What's up with Fort Hills?Apparently the reason Suncor's stock price is limp is due to Mildred Lake running out of reserves in 10- 15 years. This is for the most part fixed if the Fort Hills deal goes through. There will be enough feedstock for the Upgrader to keep running at 100% capacity after 2035. That said an already built upgrader in Fort Mac is not going to sit idle under any circumstance in the future so it will still be a profit center.
I don't see Suncor and Total not doing the deal now simply because Conaco Philips took the Surmont piece. The 35% piece of Fort Hills also comes with some tax pools so it may be a very good deal. The cost should be just north of $2 billion which shouldn't take long to pay off because the money coming in from Suncor's recent divestitures will be realized in 2023.
Anyways I suspect there will be some sort of announcement re: Fort Hills soon prior to earnings. I hope we see the deal go through because I think it's a big positive with the reasonable price, tax pools, increased reserves and increased production.
Otherwise Suncor now pays a 5.4% dividend with good prospects for future increases and capital gains. I bought my first chunk of the current shares I own for ~$23 so there I am getting a 9% return. I also bought more in the 30's & 40's though so there’s that. (lol) I would argue buying a solid dividend is better than a GIC because the tax implications are better and you’re in for future dividend increases and potential capital gains.
It may not seem like it though WTI only averaged just ~$2 less per barrel Q2/Q1 so Suncor will have a quarter not far off its most recent. That should be boring aside from what’s up with Fort Hills.