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This shouldn't really be a surprise and I think has mostly been priced in. Suncor isn't the type of company to pay a dividend out of spite, nor have investors historically relied on it as it typically is 3-4% at most. Better to cut it before they start attracting investors interested in the high yield.

The biggest oil supply contraction in history is underway. Any increase in demand from here is going to require investment, and there is none; production is going to fall much further in the next 12 months. Suncor identified $35 WTI as the point where they are sustainable with current capital spending and the new dividend. While that price isn't in the future contracts until 2021-22, that price is well lower than virtually all other companies and countries in the world. There were only capital writedowns in Fort Hills and their offshore production.
 

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Has Suncor peaked around these levels for the next couple of years or could it ever get back above $40
I believe it has room to move to $40 but it may take a year as they pay down debt and increase dividends to shareholders. Perhaps even share buybacks too. It takes a larger integrated longer to respond than the smaller pure upstream E&P companies.

Whether it will get above $40 on a sustained basis is an open question. There is not much room in Canada for substantial increased oil production growth so it really comes down to very modest production growth through production optimizations and most of all, margin increases. There are simply too many headwinds (carbon taxes and fuel substitution) for investors to project significant growth in the oil business. It may well become just another income stock in 2-4 years.
 

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I believe it has room to move to $40 but it may take a year as they pay down debt and increase dividends to shareholders. Perhaps even share buybacks too. It takes a larger integrated longer to respond than the smaller pure upstream E&P companies.

Whether it will get above $40 on a sustained basis is an open question. There is not much room in Canada for substantial increased oil production growth so it really comes down to very modest production growth through production optimizations and most of all, margin increases. There are simply too many headwinds (carbon taxes and fuel substitution) for investors to project significant growth in the oil business. It may well become just another income stock in 2-4 years.
I believe it has room to move to $40 but it may take a year as they pay down debt and increase dividends to shareholders. Perhaps even share buybacks too. It takes a larger integrated longer to respond than the smaller pure upstream E&P companies.

Whether it will get above $40 on a sustained basis is an open question. There is not much room in Canada for substantial increased oil production growth so it really comes down to very modest production growth through production optimizations and most of all, margin increases. There are simply too many headwinds (carbon taxes and fuel substitution) for investors to project significant growth in the oil business. It may well become just another income stock in 2-4 years.
Has Suncor peaked around these levels for the next couple of years or could it ever get back above $40
Suncor,Cenovus,,if oil can hold these prices these companies will make alot of free cash flow,driving share prices higher.
 

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I agree and it will manifest itself in share buybacks and dividend increases (along with debt repayment). The endpoint is finite though so share price at some point, wherever that is, will stall due to lack of demand growth and hence production growth. Once TMX (end of 2022) and Enbridge Line 3 (end of 2021) are operational, there will be some room for production growth, after which we will see the limits of the Canadian oil industry.

There will come a point that the determining factor for production will be customers, not pipeline space. It is coming, even in America. Just a matter of when. Investors don't particularly like mature industries, or to some extent sunset industries and compressed valuation metrics, e.g. a P/E that doesn't exceed 10 or even 8, will reflect that. These things are real and will become a reality somewhere in the not too distant future.

It doesn't matter whether SU will top out at $35, $40, or $50. It will top out and I am not likely to own a stock that is on a 'leash'. SU will have to re-invent itself into other businesses if it wants to continue to grow.
 

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The oil-less future is coming, but not before we experience a rough go pretty soon with oil supply shortages that may last a decade. It's just a matter of time. Coal prices are at decade+ highs, natural gas prices are surging to decade highs as well. It's a preview of what is coming when oil prices hit all time highs. Or whatever price is required to induce significant demand destruction.

Of course, oil stocks like Suncor could still remain cheap. But they will be flush with cash that will make 2008 look like hard times, because the cost basis has come down so far. Buying back their shares is really the only way to stay above water.
 

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I'm millennial aged, just starting a family... Even under the "aggressive" fantasy schedule of some regions banning sales of gas cars by 2035, that means I can still by a a new gas car right now and run it for 15 years, a new gas or hybrid car in 2034 (maybe I'll buy two then so they last longer) and those cars will be going for me until I'm 60-65 years old... And I'm in the younger half of the population, still driving gas cars into retirement...

So when's that rollover in oil demand going to happen?

Also a likely scenario is that there are lots of PHEVs sold over the next 30 years, at great taxpayer expense directed to the car companies, and then the consumers still put tons of gasoline in them...They'll forget to plug in, won't bother with the home electrical upgrades, or don't have time to wait 45 minutes at a station. I would totally buy a PHEV to get that sweet subsidy, and then never plug it in ever. If I can manage to buy of those in 2049, that'll last me to death, burning gas.
 

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I'm millennial aged, just starting a family... Even under the "aggressive" fantasy schedule of some regions banning sales of gas cars by 2035, that means I can still by a a new gas car right now and run it for 15 years, a new gas or hybrid car in 2034 (maybe I'll buy two then so they last longer) and those cars will be going for me until I'm 60-65 years old... And I'm in the younger half of the population, still driving gas cars into retirement...

So when's that rollover in oil demand going to happen?

