Suncor Energy Announces Share Financing Worth $2.5 Billion
Calgary-based Suncor Energy Inc. SU announced that it has signed a C$2.5 billion deal for the sale of 71.5 million shares at C$35 a share. The sale, which is at a 4.1% discount to the Tuesday closing price of C$36.5 per share, will be carried out on a bought-deal basis.
The sale will be carried out through three underwriters led by TD Securities Inc., CIBC Capital Markets and J.P. Morgan Securities Canada Inc. The stock offering is anticipated to close on Jun 22, 2016. It is, however, subject to customary closing conditions that include approval of the Toronto Stock Exchange and the New York Stock Exchange.
Suncor will provide underwriters with an option to procure up to 10.7 million additional common shares within 30 days from the date of offering. The company expects to generate gross proceeds of C$2.9 billion from the offering if the over-allotment option is exercised in full.
The company intends to use the proceeds from the aforesaid offering to buy Murphy Oil Corporation’s MUR 5% interest in the Syncrude mining venture for C$937 million. Also, it will help the company in improving its balance sheet flexibility by reducing outstanding debt.
In March, Suncor finalized its $4.2-billion deal with Canadian Oil Sands Ltd. Suncor’s motivation behind this deal with the company was to secure an additional 37% interest in Syncrude, thereby acquiring the largest stake in the consortium.
Suncor is Canada’s largest integrated energy company. The company’s operations include oil sands development and upgrading, conventional and offshore crude oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.
Recently, the company provided its new production guidance wherein it lowered the 2016 output projection. The revised guidance was attributable to the massive Canadian wildfire that had affected the company’s production the most. The company anticipates 2016 total production in the range of 585,000–620,000 barrels of oil equivalent per day (BOE/D) as against the prior guidance of 620,000–665,000 BOE/D.
Some better-ranked players in the energy sector are McDermott International Inc. MDR and North Atlantic Drilling Limited NADL. Both stocks sport a Zacks Rank #1 (Strong Buy).
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