Suncor's Fort Hills oil sands operation.Kelly Cryderman/The Globe and Mail
Suncor Energy Inc. boosted its dividend by 10 per cent as the oil sands producer swung to a fourth-quarter profit.
However, the Calgary-based company said costs at its Fort Hills mine under construction in Northern Alberta had increased, owing to delays from last year's wildfires and other design changes.
The company has upsized the production capacity to 194,000 barrels a day from 180,000 barrels. It now pegs the cost between $16.5-billion and $17-billion, compared with $15.1-billion previously. First oil is still expected later this year, and the company said it would cover its share of the increase within its existing budget of between $4.8-billion and $5.2-billion.
For subscribers: The Fort Hills gamble: Will a $15-billion bet pay off?
Suncor late on Wednesday raised the quarterly payout to 32 cents, from 29 cents previously.
The move comes as a recovery in oil prices stalls, despite a return to discipline on production by members of the Organization of Petroleum Exporting Countries after more than two years of pumping flat out. U.S. West Texas intermediate oil closed up 17 cents (U.S.) at $52.34 per barrel on Wednesday.
Suncor also reported net earnings for the fourth quarter of $531-million (Canadian) or 32 cents per share, compared with a net loss of about $2-billion or $1.38 in the year-ago period.
The year-ago loss included a non-cash impairment of roughly $1.6-billion and an unrealized after-tax foreign exchange loss of $382-million tied to the revaluation of U.S. dollar-denominated debt.
Operating earnings, which exclude such items, were $636-million or 38 cents per share in the quarter ended Dec. 31, versus a loss of $26-million or 2 cents in the same period of 2015.
The company said output from its Northern Alberta operations dipped to 433,400 barrels per day from 439,700 a year ago due to unplanned maintenance.
Still, total output jumped to a quarterly record of 738,500 oil-equivalent barrels per day, from 582,900 boe/d in the fourth quarter of 2015, driven by Suncor's beefed up ownership share of the Syncrude Canada bitumen project.
Production costs in the oil sands fell to $24.95 per barrel compared to $28 per barrel a year ago as a result of cost cutting.
Cash flow, an indication of the company's ability to fund growth, was $2.4-billion, up from $1.3-billion in the same period of 2015.
For the year, the company earned $445-million versus a loss of $2-billion in 2015.