SU: Suncor Energy, Inc. Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : SU: Suncor Energy, Inc.

SU 39.63

-0.5%

Nov 3 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: Dennis Roth	4/27/2007 9:24:46 AM
	Read Replies (2) of 37

Remains Buy as we have confidence in discipline, oil sands viability April 27, 2007 Goldman Sachs What's changed Suncor reported adjusted 1Q 2007 EPS of US$1.00 versus our US$0.71 and consensus of US$0.82, with the majority of the variance from our estimate due to stronger than expected performance in the refining business. The company took up its unit cost guidance by C$2 per gross barrel and its production guidance down by 5,000 bpd. Implications We believe the cost increase was reflective more of lower 1H production than a step change in sustainable costs, though 4Q 2007 will be a key test of this view. We believe oil sands production medium to longer term represents baseload, not marginal, production, and we see both near- and medium-term upside to WTI oil prices as well as the potential for refining margins to be higher than expected. We do not believe higher costs are unique to the oil sands, and we see the drivers of oil sands cost inflation as more cyclical than secular, meaning there is greater room for cost reduction. Valuation Suncor trades at 9.8x 2008 EV/debt-adjusted cash flow versus 5.4x for other large-cap integrated oils. We believe Suncor’s premium is more than deserved due to the more manufacturing nature of its asset base. We see 10% upside to an US$89 discounted cash flow based 12-month target price. Key risks Key risks include commodity price volatility, capital and operating cost pressures and changes in taxation and emissions regulations.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next