http://www.suncor.com/en/newsroom/2418.aspx?id=1092394
Summary
Suncor Energy Inc. is assessing the damages of the fire that happened at one of the company’s two oil sands upgraders in Alberta. The fire occurred on December 15 at around 10 a.m. and was extinguished within one hour. Early reports show that no structural damage, environmental impacts, and injuries occurred because of the fire, and repairs to the oil sands upgraders will take between 2-4 weeks. During the repair week, Suncor’s production is anticipated to be reduced by 120,000 to 150,000 barrels of crude oil per day.
Connection
Suncor Energy Inc. does their financial statements monthly so that their stakeholders can get a sense of the company’s performance and financial status. Since the fire occurred on December 15 and the repairs are said to be finished within 2-4 weeks, we can assume that the fiscal period of December 2009 will end before the oil sands upgraders will be fully restored. This will affect the income statement for the fiscal period. Repairs expense for this particular event will not fall under the Normal Income from Continuing Operations category on the Multi-step income statement because fires do not occur frequently. Instead, it will be recorded under Gains or Losses from Unusual or Infrequent Sources as fires are not expected to occur.
Reflection
Stakeholders are a person, group, or organization that has stake in an organization because it can affect or be affected by the organization’s actions, objectives, and policies. That includes creditors, consumers, all the employees of the company, owners, shareholders, suppliers, unions, government, etc. Suncor Energy Inc. is committed to producing monthly statements to provide valuable information to their stakeholders, and that is a very strong decision being made. By providing this information, it enables everyone to see and analyze the performance of the company, and to predict future decisions. For employees who just want to work and make a living, having this information can also encourage employee loyalty.
Also, closing books after one month allows financial information to be up-to-date. Investors, government, banks, and all sorts of financial data users always look for the most up-to-date information, and Suncor will be able to provide it efficiently every time as it is already part of their monthly routine.
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It is unfortunate that Suncor Energy suffered from an unexpected fire. I read the article and it provided no information about how the fire was triggered. The company obviously did not want to release additional details to the public about this event. Although there were no injuries, Suncor should reassess the safety of their locations to ensure their employees face no harm in the future. As mentioned in the article summary, Suncor will be facing a reduction of 120,000 to 150,000 barrels of oil per day but I do not think this will greatly hinder the company’s performance as they have a great amount of control over the energy market in Canada. This will not be the last of Suncor’s unfortunate events because just this month, Sunoco, another energy company, sued them for two million dollars. Suncor was planning to shut down and take over Sunoco’s retail locations without legal permission. Could the fire damages at one of their oil sand locations force Suncor to make such a risky maneuver?
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