The Case For Investing In Suncor Energy
Elliott Gue • 12 Comments
Elliott Gue • 12 Comments
Mon, May 9, 3:19 PM
- Crude oil prices erased all of Friday's gains and more, as June futures ended the pit session 2.7% lower to $43.55/barrel even as the massive wildfires in the heart of Canada's oil sands continue to spread, albeit more slowly.
- But positioning in the oil market is very stretched, and analysts say speculators already hold the largest number of wagers for a rise in WTI futures since last summer and near-record high bullish bets on Brent, so the scope for further gains was limited without more clarity on the extent of damage to oil facilities or supply outages.
- The sacking of Ali al-Naimi as head of Saudi Arabia’s oil ministry also may be a reason why oil prices failed to maintain early gains, as successor Khalid al-Falih, the former head of Aramco, is expected to follow the strategy of protecting the country’s market share.
- Yesterday, Cnooc’s Nexen (NYSE:CEO) operations to the south of Fort McMurray reportedly suffered minor damage, while Suncor (NYSE:SU) says its facilities have not been damaged and is beginning to implement a plan for a return to operations.
- Other relevant tickers: RDS.A, RDS.B, XOM, IMO, COP, OTCPK:HUSKF, OTCPK:ATHOF, CNQ, CVE, OTCPK:MEGEF, ENB, OTCPK:IPPLF, OTC:KEYUF, TRP, PSX, STO
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM
- Now read Fort McMurray situation getting better - oil markets daily
Sat, May 7, 12:32 AM
- The devastating wildfires in and around Alberta's Fort McMurray may double in size to 2K sq. km over the weekend and burn for weeks, officials say.
- Bank of Montreal has cut its Q2 Canadian GDP growth estimate to zero from 1.5%, citing “severe disruptions to oil production” due to the fires, and said the estimate was just a placeholder dependent on more information on the scope of the disaster.
- Royal Bank of Canada estimates that as much as 1M bbls/day of production has been shut, or ~40% of oil sands output, as companies including Suncor (NYSE:SU), Shell (RDS.A, RDS.B), Exxon (NYSE:XOM) subsidiary Imperial Oil (NYSEMKT:IMO), ConocoPhillips (NYSE:COP), Husky Energy (OTCPK:HUSKF) and Athabasca Oil (OTCPK:ATHOF) cut production.
- The fire is said to be “at the gates” of Nexen’s (NYSE:CEO) Long Lake project, but a few companies including Canadian Natural Resources (NYSE:CNQ), Cenovus (NYSE:CVE) and MEG Energy (OTCPK:MEGEF) say their production has been unaffected so far.
- Among pipeline companies, no assets have incurred significant damage, but Enbridge (NYSE:ENB) shut all pipelines in and out of Cheecham Terminal, Inter Pipeline (OTCPK:IPPLF) shut parts of its system in the province, and Keyera's (OTC:KEYUF) South Cheecham rail and truck terminal is shut down; TransCanada (NYSE:TRP) says it does not expect the fires to affect deliveries of natural gas.
- SU, Phillips 66 (NYSE:PSX) and Statoil (NYSE:STO) have declared force majeure on supplies from the region.
Thu, May 5, 6:38 PM
- Alberta's raging wildfire has caused Canadian crude oil output to drop by at least 475K bbl/day, or nearly 20% of Canada's 2.5M barrels in total oil sands production - much of it typically sent to U.S. refineries.
- While no oil operations have sustained damage from the fires, many operators have cut output amid evacuations of non-essential staff, pipeline outages and the risk from encroaching fire.
- The amount of daily oil production threatened by the Canadian fires would be enough to nearly wipe out the world's oversupply, says Tim Pickering of Auspice Capital Advisors, calling the blaze "the most important issue in oil today."
- The Bank of Nova Scotia says the destruction of property and loss of production could mean "very little" GDP growth during Q2 for the overall Canadian economy and that the damage to infrastructure will slow the recovery in the country's oil patch.
- In the latest of a series of plant closures, ConocoPhillips (NYSE:COP) today shut down its Surmont oil sands site that produces 50K bbl/day and evacuated all staff, and Suncor (NYSE:SU) cut output at its 350K bbl/day Syncrude mining operation and its 203K bbl/day Firebag well site without specifying how much.
- Other relevant tickers include: RDS.A, RDS.B, IMO, XOM, CNQ, ENB, PBA, CEO, OTCPK:HUSKF, OTCPK:IPPLF.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Wed, May 4, 11:18 PM
- The huge wildfire (I, II) that already has forced more than 80K people to flee their homes in and around Fort McMurray and disrupted oil sands operations in Alberta reportedly is set to expand.
- Wildfire officials say the blaze probably will grow to 100 sq. km (40 sq. miles) from ~80 now, and that although lower temperatures may aid firefighters tomorrow, the fire is expected to last at least until the weekend.
