Suncor Energy Inc. reports that it has settled business interruption insurance claims related to a January 2005 fire at the company’s oil sands facilities.
The total amount of the BI settlement is approximately $980 million (US$830) of which approximately $385 million (US$330 million) will be recorded in income when first quarter results are released on May 4, 2006. Approximately $594 million (US$500 million) in BI proceeds were recorded in 2005. BI proceeds are before tax and Alberta Crown royalties.
“The settlement of our business interruption claims is a major milestone in the fire recovery,” said Ken Alley, senior vice president and chief financial officer. “Suncor has worked hard from an operational and financial perspective to put the fire behind us. We committed to shareholders to return to full production by September 2005, to stay the course on our expansion plans, and to work diligently with insurers to settle our claim. With those three commitments largely met, we can now focus on our growth plans.”
Suncor and its insurers are still working to settle a smaller claim related to property loss as a result of the fire. In 2005, the company received $115 million (US$95 million) in property loss insurance proceeds. Total property loss claims are expected to be less than the full policy limits of approximately $290 million (US$250 million).
Suncor expects combined PL and BI insurance proceeds for 2005 and 2006 to total approximately $1.2 billion (US$1.0 billion), which significantly mitigates the financial impact of the fire.
Source: Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta.
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