1. World oil reserves and OPEC member countries
The world’s proven oil reserves are about 1500 billion barrels. OPEC countries have approximately 1200 billion barrels of oil reserves, accounting for 81% of the total oil reserves. Non-OPEC oil reserves are about 280 billion barrels, accounting for 19% of annual oil reserves. OPEC accounts for approximately 65% of the oil reserves of Middle Eastern countries. OPEC has 14 member states. They are Algeria, Angola, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela.
Among OPEC countries, Venezuela has 300.9 billion barrels of oil reserves, accounting for 24.8% of the entire OPEC country's reserves. Saudi Arabia's oil reserves are 266.5 billion barrels, accounting for 22% of the OPEC reserves. Iran’s oil reserves are 158.4 billion barrels, accounting for 13.1% of the total oil reserves. Iraq’s oil reserves are 142.5 billion barrels, accounting for 11.7% of the total oil reserves. Kuwait’s oil reserves are 101.5 billion barrels, accounting for 8.4% of the total oil reserves. The UAE’s oil reserves are 97.8 billion barrels, accounting for 8.1% of the total oil reserves. Libya's oil reserves are 48.4 billion barrels, accounting for 4.0% of the total oil reserves. Nigeria’s oil reserves are 37.1 billion barrels, accounting for 3.1% of the total oil reserves. Qatar's oil reserves are 25.2 billion barrels, accounting for 2.1% of total oil reserves. Algeria's oil reserves are 12.2 billion barrels, accounting for 1% of total oil reserves. Angola's oil reserves are 9.5 billion barrels, accounting for 0.8% of the total oil reserves. Ecuador's oil reserves are 8.3 billion barrels, accounting for 0.7% of the total oil reserves. Indonesia's oil reserves are 3.2 billion barrels, accounting for 0.3% of total oil reserves. Gabon’s oil reserves are 2 billion barrels, accounting for 0.2% of the total oil reserves.
World oil production
The impact of OPEC and world oil supply on oil prices
In February 2020, total world oil production was 99.8 million barrels per day, and OPEC’s oil production was 27.8 million barrels per day. OPEC's oil production is one of the important factors affecting oil prices. This organization seeks to actively manage oil production by setting output in its member countries. OPEC's oil production accounts for about 33% of the world's total production, but its oil exports account for 60% of total oil transactions. Because of this market share, any OPEC actions will affect oil prices. Saudi Arabia is the largest oil producer in the organization, and changes in the country's crude oil production have the greatest impact on world oil prices. In order to effectively manage the market, the country usually maintains a reserve output of more than 1.5-2 million barrels per day. OPEC's reserve output can reduce supply in the event of a crisis in the economy. If OPEC's reserve production decreases, oil prices will risk rising. From 2003 to 2008, OPEC's total reserve production was below 2 million barrels per day, and supply could not be guaranteed when demand rose rapidly.
Non-OPEC oil production accounts for approximately 66% of the world's total oil production. The main countries are the United States, Canada, Russia, Mexico, Norway and other countries. Unlike OPEC countries, these countries harmonize themselves and make independent decisions. Another difference from OPEC is that most of its oil production is dominated by national oil companies, international multinational oil companies and private investment companies. Their production depends more on economic factors and shareholder interests. The main purpose of national oil companies is to provide employment opportunities, enhance infrastructure, and increase tax revenue. Non-OPEC is mainly based on oil prices, rather than affecting prices through production. Since most of the low-cost traditional oil resources are in OPEC countries, non-OPEC countries must spend more to discover and produce oil. This result puts non-OPEC at a disadvantage in terms of production costs. Due to the high production costs, if oil prices fall due to an oversupply of oil, non-OPEC countries usually cut production first to achieve a balance between supply and demand to increase oil prices.
