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Suncor Energy (SU) Hikes 2021 CapEx & Production View Y/Y

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Suncor Energy (SU - Free Report) recently released its capital budget and production guidance for 2021 and expects its output to increase next year as it presumes commodity prices and demand to improve from pandemic slumps.

Production in 2021

Suncor expects its average upstream production for 2021 in the range of 740,000-780,000 barrels of oil equivalent per day (Boe/d), approximately 10% higher than the midpoint of the 2020 guided range.

Meanwhile, the company anticipates its 2021 refinery throughputs in the band of 415,000-445,000 barrels per day (BPD).

Suncor’s production from its stake in Fort Hills is projected in the range of 65,000-85,000 BPD, indicating a 20% rise from the midpoint of the 2020 guided range. Meanwhile, Fort Hills’ cash operating costs are estimated in the $25-$29 per barrel range, nearly 20% below the midpoint of the 2020 guidance.

Further, Suncor forecasts cash operating costs for its oil sands operations to decline 8% to $26-$28.50 per barrel from the midpoint of 2020 outlook.

Capital Spending View

For 2021, this Alberta-based integrated player’s total capex is envisioned in the range of C$3.8-C$4.5 billion, higher than 2020's guided range of C$3.6-C$4 billion. It estimates to disburse in the range of C$2.9-C$3.4 billion for the upstream segment. Moreover, the company has plans to spend C$700-C$800 million on its downstream operations while the corporate spending is assumed in the C$200-C$300 million bracket.

Financials

In order to maintain solid finances, backed by a strong balance sheet, Suncor plans a C$500 million worth share buyback program for 2021. It also aims to pay off debt ranging from C$500 million to C$1 billion during the year.

Regardless of the challenges faced in 2020, such as the unexpected drop in oil prices and a decline in global demand due to the novel coronavirus outbreak, Suncor continued to focus on safety and maximizing shareholder value through improved performances and cost minimization.

Company Profile

Founded in 1917, Suncor is Canada's premier integrated energy company. Its operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining and product marketing. Suncor is one of the largest owners of oil sands in the world.

Zacks Rank & Key Picks

Suncor currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are CNOOC Limited (CEO - Free Report) , Noble Corporation (NE - Free Report) and Antero Midstream Corporation (AM - Free Report) , each presently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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