|Bid||16.15 x 3200|
|Ask||16.30 x 1000|
|Day's range||15.55 - 17.93|
|52-week range||9.61 - 34.56|
|Beta (5Y monthly)||1.50|
|PE ratio (TTM)||7.16|
|Forward dividend & yield||1.29 (7.64%)|
|Ex-dividend date||02 Mar 2020|
|1y target est||42.83|
The analysts covering Suncor Energy Inc. (TSE:SU) delivered a dose of negativity to shareholders today, by making a...
(Bloomberg) -- The last major oil-sands mine to start operating in northern Alberta could be Canada’s first big casualty of the Saudi-Russian price war and the Covid-19 pandemic.Teck Resources Ltd., one of the partners in the Fort Hills project that formally opened in September 2018, is considering a full shutdown of the mine to cut costs after local prices hit record lows. Suncor Energy Inc., another partner in the venture, announced last week one of the mine’s two production lines would be closed to preserve cash.“The partners continue to further analyze capital- and operating-cost reduction opportunities, and, as you might imagine, we’re certainly looking at the potential shutdown of the operation,” Teck Chief Executive Officer Don Lindsay said during an investor presentation. “However, more work needs to be done and we will update you as work progresses.”Storage tanks worldwide are brimming with crude as the global pandemic destroys demand, while Saudi Arabia and Russia flood the market in a fight for market share. The dual shock is pushing some producers to the brink, with shale titan Whiting Petroleum Corp. filing for bankruptcy on Wednesday. Meanwhile, refineries in North America are cutting fuel production, with some shutting down altogether.Fort Hills can produce 194,000 barrels of oil a day, more than OPEC member Equatorial Guinea. Total SA is also one of the owners.“At this time, we have made no decision to move to a full shutdown,” a representative for Suncor said. “The partners haven’t discussed a full shut down,” which would require unanimous consent of the shareholders, she said.Canadian oil producers have already announced about 100,000 barrels a day of production cuts in response to the price crash, Goldman Sachs Group Inc. analyst Emily Chieng said in a note. Further cuts will be necessary to respond to the reduction in demand, otherwise commercial inventory levels could be breached within two to three weeks, she said.Oil-sands shutdowns could reach half a million barrels a day, with the bulk of operational shut-ins starting in May, Matt Murphy, a director of research at Tudor Pickering Holt & Co., said by phone.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Only the old hands at the Coffeyville oil refinery could remember anything like the prices posted this month. The small Kansas plant in the heart of rural America was offering just $1.75 a barrel for Wyoming sweet crude.With more than two billion people on virus lockdown from India to California, energy demand has plunged. In corners of the U.S., Canada, Russia and China, oil prices at the well-head are collapsing under the weight of an unprecedented glut.And with it, the industry is bracing for something that last happened on this scale 35 years ago: producers shutting down their wells as pumping crude makes no economic sense.“I have never seen anything like this in the markets,” said Torbjorn Tornqvist, the co-founder of Gunvor Group Ltd., a large commodity trading house. “We’ve never seen anything even close to today.”The oil market -- hit by the double blow of a demand slump and a supply surge as Saudi Arabia and Russia wage a price war -- is battling a surplus of as much as 20% of global consumption.The consequences are brutal: prices are now low enough to force a widespread suspension of production, or a shut-in as it’s known in the industry. For those waging the price war, it counts as a victory -- as long as the shut-ins happen elsewhere.Brent and West Texas Intermediate, the benchmarks closely followed in Wall Street, are hovering around $25 a barrel. But in the world of physical oil -- where actual barrels change hands -- producers are getting much less.The industry is navigating what Paul Sankey, a veteran oil analyst at Mizuho Bank Ltd, described as “uncharted waters to unknown