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Suncor Energy (SU) Incurs Wider-Than-Expected Loss in Q1

Suncor Energy Inc. SU reported first-quarter 2016 operating loss per share of 33 cents, wider than the Zacks Consensus Estimate of loss of 17 cents. The company had reported a profit of 12 cents per share in the year-ago comparable quarter.  

Quarterly revenues of C$5.6 billion also decreased significantly from C$7.4 billion in the year-ago quarter.

A weak crude pricing environment along with lower refinery utilization led to the disappointing results.

Suncor incurred quarterly operating loss of C$500 million. The company had earned C$175 million in the year-ago quarter. Moreover, cash flow from operations decreased to C$682 million from C$1.5 billion in the first quarter of 2015.

Production

Total upstream production in the reported quarter averaged 691,400 barrels of oil equivalent per day (BOE/d), 14.8% higher than the prior-year level of 602,400 BOE/d. Increased output from Oil Sands operations drove volume growth.   

Oil Sands operations volume was 453,000 barrels per day (Bbl/d), higher than 440,400 Bbl/d in the year-ago quarter.

Production from Syncrude operations was 112,800 Bbl/d in the quarter, significantly higher than 35,200 Bbl/d in the year-ago quarter.

Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 125,600 BOE/d. The segment had produced 126,800 BOE/d in the prior-year quarter.

The Refining and Marketing segment averaged 420,900 Bbl/d of refinery crude processed, down from 437,100 Bbl/d in the year-ago quarter. Refinery utilization came in at 91%, below the year-ago quarter level of 95%.

Product Sales

The company’s refined product sales of 489,500 Bbl/d decreased from the prior-year quarter figure of 519,700 Bbl/d.

Balance Sheet & Capital Expenditure

As of Mar 31, 2016, Suncor had cash and cash equivalents of C$3.1 billion and total long-term debt (including current portions) of C$17.9 billion. The total debt-to-capitalization ratio was approximately 29.4%. Moreover, the company incurred capital expenditure of C$2 billion in the quarter. 

Guidance

Suncor maintained its 2016 capital spending projection at C$6.0–C$6.5 billion.

The company affirms its projected full-year total production at 525,000–565,000 BOE/d. Suncor’s newly projected 2016 Oil Sands sales is in the band of 390,000–435,000 Bbl/d.

Refinery throughput was reiterated in the range of 420,000–440,000 Bbl/d. Refined products sales are anticipated in the 510,000–550,000 Bbl/d band.

Other News

Suncor Energy has declared its intention to buy additional interest in Syncrude Canada oil sands mine from Murphy Oil Corporation MUR for a consideration of $937 million. With the closure of the deal, Suncor Energy will have 53.7% interest in the mine that is higher than the current 48.7% interest.  

Zacks Rank   

Suncor currently carries a Zacks Rank #2 (Buy), implying that it will outperform the broader U.S. equity market over the next one to three months.

Investors can also consider players in the energy sector like Vanguard Natural Resources, LLC VNR and World Point Terminals, LP WPT. Both stocks sport a Zacks Rank #1 (Strong Buy).

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SUNCOR ENERGY (SU): Free Stock Analysis Report
 
VANGUARD NATURL (VNR): Free Stock Analysis Report
 
MURPHY OIL (MUR): Free Stock Analysis Report
 
WORLD POINT TER (WPT): Free Stock Analysis Report
 
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