Suncor Energy Announces Adjusted 2020 CapEx & Production View

Suncor Energy SU recently released its operational update along with its revised capital budget and production guidance for 2020 following a fire incident at the secondary extraction facilities of its Base Plant mine, which occurred last month.

Production in 2020

Suncor expects its overall net production for 2020 in the range of 680,000-710,000 barrels of oil equivalent per day (Boe/d), lower than the previously provided guided range of 740,000-780,000 BPD.

The company anticipates its 2020 refiner throughputs in the band of 390,000-420,000 barrels per day (BPD). Output from oil sands operations is estimated within 355,000-380,000 barrels per day. Suncor’s production from its stake in Fort Hills is projected in the range of 60,000-65,000 BPD while the same from Syncrude is estimated at 160,000-175,000 BPD. Besides, exploration and production for 2020 is predicted within 100,000-110,000 Boe/d.

Suncor along with its Fort Hills partners is gearing up to resume operating the second primary extraction train this month with initial gross production anticipated in the 120,000-130,000 BPD range.

By the end of this month, the company plans to reduce production rates at Firebag in-situ to around 110,000 BPD for four weeks as it accelerates maintenance work that was initially slated for 2022. With the completion of the same, the capacity of Firebag nameplate is estimated to rise 12,000-215,000 BPD. Moreover, it is likely to produce at normal capacity utilization level (approximately 95%) by early November.

Capital Spending View

For 2020, this Alberta-based integrated player’s total capex is envisioned within C$3.6-C$4 billion. It estimates to disburse funds in the range of C$3.05-C$3.30 billion for the upstream segment. Moreover, the company has plans to spend C$450-C$550 million on its downstream operations this year while the corporate spending is assumed in the C$100-C$150 million bracket.

Mark Little, president and CEO of Suncor, believes that regardless of the challenges faced in 2020, such as the operational incident, the unexpected drop in oil prices and a decline in global demand due to the novel coronavirus outbreak, Suncor continued to focus on safety and maximize value through an improved performance and minimization of costs.

Company Profile

Founded in 1917, Suncor is Canada's premier integrated energy company. The company's operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining and product marketing. Suncor is one of the largest owners of oil sands in the world.

Zacks Rank & Key Picks

Suncor currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the energy space are Murphy USA Inc. MUSA, CNOOC Limited CEO and SilverBow Resources Inc. SBOW, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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