Latest news with #Oilsands
Yahoo
31-07-2025
- Business
- Yahoo
MEG Energy reports $67M in Q2 profit, down from last year
CALGARY — Oilsands producer MEG Energy Corp. says its profits fell during the second quarter compared with a year earlier. Net earnings for the quarter came in at $67 million, or 26 cents per diluted share, compared with $136 million, or 50 cents per diluted share, during the same period last year. Revenue came in at $757 million during the quarter, down from $1.37 billion a year earlier. Production for the quarter was 63,502 barrels per day compared with 100,531 barrels per day during the same period last year. MEG Energy also announced its board of directors approved a 10 per cent increase to its dividend, to 11 cents per share. Darlene Gates, MEG Energy's chief executive, says the company looked to execute on its planned turnaround during the quarter alongside wildfire-related challenges. This report by The Canadian Press was first published July 31, 2025. Companies in this story: (TSX:MEG) The Canadian Press Sign in to access your portfolio
Forbes
23-07-2025
- Business
- Forbes
Suncor Energy: From Sand To Profits
"Calgary, Alberta - April 2, 2012: Suncor Energy's head office in Calgary Alberta. Suncor is one of ... More the major developers of the Alberta Oilsands, as well as holding international developments in the North Sea, Libya, Syria, and Trinidad and Tobago." The United States is fully immersed in summer this week with scorching temperatures driving air conditioners into overdrive. A powerful heat dome has enveloped much of the country. This extreme weather event serves as a vivid reminder of how environmental factors, entirely outside of our control, can ripple through the economy and investor sentiment alike. Meanwhile, geopolitical tensions remain front and center on the global stage. At the NATO summit, member nations committed to increasing defense spending to 5% of GDP by 2035, which signals a significant shift toward bolstered military readiness. With both Europe and the United States reinforcing defense postures, the international security landscape appears to be entering a more assertive and dynamic phase. In such a charged environment, maintaining a cool and clear-headed approach to investing is essential. When headlines and market narratives have the power to sway emotions, rigorous and disciplined research becomes indispensable for investors focused on long-term success. After all, while the war drums are beating around the world, thoughtful decision-making remains the best way to navigate the markets. My latest Long Idea helps you do just that. The business benefits from long-term industry tailwinds and operational efficiency advantages. It returns significant capital to shareholders, and, best of all, its stock trades at a steep discount. I first made Suncor Energy (SU) a Long Idea in April 2023. Since my original report, the stock is up less than the S&P 500 even as the business generated billions in profits. After the company beat on the bottom-line but missed top-line 1Q25 estimates, my thesis remains intact, and this stock provides quality upside potential. SU still offers favorable Risk/Reward based on the company's: What's Working Long-Term Energy Demand is on the Rise, Oil is Still King While global energy demand will surely peak at some point, the fact remains that it is expected to rise through at least 2050. At the same time, the share of oil and gas in the energy mix is expected to stay above 53% (oil at 29% and gas at 24%) through 2050. OPEC's latest World Oil Outlook forecasts global primary energy to increase from 301 barrels of oil equivalent a day (mboe/d) in 2023 to 374 mboe/d in 2050, an increase of 24%. The three fuel types that are expected to see the largest increase in demand from 2023 through 2050 are renewables (43 mboe/d), gas (21 mboe/d), and oil (17 mboe/d). Suncor, as a leading renewable and oil provider, is positioned to benefit from this long-term trend for years to come. Figure 1: Growth in Global Energy Demand by Fuel Type: 2023 – 2050 Global Energy Demand Longer Reserve Life and Superior Efficiencies Suncor possesses a competitive advantage over other integrated oil and gas companies: it operates in oil sands instead of oil shales. Suncor's oil sand operations have a much longer a reserve life compared to oil shales. For instance, Suncor's oil sands reserve life sits at 25 