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Suncor (SU) Alters Board, Reviews Station Sale Post Elliot Deal

·3 min read

Suncor Energy SU recently declared that it has entered into an agreement with the activist investment firm — Elliott Investment Management — according to which SU’s board of directors will appoint three new independent directors, two of whom will serve on the CEO search committee. The company also stated that it would review the possibility of selling its retail gas station business to unlock shareholder value.

The Calgary-based Canadian integrated energy company has been under constant pressure from
Elliott, which owns a 3.4% interest in Suncor, concerning its operational and safety record. The latest mishap at SU’s site, along with CEO Mark Little’s resignation, added to the pressure.

Earlier this year, Elliot urged Suncor to revamp its board and management team by adding new directors and initiating a strategic review, arguing that the company’s shares have underperformed, though crude prices have risen to multi-year highs.

Per the agreement, SU appointed three new independent directors to its board, which includes Ian Ashby — the former president of BHP Billiton’s Iron Ore Customer Sector Group — who brings broad global experience in surface mining, including technical and operational expertise. The board also includes Chris Seasons, the former president of Devon Canada and the partner of ARC Financial Corporation, and Jackie Sheppard – the former executive vice president, Corporate and Legal Affairs with Talisman Energy Inc.

Moreover, Seasons and Sheppard will also supervise the strategic review and make a recommendation along with joining Suncor’s search committee for a permanent CEO.

Suncor’s retail business portion, which might be divested, includes more than 1,500 gas stations and store locations operating under the Petro-Canada brand.

Founded in 1917, Suncor Energy, Inc. is Canada's premier 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. SU is one of the largest owners of oil sands worldwide. The company gained new oil sands properties to supplement its existing operations in northern Alberta, making it the dominant producer in the region, where reserves are second only to Saudi Arabia.

Suncor currently sports a Zacks Rank #1 (Strong Buy). Investors interested in the energy space might also look at the following companies — Range Resources RRC, Cenovus Energy (CVE) and HighPeak Energy HPK — each sporting a similar Zacks Rank. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Range’s 2022 earnings is pegged at $5.06 per share, up about 150.5% from the year-ago earnings of $2.02.

The Zacks Consensus Estimate for RRC’s 2022 earnings has been revised upward by about 27.4% over the past 90 days from $3.97 to $5.06 per share.

The Zacks Consensus Estimate for Cenovus Energy’s 2022 earnings is pegged at $3.02 per share, up 272.8% from the year-ago earnings of 81 cents.

The Zacks Consensus Estimate for CVE’s 2022 earnings has been revised 11% upward over the past 60 days.

The Zacks Consensus Estimate for HighPeak’s 2022 earnings has been revised about 10% upward over the past 60 days from $4.45 per share to $4.89.

The Zacks Consensus Estimate for HPK’s 2022 earnings stands at $4.89 per share, up 640.9% from the year-ago earnings of 66 cents.

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