Yahoo Finance Suncor earnings: Shares fall as Q4 swings to $1.5B profit
Suncor Energy (SU.TO)(SU) shares fell on Thursday, after the Calgary-based oil producer and refiner reported that it swung to a quarterly profit versus a year ago, but fell short of analyst estimates.
Suncor says rising oil prices and stronger refined product sales fuelled a net profit of $1.55 billion, or $1.07 per share, in the fourth quarter, compared to a $168 million loss ($0.11 per share) in the same period last year. Adjusted for one-time items, Suncor earned $0.89 per share, versus expectations for $0.94, according to Refinitiv data.
Toronto listed shares fell 2.96 per cent to $37.31 at 11:41 a.m. ET. The stock has climbed more than 78 per cent in the past 12 months, riding an uptick in investor enthusiasm for Canadian oil and gas shares.
Speaking on a post-earnings conference call with analysts, president and CEO Mark Little said he sees demand rebounding from COVID-19 related lockdowns in Ontario and Quebec that impacted gasoline demand through January.
"It looks like all of these lockdowns are rapidly coming to an end, or are certainly getting less constraining," he said on Thursday. "We're starting to see demand coming back already, and we're expecting to see, as you get out to mid-year, normal demand. So we think this year [there] will be much stronger demand in Canada than what we saw last year."
Canada's second-largest oil producer raised its full-year outlook for North American benchmark West Texas Intermediate (CL=F) crude by US$10 per barrel, from US$70 to US$80. It also lifted its expectations for Western Canadian Select, the primary grade produced in Canada energy patch, by US$13 per barrel, from US$55 to US$68.
Total upstream production was 743,300 barrels of oil equivalent per day (boe/d) in the quarter, compared to 769,200 boe/d in the year-ago period. The company says the drop was due in part to the absence of output from its Golden Eagle Area development, which was sold in the fourth quarter of 2021.
Suncor says revenue for the three months ended Dec. 31, 2021 climbed 68 per cent to $11.1 billion, from $6.6 billion in the fourth quarter of 2020. The company says it booked a record-setting $3.1 billion, or $2.17 per share, in adjusted funds from operations during the period.
"Our increased cash flows in 2021 enabled us to exceed our shareholder return targets for the year through increased dividends and accelerated share repurchases, while at the same time strengthening our balance sheet through accelerated debt reduction," Little said in a news release.
Chief financial officer Alister Cowan said shareholders should expect "similar, if not higher" cash returns to shareholders in 2022, based on current stock prices.
Suncor is a member of the Oil Sands Pathways to Net Zero initiative, a six-company alliance that plans to use carbon capture and other technologies to achieve net-zero emissions by 2050. Little said his company's efforts to improve its greenhouse gas emission are "going well."
"The whole focus right now is finalizing the pour space in Alberta so, we have a place to put the CO2," he said.
Imperial Oil (IMO.TO)(IMO) CEO Brad Corson, whose company is also among the alliance's members, recently said the group is taking an "all hands on deck" approach.
"As CEOs [of] the six companies, we get together every single week, and are having discussions about the progress of the project and key priorities," he said on a call with analysts on Tuesday.
Little also addressed his company's safety record, following the Jan. 6 death of a worker at Suncor’s Base Mine site in Alberta.
“As CEO, the accountability for safety and operational excellence is with me, period. Like, I own this," he said on Thursday's conference call. "I know we need to do better."
Little said the company will adopt new safety technology, and implement standard risk assessments across all sites.
-With files from Reuters
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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