years. Competitors, including BP, PLC (BP), Shell (SHEL), and TotalEnergies (TTE) have reserve lives of 7, 8, and 11 years, respectively. Not only does Suncor have longer reserve life, but it is consistently improving its ability to extract and process that oil and gas. Suncor's average annual refinery utilization rate consistently ranks above both U.S. and Canadian averages for the last decade. In fact, the company's average annual refinery utilization rate increased from 90% in 2023 to 100% in 2024. This improvement is a result of both record refinery utilization rates and record production across multiple facilities. See Figure 2. At its most basic level, utilization first begins with the ability to get material to refineries. Suncor excels in this regard because its facilities are connected directly via pipeline to both mining and in situ oil sand assets. The company also maintains direct access to different feedstocks via rail and marine, as well as the ability to process multiple crude types (depending upon facility). Figure 2: Suncor's Average Annual Utilization Rate vs. Industry Averages: 2015 – 2024 Suncor Energy Utilization Rate Leading in Profitability as Well Suncor's superior operational efficiencies manifest in the company's top-tier profitability. Suncor is the most profitable integrated energy company across the globe, among publicly traded competitors. Over the TTM, Suncor has the highest return on invested capital (ROIC) and second highest net operating profit after-tax (NOPAT) margin among competitors, which include TotalEnergies (TTE), Shell (SHEL), Exxon Mobil (XOM), Chevron Corp (CVX), and more. See Figure 3. Figure 3: Suncor's Profitability Vs. Peers: TTM SU Profitability vs Peers Improving Fundamentals Rising demand, improving efficiency, and high margins result in Suncor achieving growth across both the top and bottom-line. In fact, the company has grown revenue and NOPAT by 3% and 5% compounded annually since 2019 (pre-COVID). The company improved its NOPAT margin from 14% in 2019 to 15% in the TTM while invested capital turns rose from 0.4 to 0.5 over the same time. Rising NOPAT margins and invested capital turns drive the company's ROIC from 6% in 2019 to 8% in the TTM ended 1Q25. Additionally, the company's Core Earnings, a superior and cleaner earnings measure, grew 7% compounded annually from $3.3 billion in 2019 to $4.7 billion in the TTM. Figure 4 shows Suncor's revenue and NOPAT growth from 2015-TTM. Figure 4: Suncor's Revenue and NOPAT: 2015 – TTM SU Revenue & NOPAT 2015 - TTM Potential for 9%+ Yield Since 2021, Suncor has paid $7.7 billion (15% of market cap) in dividends and has increased its quarterly dividend from $0.17/share in 1Q21 to $0.42/share in 2Q25. The company's current dividend, when annualized, provides a 4.3% yield. Suncor also returns capital to shareholders through share repurchases. Since 2021, Suncor repurchased $9.9 billion (20% of market cap) worth of shares. During the first three months of 2025, the company repurchased $555 million worth of shares. The company renewed its annual normal course issuer bid (NCIB) for 2025, which allows the company to repurchase 10% of its shares outstanding. Should the company repurchase shares at the TTM pace through the next year, it would repurchase $2.4 billion of shares, which is 4.7% of the company's current market cap. When combined, the dividend and share repurchase yield could reach 9.0%. Strong Cash Flows Support Shareholder Return Investors should take comfort in knowing Suncor will be able to afford to pay its dividends and repurchase shares due to its large free cash flow (FCF) generation. From 2021 through 1Q25, Suncor generated $29.5 billion in FCF, which equals 46% of the company's enterprise value. Figure 5: Suncor's Cumulative Free Cash Flow: 2021 – 1Q25 Suncor Energy Free Cash Flow: 2021-1Q25 Suncor's $29.5 billion in FCF since 2021 is more than enough to cover its $17.5 billion in combined dividend payments ($7.7 billion) and share repurchases ($9.9 billion). Suncor's repurchases have also meaningfully reduced its shares outstanding from 1.4 billion in 2021 to 1.2 billion in 1Q25. See Figure 6. I like companies that choose to return capital to shareholders instead of spending it on costly acquisitions or executive bonuses that rarely drive shareholder value creation. In addition, reductions in shares outstanding tend to ensure capital appreciation for