SU, CVE, CNQ: Wildfires Severely Disrupt Canada’s Oil Production

Wildfires blazing across the Province of Alberta have severely disrupted Canada’s oil production.

Fires currently underway have impacted more than 344,000 barrels per day of oil production in Alberta, representing about 7% of Canada’s total crude output. The disruption comes after the oil hub of Fort McMurray evacuated workers from various sites and shutdown production due to growing fire risks.

Canadian Natural Resources (CNQ) said it evacuated workers from its main Alberta site, shutting down 36,500 barrels per day of bitumen production. Cenovus Energy (CVE) said it evacuated non-essential personnel from its oil sands site, and shutdown 238,000 barrels per day of crude oil production.

Evacuations and Shutdowns

Wildfires have also impacted Alberta’s conventional (not oil sands) production. Alberta is dealing with 49 active wildfires. The provincial government has said that some 400,000 hectares (988,422 acres) have now burned in the province, up from only 9,000 a week ago. In recent days, 5,000 people have been evacuated in Alberta as the fires intensify and spread.

Canada currently produces 4.9 million barrels of oil each day. Wildfires have disrupted oil and gas production in Canada several times over the past decade. Last year, Suncor Energy (SU), Canada’s second-largest oil producer, had to curtail production due to a major wildfire blaze.

In 2023, companies’ shutdown 319,000 barrels of oil per day, or 3.7% of Canada’s total production, as more than 100 wildfires burned across Alberta. Canada is the world’s fourth largest oil producer after the U.S., Saudi Arabia, and Russia.

Is SU Stock a Buy?

Suncor Energy’s stock has a consensus Moderate Buy rating among 12 Wall Street analysts. That rating is based on seven Buy and five Hold recommendations issued in the last three months. The average SU price target of $43.35 implies 17.77% upside from current levels.

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