If I was running SuncorSU is in the incredibly fortunate position of being a cash elephant (cow is too small) these days and probably for the forseeable future. The trick is to decide how to use the cash.
Currently, with the share price at $29 at the FCF at about $10 per share, the company can earn a risk-free 35% return on its investment by buying back its shares under its existing NCIB. I don't know any business that wouldn't do that.
If I was running SU, I would be reaching out to its institutional shareholders to feel them out about their intentions going forward. Once I had figured out who's who in the zoo, I would propose to take take out the futures sellers to the tune of 300mm shares at $33 per share.
The cost of 300mm shares at $33 per share would be $10 billion which would provide SU with a 30% return on expected FCF for 2022. SU could pay off the $10 billion by the end of 2022 from the FCF.
The TSX would would probably have some hoops for SU to jump through but that is what lawyers are for. I expect a workaround could be arranged via a Tender Offer for 20% of the outstanding shares of the company.
Talk about a win-win-win.
SU: would be able to earn a 30% return on FCF and pay off the purchase in a year from pending FCF. The reduction of 300mm shares would boost earnings and permanently eliminate the cash drain of future dividends.
Institutions: that have ESG constraints could quickly and efficiently exit their SU holdings at a premium
Retail shareholders: the share price would jump up 10% and the prospects for future share price growth would improve as a 300mm share overhang would be removed