Suncor Energy reported second-quarter earnings that exceeded expectations.

【Answer 1】 Canadian oil sands giant Suncor Energy reported second-quarter net income of C$1.57 billion (US$1.14 billion), driven by higher production and rising oil prices. According to LSEG data cited by Reuters, earnings per share were C$1.27—above the analysts’ consensus estimate of C$1.08. However, this result was lower than both the first quarter of 2024 and the second quarter of 2023. The company reported average daily production of 771,000 barrels in the quarter, with refinery output averaging 431,000 barrels per day. For the first half of the year, Suncor achieved a record average daily production of 803,000 barrels, while refinery throughput averaged 443,000 barrels per day. CEO Rich Kruger stated: “Following a strong first quarter, the focus in Q2 was on execution and momentum—executing major upstream and downstream turnaround activities with high quality, and maintaining momentum on targeted improvement priorities, including operational reliability and cost management.”

Suncor Energy looks better from the current perspective.

【Answer 2】 Suncor’s underperformance over the past year stands out especially when compared with peers—including Baytex Energy, an oil-leveraged independent producer that has delivered strong results: Data by YCharts Previous articles have discussed Suncor’s challenges: operational issues—which seem to recur annually—most recently including a major delay on a key project, revealed when joint-venture partner Teck Resources (NYSE: TECK) disclosed it; substantial investments in alternative energy, which target lower returns and may also weigh on Suncor’s valuation by reducing future return on invested capital; and Suncor’s dividend cut in May 2020—a move deeply unpopular among its dividend-oriented shareholders. Sounds great, right? Yet almost anything comes at a cost. Suncor’s underperformance drove its stock price further down—particularly as market attention turned to massive hedge losses incurred by competitors due to price hedges (oil-price-locking contracts, typically using derivatives, many of which were struck at prices far below current levels). For example, Pioneer Natural Resources (NYSE: PXD) posted hedge losses exceeding US$500 million in a single quarter—and had lost US$2 billion through mid-2021. In the current market environment, Suncor holds an advantage over companies like Pioneer because it carries no oil-price hedges. Suncor may also benefit from rising refining margins. Source: Refinitiv This may require some squinting—especially relative to other market charts—since refining margins in Europe and Asia have surged dramatically, while North American refining margins are only now rising. Such elevated overseas margins help lift North American margins and suggest room for further improvement, driven by rebounding travel demand and higher jet fuel consumption. Given its markedly weak stock performance, absence of hedging, and potential gains from rising refining margins, Suncor could ride a broader rebound in oil-and-gas stocks—and may even catch up to peers such as Imperial Oil. The following slide from Suncor’s most recent investor presentation illustrates the dual benefits of rising oil prices and improving refining margins: Source: Suncor presentation

Suncor Energy Tops Profit Estimates on Higher Oil Prices and Margins

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Suncor Energy surpassed Q3 profit forecasts due to rising oil prices and robust refining margins, despite reduced production volumes. The Calgary-based firm also raised its quarterly dividend and finalized a C$1.2 billion sale of offshore assets.

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