Stockwatch Energy - Yesterday Heading into the final week of the third quarter, oil prices are facing the prospect of their first quarterly slump in two years. Prices took another tumble today, coming under continued pressure from the rising U.S. dollar (which dents demand by making oil more expensive in other currencies). Iraqi Oil Minister Ihsan Abdul Jabbar said OPEC+ is keeping an eye on the "challenging" circumstances. "We don't want a sharp increase in oil prices or a collapse," he told an interviewer on state television (quoted in Reuters). OPEC+ will hold its next monthly meeting on Oct. 5.
Here in Canada, oil sands giant Suncor Energy Inc. (SU) lost 36 cents to $36.59 on 31.8 million shares, as it held its head high and gave the impression of a beautifully bulging treasury. It announced this morning that it has launched a bond buyback program for up to $1.75-billion. The offer spans 10 series of notes due from 2026 to 2042 and expires on Oct. 4.
The offer also comes just a few weeks after Suncor got a scolding from S&P Global Ratings, which downgraded the company by one notch to BBB -- the second-lowest rating that is still investment-grade -- and gave it a "negative" outlook on Aug. 31. The ratings agency said Suncor's share buybacks may put its per-share credit ratios below desirable levels, even as the company goes ahead with its previously announced efforts to reduce debt. (More broadly, the agency has been tightening its credit ratio thresholds for Canadian oil companies, saying they have been more prone to volatile operating performance than their U.S. competitors.)
In any case, Suncor is not the only oil and gas producer cleaning up its debt load through buybacks -- not even the only one this month. On Sept. 9, fellow oil sands player Cenovus Energy Inc. (CVE: $20.04) launched a $1.5-billion (U.S.) tender offer for outstanding notes, hiking the offer to $2.2-billion (U.S.) on Sept. 12. Yet another oil sands player, MEG Energy Corp. (MEG: $14.09), redeemed $216-million in notes last quarter and has repurchased another $361-million in debt on the market since May, including $41.6-million so far in September.