lands.”Wyoming Sweet, a landlocked crude with few outlets other than American refineries like Coffeyville, is paradigmatic of how the dynamics of the oil market are forcing output cuts. There are others: North Dakota Light Sweet has traded at $9.97 a barrel. Across the border, Western Canadian Select has plunged to $6.45. In Siberia, Russian crude has changed hands for less than $10 and Chinese domestic prices have fallen to single digits.Ultra-low oil prices are starting to work: Petrobras, the Brazilian state-run producer, is cutting output by 100,000 barrels a day from high-cost offshore platforms. Glencore Plc., the commodity giant, is shutting down its oilfields in Chad. In Canada, Suncor Energy Inc. has partially shutdown its Fort Hills oil sands mine.As the pain spreads, industry executives believe many other companies will stem production in the next few days.“We need to cut crude supply by 10 million barrels a day pretty quickly,” said Russel Hardy, the head of top independent oil trader Vitol Group. “Oil prices will need to go lower, to bring the prices to a level that triggers a response.”The last time the oil industry faced widespread shut-ins was in 1986, when Saudi Arabia also ravaged the market in a price war. During the price battles of 1998-99 and 2015-16 the industry also saw cuts, but not on a large scale.Put simply, the world cannot continue pumping at the current level of about 100 million barrels a day while demand is as much as 20% lower. The surplus would overwhelm storage capacity within weeks.In some emerging markets, where infrastructure is less developed, it’s already happening. Pakistan has told refiners to stop importing gasoline and diesel as the tanks are already brimming.Rush to SeaWhere there’s access to the sea, traders use tankers to store oil -- and wait for prices to go up. Crude is now moving onto ships at a record pace, according to one of the industry’s largest shipowners.But inland, producers are reliant on sending crude to local refineries like Coffeyville and the lack of storage capacity will be decisive.“The surge in inventory in coming weeks will inevitably saturate local infrastructure, in our view, forcing many inland producers to shut-in wells,” said Damien Courvalin, oil analyst at Goldman Sachs Group Inc.Some producers will prefer to take the hit of negative prices -- paying someone to take the oil off their hands -- to the long-term costs of shutting down a well. In the aftermath of the last major downturn, a North Dakota sour crude went to a negative 50 cents.But as storage fills up, production will have to respond. IHS Markit Ltd., a consultant, estimates the Canadian province of Alberta has inland tanks able to store the equivalent of just 3.2 days of daily production. The central U.S., which includes Wyoming, has room for just 12.8 days’ output.“Production is going to have to be reduced or even shut in,” said Jim Burkhard, head of oil markets at IHS Markit. “It is now a matter of where and by how much.”(Adds detail on tankers)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Record low prices for heavy Canadian crude have prompted one of the biggest operators in the oil sands to take the rare step of shutting production.Motivated by the “extremely low” prices, Suncor Energy Inc. announced on Tuesday that it will shut in one of its two so-called trains at its two-year-old, 194,000 barrel-a-day Fort Hills oil sands mine. The company also is delaying the start up of its MacKay River oil sands wells to May, after operations were halted in December because of a malfunction and fire. Suncor joins Athabasca Oil Corp., which said last Friday it would curtail production from its Hangingstone oil sands site by about 50% to maximize corporate funds flow and liquidity.The move comes as the coronavirus pandemic slashes worldwide oil demand just as Saudi Arabia ramps up oil production in a price war with Russia, sending global oil benchmarks to the lowest prices in almost two decades. Western Canadian Select, the oil-sands benchmark, fell to a record low of $8.90 a barrel on Tuesday, data compiled by Bloomberg show. The value of the bitumen itself, excluding the light condensate that’s