Blog Coverage Canada’s Largest Crude Oil Producer Suncor Energy Tables its Corporate Guidance for FY17

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LONDON, UK / ACCESSWIRE / November 18, 2016 / Active Wall St. blog coverage looks at the headline from Suncor Energy, Inc. (NYSE: SU) as the company released its corporate guidance for the year 2017. The corporate guidance sheds light on management’s plans with regards to capital spending, production outlook, and other areas of business. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Suncor Energy’s competitors within the Independent Oil & Gas space, Pioneer Natural Resources Co. (NYSE: PXD), reported on November 01, 2016, financial and operating results for the quarter ended September 30, 2016. AWS will be initiating a research report on Pioneer Natural Resources in the coming days.

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Suncor is headquartered in Alberta, Canada and its main business is extracting crude oil from oil sands. Suncor operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Apart from this Suncor owns and operates four refineries which have a combined capacity of 460,000 barrels per day, a lubricants plant, Canada’s largest ethanol plant, wind farms, and a large network of retail businesses.

Sharing his thoughts on the outlook, Steve Williams, President and CEO said:

“Through our 2017 capital spending program, we’ve earmarked the capital required to bring two major growth projects, Fort Hills and Hebron, to completion while at the same time investing in our existing assets to ensure continued safe, reliable and efficient operations. We will maintain the unwavering focus on cost management, which has helped us to generate strong cash flow throughout these past two years of low oil prices.”

Highlights of the Corporate Guidance for 2017

(Please note that the company has shared all figures in Canadian Dollars)

Production

Suncor expects average production in the range of 680,000 to 720,000 boe/d (barrels of oil equivalent per day). This represents a year-over-year increase to production range at midpoints of more than 13%. Of this production from oil sands is expected to be in the range of 420,000 to 450,000 barrels per day and from Syncrude in the range of 150,000 to 165,000 barrels per day.

The Suncor’s refinery throughput (capacity for refining crude oil) is expected to be in the range of 425,000 – 445,000 barrels per day with refinery utilization in the range of 92% – 96%.

Sales

The sales from total refined products are expected to be in the range of 515,000 to 545,000 barrels per day. Of this Synthetic crude oil, will contribute 305,000 to 325,000 barrels per day and Bitumen will contribute 110,000 to 130,000 barrels per day.

Capital Expenditure

The company’s capital expenditure is expected to be contained between $ 4.8 billion – $ 5.2 billion. This translates to a reduction of approximately $1 billion for the year. The steep oil prices drop in the last few years has compelled oil producers to rein in costs to sustain their business.

The reduction in capital expenditure comes even after Suncor purchased an additional 5% in the Syncrude joint venture in June 2016. Currently, Suncor owns 53.74% in the joint venture project. Out of the total capital expenditure, 40% has been earmarked for upstream growth projects including projects at Fort Hills and Hebron. Both these projects are expected to achieve first oil by end 2017. The remaining 60% of the capital expenditure is allocated for bolstering capital in the upstream, downstream, and corporate segments.

Operating costs

Projected operating costs at the Suncor Oil Sands operations are to be in the range of $24 – $27 per barrel. It takes into account an increase of $1 per barrel, assuming that the price of natural gas would rise. Projected operating costs at Syncrude are expected to be in the range of $32 – $35 per barrel.

All the figures have been calculated with the assumption that Brent is at US $53 per barrel.

Financial Brief

On November 14, 2016, Suncor Board had announced a quarterly dividend of $0.29 per share payable on December 23, 2016.
On October 2016, Suncor had announced its results for the third quarter of 2016. It had reported a cash flow of $2.025 billion for Q3 from operations which are approximately $1.22 per share. Its operating revenues were $346 million and net revenues were at $392 million.

Stock Performance

On Thursday, the stock closed the trading session at $30.54, marginally up 0.10% from its previous closing price of $30.51. A total volume of 4.87 million shares have exchanged hands, which was higher than the 3-month average volume of 4.15 million shares. Suncor Energy’s stock price advanced 4.20% in the last month, 8.30% in the past three months, and 18.02% in the previous six months. Furthermore, since the start of the year, shares of the company have surged 21.35%. The stock has a dividend yield of 2.88%. The stock had a market cap of $51.95 billion.

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