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Notably, Canadian Oil Sands investors, whose shares were acquired via the Amalgamation process, will be paid 0.28 Suncor share for every share of Canadian Oil Sands. The company, which is the largest owner of the Syncrude oil sands mine with a 36.7% stake, will be de-listed from the Toronto stock exchange following the close of trading on Mar 23, 2016. Meanwhile, Suncor will shift focus toward reducing costs, improving asset performance and exploring synergy opportunities by working in harmony with Syncrude.

Suncor’s motivation behind this $4.2 billion deal with Canadian Oil Sands was to secure an additional 37% interest in Syncrude, thereby acquiring the largest stake in the consortium. Post the Canadian Oil Sands acquisition, Suncor now owns 49% of Syncrude. The world’s largest publicly traded oil company, Exxon Mobil Corporation XOM holds 25% stake in the entity.

Suncor’s deal with Canadian Oil Sands fits its strategy and is expected to prove beneficial to it in several aspects. The buyout should improve oil sands production from 80% of the total volumes in 2015 to 83% in 2016. By enhancing Syncrude’s performance by addressing the company’s problems with reliability and operational setbacks, Suncor is expected to realize synergies that will elevate utilization rates to levels near its own average. This in turn will lead to greater production, lower costs per barrel, and better earnings for Suncor shareholders.

Calgary, Alberta-based Suncor is Canada’s largest integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore crude oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.

However, the company’s earnings and cash flows have been adversely affected by the ongoing oil price slump. As a result, Suncor currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked stocks in the broader energy sector are Africa Oil Corp AOIFF and OMV Aktiengesellschaft OMVJF. Both these stocks sport a Zacks Rank #1 (Strong Buy).

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