Suncor Energy Inc. is cutting its contractor workforce by 20 percent as part of its efforts to improve the safety and performance of its oil and sands operations.
Interim CEO Kris Smith told analysts on a conference call Thursday that more than half of the workforce reductions have already been completed and the rest will be completed in the first half of 2023.
He said the decision to reduce the number of contractors working on Suncor’s sites was the result of a “thorough review of our frontline workforce composition” and was aimed at reducing the number of exposure hours that expose the company to workplace injuries. or deaths and improve efficiency and competitiveness.
“My priority has been to remove distraction from the organization and focus our employees on safe and reliable operations to the greatest extent possible,” Smith said on the call.
Suncor’s safety record has been under the microscope in 2022 since US-based activist investor Elliot Investment Management publicly called for change at the Calgary-based energy company.
At least 12 people have died at Suncor’s oil sands plants in northern Alberta since 2014, including five since 2021. That’s more than all companies in the industry combined.
Smith stepped into the CEO role in July to replace Mark Little, who stepped down from the top job one day after a 26-year-old contract worker was struck and killed by equipment at Suncor’s base mine.
He said Suncor is also improving its contractor management processes and working with experts to ensure managers in all departments and functions have the latest safety training and education.
The company is also installing anti-collision technology on more than 1,000 mobile mining rigs to eliminate “key risk” in its operations. Fatigue management systems will also be completed at all Suncor mines by early 2023, Smith said.
Suncor reported a third-quarter net loss of $609 million on Wednesday night, due to a $3.4 billion write-down against its stake in the Fort Hills oil sands mine.
The net loss of 45 cents per common share is in contrast to a profit of $877 million, or 59 cents per common share, in the year-ago quarter.
Suncor buys Teck’s stake in Fort Hills
Suncor announced last week that it would buy Teck Resources Ltd.’s 21.3 percent stake in the Fort Hills oil sands project for about $1 billion. The agreed sale price reflects the lower market value of the mine, resulting in a non-cash impairment charge.
On an adjusted basis, however, Suncor said it earned $2.6 billion, or $1.88 per share, for the three months ended Sept. 30, more than double the $1 billion, or 71 cents per common share, it earned on an adjusted basis in the same three months. in 2021 thanks to significantly higher crude oil prices and upstream production.
Suncor’s total upstream production increased to 724,100 barrels of oil equivalent per day (boe/d) in the third quarter of 2022, compared to 698,600 boe/d in the year-ago quarter. Refinery crude throughput was 466,600 barrels per day and refinery utilization was 100 percent in the third quarter of 2022, compared to 460,300 barrels per day and 99 percent in the third quarter of 2021.
Suncor has said it will hold an investor presentation on Nov. 29 to learn more about its plans to improve safety and performance and the results of a review of the potential sale of its retail division.
Suncor, which recently sold its wind and solar assets and exploration and production facilities in Norway, is trying to streamline its portfolio to focus on its “core business.”
Eight Capital analyst Phil Skolnick said this could mean Suncor is embarking on a “buying spree” in the oil sands. He said after the deal to buy Teck’s Fort Hills stake that he wouldn’t be surprised if Suncor is also in talks with France’s TotalEnergies SE for its remaining 24.6 percent stake in the Fort Hills project.
“We could also see (Suncor) looking to buy CNOOC and Sinopec’s combined 16.2 percent stake in Syncrude (China is reported to be seeking to exit Canada),” Skolnick said in a research note.
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