Core Viewpoint - Suncor Energy's recent earnings report shows a mixed performance with strong production growth in the upstream segment but challenges in the downstream segment and overall revenue decline due to lower commodity prices [2][3][5]. Financial Performance - Adjusted operating earnings for Q4 2024 were 89 Canadian cents per share, exceeding the Zacks Consensus Estimate of 82 Canadian cents, but down from 93 Canadian cents in the same quarter last year [2]. - Operating revenues reached $8.9 billion, surpassing estimates by 4.3%, but decreased approximately 14% year over year due to lower commodity prices [3]. - Total expenses increased by 6.2% to C$11.4 billion compared to the prior-year quarter [17]. Shareholder Returns - The company distributed a total of C$1.7 billion to shareholders in Q4 2024, including C$1 billion in share repurchases and C$700 million in dividends [4]. - A quarterly dividend of 57 Canadian cents per share was declared, unchanged from the previous quarter [3]. Production and Operational Highlights - Upstream production reached a record 875,000 barrels per day (bbls/d), a 20% increase year over year, and exceeded the consensus estimate of 846,000 bbl/d [7]. - Oil sands bitumen production hit a record of 951,500 bbls/d, up from 866,200 bbls/d in the previous year [7]. - Refining throughput was near-record at 486,200 bbls/d, with refinery utilization at 104% [5][16]. Cost Management - Operating cost per barrel decreased to C$26.55 from C$30.80 in the corresponding period of 2023, attributed to higher production and lower commodity costs [9][12]. - Cash operating costs for Oil Sands operations are expected to range from C$26 to C$29 per barrel for 2025 [21]. Future Guidance - For 2025, Suncor Energy expects upstream production to range from 810,000 to 840,000 barrels of oil equivalent per day (boe/d) [19]. - Total capital expenditures for 2025 are projected to be between C$6.1 billion and C$6.3 billion [22]. Market Sentiment - There has been an upward trend in estimates revision, with the consensus estimate shifting by 21.95% [23]. - The stock has a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [25].

Financial Performance - Suncor generated adjusted funds from operations of $13.846 billion in 2024, or $10.87 per common share, compared to $13.325 billion, or $10.19 per common share, in the prior year [75]. - Net earnings for 2024 were $6.016 billion, or $4.72 per common share, down from $8.295 billion, or $6.34 per common share in 2023 [76]. - The company reported a cash flow from operating activities of $15.960 billion in 2024, compared to $12.344 billion in 2023 [76]. - Adjusted operating earnings increased to $6.884 billion in 2024, compared to $6.677 billion in 2023, reflecting a growth of 3.1% [93]. - Corporate loss before income taxes was $(1,883) million in 2024, compared to $(1,296) million in 2023, influenced by unrealized foreign exchange losses and asset impairments [188]. - Adjusted funds from operations were $3.493 billion ($2.78 per common share) in Q4 2024, down from $4.034 billion ($3.12 per common share) in Q4 2023 [199]. - Net earnings for Q4 2024 were $818 million, significantly lower than $2.820 billion in Q4 2023, influenced by lower refined product realizations and increased royalties [198]. - The effective tax rate increased to 26.5% in 2024 from 21.7% in 2023, influenced by non-taxable gains and foreign exchange losses [195]. Production and Sales - Total Oil Sands production volumes increased to 773.8 mbbls/d in 2024, up from 689.6 mbbls/d in 2023, representing a 12.6% increase [67]. - Suncor achieved record upstream production of 827,600 bbls/d in 2024, up from 745,700 bbls/d in 2023, representing an increase of approximately 11.5% [84]. - Total Oil Sands bitumen production increased to 907,000 bbls/d in 2024, up from 819,800 bbls/d in 2023, primarily due to increased working interest in Fort Hills and strong mining performance [132]. - Total refined product sales reached a record of 600,400 bbls/d in 2024, up from 553,100 bbls/d in 2023, driven by higher refinery throughput [182]. - Total production averaged 53,800 mboe/d in 2024, a decrease from 56,100 mboe/d in 2023, with E&P Canada production increasing to 49,700 bbls/d [165]. Capital Expenditures and Investments - Capital expenditures for 2024 were $6.166 billion, an increase from $5.573 billion in 2023 [64]. - The company plans to allocate $6.1 billion to $6.3 billion for capital spending in 2025 [251]. - Economic investment expenditures in Oil Sands Base were $1.852 billion in 2024, focusing on the Upgrader 1 coke drum replacement and a new cogeneration facility [227]. - Refining and Marketing capital expenditures were $1.186 billion in 2024, primarily for asset sustainment and maintenance activities [233]. - Exploration and Production capital expenditures were $862 million in 2024, mainly for the West White Rose Project and SeaRose Asset Life Extension Project [232]. Debt and Financial Position - Suncor's net debt decreased to $6.861 billion in 2024 from $9.852 billion in 2023, reflecting improved financial condition [64]. - Total debt to total debt plus shareholders' equity decreased to 18.9% in 2024 from 21.1% in 2023 [243]. - The company reported a net debt to adjusted funds from operations ratio of 0.5 times in 2024, down from 0.7 times in 2023 [243]. - Cash and cash equivalents at the end of 2024 were $3.484 billion, compared to $1.729 billion at the end of 2023 [243]. - Available credit facilities increased to $5.475 billion at the end of 2024, up from $4.957 billion at the end of 2023 [255]. Operational Efficiency - The company achieved a refining and marketing gross margin of $36.40 per barrel in 2024, down from $45.00 per barrel in 2023 [67]. - Suncor's upgrader utilization reached 98% in 2024, up from 92% in 2023, indicating improved operational efficiency [84]. - Oil Sands operations cash operating costs per barrel decreased to $26.90 in 2024 from $29.70 in 2023, due to increased production and cost optimizations [148]. - Fort Hills cash operating costs per barrel decreased to $32.80 in 2024 from $34.40 in 2023, primarily due to increased production volumes [149]. - Syncrude cash operating costs per barrel decreased to $35.15 in 2024 from $37.15 in 2023, driven by increased production and workforce optimizations [150]. Market Conditions - The average price realization for upgraded net SCO and diesel was $97.91 per barrel in 2024, slightly down from $99.40 per barrel in 2023 [67]. - The average WTI crude oil price was $75.70/bbl in 2024, down from $77.60/bbl in 2023, reflecting a decrease of 2.9% [101]. - The average AECO natural gas benchmark price decreased to $1.35/GJ in 2024 from $2.50/GJ in 2023 [110]. - The Alberta power pool price averaged $62.80/MWh in 2024, down from $133.65/MWh in the previous year [111]. - The average WTI crude oil price in Q4 2024 was $70.30 per barrel, down from $78.35 per barrel in Q4 2023, indicating a decrease of approximately 10.5% [219].

