(Adds details, analyst comment)
By Nia Williams
Nov 29 (Reuters) - Canada's Suncor Energy said on Tuesday it will retain its Petro-Canada gas station retail business following a review the company initiated earlier this year under pressure from activist investor Elliott Investment Management.
Suncor replaced its chief executive in July and agreed to review its retail fuel unit by the end of this year after Elliott Investment, which owns 3% in the company, pushed for changes, flagging a poor safety record and lackluster stock performance.
"After careful consideration, the Board has concluded that retaining and optimizing the company's retail business will generate the highest long-term value for shareholders," said Mike Wilson, chair of Suncor board, in a statement released alongside Suncor's 2023 capital budget.
Calgary-based Suncor owns 1,600 Petro-Canada stations and accounts for 18% of Canada's retail fuel sales, making the business one of the biggest in the country. Earlier this year
analysts estimated the unit
could be worth C$5 billion to C$11 billion ($8.61 billion).
The company, Canada's second-largest oil producer, said it would focus on improving the business through expanding partnerships with non-fuel businesses such as quick service restaurants and convenience stores.
"We do not see the retail segment as being an issue operationally and believe the asset provides outsized strategic value within the existing organizational structure," National Bank analyst Travis Wood said in a note to clients.
Suncor shares fell 0.3% on the Toronto Stock Exchange to C$46.06. The company holds an investor day presentation later on Tuesday.
Elliott did not immediately respond to a request for comment.
Suncor has made a number of major changes since the activist firm took aim at the company, including changing its CEO and some board members, selling renewable energy assets and taking steps to improve safety and operations at oil sands sites.
Suncor forecast higher capital spending in 2023 while production remains nearly flat. The company also forecast higher oil sands operating costs as it starts a three-year plan to improve performance at the troubled Fort Hills oil sands mine in northern Alberta. (Additional reporting by Ankit Kumar and Mrinalika Roy; Editing by Shinjini Ganguli and Deepa Babington)