- WTI crude oil prices have jumped past $45/bbl overnight as the fire disrupts oil sands production.
- Alberta oil sands producers are not yet in the fire's path but have cut or halted operations because of evacuations: Royal Dutch Shell’s (RDS.A, RDS.B) Canadian unit shut its Albian Sands mining operations which produce ~255K bbl/day, Suncor (NYSE:SU) cut production at all of its oil sands sites, Inter Pipeline (OTCPK:IPPLF) partially closed its 540K bbl/day Polaris pipeline system and its 346K bbl/day Corridor system, Husky Energy (OTCPK:HUSKF) cut output at its Sunrise oil sands plant by two-thirds to 10K bbl/day, Exxon’s (NYSE:XOM) Imperial Oil (NYSEMKT:IMO) Canadian unit says production has not yet been affected, and operations by Enbridge (NYSE:ENB), Pembina Pipeline (NYSE:PBA) and Canadian Natural Resources (NYSE:CNQ) apparently have not been affected.
- The inferno is shaping up to be worse than the Slave Lake fire of 2011, one of the most costly natural disasters in Canada’s history, and is a severe blow to an area already devastated by job losses stemming from low energy prices.
Wed, May 4, 10:18 AM
- Royal Dutch Shell (RDS.A, RDS.B) says it has shut down its Albian Sands mining operations in Alberta following the huge wildfire that forced evacuation of tens of thousands people from Fort McMurray and the surrounding area.
- "While our operations are currently far from the fires, we have shut down production at our Shell Albian Sands mining operations so we can focus on getting families out of the region,” the company says.
- Suncor Energy (NYSE:SU) earlier said it was reducing output at its facilities in the region to allow workers and their families to get to safety; SU says its plant is ~16 miles north of Fort McMurray and is in a safe condition.
- Nexen, the Cnooc (NYSE:CEO) subsidiary whose Long Lake oil sands project is close to Fort McMurray, says it is working on a modified staffing plan to manage the situation.
Wed, May 4, 7:30 AM
- More than 60K residents of the Canadian oil city of Fort McMurray evacuated overnight as authorities battled an out-of-control wildfire.
- Authorities say the worst of the fire is not over, as the dangerous conditions that sparked the blaze - high temperatures, low humidity and high winds - are expected to continue today.
- Suncor Energy (NYSE:SU) said late last night that it was “reducing production” at all of its oil sands operations in the region; the company, which produces 453K bbl/day from its oil sands sites in northern Alberta, did not quantify the volume or timeline for the reduced output.
- Other major oil sands producers, such as Exxon Mobil (NYSE:XOM) subsidiary Imperial Oil (NYSEMKT:IMO), Royal Dutch Shell (RDS.A, RDS.B) and Canadian Natural Resources (NYSE:CNQ), said their operations have not been affected but are monitoring events.
Thu, Apr. 28, 12:57 PM
- Suncor Energy (SU +3.8%) CEO Steve Williams says the company is not likely to start any new major growth projects given the current economic environment.
- SU is working towards finishing two multibillion-dollar growth projects in the oil sands, but once those are complete, the company will be “taking a breath around growth projects," the CEO says.
- Williams says SU will continue to focus on lowering costs as it ramps up daily production from 691K boe/day during Q1, which was 602K boe/day in the year-ago quarter, to ~800K by 2019; the Q1 gain stemmed largely from the increased stake in Syncrude and higher oil sands output.
- SU raises its FY 2016 production guidance to 620K-665K boe/day from its previous forecast of 525K-565K boe/day (Q1 earnings report).
- Williams says SU is considering selling off $1B-$1.5B in assets during the next year or so, with the sale of its retail gas business a possibility.
- SU also is keeping its spending plans for the year unchanged at C$6B-C$6.5B.
- Now read Suncor takes extra 5% stake in Syncrude for $937M
Wed, Apr. 27, 11:44 PM
Wed, Apr. 27, 7:56 PM
- Suncor Energy (SU -0.5%) says it's agreed to take a bigger interest in the Syncrude joint venture, buying another 5% for about $937M.
- The move brings Suncor's share of Syncrude to 53.74% from the previous 48.74%. The company says it can now profitably grow production by more than 40% Y/Y, heading toward its target of 800,000 bpd even sooner, in 2019.
- It's a "strategic fit for our portfolio," says CEO Steve Williams, "consistent with our focus on capital and operational discipline and builds on our successful acquisition of Canadian Oil Sands, increasing our production capacity by 17,500 barrels per day of high-quality light sweet synthetic crude."
- Two weeks ago, Suncor said it was open to raising its Syncrude stake even after a $6.6B acquisition of Canadian Oil Sands.
- Now read Suncor Energy - A Safe Way To Ride The Rally In Oil »
Wed, Apr. 27, 6:08 PM
Thu, Apr. 21, 6:17 PM
- Alberta's provincial government releases technical formulas for its new oil and gas royalty framework, a move welcomed by the energy industry as providing clarity to potential investors and enabling producers to move forward with drilling and investment plans.
