‘Pragmatism over pride’: Suncor no longer a dividend aristocrat — and others may follow suit

CALGARY — After posting a $3.5-billion net loss Wednesday and cutting its previously untouchable dividend, Suncor Energy Inc. warned more challenging times for the energy industry are ahead and predicted a prolonged recovery in oil markets.

Suncor, Canada’s largest oil producer by market capitalization, is considered among the most stable operators in the domestic energy industry thanks to its network of refineries and Petro-Canada fill-up stations across the country. The integration of its assets has, in past bear markets, helped it weather downturns.

The first quarter witnessed a collapse in global oil demand as major economies including the U.S. and Canada issued quarantine orders and commuters stayed home. Oil prices plunged to record-breaking lows, reaching negative values for some expiring contracts in the second quarter. Until Wednesday, Suncor had been listed as a Canadian dividend aristocrat, a label for companies that have increased dividend payouts for 25 straight years, alongside the likes of Royal Bank of Canada and other oilsands giants Canadian Natural Resources Ltd. and Imperial Oil Ltd.

“I think the one that set the tone was Royal Dutch last week,” National Bank Financial analyst Travis Wood said, referring to global super-major Shell’s April 30 decision to cut its dividend for the first time since 1945. In the current market, even integrated majors such as Shell and Suncor have not been insulated against the crash in oil prices as quarantine orders have led to a rapid decline in refining economics.Travis Wood said “The convergence of global events has created a turbulent market situation.

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