Suncor Energy (SU) Q4 Earnings Fall Y/Y, Sales Beat Estimates

Suncor Energy Inc. SU reported fourth-quarter 2023 adjusted operating earnings of C$1.26 per share, down from the prior-year quarter's level of C$1.81. The underperformance could be primarily attributed to a 4.2% increase in expenses year over year.

Operating revenues of $10.4 billion beat the Zacks Consensus Estimate by 22.4%. The top line also increased approximately 2% on a year-over-year basis due to higher sales in the Upstream and Downstream segments.

Suncor Energy’s board of directors approved a quarterly dividend of 54.5 Canadian cents per share, on its common shares, payable on Mar 25, 2024, to shareholders of record at the close of business on Mar 4, 2024. The company repurchased shares worth approximately C$375 million during the reported quarter.

Suncor Energy Inc. Price, Consensus and EPS Surprise

Suncor Energy  Inc. Price, Consensus and EPS Surprise

Suncor Energy Inc. price-consensus-eps-surprise-chart | Suncor Energy Inc. Quote

Segmental Performance

Upstream: Total production in this segment increased 5.9% year over year to 808,100 barrels of oil equivalent per day (boe/d) from 763,100 boe/d.

The company’s exploration and production volume (international, offshore and natural gas) slipped 32.4% to 50.700 boe/d from 75,000 boe/d in the year-ago quarter. This was due to the divestment of SU’s U.K. portfolio.

Adjusted operating earnings totaled C$1.6 billion compared with C$2.4 billion in the year-ago quarter.

Operating cost per barrel increased to C$30.8 from C$28.35 in the corresponding period of 2022.  Upgrader utilization decreased to 83% from 93% a year ago.

Bitumen production increased to 281,400 boe/d from 170,600 boe/d in the prior-year period. Oil sands volumes reduced to 475,700 boe/d from 517,500 boe/d a year ago.

Fort Hills reported an average fourth-quarter volume of 154,100 bpd, higher than the year-ago quarter’s level of 69,500 bpd.  Cash operating cost per barrel decreased to C$28.1 from C$37.1 in the prior-year period. This cost reduction can be attributed to increased production volumes and lower natural gas prices.

Downstream: Adjusted operating earnings from the unit decreased to C$8.1 billion from the year-ago quarter’s reported figure of C$9 billion. This was due to lower benchmark crack spreads.

Refined product sales totaled 575,500 bpd, up from the prior-year quarter’s level of 548,200 bpd due to higher refinery production.

Crude throughput totaled 455,900 bpd compared with 440,000 bpd in the year-ago period.  Refinery utilization was 98% compared with 94% a year ago.

Financial Position

Total expenses increased 4.2% to C$10.7 billion from that recorded in the prior-year quarter.

Cash flow from operating activities amounted to C$4.3 billion, up from the prior-year quarter’s level of C$3.9 billion. Suncor Energy incurred capital expenditures worth C$1.5 billion in the fourth quarter of 2023.

As of Dec 31, 2023, the company had cash and cash equivalents of C$1.7 billion and long-term debt of C$11.1 billion. Its total debt to total capital was 20.4%.

Guidance

Suncor anticipates significant planned turnaround activities at Syncrude to begin in the first quarter of 2024 and conclude in the second quarter. The impact of this maintenance will be accounted for in the company's 2024 guidance.

SU expects production in the range of 770,000-810,000 boe/d for 2024.

Oil Sands operations yield is anticipated in the band of 430,000-460,000 bbls/d, while the same for Fort Hills is projected in the 155,000-165,000 bbls/d range.  Syncrude and Exploration and Production operations yield is expected in the range of 175,000-190,000 bpd and 45,000-55,000 boe/d, respectively.

The company also expects capital expenditures in the band of C$6.3-C$6.5 billion for full-year 2024.

Zacks Rank and Key Picks

Currently, SU carries a Zacks Rank #4 (Sell).

Investors interested in the energy sector might look at some better-ranked stocks like Subsea 7 S.A. SUBCY and Energy Transfer LP ET, both sporting a Zacks Rank #1 (Strong Buy), and Murphy USA Inc. MUSA, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Subsea 7 is valued at $3.97 billion. The company currently pays a dividend of 38 cents per share, or 2.94%, on an annual basis.

SUBCY offers offshore project services for the energy industry, specializing in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.

Energy Transfer is valued at $49.3 billion. The company currently pays a dividend of $1.26 per share, or 8.61%, on an annual basis.

ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.

Murphy USA is valued at around $8.47 billion. In the past year, its shares have risen 48.9%.

MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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