added so the heavy crude can be pumped through pipelines, was valued at just $4.40 a barrel.Oil sands wells and mines are built for billions of dollars to last for decades. They are rarely shut because many of their operating costs are fixed and, for the wells, leaving the reservoirs cold for an extended period of time could cause damage. Suncor and its partners Total SA and Teck Resources Ltd. agreed to operate the single processing stream at Fort Hills at full utilization to increase cash flow amid the low prices for bitumen.The guidance for Suncor’s share of Fort Hills bitumen production in 2020 was reduced to between 55,000 to 65,000 barrels a day from between 85,000 to 95,000 barrels a day, the company said in its release.The use of one train at the mine “will increase cash flow, particularly when bitumen prices are extremely low, as we are able to significantly reduce variable costs,” the company said. “Unit costs for the remaining production will be higher because of this decision as a result of fixed costs being covered by lower volumes.”(Adds Athabasca in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Canadian stocks soared the most in at least 43 years, joining a global rally on hopes government stimulus will soon flow to economies hammered by the coronavirus.The S&P/TSX Composite Index rose 12% on Tuesday, the biggest one-day percentage jump since at least 1977 when the index’s predecessor began. South of the border, stocks boomed with the Dow Jones Industrial average posting its best day since 1933 as a U.S. stimulus bill of about $2 trillion inches forward.Investors had been searching for buying opportunities amid the brutal sell-off but volatility has made it difficult to call a bottom on the stocks. The Canadian market is still down about 30% from its February peak.“We had cash going into this period, and I have been investing it as the market has been going down,” said Whitney George, chief investment officer of Sprott Asset Management. “I have been reinvesting the proceeds incrementally as the market keeps dropping.” Gold’s spot price was up about 5% and silver more than 6% on Tuesday, giving a boost to mining stocks. The spending package by the U.S. government caused Goldman Sachs to predict an “inflection point” for gold and the bank is recommending its clients buy now.Canada’s economic heartland is shutting down to fight the virus outbreak. Ontario and Quebec, which together account for about 57% of the country’s economy, have ordered non-essential businesses to close by the end of today. Nearly one million Canadians applied for jobless claims last week, representing almost 5% of the labor force, according to a senior government official with knowledge of the data.Debate on Prime Minister Justin Trudeau’s C$82 billion ($57 billion) stimulus package is stalled as parties negotiate the terms in a minority parliament.Within the energy patch, record low prices for heavy Canadian crude have prompted one of the biggest operators in the oil sands to take the rare step of shutting production. Motivated by the “extremely low” prices, Suncor Energy Inc. announced on Tuesday that it will shut in one of its two so-called trains at its two-year-old, 194,000 barrel a day Fort Hills oil sands mine.Bombardier Inc. said it will suspend all non-essential work at most Canadian-based operations tonight until April 26 to comply with government mandates to help slow the spread of Covid-19.Sprott’s George is keeping a positive outlook for the market despite all the volatility. “Looking ahead, I am confident that markets and the economy will bounce back as they have had in the past,” he said.CommoditiesWestern Canada Select crude oil traded at a $15.00 discount to West Texas IntermediateSpot gold rose about 4.7% to $1,626.15 an ounceFX/BondsThe Canadian dollar was little changed at C$1.4487 per U.S. dollarThe 10-year government bond yield rose about 8 basis points to 0.873%(Updates with closing prices.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Suncor Energy (SU) trimmed its 2020 capital spending guidance by nearly 26% due to an unexpected drop in oil prices and bleak global demand on account of the coronavirus outbreak.
