Strong Q3 2024 Earnings and Dividend Hike Fuel Suncor Energy’s Momentum
Suncor Energy Inc. (TSX: SU) has reported its results for Q3 2024, highlighting strong refinery throughput, increased production levels, and significant debt reduction. The company posted net earnings of $2.02 billion ($1.59 per share) in Q3 2024, up from $1.544 billion ($1.19 per share) in Q3 2023, marking a 30.8% increase year-over-year.
On a sequential basis, net earnings rose from $1.568 billion ($1.22 per share) in Q2 2024, indicating an upward trend across quarters. However, much of this growth is attributable to Suncor’s increased production volumes and higher refinery utilization rather than improved pricing, as oil price pressures weighed on margins throughout the quarter.
Adjusted operating earnings were $1.875 billion ($1.48 per share), which, while significant, showed a year-over-year decline from $1.98 billion ($1.52 per share) in Q3 2023, indicating a 5.3% drop, and a modest sequential increase from $1.626 billion in Q2 2024.
Adjusted funds from operations reached $3.787 billion ($2.98 per share) in Q3 2024, a 4.2% increase from $3.634 billion ($2.80 per share) in Q3 2023, and a rise from $3.397 billion ($2.65 per share) in Q2 2024.
Suncor’s cash flow provided by operating activities rose to $4.261 billion ($3.36 per share), slightly above the $4.184 billion ($3.22 per share) in Q3 2023. On a sequential basis, this figure grew from $3.829 billion ($2.98 per share) in Q2 2024.
In terms of capital expenditures, Suncor reported a total of $1.467 billion in Q3 2024, down slightly from $1.512 billion in Q3 2023 and significantly reduced from the $1.964 billion spent in Q2 2024. Notably, total operating, selling, and general expenses fell to $3.055 billion in Q3 2024, down from $3.124 billion in Q3 2023, driven by lower share-based compensation expenses, reduced operations and maintenance costs, and lower commodity costs.
The firm’s net debt position dropped to $7.968 billion at the end of Q3 2024, a significant improvement from $9.837 billion at the end of Q3 2023 and down from $9.054 billion in Q2 2024. Achieving its net debt target of $8 billion represents a notable milestone and allowed Suncor to commit to returning all excess funds to shareholders, thereby completing $1.5 billion in shareholder returns through dividends and share repurchases during the quarter.
In terms of operations, the company’s total upstream production rose to a record 829,000 barrels per day (bbls/d), up significantly from 690,500 bbls/d in Q3 2023, driven by gains in Oil Sands production and enhanced performance from acquired assets like Fort Hills. Refinery utilization reached an unprecedented 105%, with refined product sales reaching 612,000 bbls/d, marking a third consecutive quarter of record sales.
Suncor’s increase in shareholder returns is underscored by the board’s decision to raise its quarterly dividend by 5% to $0.57 per share. Although this move reflects confidence in sustained cash flow, it could also signal that Suncor sees limited immediate avenues for reinvestment, focusing instead on rewarding shareholders.
Suncor Energy last traded at $53.16 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
