Oct. 31 (Bloomberg) -- Suncor Energy Inc., Canada’s largest energy company by market value, will proceed with the C$13.5 billion ($12.9 billion) Fort Hills oil sands project as it seeks to increase production.
The venture with Total SA and Teck Resources Ltd. will begin producing crude in 2017, adding 180,000 barrels a day of output in northern Alberta, the company said yesterday in a statement. Calgary-based Suncor’s share of the costs will be C$5.5 billion.
The approval comes after Chief Executive Officer Steve Williams earlier this year canceled another venture with Total in a bid to reduce costs and boost profitability. Fort Hills, which had initially been slated to start in 2016, has 3.3 billion barrels of reserves and will produce oil for about 50 years, the company said.
“This project will be a significant source of long-term cash flow for the company and contribute strong returns for our shareholders,” Williams said in the statement.
Suncor’s shares were little changed at C$37.99 at the close in Toronto before the approval was announced. The stock has 22 buy recommendations from analysts and three holds, according to data compiled by Bloomberg.
Suncor’s third-quarter net income rose to C$1.69 billion, or C$1.13 per share, from C$1.54 billion, or C$1.01, a year ago, the company said in a separate statement.
“Overall they’ve been increasing bitumen production and boosting efficiencies,” Michael Dunn, an analyst at FirstEnergy Corp. in Calgary, said in an interview before the earnings were released.
Suncor also lowered its full-year production target to the equivalent of between 545,000 barrels of oil a day and 590,000 barrels from an earlier outlook of between 570,000 barrels and 620,000 barrels because of disruptions in Libya, planned outages at Syncrude Canada Ltd. and the sale of part of its natural gas business in western Canada.
The price of Canadian heavy crude rose 8.3 percent to an average of $83.10 a barrel in the third quarter from a year earlier, according to data compiled by Bloomberg. Brent, the global benchmark, traded at an average of $109.65 in the third quarter compared with an average price of $109.42 in the year- earlier quarter.
Suncor operates four refineries in North America in Alberta, Ontario, Quebec and Colorado that produce fuels, solvents and petrochemicals, according to the company’s website. The company also owns wind farms, a biofuel plant and offshore oil assets.
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--Editors: Andrew Hobbs, Keith Gosman