Suncor Energy Inc Announces Game Changing Production Plan
Uncertainty surrounding the war in Iran continues to energize crude oil prices to multi-year highs. Gasoline prices meanwhile are, on average, north of $4.00 per gallon, unless you live in California where it’s closing in on $6.00 per gallon.
Prices are soaring as the world scrambles to find supply with the closure of the Strait of Hormuz. This is great for energy stocks over the near term. Over the longer term, the outlook for energy stocks remains robust as demand for crude is expected to grow over the coming decades.
That’s why it’s a good idea for oil bulls to look beyond the war in Iran and find energy companies with strong operations and an industry edge. That brings us to Suncor Energy Inc (NYSE:SU, TSX:SU) an integrated energy company with an excellent balance sheet that is throwing off lots of cash. This helps fuel its industry leading cash returns, which it uses for its reliably growing high yield dividend and share repurchase program.
It recently reported strong fourth quarter financial results and announced an aggressive three-year action plan aimed at significantly increasing its oil production and cash flow.
It’s share price has been on a tear too since late 2025. On March 30, SU stock hit a record high of $67.76. It continues to trade near that level. SU stock is crushing the S&P 500, and is, as of this writing, currently trading up:
- 16% over the last month
- 50% year to date
- 62% over the last six months
- 112% over the last year
Chart courtesy of StockCharts.com
About Suncor Energy
Suncor Energy Inc. is a Canada-based integrated energy company with operations around the world. The company’s operating segments include Oil Sands, Exploration and Production (E&P), and Refining and Marketing. (Source: “What We Do,” Suncor Energy, last accessed April 6, 2026.)
The Oil Sands segment includes the company’s owned operations in the Athabasca oil sands in Alberta to explore, develop and produce bitumen, synthetic crude oil and related products. Here it pumps out approximately 600 thousand barrels of oil equivalent per day (mboe/d).
Alberta’s oil sands hold approximately 165 billion barrels of recoverable reserves, making it the third largest oil reserve in the world.
The company’s exploration and production (E&P) business consists of offshore operations off the east coast of Canada and onshore assets in Libya and Syria. Its refining business, with operations in Alberta, Ontario and Quebec, Canada, and in Colorado processes oil sands crude into refined products. This segment is also involved in the trading of crude oil and refined products, natural gas, and power.
It’s pipelines criss-cross Canada and across the central and western part of the U.S. making their way down to Houston.
It actually supplies 1/3 of jet fuel used at Denver International Airport via direct pipeline . It’s refinery in Commerce City Colorado has a 98 million barrels of oil per day throughput capacity. Commerce City is the only refinery in Colorado and the largest refinery in the U.S. Rockies.
Suncor also owns Petro-Canada, a network of more than 1,800 retail and wholesale locations across Canada. In addition to providing gasoline, Petro-Canada also operations Canada’s Electric Highway, the first coast-to-coast network of electric vehicle chargers in Canada.
Strong Q4 Including Record Upstream Production
In February, Suncor announced its financial results for the fourth quarter ended December 31, 2025. All funds are in Canadian dollars. At the time of this writing, CAD$1 is equal to USD$1.39. (Source: “Suncor Energy reports fourth quarter 2025 results,” Suncor Energy, February 3, 2026.)
Suncor’s fourth quarter net income advanced 80% to $1.47 billion, or $1.23 per share. Adjusted funds from operations came in at $3.2 billion, while free funds flow was $1.7 billion. Cash flow from operating activities was $3.9 billion.
It recorded:
- Record quarterly upstream production of 909,000 barrels per day (bbls/d).
- Record quarterly refining throughput of 504,000 bbls/d
For 2025, it generated $12.8 billion in adjusted funds from operations and $6.9 billion in free funds flow.
It also reported:
- Record upstream production of 860,000 bbls/d
- Record refining throughput of 480,000 bbls/d
- Record refined product sales of 623,000 bbls/d
It also achieved its aggressive 2024 Investor Day three-year targets a full year ahead of schedule.
These targets included:
- Increase in normalized free funds flow of $3.3 billion per year
- Reduction in corporate WTI breakeven of US$10 per barrel
- Increase in upstream production of 100,000 bbls/day
- Reduce annual capital expenditures to $5.7 billion
- Achieved net debt target of $8 billion, with 100% of excess funds to shareholders thereafter
Announces New 3-Year Improvement Plan
No matter how great your financial results are there’s always ways to improve. In late March Suncor announced a new lofty three-year improvement plan that will look to boost oil production by 100,000 barrels per day to nearly one million barrels by 2028.
By 2028, Suncor aims to increase free cash flow by $2-billion, reduce the break-even cost of a barrel by US$5 to US$38, and boost capacity of Suncor’s refining network by 10% to 511,000 barrels per day. (Source: “Suncor Energy increases shareholder returns, publishes 2026 Investor Day presentation; files contingent resources report,” Suncor Energy, March 31, 2026.)
When asked whether the goals were perhaps too aggressive and if Suncor’s “figurative cupboard is bare,” Richard Kruger, CEO said, no. Instead, it’s “like walking into a Costco warehouse. We have a lot of opportunities.” (Source: “Suncor aims to boost production, increase cash flow with new three-year goals,” The Globe And Mail, March 31, 2026.)
Where some sceptics question whether Suncor can continue this torrid pace of growth, Kruger, who spent seven years at Imperial Oil and more than 30 years at ExxonMobile Corp, said he has never led a company like Suncor.
This optimism is has resulted in analyst’s at CIBC naming Suncor its top pick of Canadian oil majors. Goldman Sachs even raised its price target for Suncor by more than 10% from $66.00 to $73.00. That points to 10.4% upside from current levels. (Source: “Suncor Energy (SU) Receives a Rating Update from a Top Analyst,” The Globe And Mail, April 2, 2026.)
Has Raised Dividend For 5 Consecutive Years
Suncor’s strong cash generation helps fuel is industry leading cash returns to shareholders. In 2025, it returned $2.8 billion to shareholders via dividends. This includes $719 million in the fourth quarter.
In March it paid out a quarterly dividend of $0.60 per share, or $2.40 per share on an annual basis for a forward dividend yield of 2.6%. In the U.S., this works out to $1.74 on an annual basis.
Since 2021, Suncor has increased its quarterly payout 185% from $0.21 to $0.60 per share. (Source: “Dividends,” Suncor Energy, last accessed April 6, 2026.)
It also has an aggressive share repurchase program. In 2025, it repurchased $3.0 billion in shares, including $775 million in the fourth quarter.
The Lowdown on Suncor Energy
Suncor Energy is a great integrated oil & gas company with a big footprint across North America. It has an excellent balance sheet and is home to industry leading cash returns, which includes its reliable, ultra-high yield dividend.
It reported record fourth quarter and full year financial results and achieved its 2024 Investor Day three-year targets a full year ahead of schedule. In an effort to capture more of the North American market, it announced a new, even more aggressive three-year plan that includes plans to boost the capacity of its refining network by 10%, increase free cash flow by $2 billion, and reduce break-even costs of a barrel by US$5 to US$38.
For income investors, Suncor has been increasing its quarterly dividend for the last five consecutive years and maintains a solid share repurchase program.
Perhaps not surprisingly, it has a large number of institutional holders, 985 and counting. Three of its biggest holders are Royal Bank of Canada, Vanguard Group Inc, and Elliott Investment Management L.P. (Source, “Holders,” Yahoo!Finance, last accessed April 6, 2026.)