The Suncor Refinery in Edmonton is seen on Tuesday, April 29, 2014.JASON FRANSON/The Canadian Press
Suncor Energy Inc. says it will spend between $7.2-billion and $7.8-billion next year, defying a steep drop in crude prices that has forced competitors to consider pulling back from big capital plans.
Suncor, Canada's largest oil and gas company, unveiled a 2015 budget late Tuesday that will see the company spend up to $4.3-billion on growth projects. About 45 per cent of the overall outlay, or up to $3.5-billion, is earmarked for sustaining capital, or spending on existing projects.
Suncor is boosting overall spending – from a budget of $6.8-billion this year – with oil prices down more than 30 per cent since June. U.S. crude for January delivery fell 1.4 per cent Tuesday to settle at $74.64 (U.S.). Brent, the global benchmark, retreated 84 cents to $78.47.
"Our disciplined approach to building a strong balance sheet and prudently managing our capital program has positioned us to execute on our strategy even during periods of lower crude prices," Suncor chief executive Steve Williams said in a statement.
"We will continue to invest in both our base business and in our key growth projects going forward and would expect to generate free cash flow even with Brent oil prices in the $80 to $85 per barrel range."
Suncor said it expects production next year will average between 540,000 to 585,000 barrels of oil equivalent per day (boe/d). The company said output this year would fall in the lower end of its guidance range of between 525,000 to 570,000 boe/d.
Suncor's spending plans are based on a Brent crude price of $85 and a West Texas intermediate (WTI) price of $78. The company expects Western Canada Select (WCS), the main oil sands benchmark, to fetch $60. That's down from earlier expectations of $102 for Brent, $96 for WTI and $76 for WCS.
Suncor's budget contrasts with some competitors in the oil sands sector that have pledged to dial back expenditures next year if oil prices continue to slump.
Canadian Natural Resources Ltd., for example, has said it can quickly trim $2-billion (Canadian) from its $8.6-billion capital budget next year if needed. The cuts could include $260-million from the company's thermal oil sands business.
Suncor said it plans to pump more than $2-billion into the oil sands next year. The company is developing the $13.5-billion Fort Hills mine with Teck Resources Ltd. and France's Total SA. The project is due to add 180,000 b/d of production capacity in northern Alberta, with first oil slated for 2017.