| StockTradersPress.com |
| A Corporate
Communications Corp. Publication ---- All Rights Reserved |
| Update
Report |
August
3, 2004 |
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| STRONG BUY/ HOLD |
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| Suncor Energy Inc. (NYSE) SU
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$29.61 |
| 52-week range |
$17.86-$29.99 |
| Market Cap |
$13.42B |
| Shares Outstanding |
452.83M |
| Book Value |
$7.11 |
| Price/Book |
4.18 |
| Average Daily Vol. |
860K |
| Target Price |
$38.00 |
| Target Percentage |
28% |
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| Suncor Energy Inc. is an integrated Canadian
energy company, which is engaged in production, refining and marketing
of oil and natural gas. The stock Suncor Energy Inc (SU)
has performed quite well since our initial recommendation in November
2003 at a price of $21.93 per share. During this period the stock
has risen $7.60 per share or 35% while the overall markets have been
relatively unchanged. |
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| We are attracted to Suncor Energy
for the following reasons: |
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- The estimated reserves of the oil sands of Alberta are about
7.5 billion barrels. This sizeable deposit will
more than offset the declining oil production of the North Slope.
- Suncor has achieved a daily production output of a
little over 200,000 barrels a day. Also, the company had higher
natural gas production up to 209 million cubic feet per day (up
19%).
- While the cost of production from oil sands is higher than
conventional oil production, it’s still well below the average
price of oil over the past several years. At the present time
the average cost of production is about $11 per barrel; which
compares to an average selling price of $25 per barrel. With the
price of oil over $40 per barrel, we expect second half 2004 and
2005 profits to continue to be robust. This is also true for natural
gas, which is near the $6 level, and Suncor will
increase its natural gas production.
- While we expect oil prices will decline somewhat, (possibly
to $36-$38 per barrel) the company will continue to have
higher profits due to increased oil and gas production.
- For 2004, we expect the company to earn about $1.90 per share
and generate cash flow of about $2.75 per share. At $29 per share,
we believe the company is attractive; especially in view of its
substantial petroleum reserves.
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We recommend
Suncor Energy Inc. as an attractive investment in the energy industry.
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| We have increased
our target price to $38 per share from $31 per share |
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| STOCKTRADERSPRESS.COM
|
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