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Suncor Energy Inc T.SU

Alternate Symbol(s):  SU

Suncor Energy Inc. is a Canada-based integrated energy company. The Company's segments include Oil Sands, Exploration and Production (E&P), and Refining and Marketing. Its operations include oil sands development, production and upgrading, offshore oil and gas production, petroleum refining in Canada and the United States and its Petro-Canada retail and wholesale distribution networks, including Canada’s Electric Highway, a coast-to-coast network of fast-charging electric vehicles (EV) stations. Petro-Canada has a network of over 1,800 retail and wholesale locations across Canada, providing customers with a wide variety of fuel and service offerings including low-carbon fuel options. The Company is developing petroleum resources while advancing the transition to a low-emissions future through investment in power and renewable fuels. It also wholly owns the Fort Hills Project, which is located in Alberta's Athabasca region, approximately 90 kilometers north of Fort McMurray.


TSX:SU - Post by User

Post by Obscure1on Jul 22, 2021 3:30pm
214 Views
Post# 33591194

Hope for pension income seekers

Hope for pension income seekersAccording to the company's guidance in February, they have all of their costs covered (operations, maintenance, dividend, Capex) with WTI at US$45. 

If oil prices stay in the $70's, which they are likely to do as Russia and Saudi Arabia now control both the world wide supply and price, then Suncor will remain an incredible cash cow.

SU should be able to generate an additional $8 billion of free cash flow beyond paying it's existing dividend.

Next year, SU only has C$240mm of debt that is due, which represent less than 2 weeks of cash flow. If SU chooses to initiate another max. NCIB next year, they could be able to buy back another 135mm shares.  At $30 per share, a max. buyback would cost $4 billion, which would still leave another $4 billion left over.  

The extra $4 billion has to go somewhere.  Will the company go on a shopping spree?  Certainly not for oil assets.  Could they spend it on something green?  Perhaps, but that is a big chunk of cash.  It wasn't too long ago when Buffet bought Dominion Energy's nat gas pipeline assets for $4 billion cash and that was a big deal.

If SU only raises it's dividend 25% next year, that equates to $0.21 per share.  Based upon 1.35 billion shares outstanding, that equates to about $270mm which represents about 1/15 of the leftover $4 billion.  I think mgmt will raise the dividend sooner and faster than they offered in their guidance unless they plan to make a huge acquistion every year, which is pretty much logistically impossible.





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