“Suncor generated $2.4 billion in funds from operations in the
quarter while also completing significant turnaround activities in
the upstream and downstream businesses,” said Mark Little,
president and chief executive officer. “The improved cash
generation enabled us to increase shareholder returns to
approximately $1.0 billion, representing approximately 40% of our
funds from operations and we’re targeting further debt reduction in
the latter half of the year in line with our previously announced
capital allocation strategy.”
- Funds from operations increased to $2.362 billion ($1.57 per
common share) in the second quarter of 2021, compared to $488
million ($0.32 per common share) in the prior year quarter. Cash
flow provided by operating activities, which includes changes in
non-cash working capital, was $2.086 billion ($1.39 per common
share) in the second quarter of 2021, compared to cash flow used in
operating activities of $768 million ($0.50 per common share) in
the prior year quarter.
- The company recorded operating earnings1 of $722 million ($0.48
per common share) in the second quarter of 2021 compared to an
operating loss of $1.345 billion ($0.88 per common share) in the
prior year quarter. The company had net earnings of $868 million
($0.58 per common share) in the second quarter of 2021, compared to
a net loss of $614 million ($0.40 per common share) in the prior
year quarter.
- Suncor’s total upstream production increased to 699,700 barrels
of oil equivalent per day (boe/d) in the second quarter of 2021,
compared to 655,500 boe/d in the prior year quarter, due to strong
Oil Sands operations production including record In Situ volumes,
partially offset by the impact of planned turnaround maintenance at
Syncrude.
- Significant turnaround activities were completed at Syncrude,
Buzzard and across all of the company’s refineries during the
second quarter of 2021.The company exited the quarter with refinery
utilization of approximately 94%, and with Syncrude and Buzzard
having returned to production, the company is set up for a strong
second half of the year.
- Canadian gasoline and diesel demand in the second quarter of
2021 is estimated to be 13%2 below the comparable pre-COVID-19
period in 2019, reflecting the continued COVID-19 related
restrictions across Canada. With the lifting of many restrictions
in July, gasoline and diesel demand is estimated to have improved
to 6%2 below the comparable 2019 levels.
- The company shared its updated strategy, which focuses on
increasing shareholder returns while accelerating its greenhouse
gas (GHG) emissions reduction targets, growing its business in low
GHG fuels, electricity and hydrogen, sustaining and optimizing its
base business and transforming its GHG footprint to be a net-zero
company by 2050.
- Suncor, together with four industry partners representing 90%
of Canada’s oil sands production, announced the Oil Sands Pathways
to Net Zero alliance whose initiative is aimed at working
collectively with the federal and Alberta governments to achieve
net-zero GHG emissions from oil sands operations by 2050.
- In the second quarter of 2021, Suncor remained focused on
maximizing the return to its shareholders through the repurchase of
approximately 23 million common shares for $643 million under the
company’s share repurchase program, and payment of $315 million of
dividends. Share repurchases in the quarter represent 1.5% of
Suncor’s issued and outstanding common shares as at January 31,
2021. Since the start of the normal course issuer program (NCIB) in
February 2021, the company has repurchased $961 million in common
shares, representing approximately 35 million common shares at an
average share price of $27.47 per common share, or the equivalent
of 2.3% of Suncor’s issued and outstanding common shares as at
January 31, 2021.
- Subsequent to the second quarter of 2021, Suncor’s Board of
Directors (the Board) approved an increase to the company’s share
repurchase program to approximately 5% of the company’s outstanding
common shares as at January 31, 2021. Concurrently, the Toronto
Stock Exchange (TSX) accepted a notice to increase the maximum
number of common shares the company may repurchase pursuant to its
NCIB to approximately 5%. The increase to the program demonstrates
management’s confidence in the company’s ability to generate cash
flow and its commitment to return cash to shareholders.
