Suncor Energy Inc. is scheduled to report its Q1 2010 after the market closes on May 3, 2010. 2010 is the transition year for Suncor, where the divestiture program will begin to impact the business mix and the market will again assign value to the growth trajectory of the underlying oil sands asset. However, the 4Q operational outage (a fire on-site in Dec.), which has impacted 1Q10 operations and the planned vacuum tower turnaround in Q2 (75 mbpd for 44 days,) suggests that the street will now need to wait for3Q10 results to get a "clean" quarter operationally.
SUNCOR ENERGY is a world leader in mining and extracting crude oil from the vast oil sands deposits of northern Alberta. They also explore for, develop and market natural gas, operate a refining and marketing business in Ontario, and are actively involved in the development of renewable energy sources to help meet the energy needs of tomorrow.
In Q4 2009, Suncor Energy reported net earnings of $457 million ($0.29 per common share), compared to a net loss of $215 million ($0.24 per common share) for the Q4 of 2008. Operating earnings in the Q4 of 2009 were $323 million ($0.21 per common share), compared to $14 million ($0.02 per common share) inQ4 of 2008. Cash flow from operations was $1.129 billion in Q4 of 2009, compared to $231 million in Q4of 2008. Suncor's total upstream production during Q4of 2009 averaged 638,200 barrels of oil equivalent (boe) per day, including additional production of 325,600 boe per day resulting from the merger. Upstream production from Suncor's legacy oil sands and natural gas operations averaged 312,600 boe per day in the Q4 of 2009, compared to 279,400 boe per day in the Q4 of 2008. Oil Sands production (excluding proportionate production share from the Syncrude joint venture) contributed an average 278,900 barrels per day (bpd) in the Q4 of 2009, compared to Q4 2008 production of 243,800 bpd. Average production increased compared to the Q4 of 2008 due to improved operational reliability during the quarter.
Analysts' estimates for Q1 2010 range from a low of $0.05 to a high of $0.41, compared to a consensus estimate of $0.17, with number of estimates being 14and the co-efficient variance of 57.51. In June 2009, Suncor shareholders approved a merger with Petro-Canada, which subsequently closed on August 1, 2009. On December 31, 2009, Suncor entered into an agreement to sell substantially all of its oil and gas producing assets in the United States Rockies for proceeds of $517 million (US$494 million), which is approximately equal to its net book value at December 31, 2009. In conjunction with the merger with Petro-Canada, the Competition Bureau of Canada required Suncor to divest 104 retail sites in Ontario. On December 8, 2009, Suncor entered into an agreement with Husky Energy whereby Suncor agreed to sell 98 sites with expected closing dates commencing in the first half of 2010 as ownership of individual sites istransferred to the purchaser. While the timeline for the divestment of assets remains flexible, Suncor expects most of the sales to occur during 2010. Divestment proceeds will be used to reduce the company's debt.On February 4, 2010, Suncor Energy Inc.'s Board of Directors approved a quarterly dividend of $0.10 per share on its common shares, payable March 25, 2010 to shareholders of record at the close of business on March 5, 2010. On March 8, 2010, Suncor Energy Inc. reported that the company's oil sands production during February averaged approximately 211,000 barrels per day (bpd). Year-to-date oil sands production at the end of February averaged approximately 181,000 bpd.
Revenues for the Q1 2010 are expected to reach as much as $7.3 billion and total expenses $7.125 billion. EBIT should roll in at $259 million and net earnings at $169 million. EPS for the period is likely to be around $0.11 basic/diluted.
The stock closed at $34.30, up 2.42% on April 20, 2010 with most analysts' rating the stock a relative Overweight with an average price target of $43.Suncor Energy is a preferred play on long-termstructural supply constraints in the global crude market. Its core oil sands asset offers reinvestment visibility and a 40+ year reserve life, in a low-riskregulatory environment.
