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Suncor Energy (SU) Q2 Earnings Fall Y/Y, Sales Beat Estimates
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Suncor Energy (SU - Free Report) reported second-quarter 2023 adjusted operating earnings of 96 Canadian cents per share, down from the prior-year quarter's level of C$2.71. This could be attributed to lower crude oil and refined product realizations, reflecting a weaker business environment in the reported quarter.
Operating revenues of $8.7 billion beat the Zacks Consensus Estimate by 10.1% due to an increase in Upstream’s production. The top line decreased approximately 37% on a year-over-year basis.
The company repurchased shares worth approximately C$684 million during the reported quarter.
Suncor Energy Inc. Price, Consensus and EPS Surprise
Upstream: Total production in this segment increased 3% year over year to 741,900 barrels of oil equivalent per day (boe/d) from 720,200 boe/d in the prior-year quarter. The figure missed our projection of 793,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 20.2% to 62,800 boe/d from 78,700 boe/d a year ago due to natural declines and asset sales.
Adjusted operating earnings totaled C$1.9 billion compared with C$3.99 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.1 from C$33.5 in the corresponding period of 2022 due to lower natural gas prices. Upgrader utilization increased to 94% from 89% a year ago.
Bitumen production increased to 174,100 boe/d from 158,500 boe/d in the prior-year period. Oil sands volumes went up to 505,000 boe/d from 483,00 boe/d a year ago.
Fort Hills reported an average second-quarter volume of 95,800 bpd, higher than the year-ago quarter’s 87,400 bpd. However, the figure missed our projected volumes of 104,800 bpd. Cash operating costs per barrel increased to C$31.4 from C$30.2 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$28.62.
Downstream: Adjusted operating earnings from the unit decreased to C$494 million from the year-ago quarter’s reported figure of C$2 billion. This deterioration was due to a decrease in refining and marketing benchmark crack spreads and FIFO inventory valuation loss in the reported period.
Refined product sales totaled 547,000 bpd, up from the prior-year quarter’s level of 536,900 bpd. This can be attributed to the company leveraging its extensive domestic sales network and export channels in the quarter.
Crude throughput came in at 394,400 bpd compared with 389,300 bpd in the year-ago period. Refinery utilization was 85% compared with 84% a year ago.
Financial Position
Total expenses decreased 13.2% to C$9.4 billion from that recorded in the prior-year quarter. The expense amount was higher than our estimate of C$9.1 billion.
Cash flow from operating activities amounted to C$2.8 billion, down from the prior-year quarter’s level of C$4.2 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the second quarter of 2023.
As of Jun 30, 2023, the company had cash and cash equivalents worth C$2.6 billion, and long-term debt of C$9.6 billion. Its total debt to total capital was 19.1%.
Guidance
SU expects production in the range of 740,000-770,000 boe/d for 2023.
Oil Sands operations yield is anticipated in the band of 385,000-425,000 bbls/d, while the same for Fort Hills is projected in the 85,000-95,000 bbls/d range. Syncrude, and Exploration and Production operations yield are expected in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also projects full-year capital expenditure of C$5.4-C$5.8 billion.
CVR Energy (CVI - Free Report) is valued at around $3.67 billion. In the past year, its shares have risen 19.5%
CVI currently pays a dividend of $2 per share, or 5.47% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Evolution Petroleum is worth approximately $320.71 million. EPM currently pays a dividend of 48 cents per share, or 4.98% on an annual basis.
The company currently has a forward P/E ratio of 8.93. In comparison, its industry has an average forward P/E of 14.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.04 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.75%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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Suncor Energy (SU) Q2 Earnings Fall Y/Y, Sales Beat Estimates
Suncor Energy (SU - Free Report) reported second-quarter 2023 adjusted operating earnings of 96 Canadian cents per share, down from the prior-year quarter's level of C$2.71. This could be attributed to lower crude oil and refined product realizations, reflecting a weaker business environment in the reported quarter.
Operating revenues of $8.7 billion beat the Zacks Consensus Estimate by 10.1% due to an increase in Upstream’s production. The top line decreased approximately 37% on a year-over-year basis.
The company repurchased shares worth approximately C$684 million during the reported quarter.
Suncor Energy Inc. Price, Consensus and EPS Surprise
Suncor Energy Inc. price-consensus-eps-surprise-chart | Suncor Energy Inc. Quote
Segmental Performance
Upstream: Total production in this segment increased 3% year over year to 741,900 barrels of oil equivalent per day (boe/d) from 720,200 boe/d in the prior-year quarter. The figure missed our projection of 793,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 20.2% to 62,800 boe/d from 78,700 boe/d a year ago due to natural declines and asset sales.
Adjusted operating earnings totaled C$1.9 billion compared with C$3.99 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.1 from C$33.5 in the corresponding period of 2022 due to lower natural gas prices. Upgrader utilization increased to 94% from 89% a year ago.
Bitumen production increased to 174,100 boe/d from 158,500 boe/d in the prior-year period. Oil sands volumes went up to 505,000 boe/d from 483,00 boe/d a year ago.
Fort Hills reported an average second-quarter volume of 95,800 bpd, higher than the year-ago quarter’s 87,400 bpd. However, the figure missed our projected volumes of 104,800 bpd. Cash operating costs per barrel increased to C$31.4 from C$30.2 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$28.62.
Downstream: Adjusted operating earnings from the unit decreased to C$494 million from the year-ago quarter’s reported figure of C$2 billion. This deterioration was due to a decrease in refining and marketing benchmark crack spreads and FIFO inventory valuation loss in the reported period.
Refined product sales totaled 547,000 bpd, up from the prior-year quarter’s level of 536,900 bpd. This can be attributed to the company leveraging its extensive domestic sales network and export channels in the quarter.
Crude throughput came in at 394,400 bpd compared with 389,300 bpd in the year-ago period. Refinery utilization was 85% compared with 84% a year ago.
Financial Position
Total expenses decreased 13.2% to C$9.4 billion from that recorded in the prior-year quarter. The expense amount was higher than our estimate of C$9.1 billion.
Cash flow from operating activities amounted to C$2.8 billion, down from the prior-year quarter’s level of C$4.2 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the second quarter of 2023.
As of Jun 30, 2023, the company had cash and cash equivalents worth C$2.6 billion, and long-term debt of C$9.6 billion. Its total debt to total capital was 19.1%.
Guidance
SU expects production in the range of 740,000-770,000 boe/d for 2023.
Oil Sands operations yield is anticipated in the band of 385,000-425,000 bbls/d, while the same for Fort Hills is projected in the 85,000-95,000 bbls/d range. Syncrude, and Exploration and Production operations yield are expected in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also projects full-year capital expenditure of C$5.4-C$5.8 billion.
Zacks Rank and Key Picks
Currently, SU carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy (CVI - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum (EPM - Free Report) and Archrock (AROC - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy (CVI - Free Report) is valued at around $3.67 billion. In the past year, its shares have risen 19.5%
CVI currently pays a dividend of $2 per share, or 5.47% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Evolution Petroleum is worth approximately $320.71 million. EPM currently pays a dividend of 48 cents per share, or 4.98% on an annual basis.
The company currently has a forward P/E ratio of 8.93. In comparison, its industry has an average forward P/E of 14.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.04 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.75%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.