Financial Results
Operating Earnings (Loss)
Suncor’s second quarter 2021 operating earnings
were $722 million ($0.48 per common share), compared to an
operating loss of $1.345 billion ($0.88 per common share) in the
prior year quarter. In the second quarter of 2021, crude oil and
refined product realizations increased significantly compared to
the prior year quarter, which reflected the impact of the
unprecedented decline in transportation fuel demand, due to the
impacts of the COVID-19 pandemic, and the increase in OPEC+ crude
supply. The improving business environment in the second quarter of
2021 also resulted in a net inventory valuation gain, reflecting a
first-in, first-out gain as a result of the increasing value of
refinery feedstock. Operating earnings were partially offset by an
increase in royalties and operating expenses associated with
Suncor’s increased production in the second quarter of 2021 and
reflected lower costs in the prior year quarter related to specific
measures taken by the company to reduce operating costs in response
to the COVID-19 pandemic.
Net Earnings (Loss)
Suncor’s net earnings were $868 million ($0.58 per
common share) in the second quarter of 2021, compared to a net loss
of $614 million ($0.40 per common share) in the prior year
quarter. In addition to the factors impacting operating earnings
(loss) discussed above, net earnings for the second quarter of 2021
included a $156 million unrealized after-tax foreign exchange gain
on the revaluation of U.S. dollar denominated debt and a $10
million after-tax unrealized loss on risk management activities.
The net loss in the prior year quarter included a $478 million
unrealized after-tax foreign exchange gain on the revaluation of
U.S. dollar denominated debt and a $144 million after-tax
unrealized loss on risk management activities.
Funds from Operations and Cash Flow
Provided by (Used in) Operating Activities
Funds from operations were $2.362 billion
($1.57 per common share) in the second quarter of 2021, compared to
$488 million ($0.32 per common share) in the second quarter of
2020. Funds from operations were influenced by the same factors
impacting operating earnings (loss) noted above.
Cash flow provided by operating activities, which
includes changes in non-cash working capital, was $2.086 billion
($1.39 per common share) for the second quarter of 2021, compared
to cash flow used in operating activities of $768 million
($0.50 per common share) in the prior year quarter. In addition to
the factors noted above, cash flow provided by operating activities
was further impacted by a use of cash associated with the company’s
working capital balances in both periods. The use of cash in the
second quarter of 2021 was primarily due to an increase in
production and commodity prices at the end of the quarter,
resulting in an increase in accounts receivable and inventory
balances, which was partially offset by a decrease in income tax
receivable balances related to the receipt of a portion of the
company’s 2020 income tax refund.
Operating Results
Suncor’s total upstream production increased to
699,700 boe/d in the second quarter of 2021, compared to 655,500
boe/d in the prior year quarter, reflecting strong Oil Sands
operations production during the quarter, partially offset by the
impact of planned turnaround maintenance at Syncrude. The prior
year quarter was impacted by the significant decline in crude oil
demand due to the impacts of the COVID-19 pandemic.
The company’s net synthetic crude oil production
increased to 437,200 barrels per day (bbls/d) in the second quarter
of 2021 from 436,600 bbls/d in the second quarter of 2020. Strong
mining and upgrading performance at Oil Sands Base resulted in
upgrader utilization of 96%, compared to 93% in the prior year
quarter. At Syncrude, both periods were impacted by planned
maintenance, and following the completion of planned turnaround
activities in the second quarter of 2021, Syncrude ramped up to
full operating rates subsequent to the end of the quarter. Due to
the impacts of the COVID-19 pandemic in the Fort McMurray region,
the company staggered its planned turnarounds at Oil Sands Base
plant Upgrader 2 and Syncrude, resulting in the deferral of the Oil
Sands Base turnaround to the third quarter of 2021. This decision
supported the safe and efficient completion of the Syncrude
turnaround activities and minimized the overlap between the two
assets. The deferral of the turnaround activities at Oil Sands Base
is not anticipated to impact annual production volumes and has been
reflected in the company’s 2021 guidance. Suncor continues to work
with the community of Fort McMurray, various levels of government
and other industry stakeholders to accelerate rapid testing and
vaccinations in the region.
The company’s non-upgraded bitumen production
increased to 178,500 bbls/d in the second quarter of 2021 from
117,100 bbls/d in the prior year quarter, which, for the second
quarter in a row, included the best In Situ quarterly production in
the company’s history. During the quarter, the increase in
non-upgraded production to market was further supported by strong
mining performance at Oil Sands Base, which resulted in less
Firebag volumes utilized at the upgrader and overall higher Oil
Sands operations production volumes. At MacKay River, production in
the prior year quarter was impacted by an outage that occurred in
late 2019.