- Analysts say the technical formulas are a net positive for producers by basing well cost allowances on the 2012-15 period when costs were higher, but oil prices - and whether they recover or continue to languish near $40/bbl - would have a much greater impact on investment decisions in Alberta than the royalty structure.
- Alberta's new NDP government unveiled its new royalty framework in January which left rates largely unchanged on oil sands projects and existing wells.
- Relevant tickers: SU, CVE, OTCPK:HUSKF, RDS.A, RDS.B, IMO, XOM, CNQ, ENB, TRP, PDS, OTCPK:MEGEF
- Now read Which Canadian mid-cap pipelines pay out safe dividends?
Mon, Apr. 18, 10:57 AM
- Suncor Energy (SU -0.3%) says it will disclose more details on its plans to compete in a lower-carbon future and on its lobbying activities.
- SU also says it will provide more information related to its policy on lobbying and political donations, and list trade associations it pays to lobby the government.
- Exxon and some other oil and gas companies have been pressured by regulators and shareholders to disclose more details on their climate change strategies.
- Now read Oil sands megaprojects are finished, major Canada developers say
Wed, Apr. 13, 12:57 PM
- The era of megaprojects in Canada’s oil sands likely is over as crude is seen staying lower for longer, according to executives from Suncor Energy (SU +0.2%), Cenovus Energy (CVE -1.1%) and Meg Energy (OTCPK:MEGEF).
- “We’re more likely into smaller, more modular-type projects.” says SU CFO Alister Cowen, adding that the C$13B (US$10B) Fort Hills project being pursued by SU and Teck Resources (TCK -0.1%), probably will be the last oil sands mine built for many years.
- Producers in Canada’s oil sands, among the most expensive reserves in the world to develop, are depending on technology and process improvements to bring down costs; CVE CFO Ivor Ruste and Meg CFO Eric Toews say their companies are looking at solvents to reduce the amount of steam used to get bitumen from their wells, and Cowen says SU is experimenting with radio waves to potentially replace steam entirely.
- Now read Suncor says still looking for deals after purchasing Canadian Oil Sands
Wed, Apr. 13, 10:21 AM
- Suncor Energy (SU +0.2%) is still open for more deals after its $6.6B acquisition of Canadian Oil Sands, and adding to its stakes in Syncrude and the Fort Hills project is a possibility, CFO Alister Cowan says.
- SU expects to ramp up production to 800K bbl/day by 2020 from 578K bbl/day in 2015, as the Fort Hills development and the Hebron project off the east coast come on stream.
- "That’s a growth of 6% per annum, per share,” Cowan says. “Beyond that, we have ~400K bbl/day of potential production from sweet spots in our SAGD reservoirs. We have deferred these developments for the next two to three years as we don’t want to commit to any big projects beyond Fort Hills in this environment.”
- Now read Suncor rated Neutral at J.P. Morgan as it integrates Canadian Oil Sands
Fri, Apr. 8, 5:29 PM
- Barclays expects the major oil companies' Q1 earnings results will mostly come in below expectations, with no pleasant surprises ahead.
- Since Barclays believes oil prices will be range-bound for the next 3-6 months between $30-$45, it sees limited near-term upside and anticipates better entry points over the next 6-9 months for names aside from its favorites, which remain ConocoPhillips (NYSE:COP) and Suncor (NYSE:SU).
- Even so, the firm raises its target prices for Chevron (NYSE:CVX) to $97 from $89, Exxon Mobil (NYSE:XOM) to $85 from $80, and Hess (NYSE:HES) to $54 from $48.
- Now read Suncor Energy: A safe way to ride the rally in oil
Thu, Apr. 7, 5:46 PM
- Spending in Canada’s oil and natural gas sector has fallen by a record C$50B (US$38B) over the past two years, a 62% drop that marks the biggest two-year decline since 1947 when data was first collected, according to the Canadian Association of Petroleum Producers.
- The group predicts total capital investment in the oil and natural gas sector will fall to C$31B in 2016, down from C$48B in 2015 and a record C$81B in 2014.
- CAPP also forecasts that the total number of wells drilled in Canada’s western provinces, home to the world's third largest oil reserves, will fall to 3,500 in 2016 from 10,400 drilled in 2014 and that capital spending there will drop to $17B this year, about half of 2014 levels.
- Relevant tickers: SU, CVE, IMO, XOM, RDS.A, RDS.B, CNQ, ENB, TRP, PDS, OTCPK:HUSKF, OTCQX:COSWF, OTCPK:MEGEF
- Now read Canada's biggest oil producers sitting on near-record cash pile
Suncor Energy, Inc. is an integrated energy company, which develops petroleum resource basins. It explores, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. Suncor Energy, through its Petro-Canada brand, provides oil sands development & upgrading,... More
Sector: Basic Materials
Industry: Independent Oil & Gas
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