Yesterday, 3:45 PM
- Barclays maintains a Neutral rating on the group of 10 Americas-based oil majors, expecting the group to miss consensus expectations in the light of lower crude oil and gas prices, while it reduces the ratings and price targets of several of the companies.
- Although the refining companies have benefited from a modest widening of the key North American crude differentials and stronger product cracks, the firm says higher operating costs and lower than expected margin capture rate at several refiners due to unplanned outages have partially offset these benefits.
- Barclays downgrades Petrobras (PBR -3.7%) to Equal Weight from Overweight, as the company’s unsustainable levels of debt, cash flow outlook and concerns surrounding the corruption investigation cannot be ignored even as shares appear attractively valued; Imperial Oil (IMO -2.1%) also is cut to Equal Weight from Overweight.
- The firm maintains Suncor Energy (SU -0.5%) and Husky Energy (OTCPK:HUSKF -1.9%) at Overweight, saying the two stocks offer the best value over the next 12 months on a risk-adjusted basis, while maintaining Chevron (CVX -0.9%), Hess (HES -2.8%) and Murphy Oil (MUR -3.2%) with Equal weight ratings; it cuts price targets slightly for all five companies.
- Earlier: Exxon upgraded to Equal Weight at Barclays
Yesterday, 7:52 AM
- Exxon Mobil (NYSE:XOM) is upgraded to Equal Weight from Underweight with a $85 price target, raised from $80, at Barclays, citing the company's relative dividend yield.
- However, the firm says it still prefers ConocoPhillips (NYSE:COP) and Suncor (NYSE:SU) over XOM among oil majors.
- XOM +0.8% premarket.
Wed, Oct. 7, 5:56 PM
- Suncor Energy (NYSE:SU) criticizes the move by Canadian Oil Sands' (OTCQX:COSWF) board to adopt a poison pill defense two days after receiving SU's unsolicited takeover offer, predicting the effort to block a deal would fail based on the price premium offered to COSWF shareholders.
- Before SU’s offer, the COSWF stock price had fallen 41% YTD, a reflection of its struggle with lower oil prices, production problems at Syncrude and a surging debt load.
- On a conference call, SU CEO Steve Williams said his company made a few overtures to its target in the spring, but was rebuffed.
- SU says its offer will stay open until Dec. 4, although it could be withdrawn or the deadline could be extended.
Wed, Oct. 7, 10:26 AM
- Canadian Oil Sands (OTCQX:COSWF +1.4%) adopts a poison pill takeover defense calling for 120 days to consider offers, two days after Suncor Energy (SU +2.7%) launched a hostile bid for the company.
- The rights plan, which is in addition to one already in place, would be triggered upon the purchase of 20% or more of the company’s shares outstanding by any person.
- COSWF says the shareholder rights plan is meant to give its shareholders and board adequate time to evaluate SU’s C$4.3B ($3.3B) all-stock offer and any other unsolicited bid or strategic options.
- SU expected its bid to be rejected initially and would work to win over shareholders in several meetings, CEO Steve Williams told Bloomberg yesterday.
Mon, Oct. 5, 7:45 PM
- Suncor Energy's (NYSE:SU) C$4.3B hostile takeover bid for Canadian Oil Sands (OTCQX:COSWF) is "not a low-ball offer, it’s a no-ball offer,” according to billionaire Seymour Schulich, who owns 25M shares, or 5%, of the company and says he is not selling at the offer price.
- Schulich says SU's proposal is worth less than half the replacement value of the Syncrude Canada joint venture, of which COSWF owns 37%, and that Imperial Oil (NYSEMKT:IMO) recently built the Kearl oil sands project at a cost of $13B, which produces lower-grade oil than the Syncrude project.
- Analysts are split on whether the deal was a good one for COSWF shareholders; National Bank Financial's Kyle Preston calls the bid “a positive deal" and raises the possibility that IMO, along with parent company Exxon Mobil (NYSE:XOM), could launch a competing bid, but Barclays’ Paul Cheng, among others, does not believe IMO will make a bid.
