Suncor says it's still hunting for cost savings after wave of job cuts

Suncor Energy Inc. says it has wrapped 1,500 job cuts two months ahead of schedule, but it will continue to look for areas to trim as part of a wider efficiency push.

Chief executive Rich Kruger said on an earnings conference call Thursday that the cuts are expected to save $450 million a year, or about $50 million more than what they expected when the cuts were announced in June.

The extra savings came in part from additional reductions of contingent workers and contractors, while the overall cuts, combined with leadership and structural changes, put the company in a more competitive position, said Kruger.

"We are a simpler, more focused organization, positioned to compete and win."

The company is also pushing ahead with plans for fewer, bigger trucks; buying and leasing a combined 55 ultra-class 400-ton trucks that will displace nearly twice as many smaller third-party vehicles, said Kruger.

The trucks will be driverless-ready as part of a wider push into the technology.

Suncor will be ramping up the number of trucks running autonomously at its Base Plant operation from 31 as of the second quarter this year to 91 by the end of next year.

"If our data is correct, this will be the largest single mine fleet of autonomous ultra class trucks globally," said Kruger.

The company is not done finding efficiencies in its contractor base, but further improvements will be harder as much of the waste has already been taken out of the system, said Peter Zebedee, executive vice-president of oilsands.

"Now we're looking at more sophisticated examples of integrated planning and scheduling, and maintenance, scheduling activity to drive further efficiencies. So do I think there's more? Yes, absolutely. But this stuff is a bit more difficult to go after."

Kruger stepped into the chief executive role in April with a commitment to cost-cutting and simplifying Suncor's operations.

He drew criticism earlier this year for saying the company had been too focused on the longer-term energy transition and the shift toward clean and low-carbon energy sources.

Kruger made no mention of climate change on Thursday's call, though Kris Smith, chief financial officer, reiterated the company's commitment to its 2030 emission reduction goals that it plans to achieve though initiatives such as a cogeneration project and carbon capture plans.

On Thursday's call, Kruger instead kept his focus on savings, talking about how much company efforts would reduce its break-even price on a barrel of oil. The job cuts should work out to about $1.20 US per barrel, while the more efficient trucks should shave about $1 US per barrel, he said.

"We're looking at it very, very closely in terms of, you know, bang for the buck."

He said that along with operational changes, the company would also look at the corporate side as it works towarda $5 US per barrel initial savings target.

The ongoing savings push comes as the company reported on Wednesday evening a profit of $1.54 billion in the third quarter of 2023, compared to a net loss of $609 million in the prior year's quarter.

On an adjusted basis, Suncor earned $1.98 billion, or $1.52 per common share, in the third quarter of 2023, compared to $2.57 billion, or $1.88 per common share, in the third quarter of 2022.

The company attributed the decrease in adjusted earnings to lower crude prices year-over-year and a weaker business environment, as well as increased royalties and decreased sales volumes due to international asset divestments.

Suncor has also been pushing to improve its safety record. At least 12 workers have died at the company's oilsands operations in northern Alberta since 2014, and former CEO Mark Little resigned just one day after a fatality in July last year.

Kruger said the company's track record is improving, including zero life-threatening or life-altering injuries so far this year, while its refining operations had no recordable injuries in the third quarter, the first injury-free quarter in the company's history.