Suncor Energy: Record Production Drives Exceptional Quarterly Performance

With record production volumes across both upstream and downstream operations, Suncor Energy has proven its ability to maximize asset usage while maintaining strict cost discipline. This operational excellence positions the company to generate strong free cash flows for some time to come.

The company’s integrated business model also provides resilience against oil price volatility. With a robust dividend yield, ongoing share repurchase program, and management’s clear focus on operational excellence, the firm presents an attractive opportunity while the stock trades at just 5.1 times the forward cash flow forecast.

SUNCOR ENERGY INC. (Toronto symbol SU; www.suncor.com) is Canada’s largest integrated oil firm, with major projects in the Alberta oil sands. It also operates four refineries (three in Canada and one in Colorado), along with over 1,800 Petro-Canada gas stations.

In 2024, Suncor’s production rose 10.9% to a record 827,000 barrels a day from 746,000 barrels in 2023. That’s partly because the expanded Trans Mountain pipeline let it ship more crude oil from its Alberta oil sands projects to the west coast, in part to meet Asian demand. As well, its refineries processed a record 465,000 barrels a day in 2024, up 10.5% from 2023.

Meantime, the company produced a record 853,200 barrels a day in the first quarter of 2025, up 2.1% from 835,300 barrels a year earlier. That was due to higher output from its main oil sands projects. The company also reported record sales of refined petroleum products of 604,900 barrels a day, up 4.1% from 581,000 barrels.

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Suncor’s strong dividend yield rewards income-focused investors

In 2025, Suncor aims to spend between $6.1 billion and $6.3 billion on exploration and upgrades to its existing operations. About two-thirds of that spending will go to expanding its oil sands properties.

Those investments should lift this year’s average production by about 1% to 833,600 barrels a day. Suncor also expects to increase its refinery volumes by about 1%, to between 435,000 and 450,000 barrels a day, in 2025.

The higher output should also lift the company’s free cash flow (after capital expenditures) from $7.36 billion in 2024 to $10.8 billion in 2026. That will give Suncor more room to reward investors. In 2024, it spent $3.0 billion on share buybacks.

At the same time, Suncor is benefitting from a recent restructuring plan, including job cuts and investments in new trucks with greater capacity. As a result, the company’s operating costs will probably decline 7% to roughly $33.00 a barrel in 2025.

With the December 2024 payment, Suncor raised your quarterly dividend by 4.6%. Investors now receive $0.57 a share instead of $0.545. The new annual rate of $2.28 yields
a high 4.7%. The company also plans to increase the dividend rate by 3% to 5% annually.

The stock now trades at just 5.1 times the company’s projected 2025 cash flow of $9.59 a share.

Recommendation in The Successful Investor: Suncor Energy Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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