(Bloomberg) -- Canada’s largest oil and gas company said it would cut its capital program this year by 26% as it tries to outlast the plunge in crude prices.Suncor Inc. will lower its capital program by C$1.5 billion ($1 billion) this year to between C$3.9 billion and C$4.5 billion, the company said in a statement. It will also reduce operating expenditures by C$1 billion from C$11.2 billion in 2019, and is adjusting refinery utilization because of the drop in fuel demand. The company is also delaying its target of C$2 billion of incremental free funds flow by two years to 2025.Suncor’s cuts follow $4.4 billion in reductions already announced by other companies in the nation. Canada has been particularly hard hit by the oil crash, as pipeline constraints force steep price discounts even beyond the drop in global benchmark prices. Workers in the remote oil-sands region in Alberta are also bracing for potential outbreaks of the coronavirus.“The simultaneous supply and demand shocks are having a significant impact on the global oil industry,” Mark Little, Suncor’s chief executive officer, said in the statement. “We are adjusting our spending and operational plans to be prepared in the event the current business environment persists for an extended period of time.”The company’s full-year production outlook is 740,000 to 780,000 barrels a day, compared with about 743,000 in the first quarter. That includes an increase in bitumen output offset by lower production expected from Fort Hills, where the partners are reducing it to a one-train operation to increase cash flow, according to the statement.The Syncrude annual coker turnaround is being deferred from the second quarter to the third, while MacKay River’s return to operations has been intentionally extended to May because of the virus and low prices. The company is also seeking options for its project to extend the life of the Terra Nova floating production vessel as Spain is no longer able to accommodate a dry dock slot.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- As if the market crash threating their jobs wasn’t stressful enough, workers in Canada’s oil-sands are bracing for the coronavirus to upend life in the remote camps where they’re lodged.One suspected case among them is already haunting roughnecks who fly in from across Canada and live for weeks on end in barracks-like facilities built in the boreal forests and marshes of northern Alberta, which houses the world’s third-largest crude reserve. Civeo Corp., a Houston-based company that provides lodging for workers in the Fort McMurray area near oil-sands mines, on Friday said one of its guests “has symptoms consistent with COVID-19, has been tested and we are awaiting results.”A widespread infection afflicting a workforce that grapples with long hours of physical labor in punishing cold would also be a blow to producers already reeling from the fallout of the oil price war between Russia and Saudi Arabia. It would disrupt what’s set to be the industry’s heaviest maintenance season in five years. Thousands of temporary workers will be needed as producers like Suncor Energy Inc. and Canadian Natural Resources Ltd. shut equipment for repairs.Anxieties already are running high among workers, who often have their own rooms but share restrooms and cafeterias, providing many opportunities for the virus to go around.“Most of the discussions in the lunchroom are based on what’s going on with the virus, what’s going on medically, what’s going on financially, how bad are the markets down?” said a 43-year-old who lives in Albian Village Camp, which houses workers for a Canadian Natural oil-sands mine. He asked not to be named for fear of losing work at the site. “Are we going to get stuck here? Are there going to be flights home? Will we have jobs to come back to?”Albian Village is adding hand-sanitizing stations, prepackaging workers’ food instead of letting them serve themselves buffet-style, and spacing out the cafeteria tables, the worker there said.ESS Support Services Worldwide, which runs that camp, didn’t immediately return messages seeking comment. Canadian Natural said in an e-mailed statement that it has implemented precautionary measures across its camps and will continue to strengthen them at the advice of public health officials.In Civeo’s camp, where the suspected case was reported, anyone who has traveled internationally won’t be allowed in the facilities for 14 days after a return, sanitizing measures are being enhance and screening and quarantining procedures are being implemented.Workers also are afraid that if they’re infected, they’d face weeks quarantined in their rooms, which the worker estimates are only around 200 square feet, or roughly 20 square meters.“These rooms are pretty small,” he said. “It’s not like being at home. If you get quarantined here, it would be pretty hellish.”Workers have also watched warily as governments have implemented increasingly stringent travel restrictions, threatening their ability to get home. The Albian worker would be able to drive 14 hours to his home in British Columbia in the event of a total shutdown of Canada’s air transportation, but his coworkers who live 5,000 kilometers (3,100 miles) away in Canada’s Atlantic provinces of New Brunswick and Nova Scotia wouldn’t be so lucky.According to a 2018 census, there were 74 temporary workers’ dwellings in the Regional Municipality of Wood Buffalo, the sprawling northern Alberta region that houses the oil sands deposits. The region’s so-called shadow population of temporary residents who live outside of the municipality but who are employed in the region for at least 30 days a year was 33,000, according to that census.Suncor, Canada’s largest integrated oil company, is working with the companies that run its camps on a variety of safety measures, said Erin Rees, a company spokeswoman. Camps are conducing more frequent and deeper cleaning of high touch-point areas like door handles, posting security outside of cafeterias to make sure everyone uses hand sanitizer before entering and switching cafeterias from self-serve to full service style so that fewer people come into contact with the food, she said.While the worker in Albian Village said the camp operators are doing everything they reasonably can to protect workers, they might ultimately be fighting a losing battle.“If it’s coming in, it’s coming in,” he said. “There’s no stopping it once it’s here.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Unfortunately for some shareholders, the Suncor Energy (TSE:SU) share price has dived 61% in the last thirty days...
