Suncor Plans More Layoffs

Calgary-based Suncor Energy has plans to lay off an another 1,000 workers this year as it continues to digest the assets of Petro-Canada it gained in a $20-billion merger last fall, the Calgary Herald reported

The decision was announced at an investor’s conference in New York last Tuesday. The new round of layoffs would bring the total staff reductions made by the company to 2,000. The company also is planning $2 billion to $4 billion in asset sales, with about half to be completed by mid-2010.

“Where most of the synergies are coming from are reductions in workforce,” said John Rogers, Suncor vice-president of investor relations, while discussing corporate cost control during a presentation to the BMO Capital Markets Unconventional Resource Conference in New York.

Randy Ollenberger, a BMO research analyst who covers Suncor said the investment community was expecting further cuts, but there was surprise at the size of the layoffs. “They’re continuing to rationalize their operations and they’ve hinted at that before, that they weren’t done with staff reductions,” he said. “It’s fair to say it’s a little bit larger number than most people had been anticipating.”

Suncor spokesman Brad Bellows said while as many as 1,000 people could leave Suncor’s payroll this year, many will be rehired by the companies that are buying Suncor’s assets.

“I wouldn’t characterize these as layoffs,” he said. “What we are talking about primarily here are jobs that are associated with the divestments we planned over the course of 2010. What frequently happens in asset sales like this is the people go with the asset to the new owner. So, from John’s point of view, the Suncor workforce, those directly employed by Suncor on payroll, we are expecting to bring those numbers down.”

Bellows noted that 1,000 is a “preliminary” number and “at the high end.” Before the merger, Suncor and Petro-Canada had a combined 12,886 employees.

Suncor is selling Canadian assets producing 360 million cubic feet per day of natural gas, worth $2 billion to $3 billion, according to analysts. In addition, the company is looking at contracting out some services, such as supply chain management and information technology.

About 100 of the job reductions will result from the recently announced $494-million U.S. sale of Suncor’s U.S. Rockies gas assets to Houston-based Noble Energy, according to Bellows. Those employees work in the field and at the Denver office. Additional Suncor employees will get the boot when the company closes bids on its Trinidad and Tobago assets and wraps up the sale of non-core North Sea assets, he added. Suncor is also reducing the size of the former Petro-Canada international operations headquarters in London. It plans to grow oilsands production of 300,000 barrels per day to more than one million barrels per day by 2020, using the land assets it currently owns.

The company reportedly wants to reduce its total debt from $13 billion to $10 billion by the end of the year while it increases investments in the oilsands.

 

 

 

 

 

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