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Suncor Energy head office is pictured in Calgary, Alberta June 17, 2009.Todd Korol/Reuters

Suncor Energy Inc. is eyeing a return to big production gains, defying the slump in crude prices that has battered the industry and forced competitors to curtail growth.

Calgary-based Suncor on Thursday said its overall output would climb 40 per cent from 2015 levels, exceeding 800,000 barrels a day by 2019, as a flurry of deals add up and big-ticket projects in the oil sands and offshore Canada's East Coast finish construction.

"That's a growth trajectory that very few companies of our scale can hope to equal," chief executive officer Steve Williams told analysts. "More importantly, it's growth that gives us even more leverage to rising oil prices."

Such swagger stands in sharp contrast to the prevailing mood in Canada's oil patch, where companies have taken a cleaver to budgets and production growth to help shore up finances.

Rival Canadian Natural Resources Ltd., for instance, has said company-wide production will stay relatively flat through 2018 despite finishing multibillion-dollar expansions at its Horizon bitumen mine as the company seeks to pay down debt.

Suncor is beefing up its presence in northern Alberta as U.S. crude tops $46 (U.S.) a barrel, extending gains despite still-elevated global inventories and an intensifying battle for market share between top exporters Russia, Saudi Arabia and Iran.

On Wednesday, Suncor snapped up an additional 5-per-cent stake in the Syncrude Canada Ltd. project from Murphy Oil Corp. for $937-million (Canadian), lifting its ownership of the oil sands mega-mine to roughly 54 per cent.

It follows Suncor's $4.2-billion acquisition of Canadian Oil Sands Ltd., previously the project's largest owner with a 37-per-cent interest. Suncor also bought an additional 10-per-cent slice of its Fort Hills mine last year from partner Total SA.

The latest deal comes as Suncor reported a first-quarter operating loss of $500-million or 33 cents a share, owing to a 31-per-cent drop in U.S. crude prices from levels in 2015. A year earlier, the company booked an operating profit of $175-million or 12 cents.

In the quarter, the company posted a final profit of $257-million or 17 cents a share, driven by foreign exchange gains on the revaluation of its U.S. dollar-denominated debt. That compares with a loss of $341-million or 24 cents a year earlier. Cash flow skidded to $682-million from $1.5-billion.

Belt-tightening at Suncor includes deferring a planned upgrade at its Montreal refinery as well as the next phase of growth in the oil sands using steam-driven technologies. That has resulted in continuing jobs cuts, adding to a net 1,700 reductions made last year. In February, the company lowered its 2016 budget by 10 per cent to the range of $6-billion to $6.5-billion.

Nevertheless, it has poured billions of dollars into major investments that were started before global oil prices cratered from more than $100 (U.S.) a barrel in mid-2014.

They include its $15-billion (Canadian) Fort Hills mine north of Fort McMurray, Alta., and the $14-billion Hebron joint venture off the Newfoundland coast.

Now, with those developments nearing completion, Mr. Williams said the company would focus on wringing better performance out of the struggling Syncrude operation, as well as possible acquisitions as he seeks alternatives to building hugely expensive projects from scratch.

It could take until 2022 for the next stage of steam-driven oil sands projects in the company's portfolio to start production, he said.

"It is difficult in the current economic environment to see how you would be approving those types of projects," Mr. Williams said on a conference call to discuss the company's results. "The market is offering a cheaper alternative in terms of buying capacity."

Industry analysts said Wednesday that the deal with Murphy amounts to a slight premium for a majority stake in Syncrude compared with Suncor's earlier deal for Canadian Oil Sands.

Suncor is also targeting between $1-billion and $1.5-billion of asset sales over the next 12 to 15 months, with possible dispositions including processing and storage assets, wind farms, as well as its lubricants business.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
CNQ-N
Canadian Natural Resources
+1.13%76.32
CNQ-T
Canadian Natural Resources Ltd.
+0.87%103.33
MUR-N
Murphy Oil Corp
+1.31%45.7
SU-N
Suncor Energy Inc
+1.18%36.91
SU-T
Suncor Energy Inc
+0.99%49.99

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