Suncor Cuts Capital Spending, 1,000 Jobs On Plunging Crude Prices

(RTTNews) - Canadian oil giant Suncor Energy Inc. (SU.TO, SU), Tuesday announced plans to cut capital spending by C$1 billion and to also lay off 1,000 employees, in order to survive the ongoing global crude oil pricing crisis.

Suncor also intends to reduce operating expenses by C$600 million to C$800 million to be phased over two years to offset inflation and growth, according to a company statement. Nonetheless, the Calagary, Alberta-based company has maintained its production guidance for 2015.

CEO Steve Williams said, "Cost management has been an ongoing focus, with successful efforts to reduce both capital and operating costs well underway before the decline in oil prices. However, in today's low crude price environment, it's essential we accelerate this work. Today's spending reductions are consistent with our commitment to spend within our means and maintain a strong balance sheet. We will monitor the pricing environment and take further action as required."

The company plans to defer some capital projects that have not yet been sanctioned as well as reduce discretionary spending in order to achieve the cost reduction targets.

Suncor plans to reduce its workforce in 2015 by about 1000, primarily through its contract workforce, in addition to reducing employee positions. There will also be an overall hiring freeze for roles that are not critical to operations and safety, the company said.

In mid-November, Suncor Energy had announced its capital spending guidance for 2015 of C$7.2 billion to C$7.8 billion and planned average production of 540,000 to 585,000 barrels of oil equivalent per day.

SU closed Tuesday's trading at $29.10, up $0.43 or 1.50%, on the NYSE. The stock, however, fell $0.05 or 0.17% in the after-hours trade.