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Suncor Energy (SU) Hikes 2022 CapEx & Production View Y/Y

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·4 min read
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Suncor Energy SU recently released its capital budget and production guidance for 2022, confirming prior pronouncements of doubling the dividend, expanding share buybacks and reducing the capital program by $300 million. The projection for 2022 includes solid operational performance across all assets as well as the ongoing capital and expense control.

Bringing in cheer for investors, Suncor doubled its quarterly dividend to 42 Canadian cents per share in the last reported quarter and increased the buyback authorization to roughly 7% of its public float.

Suncor will continue to concentrate on operational excellence, capital and expense discipline, shareholder return enhancement and a more robust future as it enters 2022.

Production in 2022

Suncor expects its average upstream production for 2022 in the range of 750,000-790,000 barrels of oil equivalent per day (Boe/d), approximately 5% higher than the 2021 guided range.

Management anticipates 2022 refinery throughputs in the band of 430,000-445,000 barrels per day (BPD).

Suncor’s 2022 production from its stake in Fort Hills is projected in the range of 85,000-100,000 BPD, indicating a 23.3% rise from the midpoint of the 2021 guided range. Fort Hills’ cash operating costs are estimated in the $23-$27 per barrel range, nearly 40% below the midpoint of the 2021 guidance.

SU forecasts cash operating costs for its oil sands operations in the $25-$28 per barrel band for 2022.

Capital Spending View

For 2022, this Alberta-based integrated player’s total capex is envisioned to be C$4.7 billion, 12% higher than the 2021 projection of C$4.2 billion. Suncor estimates a disbursement of C$3.6-C$3.8 billion for the upstream segment. Moreover, SU has plans to spend C$700-C$850 million on its downstream operations while the corporate spending is assumed in the C$200-C$250 million bracket.

Company Profile

Founded in 1917, Suncor is Canada's premier integrated energy company. SU’s operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining and product marketing. SU is one of the largest owners of oil sands in the world.

Zacks Rank & Key Picks

Suncor currently carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum Corp. OXY is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of various basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020 end, Occidental Petroleum's preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.

In the past year, shares of Occidental Petroleum have surged 99% compared with the industry's growth of 96.6%. OXY's 2021 earnings are expected to soar 151.4% from the year-ago reported figure. OXY has also witnessed eight northward estimate revisions in the past 60 days. In the third quarter, OXY achieved its divestiture target of $10 billion by inking a deal to sell off its interest in two offshore Ghana assets for $750 million.

PDC Energy PDCE is an independent upstream operator dealing in exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which was formed from the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDC Energy's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

In the past year, shares of PDC Energy have gained 169% compared with the industry's growth of 108.6%. PDCE's earnings for 2021 are expected to surge 273.4% from the prior-year reported figure. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised 26.8%. Earnings of PDCE beat the Zacks Consensus Estimate in all the last four quarters, the average being 51.06%.

Callon Petroleum Co. CPE solely focuses on exploring and producing oil and gas resources in the Permian Basin. CPE boasts an impressive footprint throughout the core of the Permian Basin, the highest-producing shale play in the United States. CPE, currently valued at $2.9 billion, entered the basin in 2009 and has been strengthening its foothold in the region ever since.

In the past year, shares of Callon Petroleum have soared 234.6% compared with Zacks Exploration and Production Industry's growth of 90.7%. CPE's 2021 earnings are expected to skyrocket 222.7% from the prior-year reported figure. CPE currently has a Zacks Style Score of A for both Growth and Momentum. CPE has witnessed six upward revisions in the past 60 days.


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