Production at Fort Hills during the quarter
reflected the previously communicated change in the mine ramp up
strategy. This strategy is principally focused on building
ore inventory as appropriate ore inventory levels are required to
operate the plant at 90% of nameplate capacity on a two-train
operation. By the end of the quarter, ore inventory build was
slower than expected with access to additional contract equipment
and labour being more constrained than expected. Access to
additional resources has increased and we anticipate being at
expected contractor capacity by August 2021. Subsequent to the
quarter, slope instability on the south side of the mine, which
contains the majority of the exposed ore, will require overburden
removal to occur earlier than expected to provide full access to
the exposed ore and maintain slope integrity. This activity is
underway and is expected to be completed by the end of 2021. As a
result, Fort Hills plans to continue at the current production
level for the remainder of the year, with a transition to both
primary extraction trains beginning in late 2021 to enable full
production in early 2022. 2021 annual guidance for Fort Hills
production and Fort Hills cash operating costs have been updated to
reflect these changes.
Exploration and Production (E&P) production
during the second quarter of 2021 decreased to 84,000 boe/d from
101,800 boe/d in the prior year quarter, primarily due to planned
turnaround activities at Buzzard and natural declines. Both periods
were impacted by the absence of production from Terra Nova as the
asset has remained off-line since the fourth quarter of 2019.
During the second quarter of 2021, the company announced that the
co-owners of the Terra Nova Floating, Production, Storage and
Offloading facility and associated Terra Nova Field have reached an
agreement, in principle, to restructure the project ownership and
provide short-term funding towards continuing the development of
the Asset Life Extension Project, with the intent to move to a
sanction decision in the third quarter of 2021. The agreement is
subject to finalized terms and approval from all parties to the
agreement and is contingent upon the previously disclosed royalty
and financial support from the Government of Newfoundland &
Labrador.
Refinery crude throughput was 325,300 bbls/d and
refinery utilization was 70% in the second quarter of 2021,
compared to refinery crude throughput of 350,400 bbls/d and
refinery utilization of 76% in the prior year quarter, reflecting
planned turnaround activities in the current quarter and reduced
rates in response to lower demand due to the COVID-19 pandemic in
the prior year quarter. During the second quarter of 2021, the
company completed turnaround activities for the year across all its
refineries, enabling them to exit the quarter with a refinery
utilization of approximately 94%. Refined product sales in the
second quarter of 2021 increased to 463,300 bbls/d, compared to
438,800 bbls/d in the prior year quarter, due to improved refined
product demand and a draw in product inventory as we strategically
built inventory in support of significant planned turnaround
activities and an improving business environment. With the
completion of turnarounds across the company’s refineries and the
phased lifting of COVID-19-related restrictions, the company is
positioned to capture improved margins in the second half of the
year as domestic demand continues to recover towards pre-pandemic
levels.
“In the first half of 2021, we achieved strong Oil
Sands Base mining and upgrading production and consecutive
quarterly production records at In Situ leading to the best start
to the year in the company’s history at Oil Sands operations,” said
Little. “During the quarter we completed significant turnaround
activities at Syncrude and across all our refineries. Following the
quarter, we’ve ramped up our assets and are positioned for a strong
second half of 2021.”
The company’s total operating, selling and general
expenses increased to $2.720 billion in the second quarter of 2021
from $2.129 billion in the prior year quarter due to increased
production at Oil Sands Base, and higher planned maintenance that
was conducted at the same time as the planned turnaround activities
at Syncrude. These expenses were partially offset by cost
reductions related to digital technology and transformation
initiatives. Increased production in the quarter resulted in higher
absolute costs but lower cash operating costs per barrel at Oil
Sands operations, despite a significant increase in natural gas
prices compared to the prior year quarter. The prior year quarter
reflected lower costs related to specific measures taken by the
company to reduce operating costs in response to the COVID-19
pandemic and was also favourably impacted by the Government of
Canada’s Emergency Wage Subsidy.
