Stock Watch > Suncor Energy Inc, reported its best quarter ever, with a 36% rise in net profit for the three months to March to C$1.49B, or $1.01 per share.
Canada’s top oil and gas company, Suncor Energy Inc. (TSE:SU, Mkt cap 62.39B, P/E 16.35, Div/yield 0.23/2.17, EPS 2.59, Shares 1.47B), reported on Monday its best quarter ever, with a 36% rise in net profit for the three months to March to C$1.49 billion, or C$1.01 per share. The increase was driven by strong oil prices and successful implementation of its long-term market access strategy.
The result compares to net income of C$1.09 billion, or C$0.72 per share, achieved in the first quarter of 2013.
Cash flow from operations also hit a quarterly record, reaching C$2.88 billion against C$2.284 billion in January-March 2013.
The company’s adjusted earnings, which exclude most one-time items, advanced 31% to C$1.79 billion, or C$1.22 per share, from C$1.37 billion, or C$0.90 per share, in the same period last year. The figure exceeded the forecast of analysts polled by Thomson Reuters, who had expected adjusted income of C$0.93 a share.
The strong quarterly performance delivered by the Calgary-based company was underpinned by its decision to focus on oil production and divest its natural gas business. Crude oil accounted for almost 100% of its output against 92% in the year-earlier period, although its operations in Libya remained suspended in the quarter.
Suncor’s production stood at 545,300 barrels of oil equivalent per day (boe/d) in the quarter, down from 596,100 boe/d a year earlier. Production from its oil sands operations rose 8.8% to an average of 389,300 barrels per day.
Suncor also announced that it paid out C$338 million in dividends and C$384 million in share repurchases to stockholders in the quarter. The amount allocated for dividend distribution was 70% higher than the sum paid in the same period of 2013.
In August 2013 Warren Buffett, the CEO of Berkshire Hathaway Inc. revealed in a U.S. regulatory filing that he has accumulated 17.8-million shares in Suncor Energy Inc. His investment is worth $755-million at the current share price.
Suncor is a core holding in our clients’ portfolios. It’s a significant validation to see other investors, including Mr. Buffett, the world’s bet know value investor, appreciate the compelling attributes of Suncor. These include a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model smoothing to some extent the cash flow from the various business segments.
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