investors no matter how growth or momentum crazed the overall market it. In other words, companies that sport strong enough cash flows that enable them to consistently lower their shares outstanding offer excellent value. Figure 6: Suncor's Shares Outstanding: 2021 – 1Q25 Suncor Shares Outstanding 2021-1Q25 Strong Balance Sheet and Credit Rating to Weather Uncertainty Suncor has also leveraged its strong cash flow generation to improve its balance sheet. The company has decreased its total debt from $17.0 billion in 2020 to $10.2 billion in the TTM. Over the same time, cash and equivalents increased from $1.5 billion to $2.4 billion. Suncor earns an Attractive overall Credit Rating and scores an Attractive-or-better rating in four of the five credit rating metrics. See Figure 7. Even if economic conditions deteriorate, demand fluctuates, or oil prices fluctuate due to the war in the middle east, the company's strong financial footing secures its operations for the foreseeable future. Figure 7: Suncor's Credit Rating Details SU Credit Rating What's Not Working War Might Result in Further Price Volatility War drums in the middle east and around the world are knocking oil prices all over the place these days. Oil prices increased nearly 20% from the beginning of June through Friday June 20, largely due to fears that Iran could close the Strait of Hormuz, which accounts for ~20% of global oil and gas transportation. However, these worries have abated for now with the announcement of a ceasefire between both Isreal and Iran. Brent crude prices fell ~6% on Monday June 23 from Friday June 20 closing prices. Had Iran closed Hormuz in retaliation, oil prices were expected to surpass $100 per barrel, a stark increase from $75/barrel before the ceasefire announcement and ~$60/barrel at the beginning of June. The price volatility comes on the heels of falling oil prices for much of 2025. In mid-May, Brent crude prices were down over 25% from their early January highs. The plummeting price could be attributed to OPEC's decision to heavily increase production in May, June, and July of this year. The good news for Suncor investors is that the company has been lowering its crude oil breakeven price for years. In 2024, the company achieved a $7/barrel West Texas Intermediate (WTI) breakeven reduction, and its overall breakeven sits ~$45/barrel. Suncor even includes its dividend in its breakeven calculation to ensure it's able to return capital to shareholders throughout price cycles. Best of all, any potential further decline in oil prices is already more than priced into Suncor's current valuation, as I'll show below. Current Price Implies Profits Will Permanently Fall by 20% At its current price of $38/share, SU has a price-to-economic book value (PEBV) ratio of 0.8. This ratio means the market expects the company's NOPAT to permanently decline 20% from TTM levels. This expectation seems overly pessimistic considering Suncor has grown NOPAT by 5% compounded annually over the last five years and 2% compounded annually over the last ten years. Below, I use my reverse discounted cash flow (DCF) model to quantify the cash flow expectations for different stock price scenarios for SU. In the first scenario, I quantify the expectations baked into the current price. If I assume: then the stock would be worth $38/share today – or equal to the current stock price. In this scenario, Suncor's NOPAT would fall 1% through 2034, which is well below historical growth rates. Shares Could Go 30%+ Higher at Minimal Profit Growth If I instead assume Suncor's: SU would be worth at least $51/share today – a 34% upside to the current price. In this scenario, Suncor's NOPAT would grow 1% through 2034. Should SU grow profits more in line with historical levels, the stock has even more upside. Figure 8 compares Suncor's historical NOPAT to the NOPAT implied in each of the above DCF scenarios. Figure 8: Suncor's Historical and Implied NOPAT: DCF Valuation Scenarios SU DCF Implied NOPAT Scenarios
CBC
04-07-2025
- Business
- CBC
Suncor fined after protected bird nests were buried at Alberta oilsands mine
