Suncor Energy’s Q1 Results: A Beat on Estimates Despite YoY Decline

Suncor Stock

Suncor Energy (SU:NYE), the leading integrated energy company in Canada, has announced its first-quarter financial results for 2023. Despite a year-over-year decline, Suncor stock managed to beat estimates, displaying resilience in challenging market conditions.

 

Financial Performance:

Suncor Energy generated total revenues of CAD 15.2 billion in the first quarter, reflecting a decline of 11.4% from the same quarter last year. The decline was primarily due to lower crude oil prices and refining margins, offset by higher production volumes and favorable foreign exchange rates.

Despite the decline in revenues, Suncor Energy reported net earnings of CAD 1.8 billion, which surpassed the consensus estimate of CAD 1.3 billion. The earnings per share (EPS) of CAD 1.19 were also above the expected EPS of CAD 0.84.

 

Operational Performance:

Suncor Energy’s total production during the quarter was 767,900 barrels of oil equivalent per day (BOE/d), a 9.3% increase from the first quarter of 2022. The company’s Oil Sands operations contributed 437,100 BOE/d, while its Exploration and Production operations produced 330,800 BOE/d.

The Oil Sands operations benefited from higher production volumes and lower operating costs, partially offset by lower realized prices. The Exploration and Production operations benefited from higher realized prices, partially offset by lower production volumes.

Suncor Energy’s refining and marketing operations had an average throughput of 455,300 barrels per day (bbls/d) during the quarter, reflecting a 3.3% increase from the same quarter last year. The segment’s operating margin of CAD 2.9 per barrel was lower than the margin of CAD 3.6 per barrel in the first quarter of 2022, primarily due to lower refining margins.

 

Capital Spending and Debt Reduction:

Suncor Energy’s capital spending during the quarter was CAD 1.1 billion, primarily focused on sustaining and maintenance activities. The company reduced its net debt by CAD 0.5 billion during the quarter, reflecting disciplined capital allocation and strong cash generation.

 

Outlook:

Suncor Energy expects to generate free funds flow of CAD 2.5-3.0 billion in 2023, assuming Brent crude oil prices average USD 70-75 per barrel. The company plans to invest CAD 1.8-2.0 billion in sustaining and maintenance capital and CAD 1.0-1.2 billion in growth capital.

 

Suncor Stock Forecast:

Based on the Suncor stock forecast from 11 analysts, the average analyst target price for Suncor Energy Inc is USD 55.64 over the next 12 months. Suncor Energy Inc’s average analyst rating is Buy.

Stock Target Advisor’s own stock analysis of Suncor stock is Bearish, which is based on 4 positive signals and 10 negative signals. At the last closing, Suncor stock price was USD 30.00. Suncor Energy Inc’s stock price has changed by -2.72% over the past week, -5.09% over the past month, and -19.03% over the last year.

SU Ratings by Stock Target Advisor

Conclusion:

Suncor Energy’s Q1 results demonstrate the company’s ability to withstand challenging market conditions and generate strong financial and operational performance. Despite a decline in revenues, the company beat estimates and showcased resilience through cost management, production optimization, and disciplined capital allocation.

We believe that Suncor Energy’s strong financial position, diverse asset base, and focus on sustainable energy transition make it an attractive investment opportunity in the energy sector.

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