Also a likely scenario is that there are lots of PHEVs sold over the next 30 years, at great taxpayer expense directed to the car companies, and then the consumers still put tons of gasoline in them...They'll forget to plug in, won't bother with the home electrical upgrades, or don't have time to wait 45 minutes at a station. I would totally buy a PHEV to get that sweet subsidy, and then never plug it in ever. If I can manage to buy of those in 2049, that'll last me to death, burning gas.
In the developed world, likely demand will be flat and/or decline from now on. But the other 6 billion people in the world are going to consume more and cannot afford $50k electric cars, neither can their governments afford subsidies. They can afford $3-4k Tatas though. As such, total world oil demand will reach pre-COVID levels next year and exceed it in 2023, and increase further for at least 10 years.

The only reason we don't have a supply crisis today is because oil tanks were literally overflowing last year because of the drop in demand. Those tanks are slowly emptying. The inflection point will probably be Q2-Q3 next year, when OPEC can turn on maximum production and the tanks are still emptying. Watch out when that happens.
 

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I generally concur with Doctrine's viewpoint but not the numbers. I think peak oil demand will occur well before 10 years, with peak production rates well below what many believe. Oil prices could temporarily hit $100 but it will not be long lasting and oil company share prices won't reflect those prices for long. Every investor knows, or should know, the private oil industry will be boxed in taking the brunt of demand decline and eventually squeezed out. Sovereign oil firms will see to it.

I also don't believe 6 billion people will necessarily use more oil. There will be inexpensive EV alternatives and China will be leading the way. India will do likewise. Most people in the developing world don't need range beyond 100km anyway...treks into the wilderness not withstanding. I think we will see more e-bikes and e-motorcycles in developing countries too.
Example for China
Tata and Strom for India
Electric bikes and scooters in India - applicable for a lot of SE Asia and Africa too for that matter.

We in the West are far too insular to understand the revolution that is well underway.
 

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In related news, Apple produces dual SIM iPhones for only the China market; The SIM card slot has one each on the top and bottom.
It's too bad there isn't much availability for dual sim phones in Canada. Speaks to the insular part as dual sim phones are much more useful for people who like traveling.
 

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I'm done with oil stocks. I think these companies will struggle if they don't re-invent themselves. Oil may remain for some time, but we cannot deny the new wave of alternative fuel/electrification going strong. Electric vehicles are here to stay. Technology is advancing at record speeds - its only a matter of time that gas vehicles become obsolete.
 

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I'm done with oil stocks. I think these companies will struggle if they don't re-invent themselves. Oil may remain for some time, but we cannot deny the new wave of alternative fuel/electrification going strong. Electric vehicles are here to stay. Technology is advancing at record speeds - its only a matter of time that gas vehicles become obsolete.
Commodities are cyclicals, i.e. trades, not buy and holds. Good money can be made from them but one has to really understand the cycles, and in oil especially, subject to the whims of OPEC+. A number of folks here have done well in this sector but it takes staying power and discipline....and I might add, luck too.
 

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Canadian oil exports were the largest component of the $3 billion trade surplus Canada just posted.

I don't think we are ready to throw in the towel on oil just yet.

Maybe in a few years, but for now.....make hay while the sun shines.
 

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I'm done with oil stocks.
I said the exact same thing a few months ago lol.
Now that I've made back my losses and done more research, I think energy is a good place to be for the next 5+ years.
Gonna cautiously add a variety of energy shares.
SU looks dirt cheap, and I believe they'll raise their dividend.

Edit: Can someone shed light on why SU is so cheap compared to CNQ? I realize the latter has a higher div which wasn't cut and it has more natural gas exposure. Is that it? Better CEO in Murray Edwards?
 

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CNQ has a premium likely because they are not making any mistakes. They also grew considerably through huge acquisitions bought at big discounts, whereas Suncor has been investing more capital like in Fort Hills at very high prices and it is still not fully operational and this is what 8 years later? So, Suncor is a little spotty and CNQ is nearly perfect. But Suncor hasn't taken on new projects so they really just need to straighten out their own house and the stock should move back up. Both are good investments but I think Suncor is going to double before CNQ.

Suncor is technically looking very good now and at 2-3 month highs in a seasonally weak period whereas the index is not quite breaking out yet.
 

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CNQ has a premium likely because they are not making any mistakes. They also grew considerably through huge acquisitions bought at big discounts, whereas Suncor has been investing more capital like in Fort Hills at very high prices and it is still not fully operational and this is what 8 years later? So, Suncor is a little spotty and CNQ is nearly perfect. But Suncor hasn't taken on new projects so they really just need to straighten out their own house and the stock should move back up. Both are good investments but I think Suncor is going to double before CNQ.

Suncor is technically looking very good now and at 2-3 month highs in a seasonally weak period whereas the index is not quite breaking out yet.
CNQ and Suncor are quite different in some respects. Suncor has a big finger in refining and retail. They are Canada's version of Exxon or Chevron. CNQ is mainly a primary producer. CNQ has a large investment in the oil sands but it has a large investment in conventional oil and gas as well. Suncor less so in conventional oil and gas.
 

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You can see my running commentary in this thread over the last 2 years has been consistent. If anything, oil inventories are dropping faster now than any time in the last 2 years. Suncor's assumption is at best very conservative. In fact, they were assuming some ridiculous number like $55 until very recently. It likely prevented them from raising their dividend above 2020 levels for longer than was necessary, but they are back on track. Suncor's forward P/E is easily 5 or less depending on your assumptions.
 
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