Oilsands giant Suncor has been fined $5,000 for burying known habitat for bank swallows during mining operations in northern Alberta three years ago. The Calgary-based company was issued the penalty by the Alberta Energy Regulator last week for an incident near Fort McMurray in June 2023. The regulator fined the company for failing to ensure that critical bird habitat was protected from ground excavation operations at the mining site. According to the investigation, material was placed over a bank known to be used by bank swallows as a nesting site, likely killing or injuring the birds and destroying their nests. The company failed to complete a required wildlife sweep of the site before the bank was buried, the investigation found. A 100-metre buffer that should have been maintained around the nests, a requirement under federal environmental laws, was not enforced, the AER ruled. "There is no direct evidence of destroyed nests or dead bank swallows," Candace MacDonald, a director of field operations for AER, wrote in her penalty decision against the operator. "However, the potential for the bank swallows to have become injured or killed and nests destroyed by the disturbance in these circumstances is highly probable." Alberta's oilsands industry has faced scrutiny and investigations for a string of bird death incidents. Suncor, among the largest operators in the oilpatch, has a history of such infractions. In 2017, 123 birds were reported dead at the company's Fort Hills oilsands project. More recently, in May 2023, more than 30 birds, including sensitive waterfowl species, were found dead at Suncor's tailings ponds sites in northwestern Alberta. In the investigation of the incident involving bank swallows, Suncor told the regulator that they could not be certain whether the nests were active or not when the bank was buried. The only way to find out would be to dig up the area, which the regulator determined would likely cause more harm to the already damaged habitat. Cyberattack blamed CBC News sought comment from Suncor on the penalty but did not receive a response. During the course of the AER investigation, company officials blamed the incident on a cyberattack that left its wildlife monitoring systems inaccessible. Documents show the penalty for the infraction was elevated because of Suncor's lack of due diligence following the cyberattack and the bird's fragile conservation status. Bank swallows, which commonly nest near water and excavate burrows into the soil, are listed federally as a threatened species. Bank swallows are also protected as a migratory species under the federal Migratory Birds Convention Act. The Alberta government has classified the species as sensitive since 2015, as losses in recent decades have left local populations vulnerable to human and industrial disturbance. These protected statuses indicate a need for a "heightened awareness" around this species, the regulator found. "The requirement to conduct a wildlife sweep or walkthrough before conducting any land disturbance serves as a safeguard for wildlife, aiming to protect species such as bank swallows and preserve critical habitats such as their nests," MacDonald wrote. "Suncor ultimately failed to identify their error and take appropriate mitigative measures." Suncor had a system in place to monitor wildlife but the company said the program, contained in a spreadsheet, was not available at the time of the incident because of a cyberattack. A backup spreadsheet to track the wildlife program had been set up but company officials told investigators that the backup document was also not available at the time of the incident due to "information technology limitations." Suncor should have been on a heightened awareness and diligence. The regulator said the company demonstrated a lack of due diligence and failed to follow its own environmental policies. "With both Suncor's wildlife sighting tracking program and backup Excel spreadsheet not being available, Suncor should have been on a heightened awareness and diligence to ensure all workgroups were aware of the bank swallow nests to mitigate the potential of this contravention occurring," MacDonald wrote in her investigative report. "Even though Suncor had policies and procedures in place, these were not followed." According to the investigation, Suncor has since implemented additional measures to prevent similar incidents, including updating its wildlife protection policies to include a land disturbance checklist that will ensure mandatory sweeps are completed before potential bird habitat is disturbed by mining operations. The administrative penalty was formally issued on June 26. Suncor has 30 days to file an appeal.