- Earlier: Reuters: Canadian Oil Sands to reject Suncor bid, unlikely to engage
Mon, Oct. 5, 3:58 PM
- Canadian Oil Sands (OTCQX:COSWF +55%) is prepared to reject the hostile takeover bid made by Suncor Energy (SU -1.6%) and is unlikely to engage with SU on the basis of the current proposal, Reuters reports.
- Earlier this afternoon, COSWF said it was reviewing the offer and asked shareholders to wait until it has time to respond.
- SU earlier today shook up Canada's oil industry by forwarding an all-stock offer for COSWF, which owns a large stake in Canada's Syncrude project in Alberta.
- "Maybe Suncor comes back with a small sweetener, to maybe save some face and make it look a little bit better, but I don't know if they even need to do that," says 3Macs energy analyst Robert Mark, adding that "my guess is that this deal gets done at the current price."
Mon, Oct. 5, 7:28 AM
- Suncor Energy (NYSE:SU) says it has offered to acquire all outstanding shares of Canadian Oil Sands (OTCQX:COSWF) for ~C$4.3B ($3.3B), a 43% premium over Friday's closing price.
- Including the company’s estimated outstanding net debt of C$2.3B as of June 30, the total transaction value would be ~C$6.6B.
- The offer for CPSWF, which owns 37% of the Syncrude oil sands consortium, comes as the company struggles with a slumping stock price due partly to low crude prices.
- For SU, the deal would give it a growing presence in the Canadian oil sands after recently boosting its stake in the Fort Hills oil sands project in Alberta to just over 50% by buying a 10% stake from project partner Total.
- SU -1.6% premarket.
Thu, Oct. 1, 3:58 PM
- Canadian light synthetic crude and North Dakota Bakken crude for November delivery are rising sharply after Enbridge (ENB +0.4%) gained approval from regulators late yesterday to open its Line 9 crude pipeline.
- ENB has not said when the 300K bbl/day pipeline will start operating but traders say there is demand for light crude in anticipation of the line being filled in the next month or so.
- Light synthetic crude from the oil sands trades at ~$1/bbl above the WTI benchmark, up from $0.10/bbl below WTI yesterday, while Bakken crude delivered to Clearbrook, Minn., trades $0.70 below WTI, up $1.
- Suncor Energy (SU -0.6%), which owns a refinery in Quebec and is one of Line 9's biggest customers, and Valero Energy (VLO +3.6%), which also has a refinery in Quebec, are expected to benefit from being able to replace imported crude with cheaper inland barrels.
- The newly reversed Line 9 will ship mainly light inland crude from Sarnia, Ontario, to Montreal, after previously flowing in the opposite direction, taking imported crude to Ontario.
Tue, Sep. 22, 11:56 AM
- Teck Resources (TCK -9.2%) slumps to a 52-week low after Total's (TOT -2.8%) sale of its 10% stake in the Fort Hills oil sands project to Suncor (SU -1.3%) raises several questions for 20% stakeholder TCK.
- TCK's stake is valued at $620M, based on yesterday's deal, while TCK's net carrying value for the position at the end of June was $2.3B.
- But that does not mean a writedown is coming, TD Securities analyst Greg Barnes says, because TOT's sale was based on its desire to cut capital spending, not a valuation of the project.
- If TCK were to write down its Fort Hills stake, Barnes says the company's debt covenants would cause concern, causing its debt-to-capital ratio to tumble to 32% as of the end of June.
- Thus the odds of TCK selling its Fort Hills stake are "minimal," according to Barnes, while acknowledging the company's participation in the project will remain unpopular with investors in the current macro environment.
Mon, Sep. 21, 12:58 PM
- Teck Resources (TCK -5.8%) is reiterated with an Outperform rating at FBR following Suncor Energy's (SU +1.2%) announced agreement to purchase an additional 10% interest in the Fort Hills oil sands project from Total (TOT -1.3%) for C$310M; TCK has a 20% interest in the project.
- FBR analyst Lucas Pipes values TCK's share at C$1.945B, with today's transaction "right in-line with our valuation when considering Suncor’s incremental capital increase."
- Pipes believes TCK’s interest in Fort Hills greatly reduces its overall risk profile, and is encouraged by SU’s continued commitment to the project; he also likes TCK for its low-cost exposure to met coal and zinc, two commodities he sees as "better positioned in the current market environment."
