TSX dips as oil drops, Oct. 24-28

The S&P/TSX Composite Index lost ground over the week, retreating 1.3% to 14,785.29, as the price of oil weakened. The S&P/TSX Global Mining Index stayed relatively flat at 63.46, while the S&P/TSX Global Gold Index lost 2.6% to finish at 218.26. The spot gold price rose 0.7% to US$1,274.70 per oz. gold. The December crude oil contract on the New York Mercantile Exchange fell 4.2% to US$48.70 per barrel, after concerns on whether the Organization of the Petroleum Exporting Countries could achieve its proposed production cuts.

Suncor Energy advanced $2.10 per share to finish at $41.29 per share on 26 million shares traded. Canada’s largest energy company reported net earnings of $392 million, or 24¢ per share, compared to a net loss of $376 million, or 26¢ per share, in the same quarter last year. Suncor’s operating profit, which excludes one-time items, was $346 million, or 21¢ per share, slightly below the year-prior quarter’s 28¢ per share. Analysts had expected a 9¢-per-share operating profit.

Suncor’s quarterly production grew 29% year-over-year to 728,100 barrels of oil equivalent per day, as the company increased its interest in the Syncrude project, combined with improved performance from Syncrude. Suncore’s oilsands cash-operating cost fell 18% in the past year to $22.15 per barrel, marking its lowest level in over a decade, due to its cost-cutting. The company’s oilsands assets returned to normal production rates in the third quarter, after the forest fire shutdown in the previous quarter. On the financial results, BMO analyst Randy Ollenberger increased his target price by $3 to $45 per share.

Teck Resources added 90¢ to finish at $28.21 per share, as 24 million shares changed hands. During the week, it reported its third-quarter results. Revenues were up 10% to $2.3 billion on the back of higher steelmaking coal and zinc prices. Adjusted earnings were $152 million, or 26¢ per share, compared to $29 million, or 5¢ per share, a year ago.

On a conference call, Teck’s CEO Don Lindsay said while the adjusted earnings were below the average analysts’ expectations, the company overall had a “very good quarter.” Teck exceeded its guidance on coal sales, zinc sales from the Red Dog operation and copper production in the quarter, he notes. Teck also had better-than-expected coal and copper costs.

Strong third-quarter earnings also drove up Agnico Eagle Mines shares. Agnico added 84¢ to close at $66.17 per share, on 3.4 million shares traded. Adjusted third-quarter earnings grew 44% year-over-year to US$56.6 million, or US25¢ per share. Analysts had estimated earnings per share of US19¢. The beat resulted from higher production and sales. In the third quarter, Agnico produced 416,187 oz. gold, at all-in sustaining costs of US$821 per oz. gold.