Suncor Energy Inc. (USA) (SU), Exxon Mobil Corporation (XOM): Canada’s Energy Sector Offers Value for Investors

Investors have yet to recognize the value in Imperial Oil Limited (USA) (NYSEAMEX:IMO) with the company currently trading at some particularly cheap multiples despite its share price for the year-to-date remaining flat. Imperial Oil is trading with an enterprise value of eight times EBITDA and 11 times its proved reserves, making it better value than Exxon Mobil Corporation (NYSE:XOM) or Suncor Energy Inc. (USA) (NYSE:SU).

Husky Energy Surprises the Market with Better than Expected Earnings
Husky Energy , which for some time now has failed to deliver for investors, surprised the market with some particularly strong second quarter 2013 earnings. Despite softer crude prices Husky’s revenue grew 8% year-over-year to $5.6 billion. Its bottom line also grew spectacularly with net income surging by 40% year-over-year to $575 million.

Husky’s results were boosted by higher than expected realized pricing, as well as lower than expected operational, general and administration costs. In addition to which, unlike Chevron and Exxon Mobil Corporation (NYSE:XOM), Husky reported higher margins in its refining segment. It is also expected that Husky’s performance will continue to improve over the short to medium-term, with its Liwan project expected to commence production in late 2013 or early 2014.  This will add substantial production and cash growth, boosting Husky’s bottom line.

While Husky is trading with an enterprise-value of six times EBITDA making it appear cheap, its lack of proved reserves is of some concern. Currently, Husky is trading with an enterprise-value of 25 times its proved reserves, which is significantly higher than Suncor Energy Inc. (USA) (NYSE:SU), Exxon Mobil Corporation (NYSE:XOM) and Imperial Oil Limited (USA) (NYSEAMEX:IMO).

Foolish Bottom Line
Exxon Mobil Corporation (NYSE:XOM), the world’s largest publicly traded oil company, has recently made considerable investments in unconventional oil, its latest being in Canada. This along with Buffett’s $500 million foray into Suncor Energy Inc. (USA) (NYSE:SU) has brought spotlight back onto Canada’s unconventional oil industry. Clearly there is considerable value to be found for investors in this sector and both Suncor and Husky are well positioned to reward patient investors.

The article Canada’s Energy Sector Offers Value for Investors originally appeared on Fool.com.

Matt Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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