Suncor Set for More Sand Dollars

Spinning off refining and retail downstream assets has been a growing trend for major integrated oil companies, as management and analysts find additional value by separating the upstream from the downstream. Having an integrated operation places an inherent hedge on the business because oil companies drive more profit when crude prices are high, but lose margin in the refining business because high crude prices increase input costs.

A few recent examples are Conoco spinning off Phillips 66 and Marathon Oil divesting Marathon Petroleum, but there are still a few integrated majors successfully adding value by packaging the entire process in-house. ExxonMobil is still enormously profitable using its integrated approach, but Suncor is a company that uses its refining and marketing business more efficiently.

Suncor produces around 70% of its crude in the Canadian oil sands, and unlike most oil produced in Canada and the U.S. mid-continental region that fetches the cheaper WTI crude price, Suncor uses its refining capacity and retail segment to secure Brent crude prices for 96% of production. Suncor plans to increase its oil sands production by the end of the year when its Firebag 4 project commences, creating even more opportunity to mine bitumen and realize international prices for its finished product.

There are many different ways to play the energy sector, and our analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out our special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Joel South has no positions in the stocks mentioned above. Taylor Muckerman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2073304, ~/Articles/ArticleHandler.aspx, 9/23/2014 8:35:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement