Canada's premium integrated energy company,
Suncor Energy Inc.
) reported second quarter 2013 earnings of 62 Canadian cents (61
US cents) per share, missing the Zacks Consensus Estimate of 67
cents. The earnings also reflect a decrease of 18 Canadian cents
from the year-ago quarter profit.
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A combined effect of several factors such as reduction in
production levels in the 'Oil Sands' segment as well as increase
in operating costs and other costs associated with planned
maintenance events can be held responsible for the downfall.
Total revenue of C$9,714 million (US $9,493 million) increased
slightly from the year-ago level of C$9,707 million, beating the
Zacks Consensus Estimate of $9,262 million.
Cash flow from operations was reported at C$2.25 billion, down
approximately 4.1% from the second quarter of 2012.
Upstream production during the quarter was 500,100 barrels of oil
equivalent per day (BOE/d), down from the second-quarter 2012
level of 542,400 BOE/d.
Oil sands volume was 276,600 barrels per day (Bbl/d), lower than
309,200 Bbl/d in the prior-year quarter. The quarter's results
were negatively impacted by a planned turnaround at Upgrader 1
and unplanned third-party activities; the latter being the cause
of approximately 36,000 bbls/d reduction in yield.
Production from the Syncrude operations grew 14.7% year over year
to 32,800 bbls/d in the quarter. The increase is due to the
effects of maintenance activities undertaken in the second
quarter of the previous year.
Suncor's Exploration and Production segment (consisting of
International and Offshore and Natural Gas segments) yielded
190,700 BOE/d against 204,600 BOE/d in the prior-year quarter.
The reduction was primarily due to lower production levels in
Libya, partially offset by increased production at White Rose and
The Refining and Marketing segment averaged 414,500 bbls/d of
refinery crude against 427,200 bbls/d in the year-ago quarter.
The refinery utilization fell to 90% from 94% a year ago. The
lower utilization levels were primarily due to maintenance
activities that suppressed utilization at the Edmonton refinery.
The company's total product sales of 84,600 cubic meters per day
was down 3.3% from the prior-year quarter primarily due to lower
production levels owing to Suncor's planned maintenance events.
The depreciation, depletion, amortization and impairment expenses
of Suncor decreased 35.3% to C$1,029 million year over year.
Balance Sheet & Capital Expenditure
As of Jun 30, 2013, Suncor had cash and cash equivalents of
C$4,530.0 million and total long-term debt (including current
portions) of C$10,855 million. The debt-to-capitalization ratio
was approximately 21.2%. The company also incurred C$1,980
million as capital and exploration expenditure during the
Suncor expects an increase in its production capacity due to
several maintenance events undertaken during the quarter. This
has also enhanced the company's asset portfolio strength. Suncor
targets capital spending of almost C$7.0 billion for 2013.
Suncor currently retains a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity
market over the next one to three months.
However, other firms in the integrated energy sector that are
expected to significantly outperform the broader U.S. equity
market over the next one to three months are
Enerplus Resources Fd
Arc Resources Ltd
Canadian Oil Sands
). All three stocks sport a Zacks Rank #1 (Strong Buy).