Suncor settles business interruption claims for CD$980 million

Suncor Energy Inc. has settled business interruption insurance claims related to a January 2005 fire at the company’s oil sands facilities for a total amount of CD$980 million (US$830), the company has announced in a press release.
Of this total, approximately CD$385 million (US$330 million) will be recorded in income when first quarter results are released on May 4, 2006. Approximately CD$594 million (US$500 million) in business interruption proceeds had been recorded in 2005.
The proceeds are before tax and Alberta Crown royalties.
“The settlement of our business interruption claims is a major milestone in the fire recovery,” Ken Alley, Suncor’s senior vice president and CFO, said in the release. “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 CD$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 CD$290 million (US$250 million).
Suncor expects combined property loss and business interruption insurance proceeds for 2005 and 2006 to total approximately CD$1.2 billion (US$1.0 billion).
This total “significantly mitigates the financial impact of the fire,” Suncor says.