In short, the strategy of the new Suncor will look a lot like the old Suncor, according to CEO Rick George.
George did offer a few more tidbits during Suncor's second-quarter conference call -- and its last as a standalone company before the merger closes Aug. 1 -- about what to expect including how it views Petro-Canada's North Sea and East Coast assets; and which projects will move forward.
"You're going to see us very focused on oil," said George, who will maintain the CEO position with the merged company. From there, Suncor will give priority to those projects with the lowest risk and the highest return on capital and near-term cash-flow, he said.
The merged Suncor will have the largest oilsands resource position, and considering the large amounts of capital already invested in various oilsands projects, it's safe to assume it will be a priority.
Of course, that doesn't mean every oilsands project will be given the thumbs up. Take the company's Voyager upgrader project, which is designed to process the heavy oilsands bitumen it extracts and later sells it to U.S. refiners. From there refiners can further refine the heavy oil into gasoline.
Construction on Voyager was stopped in January and based on the few hints George provided during Wednesday's conference call, it doesn't appear it will start back up anytime soon.
Right now there is increasing demand for heavy oil from U.S. refiners. This places Suncor in a nice position if it can produce more bitumen than it's able to upgrade and passes that job and the cost onto refiners.
"We want to be long on bitumen," George said during the conference call. "There's no need to build the upgrader if you don't have the bitumen to fill it. Given the environment we're in and given the demand out there for heavy oil, make sure you have bitumen long, get volumes up and then take a look at finishing the upgrader."Suncor is open to taking on a partner for the upgrader project for up to half of its 200,000 barrels a day processing ability, he said, adding the first priority is to increase production.
Petro-Canada's assets in the North Sea and on the Canadian east coast are "key long-term keepers" for Suncor, George said.
Suncor may continue to invest in those assets if the risk and return on capital numbers are adequate, he said.
Natural gas may be another story. Suncor could look at divestments in natural gas, if that's what is required to get the company to a low cost structure, said George without providing further detail.
Or the company may simply not invest in natural gas at the same rate Suncor and Petro-Canada did as separate companies, he said.
George did not discuss potential layoffs once the companies consolidate. He said those numbers will be revealed in late August or September.
Highlights of the merger:
- Canada's Competition Bureau -- which approved the merger Tuesday -- stipulated the combined company must sell 104 gas stations in Ontario in an effort to maintain competition within that particular market.
- Under the agreement, Suncor must sell 1.1 billion liters of wholesale terminal storage and distribution capacity annually to competitors for 10 years. And the company has to supply 98 million liters a year to independent gasoline marketers for the same amount of time.
- Suncor shareholders approved the C$15 billion all-stock deal to takeover Petro-Canada in June.