Strategy Update
In May, Suncor held its investor day event to
outline the company’s medium-term corporate outlook, provide an
update on the progress made to date on its $2.15 billion
incremental free funds flow target and discuss other strategic
objectives. In the near term the company expects to continue to
execute its plans to structurally lower its cost base and improve
productivity, including ensuring the smooth transition of Syncrude
operatorship and continuing Suncor’s digital transformation. Once
Syncrude operatorship is transferred, gross synergies of
approximately $100 million are expected for the joint venture
owners within the first six months with an additional $200 million
through 2022-2023. Building on the achievements in 2020, which
included debottlenecks and tailings management, initiatives in 2021
such as mine optimization and digital, process and technology
projects are expected to contribute to the company's $2.15 billion
incremental free funds flow target.
Suncor also announced its new strategic objective
to become a net-zero GHG emissions company by 2050 (on emissions
produced from running its facilities, including those it has a
working interest in) and to substantially contribute to society’s
net-zero ambitions. While Suncor will continue to track and report
emissions intensity, the company has set a more ambitious near-term
goal to better align with its objective to reach net-zero emissions
and to provide a clearer way to demonstrate progress: targeting
annual emissions reductions of 10 megatonnes across its value chain
by 2030. Suncor plans to achieve this by reducing its base business
emissions, investing in profitable low emissions ventures and
technologies, taking actions that reduce others’ emissions and
investing in offsets outside its business. Additionally, Suncor,
together with Canadian Natural Resources, Cenovus Energy, Imperial
Oil and MEG Energy – who together operate 90% of oil sands
production – announced the Oil Sands Pathways to Net
Zero alliance. The goal of this alliance is to work
collectively with the federal and Alberta governments to achieve
net-zero GHG emissions from oil sands operations by 2050. The
Pathways initiative will explore several parallel pathways to
address GHG emissions, including the creation of a Carbon Capture,
Utilization and Storage trunkline connected to a carbon
sequestration hub to enable multi-sector ‘tie-in’ projects as well
as the implementation of other next-generation technologies.
Suncor’s new strategic objectives and targets
around absolute GHG emissions reductions will be supported by
pragmatic and economic investments that are part of – or
synergistic with – the company’s core capabilities. This includes
investments in the cogeneration facility at Oil Sands and the Forty
Mile Wind Power Project, which are expected to generate mid-teen
returns. Additionally, during the second quarter of 2021, Suncor
and ATCO Ltd. announced a partnership on a potential world-scale
clean hydrogen project to be developed in Alberta, Canada. A
sanctioning decision is expected in 2024 and the facility could be
operational as early as 2028, provided it has the required
regulatory and fiscal support to render it economic.
The company also recently released its 2021 Report
on Sustainability and Climate Report, marking over 25 years of
dedication to improve sustainability performance and increase
transparency and reporting. The details of Suncor’s new GHG
emissions reductions objectives can be accessed at
sustainability.suncor.com.
“We continue to progress on our ambition to be
Canada’s leading energy company – focusing on increasing
shareholder returns while accelerating our GHG emissions reduction
targets,” said Little. “Our strategy will optimize the value of our
base business, improving its cost and capital efficiency, while
supplementing it with economically robust energy expansion
investments that will contribute to increasing free funds flow.
This balance will be critical to increasing our shareholder
returns, fortifying our balance sheet while significantly lowering
GHG emissions by 2030 and progressing to net zero by 2050.”
The updated strategy and progress on the company’s
GHG emissions reduction objectives will continue to be underpinned
by capital discipline. The company has set an annual ceiling for
total capital expenditures of $5 billion, including lowered
sustaining and economic capital, to sustain its base business while
investing in energy expansion and building out its low-carbon
business. Over the medium-term, Suncor expects to allocate
approximately 10% of its annual capital budget (approximately $500
million per year) on investments that are intended to advance its
lower-carbon energy offering.
The company plans to allocate incremental funds to
shareholder returns in the form of dividends and share buybacks as
well as towards debt reduction, with the company targeting absolute
net debt, inclusive of leases, of $12 - $15 billion by 2025.
