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Suncor Energy Inc. SU recently released its 2025 corporate guidance showing consistency in its upstream growth plan. The company targets an upstream production range of 810,000 to 840,000 barrels per day (bbls/d) annually, a 4% rise approximately as compared to projected output for 2024. The growth in production reflects its sustainability of higher performance, and planned turnaround and maintenance activities during the year, including a 91-day outage at Base Plant Upgrader 1 for coke drum replacement.
The company also plans to increase its annual refining utilization from the existing 93% to an estimated 97%, reflecting the impact of scheduled turnarounds at the Edmonton and Sarnia refineries and supported by improved operational efficiency throughout 2024.
SU’s Focus on Free Funds Flow Growth
SU aims to grow free funds flow per share by increasing volumes and margins, reducing costs and following a disciplined capital expenditure (Capex) program. The company has been achieving its shareholder value through the years through its unmatched asset base and large-scale oil sands resources.
SU’s Trimmed Capex Plan
Through its 2025 corporate guidance, Suncor plans to strike a balance between sustaining its business through further investment and planning investment in new opportunities that have high economic value. The company plans to reduce the Capex by 3% in 2025 to range between C$6.1 billion and C$6.3 billion. The key Capex plans of Suncor include the replacement of the Upgrader 1 coke drums at the Base Plant, the development of projects like Mildred Lake West Mine Extension and West White Rose, and the improvement of the Petro-Canada retail network to optimize its downstream operations.
Cost Reductions Strengthen Competitive Edge
SU’s cost management strategies are paying off by reducing its corporate West Texas Intermediate (WTI) breakeven price by $10 per barrel. Operations at the Fort Hills are helping the company to exemplify this efficiency, benefiting from accelerated North Pit activities that ensure long-term production growth.
Does Demand Support SU’s Rise in Production?
According to the U.S. Energy Information Administration, fuel demand will rise in the United States, the biggest market for Canadian crude oil, due to an increase in U.S. industrial activity that benefited from a rate cut by the Federal Reserve.
The Canadian oil companies, like SU, currently carrying a Zacks Rank #3 (Hold), are also in a better position for production growth as they can gain from the start-up of the Trans Mountain pipeline expansion earlier this year. With the pipeline expansion, the oil flow to Canada's Pacific Coast from landlocked Alberta has nearly tripled, boosting the price of Canadian crude oil and opening up the market reach to Asia and the U.S. West Coast.