Sprung Investment Management Inc.

Suncor's Record Quarterly Profit a Validation of Sprung Investment Management's Value Investing Approach

Warren Buffett, another well know value investor, also appreciates the compelling attributes of Suncor: strong production base, a strong balance sheet, and an integrated business model.

Michael Sprung, president of Sprung Investment Management, explained that, "Suncor is a core holding in our clients' portfolios. It's a significant validation to see that other investors, including Warren Buffett, the world's best know value investor, appreciate the compelling attributes of Suncor. These include a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model smoothing to some extent the cash flow from the various business segments."

In August 2013 Warren Buffett, the CEO of Berkshire Hathaway Inc., revealed in a U.S. regulatory filing that he has accumulated 17.8-million shares in Suncor Energy Inc. His investment is worth C$640-million at the current share price.

Canada's top oil and gas company, Suncor Energy Inc, reported on Monday its best quarter ever, with a 36% rise in net profit for the three months to March to C$1.49 billion, or C$1.01 per share. The increase was driven by strong oil prices and successful implementation of its long-term market access strategy.

The result compares to net income of C$1.09 billion, or C$0.72 per share, achieved in the first quarter of 2013. Cash flow from operations also hit a quarterly record, reaching C$2.88 billion against C$2.284 billion in January-March 2013.

The company's adjusted earnings, which exclude most one-time items, advanced 31% to C$1.79 billion, or C$1.22 per share, from C$1.37 billion, or C$0.90 per share, in the same period last year. The figure exceeded the forecast of analysts polled by Thomson Reuters, who had expected adjusted income of C$0.93 a share.

The strong quarterly performance delivered by the Calgary-based company was underpinned by its decision to focus on oil production and divest its natural gas business. Crude oil accounted for almost 100% of its output against 92% in the year-earlier period, although its operations in Libya remained suspended in the quarter.

Suncor's production stood at 545,300 barrels of oil equivalent per day (boe/d) in the quarter, down from 596,100 boe/d a year earlier. Production from its oil sands operations rose 8.8% to an average of 389,300 barrels per day.

Suncor also announced that it paid out C$338 million in dividends and C$384 million in share repurchases to stockholders in the quarter. The amount allocated for dividend distribution was 70% higher than the sum paid in the same period of 2013.

Categories: Investments

Tags: su, Suncor Energy, value investing

About Sprung Investment Management Inc.

View Website

Robert D. Champion
Sprung Investment Management Inc.
Sprung Investment Management Inc.
25 Adelaide Street East, Suite 1914
Toronto, ON
M5C 3A1