Dividends are expected to increase in line with the $2.15 billion
incremental free funds flow growth, with additional free funds flow
being allocated to share buybacks.
To accelerate reaching these debt reduction
targets, in 2021 the company plans to allocate two-thirds of its
annual free funds flow, after its dividend, towards debt reductions
and one-third toward shareholder cash returns through share
buybacks. In the second quarter of 2021, the company returned
$958 million to shareholders, including $643 million in common
share repurchases and $315 million in dividends paid. Since the
start of the NCIB program in February 2021, the company has
repurchased $961 million in common shares, representing
approximately 35 million common shares at an average share price of
$27.47 per common share, or the equivalent of 2.3% of Suncor’s
issued and outstanding common shares as at January 31, 2021.
Subsequent to the second quarter of 2021, the
Board approved an increase to the company’s share repurchase
program to approximately 5% of the company’s outstanding common
shares as at January 31, 2021. Concurrently, the TSX accepted a
notice to increase the maximum number of common shares the company
may repurchase pursuant to its NCIB to approximately 5%. The
increase to the program demonstrates management’s confidence in the
company’s ability to generate cash flow and its commitment to
return cash to shareholders.
Subsequent to June 30, 2021, the agreement for the
sale of Suncor’s 26.69% working interest in the Golden Eagle Area
Development was approved by the purchaser’s shareholders with
financing conditions met. The effective date of the sale is January
1, 2021 for gross proceeds of US$325 million and contingent
consideration up to US$50 million before closing adjustments and
other closing costs and is expected to close in the third quarter
of 2021.
Operating Earnings (Loss)
Reconciliation(1)
|
|
|
|
|
|
Three months ended
June 30 |
|
Six months ended June
30 |
|
($ millions) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Net earnings (loss) |
868 |
|
(614 |
) |
1 689 |
|
(4 139 |
) |
Unrealized foreign exchange (gain) loss on U.S. dollar denominated
debt |
(156 |
) |
(478 |
) |
(337 |
) |
543 |
|
Unrealized loss (gain) on risk management activities(2) |
10 |
|
144 |
|
(10 |
) |
32 |
|
Restructuring charge(3) |
- |
|
- |
|
126 |
|
- |
|
Asset impairment(4) |
- |
|
- |
|
- |
|
1 798 |
|
Impact of inventory write-down to net realizable value(5) |
- |
|
(397 |
) |
- |
|
- |
|
Operating earnings (loss)(1)(2) |
722 |
|
(1 345 |
) |
1 468 |
|
(1 766 |
) |
- Operating earnings (loss) is a non‑GAAP financial measure. All
reconciling items are presented on an after‑tax basis. See the
Non‑GAAP Financial Measures Advisory section of this news
release.
- Beginning in the first quarter of 2021, the company has revised
its calculation of operating earnings, a non-GAAP financial
measure, to exclude unrealized (gains) losses on derivative
financial instruments that are recorded at fair value to
better align the earnings impact of the activity with the
underlying items being risk-managed. Prior period comparatives
have been restated to reflect this change.
- Restructuring charge in the Corporate segment recorded in the
first quarter of 2021.
- During the first quarter of 2020, the company recorded non-cash
after-tax impairment charges of $1.376 billion on its share of the
Fort Hills assets, in the Oil Sands segment, and $422 million
against its share of the White Rose and Terra Nova assets, in the
E&P segment, due to a decline in forecasted crude oil prices as
a result of decreased global demand due to the COVID-19 pandemic
and changes to their respective capital, operating and production
plans.
- During the first quarter of 2020, the company recorded an
after-tax hydrocarbon inventory write-down to net realizable value
of $177 million in the Oil Sands segment and $220 million in the
Refining and Marketing (R&M) segment as a result of a
significant decline in benchmarks and demand for crude oil and
refined products due to COVID-19 mitigation efforts. The full
hydrocarbon inventory write-down of $397 million after-tax was
excluded from operating earnings and funds from operations in the
first quarter of 2020, and realized through operating earnings and
funds from operations in the second quarter of 2020 when the
product was sold.
