Suncor Energy Inc T.SU

What's up with Fort Hills?

[Clemxb7]

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.

[mrbb]

correct me if i'm wrong but i don't see the urgency for SU to acquire total's 35% fort hill. SU doesn't need to own the feedstock to keep the upgrader running. Pure bunk imo.  Does PPL, Keyera or TRP need to 'own' the oil, NGL or NG in order run them through their pipeline or gas plants? As an operator of FH, SU dictate what, where and when the oilsand goes to. Unless

[Clemxb7]

You make a couple of good points I hadn't thought of still IMO Suncor should go through with Fort Hills. First it isn't that much money. When you consider what the original deal was supposed to cost and then minus what Conoco Philips paid the cost should be somewhat over 2 billion $ CAD. Its an opportunity to grow without issuing shares paid out of ongoing cash flow. With the money Suncor

[mrbb]

forget the original deal, SU was playing nice in hope to get the whole package. Since then, nothing announced for the remaining FH piece from total. Maybe Total is playing hard to get, thinking it is a seller's market and SU have to buy it.  I rather see the remaining FH piece as buyer's market. Even if SU doesn't buy total's 35% piece of FH, total still has to run their

[Experienced]

Yep...the only real advantage for SU in buying out Total is that they don't have a partner to deal with in terms of the expansion and the associated capital costs for Fort Hills. That said, in terms of getting feedstock for the upgraders long term, Fort Hills IMO is still the cheapest and lowest risk option for SU.  So if the price is right compared to their other options, they will buy

[Clemxb7]

One way or the other earnings call in two weeks so I guess we will see. One point is there is no doubt Total wants the stink of the pass' 'Tar Sands' off its cleanish European fingers tho. 

[mrmomo]

"What's up with Fort Hills?" I think this topic has been discussed quite a bit, at length by myself, Experience & others over the past month so since CanocoP's ROFR being exercised. I assume since they've had that somewhat unexpected action from ConocoP & Total probably playing hardball, it has delayed their intended plans. In addition, that unfortunate breach of