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May 4, 2021

Suncor eyes share buybacks, debt reduction with free cash flow boost: CEO

In 2021 our focus is to generate cash to pay down debt: Suncor CEO on Q1 earnings

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The head of Suncor Energy Inc. is charting the course for share buybacks and debt reduction with stronger free cash flow from the company’s first quarter results.

Mark Little, president and Chief Executive Officer at Suncor, told BNN Bloomberg that while the company typically uses its shares as currency for merger and acquisition activity, this strategy would be difficult to implement when the share price is weakened. Before the company uses cash for potential acquisitions, it would first need to identify synergies for shareholders.

“Right now, our commitment is to actually pay down debt. We said two-thirds of our free cash flow would go to debt and one-third to share buybacks this year,” said Little in a broadcast interview. “But in 2021, our focus is sticking to our plan… and executing independent [of the] share price. If the price stays like this, we’re going to make enormous progress in paying down our debt and buying back shares.”

In its first quarter results, Suncor reported just over $2.3 billion in cash flow from operating activities, or $1.54 per share. This allowed Suncor to reduce debt by $1.1 billion and repurchase over $300 million of its shares, meeting its goal of repaying between $500 million and $1.0 billion in debt, a target established in the company’s 2021 production outlook released late last year.

Little didn’t rule out the possibility of dividend hikes down the road, hinting that shareholder returns will play a role in the company’s investor day report on May 26.

“We’re looking forward to kind of going into talking about our production plans and our cost structure, capital allocation and shareholder returns as well.”