Tue, Mar. 24, 11:59 AM
- Canadian energy companies are trading at record valuations, signaling their shares have not yet caught up to the reality of lower crude oil prices, according to a Bloomberg analysis.
- Suncor Energy (NYSE:SU), Canadian Natural Resources (NYSE:CNQ) and other stocks in the S&P/TSX Energy Sector Index are priced at 65x expected earnings, an all-time high and more than double the average of U.S. peers.
- "The group, in general, is reflecting oil prices closer to US$60," says an analyst at Cormark Securities, adding that "the longer oil stays at these levels, there is downside risk.”
- SU, Canada’s largest oil producer, is changing hands at 58x projected earnings and Husky Energy (OTCQB:HUSKF) is at 85x, Bloomberg says.
Fri, Mar. 20, 5:20 PM
- Despite the steep drop in energy prices, most investment-grade E&P companies face little risk of default because they are well-managed, diversified and have plenty of cash, according to analyst Philip Adams of bond rating firm Gimme Credit.
- Companies Adams believes are in strong positions - with a starting cash position greater than his estimated free cash flow deficit - include Suncor (NYSE:SU), Chesapeake Energy (NYSE:CHK), ConocoPhillips (NYSE:COP), Hess (NYSE:HES) and Anadarko Petroleum (NYSE:APC).
- Adams is “throwing in the towel" on only one company: WPX Energy (NYSE:WPX).
- He expects energy prices will rise this year due to less drilling, disruptions in countries such as Libya and new regulations that curtail fracking, but warns that the glut will worsen if Iran rejoins the market.
Wed, Feb. 18, 7:45 PM
- Warren Buffett's decision to dump his entire $4B stake in Exxon Mobil (NYSE:XOM) is pointing investors toward more nimble producers such as Suncor (NYSE:SU) and Phillips 66 (NYSE:PSX) that can deliver higher returns during an oil price recovery.
- J.P. Morgan is reiterating its lukewarm outlook on XOM, "which has not yet fully pulled the trigger to just run at maintenance type levels," as well as ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX) and Cenovus Energy (NYSE:CVE), which the firm says are "getting quite close to their sustaining capex/free cash flow potential already."
- Not everyone is so down on the supermajors; BlackRock favors the group because of their strong balance sheets, high dividends and integrated business models, and Ed Yardeni notes that the stocks remain attractive for income-oriented accounts.
Tue, Feb. 17, 5:11 PM
- Warren Buffett added to his IBM bet amid the IT giant's Q4 selloff: Berkshire Hathaway (BRK.A, BRK.B) owned 77M IBM shares at the end of Q4, up from 70.5M at the end of Q3. (13F filing)
- Berkshire also upped its stake in Suncor (NYSE:SU) by nearly 4M shares to 22.4M as oil prices plunged. However, the firm dumped the 41M-share stake in Exxon Mobil (NYSE:XOM) it held at the end of Q3, and its 5M-share stake in ConocoPhillips (NYSE:COP). Its 449K-share stake in Express Scripts (NASDAQ:ESRX) was also liquidated.
- A new 8.4M-share stake was taken in Restaurant Brands (QSR - rose 8.7% today following earnings), and a 4.7M-share stake in 21st Century Fox (NASDAQ:FOXA). Existing stakes in GM, DirecTV, MasterCard, and Visa were moderately upped (among others), and stakes in Bank of New York and National Oilwell moderately lowered.
- Berkshire owned 17.1M Deere (NYSE:DE) shares at the end of Q4, up from 7.6M at the end of Q3 (the Q3 stake was kept confidential). Deere is up 1.6% AH.
- Overall, Buffett's firm created or expanded positions in 15 companies, and cut or liquidated positions in 5.
Thu, Feb. 5, 8:19 AM
- Suncor Energy (NYSE:SU) -1.3% premarket after reporting an 81% drop in Q4 earnings that also fell short of expectations, hurt by lower crude prices and reduced output at its oil sands mining operations due to unplanned maintenance.
- Profit also was hit by a C$302M forex loss on U.S. dollar-denominated debt due to a weakening of the Canadian currency.
- SU says Q4 oil and gas production totaled 557.6K boe, flat Y/Y, but oil sands output fell 6.2% to 384.2K bbl/day from 409.6K bbl/day due to maintenance issues affecting upgrader equipment.
