Suncor (SU) Expects Strong Production for the Rest of 2018

Suncor Energy Inc. SU recently announced that the company has finished its turnaround programs in its oil sands assets as well as the downstream properties. The integrated energy company also stated that its growth projects have exceeded expectations so far. The company further provided production update for the second quarter, which so far averaged at around 636 thousand barrels per day (MBPD).

Notably, Suncor’s May exit-rate stands at around 800 MBPD. Assets and refineries of the company’s oil sands base plant, Syncrude, are anticipated to run at full rates in June. Moreover, the output from its growth projects in Hebron and Fort Hills sites has surpassed estimations.

Especially, the Fort Hills project, which has a design capacity of 194 MBPD, came online way before its scheduled time and its production is receiving a “premium price.” Suncor completed test runs in its Fort Hills facility, achieving more than 90% production capacity without any significant issues.

Better-than-expected performance from Fort Hills — where the company has 54.1% stake — enables the company to reach the high end of the guidance. Per guidance provided by Suncor on May 1, the company expects its Fort Hills production to be in the range of 50-60 MBPD.

The company expects the completion of its maintenance activities and strong performance from its growth projects like Hebron and Fort Hills to enable it in reaching a high output level for the rest of the year. For the full year, the company expects its total equivalent production to be in the range of 740-780 thousand barrels per day.

With strong production activities in the improving oil price environment, Suncor’s top line is expected to increase 18.9%. The Zacks Consensus Estimate for Suncor’s 2018 sales is currently pegged at $29.5 billion.

Price Performance

Suncor has gained 33.8% in the past year compared with 13.9% growth of its industry.

Zacks Rank and Stocks to Consider

Currently, Suncor carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Anadarko Petroleum Corp. APC, Delek US Holdings, Inc. DK and HollyFrontier Corp. HFC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Woodlands, TX-based Anadarko is an exploration and production company. For 2018, its bottom line is likely to be up 239.3%. In the last reported quarter, the company delivered a positive earnings surprise of 20.1%.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 39.2% year over year, while its bottom line is expected to increase 230.2%.

Dallas, TX-based HollyFrontier is an independent refining company. For 2018, its bottom line is likely to be up 145.3%. In the last four reported quarters, the company delivered an average positive earnings surprise of 41.3%.

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