Canada's biggest energy firm
Suncor Energy Inc.
) has trimmed production temporarily from its oil sands operation
in Fort McMurray, Alberta, which has been massively affected by
ENBRIDGE INC (ENB): Free Stock Analysis
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The natural calamity has forced Canadian pipeline operator,
) to shut two lines of the Enbridge pipeline system in the Fort
McMurray region as a preventive measure. Consequently, Suncor had
to decrease output as it is not possible for the company to carry
crude oil away from the region.
In order to lessen the impact of decreased production, Suncor is
now operating its existing storage capacity and oil sands
pipeline. Suncor added that it is working with Enbridge in order
to bring the Enbridge pipeline system back to operation. However,
Suncor believes that this shutdown will not hamper it to achieve
the guidance of annual production.
Calgary, Alberta-based Suncor is Canada's premier integrated
energy company. Suncor's business can be divided into four
segments: Oil Sands, Exploration and Production, Refining and
Marketing, and Corporate, Energy Trading and Eliminations.
Suncor has significant oil sands and conventional production
platform, huge long-lived oil-sands reserves and an impressive
downstream portfolio. The company's asset base includes
substantial conventional reserves and production at offshore
Eastern Canada and North Sea, which generate strong margins and
should provide free cash flow to fund future oil sands expansion.
However, in our view, Suncor's proven deep oil sands technology
is still vulnerable to potential implementation delays.
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 1 to 3 months.
Meanwhile, one can look at
Ferrellgas Partners LP
) as good buying options. The energy firms - sporting a Zacks
Rank #1 (Strong Buy) - have solid secular growth stories with the
potential to rise significantly from the current levels.