- For FY 2014, SU's oil sands production volume was 421.9K bbl/day, up 7% from 392.5K in 2013, while total oil and gas production was 534.9K boe/day, down 4.9% from 562.4K in 2013; SU plans to produce up to 585K boe/day in 2015.
- SU maintains its latest spending plan for this year, which was revised lower last month at C$6.2B-C$6.8B; final 2014 capex came in C$300M below the planned budget of C$6.8B.
- SU says it will move forward with its planned Fort Hills oil sands project.
- Says it will maintains a quarterly dividend of C$0.28/share, but plans no share repurchases in light of the lower oil price environment.
Thu, Feb. 5, 6:11 AM
Thu, Feb. 5, 5:10 AM
Thu, Jan. 22, 11:31 AM
- Suncor (SU -0.3%) CFO Alister Cowan says the company has no plans to delay its biggest long-term projects, convinced that crude oil prices will bounce back to $90-$100/bbl within the next 3-4 years.
- SU is pledging to move ahead with its largest growth projects - the Fort Hills oil sands mine in Alberta and the Hebron oil field offshore Newfoundland - and sees its production rising to as much as 585K boe/day this year from 525K-570K boe/day in 2014.
- Cowan says SU has enough cash on its balance sheet to fund its stakes in both projects through their planned startups in 2017.
- The bullish outlook echoes recent comments by CEO Steve Williams, who also has said oil prices likely will climb back to last summer's levels.
Wed, Jan. 21, 7:11 PM
- Suncor Energy (NYSE:SU) expects Enbridge's (NYSE:ENB) Line 9B crude pipeline to start up towards the end of Q2 2015, according to Suncor CFO Alister Cowan.
- SU is a committed shipper on the pipeline, which will take crude from Sarnia, Ontario, to Montreal, Quebec.
- Line 9B originally was scheduled to start up late last year but ran into delays after Canada's National Energy Board requested data on valve placements on the revamped pipeline.
Thu, Jan. 15, 2:56 PM
- Suncor Energy's (SU -1.6%) decision to cut $1B from its 2015 capital spending program actually came in below what some analysts expected, but continued weak oil prices would force some tough choices - including whether to reduce spending on its Fort Hills and/or Hebron projects, or take on more leverage to keep them moving.
- Desjardins Capital's Justin Bouchard notes that SU’s revised budget is based on oil at $59 but if oil was $50, he estimates SU would generate $4.8B in cash flow, meaning it would be $3.5B short in meeting its $6.5B capex and another $1.6B in dividends.
- But most analysts believe SU's move was prudent, since the company still has room to take on debt to fund existing projects or buy up any cheap assets that pop up given the industry’s weakness.
Tue, Jan. 13, 5:19 PM
- Suncor Energy (NYSE:SU) says it is cutting $1B from its planned 2015 capital budget from earlier projections of $7.2B-$7.8B in capital spending, and make operating expense reductions of $600M-$800M to be phased in over two years, in response to plummeting crude oil prices.
- SU says it will cut 1,000 jobs, primarily through its contract workforce, in addition to reducing employee positions; it also will initiate an overall hiring freeze for roles that are not critical to operations and safety.
- Major projects under construction such as the $13.5B Fort Hills mine in Alberta and the Hebron field offshore Newfoundland will move ahead as planned, but projects that have not yet been given approval, such as the MacKay River 2 oil sands project and the White Rose offshore oil field extension, will be deferred.
- SU says 2015 production guidance for 540K-585K boe/day has not changed.
Tue, Jan. 13, 3:23 PM
- J.P. Morgan's Joseph Allman is “mildly bullish” on oil and gas E&P companies in 2015, as short-term nervousness about the oil market’s oversupply is outweighed by the benefits of low oil prices, declining service costs and a more balanced oil market.
- Allman’s favorite picks among big-cap names are EOG, APC and NBL, among mid-caps are XEC and PXD, plus PDCE in the small-cap space; his least favorite stocks are APA, AREX, GDP and JONE.
