Suncor kicks off heavy earnings week for Canadian energy sector Tuesday

CALGARY - With major Canadian energy companies set to reveal how they finished one of the toughest years in recent memory, oil producers are expected to shine while natural gas and refining-weighted players continue to suffer.
Investors this week will hear from three major integrated energy firms, which have operations in production, refining and retail aspects of the business.
Oilsands-focused Suncor Energy Inc. (TSX:SU) reports earnings before the start of trading Tuesday morning, with Imperial Oil Ltd. (TSX:IMO) following later in the day and Husky Energy Inc. (TSX:HSE) reporting on Wednesday.
During the last three months of 2009, oil prices were stronger, while natural gas prices and refining margins were down compared with the fourth quarter of 2008.
"We would expect to see the companies that are more levered to oil do better than the companies that are more levered to gas," said Lanny Pendill, an energy analyst with Edward Jones.
"And we would expect to see the exploration and production companies as a whole do better than the integrated companies that own the refineries."
Big heavy oil producers that don't own refineries, like Canadian Natural Resources Ltd. (TSX:CNQ) and Nexen Inc. (TSX:NXY), are expected to post good results, Pendill said.
Nexen has natural gas assets in emerging shale gas plays, but doesn't have a lot of production from them, while production from the Long Lake oilsands project the company owns with Opti Canada Inc. (TSX:OPC) is also ramping back up after some glitches last year.
Meanwhile, Canadian Natural has been opting to invest a great deal less in its natural gas wells given the current environment.
"That's one of the strengths of their management team, is the way that they allocate capital within the business," Pendill said.
Nexen releases its earnings Feb. 18, while Canadian Natural is on deck for March 4.
Companies involved in the downstream - the part of the business that includes refining crude oil into products like gasoline and then selling them - continue to face a challenging environment.
Imperial, majority owned by U.S. major ExxonMobil Corp. (NYSE:XOM), is a big oilsands producer, but also has a number of Canadian refineries and a chain of Esso-branded gas stations.
"For what seems to be a continuing theme, we expect IMO to be negatively impacted by tighter refining margins and weaker end user demand in the downstream," wrote UBS Investment Research analyst Andrew Potter in a note to clients.
UBS is forecasting downstream earnings for Imperial to be $87 million for the fourth quarter, compared with $285 million during the final three months of 2008.
Calgary investment dealer FirstEnergy Capital is forecasting $54 million in downstream earnings for Imperial.
FirstEnergy is expecting a downstream loss of $65 million for Suncor, which inherited refinery and retail assets through its merger with Petro-Canada last year.
For Husky, which has refineries and gas stations and is set to begin construction on its Sunrise oilsands project later this year, FirstEnergy is expecting a downstream loss of $17 million.
Pipeline giant Enbridge Inc. (TSX:ENB), a top transporter of crude oil in Canada and the United States, reports its earnings Wednesday.
Earnings from pipeline companies like Enbridge tend to be stable and predictable, so UBS analyst Chad Friess isn't expecting any major surprises for the fourth quarter.
Instead, investors will likely want to hear more from management about when two major pipeline projects - Alberta Clipper and Southern Lights - are expected to come into service, as well as how the company intends to spend its hefty capital surplus.
The fourth quarter will also be the first when natural gas heavyweight EnCana (TSX:ECA) reports independent of its oil-focused spinoff, Cenovus Energy Inc. (TSX:CVE).
Both firms, which officially split in late November, report on Feb. 11.
The fourth quarter for both is expected to be "messy," the FirstEnergy note said, as investors try to figure out the tax implications of the split.