Activist investor Elliott Investment Management LP is targeting Canadian oil producer Suncor Energy Inc., urging the company to add five new directors and change management to change the “slow-moving, overly bureaucratic corporate culture”.
Elliott said the company should also consider selling its retail network of gas stations in Canada to unlock a higher share price. The Calgary-based company is Canada’s worst-performing major oil producer since early 2021.
Analysts say the stock is plagued by a number of operational problems, including a fire that injured a refinery in March and fatal accidents in the past two years. Suncor also cut its production guidelines at its Fort Hills oil sands mine in 2021 after finding that the mine’s slopes were unstable.
Suncor rose 10 percent to $ 46.38 at 10:09 a.m. in Toronto. The company did not respond immediately to a request for comment.
“Suncor is now plagued by recurring operational challenges and safety issues,” wrote Elliott partner John Pike and portfolio manager Mike Tomkins in a letter to the company, noting missed production targets and high costs.
Elliott, founded by Paul Singer, has not nominated directors for this year’s May 10 general meeting. The company, which has a 3.4% economic stake in Suncor, could increase that stake or partner with other shareholders, a special meeting if the company resists change, according to a person familiar with the matter.
The “full rise” of the restructuring plan would set Suncor’s share price at $ 68, an increase of more than 50% from Wednesday’s close, the company said in a presentation.
“Our investment in Suncor is backed by our conviction that with the right leadership, the company can regain its previous success. “Suncor’s integrated oil sands operations are a critical part of global energy supply, and we believe these assets are drastically undervalued,” Pike and Tomkins said in a letter.
While stocks returned 107 percent from the beginning of last year, to close on Wednesday, these gains were lower than 172 percent of Canadian Natural Resources Ltd. for the same period. Cenovus Energy Inc. has returned more than 200 percent, and Imperial Oil Ltd. – 168 percent. The figures include dividends.
“Given how long safety issues have lasted and the number of deaths they’ve had, I think it’s fair to criticize that their eyes weren’t so focused on the safety ball,” said Eric Nuttle, senior portfolio manager. manager at Ninepoint Partners, told BNN Bloomberg Television.
Nuttall called Elliott the “real deal” and said his appearance at Suncor could lead to more active and valuable investors looking at Canadian energy stocks.
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