Canada Oil and Gas
Oil
Canada's oil reserves are 171 billion barrels, of which 166.3 billion barrels are oil sands, ranking third in the world after Venezuela and Saudi Arabia. Canada's oil reserves account for about 10% of the world's oil reserves. Oil sands are the world’s third largest proven oil reserves, accounting for 166.3 billion barrels (or 97%) of Canada’s 171 billion barrels of proven oil reserves. Oil sands are natural mixtures of sand, clay or other minerals, water and asphalt. Two methods can be used to extract bitumen, depending on the depth of the sediment below the surface. Canadian oil sands are developed by the private sector, and companies in Canada, the United States, Europe and Asia have made major investments. Canadian and global developers have benefited from the development of oil sands. So far, it is estimated that 243 billion Canadian dollars of capital expenditure has been invested in the oil sands industry, which exceeded 30 billion Canadian dollars in 2014 alone.
Innovation is essential to reduce the environmental damage of oil sands development. The Canadian government pledges to invest 200 million Canadian dollars each year to support research and innovation, and to invest 100 million Canadian dollars in clean technology producers. The Canadian Department of Natural Resources supports oil sands innovation by providing funding for research and development of new and improved oil sands technologies, as well as providing scientific information and advice to government policy makers and regulatory agencies. Oil sands science and research and exploration are being carried out by the Natural Resources Department to reduce the environmental challenges of development and production.
Canadian oil production is approximately 5.71 million barrels/day, heavy oil at 1.97 million barrels/day, light oil at 2.56 million barrels/day, and liquefied natural gas at 1.18 million barrels/day. Canada’s largest oil producing province is Alberta, which accounts for 77.4% of the country’s production. In addition to being self-sufficient, Canadian oil and natural gas are exported to the United States, Asia, Europe and other countries in large quantities. Approximately 97% of crude oil is exported to the United States, and 3% is exported to Europe and Asia.
Natural Gas
Canada is also the world's fifth largest natural gas producer and the world's fourth largest natural gas exporter. Natural gas is a naturally occurring hydrocarbon. Hydrocarbons are organic compounds composed of carbon and hydrogen, including crude oil, natural gas, and coal. Raw natural gas (before processing) is mainly composed of methane and may also contain varying amounts of ethane, propane, butane and pentane (commonly referred to as natural gas liquids [NGLs]). Raw natural gas may also contain non-energy components such as nitrogen, carbon dioxide, hydrogen sulfide and water. Before the sale of natural gas, most of the NGL and all non-energy components have been removed in the processing plant and then put into the pipeline.
Natural gas is widely used in residential, commercial, industrial and power generation applications. Natural gas is mainly used by residential and commercial users as a source of space heating, water heating, clothes drying, and cooking applications. The industrial sector uses natural gas as a process heat source, as a fuel for steam generation, and as a raw material for petrochemical products and fertilizers. The power generation sector uses natural gas to generate electricity.
Natural gas is also used as an alternative fuel in the transportation sector. Natural gas, which has been fueling cars since the 1930s, is becoming more and more popular as a fuel for cars. Most natural gas vehicles (NGV) operate on compressed natural gas (CNG) or LNG. CNG is more popular in light passenger vehicles, while LNG is popular in heavy applications such as buses or locomotives. The natural gas industry itself also uses natural gas. For example, manufacturers use natural gas as fuel in processing facilities, while pipeline companies use natural gas to fuel compressors that propel natural gas along pipelines. Due to the multiple characteristics of natural gas-relatively clean combustion, safe, reliable and efficient-natural gas has become a common fuel for residential, commercial and industrial applications and power generation.
Canada largest oil company Suncor Energy
In February 2019, Buffett’s Berkshire Hathaway announced the company’s holdings in the fourth quarter of last year. It was discovered that Buffett had invested about 300 million US dollars in increasing the shares of Canadian Suncor Energy. In 2020 In February, Berkshire Hathaway increased its holdings of Suncor Energy's stock to $450 million. Judging from the previous shareholding situation, Buffett has no shares in other energy companies except Philip 66. And Suncor is a Canadian company, why is it favored by Buffett? What kind of company is it?
