Suncor Energy surges after strong Q3; to return all excess cash to shareholders

Suncor Energy (NYSE:SU) +3.5% in Wednesday’s trading after reporting better than expected Q3 adjusted earnings and saying it expects to return all excess funds to shareholders after achieving its debt reduction target ahead of schedule.

Suncor’s (SU) board raised the quarterly dividend by 4.6% to C$0.57/share after the company cut its debt by more than C$1.4B in the quarter to achieve its net debt target of C$8B, triggering a 100% return of excess funds to shareholders.

Q3 net earnings jumped to C$2.02B, or C$1.59/share, from C$1.54B, or C$1.19/share, in the year-earlier quarter; on an adjusted basis, earnings of C$1.48/share came in ahead of C$1.12/share analyst consensus estimate.

Net debt fell to C$7.97B from C$9.05B in the previous quarter and C$9.84B a year ago, as cash flow generated by operating activities increased to C$4.26B from C$4.18B in the same period last year.

Suncor (SU) said Q3 upstream production jumped 20% Y/Y to 829K bbl/day, refining throughput rose 5% to 488K bbl/day and refined sales totaled 612K bbl/day; the refinery results marked the company’s best-ever quarter.

The company maintained FY 2024 guidance of 770K-810K bbl/day of total production and $6.4B in capital spending.

On Suncor’s (SU) earnings conference call, CEO Rich Kruger said efforts to ease bottlenecks and no major maintenance work helped push records higher.

“There are good quarters, bad quarters, and great quarters. This was a great quarter,” Scotiabank analyst Jason Bouvier said, maintaining his Sector Perform rating for Suncor (SU) while raising his price target to $62 from $59.

Suncor’s (SU) exceptional quarter shows it continues to clear an increasingly high bar, and “there is no doubt the business continues to outperform and the market should react positively,” Raymond James analyst Michael Barth said.