Analyst Upgrades Suncor, Cites Production Rise

DENVER (AP) — An analyst upgraded Suncor Energy Inc. Tuesday, noting its completed recently completed $20.7 billion acquisition of Petro-Canada should raise oil sands production and asset sales should boost stock prices.

Stifel, Nicolaus & Co. analyst Amir Arif raised his rating to "Buy" from "Hold" and set a $39 share price target on Canada's largest energy producer.

Oil sands' operating costs should drop as a result of the acquisition as the company sells conventional assets, the analyst said.

"With the merger now complete, the company should be in a better position to lay out which assets are noncore and begin to focus its efforts on a more oil sands centric strategy," Arif wrote in a note to clients.

The Suncor acquisition, which closed last month, comes as pressured oil prices have forced companies to scrap or delay oil sands projects, which has significantly hurt the industry.

The new Suncor has said it could save $1 billion in capital spending and about $300 million in operating costs.

Current upstream production totals about 710,000 barrels of oil equivalent per day, supported by 7.5 billion barrels of reserves and an additional 19 billion barrels of contingent resources to support future development.

U.S.-traded shares of Suncor rose $1.12, or 3.6 percent, to $32.35 in morning trading.