Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Shares of Canadian energy giant Suncor Energy Inc. (TSX:SU) rose on Wednesday after the company released a strong earnings report and achieved its debt reduction target ahead of schedule. This success means Suncor plans to return all excess cash to shareholders, signaling more than just a win for the company itself and marking a broader recovery in Canada’s energy sector.
Looking at the report details: third-quarter net profit surged to CAD 2.02 billion, or CAD 1.59 per share, up from CAD 1.54 billion, or CAD 1.19 per share, a year earlier. Adjusted earnings per share reached CAD 1.48, exceeding analysts’ consensus of CAD 1.12. Net debt decreased from CAD 9.05 billion in the previous quarter to CAD 7.97 billion, also lower than CAD 9.84 billion a year ago, while cash flow from operating activities grew from CAD 4.18 billion to CAD 4.26 billion.
Suncor reduced its debt by over CAD 1.4 billion this quarter, hitting its net debt target of CAD 8 billion, which initiated the mechanism to return all excess funds to shareholders. Consequently, the board raised the quarterly dividend by 4.6% to CAD 0.57 per share.
David Szybunka, portfolio manager and managing director of Canoe Energy Team, commented, “They hit their CAD 8 billion debt target sooner than expected, and now they’re returning 100% of free cash flow to shareholders. Overall, it’s an excellent performance.”
Suncor’s stock is up 27% year-to-date, yet Szybunka sees further upside potential. Scotiabank analyst Jason Bouvier maintained his sector perform rating on Suncor stock, raising his price target from CAD 59 to CAD 62. Raymond James analyst Michael Barth remarked that Suncor continues to exceed expectations, and the market is likely to respond positively.
Additionally, Suncor reported a 20% year-over-year increase in upstream production to 829,000 barrels per day, refining throughput rose 5% to 488,000 barrels per day, and refined product sales totaled 612,000 barrels. Refining results set a company record. The company maintained its 2024 guidance with expected daily production between 770,000 to 810,000 barrels and CAD 6.4 billion in capital spending.
Szybunka noted that Suncor’s strong earnings report indicates that Canada’s energy sector is in recovery and on an upward trajectory. He mentioned that the overall sentiment in the oil industry has improved so much that last week’s news on emission caps for oil and gas companies didn’t provoke the usual investor backlash. “This is called an upturn,” he said. “We were in a downturn, and now we are in an upturn.”
He is optimistic about the Canadian oil and gas sector, noting that valuations and outlook for large and medium-sized energy companies are more favorable than for smaller ones. As such, he expects merger and acquisition activity in Canada to continue gaining momentum, citing industry players like Canadian Natural Resources in the oil sector and Tourmaline in natural gas.
