Canada’s biggest energy firm and the largest oil sands outfit, Suncor Energy Inc. (SU - Analyst Report) reported third-quarter 2014 operating earnings per share of 89 Canadian cents (82 U.S. cents), which surpassed the Zacks Consensus Estimate of 79 U.S. cents. Higher production from the Oil Sands operations primarily aided the results.

However, comparing year over year, the bottom line declined 6.3% from 95 Canadian cents per share, due to lower production and realization from Exploration and production (E&P) operations.

In the reported quarter, total revenue was C$10.27 billion (US$9.44 billion), compared with $10.37 billion in the year-ago level. The top line also failed to meet the Zacks Consensus Estimate of US$10 billion.

Quarterly operating earnings of C$1.3 billion were below C$1.4 billion recorded a year ago. Moreover, cash flow from operations decreased to C$2.3 billion from C$2.5 billion in the third quarter of 2013.    

Production

Total upstream production in the reported quarter averaged 519,300 barrels of oil equivalent per day (BOE/d), down from the third-quarter 2013 level of 595,000 BOE/d. The result reflects impact of the sale of the conventional natural gas business, lower production from Libya and planned maintenance activity in E&P. However, the negatives were partially offset by better results from Oil Sands operations.

Oil sands volume was 411,700 barrels per day (Bbl/d), higher than 396,400 Bbl/d recorded in the year-ago quarter. Full functionality of the Firebag was the primary reason for the improvement. However, it was partially offset by unplanned maintenance activities and negative weather-related impact.

Production from Syncrude operations increased 8.1% year over year to 29,400 Bbl/d in the quarter as a result of lower planned maintenance activities.

Suncor’s Exploration and Production segment (consisting of International and Offshore and Natural Gas segments) produced 78,200 BOE/d, substantially lower than 171,400 BOE/d in the prior-year quarter. Sale of Suncor’s conventional gas operations, along with planned maintenance activities and reduced output from Libya, hampered the output.

The Refining and Marketing segment averaged 435,700 Bbls/d of refinery crude processed, down from 448,800 bbls/d in the year-ago quarter. The refinery utilization came in at 94%, lower than the year-ago quarter level of 98% primarily due to planned maintenance work at the Edmonton, Sarnia and Montreal refineries during the quarter.

Product Sales

The company’s refined product sales of 542,400 Bbls/d decreased 4.6% from the prior-year quarter.  

Operating Expenses

Suncor reported operating cost of C$2.4 billion, compared with C$2.3 billion in the year-ago quarter level.

Balance Sheet & Capital Expenditure

As of Sep 30, 2014, Suncor had cash and cash equivalents of C$5.4 billion and total long-term debt (including current portions) of C$11.1 billion. The debt-to-capitalization ratio was approximately 20.9%. Moreover, the company incurred capital expenditure of C$1.7 billion in the quarter.  

2014 Guidance

Suncor expects full year production in the 525,000–570,000 BOE/d range. The company expects refined products sale in the band of 500,000–550,000 Bbls/d.

The company maintains its 2014 capital spending guidance at C$6.8 billion.

Zacks Rank    

Suncor currently carries a Zacks Rank #3 (Hold).

Meanwhile, one could consider better-ranked players from the broader energy sector like Magellan Midstream Partners LP (MMP - Analyst Report), Cobalt International Energy, Inc. (CIE - Snapshot Report) and Delek Logistics Partners, LP (DKL - Snapshot Report). All these sport a Zacks Rank #1 (Strong Buy).

Get the full Analyst Report on MMP - FREE

Get the full Analyst Report on SU - FREE

Get the full Snapshot Report on CIE - FREE

Get the full Snapshot Report on DKL - FREE