CALGARY, Dec. 18 /PRNewswire-FirstCall/ -- Suncor Energy Inc. announced today it is targeting average oil sands production of 260,000 to 270,000 barrels per day (bpd) and natural gas production of 215 to 220 million cubic feet equivalent (mmcfe) per day in 2007.
"Strong, steady and reliable is the theme for 2007," says Rick George, president and chief executive officer. "Despite a planned shutdown at our oil sands operations, we're targeting a marginal increase over 2006 production and, at the same time, we'll be laying the groundwork to increase production capacity by more than 30 per cent in 2008."
During a planned 40 to 50 day shutdown at its oil sands facility, Suncor expects to tie-in key components of its Upgrader 2 expansion, as well as to conduct routine scheduled maintenance. Timing of the shutdown has not yet been confirmed. During the shutdown of Upgrader 2, Upgrader 1 is expected to remain in production.
Suncor's outlook provides management's targets for 2007 in certain key areas of the company's business. Outlook forecasts, which are updated quarterly, are subject to change.
2007 Full Year Outlook
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Oil Sands
Production (bpd)(1) 260,000 to 270,000
Diesel 10%
Sweet 42%
Sour 43%
Bitumen 5%
Realization on crude WTI @ Cushing less
sales basket Cdn$7.50 to $8.50 per barrel
Cash operating costs(2) $21.50 to $22.50 per barrel
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Natural Gas
Natural gas(3) 215 to 220
(mmcf equivalent per day
including liquids)
(1) The 2007 Oil Sands production target includes approximately 5% non-
upgraded bitumen sold directly to the market. In 2006, the production
target referred only to synthetic crude oil production.
(2) Cash operating cost estimates are based on the following assumptions:
i) production of 260,000 to 270,000 bpd; ii) a production sales mix
as described in the chart above; and iii) a natural gas price of
US$7.60 per thousand cubic feet (mcf) at Henry Hub. Cash operating
costs per barrel are not prescribed by Generally Accepted Accounting
Principles (GAAP). This non-GAAP financial measure does not have any
standardized meaning and therefore is unlikely to be comparable to
similar measures presented by other companies. Suncor includes this
non-GAAP financial measure because investors may use this information
to analyze operating performance. This information should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. See "Non-GAAP Financial
Measures" in Suncor's third quarter 2006 MD&A.
(3) The 2007 production target includes natural gas liquids (NGL) and
crude oil converted into mmcf equivalent at a ratio of 1 barrel of
NGL/crude oil: six thousand cubic feet of natural gas. The 2006
production target forecast included only natural gas volumes. This
mmcf equivalent may be misleading, particularly if used in isolation.
A conversion ratio of 1 barrel of NGL/crude oil: six thousand cubic
feet of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead.
Factors that could potentially impact Suncor's financial performance in 2007 include:
- Crude oil hedges. Suncor has entered into hedging agreements for
60,000 bpd in 2007. These costless collar hedges have an average
floor of approximately US$51.64 per barrel while allowing
participation in higher crude oil prices with an average ceiling of
approximately US$93.26 per barrel. The company will consider future
costless collars up to 30% of annual planned crude oil production if
strategic opportunities are available.
- Scheduled maintenance work and tie-in of modified facilities at
Suncor's oil sands operation is planned during 2007. Although this
maintenance work is reflected in operational targets for the year,
production estimates could be impacted if the work takes longer than
planned or is impacted by labour or material supply issues. The tie-
in work is required to enable production capacity to be increased to
a planned 350,000 bpd in 2008.
Further discussion of the risks, uncertainties and other factors that could affect these plans, and any actual results, is included in Suncor's annual report to shareholders and other documents filed with regulatory authorities.
Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta. Suncor's oil sands business, located near Fort McMurray, Alberta, extracts and upgrades oil sands and markets refinery feedstock and diesel fuel, while operations throughout Western Canada produce natural gas. Suncor operates a refining and marketing business in Ontario with retail distribution under the Sunoco brand. U.S.A. downstream assets include pipeline and refining operations in Colorado and Wyoming and retail sales in the Denver area under the Phillips 66(R) brand. Suncor's common shares (symbol: SU) are listed on the Toronto and New York stock exchanges.
Suncor Energy (U.S.A.) Inc. is an authorized licensee of the Phillips 66 (R) brand and marks in the state of Colorado. Sunoco in Canada is separate and unrelated to Sunoco in the United States, which is owned by Sunoco, Inc. of Philadelphia.
This news release contains forward-looking statements that address goals, expectations or projections about the future. These statements are based on Suncor's current goals, expectations, estimates, projections and assumptions, as well as its current budgets and plans for capital expenditures. Some of the forward-looking statements may be identified by the words "outlook", "target", "forecast", "expects", "estimate", "the theme", "could", "planned", "potentially", "consider", "planned", "laying the groundwork" and similar expressions. These statements are not guarantees of future performance. Actual results could differ materially, as a result of factors, risks and uncertainties, known and unknown, to which Suncor's business is subject. Further discussion of the risks, uncertainties and other factors that could affect these plans, and any actual results, is included in Suncor's annual report to shareholders and other documents filed with regulatory authorities.