(Bloomberg) -- First, office workers and bartenders were sent home. Now, the cogs of Canadian industry are slowly grinding down as major companies curb operations to limit the spread of the coronavirus.Firms like Vale SA are idling some operations while Canadian oil sands producers Syncrude Canada Ltd. and Suncor Energy Inc. are delaying maintenance work as coronavirus cases rise across Canada. Growth forecasts that were already revised lower amid the pandemic and tumbling oil prices are being cut again. Economists expect the virus will spur a recession with few industries left untouched.“It looks like it’s going to be a broad-based economic downturn rather than companies being hit on their supply chains,” said Robert Hogue, senior economist at Royal Bank of Canada. “I’m pressed to think of any sectors that will be unscathed.”In the past week, coronavirus cases have surged to 569 across Canada, including seven deaths in British Columbia and one in Ontario, which has declared a state of emergency. The U.S. and Canada have agreed to close the border between the two nations to non-essential traffic. Prime Minister Justin Trudeau had already announced moves to limit entry of travelers from overseas.Newfoundland TouchedThe threat of infection spurred Vale, one of the world’s top metal producers, to idle its fly-in mining operations at Voisey’s Bay, Newfoundland, on Canada’s east coast. Concerns about flying workers from out of town led Syncrude to delay coker maintenance at its upgrader near Fort McMurray, Alberta, and Suncor pushed back planned work scheduled for May.Other miners including Teck Resources Ltd. and Lundin Mining Corp. have halted construction on some projects outside Canada, which may have knock-on effects later.Canadian automakers have begun following their U.S. and European counterparts in suspending operations. General Motors Canada will reevaluate a decision to halt manufacturing weekly, spokeswoman Jennifer Wright said in an email.Earlier, General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV said they will temporarily shut down their U.S. plants, and European car manufacturers such as Volkswagen AG idled production until further notice amid coronavirus disruptions.Linamar Corp. has established a task force and comprehensive action plan to deal with the virus and is keeping employees safe and customers supplied while mitigating the financial impact of the situation “as best we can,” Chief Executive Officer Linda Hasenfratz said in an email statement.“The sooner we can all rapidly act to contain the spread of the virus as effectively as possible the sooner we will all be back to work and the less the human and economic fallout from the situation,” Hasenfratz said.Recession OddsWhile the Canadian economy was relatively well positioned to navigate the early stages of the coronavirus outbreak, rising domestic case counts and a “sudden stop” in a wide range of industries means it’s no longer an external problem, Bloomberg Economics economist Andrew Husby said Wednesday in a report. Oil prices at or below $30 a barrel will also lead to a significant hit in oil sector investment, depressing growth and incomes beyond the virus shock, he said.Trudeau unveiled a C$82 billion ($56.7 billion) stimulus package on Wednesday that’s worth 3% of GDP, but the chief economist at Canadian Imperial Bank of Commerce said a recession was “still inevitable.”A big chunk of the economy is already shutting down with schools, restaurants and entertainment spots closing their doors, RBC’s Hogue said. The shutdowns are broader than “we might’ve imagined just a week ago” and the longer the pandemic lasts the more the risk of a snowball effect, as workers start to see their hours reduced or companies are forced to lay off employees, he said. That, in turn, reduces consumer spending and exacerbates the hit on the economy.Small businesses are already feeling the pinch. A quarter of small business owners said they won’t survive a month with a big drop in income, according to a Canadian Federation of Independent Business email survey of 748 companies. Hotels, restaurants and retailers are the hardest hit and many are shut down with no real sense of when they’ll be able to reopen, said Ted Mallett, the federation’s chief economist.While new stimulus measures will help give businesses wage subsidies and tax deferrals, companies are still dealing with many unknowns that most disaster plans didn’t account for, he said.“When the entire economy shuts down that is completely different,” Mallett said by phone. “We’re in unknown territory.”(Updates with GM Canada suspension in paragraph 6)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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