Canadian oil and gas producer Suncor Energy, which is under pressure from an activist investor firm, on Tuesday said it is making progress on safety and operational improvements after posting stronger-than-expected first quarter results.
Last month Elliott Management publicly called for new board directors, a management overhaul and a strategic review at Suncor, arguing its shares have lagged peers even as crude prices surged to multi-year highs.
On Tuesday’s call to discuss first-quarter earnings, Suncor chief executive Mark Little said the company looked forward to engaging in constructive discussions with Elliott. The company will hold its annual general meeting later in the day.
He pointed to new executives in the company’s oil sands business as a sign of concrete action to address repeated operational mishaps that have resulted in four fatalities on Suncor sites since 2020 and raised questions about Little’s future as chief executive.
Little also emphasised the value of Suncor’s retail fuel business, which Elliott has urged the company to explore selling to provide additional returns to shareholders. Suncor is an integrated oil company, meaning it has both upstream production and downstream refining and marketing operations.
“We think it’s key to maximising value across the integrated business chain,” Little said. “We think we have the best downstream business in North America and we think it’s important that it stay together.”
On Monday evening Suncor reported a net income of C$2.95 billion ($2.27 billion), increased its dividend and said it was exploring the sale of its UK North Sea assets.
“We applaud Suncor for the better-than-expected results; however, we believe the market needs to see consistent meet (or) beats and a lack of operational mishaps,” Eight Capital analyst Phil Skolnick wrote in a note, referring to Suncor meeting or exceeding analyst forecasts.
Suncor shares were last up 1.2% at C$45.84 on the Toronto Stock Exchange.