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Image source: Suncor.

Oil prices have been gradually rising, but shares of Canadian oil giant Suncor (NYSE:SU) haven't. Concerns surrounding the massive wildfire that emptied the city of Fort McMurray, Alberta, have put pressure on Suncor's shares, pushing them down 15%.

Does this present an opportunity for investors?

Has the long-term value proposition changed?

SU Chart

SU data by YCharts

Since the start of May, the stock price has taken a bit of a tumble. It's hard, though, to see how any of the news from Fort McMurray is much more than a temporary cash-flow interruption. Suncor's facilities haven't been threatened, and the company's massive reserve base is fully intact.

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Image source: Suncor corporate presentation.

In fact, two impressive things stand out about Suncor's assets. The first is their incredible reserve life. Suncor's proven and probable reserves have a 35-plus-year reserve life, a number virtually unmatched in the industry. The second is that the predictable nature of oil-sands development means Suncor has a clear path to production growth without having to discover a single additional barrel of oil.

A temporary production outage such as what the recent wildfire has caused isn't going to have any impact on the long-term value Suncor's shareholders will realize from the development of those reserves. If Suncor investors want to worry about something, they'd be better off focusing on carbon initiatives and the electric car.

Suncor has a great record for exploiting cyclicality

This oil crash has reinforced one thing for me: This industry does a terrible job of planning for cyclicality. It's not exactly a mystery that oil prices can suffer from periodic crashes. The last instance was in 2008, not that long ago. And it only took six years before the bottom fell out this time.

Yet here we are, with companies going bankrupt left and right and all kinds of other producers trying to sell assets at the bottom of the cycle in an extreme buyer's market.

Suncor, in contrast, is a rare producer. Instead of suffering from this cyclicality, it's exploiting it.

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Image source: Suncor corporate presentation.

This chart, from Suncor's most recent corporate presentation, shows the company's admirable track record of exploiting the cycles. In its oil production business, Suncor snatched up Petro-Canada when oil prices collapsed in 2009 and has taken advantage again this time by adding to its Fort Hills interest in Alberta and significantly adding to its Syncrude ownership.

Suncor has done the same on the refining side, by making acquisitions when refining margins were thin and selling when they were wide.

What did Suncor buy this time?

This time around, Suncor aggressively bid for and eventually acquired Canadian Oil Sands, which was a pure play on Syncrude production, and then also added Murphy Oil's (NYSE:MUR) Syncrude interest in a second deal.

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Image source: Suncor corporate presentation.

The two deals took Suncor's 12% interest in Syncrude and turned it into a majority 53.74% interest. The price Suncor paid for Canadian Oil Sands was one-third of where the latter had traded in 2011. If you're long-term bullish on oil prices, then you have to be bullish on this deal.

Is Suncor a bargain today?

If you think fossil fuels are going to be phased out within 20 years, then Suncor, like most oil companies, shouldn't be on your buy list.

If you don't hold that view, then whether you think Suncor is a bargain is something you can't answer without having an opinion on long-term oil prices, as well as on what sort of negative fallout from climate-change action the oil sands attract. If you think $80 to $100 oil prices are likely to be the long-term norm in the coming decades, then you should be backing up the truck on Suncor every time it sells off. This is a very well-run company with an asset base that can't be duplicated.

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