Core Viewpoint - Suncor Energy has filed its 2024 Annual Report and renewed its Normal Course Issuer Bid (NCIB) to repurchase up to 123.8 million common shares, representing approximately 10% of its public float, indicating a strategic move to enhance shareholder value [1][3][4]. Group 1: Annual Disclosure Documents - Suncor Energy has filed its 2024 Annual Report, Annual Information Form, and Management Proxy Circular [1]. - The annual disclosure documents can be accessed on Suncor's profile on sedarplus.com, sec.gov, or the company's website [2]. Group 2: Normal Course Issuer Bid (NCIB) - The TSX has accepted Suncor's notice to renew its NCIB, allowing the company to purchase up to 123,800,000 common shares from March 3, 2025, to March 2, 2026 [3]. - As of February 18, 2025, Suncor had 1,238,456,851 common shares issued and outstanding, with the NCIB representing about 10% of the public float [3][4]. - Under the previous NCIB, Suncor repurchased 61,065,792 shares for approximately $3.258 billion at a weighted average price of $53.35 per share [5]. Group 3: Share Repurchase Strategy - Suncor believes that repurchasing its own shares is an attractive investment opportunity and aligns with the best interests of the company and its shareholders [4][9]. - The company plans to limit daily purchases under the NCIB to no more than 25% of the average daily trading volume, which is approximately 2,017,894 common shares [6]. - An automatic share purchase plan is expected to be implemented in relation to the NCIB starting March 3, 2025 [6]. Group 4: Company Overview - Suncor Energy is Canada's leading integrated energy company, involved in oil sands development, offshore oil production, and petroleum refining, as well as retail and wholesale distribution networks [12]. - The company is also focused on transitioning to a lower-emissions future through investments in lower emissions intensity power and renewable feedstock fuels [12].

Group 1 - The Cash Flow Kingdom Income Portfolio aims to achieve an overall yield in the range of 7% - 10% by combining various income streams for a steady payout [1] - Suncor Energy Inc. is highlighted as a high-quality oil sands company that has recently demonstrated strong results and plans to increase shareholder returns as it has reduced its net debt [1] - The portfolio includes features such as access to a leader's personal income portfolio targeting a yield of over 6%, community chat, and coverage of various sectors including energy midstream and commercial mREITs [1] Group 2 - Jonathan Weber, an analyst with an engineering background, has been active in the stock market and focuses primarily on value and income stocks while occasionally covering growth stocks [2]

Core Viewpoint - Suncor Energy has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, which significantly influences near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance and Analyst Sentiment - The recent upgrade reflects an improvement in Suncor Energy's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - Over the past three months, the Zacks Consensus Estimate for Suncor Energy has increased by 18.1%, although the expected earnings per share for the fiscal year ending December 2025 is projected to be $3.42, representing a year-over-year decline of 13.2% [8]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places Suncor Energy in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

SUNCOR ENERGY Investor Information Q4 2024 Published February 5, 2025 SUNCOR ENERGY Suncor's value proposition Long-life, competitively advantaged assets Regional and vertical integration Operational reliability Disciplined investment & cost management Deliver superior long-term shareholder value SUNCOR ENERGY 2 Suncor key statistics | Market capitalization YE 2024 | $64B | | --- | --- | | Net debt to AFFO 2024 | 0.5x | | Oil sands reserve life index | 2023 26 yrs | | Upgrading capacity | 556 kbpd | | Refin ...

Financial Data and Key Metrics Changes - Suncor Energy reported a full-year upstream production of 828,000 barrels per day, which is 51,000 barrels per day or 6.5% higher than the previous best year and 82,000 barrels per day or 11% higher than 2023 [11][12] - The total capital expenditure for 2024 was $6.2 billion, more than $200 million below the midpoint of guidance [21] - Free funds flow for 2024 was $7.4 billion, essentially flat with 2023, despite a decrease in the business environment impacting free funds flow by about $1.5 billion year-on-year [21][30] Business Line Data and Key Metrics Changes - Upstream production in Q4 averaged 875,000 barrels per day, including 818,000 barrels per day in Oil Sands, marking the highest quarterly production in company history [34] - Refining throughput for the full year was 465,000 barrels per day, which is 24,000 barrels per day or 5.5% better than the previous best [14] - Refined product sales averaged a record 600,000 barrels per day for the full year, which is 46,000 barrels per day or 8% higher than the previous best [16] Market Data and Key Metrics Changes - Crude oil prices weakened during Q4, with WTI averaging $70 per barrel, while the light-heavy differential remained steady at $13 per barrel [31] - The refining index averaged $24.25 per barrel, which is $1.80 below Q3, driven primarily by lower cracks [32] - Natural gas prices increased by $0.80 per GJ, averaging $1.45 in the quarter, remaining attractively priced for natural gas consumers [32] Company Strategy and Development Direction - The company aims to solidify gains from 2024 and capture the next tranche of value in 2025, focusing on growing the bottom line and free funds flow to drive increased returns for shareholders [43] - Suncor is committed to returning 100% of excess funds to shareholders, having achieved its $8 billion net debt target early [30][39] - The company is focused on operational improvements and cost management, with a culture that emphasizes discipline and attention to detail [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance for 2025, despite planned maintenance activities that may impact production [41][138] - The company is optimistic about the potential for further operational improvements and cost reductions, with ongoing initiatives to enhance production efficiency [96][102] - Management highlighted the importance of maintaining a strong focus on fundamentals and executing on commitments to drive shareholder value [40][43] Other Important Information - Suncor successfully completed the base plant cogeneration facility, which will provide integrated steam and power to operations and the capability to export up to 800 megawatts of electricity [36] - The company has made significant progress in its autonomous trucking implementation, with all ore delivery at the base plant now under autonomous operation [78] Q&A Session Summary Question: Does either segment shine more brightly for 2025? - Management indicated that both upstream and downstream segments have potential for improvement, with ongoing efforts to identify and remove production constraints [48][49] Question: Update on Fort Hills mine progression? - Management reported positive developments in the Fort Hills mine, with significant equipment deliveries and progress in transitioning to the center and north pits [70][74] Question: Steps to drive cost controls during major turnarounds? - Management emphasized extensive planning and readiness for the upcoming coke drum replacement project, with a focus on minimizing downtime and optimizing costs [86][90] Question: Potential for lowering all-in breakeven beyond $10? - Management acknowledged the possibility of exceeding the $10 target but emphasized the focus on delivering value rather than recalculating targets at this stage [96][97] Question: Outlook for refining margins? - Management expressed a focus on optimizing operations to succeed in varying market conditions, with potential upside in refining margins anticipated [101][102] Question: Thoughts on Syncrude consolidation? - Management stated that while they are open to opportunities, their current focus is on maximizing value from existing assets rather than pursuing specific consolidations [112][115] Question: Ability to shift cargoes away from U.S. markets? - Management highlighted their integrated asset base, which provides resilience and flexibility in navigating market changes and potential tariff impacts [120][121]

