by Jack Barnes, contributing editor Money Morning
Looking for a mining company that generates energy with its own
diversified refinery division, wholly owned pipelines, and a retail gas
station network?
In that case,
Suncor Energy (
SU) -- founded in 1953 and headquartered in Calgary, Canada -- should be at the top of your list.
Most importantly, it boasts strong and reliable crude oil production from its oil sands operations.
Suncor produces bitumen in the Canadian oil sands, which it expects to account for 90% of its 2011 crude oil production.
Furthermore,
Suncor has built the necessary refining capacity to convert the tar
sands' synthetic oil into refined gasoline and oil products.
This process allows the company to capture the profits of the full hydrocarbon supply chain.
Suncor has refining capacity of 443,000 barrels of oil equivalent per
day (boe/day), with roughly half of that capable of running on oil sand
feeds.
That refining capacity is spread out over both eastern
and western Canada. The company also has a small refinery outside of
Denver, CO, giving it U.S. domestic refining exposure.
Currently,
oil sands production accounts for 330,000 barrels of oil equivalent per
day (boe/day). But Suncor expects that to grow to about 800,000 boe/day
by 2020.
The company expects to grow at a compounded annual growth rate (CAGR) of 8% over the next decade.
Suncor
often highlights that fact to show that it expects to grow its oil
sands production at a CAGR of 10% and its conventional and
international CAGR production at 4%.
Of course, that growth is
predicated on regulatory approval, due to a strategic oil sands
partnership Suncor formed with Total S.A.
This relationship
includes the development of new oil sands mines and upgrades, as well
as asset ownership swaps between the two firms.
This new
partnership will provide Suncor with $1.75 billion in the first half of
2011. The extra liquidity will allow the company to focus on mining as
its engine of growth.
Suncor also has divested some of its natural gas-specific projects, allowing it to pay down its debt load over the last year.
This deleveraging process already has reduced Suncor's net debt to $11.1 billion from $13.3 billion a year ago.
If
you're looking for stable energy companies capable of leveraging higher
oil prices, but not susceptible to the violence in the Middle East, you
might consider Suncor.