Oil company earnings climb, but spending curtailed

By Matt Daily

NEW YORK (Reuters) - Oil companies PetroChina, Suncor Energy and Hess recorded higher quarterly earnings on Wednesday, but Hess joined the growing list of producers to cut planned spending in the wake of the downturn in oil prices.

Beaten-down shares in nearly all the oil and natural gas producers climbed as crude oil prices showed a rare jump after hitting multi-month lows in the United States earlier this week.

The sagging global economy and sell-off that has more than halved oil prices since they hit records above $147 a barrel in early July have put some new expensive oil and gas production projects in doubt.

"Based upon this uncertain economic environment, we will make an appropriate reduction in our 2009 capital and exploratory expenditures to maintain our financial strength," Hess (HES.N) Chief Executive Officer John Hess told analysts.

Suncor Energy (SU.TO), Canada's second-biggest oil sands producer, said last week it had delayed the completion of the C$20.6 billion (10.23 billion pounds) Voyager expansion project by a year because of declining oil prices.

Alberta's oil sands are one of the largest production growth areas in the world, but high extraction and processing costs have put some projects in doubt as oil prices have eased.

Suncor CEO Rick George insisted his company could still generate a strong return from its base operations if crude fell to $60 a barrel, without the exploration risk or production declines associated with conventional oil.

In addition, the expansion, which would take four years to complete, is designed to produce a 15 percent return on capital with crude at $80, George said.