Q3 Higher crack spreads =higher sequential earnings (Q3/Q2)?I copied and pasted this (below) from a post I did a few weeks ago. There is a possible very realistic chance Suncor could realize a higher increase in FCF than the decrease caused from lower oil prices.
From the information you can glean from guidance it looks like Suncor will have significantly higher refinery margins Q3/Q2. We know the cracks we can get quotes on are right now between $70 and $80 USD. From the Q2 report margins were $41 USD Q2. It’s hard to be precise because I cannot find quotes for 2 of the referenced regional cracks still there is a good chance I have been too conservative in assuming a $25 CAD increase in differentials Q3/Q2. CAD has depreciated (higher realized price), and today cracks are $35 US above Q2.
One thing for sure the refineries contribution to FCF for Suncor gets no love. Perfect logic that Su has sold off since June due to lower oil prices right? Well these last 4 months Suncor has been quietly raking in the cash on products. It's gonna be a pile of money tha either exceeds or makes up for the lower oil prices or come very close.
"Suncor produces ~750,000 barrels per day oil = 750,000 x $14 (price dif Q2/Q3) x 92 (days in quarter) x 1.31 (exchange rate) = ~$ 1.266 billion CAD less FCF for oil production Q3/Q2.
HOWEVER: Suncor cracks 460,000 barrels per day oil = 460,000 x ~$25 (CAD) (conservative assumption difference in crack spreads Q3/Q2) x 1.16 (increased throughput Q3/Q2 due to maintenance being over) = ~$1,227 billion more in FCF from higher crack spreads."
https://stockhouse.com/companies/bullboard?symbol=t.su&postid=34940260