Suncor Energy Inc (SU.TO)

It is sitting with good production volumes and they have done very well in refining. Production is improving but there is nowhere for the additional oil to go. If it backs off below $40 then it would be interesting and a table pounding buy at book value. He has nothing against it.

Canadian Natural Resources (CNQ-T) or Suncor (SU-T) for a longer outlook for gains? They are almost interchangeable. They are the 2 quality companies in the Canadian oil patch, and the 2 that have been able to purchase assets at good prices, while other companies were down. He owns both, and it is a coin toss as to which would do better in the next couple of years. He would be a buyer of both.

His preferred way to play the energy space right. He likes that they have a very stable balance sheet. At $55-$60 oil, they are cranking out a good amount of cash flow out of the oil sands. They are diversified with downstream operations, which moves out the cash flow profile. They’re returning cash back to shareholders. A good holding.

A great company. They have the Fort Hills coming on, probably the last big project in the oil sands. A free cash flow story. The question is, what do they do with the money. His hope is that they give it back to shareholders in the form of dividends. Dividend yield of 2.9%.

SU-T vs. CNQ-T. SU-T is a great company. With CNQ-T they are the two big guys in the field. He owns neither one but he would lean a little more to CNQ-T because of better valuation. The yield is not as great but they have more potential to bump the dividend up. Unit we get a better energy environment in Canada the growth will be limited.

Just announced they are starting production on their Hebron project off the east coast. Seasonally, this has a period of seasonal strength from approximately mid-Jan right through until May each year. Technically, the stock is getting into gear, but still a little early for a seasonal trade.

The old highs are always bullish and we are now testing a 3^rd high. Expects it will go higher. There are still uncertainties in the oil market. Crude has recovered and is now $57-$58, but you have the American shale producers that have lots of capacity. During uncertainty, you want to buy the strongest company in the sector, and this company is definitely benefiting from that.

Bought this when he thought a pro-growth theme was evolving. The chart shows there was a little resistance but it got through that around the $44 mark. Now you want to see it push higher with strength. The producer, not the crude, will lead on the way up. It should run up to $50 next year before there is any resistance.

Not bullish on oil for the longer-term. The Western world is moving away from oil. World oil production was expanded massively to bring China on the last 20 years. Now Russia, Iran, Iraq, etc., etc. are needing money. There is a lot of oil in the globe to be brought on by people who are really desperate to drive their economies forward. Then you have the great shale boom in the US where hundreds of barrels of oil have been on lock by the shale technology. It’s coming out at $50 a barrel and they’re making money. You don’t want to invest in oil unless you have a company that can truly make money at that level. Suncor can make money at these levels, but a lot of that is because they have an old plant that was built over the last 40-50 years at different costs. He doesn’t see exciting upside in this company.

CNQ-T vs. SU-T. Both are up for the year because the profits are in refining. They will both generate significant cash flow. They could buy back shares or make an acquisition. Both are good for the long term but there could be weakness during tax loss selling. SU-T gives you refining stability and CNQ-T gives you oil sands growth.

It is moving up with the group and is a safe way to get energy exposure. If you think oil goes up theis is upside, bit it will go down less when the group goes down.

Just released fantastic results. This has performed well amongst the energy patch. An integrated company, and has done very well on the refinery side. A good long-term hold. With higher oil prices you could get some capital gain.

One of the blue-chip names in the industry, and has withheld the storm better than most. Has diversity in their upstream, midstream and downstream assets. If oil goes down, but are still charging the same at the pump, they end up insulating themselves. If uncertain about where oil is heading, this is a good name to own. It isn’t going to have as much torque though, when oil does move up.

In the current environment you want to play safe, with good quality and long term assets. Has a very strong balance sheet and limited downside risk.

It is one of his preferred names in the oil patch. Canada’s largest integrated oil producer. They are at the end of a very capital intensive phase in their company. Fort Hills is coming to fruition. It has long life, high quality reserves that are past the peak of capital spending. He expects that the company will be in capital return to shareholder mode in the year ahead. There could be dividend increases and share buyback to do this.