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Suncor Energy Inc. Message Board

  • earlyoutpress earlyoutpress Jul 1, 2008 10:31 AM Flag

    Reason for the decline

    Obviously something is going on here. The huge stock drop from $72 has a reason. The insiders know. All we can do is guess. Here are a few guesses.
    1. They face an environmental problem. Perhaps not enough water for their process and future growth. Shortage of water could be serious and the possibility was reported in the press last year as a long term problem for the industry.
    2. Huge CO2 emissions could prevent expansion.
    3. Big labor shortage that will delay future construction plans.

    I do not know but the insiders know why the stock is down.

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    • S&P reports that one of 2 shale oil facilities was shutdown on May 16 for maintenance. Supposed to be down for 30 days. Chart shows that is when the decline started. I bought some call spreads today based on this being a temporary price fluction.

    • Oil sands water use
      • consumption per barrel reduced approximately 50% since 2003
      • total consumption reduced approximately 40% since 2003

      oil sands CO2 intensity per barrel reduced by 50% since 1990
      • cost of Alberta climate change regulatory compliance: $500,000 for second half 2007

      -35 % increase in production this year

      -15.5 billion barrels in recoverable reserves that might soon qualify for SEC reporting.

      ROCE 15% @ $60 WTI


      Valuation -wise, CNQ is better IMO, but I wouldn't discount SU's performance...and those recoverable reserves in the ground gotta be worth somethin.

      • 2 Replies to brnoil
      • Valuation -wise, CNQ is better IMO, but I wouldn't discount SU's performance...and those recoverable reserves in the ground gotta be worth somethin. >brnoil

        I agree, though with the recent decline SU is about the same as CNQ valuation wise. There doesn't seem to be any one compelling reason for the recent SU decline, volume has been a little heavier than normal lately, but for the first part of the decline it was average or less.

        Looks like a buying opportunity to me. I've never owned SU stock-I have CNQ,ECA,DVN,CLL.TO and PBG.TO who all have operations in the oil sands. I'm seriously thinking of buying now.

      • Would you guys believe it could be something so simple as the stock was over bought? The buy point being 52/53 per share. Working off the excess and up she'll go. So don't give up. If management didn't know what they were doing, the company wouldn't be where its at today. Also, after the split, some funds and hedges have toooo much stock so its rebalence time...Mike

    • 1. They face an environmental problem... long term problem for the industry

      woudln't CNQ ECA PCZ IMO BQI equally affected ?

      2. Huge CO2 emissions could prevent expansion.

      isolated to SU only ?

      3. Big labor shortage that will delay future construction plans.

      CNQ horizon and ECA future sands plans going on unabated

      probably due to mispriced forward hedges

    • They have TONS of water, I dont think thats an issue.
      I think $140 oil will make the environmental whackos in the backseat and keep their mouths shut.
      The world is depending on companies like Suncor that are actually bring more crude to the market.
      With crude at $143, the PROFIT on SU products is up automatically by 20%. As 10% increase in crude is all topline and goes to profit.

      As for labor, if there is a recession you will have ample people looking for high paying jobs.
      All people that just got out of college will be looking for new job opportunities.

      SU is one of the best poised companies for 40% annual growth for the next 3 years.

      • 1 Reply to cspanosmwc
      • Quote from the below reference indicates that water will be a problem.

        Choke point for oil sands may be water shortage
        Posted: May 11, 2007

        Martin Mittelstaedt, May 11, 2007, Globe and Mail -- The amount of water available in Northern Alberta isn't sufficient to accommodate both the needs of burgeoning oil sands development and preserve the Athabasca River, contends a study issued jointly yesterday by the University of Toronto and the University of Alberta.

        The study, written in part by Dr. David Schindler, a University of Alberta biologist considered Canada's top water expert, suggests that the choke point for the province's oil sands expansion may not be the huge carbon dioxide emissions arising from mining and processing the sticky, bitumen containing tar sands, as is widely assumed, but a lack of water.

        Oil sands plants typically use two to four barrels of water to extract a barrel of oil from the tar sands, a resource that has given the Northern Alberta region the world's largest petroleum reserves but made it a global centre of environmental controversy.

        The problem of water availability is expected to become acute in the decades ahead because climate change is likely to cause much more arid conditions, reducing stream flows on the Athabasca River, the source of the industry's water, to critically low levels during parts of each year.

        The rest of the article can be found at

        This industry expansion may be limited and the insiders may know of some pending announcement.

32.22-0.38(-1.17%)May 1 4:02 PMEDT