Suncor Reports Improvement in Operations, Plans Discussion with Activist Firm, According to Reuters

By Nia Williams

Canadian oil and gas producer Suncor Energy, which is facing pressure from an activist investor firm, announced progress on safety and operational improvements following stronger-than-expected first-quarter results.

Last month, Elliott Management publicly urged Suncor to appoint new board directors, implement a management overhaul, and conduct a strategic review, arguing that the company’s shares have underperformed compared to its oil and gas peers, even as crude prices reached multi-year highs.

During a conference call addressing the quarterly earnings, Suncor’s Chief Executive Officer, Mark Little, expressed optimism about engaging in constructive discussions with Elliott. However, he rejected the activist firm’s proposal to consider selling the company’s fuel retail business to enhance shareholder returns. As an integrated oil company, Suncor operates both upstream production and downstream refining and marketing.

"We believe that the retail segment is essential for maximizing value across the integrated business chain," Little stated. "We think we have the best downstream operation in North America and it’s vital for it to remain intact."

On the same day, Suncor held its annual general meeting, where shareholders voted to re-elect all 11 current board members. One of Elliott’s requests was for the addition of five new independent directors, although the firm has not publicly nominated any candidates.

Little pointed to recent appointments in the oil sands division as evidence of proactive measures being taken to address persistent operational incidents that have led to four fatalities at Suncor sites since late 2020, raising concerns about his tenure as CEO.

Suncor reported a net income of C$2.95 billion in the first quarter and announced an increase in dividends, in addition to exploring the sale of its assets in the UK North Sea.

"We commend Suncor for delivering better-than-expected results; however, it’s crucial for the market to see consistent performance that meets or exceeds forecasts, along with a reduction in operational issues," noted Phil Skolnick, an analyst at Eight Capital.

Suncor’s shares fell by 4.4% to C$43.28 on the Toronto Stock Exchange amid a broader sell-off in energy stocks.