Suncor Energy Inc T.SU

Suncor year end Report Card / Total return of 42.85%

[Clemxb7]

The good, the bad and the unfortunate: 

The good:

• Paid back a lot of debt – net debt should be under $11 billion. The current cash position should be good enough to possibly pay cash for the remaining stake in Fort Hills to own 100%. Suncor should have paid off 30%-35% of the net debt from January 1. It’s boring but very much a business improver.

• Bought back significant amount of shares: 7% as of November and possibly more in December. Buying back shares grows the value of each remaining share by 7.5% (1/.93) YTD.

• YTD capital gain of:  30.33% ($41.25/$31.65)

• Total return of 30.33% + 7.5% + 5.0% = 42.85%

• Raised Dividend twice

• Bought a bigger stake in Fort hills at a good price which will increase production and reserves and likely now have the cash to buy 100%.

• Got rid of Little. I think a CEO is a lot like an NHL coach. Some can get more out of an organization than others. I really don’t think the new guy seems too bad (see list of goods).
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The bad:

• The worker death! I have worked in the industry for many years and I am shocked at how many deaths that have occurred at Suncor sites. This is something they should be able to address. They have to get a grip on this.

• Missed targets. For instance management keeps promising to aggressively buy back shares though that has been a bit uneven and sporadic.

• “Investor Day” Instead of talking about the good at Suncor they had to defend owning Petrocan and go into boring safety related detail.

The unfortunate:

• Having Elliot come in and propose selling Petrocan like it was easy as pie to get zillions. The way I see Petrocan it is neutral: neither an advantage nor disadvantage. It was unfortunate that Suncor got put into a position of having to defend owning something that was previously uncontroversial. Some investors seemed to flee when when it became know they wouldn't sell.