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Suncor (SU) Earnings Top Estimates in Q3, Revenues Up Y/Y

Canadian energy giant Suncor Energy Inc. SU reported third-quarter 2017 operating earnings per share of 41 cents surpassing the Zacks Consensus Estimate of 26 cents. Strong upstream production, reduced expenses, improved benchmark crack spreads and higher crude price realizations drove the company’s earnings. In the year-ago quarter the company reported earnings of16 cents a share. 

Suncor recorded quarterly operating earnings of C$867 million compared with C$346 million in the year-ago quarter, reflecting an increase of 150.5%.

While quarterly revenues of $6.2 billion increased from $5.8 billion in the year-ago quarter, the top line lagged the Zacks Consensus Estimate of $6.8 billion.

Suncor Energy Inc. Price, Consensus and EPS Surprise

 

Suncor Energy Inc. Price, Consensus and EPS Surprise | Suncor Energy Inc. Quote

Production

Total upstream production in the reported quarter was 739,900 barrels of oil equivalent per day (BOE/d), compared with the prior-year level of 728,100 BOE/d, reflecting an increase of 1.6%. This marks a new quarterly production record achieved by the company mainly due to higher production at Oil Sands operations.

Oil Sands operations volume was 469,300 barrels per day (Bbl/d) compared with 433,700 Bbl/d in the year-ago quarter. The increase is attributed to improved upgrade reliability and higher Firebag utilization over 90%.

Production from Syncrude operations was 159,100 Bbl/d in the quarter compared with 183,800 Bbl/d in the year-ago quarter. The decrease is attributed to the outage associated with the facility incident and planned coker maintenance.

Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 111,500 BOE/d. The segment produced 110,600 BOE/d in the prior-year quarter. Higher production from U.K. and Libya drove results.

Refinery utilization came in at 101%, in line with the year-ago quarter, reflecting strong reliability in both periods.

Product Sales

The company’s refined product sales of 564,500 Bbl/d increased from the prior-year quarter level of 548,700 Bbl/d due to stronger demand.

Expenses

Total expenses in the reported quarter declined to $6,352 million compared with $7,068 million in the year-ago quarter. The company’s financing income was C$323 million as against C$288 million worth financing expenses incurred in the year-ago quarter.  Lower exploration, depreciation and transportation expenses also lowered expenses. The results were partly offset by increased costs related to purchase of crude oil and higher operating, selling/ general costs.

Balance Sheet & Capital Expenditure

As of Sep 30, 2017, Suncor had cash and cash equivalents of C$2.76 billion and total long-term debt (including current portions) of C$12.3 billion. The total debt-to-capitalization ratio was approximately 21.3%. The company incurred capital expenditure of C$1.7 billion in the quarter.

Dividend and Share Repurchase

Suncor returned C$531 million to shareholders through dividends and bought back $282 million of outstanding shares in third-quarter 2017.

Guidance

The company reiterated its prior guidance. The full-year outlook range for E&P production is estimated to lie within 115,000-125,000 Boe/d. The full-year outlook range for Syncrude production is forecasted to be between 130,000 Bbls/d and145,000 Bbls/d.  Further the full-year outlook range for Syncrude cash operating costs is to lie in the $42.00-$45.00/bbl range.

The estimated capex for 2017 is $5.4-$5.6 billion.

Zacks Rank and Other Stocks to Consider

Headquartered in Canada, Suncor is a world leader in mining and extracting crude oil from the vast oil-sands deposits of northern Alberta. The company also explores, develops and markets natural gas. Moreover, it operates a refining and marketing business in Ontario and is actively involved in the development of renewable energy sources. The company currently carries a Zacks Rank #2 (Buy).

Year to date, shares of Suncor have moved up about 1%, outperforming the industry’s 14% decline.

 

Some other top-ranked stocks in the oil and energy sector are Par Pacific Holdings, Inc. PARR, Braskem S.A. BAK and Denbury Resources, Inc. DNR. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific’s sales for third-quarter 2017 are expected to increase 28.5% year over year. The company delivered an average positive earnings surprise of 195.3% in the last four quarters.

Braskem’s sales for third-quarter 2017 are expected to increase 4.1% year over year. The company delivered a positive earnings surprise of 68.2% in the preceding four quarters.

Denbury Resources’ sales for 2017 are expected to increase 5.9% year over year. The company delivered average positive earnings surprise of 25% in the trailing four quarters.

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