Canada’s biggest energy firm and the largest oil sands outfit, Suncor Energy Inc. SU reported third-quarter 2015 operating earnings per share of 28 Canadian cents (21 US cents), breezing past the Zacks Consensus Estimate of 9 US cents. Strong refinery utilizations along with higher contributions from Oil Sands operations led to the improvement. A weak crude pricing environment, however, partially dampened the results.
However, the reported earnings deteriorated from the year-ago quarter level of 89 Canadian cents. Quarterly revenues of C$7.6 billion also decreased significantly from C$10.3 billion in the year-ago quarter.
Quarterly operating earnings of C$410 million were significantly lower than C$1.3 billion recorded a year ago. Moreover, cash flow from operations decreased to C$1.9 billion from C$2.3 billion in the third quarter of 2014.
Production
Total upstream production in the reported quarter averaged 566,100 barrels of oil equivalent per day (BOE/d), 9% higher than the prior-year level of 519,300 BOE/d. Higher output in the U.K. and Oil Sands operations’ strong contribution helped in volume growth.
Oil Sands volume was 458,400 barrels per day (Bbl/d), greater than 441,100 Bbl/d recorded in the year-ago quarter.
Production from Syncrude operations was 28,100 Bbl/d in the quarter, lower than 29,400 Bbl/d in the year-ago comparable quarter.
Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 107,700 BOE/d, much higher than 78,200 BOE/d in the prior-year quarter. Improved production from U.K. supported the growth in volume.
The Refining and Marketing segment averaged 444,800 Bbl/d of refinery crude processed, up from 435,700 Bbl/d in the year-ago quarter. The refinery utilization came in at 96%, higher than the year-ago quarter level of 94%.
Product Sales
The company’s refined product sales of 546,400 Bbl/d decreased nominally from the prior-year quarter figure of 547,100 Bbl/d.
Operating Expenses
Suncor reported operating costs of C$2.1 billion compared with C$2.3 billion in the year-ago quarter.
Balance Sheet & Capital Expenditure
As of Sep 30, 2015, Suncor had cash and cash equivalents of C$5.4 billion and total long-term debt (including current portions) of C$14.2 billion. The debt-to-capitalization ratio was approximately 25.7%. Moreover, the company incurred a capital expenditure of C$1.7 billion in the quarter.
Guidance
Suncor maintained its 2015 capital spending projection at C$5.8–C$6.4 billion.
The company continues to project full-year total production at 550,000–595,000 BOE/d. Suncor still anticipates full-year Oil Sands sales in the range of 405,000–455,000 Bbl/d.
Refinery throughput was reiterated in the range of 190,000–210,000 Bbl/d in Eastern North America and 220,000–240,000 Bbl/d in Western North America. Refined products sales are anticipated in the 500,000–550,000 Bbl/d band.
Zacks Rank
Suncor Energy currently carries a Zacks Rank #2 (Buy).
Some better-ranked players in the energy sector are NuStar Energy LP NS, Matrix Service Company MTRX and Paragon Offshore plc PGN. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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Click to get this free report NUSTAR ENERGY (NS): Free Stock Analysis Report MATRIX SERVICE (MTRX): Free Stock Analysis Report SUNCOR ENERGY (SU): Free Stock Analysis Report PARAGON OFFSHOR (PGN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research