Core Insights - Suncor Energy Inc. reported fourth-quarter 2024 adjusted operating earnings of 89 Canadian cents per share, exceeding the Zacks Consensus Estimate of 82 Canadian cents, driven by strong production growth in the upstream segment, although it declined from 93 Canadian cents in the same quarter last year due to lower earnings in the downstream segment and increased expenses [1][2] Financial Performance - Operating revenues for the fourth quarter were C$8.9 billion, surpassing the Zacks Consensus Estimate by 4.3%, but down approximately 14% year-over-year due to lower commodity prices [2] - The company declared a quarterly dividend of 57 Canadian cents per share, unchanged from the previous quarter, to be paid on March 25, 2024 [2] - Suncor distributed a total of C$1.7 billion to shareholders, including C$1 billion in share repurchases and C$700 million in dividends [3] - Adjusted funds from operations were C$3.5 billion, with free cash flow of C$1.9 billion for the quarter [3] Production and Operational Highlights - Upstream production reached a record 875,000 barrels per day (bbls/d), a 20% increase from 808,100 bbls/d year-over-year, exceeding the consensus estimate of 846,000 bbls/d [6] - Total oil sands bitumen production hit a record 951,500 bbls/d, up from 866,200 bbl/d in the previous year [6] - The company's E&P volume increased 18.5% to 57,500 barrels of oil equivalent per day (boe/d) from 50,700 boe/d year-over-year, also beating the consensus estimate [7] - Refining throughput was near-record at 486,200 bbls/d, with refinery utilization at 104% [4][14] Cost and Efficiency Metrics - Operating cost per barrel decreased to C$26.55 from C$30.80 in the same quarter last year, attributed to higher production and lower commodity costs [10] - Cash operating costs for oil sands operations dropped to C$26.55 from C$30.80, while Syncrude's cash operating costs per barrel decreased to C$32.80 from C$33.85 [11][10] Segment Performance - Downstream segment adjusted operating earnings were C$410 million, down from C$598 million year-over-year, primarily due to lower benchmark crack spreads [13] - Refined product sales increased to 613,300 bpd from 575,500 bpd in the prior-year quarter, driven by higher refinery throughput [13] Financial Position and Guidance - Total expenses rose 6.2% to C$11.4 billion from the prior-year quarter, with cash flow from operating activities amounting to C$5.1 billion [15][16] - Suncor expects upstream production for 2025 to range from 810,000 boe/d to 840,000 boe/d, with cash operating costs for Oil Sands operations anticipated between C$26-C$29 per barrel [17][19] - Total capital expenditures for 2025 are projected to be between C$6.1 billion and C$6.3 billion [20]

Group 1: Earnings Performance - Suncor Energy reported quarterly earnings of $0.89 per share, exceeding the Zacks Consensus Estimate of $0.82 per share, but down from $0.93 per share a year ago, representing an earnings surprise of 8.54% [1] - The company has surpassed consensus EPS estimates for the last four quarters [2] - Suncor Energy's revenues for the quarter ended December 2024 were $8.94 billion, surpassing the Zacks Consensus Estimate by 4.35%, compared to $10.39 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - Suncor Energy shares have increased approximately 6.9% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.82 on revenues of $8.17 billion, and for the current fiscal year, it is $3.25 on revenues of $32.44 billion [7] Group 3: Industry Context - The Oil and Gas - Integrated - Canadian industry, to which Suncor Energy belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Suncor Energy's stock performance [5][6]

Core Insights - Suncor Energy Inc. reported strong performance in Q4 2024, achieving record production levels and operational efficiency, setting the stage for continued success in 2025 [3][6][7] Financial Highlights - Net earnings for Q4 2024 were Cdn$818 million, down from Cdn$2.820 billion in Q4 2023 [5][12] - Adjusted operating earnings were Cdn$1.566 billion, compared to Cdn$1.635 billion in the prior year [12] - Adjusted funds from operations totaled Cdn$3.493 billion, down from Cdn$4.034 billion year-over-year [12][13] - Free funds flow reached Cdn$1.923 billion in Q4 2024 [8] Operational Performance - Record upstream production of 875,000 barrels per day (bbls/d) in Q4 2024, compared to 808,100 bbls/d in Q4 2023 [6][17] - Refinery utilization was at 104%, with throughput of 486,200 bbls/d, up from 455,900 bbls/d in the prior year [17] - Refined product sales reached a record 613,300 bbls/d, exceeding the previous record of 575,500 bbls/d [17] Shareholder Returns - Suncor returned Cdn$1.7 billion to shareholders in Q4 2024, including Cdn$1 billion in share repurchases and Cdn$700 million in dividends [6][24] - The quarterly dividend was increased by approximately 5% to Cdn$0.57 per share [24] Debt and Financial Position - Net debt decreased to Cdn$6.861 billion from Cdn$9.852 billion year-over-year [36] - Total debt was reported at Cdn$10.345 billion, down from Cdn$11.581 billion [36] Corporate Strategy - The company has committed to returning 100% of excess funds to shareholders following the achievement of its Cdn$8 billion net debt target [24][21] - Suncor is focused on maintaining high performance and operational reliability to achieve free cash flow targets and enhance shareholder value [3][6]