Interim CEO says Suncor needs to stop diagnosing, implement workplace safety changes | Pro IQRA News

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Suncor Energy Inc.’s new interim CEO says the oil and gas giant is ready to stop studying the workplace safety problem and implement solutions instead.

Chris Smith, who took over the helm of the Canadian oil and gas producer following the departure of former CEO Mark Little, resigned last month a day after a worker died at Suncor’s Base Mine near Fort McMurray, Alta. – made the comments Friday during his first quarterly conference call with analysts since assuming his new role.

“We completed an independent safety assessment last year and we are clear on what we need to do to improve our safety performance,” Smith said. “We don’t need more diagnoses, but what we need to do is execute.”

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At least 12 workplace fatalities have occurred at Suncor fields since 2014, more than all of the company’s oil industry peers combined.

Earlier this spring, Suncor’s safety record — as well as a series of recent operational and production problems — caught the attention of US-based activist investor Elliot Investment Management, which publicly laid out its case for change at the Calgary-headquartered company.

Last month, Suncor announced an agreement with Elliott that included the appointment of three new independent directors to Suncor’s board, as well as a review of Suncor’s retail chain of Petro-Canada gas stations — which could result in a sale. that business.

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Despite his interim status, Smith said he doesn’t see himself as just a placeholder until a new permanent CEO is hired. He said he feels an urgency to pursue new measures, such as introducing new technology at oil sands sites, including collision warning and driver safety systems, which should help improve workplace safety.

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But Smith added that while technology is an important tool, addressing the company’s security culture on the front lines will be even more important.

“When I go back to what happened to us, I see how things are done on the field,” Smith said. “While technology is a huge enabler…it’s really about ensuring and engaging that work is done safely in the field every day.

“And that’s really, in my opinion, an area that needs focus and attention.”

Phil Skolnick, an analyst at Eight Capital in New York, said he recognizes that Suncor is long overdue for aggressive action on safety and operational performance.

“How many conference calls have we had now where we hear that safety is the number one priority?” Skolnik said in an interview. “And then there’s another unfortunate death or another operational failure.”

Skolnick added that he was “uncertain” about Smith and other Suncor executives on Friday’s analyst call.

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“They couldn’t pinpoint what the problem was. They talked about technology, but it’s cultural,” he said, adding that when a company has a workplace safety problem, it’s usually at the middle management and direct supervisory level.

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“I think there will be more headcount changes. Changes, reductions. I think there are probably some people who are not in the right place,” Skolnik said.

On Thursday, Suncor raised its capital spending budget for the year to $5.2 billion, from $4.7 billion to $4.9 billion. The company attributed the increase to inflationary pressures, as well as increased spending on repairs and maintenance to improve safety and reliability.

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Skolnick said it will take time and money to improve Suncor’s track record, which is part of the reason he recently downgraded his rating on the stock to “sell.”

“I think it’s early days to see the money go up to address this problem,” he said.

Suncor said it will provide more details on its plans to improve safety and operational performance at an investor day in the fall.

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The company’s board has formed a committee to conduct a global search to find its next CEO. He hopes to have someone in place by the end of this year or early 2023.

Suncor Inc. on Thursday reported second-quarter 2022 earnings of $3.99 billion, or $2.84 per common share, four and a half times the $868 million it earned in the same period in 2021.

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The Calgary-based oil producer and refiner said its adjusted earnings from operations were $5.35 billion in the quarter, up 33 percent, the highest in the company’s history, as the war in Ukraine sent crude prices skyrocketing.

Production from the company’s oil sands assets rose to 641,500 bpd in the second quarter from 615,700 bpd in the previous quarter, driven by increased production at the Syncrude and Fort Hills fields.

In the second quarter of 2022, the refinery’s crude oil throughput increased to 389.3 thousand barrels per day, and refinery utilization was 84 percent, compared with 325,300 barrels per day and 70 percent in the year-ago quarter.

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The company also said Thursday that it has reached an agreement pending regulatory approval to sell its Norwegian assets for total proceeds of approximately $410 million. The sale is expected to close in the fourth quarter of 2022.

Suncor is also looking to divest its wind and solar businesses, with the sale expected to close in early 2023. It has also started the sale process for its entire exploration and production portfolio in the UK.

Suncor shares were down 50 cents, or 1.27 per cent, at $38.96 on the Toronto Stock Exchange by mid-day trading on Friday.

© 2022 The Canadian Press