CALGARY — Suncor Energy Inc. is not interested in selling off its Petro-Canada retail network, the oil giant’s chief executive said Tuesday, in spite of pressure from an aggressive activist investor.
Speaking publicly for the first time since U.S.-based Elliott Investment Management called for changes to Suncor’s board and a review of its executive leadership as well as the possible sale of Petro-Canada, company CEO Mark Little told analysts that the 1,800-location retail chain is a key element of Suncor’s business.
“It’s intertwined with our wholesale and industrial business as well,” Little said during a conference call to discuss the company’s first quarter financial results.
“(Petro-Canada) is a very strong performer and can go head-to-head with other retail businesses … We think we have the best downstream business in North America, and we think it’s important that it stays together.”
The recent proposal by Elliott — a well-known activist investor that holds a 3.4 per cent economic interest in Suncor and which has a track record of targeting large corporations it views as underperformers — had the Calgary-based oil producer on the defensive on Tuesday’s call.
Elliott has been critical of Suncor’s lagging share price as well as a recent spate of operational difficulties and workplace safety incidents, and analysts wanted to know how the company is responding to these concerns.
But Little pointed to Suncor’s first quarter profits of $2.95 billion in the first quarter — up from $821 million in the same period of 2021 — as well as the highest quarterly cash flow in the company’s history as proof that Suncor is on the right track.
“While we still have work to do, I’m pleased to report that we’re making progress and that all parts of Suncor are shifting into high gear,” Little said.
“Our board and management have great confidence in our plan and the progress we’re making.”
On Monday, Suncor declared a quarterly dividend of 47 cents per common share payable June 24 to shareholders of record as of June 3. The company says the dividend is the highest in the company’s history and 12 per cent higher than the previous quarter’s dividend.
The company’s net earnings amounted to $2.06 per common share, compared to 54 cents per common share in the first quarter of last year.
Revenues were $13.5 billion, up from $8.6 billion in the prior quarter.
Suncor reported total upstream production of 766,100 barrels of oil equivalent per day (boe/d) in the first quarter of 2022, compared to 785,900 boe/d in the prior year quarter.
Refinery crude throughput increased to 436,500 barrels per day and refinery utilization was 94 per cent in the first quarter of 2022, compared to 428,400 barrels per day and 92 per cent in the prior year quarter.
This report by The Canadian Press was first published May 10, 2022.
Companies in this story: (TSX:SU)
Amanda Stephenson, The Canadian Press
Regulator rules in favour of Trans Mountain route deviation
Workers place pipe during construction of the Trans Mountain pipeline expansion on farmland, in Abbotsford, B.C., on Wednesday, May 3, 2023. THE CANADIAN PRESS/Darryl Dyck
By Amanda Stephenson in Calgary
The Canada Energy Regulator has approved Trans Mountain Corp.’s application to modify the pipeline’s route, a decision that could spare the government-owned pipeline project from an additional nine-month delay.
The regulator made the ruling Tuesday, just one week after hearing oral arguments from Trans Mountain and a B.C. First Nation that opposes the route change.
It didn’t release the reasons for its decision Tuesday, saying those will be publicized in the coming weeks.
By siding with Trans Mountain Corp., the regulator is allowing the pipeline company to alter the route slightly for a 1.3-kilometre stretch of pipe in the Jacko Lake area near Kamloops, B.C., as well as the construction method for that section.
Trans Mountain Corp. had said it ran into engineering difficulties in the area related to the construction of a tunnel, and warned that sticking to the original route could result in up to a nine-month delay in the pipeline’s completion, as well as an additional $86 million more in project costs.
Trans Mountain has been hoping to have the pipeline completed by early 2024.
But Trans Mountain’s application was opposed by the Stk’emlúpsemc te Secwépemc Nation, whose traditional territory the pipeline crosses and who had only agreed to the originally proposed route.
In their regulatory filing, the First Nation stated the area has “profound spiritual and cultural significance” to their people, and that they only consented to the pipeline’s construction with the understanding that Trans Mountain would minimize surface disturbances by implementing specific trenchless construction methods.
The Stk’emlúpsemc te Secwépemc argued that Trans Mountain never said its originally proposed construction method was impossible, only that it couldn’t be done in time to meet a Jan. 1 in-service date for the pipeline.
The First Nation didn’t respond to a request for comment by publication time.
The Trans Mountain pipeline is Canada’s only pipeline system transporting oil from Alberta to the West Coast. Its expansion, which is currently underway, will boost the pipeline’s capacity to 890,000 barrels per day (bpd) from 300,000 bpd currently.
The pipeline — which was bought by the federal government for $4.5 billion in 2018 after previous owner Kinder Morgan Canada Inc. threatened to scrap the pipeline’s planned expansion project in the face of environmentalist opposition and regulatory hurdles — has already been plagued by construction-related challenges and delays.
Its projected price tag has since spiralled: first to $12.6 billion, then to $21.4 billion and most recently to $30.9 billion (the most recent capital cost estimate, as of March of this year).
Keith Stewart with Greenpeace Canada said it’s alarming to see the regulator over-rule the wishes of Indigenous people in order to complete a pipeline on deadline.
“Every Canadian should be outraged that our public regulator is allowing a publicly owned pipeline to break a promise to Indigenous people to protect lands of spiritual and cultural significance,” Stewart said.
The federal government has already approved a total of $13 billion in loan guarantees to help Trans Mountain secure the financing to cover the cost overruns.
Trans Mountain Corp. has blamed its budget problems on a variety of factors, including inflation, COVID-19, labour and supply chain challenges, flooding in B.C. and unexpected major archeological discoveries along the route.
Given the Canadian regulatory system has a reputation for being slow and cumbersome, it was surprising to see the Canada Energy Regulator rule so quickly on Trans Mountain’s route deviation request, said Richard Masson, executive fellow with the University of Calgary’s School of Public Policy.
“It’s a challenging decision to have to make, when you’ve got a $30 billion pipeline that needs to be completed,” Masson said.
“If there’s no feasible way to do that tunnel, then I guess you have to allow for this.”
Masson added that if the regulator had denied Trans Mountain’s request, it would have been bad news for taxpayers as well as the federal government, which is seeking to divest the pipeline and has already entered into negotiations with several interested Indigenous-led buyers.
It also would have been bad news for Canadian oil companies, who have been eagerly anticipating the pipeline’s start date to begin shipping barrels to customers.
“If this can result in the pipeline being completed by year-end and started up in the first quarter, that’s good news. The world is still looking for oil, and oil prices are up at US$90 a barrel,” Masson said.
This report by The Canadian Press was first published Sept. 25, 2023.
Partial settlement approved in lawsuit against Calgary Stampede over abuse of boys
A judge has approved a partial settlement in a class-action lawsuit against the Calgary Stampede that alleged the organization allowed a performance school staffer to sexually abuse young boys.
Phillip Heerema received a 10-year prison sentence in 2018 after pleading guilty to charges including sexual assault, sexual exploitation, child pornography and luring.
Heerema admitted to using his position with the Young Canadians School of Performing Arts, which performs each year in the Calgary Stampede Grandstand Show, to lure and groom six boys into sexual relationships.
The school is operated by the Calgary Stampede Foundation.
Court of King’s Bench Justice Alice Woolley approved the deal in which the Stampede has agreed to pay 100 per cent of the damages.
Hearings on the amount will take place on Dec. 14 and 15.
This report by The Canadian Press was first published Sept. 25, 2023
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