC and ConocoPhillips Co. as sellers, with Canadian companies playing consolidators.
Total holds a 29.2-per-cent interest in Fort Hills and has mulled paring exposure to higher-cost projects globally. Suncor, the operator, boosted its ownership in the venture in 2015, buying an additional 10-per-cent stake from Total. It now owns 50.8 per cent; Teck Resources Ltd. owns the remaining 20 per cent.
"I often get asked, would I want more of it?" Mr. Williams told reporters at the company's annual shareholder meeting. "At the right price, it might be possible, but it's not at the top of my agenda."
He said Suncor has no need for another acquisition, having already picked up a controlling interest in the Syncrude Canada mining project with a hostile takeover last year.
The company is focused instead on boosting shareholder returns, announcing late on Wednesday plans to buy back up to $2-billion in shares over the next year starting on May 2. It also repaid $1.25-billion (U.S.) in long-term debt.
Earlier this year, it boosted its quarterly dividend by 10 per cent to the current level of 32 cents (Canadian) a share.
The financial moves come even though oil prices still languish below $50 (U.S.) a barrel, underscoring confidence in the company's cash flow as it prepares to start production from Fort Hills and its Hebron joint venture offshore Newfoundland and Labrador later this year.
Suncor earlier reported first-quarter earnings of $1.4-billion (Canadian), or 81 cents per share, versus a year-ago profit of $257-million or 17 cents.
The company said funds from operations rang in at just over $2-billion, driven by higher crude prices, strong production and lower costs.
Total output was lifted by its larger share of Syncrude production to 725,100 barrels of oil equivalent per day, up from 691,400 boe/d in the same period a year ago.
However, the company cut its production outlook at the mining and upgrading project, which has been running at reduced rates while work continues to repair damage from a fire in March.
It now expects its share of Syncrude output to fall in the range of 135,000 to 150,000 barrels a day for the year, down from 150,000 to 165,000 barrels previously. Costs are expected to climb from $32 to $35 a barrel to $36 $39 a barrel.
Raymond James Ltd. analyst Chris Cox said the revision at Syncrude, although a setback, is offset by expected gains elsewhere in Suncor's portfolio, enabling the company to maintain its overall production guidance.
"All told, while none of this should come as a huge surprise to the market, we do believe it will serve to underscore the growing free cash flow profile for the company as the Fort Hills and Hebron projects near completion," he said.
Recent deals have come with a hefty price. Cenovus Energy Inc.'s $17.7-billion acquisition of most of ConocoPhillips' oil sands assets has been criticized by investors as too expensive, weighing heavily on the Calgary-based company's shares.
By contrast, Suncor got "first-mover advantage" when it launched a hostile takeover of Canadian Oil Sands Ltd., Mr. Williams said. "I think we got in there first and we got a very, very good deal," he said.