Suncor Energy is a comprehensive energy company headquartered in Calgary, Alberta, Canada. The assets of a comprehensive energy company generally include upstream, midstream and downstream assets. Upstream assets refer to oil fields and oil reserves, oil drilling equipment, oil production equipment and factories. Suncor Energy has oil reserves of approximately 7.5 billion barrels of crude oil, and daily oil production is approximately 750,000 barrels. Its assets are distributed in Canada, the United States and Europe. Midstream assets mainly include oil and gas pipelines from oil fields to refineries. Downstream assets mainly include oil refineries, oil refining equipment, etc. The company processes approximately 460,000 barrels of oil per day. Downstream assets are distributed in Alberta, Ontario and Quebec in Canada and the commercial city of Colorado in the United States. In addition, Suncor Energy also owns about 1,500 gas stations in the name of Petro-Canada throughout Canada, and gas stations in Colorado, USA are named after Shell and Philip 66 brands.
As a comprehensive energy company, Suncor Energy can maintain full profitability regardless of high oil prices. When oil prices are low, its downstream assets can maintain stable growth, and when oil prices are high, its upstream assets can achieve considerable profits. These characteristics enable the company to compete in an increasingly fierce environment and continue to grow and grow through the acquisition of other high-quality assets.
Growth and Development
Suncor was founded in Montreal in 1919 as a subsidiary of Sun Oil (now Sunoco). In 1979, Sun formed Suncor by merging Canadian oil refining and retail interests. Canadian Oil Sands (a wholly-owned subsidiary that built and operated the first commercial plant for the development of Canada’s Athabasca oil sands, which began production in 1967); and its conventional oil and gas interests. In 1981, the Alberta government bought 25% of the company's shares; in 1993, Suncor bought back all the shares from the Alberta government. In 1995, Suncor bought back Sun Oil's equity, even though Suncor retained the Sunoco retail brand in Canada. Suncor took full advantage of the divestiture of these two assets to become an independent, widely held public company.
In 2003, Suncor bought an oil refinery and Phillips 66 gas station in Colorado Business City. In 2005, Suncor acquired a second refinery from Valero Energy. From 2009 to 2013, Suncor retail brands include Phillips 66 and Shell. Suncor added Exxon and Mobil brands in Colorado and Wyoming in 2015.
On March 23, 2009, Suncor announced its intention to acquire Petro-Canada. The merger created a company with a total market capitalization of 43.3 billion Canadian dollars. On June 4, 2009, Suncor’s shareholders reached a 98% approval rate for the acquisition of Petro-Canada and approved the merger on June 21, 2009. The merger with the 11th largest company in Canada was completed on August 1, 2009, and the company became the second largest company in Canada by market value (after Royal Bank of Canada) with 21 billion Canadian dollars in transactions. In December 2009, as a condition of the merger, Suncor sold 98 gas stations in Ontario to Husky Energy, including 68 gas stations under the Sunoco brand and 30 gas stations under the Petro-Canada brand.
On June 27, 2013, the company ranked first among the top 100 Canadian companies published by The Globe and Mail.
In October 2015, Suncor initiated the acquisition of Canadian oil sands worth approximately US$3.29 billion after refusing the advance payment in March and early April.
On April 27, 2016, Suncor announced that it had reached a $937 million transaction to acquire Murphy Oil Corp.'s 5% stake in the Syncrude project north of Fort McMurray in Alberta. This is after acquiring Canadian oil sands less than a year ago, it will increase its stake in Syncrude from just under 49% to nearly 54%, making it a major shareholder in the project.
Asset Location
In North America, Suncor develops and produces oil and gas in Western Canada and Colorado, and develops and produces offshore drilling in Eastern Canada. Its international businesses include offshore development in the North Sea and conventional land-based development in Libya, Syria, Trinidad and Tobago.
Suncor operates oil refineries in Edmonton, Alberta, Ontario, Sarnia; Montreal, Quebec, and the commercial cities of Colorado. These refineries provide products to industrial, retail and commercial consumers. The company is also one of Canada's largest petroleum products retailers.
Bitumen, oil and gas production
Suncor is the world's largest asphalt producer and owns and operates an oil sands improvement plant near Fort McMurray, Alberta, Canada. It was originally developed by Great Canadian Oil Sands, a wholly-owned subsidiary of Sun Oil, and is now wholly owned by the independent Suncor. This is the first commercial development project on the Athabasca oil sands, although small early projects like Bitumen have also played a role in the development. The company holds a 36.75% interest in the northern oil sands project in Jocelyn, and the shares were put on hold pending the economic evaluation of the operator Total S.A. in 2014. The Jocelyn project was sold to CNRL in September 2018. The company also produces conventional oil, heavy crude oil and natural gas.
