Suncor Energy Inc.'s (NYSE:SU) most important assets are in the Canadian oil sands. You don't drill for oil in the oil sands; you mine it. And that changes the oil equation in a big way. With two new projects ready to come online over the next year, one in the oil sands now is a good time to get to know this Canadian oil giant. Here's a quick primer explaining why you might want to buy Suncor Energy today.

Digging, not drilling

Oil sands are, basically, just what they sound like: earth that's saturated with oil. To get the oil out, you dig up the material and then process it to release the oil. It's pretty expensive to build an oil-sands project, which leaves many investors with the impression that oil sands are costly to operate. But the truth is that once built, operating an oil sands mine is relatively cheap.   

An engineer stands in front of a piece of mining equipment.

Image source: Getty Images.

For example, coal, copper, and zinc miner Teck Resources (NYSE:TECK) is expecting its Fort Hills oil sands joint venture with Suncor to add to its results even at today's relatively low oil prices. But there's more to like here because oil sands also have very long reserve lives. Fort Hills is expected to produce oil for 50 years. So despite the high upfront costs, oil sands can be very valuable assets.   

Suncor owns other assets, including retail gasoline distribution and offshore drilling, but when you think about Suncor, you need to shift the equation a little bit because of the company's oil sands exposure. For example, Suncor believes it can cover its dividend and sustaining capital costs with oil as low as $40 a barrel. Basically, because it has a solid base of low-operating-cost oil assets, Suncor can keep rewarding investors even in a low-oil-price environment.   

Built-in growth

I mentioned Fort Hills, an oil sands project that's nearly complete. It will be ramping up to full production levels over the next year or so, leading to growth in Suncor's production. But I also mentioned that it has other assets, including a 21% stake in the ExxonMobil (NYSE:XOM)-operated Hebron project. This offshore oil investment is expected to start ramping up over the next year as well. Overall, Suncor is expecting production growth to average around 10% annually over the next two years.   

A bar chart showing Sunor's production growth projection of roughly 10% annualized

Suncor expects production growth to rise at a solid clip over the next couple of years. Image source: Suncor Energy. 

But that's not all that's going on. Suncor tends to use downturns to expand by acquisition. For example, it bought Petro-Canada, its retail arm, in 2009, when oil prices were falling. During the most recent downturn, which started in mid-2014, it inked two transactions to take a controlling stake in Syncrude, a large Canadian oil sands company. With a control position, Suncor is looking to cut costs more aggressively to help improve Syncrude's results. Syncrude is another important piece of the company's production growth plans.   

Financially strong

Relatively low-cost operations and production growth are two very good reasons to like Suncor Energy. But there's another: It has a solid balance sheet. For example, long-term debt accounts for about 20% of the capital structure. That's a modest amount of leverage when you consider that Suncor has been spending on new projects such as Fort Hills and Hebron.   

A bar chart showing Suncor's cash flow generation

Suncor generated ample free cash flow even during the oil industry downturn. Image source: Suncor Energy. 

It's also worth noting that long-term debt has declined by nearly CA$4 billion since the beginning of 2017. That's a reduction of around 24% in just nine months. So not only is Suncor on solid financial footing, but it's also working hard to get itself into even better financial shape. Part of the reason it can do so is that its low-cost operations allow for ample free cash flow. That was true even during the worst of the most recent downturn, as the preceding graphic shows.   

Worth a deep dive

Suncor's exposure to oil sands makes it stand out in the oil industry, helping to keep production costs low for the company. Add in the production growth that's expected as projects such as Fort Hills and Hebron come online, and there's even more to like. And all of that is built on a solid financial foundation. Suncor currently yields around 3.1%, nowhere near the highest yield in the industry. But if you're looking for an oil investment with some growth potential, Suncor is well worth additional research today.

Reuben Gregg Brewer owns shares of ExxonMobil. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.