Sat, May 23, 10:50 AM
- Royal Dutch Shell (RDS.A, RDS.B) CEO Ben van Beurden endorses the view that the world’s fossil fuel reserves cannot be burned unless a way is found to capture their carbon emissions, but maintains that hydrocarbons will be needed for years to come.
- Justifying Shell's decision to drill exploration wells in the Alaskan Arctic, the CEO says: "The decline in existing production is always going to be faster than the decline that the most successful [low carbon] policies can create. There is always going to be a need for investment."
- But van Beurden criticizes calls for pension funds and foundations to divest from energy companies, in particular The Guardian's "Keep it in the Ground" campaign, and considers it a simplistic solution.
- Shell confirms it will attend an upcoming meeting with major European energy companies including BP, Total (NYSE:TOT), Statoil (NYSE:STO) and Eni (NYSE:E) to form a unified strategy on dealing with climate change issues ahead of U.N. talks that could force billions of dollars of oil, coal and gas to remain in the ground.
- In Canada, Suncor (NYSE:SU) CEO Steve Williams says his company is willing to pay a carbon tax but thinks it should apply to both companies and consumers; "If you look at carbon production in a modern economy, about 80% of it is at the point of consumption or the point of use," he says.
Fri, May 15, 2:45 PM
- Canada says it is committing to cut greenhouse gas emissions by 30% below 2005 levels by 2030, partly by introducing new regulations on its oil and gas sector.
- Environment Minister Aglukkaq says Canada will cut its emissions to 515 metric megatons by 2030 from 726 metric megatons in 2013; earlier this week, Ontario - Canada’s most populous province - set its own 2030 target of 112 megatons, which would represent a 46% cut from 2005 levels.
- To meet the new target, Canada will develop regulations to cut methane emissions from the oil and gas sector, such as industrial leaks and gas flares, as well as new rules to control emissions from the electricity and chemical sectors, including from nitrogen fertilizers.
- Relevant tickers: SU, ENB, TRP, IMO, CNQ, CVE, TCK, TAC, OTCQB:HUSKF, OTCQX:COSWF
Thu, May 7, 6:25 PM
- Canadian oil producers plunged for a second straight day as "all bets are off" after election results in Alberta raised concerns over the possibility of higher taxes for the companies.
- Among today's losers: SU -2.6%, OTCQB:HUSKF -5.2%, GTE -5.8%, PWE -5.7%, IMO -1%, CVE -1%, OTCQX:COSWF -3.4%, OTCPK:MEGEF -5%.
- COSWF is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta (NYSE:TAC) would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion.
- Advice is split on owning stocks of companies that transport and process fuels in Alberta; Raymond James says stocks such as TransCanada (NYSE:TRP) and Enbridge (NYSE:ENB) are less directly exposed to reduced investment in the sector, but RBC advises to sell pipeline and midstream companies with operations in Alberta.
- Analysts also are divided about how much producers with oil refineries, such as SU and IMO, could offset losses from potentially higher royalties by boosting processing of crude in Alberta, a move pro-labor NDP has pledged to support.
Wed, May 6, 2:36 PM
- Canadian energy stocks are broadly lower after the shocking election result in Alberta raised questions about the future of the country's oil industry: SU -3.3%, ENB -2.8%, TRP -2.6%, IMO -2.3%, CNQ -2.3%, CVE -5.8%, OTCQB:HUSKF -1%, TCK -1.6%, TAC -4.1%, OTCQX:COSWF -6%.
- "Energy is such a critical issue to Alberta, I’m really not that concerned," ENB CEO Al Monaco says, but investors and analysts disagree.
- "It’s completely devastating" for energy companies and investors, saysCanoe Financial's Rafi Tahmazian of stated plans by the newly elected government to raise corporate taxes, review the government’s take of energy revenue, scale back advocacy for pipelines and phase out coal power more quickly.
- “If you are invested in energy stocks, you should be concerned,” says AltaCorp’s Jeremy McCrea, noting that drillers already face higher costs to extract oil and gas in Alberta than in many jurisdictions, so an increase in royalties would make the province even less competitive.
Wed, May 6, 7:38 AM
- In a stunning election result, voters in Canada's energy-rich Alberta province swept aside the four-decade hold on power by the ruling Progressive Conservative Party and elected an New Democratic Party majority government that wants to raise corporate taxes and increase oil and gas royalties.
