Suncor says higher oil prices mean energy M&A window is closing

By Nia Williams

CALGARY, Alberta (Reuters) - Suncor Energy Inc, Canada's largest oil and gas producer, said on Thursday that higher oil prices mean the window for mergers and acquisitions is closing and the company is unlikely to do major deals in the near future.

Calgary-based Suncor has made a number of acquisitions since global crude prices started to slide in 2014, the most notable two stakes in the 350,000 barrel-per-day Syncrude oil sands project in northern Alberta that made Suncor the majority owner.

In June the company announced a C$2.5 billion share sale that many in the industry took as a sign Suncor was raising money for further acquisitions.

 

However, Chief Executive Steve Williams, speaking on the company's third-quarter earnings call, said the primary purpose of issuance was to fund its buyout of Murphy Oil's stake in Syncrude, and the probability of major M&A deals had significantly decreased since that time.

"I see the window of opportunity shutting," Williams said. "I see the speculation about us building up a war chest for further acquisitions as being overcooked."

U.S. benchmark crude prices were last trading at $49.79 a barrel, having recovered from multi-year lows around $26 a barrel in February.

Despite recent media speculation, Williams said, Suncor had never considered a transformational deal in the North Sea, was not marketing its retail assets and was not currently involved in any sales process in a refinery.

Over the rest of the decade the company is not likely to approve any major projects and will instead concentrate on small projects and returning money to shareholders, Williams said.

Alister Cowan, Suncor's chief financial officer, said the company's capital expenditure budget in 2017 was expected to be around C$5 billion ($3.7 billion), below the C$5.8 billion to C$6.0 billion the company anticipates spending this year.

Suncor reported stronger-than-expected third quarter earnings on Wednesday thanks to strong upstream production, lower costs and record crude throughput at its refineries.

($1 = 1.3383 Canadian dollars)

(Editing by Steve Orlofsky)