Falling costs cut Suncor’s cyclical risk

Article Excerpt

SUNCOR ENERGY INC. $42 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $67.2 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.0%; TSINetwork Rating: Average; www.suncor.com) is Canada’s largest integrated oil company, with major projects in the Alberta oil sands. It also owns four refineries (three in Canada and one in Colorado), along with over 1,750 Petro-Canada gas stations. As of December 31, 2018, Suncor’s proven and probable reserves totalled 7.6 billion barrels. At current production rates, those reserves would last over 28 years. Getting control of Syncrude has paid off Suncor has also invested heavily in its operations in the past few years. That included an all-stock deal to buy Canadian Oil Sands Ltd. in March 2016. If you include Canadian Oil Sands’ debt of $2.6 billion, the total price was $7.1 billion. Canadian Oil Sands owned 36.74% of the Syncrude oil sands project in northern Alberta. Subsequent purchases have increased Suncor’s stake in Syncrude to 58.74%. Partly due to the Syncrude…

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