01.07
Outperform, Average Risk, Price Target: $50.00
Suncor Energy is wasting little time in refocusing its upstream portfolio on the heels of its merger with Petro-Canada, with Noble Energy acquiring its U.S. Rockies natural gas segment for US$494 million. Although modest in scale, the transaction may prove to be a harbinger of things to come as Suncor moves ahead with non-core dispositions in western Canada, Trinidad & Tobago, and the North Sea. Removing the U.S. Rockies transaction from the mix would point toward further proceeds that Suncor pegs at $1.5 – $2.0 billion. In our view, Suncor is a multiple revaluation story, as its non-core assets are rationalized and its oil sands production weighting moves into sharper focus toward targeted levels of 70% over time. We reiterate our Outperform rating and one-year target price of $50 per share on Suncor.
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