Suncor Energy Inc T.SU

Q3 share buy back drought now over

[Clemxb7]

It is good news they sold the windfarm. I assumed they built this stuff to appease the environmentalists so somehow they would end up giving it away. 

Between this and sale of the Norway asset that adds to about 1 billion CAD to put towards debt. 

Cash flow for Q1 was $3 billion and Q2 $4 billion. Q3 will be in the middle of that so say $3.5 billion.

We now know Suncor spent (only) ~$1 billion on buybacks Q3 and the dividend costs ~$630 million (per quarter) so they likely have been able to steer 3.5 - 1 - .630 = 1.87 billion towards debt Q3. They just offered to buy back 1.75 billion in debt so that jives.

They owed 15.6 billion as of Q2 and want to get that down to $12 billion before they spend 75% of available funds on buybacks (up from the current 50%). 

So Suncor likely now (Oct 1) owes 15.6 - 1.75 - 1 = ~$12.85 billion. 

If cash flow is 3.5 billion for Q4 (same as Q3) then Suncor will spend $2.02 billion on share buybacks Q4. If they have a similar quarter to Q2 then they will spend similar to what they spent on share buybacks in Q2 and look what the share price did that quarter. 

Anyways the share buyback drought of Q3 is now over.

(from @gugo907)

[Obscure1]

Clem: Thanx for your thoughts on the numbers. Not sure if you saw this, but SU announced yesterday that they were upsizing (did they steal that term from McDonalds?) the max buyback on the debt from $1.75 billion to $3.6 billion. 

[meritmat]

So what's the chance of a div increase?

[Clemxb7]

 Yeah. Suncor will end up retiring 1/3 of its debt 2022 and probably buyback about 10% of its shares. That is impressive. The company just grows stronger and stronger.  Now they are set up to be consistently on the bid. The share buy backs really seem to goose the price (Q2) when they threw $2.5 billion at it. I do wonder why they didn't smooth out the process over Q2 & Q3