Mon, Sep. 21, 10:09 AM
- A coalition of Canadian First Nations, environmentalists and companies including Suncor Energy (NYSE:SU) calls for industry and government to seek aboriginal consent when working with indigenous groups.
- The report from the Boreal Leadership Council says Canada's principle of free, prior and informed consent - the right of native people to offer or withhold consent to development that might impact their territories - is crucial to ensuring the country's vast natural resources can be extracted.
- Disputes with First Nations groups have contributed to delays on some major energy infrastructure projects, such as Enbridge's (NYSE:ENB) Northern Gateway pipeline to Canada's Pacific coast.
Mon, Sep. 21, 9:19 AM
- Suncor Energy (NYSE:SU) agrees to acquire an additional 10% working interest in the Fort Hills oil sands project in Alberta from Total (NYSE:TOT) for $310M, increasing its partnership share in the $15B project to 50.8%.
- As a result of the deal, SU's incremental capital increase to Fort Hills is estimated at just over $1B, of which ~$700M is remaining project spending.
- SU says project engineering is more than 90% complete and construction more than 40%, placing Fort Hills on track for first oil in Q4 2017.
- Following the purchase, TOT will own 29.2% of the project and Teck Resources (NYSE:TCK) will continue to own the remainder.
Wed, Sep. 16, 11:31 AM
- Canadian Natural Resources (CNQ +5.8%) is the latest Canadian oil sands producer looking to cut costs, saying it plans to cut operating costs by $390M more than currently budgeted this year.
- CNQ, which has operating costs of ~US$30/bbl, hopes to lower that figure to $25-$27 within the next few years, to shield itself from U.S. crude prices that have been stuck below $50 in recent months.
- Cenovus Energy (CVE +6.5%) also says it is looking to aggressively slash costs, not satisfied with total costs of $11-$14/bbl and targeting a $1-$2/bbl reduction.
- Suncor Energy (SU +4.2%) has seen its cash operating costs fall to $28.20/bbl in H1 of the year, compared to $33.80 last year.
Wed, Sep. 9, 7:32 PM
- Suncor Energy (NYSE:SU) President/CEO Steve Williams rails against ongoing pipeline delays, blasting the “stupidity” of pipeline politics in the U.S. and Canada; he also hints that a deal could be in the works to buy distressed assets.
- Williams again is critical of Canada regulators for delaying the in-service date of Enbridge’s Line 9 pipeline reversal between Ontario and Quebec; the CEO says Line 9 should begin service in the next 3-6 months, which would allow SU to ship its oil sands crude directly to its refinery in Montreal and boost the facility’s utilization rate.
- Williams also offers the most direct signal yet that SU is considering making an acquisition, saying “we have too much cash on our balance sheet," and that the oil price collapse could create opportunities in “fire sales” that did not exist six months ago.
Wed, Sep. 9, 2:58 PM
- Suncor Energy (SU -0.5%) says it expects greenhouse gas emissions from its operations to rise 28% to 26.2M metric tons in 2019, from 20.5M last year, according to the company's latest annual sustainability report.
- SU plans to expand its oil sands production during the period, with production at its C$13B ($9.8B) Fort Hills mine in Alberta expected to begin in 2017.
- SU's emissions in 2014 fell 0.3% to 20.5M tons, a level little changed since 2012.
Wed, Sep. 2, 7:07 PM
- Exxon Mobil (NYSE:XOM) could outperform the market during the next 12 months thanks to a dividend yield that’s nearly twice as high as the S&P 500′s, Barclays Paul Cheng says.
- XOM’s relative yield has jumped to a recent high of 180% from 127% and compared to the 25-year average of 138%, Cheng calculates, adding that when XOM's relative yield exceeds 170%, it outperformed the S&P 500 in the subsequent one-, three- and 12-month periods by respective averages of 1.8%, 3.9% and 6.8%.
- Although Cheng thinks the energy sector’s downside risk relative to the market may be limited from current levels and that XOM may have reached near-term lows, he maintain an Underweight rating on the stock and sees better risk-reward opportunities in Suncor Energy (NYSE:SU), Imperial Oil (NYSEMKT:IMO) and ConocoPhillips (NYSE:COP).
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.
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