Suncor Energy's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Suncor Energy (SU)

Q4 2011 Earnings Call

February 01, 2012 9:30 am ET

Executives

Steve Douglas - Vice President of Investor Relations

Richard L. George - Chief Executive Officer and Non Independent Management Director

Steven W. Williams - President, Chief Operating Officer and Director

Bart W. Demosky - Chief Financial Officer

Analysts

George Toriola - UBS Investment Bank, Research Division

Mark Polak - Scotiabank Global Banking and Market, Research Division

Carrie Tait

Gil Alexandre

Brian C. Dutton - Crédit Suisse AG, Research Division

Allen Good - Morningstar Inc., Research Division

Michael P. Dunn - FirstEnergy Capital Corp., Research Division

Kam S. Sandhar - Peters & Co. Limited, Research Division

Presentation

Operator

Compare to:
Previous Statements by SU
» Suncor Energy's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Suncor Energy's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Suncor Energy's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Suncor fourth quarter and year end conference call and webcast. I would now like to turn the meeting over to Mr. Steve Douglas, Vice President, Investor Relations. Mr. Douglas, please go ahead, sir.

Steve Douglas

Thank you, Thomas. I'd like to welcome everyone to the call. I have -- we're actually in 3 locations today. We have our management team, Rick George, our CEO; Steve Williams, our President and COO; and Bart Demosky, our CFO, and they are on the West Coast in Calgary. In our head office, we have our controller, Jolienne Guillemaud; and our systems controller Greg Freidin. Here with me in Toronto is the IR team, Mark Illing and Jenna van Steenbergen.

And just before I turn it over to Rick for his opening comments, I want to give a legal advisory. Please note that today's comments contain forward-looking information. Actual results may differ materially from expected results because of various risk factors and assumptions that are described in our fourth quarter earnings release, as well as our current Annual Information Form and both of those are available on SEDAR, EDGAR and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian GAAP. For a description of these financial measures, please see our fourth quarter earnings release. With that, I will hand over to Rick George for his comments.

Richard L. George

Good morning, everyone. It's a delight to be here this morning. And also delighted to give you our fourth quarter year-end results. Obviously, we're absolutely delighted. It's been a record year for Suncor and the results, I think, really reflect where this company is and the great shape it's in as we sit here today. I'm going to let Bart and Steve take you through the details shortly, but the headlines are obviously extremely positive. It was another strong quarter, with oil sands production at just over 325,000 barrels. The average CAPP by a new production record in December of some 345,000 barrels. Operating earnings were $1.4 billion in the quarter, cash flow of just over $2.6 billion. And if you take a look at the year in total, we had record both income and cash flow. That's both the quarter and the year for the full year. And internally, we actually thought we had a shot at the $10 billion cash flow number. We didn't quite get there but listen, it's all good and really has been a great year.

Also, what's really important to us and something that you'll see us talk more about in the future is how we are improving our return on capital deployed, and moving back into our target range after the merger, and of course, the rebasing of our whole asset base at the time of the merger. And so both that was expected and is happening, which we're quite proud with. Now that the Petro-Canada merger is well, well behind us in our rearview mirror, we've got this company really set up to drive shareholder value across the business cycle, and the future looks incredibly bright.

Before I pass it on to Steve, I'd like to remind you that a year ago at this time, we set 5 major goals for this organization. And I want to kind of walk you through kind of where we got to all those in 2011. First of all, operational excellence across our entire business. Our safety and environmental excellence are the foundation of operational excellence and we've made great progress. For example, the total injury across the company came down 21% year-over-year and high-risk incidents, which are kind of a leading indicator of safety issues, were reduced by a remarkable 71%. Likewise on the environmental probe measure, reduced incidences of regulatory noncompliance by over 17%. It's never a perfect world, but that kind of steady improvement in operations and as a result of an improved reliability across the company, allowing us to set a number of production and throughput records, and really leaves us in good shape on a go-forward basis. Operational excellence led by Steve has been a really important part of the cultural change here, and no doubt will be a big part of how we continue to do that in the future.

And to the second goal we had of the 5 goals was improving our performance of Firebag in our in-situ projects. So with the rampup of production at Firebag 3 and the very successful infill drilling program at Firebags 1 and 2, we've really turned the corner in that business. It's actually quite exciting. We exited the year with an in-situ production at both Firebag above 110,000 barrels a day, and it's expected to steadily grow from there. Actually, over the next couple -- 2 or 3 years, we expect in-situ to drive that profitable growth for Suncor, and you'll start to see that quarter-over-quarter and year-over-year as we go forward.

Read the rest of this transcript for free on seekingalpha.com