Oil Refinery
Suncor Energy has an oil refinery in Commerce City, Colorado. In Canada, Suncor has refineries in Alberta, Ontario and Quebec. The company's Strathcona refinery with a daily output of 135,000 barrels runs entirely on oil sands-based raw materials and produces high-yield light oil. Montreal’s refinery refines 137,000 barrels of oil a day, and also produces gasoline, distillate oil, asphalt, heavy fuel oil, petrochemicals, solvents and lubricant raw materials. An 85,000 barrels-per-day oil refinery in Sarnia, Ontario produces gasoline, kerosene, jets and diesel. A 98,000 barrel-per-day refinery in Commercial City, Colorado produces gasoline, diesel, and asphalt for road paving.
Retail
Suncor's main downstream brand in Canada is Petro-Canada. Suncor previously operated and franchise retail stores under the Sunoco brand, but after the acquisition, all remaining Sunoco gas stations were converted to Petro-Canada. In addition, the company terminated all of its independent Sunoco franchises because it planned to implement a Petro-Canada model that requires franchisees to operate in multiple locations. In the United States, it operates retail stores in Colorado under the Shell and Phillips 66 brands.
Company fundamentals
PE refers to the ratio of stock price to company earnings. The PE ratio can help investors judge the company’s stock price and earnings. A high PE value means that the company’s profitability is low for the stock price and the stock value is overvalued; a low PE value means that the company’s earnings are relatively high relative to the stock price. The stock value is undervalued. But investors usually pay more attention to the company's future development prospects.
PB value refers to the ratio of stock price to the company's net assets. The PB value can be used as an important method of market analysis. A low PB value means that the stock price is relatively cheap and the stock value is undervalued. A high PB value means that the stock price is relatively expensive and the stock value is overvalued.
ROE refers to the measurement of a company's financial performance by calculating net income divided by net asset value. High ROE means high returns and stocks are more likely to be favored by investors. On the contrary, low ROE means low returns.
Debt to Cap refers to the ratio of debt to assets. Generally speaking, a large value means that the company's debt is high and the company will have risks. But this is not absolute. If the company's debt is low and the company's profit is high, the company's debt will make the company grow healthier.
The rating agency's assessment of Suncor Energy is: 13 agencies advocate buying, and 1 agencies advocate maintaining. The lowest price given by the agency is $23.65, the highest price is $32, and the average price is $28.21. The current stock price of Suncor Energy is $16.50.
In 2016, the company's annual gross production value was 26.8 billion Canadian dollars and profit was 450 million Canadian dollars. In 2017, the company's annual gross production value was 32 billion Canadian dollars and profit was 4.5 billion Canadian dollars. In 2018, the company's annual gross production value was 38.5 billion Canadian dollars and profit was 3.3 billion Canadian dollars. In 2019, the company's annual gross production value was 33.8 billion Canadian dollars and profit was 2.9 billion Canadian dollars.
The cash flow from production in 2019 was CAD 10.8 billion, in 2018 it was CAD 10.17 billion and in 2017 it was CAD 91.4.
In 2019, 4.9 billion Canadian dollars were returned to investors through dividends and stock repurchases. Among them, the dividend was 2.614 billion, and the stock repurchase was 2.274 billion.
Oil production in 2019 was 777,000 barrels per day, of which 670,000 barrels came from oil sands and 107,000 barrels came from exploration and production.
In 2019, 830 million yuan will be invested in scientific and technological progress and future plans, including increasing the speed of digital transmission.
1.4 billion were invested in new thermal generator equipment.
Established Canada's first electric vehicle charging station from east coast to west coast.
Production facilities in oil sands base
Production facilities in oil sands base
Gas station named after Petro-Canada
Mr. Mark Little, President and CEO of the company
Edmonton refinery
