One month after the closure of Suncor Energy’s (SU) merger with Petro-Canada, the combined entity is on course to achieve the planned annual reductions of $300 million in operating costs and $1 billion in capex. Even the company is expecting to exceed the operating and capital efficiency targets going forward leveraging the economies of scale and the integrated supply chain.

Suncor Energy merged with Petro-Canada last month to form the largest energy company of Canada. The combined entity, continuing business as Suncor Energy, presently has production capacity of nearly 710 thousand barrels of oil equivalent (BOE) per day, around 7.5 billion BOE of proved and probable reserves and an additional 19 BOE of contingent resources.

Suncor Energy expects to reduce its work force by nearly 1,000 people by the middle of October 2009. Presently, the company is evaluating potential growth projects to identify viable opportunities based on return, risk and cash flow parameters.

Shares of Suncor Energy closed at $30.1 on Thursday, trading at 17.2X trailing 12-month EPS versus 28.2X of the peer group. We maintain our Neutral recommendation for the company.
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