SU: Suncor, a leveraged bet on oil prices, with huge reserves:
I like the Oil Majors, for their dividend. But, given their inability to replace reserves, I worry about their future ability to grow profits, dividends, and stock price. I like XOM's move into natgas, but it isn't enough. This makes me consider stocks like SU and CHK.
Enterprise value / EBITA similar:
5.3 XOM
5.1 RDSA
5.3 SU
From a current production base of roughly 500,000 barrels a day Suncor is planning to hit 1 million barrels a day by 2020. That is a CAGR of about 8% per year. Suncor doesn’t have to go out and find new oil reserves in order to create this growth. There is no exploration risk....7 billion barrels of 2P reserves against a 59 billion enterprise value is around $8 per barrel... 20 billion barrels of contingent resourves
Growth will mainly come from Suncor's in situ projects (Firebag Stages 3 through 6 and the second stage of MacKay River), investments, as well as ongoing production in international and offshore operations. The C$1.75 billion strategic partnership with French oil major Total, to jointly develop the Fort Hills and Joslyn oil sands mining projects, will also play a critical role.
They even own windmills....or at least have a picture of a windmill in their Investor Presentation. Nice touch.
SU's 5Y range is $14-$72, now at $28. I'm considering starting to buy, when we take out the 2010 low, and we're almost there. I'd plan on having a full position, if we get down to the 2008 low. In general, my plan is to have full positions in a variety of energy stocks, as they approach their recession lows. SU is, tentatively, the substitute for CCJ on that list.
info from:
SU investor relations suncor.com
Company presentation, giving roadmap to 2020:
suncor.com
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