CALGARY - Energy giant Suncor Energy Inc. is wrapping up a probe into how it runs its operations after back-to-back fires shut down two of its oilsands processing units this winter.
Following the upgrader fires in December and February, Suncor enlisted the help of outside experts to recommend ways to make its operations run more smoothly.
"These two upsets we had with the upgraders clearly are a reminder that we have a lot more work to do. Please be assured that we're on it," chief executive Rick George told shareholders at the firm's annual meeting Tuesday.
"With the investigation now in its final stages, the recommendations are being formulated. But what I can tell you ... is that the data shows our asset base is sound."
Upgraders process oilsands bitumen into a lighter type of crude that refineries can more easily handle. Sometimes they are located on-site, and other times they are connected to refineries closer to market, like in the Edmonton area.
In the question-and-answer session of the annual meeting, chief operating officer Steve Williams said the investigation consists of two main components.
One is to examine the instances of upgrader upsets over the years in a "rigorous, analytical, qualitative way." Another is to look at the organization as a whole, which covers anything from corporate culture to how much experience plant operators have under their belts.
The two upgraders are back to full production, churning out a record 333,000 barrels per day in April. However, year-to-date, oilsands production at the end of April averaged about 234,000 barrels per day.
As a result of the upgrader shutdowns, Suncor has revised its production outlook for 2010 from 300,000 barrels per day to 280,000 barrels per day.
Earlier Tuesday, Canada's largest energy company said it earned $716 million, or 46 cents per share, for the first three months of the year. That compared with a loss of $189 million or 20 cents a share for the first quarter of 2009.
Revenue totalled $7.04 billion, up from $4.62 billion a year ago.
Operating earnings, which strip out the effects of one-time items, were $287 million, or 18 cents per share, compared to $380 million, or 41 cents per share, a year ago.
Analysts were on average expecting operating earnings of 14 cents per share, according to estimates compiled by Thomson Reuters.
"The variance from our estimates was attributed to a combination of higher than expected production volumes, lower than expected cash operating costs in the oil sands and better than expected downstream earnings," wrote UBS Investment Research analyst Matt Donohue in a research note Tuesday.
After the Petro-Canada merger, Suncor said it planned to sell between $2 billion and $4 billion in non-core assets.
"But at this point we're pretty confident we're going to be able to hit the upper part of that range, somewhere between $3 (billion) and $4 billion, which will go toward reducing our debt," chief financial officer Bart Demosky told shareholders.
The company also said its total oil and natural gas production during the first quarter averaged 564,600 barrels of oil equivalent output a day. That compared with 314,500 daily barrels during the first quarter of 2009.
Suncor said its increased production was the result of its union with former Crown corporation Petro-Canada last August, which created Canada's largest energy company.
In the wake of that blockbuster transaction, Suncor is sticking to its oilsands-centred strategy, shedding assets that don't fit with its core business.
It has sold natural gas properties in Western Canada, the United States and Trinidad and Tobago, garnering proceeds of more than $1.54 billion so far. However, it is keeping assets in Syria, Libya, offshore Atlantic Canada and the North Sea that it inherited from Petro-Canada.
Suncor has refineries in Edmonton, Montreal, Sarnia, Ont. and Commerce City, Colo., as well as Petro-Canada-branded retail fuel outlets across the country.
Suncor is involved in the two biggest oilsands mining projects on earth. One is its own vast mine north of Fort McMurray, Alta., which it has been developing since the 1960s. Another is its 12 per cent stake in the Syncrude Canada Ltd. consortium, which belonged to Petro-Canada before last year's deal.
Through the Petro-Canada deal, Suncor became the majority partner in the yet-to-be developed Fort Hills mine, with a 60 per cent stake. UTS Energy Corp. (TSX:UTS) and Teck Resources Ltd. (TSX:TCK.B) evenly split the rest. Suncor has said it intends to keep Fort Hills on the backburner for now, instead moving ahead with expansions to its Firebag project.
Suncor (TSX:SU) shares rose 16 cents to $34.84 on the Toronto Stock Exchange on Tuesday afternoon.