By Nia Williams
CALGARY, Alberta, April 28 (Reuters) - Suncor Energy
SU.TO , Canada's largest oil and gas producer, said on Thursday
it will focus on improving efficiency but not seek operatorship
at Syncrude oil sands project in northern Alberta, in which it
is acquiring a majority stake.
Calgary-based Suncor said on Wednesday it has struck a deal
to buy Murphy Oil (NYSE:MUR) Corp's MUR.N 5 percent stake in Syncrude for
C$937 million ($747.33 million).
The deal follows Suncor's acquisition of Canadian Oil Sands
Ltd and its 37 percent stake in February, making Suncor the
majority shareholder in the mining and upgrading project,
Canada's largest single source of crude production, with 53.74
percent.
The Syncrude project, operated by joint venture partner
Imperial Oil Ltd IMO.TO , has capacity to produce around
350,000 barrels per day (bpd) of light synthetic crude, but has
been dogged for years by operating issues and frequently
undershot production targets.
In the first quarter, however, Syncrude had its best
production rates for five years with 91 percent utilization for
the upgrader and Suncor chief executive Steve Williams said he
was aiming to replicate that performance more frequently.
"We expect it will take both time and effort to reach a
point where the operations can be sustained at this level of
performance, but have no doubt we are definitely up for the
challenge," he said on a first quarter earnings call.
Williams said having a majority stake would give Suncor some
governance benefits but the company had no plans to seek
operatorship of the Syncrude project.
"Our primary objective is to get the reliability of that
asset up by working with Imperial and Syncrude and I'm greatly
encouraged by the progress that has been made," he said.
Suncor reported a C$500 million operating loss after the
market close on Wednesday as weak global crude prices outweighed
record production.
TD Securities analyst Menno Hulshof said Suncor had a very
good quarter operationally despite low oil prices, with reduced
operating costs and improved upgrader reliability.
"Suncor is clearly making a relatively big bet on both
Syncrude, and the mining business more generally," Hulshof said
in a note, adding that the company's Fort Hills project,
currently under construction, will add another 91,000 bpd of
mining capacity in late 2017.
Suncor shares were last up 2.3 percent on the Toronto Stock
Exchange at C$37.07.
($1 = 1.2538 Canadian dollars)
(Editing by G Crosse)