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Teck Resources (TECK) Updates Fort Hills Project Guidance

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Canada-based diversified miner, Teck Resources LimitedTECK recently revised its Fort Hills project guidance.

About the Fort Hills Project

This oil sands mine located in Alberta, is a partnership project of Suncor Energy SU , Teck Resources Limited and the Canadian subsidiary of TOTAL S.A. TOT , holding 50.8%, 20% and 29.2 % of interest in the project, respectively. Suncor, which is the developer and operator of the Fort Hills Energy Limited Partnership, recently updated the capex of the project, along with its production targets and schedule.

Capex update

The Fort McMurray wildfire in May 2016 has increased the capital cost forecast for the secondary extraction facility. The capital estimate of the project has been hiked by 10% of the original estimate, excluding foreign exchange impacts. The capital cost of Teck Resources is now estimated to be $805 million, out of which the company will spend $640 million in 2017. Because of the increase in capex estimate, Teck will record an after tax impairment charge of $164 million in its fourth quarter results.

Production update

Suncor forecasts an increase of 8% in the output production to 194,000 barrels per day. Teck Resources expects a nominal capacity of 186,000 barrels per day over the life of the project.

Schedule update

Majority of the project areas are advancing according to the original plan and budget, and the project is on track for its first production in late 2017. Oil production from the first secondary extraction unit is expected by this year end. Two other extraction units are scheduled to be executed by the first half of 2018, with 90% production rate likely to be achieved by the end of 2018.

Zacks Rank & Key Picks

Headquartered in Vancouver, Teck Resources deals in mining and mineral development with business units focused on copper, coal, zinc, gold and energy. The company currently carries a Zacks Rank #2 (Buy).

The company outperformed the Zacks categorized industry over the last six months. During the aforesaid period, Teck shares registered growth of around 54%, while the broader industry gained just 34%.

The company outperformed the Zacks categorized Mining-Miscellaneous industry over the last six months. During the aforesaid period, Teck shares registered growth of around 54%, while the broader industry gained just 34%.

BHP Billiton Limited BHP is one of the top players in the industry, sporting a Zacks Rank #1(Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

BHP Billiton is expected to report year-over-year growth of 6.85% and 12.59% on its revenue and earnings for 2017.

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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.


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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