Canada’s biggest energy firm and the largest oil sands outfit, Suncor Energy Inc. SU reported second-quarter 2015 operating earnings per share of 63 Canadian cents (51 cents), which marched past the Zacks Consensus Estimate of 25 cents.
Quarterly revenues of C$8.1 billion (around $6.6 billion) also beat the Zacks Consensus Estimate of $5.7 billion. A favorable downstream business environment led to the beat.
However, the reported earnings deteriorated from the year-ago quarter level of 71 cents. The top line was also lower than the year-ago quarter level of C$10.7 billion. The year-over-year decline was due to the weak crude pricing environment.
Quarterly operating earnings of C$906 million were significantly lower than C$1.1 billion recorded a year ago. Moreover, cash flow from operations decreased to C$2.2 billion from C$2.4 billion in the second quarter of 2014.
Dividend Increase
Suncor Energy announced an increase in its quarterly dividend. The quarterly dividend of 29 Canadian cents per share marks a 1 Canadian cent increase from the last payout. The new dividend will be paid on Sep 25 to shareholders on record as of Sep 4, 2015.
Production
Total upstream production in the reported quarter averaged 559,900 barrels of oil equivalent per day (BOE/d), 8% higher than the prior-year level of 518,400 BOE/d. Strong contribution from Oil Sands and ramp-up activities of Golden Eagle production in the U.K. helped in volume growth.
Oil Sands volume was 448,700 barrels per day (Bbl/d), considerably greater than 403,100 Bbl/d recorded in the year-ago quarter. Minimal maintenance activities boosted the volume.
Production from Syncrude operations remained essentially flat year over year at 24,900 Bbl/d in the quarter.
Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 111,200 BOE/d, lower than 115,300 BOE/d in the prior-year quarter. Planned turnaround actitivites and natural decline hampered results. However, improved contribution from Golden Eagle partially offset the decline.
The Refining and Marketing segment averaged 416,800 Bbls/d of refinery crude processed, up from 391,100 Bbls/d in the year-ago quarter. The refinery utilization came in at 90%, higher than the year-ago quarter level of 85%.
Product Sales
The company’s refined product sales of 525,500 Bbls/d increased 2% from the prior-year quarter.
Operating Expenses
Suncor reported operating costs of C$2 billion compared with C$2.5 billion in the year-ago quarter.
Balance Sheet & Capital Expenditure
As of Jun 30, 2015, Suncor had cash and cash equivalents of C$4.9 billion and total long-term debt (including current portions) of C$13.2 billion. The debt-to-capitalization ratio was approximately 24.1%. Moreover, the company incurred capital expenditure of C$1.6 billion in the quarter.
Guidance
Suncor lowered its 2015 capital spending projection to C$5.8–C$6.4 billion from the prior guidance of C$6.2–C$6.8 billion.
The company projects full-year total production of 550,000–595,000 BOE/d. Suncor anticipates full-year Oil Sands sales in the range of 405,000–455,000 bbls/d.
Refinery throughput is anticipated in the range of 190,000–210,000 bbls/d in Eastern North America and 220,000–240,000 bbls/d in Western North America. Refined products sales are anticipated in the 500,000–550,000 bbls/d range.
Zacks Rank
Suncor Energy currently carries a Zacks Rank #3 (Hold).
Better-ranked players from the broader energy sector include Vanguard Natural Resources, LLC VNR, Tallgrass Energy Partners, LP TEP and CVR Refining, LP CVRR. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report SUNCOR ENERGY (SU): Free Stock Analysis Report VANGUARD NATURL (VNR): Free Stock Analysis Report CVR REFINING LP (CVRR): Free Stock Analysis Report TALLGRASS ENRGY (TEP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research