Yahoo
10-05-2025
- Business
- Yahoo
Suncor reports highest-ever Q1 production and refinery throughput
CALGARY — Oilsands giant Suncor Energy Inc. says said it had its strongest-ever first-quarter performance in its production, refining and refined product sales segments. It says production was 853,000 barrels of oil per day, refining throughput was 483,000 per day and refined product sales were 605,000 barrels per day. Net earnings for the first three months of 2025 were $1.69 billion, up from $1.61 billion during the same 2024 period. That amounted to $1.36 per share versus $1.25 per share. Gross revenues were $13.33 billion, compared to $13.31 billion a year earlier. Adjusted operating earnings, a measure Suncor says provides a better comparison between quarters, were $1.63 billion, down from $1.82 billion, which it says was due to lower crude oil sales. "Our strong first quarter financial and operating performance maintained the momentum established in 2024, as we remain laser-focused on continuing to deliver safe, reliable, and cost-effective operations," CEO Rich Kruger said in a news release Tuesday. "Our focus on the fundamentals, integrated business model, and continually improving cost structure enable us to deliver free funds flow and shareholder value despite the current volatile business environment." This report by The Canadian Press was first published May 6, 2025. Companies in this story: (TSX: SU) Lauren Krugel, The Canadian Press
CBC
07-05-2025
- Business
- CBC
3-month outage begins at Fort McMurray upgrader as aging coke drums replaced
Oilsands giant Suncor Energy Inc. has begun a three-month outage at one of its upgraders so it can begin to replace enormous components first installed almost six decades ago. The Calgary-based company is in the midst of a multi-year project to replace eight original coke drums dating back to 1967 at its Base Mine site north of Fort McMurray, Alta., with the goal of extending the upgrader's life by 30 years. The drums, weighing 270 tonnes and standing nearly 30 metres, are used in the upgrading process, where tarry oilsands bitumen is converted into a lighter crude that can then be refined into fuel. In a website post last year when one of the drums was being transported from Edmonton to the mine, Suncor said the load took up the entire width of the road, including the shoulder lanes. The outage at the upgrader — one of two at the mine — began on May 1 and is expected to last 91 days. Shelley Powell, the Suncor senior vice-president in charge of major capital projects, says the first major crane lift of equipment was successfully completed over the weekend. The project is using one of the biggest cranes in the world, the Mammoet PTC210DS. "We were really well prepared. We have all of the pre-work done, and that included actually doing some early planning and preparatory lifts," Powell told Suncor's first-quarter conference call Wednesday. "So we practised some of this stuff ahead of time to make sure we had the equipment in the right spot, we had people trained and ready to go, and everybody knew what their role was going to be." Powell added that some of the operators involved in the project have experience doing similar heavy-lifting jobs elsewhere in the world. CEO Rich Kruger said collaboration between different teams is key to pulling off a project of this scale. "We have to be seamless in our execution and our handoffs," he told investors. "We won't declare victory until we're done, but we feel quite good about our level of preparation and planning." Desjardins Securities analyst Chris McCulloch said in a note that much is riding on the coke drum replacement going according to plan. "Maintaining operational momentum will be pivotal for Suncor entering the heaviest stretch of scheduled maintenance this year," he wrote. "In our view, success of the Base Plant and other planned turnarounds will materially impact the company's ability to achieve its 2025 production guidance and (capital expenditure) targets, which we maintain have been conservatively set." Production, earnings for first three months of 2025 Late Tuesday, Suncor said its production for the first three months of 2025 was 853,000 barrels of oil per day, refining throughput was 483,000 barrels per day and refined product sales were 605,000 barrels per day. All three measures set new first-quarter records for the company. Net earnings for the first three months of 2025 were $1.69 billion, up from $1.61 billion during the same 2024 period. That amounted to $1.36 per share versus $1.25 per share. Gross revenues were $13.33 billion, compared to $13.31 billion a year earlier. Adjusted operating earnings, a measure Suncor says provides a better comparison between quarters, were $1.63 billion, down from $1.82 billion, which it says was due to lower crude oil sales. Chief financial officer Kris Smith said Suncor is positioned well to weather a West Texas Intermediate crude price of US$60 per barrel, the level it's been hovering around in recent weeks.
