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Suncor to Divest Petro-Canada Lubricants Unit for $1.13B
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Canada’s largest energy firm, Suncor Energy Inc. (SU - Free Report) recently entered into an agreement to divest its Petro-Canada lubricants business to Dallas-based HollyFrontier Corporation for $1.125 billion.
Terms of the deal
Under the deal, Suncor will be divesting a manufacturing, research and sales centre in Mississauga. This unit sells various types of specialty lubricants and oils around the world. Also, HollyFrontier will gain a perpetual exclusive license to use the Petro-Canada trademark for lubricants.
The deal is expected to close in the first quarter of 2017 and is likely to be financed with a combination of debt and cash on hand.
Purpose of the Deal
This divestment is in line with Suncor’s strategy of shifting its focus to core assets to drive long-term profitable growth. The company intends to divest assets worth $1billion–$1.5-billion by mid-2017. Recently, Suncor divested 49% stake in a storage tank farm in Alberta for about $500 million.
HollyFrontier, on the other hand, intends to become North America's fourth-largest lubricants producer with a capacity of 28,000 barrels per day. The latest acquisition is in keeping with this strategy of the company.
Company Overview
Calgary, Alberta-based Suncor is Canada’s premier integrated energy company. Suncor's operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.
HollyFrontier operates as an independent petroleum refiner in the U.S. It primarily produces high-value refined products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, liquid petroleum gas, fuel oil, and specialty and modified asphalt.
Zacks Rank & Key Picks from the Sector
Suncor currently carries a Zacks Rank #2 (Buy), implying that the stock will outperform the broader U.S. equity market over the next one to three months.
Other well-ranked players from the broader energy sector include Ultra Petroleum Corp. and Baker Hughes Incorporated . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ultra Petroleum posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, Baker Hughes posted an average positive earnings surprise of 65.12%.
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Suncor to Divest Petro-Canada Lubricants Unit for $1.13B
Canada’s largest energy firm, Suncor Energy Inc. (SU - Free Report) recently entered into an agreement to divest its Petro-Canada lubricants business to Dallas-based HollyFrontier Corporation for $1.125 billion.
Terms of the deal
Under the deal, Suncor will be divesting a manufacturing, research and sales centre in Mississauga. This unit sells various types of specialty lubricants and oils around the world. Also, HollyFrontier will gain a perpetual exclusive license to use the Petro-Canada trademark for lubricants.
The deal is expected to close in the first quarter of 2017 and is likely to be financed with a combination of debt and cash on hand.
Purpose of the Deal
This divestment is in line with Suncor’s strategy of shifting its focus to core assets to drive long-term profitable growth. The company intends to divest assets worth $1billion–$1.5-billion by mid-2017. Recently, Suncor divested 49% stake in a storage tank farm in Alberta for about $500 million.
SUNCOR ENERGY Price
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HollyFrontier, on the other hand, intends to become North America's fourth-largest lubricants producer with a capacity of 28,000 barrels per day. The latest acquisition is in keeping with this strategy of the company.
Company Overview
Calgary, Alberta-based Suncor is Canada’s premier integrated energy company. Suncor's operations include oil sands development and upgrade, conventional and offshore crude oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.
HollyFrontier operates as an independent petroleum refiner in the U.S. It primarily produces high-value refined products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, liquid petroleum gas, fuel oil, and specialty and modified asphalt.
Zacks Rank & Key Picks from the Sector
Suncor currently carries a Zacks Rank #2 (Buy), implying that the stock will outperform the broader U.S. equity market over the next one to three months.
Other well-ranked players from the broader energy sector include Ultra Petroleum Corp. and Baker Hughes Incorporated . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ultra Petroleum posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, Baker Hughes posted an average positive earnings surprise of 65.12%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.Click to see them now>>