Suncor Energy Inc. T.SU

This is why SU shareholders should be unhappy

[Obscure1]

Norway's SVAL ENERGI is paying $410 million Canadian dollars to SU for 19 million barrels of reserves. 

That equates to $21.5 per barrel of reserves that are already in service

Suncor has 4.3 billion PROVEN reserves plus another  2.3 billion PROBABLE reserves

PROVEN reserves are reserves that have a 90+% chance of commercialization

PROBABLE reserves are reserves that have a >50% and less than 90% chance of commercialization

With constant advances in engineering, which Suncor is actually good at btw, lets attach an 80% (as opposed to a 70% midway point) liklihood that Suncor will be able to convert the PROBABLE reserves into actual production.  It is not like Suncor has to hope that they can find the oil thousands of feet under the ground or under a sea.

So, let's multiply the 2.3 billion PROBABLE reserve by the .8 = 1.84 billion barrels

Adding 4.3 billion barrels to 1.8 billion barrels = 6.1 billion barrels

Applying the Cdn $21.5 per barrel benchmark that Suncor received from Sval Energi is paying, the math works out to Cdn $131 billion. 

If you divide $131 billion by 1.4 billion shares you get $93 per share. 

I assume that Sval Energi is buying the equivalent of Brent as opposed to WTI so lets apply a 5% discount taking the $93 per share down to $88 per share. 

Let's discount the $88 per share down another $3 to $85 to account for the fact that about 20% (I could be off a bit on this number so feel free to correct me) of oil that SU sells is in WCS form as opposed to SCO

So, let's start with a share price of $85 for SU's reserves.  

Now, lets add in $10 billion for the sale of Petro Can divided by 1.4 billion shares = $7 per share

Now, lets add in $25 billion for the sale of the 4 refineries divided by 1.4 billion = $18 per share

Adding $85 + $7 + $18 = $110 per share

So let's assume that buyers want a deep discount of 20% based upon wtf do I know.  That still leaves a company worth about $90 per share

[swpb]

exactly. So why is SU in the dumpers so much? Why cang Elliot turn this ship around? There is a 45$ USD target on it and to trades at 30$ and dropping.

[Experienced]

The short answer is three reasons.. 1....Management 2....Management 3....Management

[stwatcher]

Bingo !!! If they announce a new CEO that the market loves and has track history of success ... we will have an entirely new SP

[Experienced]

If you take a look at ALA and see how the SP performed after they brought in a new CEO a while back you will see what can happen.

[PabloLafortune]

While I agree that the Altagas CEO has done a masterful job,I feel the situation is different. The Altagas CEO was pretty much given (asked for?) carte blanche. Whereas the incoming CEO of Suncor will not have carte blanche obviously - the (controlling?) major shareholder Elliott wants retail and refining sold. Not sure what kind of CEO (yes man?) they can attract when the job comes with an

[angelnicky]

Elliot may skin the shareholders for their own interest Has no experience in oil and gas Market may not like Elliot approach

[Experienced]

For an amateur....lol....you are doing pretty good...lol I agree wholeheartedly about your point about the difference between ALA amd what is likely to happen at SU regarding the CEO.  The other thing about ALA is that they brought in a guy who knew the business and especially the US side of the business where most of the growth and ultimately most of the assets are held. I also agree with

[Thor16]

Experienced - do you have some math behind this or is this your gut feeling?  Would be interested in the numbers behind various scenarios.

[angelnicky]

SU is stock one of the poorest performers witjh high oil prices Shareholders are taken a beating  Elliot tatics is not helping as well Elliot must step away before they push this back to the 20's Oil up today and SU down Marfket lost fate in current management leaders along with Elliot

[Experienced]

Great question. The answer is a combination of both. Here is my thinking.... Current estimates are that PetroCanada would fetch between 10 and 15 billion.  SU owns four refineries.  Since no new refineries have been built for decades due primarily to environmental concerns, ownership of refineries is a valuable thing. A reasonable minimum selling price for a refinery would be about

[NewfieBullet76]

SU was worth almost 60,000,000,000 before they purchased Petro Can. Then they aquirred COS which was the majority shareholder of Syncrude. COS was once valued at 26 billion and only owned 37.6% of Syncrude. Between Petro can and COS just these two companies should be worth at 2022 valuation around 40 billion, add Suncor's valuation before acquiring these assets total company Value is easy 100

[angelnicky]

I beleive Elliot wants to break up the company. Breaking up the company will generate less for the retail investors Investors not happy with Elliot Plan Vote at Shareholders medeting to disapprove Elliot approach

[PabloLafortune]

If they sell refining first and then hire a CEO....problem solved. Also easier to hire to. Btw, the only comparative we have is the Conoco and Philips 66 split. Whether it was worth it is unclear.  A couple of E&Ps have outperformed the combined market cap of COP and PSX - PXD and EOG - while others have lagged (OXY). The thing that is valuable with SU is SCO - I believe they're

[jx7000]

Thank goodness I bought my Bomabardier stock earlier this year.