Tar Sands Giant Reports, Buffett Favorite Occidental Report Pending
Canada-based oil-sands producer Suncor (SU) reported above first-quarter results late Monday, boosted by a spike in oil prices after Russia invaded Ukraine. Suncor stock rebounded early Tuesday, as oil stocks overall were mixed as crude oil prices shifted lower.
Warren Buffett’s Berkshire Hathaway (BRKB) has amassed a major stake in OXY stock in recent months.
Suncor Earnings, Suncor Stock
Estimates: Wall Street expected Suncor to earn $1.27 per share, a 218% jump, according to FactSet. Sales were expected to climb 31% to $9.184 billion.
Results: Suncor’s earnings per share soared 291% to $1.93, according to FactSet. The company increased its quarterly dividend by 12%, to 47 cents. The company said it trimmed long-term debt by $728 million during the quarter.
Among other oil stocks, Exxon (XOM) tumbled 7.9% to 84.46. The stock tumbled below an 89.90 buy point. Chevron (CVX) sank 6.7% to 159.25, skidding below its 50-day moving average. Shares were in a flat base with a 174.86 buy point. Buffett’s Berkshire substantially increased its CVX stock holdings in the past few months.
Russia’s invasion has sent oil prices higher, as buyers turn away from the nation’s supply and as markets worry about shipping disruptions.
But crude oil prices and oil stocks were down on Monday, amid broader concerns about the economy and the impact on oil demand from China’s coronavirus lockdowns, along with a general stock market sell-off. U.S. light-crude oil futures tumbled 6.1% to $103.09 a barrel
Suncor, a major producer in Canada’s oil industry, uses mining and heating technology to extract oil sands — and bitumen, the thick form of crude oil those sands contain — from the ground. Along with bitumen, oil sand contains sand, clay and water. Once Suncor extracts bitumen, its refineries convert it into products like gasoline, asphalt and other materials.
Elliott Buys Suncor Stock
Elliott Investment Management last month said it had taken a roughly 3.4% stake in Suncor. At that time, it also said it sent a letter to Suncor’s board saying the company had “seen a decline in the exceptional performance that was formerly its hallmark” that had led to “missed production goals, high costs, and safety failures.” Elliott also argued that Suncor stock had underperformed many of its rivals.
Elliott called on Suncor to add five new independent directors with “deep expertise” in Canadian energy. And it called for a review of Suncor’s executive team, as well as a review of ways to strengthen business outside of Suncor’s oil-sands operations.
It also asked Suncor to increase capital returns to more than 80% of discretionary cash flow, after capital expenses and dividends. That would be up from 50%.
Suncor, in a brief statement, said it “looks forward to engaging with Elliott in due course to better understand their perspective.”
Elliott said that since 2014, 12 employees or contractors at Suncor had died in accidents. It said that figure was greater than its direct peers combined. Regulators and activists have also scrutinized the environmental impact of Suncor’s operations.
Occidental Petroleum Earnings
Estimates: Wall Street expects Occidental to earn $1.97 per share, well up from a loss a year ago. Revenue was expected to jump 47% to $7.782 billion.
Results: Due Tuesday after the close.
OXY stock slid 10.9% to 57.84 on Monday. The stock is falling back toward its rising 50-day line.
Like other oil stocks, its ratings from IBD are strong. Shares have a 99 Composite Rating. Their EPS Rating was 74.
Occidental is the largest acreage holder in the Permian Basin, located in Texas and New Mexico. It also has operations in the Gulf of Mexico, Colorado and abroad — in Oman, Algeria and the United Arab Emirates.
Shareholders of Occidental on Friday voted against a proposal by investor group Follow This for the oil company to set carbon-emissions reduction targets, according to Bloomberg. Occidental that same day said its board had declared a regular quarterly dividend of 13 cents per share.
Berkshire has become the largest shareholder of Occidental, with Warren Buffett loading up on the stock earlier this year. Berkshire owns 15.2% of OXY stock, according to FactSet data.
Teekay Tankers Earnings
Estimates: Wall Street expects Teekay to report a loss of 76 cents per share, narrower than a year ago. Sales estimates were unavailable.
Results: Due before the open on Thursday.
Shares fell 12.5% to 14.38 on Monday, undercutting the 50-day line.
Teekay operates tankers that transport crude oil. The stock’s Composite Rating is 88. Its EPS Rating is 27.
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