'Like a new Suncor': Stock analysts heap praise on Kruger-led turnaround

Suncor Energy (SU.TO)(SU) won praise from stock analysts on Wednesday as CEO Rich Kruger says his turnaround plan at the Canadian oil and gas producer is advancing ahead of schedule.

His optimism was backed by a record-breaking start to 2024 for the company’s oil sands assets, stoked by rising global demand for refined products.

Suncor’s Toronto-listed stock was down about 0.3 per cent in early-afternoon trading on Wednesday. The company released its first-quarter financial results after the closing bell on Tuesday.

“Every major asset, upstream and downstream, delivered at or above our own internal expectations,” Kruger said on Wednesday, adding that tomorrow marks one year since he first addressed Suncor investors on the company’s quarterly earnings call. “We are further ahead at the one-year anniversary for me than I would have expected us to be.”

Kruger, who previously ran rival Imperial Oil (IMO.TO)(IMO), was tasked with repairing Suncor’s safety record when he took the top job last April following multiple worker fatalities since 2014. Suncor’s poor safety record, along with lacklustre financial performance against Canadian oil and gas peers, made it a target for a U.S. activist investor in 2022, who ultimately won seats on the company’s board.

Kruger led what he recently called a “disruptive” company-wide safety and efficiency push in 2023. The plan slashed thousands of jobs, rolled out autonomous heavy trucks, and streamlined work from mining to refining, to operating retail gas stations.

“2024 will be a very good year for Suncor,” Kruger said on Wednesday, noting the company has looked beyond the oil and gas industry to inspire improvements. “We’ve created a one-of-a-kind here that’s based on the best of what we’ve seen around the globe.”

UBS analyst Manav Gupta praised Suncor’s first financial results for 2024 on Wednesday’s conference call.

“This looks like a new Suncor. You’re off to a very strong start,” he said.

TPH&Co. analyst Jeoffrey Lambujon hailed a “solid quarter” with “beats across the board,” in a note to clients. Greg Pardy at RBC Capital Markets also referred to the results as “solid.”

It’s a major shift in tone from a year ago, when multiple analysts downgraded Suncor due to swirling uncertainty around leadership, and potential asset sales at the behest of activist investors.

“When we look at the underlying performance of the business, and our confidence in that business to deliver incremental cash, that’s different than it was a few years ago,” Kruger said.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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