RE:Q4 wrapping up in 2 weeksObscure1 wrote: WTI averaged $70.62 in Q3
If the price of WTI holds where it is today for the rest of the month, the average price of WTI for Q4 will end up being $77.10 which is $6.62 higher than last quarter.
In the Q3 market call, Mark Little stated: Suncor delivered $2.6 billion of funds from operations for the third quarter while also completing the most significant maintenance year in our history
In Q4, SU's upstream production may be up 10% which while WTI is up 8%. When you factor in reduced costs at Syncrude and Fort Hills, I expect FFO to be well in excess of $3 billion for the quarter. That equates to $2 per share or $8 for the year.
If everything stays the same (which it never does), SU should be able to continue to put its house in order in the next few quarters.
My guess is that the SU share price will remain under pressure from continued distribution from ESG players for another 2 or possibly 3 quarters based upon what I saw at ENB. The fact that SU is mopping up shares at a brisk pace with its NCIB efforts is definitely a positive in mitigating the pressure. I expect that SU will reinstitute its NCIB in February based upon comments from mgmt.
Experienced has presented a pretty compelling arguement to be WARY. I can't disagree with him, but those $8 per share per year FFO numbers look pretty good to me.
If something triggers the pulling of the plug on the market, few if any companies will be immune from the fire sale. SU will eventually have to become a growth stock and adjust it's business model, but it looks like the company is getting to be a safer investment every day. The company has a long way to go, but it has also come a long way.
Great post!!
Yeah the FCF numbers look excellent and as some here have pointed out, from a valuation perspective SU shares are on sale. The fact of the matter is that the shares have been on sale fpor quite a while now and so the valuation gap is not some short term market inefficiency situation. This suggest something bigger is going on since despite what anyone might say (me included), the "Grownups" on The Street are not dummies.
I have posted a number of times before that IMO one of the reasons is that while SU mgt is doing good things (increasing the dividend, buying back shares and finding ways to reduce production costs), many of the veterans look at all this and conclude that mgt doesn't have any good ideas on how to use all that money to grow the company and for that reason they are taking their money and investing elsewhere.
One of the axioms in the market and one which goes back over a hundred years is "Don't fight the tape". Over the years I have used this axiom to my advantage and been right more times than not. Recently in the case of SU, I followed it as well and sold my stake number of weeks ago when the price shot up after the dividend announcement and I saw that there was no more momentum left in the SP.
That said, I still very much like the company but unless there is some sort of announcement of a plan to meaningfully grow the company going forward or the SP gets crushed in some sort of market meltdown, I will be sitting on the sidelines and monitoring the company closely.