03:38 PM EST, 11/18/2024 (MT Newswires) -- Suncor Energy Inc.'s ( SU ) third quarter results, released last week, impressed analysts and investors alike, and one industry watcher says he's increasingly bullish on the oil and gas producer, notes Jordan Fleguel at BNN Bloomberg, with files from The Canadian Press.

Dan Fong, head of research, industrials and energy at Veritas Investment Research, told BNN Bloomberg in a Monday interview that he was impressed with Suncor's recent performance even before last week's earnings beat.

"We thought they were ahead of schedule on their turnaround, and we thought at that point, the stock was reflecting full and fair value," he said.

"Fast forward to third quarter earnings, they blew expectations right out of the water, almost on every single measure they excelled, and we're becoming increasingly confident that there's more room to run here."

Fong said the results reflected strength across a number of smaller projects and initiatives the company has laid out in order to grow margins and keep costs low.

"It's a lot of little things, so for instance, this is a company that's really sharpened its focus on the fundamentals, those being safety, reliability and costs," he said.

"And those aren't just corporate buzz words, in this industry, when you focus on those things, those translate into very tangible dollars and cents. So, for instance safety and reliability will give us higher asset utilization, which drives volume growth, which drives revenue growth."

Fong said Suncor's focus on worker safety, though often overlooked as an indicator of financial success, has put the company in position to get the most out of their many assets.

"Everybody looks at safety as: 'Oh it's just a buzzword, and it's a politically correct thing,' but there are tangible benefits to safety. It is the number one thing in a lot of these industrial companies because when you have higher safety, you maintain those assets at a higher level," he said.

"You run them higher, you get better utilization. Better utilization gives you more volume, and when you have that steadiness of volume... that translates into positive operating leverage, so you see that time and time again."

Fong said in its latest quarter, Suncor also made a concerted effort to unlock more production by improving the capacity of assets it already owns rather than investing heavily in new wells.

"Basically, low investment projects that unleash or at least improve the productive capacity of those assets...so they can produce more with the same or less cost," he said.

"Downstream, you look at some of the refineries, they've been making incremental investments to unlock 3,000 barrels a day at Sarnia, another 12,000 barrels a day in Montreal, so these things together when you add them up, they have a sizeable impact."

(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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