Suncor Energy, Inc. is an all-inclusive energy corporation that focuses on the development of the Athabasca oil sands. The company is involved in the extraction and upgrading of oil sands into diesel fuel and refinery feedstock, and also explores, produces and develops natural gas. The company also refines crude oil and does marketing for different petrochemical and petroleum products while operating pipelines and several petroleum stations. The corporate finance of the company involves their capital structure, bonds, shares and portfolio.
Corporate Finance of Suncor Energy, Inc
The integrated gas and oil company’s upstream operations comprise of 60% of their 2013 segment earnings that were largely oiled sands, and such operations are currently based in North America and others are in North Africa and the North Sea. The downstream operations of Suncor comprise of their remaining 40% of their 2013 earnings and are currently located in Colorado and Canada. Refineries in Commerce City, Montreal, Sarnia and Edmonton are also included (Suncor Inc., 2015).
The company is on the verge of increasing their dividend by a high margin of 18%, and this will make them 13¢ from 11¢. The company had $781-million in gross free cash at the end of the quarter with $4.6-billion as cash in hand and $6 billion in debt (Murphy, 2015).
According to the director, the company ought to trade their bonds at a high premium similar to their gas and oil group, with a relatively upside potential. The company deals in international bonds, specifically the coupon bonds which operate under book building transaction. The bonds are outstanding with a minimum settlement amount of $1000 with a total outstanding value of $1,250,000,000. The company’s market capitalization is $53.49B, with a share price of 36.60 (Fergus, 2015).
The corporation’s capital management goal is to have a strong investment credit rating profile. Such an objective is crucial as it helps the company to have a flexible financial system, and have access to the amount of capital it needs to ensure its continuity and overall growth. The net debt to cash flow of the company is often calculated as long-term debt added to their short-term debt minus cash and its equivalents, divided by the year’s cash from various company operations (Corielli, 2015).
Corielli, F., Gatti, S., & Steffanoni, A. (2015). Fundamentals of Corporate Finance. Journal of Money, Credit and Banking, 42(7), 1295-1320.
Fergus, A. (2015). Operationalizing Sustainable Development Suncor Energy Inc: A critical case. ProQuest Dissertations and Theses. University of Calgary (Canada).
Suncor Inc., S. E. (2015). Energy. Innovation. Commitment. The Suncor Sustainability Report 2010. Energy, 26.
Murphy, C. (2015). Suncor. Fortune, 155(6), 46. Time Inc. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=24448789&site=ehost-live&scope=site