Q2 profit more than quadruples to nearly $4B

Suncor Energy facility is seen in Sherwood Park, Alberta, Canada August 21, 2019. REUTERS/Candace Elliott

Suncor Energy (SU.TO)(SU) interim president and CEO Kris Smith says improving the company’s “unacceptable” safety record will require more than pouring money into new technologies aimed at protecting workers.

Speaking on his first post-earnings conference call with analysts, Smith stressed the need to “engage and enable” those on the frontline of Suncor’s operations, especially workers doing high-risk jobs involving heavy vehicles and working around water.

Last month, Suncor CEO Mark Little stepped down from his role a day after the company’s 13th worksite death since 2014. The string of fatalities was among the grievances of US activist hedge fund Elliott Investment Management, which recently struck a deal with Suncor to appoint three new directors and review the sale of its Petro-Canada gas station chain.

“This isn’t a question of just saying we didn’t invest in technology, and therefore we’ve had safety issues,” Smith said on the call, in response to a question about the underlying cause of the incidents.

“Technology is an enabler. It’s one of the things that we can implement to improve our ability to manage the risks. And if we do fail, we fail safely. But that’s not at its root the issue, the fact that those systems weren’t t there.”

He says Suncor will soon announce a date for a meeting to provide more details on performance and workplace safety. The company canceled such an event last month, following a worker’s death at its Base Mine site near Fort McMurray, Alta.

While Suncor says it’s not relying on technology alone to improve safety, Smith says the company will roll out tech-based safety measures throughout 2022 and 2023, including anti-collision systems for vehicles.

Smith adds that he has the full support of Suncor’s board to drive needed changes.

“We don’t need more diagnosis, but what we need to do is execute,” he said. “We’re really focused on understanding how the work is happening at the frontline, how it’s being managed, how it’s being executed.”

Meanwhile, higher crude prices led to a fourfold profit increase in the Calgary-based oil producer and refiner’s second quarter. It reported financial results for the three months ended June 30 after the closing bell on Thursday.

Suncor says net earnings climbed to $3.996 billion, or $2.84 per share, compared to $868 million in the same period last year. The company says adjusted funds operations topped $5.35 billion in the quarter, the highest in the company’s history, as the price of North American benchmark crude averaged US$108 per barrel.

Total upstream production for the quarter was 720,200 barrels of oil equivalent per day (boep/d), compared with 699,700 boep/day a year ago. Suncor lowered its 2022 production forecast to 740,000 to 760,000 barrels per day from 750,000 to 790,000.

The company cited inflation and required spending on safety improvements as it nudged up its full-year capital expenditure forecast to $4.9 billion to $5.2 billion, from $4.7 billion.

At the same time, Suncor is paring down its portfolio of energy assets. The company says it has started a sale process for its UK business, and signed a deal to divest its Norwegian assets for $410 million. In both cases, the buyers are undisclosed. Suncor expects to complete the Norwegian sale in the fourth quarter. In April, Suncor announced plans to sell its Canadian solar and wind operations as it looks towards hydrogen and renewable fuels, seen as more complementary to its core oil and gas business.

Toronto-listed Suncor shares slipped 0.20 percent to $39.38 as of 11:34 am ET on Friday. The stock has climbed more than 64 percent in the last 12 months.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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