This year has been a solid one for Canadian oil sands giant Suncor Energy (NYSE:SU). While the company's total return of 7.5% through early December has trailed the red-hot stock market, it still delivered stellar operating results. Oil sands production is on pace to increase 14% versus last year, which, along with higher oil prices and falling costs, helped fuel a 69% surge in funds from operations through the third quarter. Those factors enabled the Canadian oil giant to boost its dividend 10% versus last year's level, which is its 15th straight increase.

That said, as good as this year has been, 2018 could be even better. That's because the company is just putting the finishing touches on two major projects, which should fuel significant production and cash-flow growth next year at a time when oil prices should be at their highest level in a quite a while. Because of that, the company could set new records in several categories. However, it will be hard for some investors to view it as the best year ever if the stock doesn't hit a new all-time high, which will be tough to do given how far it still needs to go. 

A row of oil pumps in the snow.

Image source: Getty Images.

2018 should be a record-setting year on many fronts

Suncor Energy currently expects production to be in the range of 740,000 to 780,000 barrels of oil equivalent per day next year, which, at the mid-point, would be about 10% above this year's record-setting level. One of the fuels of that growth will be the Hebron project, which ExxonMobil (NYSE:XOM) recently announced had produced its first barrel of oil. At its peak, the Exxon-operated oil field in the Canadian Atlantic should produce 150,000 barrels of oil per day, with Suncor receiving a 21% share of that production and Exxon entitled to 35.5%, while several other partners share the rest. In addition to that, Suncor is putting the final touches on its Fort Hills oil sand mine, which was 95% complete at the end of the third quarter. The company owns a 50.8% stake in that project, which should produce between 100,000 to 120,000 barrels per day next year, providing a meaningful boost to production. 

The rising output from those projects, along with higher oil prices, should enable Suncor to generate more cash flow next year than the roughly 8 billion Canadian dollars ($6.5 billion) it expects to pull in this year. If current prices hold, and it doesn't face any unexpected production outages, it's possible the company could top the CA$9.4 billion ($7.4 billion) it produced in 2013, when crude was in the triple digits for most of the year. 

Meanwhile, at the same time cash flow heads higher, investment spending will decline because the company will have finished up both Fort Hills and Hebron. Overall, Suncor expects to spend CA$750 million ($586 million) less on capex next year, which should free up even more money to send back to investors. In all likelihood, the company will give investors another double-digit dividend boost next year, taking the payout to a new all-time high. Meanwhile, the oil giant should have plenty of cash left over to repurchase as much as CA$2 billion ($1.6 billion) in stock, which could give shares more fuel to keep rising.

However, it's still a long way from the top

The increase in production, cash flow, the dividend, and oil prices should all help drive Suncor's stock higher next year, especially if the company takes out the full CA$2 billion ($1.6 billion) in shares, which represents about 3% of its outstanding stock. However, barring a significant spike in oil prices, that combination probably won't provide enough fuel to drive the stock up the roughly 100% needed to hit a new all-time high of more than $72.50 a share, which it last touched in May of 2008, when crude topped $145 a barrel. Because of that, 2018 might be a record year on many fronts -- and a potentially great year for investors -- but it probably won't be the company's best yet if we measure it by the stock eclipsing that record high. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.