- NDP leader Rachel Notley - who has vowed to raise the corporate tax rate to 12% at a time energy companies are reeling from layoffs and project cancellations amid weaker oil prices - is expected to succeed Jim Prentice as Alberta’s premier.
- Notley has said she would not lobby for the proposed Keystone XL pipeline to link Alberta’s oil deposits to refineries in Texas, and that she is against the Northern Gateway pipeline from Alberta to the British Columbia coast.
- She also has promised another review of oil royalties at a time other oil producing areas around the world that are also struggling with low oil prices are expected to make their terms more appealing.
- Relevant tickers: ENB, SU, TRP, IMO, CNQ, CVE, OTCQB:HUSKF, OTCQX:COSWF, XOM, BP, RDS.A, RDS.B
Fri, May 1, 7:20 PM
- Despite Pres. Obama's refusal to grant a permit for the northern cross-border leg of the Keystone XL pipeline (NYSE:TRP), "just as water will find its way through any crack in a foundation," Canada’s oil keeps streaming its way to Texas’ Gulf refineries, Financial Post's Claudia Cattaneo writes.
- While Keystone’s approval has sat stalled for six years, other pipelines have been built or expanded to ease bottlenecks: TRP's southern leg of Keystone XL and its Marketlink project from Cushing to Port Arthur, Enbridge (NYSE:ENB) and Enterprise Products' (NYSE:EPD) Seaway pipeline from Cushing to Freeport, and there's heavy oil coming by train and barge - it takes longer, costs more and is less efficient, but it's coming nevertheless.
- Even a prolonged slump in oil prices is not likely to stop Canada’s rush to the Texas coast: Both Imperial Oil (NYSEMKT:IMO) and Suncor (NYSE:SU) said this week their Q1 oil sands production levels are up 11% Y/Y, with IMO soon doubling production at the Kearl oil sands mine and new production beginning at its Nabiye operation.
Thu, Apr. 30, 1:12 AM
Wed, Apr. 29, 10:48 PM
Wed, Apr. 22, 6:53 PM
- Nomura came out bullish today on the energy E&P sector - issuing Buy ratings for MRO, PXD, EOG, CLR, APC, NFX, RRC, CNQ, CXO, ECA and SU - even as the firm does not foresee a V-shaped rebound in crude oil prices.
- Nomura believes core North American shale plays do not represent the economic marginal cost of supply in the world, which runs counter to commonly held views that largely see shale occupying the high end of the cost curve; thus as oil rebounds, so will investment in the shales, which should support prices, the firm says.
- In such an environment, Nomura says selecting stocks will depend on factors such as ”the reinvestment opportunity set, impact of oilfield technology, continued efficiencies, potential new geologic plays, management acumen and balance sheet strength."
- The firm is Neutral on DVN, HES, MUR, OAS, UPL, WLL, XEC, COG, COP and SWN; it rates NBL, APA, DNR, CHK and CVE as Reduce.
Tue, Apr. 14, 12:58 PM
- Canadian Oil Sands (OTCQX:COSWF +5.5%), the company with the largest stake in oil sands miner Syncrude Canada, is a prime takeover target and its most likely suitor is Imperial Oil (IMO +1.9%), the company with the second-largest stake, says FirstEnergy Capital analyst Michael Dunn.
- The analyst says his report is partly based on recent investor meetings with senior IMO execs who believe now is a good time to consider making acquisitions.
- Dunn thinks IMO would not want to pay more than a price in the low teens for COSWF, so its stock would have to fall further to make a bid attractive, and he suggests the company would not want to take on excessive debt - which could mean an equity-based offer, help from its controlling shareholder, Exxon Mobil (NYSE:XOM), or enrolling a current Syncrude partner such as Suncor (NYSE:SU).
Thu, Apr. 2, 8:19 AM
- Suncor Energy (NYSE:SU) says it expects to implement most of its C$600M-C$800M in planned operating budget cuts this year, ahead of the previously projected two-year period, with the reductions starting to be reflected in Q1 costs.
- SU also says its planned workforce reduction was mostly complete; the company had said in January that it would cut ~1K employees and contractors, freeze hiring and cut C$1B in capital spending in response to falling crude oil prices.
- SU says it produced 598K boe/day during Q1, up nearly 10% from 545K boe/day a year earlier; production from oil sands operations, Canada's largest, averaged ~440K bbl/day, up 13% from 389K a year earlier.
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.
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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