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Suncor Energy's (SU) Q2 Earnings & Sales Beat Estimates

·5 min read

Suncor Energy SU reported second-quarter 2022 operating earnings of $2.12 per share, beating the Zacks Consensus Estimate of $1.74. Moreover, SU’s bottom line improved from a profit of 39 cents in the year-ago period. This outperformance could be credited to significantly higher crude oil and refined product realizations, reflecting the improved business environment in the current quarter, combined with higher upstream production and refinery throughput.

Quarterly operating revenues of $12.7 billion beat the Zacks Consensus Estimate by 28.2% and increased by approximately 71.5% year over year.

In good news for investors, Suncor declared a quarterly dividend of 47 Canadian cents per share. The dividend is payable on Sep 26 to shareholders of record on Sep 2. The company repurchased approximately C$2.6 billion worth of its shares during the reported quarter.

Suncor Energy Inc. Price, Consensus and EPS Surprise

Suncor Energy  Inc. Price, Consensus and EPS Surprise
Suncor Energy Inc. Price, Consensus and EPS Surprise

Suncor Energy Inc. price-consensus-eps-surprise-chart | Suncor Energy Inc. Quote

Segment Performance

Upstream: Suncor’s total upstream production increased by 2.9% year over year to 720,200 barrels of oil equivalent per day (boe/d).

Significantly higher crude price realizations meant that Suncor’s upstream segment recorded adjusted operating earnings of C$3.99 billion compared with C$868 million in the prior-year quarter.

Operating costs per barrel increased to C$33.50 in the quarter under review from C$23.85 in the corresponding period of 2021. Upgrader utilization increased to 84% from 70% in the comparable quarter of the last year.

Bitumen production dropped significantly from 178,500 boe/d to 158,500 boe/d due to decreased production from the company’s In Situ assets.

Oil sands volumes in the reported quarter rose to 483,000 boe/d from 437,200 boe/d in the year-ago quarter.

During the quarter, the output from Syncrude operations increased to 196,500 barrels per day (bpd) from 113,700 bpd a year earlier.

Meanwhile, Fort Hills reported average second-quarter volumes of 87,400 bpd, greater than the 45,300 bpd registered in the second quarter of 2021.

Downstream: Adjusted operating earnings from the downstream unit rose to C$2 billion from the year-ago figure of C$468 million due to expanded margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 561,700 bpd from the prior-year quarter figure of 463,300 bpd.

Crude throughput came in at 389,300 bpd in the second quarter of 2022, up from 325,300 bpd in the year-ago period. Moreover, refinery utilization was 84% compared with 70% a year ago.

Financial Position

Total expenses in the reported quarter climbed to C$10.8 billion from C$8 billion in the year-earlier period. This uptick was mainly caused by higher costs related to the purchase of crude oil and products, a rise in operating, selling and general costs, a hike in financial expenses and a small increase in transportation and distribution costs.

Suncor reported second-quarter cash flow from operating activities of C$4.235 billion, surging from the prior year’s C$2.086 billion. The company incurred capital expenditure worth C$1.29 billion in the quarter under discussion.

As of Jun 30, 2022, SU had cash and cash equivalents worth C$1.67 billion and carried total long-term debt of C$12.88 billion. Its total debt to total capital was about 24.5%.

In the second quarter, the company distributed C$657 billion in dividends.

Guidance

Suncor updated its guidance for production for 2022 to the range of 740,000-760,000 boe/d from the earlier range of 750,000-790,000 boe/d.

The top of the production ranges for Oil Sands operations has been revised from 435,000 bpd to 415,000 bpd, Fort Hills from 100,000 bpd to 90,000 bpd, Syncrude from 190,000 bpd to 185,000 bpd and Exploration and Production guidance from 85,000 bpd to 80,000 bpd.

Suncor also revised its full-year outlook for capital expenditures from a single-point estimate of C$4.7 billion to a range of C$4.9 billion-C$5.2 billion

Finally, the full-year current income tax expense range increased from C$4-C$4.3 billion to the C$4.4 billion-C$4.7 billion range.

Zacks Rank

Suncor currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Exxon Mobil XOM, EnLink Midstream ENLC and Gulfport Energy GPOR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for XOM’s 2022 earnings is pegged at $12.43 per share, up about 131% from the year-ago earnings of $5.38.

The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised upward by about 25% over the past 60 days from $9.94 per share to $12.43 per share.

The Zacks Consensus Estimate for EnLink’s 2022 earnings stands at 37 cents per share, up 640% from the year-ago earnings of 5 cents.

The Zacks Consensus Estimate for ENLC’s 2022 earnings has been revised upward by about 13% over the past 60 days from 31 cents to 35 cents per share.

The Zacks Consensus Estimate for Gulfport’s 2022 earnings has been revised about 6% upward over the past 60 days from $19.28 per share to $20.45.

Gulfport Energy is valued at around $1.67 billion. The Zacks Consensus Estimate for GPOR’s 2022 earnings is pegged at $20.45 per share.


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