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Suncor Energy (SU) Q3 Earnings Fall Y/Y, Sales Beat Estimates
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Suncor Energy Inc. (SU - Free Report) reported third-quarter 2023 adjusted operating earnings of C$1.52 per share, down from the prior-year quarter's level of C$3.84. This could be attributed to a decrease in crude oil price realizations and a decline in upstream production, reflecting a weaker business environment in the reported quarter.
Operating revenues of $9.4 billion beat the Zacks Consensus Estimate by 14.6% due to an increase in upgrader utilization. The top line decreased approximately 18.3% on a year-over-year basis due to a decline in sales in the Upstream and Downstream segments.
Suncor Energy Inc. Price, Consensus and EPS Surprise
Upstream: Total production in this segment decreased 4.7% year over year to 690,500 barrels of oil equivalent per day (boe/d) from 724,100 boe/d. The figure also missed our projection of 749,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 43.1% to 44,400 boe/d from 78,100 boe/d a year ago due to international asset divestments.
Adjusted operating earnings totaled C$2 billion compared with C$2.6 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.2 from C$29.7 in the corresponding period of 2022 due to lower natural gas prices and other commodity costs. Upgrader utilization increased to 88% from 75% a year ago.
Bitumen production decreased to 176,800 boe/d from 240,900 boe/d in the prior-year period. Oil sands volumes went up to 469,300 boe/d from 405,100 boe/d a year ago.
Fort Hills reported an average third-quarter volume of 86,100 bpd, lower than the year-ago quarter’s level of 95,800 bpd. However, the figure beat our projection of 84,900 bpd.
Cash operating cost per barrel increased to C$43.4 from C$25.65 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$38.64.
Downstream: Adjusted operating earnings from the unit increased to C$1.3 billion from the year-ago quarter’s reported figure of C$755 million. This was due to an increase in refining and marketing benchmark crack spreads and FIFO inventory valuation gain in the reported period.
Refined product sales totaled 547,100 bpd, down from the prior-year quarter’s level of 577,300 bpd. Crude throughput totaled 463,200 bpd compared with 408,800 bpd in the year-ago period. Refinery utilization was 99% compared with 88% a year ago.
Financial Position
Total expenses decreased 32.3% to C$10.5 billion from that recorded in the prior-year quarter. The figure was higher than our estimate of C$8.7 billion.
Cash flow from operating activities amounted to C$4.1 billion, down from the prior-year quarter’s level of C$4.4 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the third quarter of 2023.
As of Sep 30, 2023, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$9.8 billion. Its total debt to total capital was 19%.
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. Operations yield for Syncrude and Exploration and Production is anticipated in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also expects capital expenditure in the band of C$5.4-C$5.8 billion for full-year 2023.
Liberty Energy is valued at $3.32 billion. LBRT currently pays a dividend of 20 cents per share, or 1.02% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.
Oceaneering International is worth approximately $2.11 billion. In the past year, its shares have risen 43.1%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
USA Compression Partners is valued at around $2.58 billion. USAC currently pays a dividend of $2.10 per unit, or 8.01% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
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Suncor Energy (SU) Q3 Earnings Fall Y/Y, Sales Beat Estimates
Suncor Energy Inc. (SU - Free Report) reported third-quarter 2023 adjusted operating earnings of C$1.52 per share, down from the prior-year quarter's level of C$3.84. This could be attributed to a decrease in crude oil price realizations and a decline in upstream production, reflecting a weaker business environment in the reported quarter.
Operating revenues of $9.4 billion beat the Zacks Consensus Estimate by 14.6% due to an increase in upgrader utilization. The top line decreased approximately 18.3% on a year-over-year basis due to a decline in sales in the Upstream and Downstream segments.
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 decreased 4.7% year over year to 690,500 barrels of oil equivalent per day (boe/d) from 724,100 boe/d. The figure also missed our projection of 749,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 43.1% to 44,400 boe/d from 78,100 boe/d a year ago due to international asset divestments.
Adjusted operating earnings totaled C$2 billion compared with C$2.6 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.2 from C$29.7 in the corresponding period of 2022 due to lower natural gas prices and other commodity costs. Upgrader utilization increased to 88% from 75% a year ago.
Bitumen production decreased to 176,800 boe/d from 240,900 boe/d in the prior-year period. Oil sands volumes went up to 469,300 boe/d from 405,100 boe/d a year ago.
Fort Hills reported an average third-quarter volume of 86,100 bpd, lower than the year-ago quarter’s level of 95,800 bpd. However, the figure beat our projection of 84,900 bpd.
Cash operating cost per barrel increased to C$43.4 from C$25.65 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$38.64.
Downstream: Adjusted operating earnings from the unit increased to C$1.3 billion from the year-ago quarter’s reported figure of C$755 million. This was due to an increase in refining and marketing benchmark crack spreads and FIFO inventory valuation gain in the reported period.
Refined product sales totaled 547,100 bpd, down from the prior-year quarter’s level of 577,300 bpd. Crude throughput totaled 463,200 bpd compared with 408,800 bpd in the year-ago period. Refinery utilization was 99% compared with 88% a year ago.
Financial Position
Total expenses decreased 32.3% to C$10.5 billion from that recorded in the prior-year quarter. The figure was higher than our estimate of C$8.7 billion.
Cash flow from operating activities amounted to C$4.1 billion, down from the prior-year quarter’s level of C$4.4 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the third quarter of 2023.
As of Sep 30, 2023, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$9.8 billion. Its total debt to total capital was 19%.
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. Operations yield for Syncrude and Exploration and Production is anticipated in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also expects capital expenditure in the band of C$5.4-C$5.8 billion for full-year 2023.
Zacks Rank and Key Picks
Currently, SU carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. (LBRT - Free Report) and Oceaneering International, Inc. (OII - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and USA Compression Partners, LP (USAC - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty Energy is valued at $3.32 billion. LBRT currently pays a dividend of 20 cents per share, or 1.02% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.
Oceaneering International is worth approximately $2.11 billion. In the past year, its shares have risen 43.1%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
USA Compression Partners is valued at around $2.58 billion. USAC currently pays a dividend of $2.10 per unit, or 8.01% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.