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Suncor Energy, Imperial Oil are top picks as Trump risk looms over Canadian energy stocksン
Suncor Energy, Imperial Oil are top picks as Trump risk looms over Canadian energy stocks

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Then-former U.S. President Donald Trump speaks at a campaign town hall at the Greater Philadelphia Expo Center & Fairgrounds, Oct. 14, 2024, in Oaks, Pa. (AP Photo/Alex Brandon, File)
Then-former U.S. President Donald Trump speaks at a campaign town hall at the Greater Philadelphia Expo Center & Fairgrounds, Oct. 14, 2024, in Oaks, Pa. (AP Photo/Alex Brandon, File) · ASSOCIATED PRESS

Canada’s largest oil and gas producers are due to begin reporting fourth-quarter financial results this week. Analysts say U.S. President Donald Trump’s tariff threats will be an ominous distraction from the industry’s solid performance in the final months of 2024.

Imperial Oil (IMO.TO)(IMO) is the first major Calgary-based producer scheduled to report Q4 financials on Jan. 31. Suncor Energy (SU.TO)(SU) results are due on Feb. 6. Cenovus Energy (CVE.TO)(CVE) is scheduled to report on Feb. 20.

RBC Capital Markets analyst Greg Pardy estimates free cash flow from Canada’s oilsands-weighted majors—Canadian Natural Resources (CNQ.TO)(CNQ), Suncor, Cenovus, and Imperial—topped $5.2 billion in the fourth quarter, down from $6.6 billion in Q3.

“The set-up for Canada’s oil-weighted producers in 2024 was one of the best we have seen in more than a decade,” Pardy wrote in a note to clients. “Balance sheets are strong and capital discipline is holding the line. And of course, many of the oil majors in Canada are distributing 100 per cent of their free cash flow.”

Scotiabank Global Equity Research analyst Jason Bouvier says his cash flow per-share estimates for the quarter are one per cent below street consensus due to “weaker realized prices.” U.S. benchmark crude (CL=F) averaged US$70.43 in the fourth quarter, down US$4.96 or seven per cent sequentially.

RBC Capital Markets estimates companies in the sector repurchased about $3.1 billion of their common shares in the fourth quarter, down modestly from about $3.4 billion in the prior three months.

Earlier this month, Canadian producers responded to Trump's increasingly harsh stance on trade by rolling out bigger production plans for 2025. The industry sees improving demand and higher prices on the horizon due to the expansion of the Trans Mountain pipeline.

While details on Trump’s tariff plan are few, analysts say Canadian producers with oil-refining capacity on Canadian soil are best positioned within the industry to withstand the potential impact.

“Canadian oil and gas equities have underperformed their U.S. peers year-to-date due to the uncertainty associated with all these possible measures,” BMO Capital Markets analyst Randy Ollenberger wrote in a research note.

“Within the Canadian oil and gas group, integrated companies have fared relatively better as they are perceived to be less impacted by potential tariffs and export taxes.”

“Suncor Energy remains our favourite integrated oil [company] in Canada, with Canadian Natural Resources our favourite producer,” Pardy wrote. “MEG Energy, Cenovus Energy, Baytex Energy, and Obsidian Energy round out our ‘Outperform’ roster.”

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