Shares of Wildcatters Portfolio holding Suncor Energy (TSX, NYSE: SU) traded to an intraday low of USD25.01 on Sept. 22, 2011, activating the stop-loss order of USD25.25 we set back in March 2009. The stock has plummeted roughly 30 percent since the end of the second quarter, reflecting concerns that the EU sovereign-debt crisis and slow economic growth in the developed world could weigh on oil demand and price.

In the Aug. 24, 2011, issue, Playing It Safe, we noted that the company’s exposure to the price West Texas Intermediate (WTI) crude oil is a slight disadvantage relative to producers with greater exposure to international oil price. Whereas a barrel of Brent crude oil continues to command more than $100, logistical constraints at the Cushing, Okla., delivery point have artificially depressed WTI prices to the low $80s per barrel. Nevertheless, WTI have remained at prices that enable the firm to post a solid profit.

CEO Richard George acknowledged as much in his Sept. 6 presentation at the Barclays CEO Energy-Power Conference:

[D]espite the fact that we haven’t really gotten a lot of recognition in the market lately on our stock price, I can guarantee you, this is–we’re going to actually have a terrific year this year in terms of cash flow and earnings. And so quite excited about the year, just haven’t necessarily seen it in the marketplace.

The company’s long-term growth prospects remain intact: In a world where global oil demand continues to increase at a rapid pace and supply grows only incrementally, Suncor Energy’s ambitious plans to grow its production should pay off.

By the end of this decade, Suncor Energy expects its Canadian oil sands division to account for three-quarters of the firm’s total cash flows. The remaining third will come from its offshore and international operations.

Management has set forth an aggressive plan for production growth, targeting 1 million barrels per day in annual output by the end of the decade. This goal implies annualized production growth of 8 percent over the next decade. Most of the growth will come from its oil sands operations, which management expects to grow its output at a 10 percent annualized rate.

Another major advantage for Suncor Energy is that more than 90 percent of its total production is oil, not natural gas or NGLs. Over the past year, the firm has disposed over more than $3.5 billion worth of noncore assets, including a number of gas-producing properties.

Although the stock could drift lower in this uncertain environment, Suncor Energy’s shares trade at a price-to-cash flow ratio of only 5.5–not far from their price-to-cash flow ratio of 4.9 in the fourth-quarter of 2008. At these levels, Suncor Energy is a bargain for investors seeking long-term growth. We are reinstating Suncor Energy to the Wildcatters Portfolio as a buy up to USD37.