Corporate Guidance
Suncor has updated its full-year business
environment outlook assumptions for Brent Sullom Voe from
US$63.00/bbl to US$68.00/bbl, WTI at Cushing from US$60.00/bbl to
US$65.00/bbl, WCS at Hardisty from US$48.00/bbl to US$52.00/bbl,
New York Harbor 2-1-1 crack from US$17.00/bbl to US$18.00/bbl and
AECO-C Spot from $2.50/GJ to $3.50/GJ, due to improvements in key
forward curve pricing for the remainder of the year. As a result of
these updates, the full-year current income tax expense range has
increased from $1.0 billion – $1.3 billion to $1.2 billion – $1.5
billion.
In addition, the production range for Fort Hills
has been updated from 65,000 – 85,000 bbls/d to 45,000 – 55,000
bbls/d reflecting additional work required to maintain slope
integrity on the south side of the mine. As a result, Fort Hills
cash operating costs per barrel have been updated from $25.00 -
$29.00 to $37.00 - $42.00.
Suncor has also modified its capital expenditure
allocation between business areas to reflect lower spending at East
Coast Canada projects in E&P, offset by increased scope of
refinery turnaround activities in R&M. As a result, Upstream
E&P capital expenditure guidance has been reduced from $350 -
$450 million to $300 - $400 million, and Downstream capital
expenditure guidance has been increased from $700 - $800 million to
$750 - $850 million. The overall capital expenditure range for the
company remains unchanged.
For further details and advisories regarding
Suncor’s 2021 annual guidance, see suncor.com/guidance.
Normal Course Issuer Bid
Subsequent to the second quarter of 2021, Suncor
received approval from the TSX to amend its existing NCIB effective
as of the close of markets on July 30, 2021, to purchase common
shares through the facilities of the TSX, New York Stock Exchange
and/or alternative trading platforms. The notice provides that
Suncor may increase the maximum number of common shares that may be
repurchased in the period beginning February 8, 2021, and ending
February 7, 2022, from 44,000,000 common shares, or approximately
2.9% of Suncor’s issued and outstanding common shares as at January
31, 2021, to 76,250,000 common shares, or approximately 5% of
Suncor’s issued and outstanding common shares as at January 31,
2021. No other terms of the NCIB have been amended.
Between February 8, 2021 and July 26, 2021 and
pursuant to the NCIB, Suncor has already repurchased approximately
$1.142 billion of common shares on the open market, representing
41,501,992 common shares. Pursuant to the NCIB (as amended), Suncor
has agreed that it will not purchase more than 76,250,000 common
shares.
The actual number of common shares that may be
purchased and the timing of any such purchases will be determined
by Suncor. Suncor believes that, depending on the trading price of
its common shares and other relevant factors, purchasing its own
shares represents an attractive investment opportunity and is in
the best interests of the company and its shareholders. The company
does not expect that the decision to allocate cash to repurchase
shares will affect its long-term growth strategy.
Non-GAAP Financial Measures
Certain financial measures referred to in this
news release (funds from operations, operating earnings (loss) and
free funds flow) are not prescribed by GAAP. Operating earnings
(loss) is defined in the Non‑GAAP Financial Measures Advisory
section of Suncor's management's discussion and analysis dated July
28, 2021 (the MD&A) and reconciled to the most directly
comparable GAAP measure in the Consolidated Financial Information
and Segment Results and Analysis sections of the MD&A.
Beginning in the first quarter of 2021, the company has revised its
calculation of operating earnings to exclude unrealized (gains)
losses on derivative financial instruments that are recorded at
fair value to better align the earnings impact of the activity with
the underlying items being risk-managed. Prior period comparatives
have been restated to reflect this change. Funds from operations
and free funds flow are defined and reconciled, where applicable,
to the most directly comparable GAAP measures in the Non-GAAP
Financial Measures Advisory section of the MD&A. These non-GAAP
financial measures are included because management uses this
information to analyze business performance, leverage and liquidity
and it may be useful to investors on the same basis. These non-GAAP
measures do not have any standardized meaning and therefore are
unlikely to be comparable to similar measures presented by other
companies and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP.
