RE:RE:RE:RE:Chevron buys HessMatt.....
Longer term, SU will be out the production from the Base Plant unless they get environmental approval so while perhaps current production may be higher for a while that will not be the case longer term without significant investment just to keep production level let alone increase production. Granted, approval for a Base Plant extension is now a bit easier with the Supreme Court decision BUT it would still be a huge risk (not to mention the cost to get the approval) for any potential buyer and that goes directly to valuation. Chevron's purchase of Hess is the opposite in that the Guyanese Government is focussed on raising the standard of living for its people and will be supportive of a huge increase in oil production from its large oil reserves. As many here have lamented, the Government of Canada is just opposite in terms of supporting the oil industry. Purchasers will pay more for anything where there is a Government that is favourable/supportive to their activities. It's really that simple.
The other thing is and I guess perhaps I wasn't as clear as I could have been, is that Hess and Suncor are not directly comparable as businesses. A significant part of the FCF for SU is derived from downstream activities - refinery and gas stations. This is not the case for Hess. Further these two businesses are not expected to grow and as I mentioned in my earlier post, the gas station part may well decline over time as more EVs enter the market due to Government legislation. SU is not going to build another refinery. All this factors significantly into the valuation comparison for the two companies.
Frankly, if you believe that oil demand will continue to grow at a healthy pace for decades, as many here do, then it is clear that one would place a higher valuation on a more pure oil play like Hess than a diversified oil company like SU.