Suncor CEO predicts slow recovery for sector from pandemic demand crunch

The CEO of oilsands and refining giant Suncor Energy Inc. says he sees signs of a slight rise in consumer demand for fuel, but he doesn't expect a full recovery in the Canadian energy sector until at least 2022.

The Calgary-based company surprised analysts by cutting its quarterly dividend by 55 per cent after 18 years of consecutive annual dividend increases as it reported a first-quarter net loss of $3.525 billion on Tuesday.

CEO Mark Little said on a conference call Wednesday the cut was necessary as the company resets its target of breaking even at a West Texas Intermediate price of $35 US per barrel, down from the previous mark of $45, because of the impact of the COVID-19 pandemic.

He said the company which sells fuel across Canada through its Petro-Canada network has seen a reduction in demand of 50 per cent for gasoline, 70 per cent for jet fuel and 20 per cent for diesel.

As oil storage tanks fill to near capacity, any rebound in upstream oil production must be led by recovery in the downstream and that means it depends on when governments reopen the economy and consumers feel confident about travelling again, Little said.

Chief financial officer Alister Cowan said on the call he expects that Suncor's gross debt of about $20 billion will grow by $2 billion or $3 billion this year, but the company will break even on a cash flow basis in 2021.