Legal Advisory – Forward-Looking
Information
This news release contains certain forward-looking
information and forward-looking statements (collectively referred
to herein as “forward-looking statements”) within the meaning of
applicable Canadian and U.S. securities laws. Forward-looking
statements in this news release include references to: Suncor’s
capital allocation strategy, including that: it is targeting
further debt reductions in the latter half of the year, the annual
ceiling Suncor has set with respect to total capital expenditures
of $5 billion annually to sustain its base business while investing
in energy expansion and building out its low carbon business, its
expectation that over the medium term Suncor will allocate
approximately 10% of its annual capital budget (approximately $500
million per year) on investments that are intended to advance its
lower-carbon energy offering, its plans to allocate incremental
funds to shareholder returns in the form of dividends and share
buybacks as well as towards debt reduction with the company
targeting absolute net debt (inclusive of capital leases) of $12 –
$15 billion by 2025, it expects dividends to increase in line with
its $2.15 billion incremental free funds flow target with
additional free funds flow being allocated to share buybacks, and
the plans the company will take to accelerate reaching its debt
reduction targets; Suncor’s updated strategy which focuses on
increasing shareholder returns while accelerating its GHG emissions
reduction targets, growing its business in low GHG fuels,
electricity, and hydrogen, sustaining and optimizing its base
business and transforming its GHG footprint to be a net-zero
company by 2050; statements surrounding Suncor’s recently announced
strategic objective to become a net zero GHG emissions company by
2050 on emissions produced from running its facilities, including
those it has a working interest in, and to substantially contribute
to society’s net zero ambitions and its target of reducing its
annual emissions by 10 megatonnes across its value chain by 2030
and its plans on how to achieve these goals; Suncor’s initiative,
together with four industry partners and collectively with the
federal and Alberta governments, to achieve net-zero GHG emissions
from oil sands operations by 2050 and the steps this initiative
will explore to address GHG emissions, including the creation of a
Carbon Capture, Utilization and Storage trunkline as well as the
implementation of other next generation technologies; Suncor’s
expectation regarding Fort Hills’ ramp up strategy, including its
belief that it will be at expected contractor capacity by August
2021, that overburden removal activity will be completed by the end
of 2021 and its plan to continue at the current production level
for the remainder of the year, with a transition to both primary
extraction trains beginning in late 2021 to enable full production
in early 2022; Suncor’s expectations with respect to the Terra Nova
Floating, Production, Storage and Offloading facility and
associated Terra Nova Field and the Asset Life Extension Project,
including that a sanction decision will occur in the third quarter
of 2021; the company’s belief that, with the completion of
turnarounds across all of the company’s refineries, Buzzard and
Syncrude (and with Syncrude and Buzzard having returned to
production), Suncor will be able to ramp up its assets and position
them for a strong second half of 2021 and that, together with the
completion of turnarounds, the phased lifting of restrictions will
position Suncor to capture improved margins in the second half of
the year as domestic demand continues to recover towards pre-
pandemic levels; Suncor’s plan to continue to structurally lower
its cost base and improve productivity, including ensuring the
smooth transition of Syncrude operatorship and continue its digital
transformation; the expectation that, once operatorship of Syncrude
is transferred, that there will be gross synergies of approximately
$100 million for the joint venture owners within the first six
months with an additional $200 million through 2022-2023; Suncor’s
expectation that initiatives undertaken in 2021 such as mine
optimization and digital, process and technology projects will
contribute to the company’s $2.15 billion free funds flow target;
statements surrounding the cogeneration project at Oil Sands Base
to replace the existing coke-fired boilers, the Forty Mile Wind
Power Project and the recently announced partnership on a potential
world-scale clean hydrogen project in Alberta with ATCO Ltd.,
including expectations on timing and the impact these projects will
have on Suncor’s new strategic carbon objectives and targets around
absolute carbon emissions reductions; Suncor’s ambition to be
Canada’s leading energy company by focusing on increasing
shareholder returns while accelerating its GHG emissions reductions
target and that its strategy will optimize the value of its base