- Among majors, JPM analysts Phil Gresh and John Royall initiate SunCor (NYSE:SU) at Overweight, citing "top tier sustainable dividend coverage and leverage, with some underlying growth potential"; the pair also downgrade Cenovus (NYSE:CVE) to Neutral, tags ConocoPhillips with an Underweight rating, and are neutral on Exxon (NYSE:XOM) and Chevron (NYSE:CVX).
- Earlier: Valero Energy upgraded, Marathon Petroleum downgraded at J.P. Morgan
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, DIG, DUG, IYE, IEO, PXE, FENY, PXJ, RYE, FXN, DDG
Tue, Jan. 13, 12:28 PM
- Canadian Natural Resources' (CNQ +1.1%) pledge to keep spending on expanding output at its biggest oil sands mine regardless of the price of crude shows that Canadian oil sands operators are intent on maintaining their production thanks to huge upfront costs, long-term breakeven points and lengthy production lives, continuing to add to the global oil glut, WSJ reports.
- CNQ said yesterday that it still expects overall output to grow beyond 2014 levels, and that it will continue expanding production because it expects higher volume will cut operating expenses at its Horizon mine - currently C$37.13/bbl - by at least another C$10/bbl.
- Existing oil sands surface mines can make money at ~$30/bbl, and the most efficient underground oil sands projects run by Cenovus Energy (CVE -1%) can stay profitable at $35/bbl, according to the report.
- Suncor (SU +1.9%) CEO Steve Williams said in November that his company’s strong balance sheet would allow it to ride out the turbulence and stick with a bullish growth strategy.
Wed, Jan. 7, 5:35 PM
Mon, Jan. 5, 12:18 PM
- Energy stocks severely underperform the broader market, with the sector -4.2% vs. the S&P 500's -1.4%, as U.S. oil prices briefly slip below $50/bbl for the first time since April 2009; Nymex crude recently was -4.4% at $50.37, while Brent crude -5.9% at $53.08.
- Among the day's biggest losers: DNR -9%, RIG -7.6%, NBR -4.8%, CHK -5.9%, SDRL -9.1%, SD -12.3%, NOV -5.9%, PSX -6.2%, APA -5.9%, DVN -4.4%, EOG -6%, SU -5.2%, OXY -4.2%, APC -8.7%, PWE -9%, ECA -5.5%, MRO -5.3%.
- Global oil majors, which have been seen as less vulnerable to falling oil prices, are posting big losses: XOM -2.7%, COP -4.5%, CVX -3.8%, BP -5.8%, RDS.A -4.6%, TOT -6.5%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, FCG, DIG, PBW, BNO, GASL, DTO, DBO, DUG, IYE, XES, IEO, QCLN, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, PSCE, RYE, SZO, PUW, FXN, OLO, DDG, HECO, TWTI, OLEM
Fri, Jan. 2, 2:30 PM
- As many as 16 oil sands’ projects worth nearly $60B that have not yet received corporate sanctioning may be deferred if current oil prices persist, according to upstream research analysts at Wood Mackenzie.
- Key projects the firm expects to come on line by 2017 include the 165K bbl/day Fort Hill venture owned by Suncor (NYSE:SU), Total (NYSE:TOT) and Teck Resources (NYSE:TCK); Canadian Oil Sands' (OTCQX:COSWF) 100K bbl/day Mildred Lake replacement project; Imperial Oil’s (NYSEMKT:IMO) 110K bbl/day Kearl Phase 2; ConocoPhillips' (NYSE:COP) 109K bbl/day Surmont Phase 2; and Shell’s (RDS.A, RDS.B) 100K bbl/day Jackpine expansion.
- Projects expected to face delays include Cenovus Energy’s (NYSE:CVE) Christina Lake Phase H and its Narrows Lake Phase A; expansion work at Husky Energy's (OTCQB:HUSKF) Sunrise SAGD plant; and PetroChina’s (NYSE:PTR) MacKay River project.
- Most analysts expect a 10%-15% drop in capex for Canadian energy producers in 2015, with bigger cuts perhaps coming as the year unfolds to rival 2009's 20% capex decline.
SU vs. ETF Alternatives
Suncor Energy Inc is an integrated energy company. Its operations include developing petroleum resource basin, Canada's Athabasca oil sands. It explores for, acquires, develops, produces & markets crude oil & natural gas in Canada and internationally.
Other News & PR