In its first-quarter earnings report, oil sands ogre Suncor Energy (NYSE: SU ) boasted of record quarterly production. So what am I doing speaking about stealth?
Well, the situation's better than it appears on the surface. That total company production figure of 314,500 barrels of oil equivalent per day represents growth of 10% -- a rate already favorable to that reported by the likes of Occidental Petroleum (NYSE: OXY ) . Suncor's reported oil sands-only production of 278,000 barrels per day (i.e. 88% of output) really understates the ramp-up, however.
A slow start after a big December turnaround (period of planned maintenance), plus some unplanned maintenance, dragged down the first two weeks or so of the period. Since then, Suncor's oil sands operations have been spitting out closer to 300,000 barrels per day. After a series of hiccups last year, that's a strong start for 2009.
Some other welcome news is that Suncor's refining and marketing business had a very strong quarter, thanks to higher gasoline and asphalt margins. This contrasts markedly with the sharp downstream dropoff reported today by ConocoPhillips (NYSE: COP ) .
If I have a bone to pick anywhere, it may be that cash costs came in higher than last year, with no more specific a culprit than "an increase in operational expenses." Folks like EnCana (NYSE: ECA ) are reporting much lower costs thanks in part to a squeeze on suppliers. Still, Suncor's cash costs did drop 13% sequentially, and management noted that costs are both trending toward the low end of guidance, and have more room to fall throughout the year. So no, the oil sands slugger's not missing out on the savings being snagged by Oxy, XTO Energy (NYSE: XTO ) , and others across the industry.
Suncor sports a sterling five-star ranking in Motley Fool CAPS. Share your own oily opinion on the stock right here.
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