Canada’s biggest energy firm and the largest oil sands outfit, Suncor Energy Inc. SU reported first-quarter 2015 operating earnings per share of 12 Canadian cents (10 US cents). The earnings reported matched the Zacks Consensus Estimate of 10 US cents but were substantially lower than the year-ago quarter level of C$1.22. Weak crude pricing environment hampered the results, partially offset by higher production.
In the reported quarter, total revenue was C$7.4 billion (around US$6 billion) compared with C$10.5 billion in the year-ago quarter. The top line failed to meet the Zacks Consensus Estimate of US$7.2 billion.
Quarterly operating earnings of C$175 million were significantly lower than C$1.8 billion recorded a year ago. Moreover, cash flow from operations decreased to C$1.5 billion from C$2.9 billion in the first quarter of 2014.
Production
Total upstream production in the reported quarter averaged 602,400 barrels of oil equivalent per day (BOE/d), 10.5% higher than the first-quarter 2014 level of 545,300 BOE/d. Strong operational reliability and the absence of maintenance activities helped the volume growth.
Oil sands volume was 440,400 barrels per day (Bbl/d), considerably greater than 389,300 Bbl/d recorded in the year-ago quarter. Again, minimal maintenance activities boosted the volume.
Production from Syncrude operations remained essentially flat year over year at 35,200 Bbl/d in the quarter.
Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 126,800 BOE/d, higher than 120,900 BOE/d in the prior-year quarter. Improved contribution from Golden Eagle and increased production at Terra Nova aided the result.
The Refining and Marketing segment averaged 437,100 Bbls/d of refinery crude processed, down from 442,000 Bbls/d in the year-ago quarter. The refinery utilization came in at 95%, lower than the year-ago quarter level of 96%.
Product Sales
The company’s refined product sales of 519,700 Bbls/d edged up 1% from the prior-year quarter.
Operating Expenses
Suncor reported operating cost of C$2.3 billion compared with C$2.5 billion in the year-ago quarter.
Balance Sheet & Capital Expenditure
As of Mar 31, 2015, Suncor had cash and cash equivalents of C$4.8 billion and total long-term debt (including current portions) of C$13.4 billion. The debt-to-capitalization ratio was approximately 24.5%. Moreover, the company incurred capital expenditure of C$1.3 billion in the quarter.
2015 Guidance
Suncor maintained its 2015 capital spending projection at C$6.2–C$6.8 billion. The company further updated that its plans to reduce operating expenses by C$600–C$800 million will mostly be realized in 2015, ahead of the two-year schedule originally thought of.
Zacks Rank
Suncor currently carries a Zacks Rank #2 (Buy).
Other players from the broader energy sector those are worth a look include Rice Energy Inc. RICE, Midstates Petroleum Co. Inc. MPO and Callon Petroleum Co. CPE.
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
Be the first to comment