RE:RE:Some of us hope admin. at SU are reading these posts!!!!!!! problem is some investors want the cake and the icings too.
A big portion of SU is downstream, meaning refining and upgrading margin that aren't quite WTI dependent but provide revenue stability during low oil price period. Secondly SU is a more conservative company than CNQ. CNQ made many acquisition during low oil price cycle. It's the risk they took and getting rewarded now. I remember CNQ bought out Devon's canadian asset for a song. CNQ is the only few O/G companies i know of that bought oil/gas asset during any big downturn, and they don't overpay. Best to ownn more than 1 O/G name in any portfolio
Experienced wrote: With all due respect, your statement suggests that you have not really looked at SU and how it makes money compared to the others that you mentioned. As well, your post doesn't recognize how The Street values companies and determines their their SP.
On this Board, many posters have made comments about why CNQ is doing much better than than SU and think SU should do as well.
The fact of the matter is that a significant portion of the cashflow for SU comes from PetroCanada and the revenue from PetroCanada is somewhat independent of the price of oil and depends on other factors such as frac spreads which can vary with the price of the oil but in practice this variation is a fraction of the swings on oil prices. Compared to CNQ this situation has an impact on what people are prepared to buy the stock.
As well, the portion of SU that is represented by PetroCanada is unlikely to grow much in the future and right now, based on what is said by SU management, the same can be said for the company as a whole. While somewhat theoretical as per a second year MBA Finance course. as a general rule, the SP today is the present value of expected future earnings for a company. Since both PetroCanada and and the SU oil production division are not likely to grow much (and may in fact decline if the green zealots have their way), the SP of Su reflects this.
On the otherhand, CNQ is not saddled with these problems and they clearly say in their Q reports that one of the benefits of them lowering their debt compared to expected EBITA is that it opens the door for futher acquisitons to grow the company.
When you put these things together it explains why the SP of CNQ is outperforming SU and it also why I have repeatedly posted that SU managment has to put foreward a plan as to how it plans to grow the company before the SP will get to the levels that most people on this Board want to see happen.