business and improve its cost and capital efficiency while
supplementing it with economically robust energy expansion
investments that will contribute to increasing free funds flow;
Suncor’s expectation that its updated strategy and progress on its
carbon objectives will continue to be underpinned by capital
discipline; Suncor's expectation that the sale of its 26.69%
working interest in the Golden Eagle Area Development will close in
the third quarter of 2021; statements with respect to planned
maintenance events and the timing thereof, including the planned
maintenance turnaround at Oil Sands Base plant Upgrader 2; and
Suncor’s full-year outlook range on Upstream E&P capital
expenditures, Downstream capital expenditures, Fort Hills
production, Fort Hills cash operating costs and current income
taxes as well as business environment outlook assumptions for Brent
Sullom Voe, WTI at Cushing, WCS at Hardisty, New York Harbor 2-1-1
crack and AECO-C Spot. In addition, all other statements and
information about Suncor’s strategy for growth, expected and future
expenditures or investment decisions, commodity prices, costs,
schedules, production volumes, operating and financial results and
the expected impact of future commitments are forward-looking
statements. Some of the forward-looking statements and information
may be identified by words like “expects”, “anticipates”, “will”,
“estimates”, “plans”, “scheduled”, “intends”, “believes”,
“projects”, “indicates”, “could”, “focus”, “vision”, “goal”,
“outlook”, “proposed”, “target”, “objective”, “continue”, “should”,
“may” and similar expressions.
Forward-looking statements are based on Suncor’s
current expectations, estimates, projections and assumptions that
were made by the company in light of its information available at
the time the statement was made and consider Suncor’s experience
and its perception of historical trends, including expectations and
assumptions concerning: the accuracy of reserves estimates; the
current and potential adverse impacts of the COVID-19 pandemic,
including the status of the pandemic and future waves and any
associated policies around current business restrictions,
shelter-in-place orders or gatherings of individuals; commodity
prices and interest and foreign exchange rates; the performance of
assets and equipment; capital efficiencies and cost savings;
applicable laws and government policies; future production rates;
the sufficiency of budgeted capital expenditures in carrying out
planned activities; the availability and cost of labour, services
and infrastructure; the satisfaction by third parties of their
obligations to Suncor; the development and execution of projects;
and the receipt, in a timely manner, of regulatory and third-party
approvals.
Forward-looking statements and information are not
guarantees of future performance and involve a number of risks and
uncertainties, some that are similar to other oil and gas companies
and some that are unique to Suncor. Suncor’s actual results may
differ materially from those expressed or implied by its
forward-looking statements, so readers are cautioned not to place
undue reliance on them.
Suncor’s Annual Information Form and Annual Report
to Shareholders, each dated February 24, 2021, Form 40-F dated
February 25, 2021, the MD&A and other documents it files from
time to time with securities regulatory authorities describe the
risks, uncertainties, material assumptions and other factors that
could influence actual results and such factors are incorporated
herein by reference. Copies of these documents are available
without charge from Suncor at 150 6th Avenue S.W., Calgary, Alberta
T2P 3E3; by email request to invest@suncor.com; by calling
1-800-558-9071; or by referring to suncor.com/FinancialReports or
to the company’s profile on SEDAR at sedar.com or EDGAR at sec.gov.
Except as required by applicable securities laws, Suncor disclaims
any intention or obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Suncor Energy is Canada's leading integrated
energy company, with a global team of over 30,000 people. Suncor's
operations include oil sands development, production and upgrading,
offshore oil and gas, petroleum refining in Canada and the US, and
our national Petro-Canada retail distribution network (now
including our Electric Highway network of fast-charging EV
stations). A member of Dow Jones Sustainability indexes, FTSE4Good
and CDP, Suncor is responsibly developing petroleum resources,
while profitably growing a renewable energy portfolio and advancing
the transition to a low-emissions future. Suncor is listed on the
UN Global Compact 100 stock index. Suncor's common shares (symbol:
SU) are listed on the Toronto and New York stock exchanges.
Legal Advisory – BOEs
Certain natural gas volumes have been converted to
barrels of oil equivalent (boe) on the basis of one barrel to six
thousand cubic feet. Any figure presented in boe may be misleading,
particularly if used in isolation. A conversion ratio of one bbl of
crude oil or natural gas liquids to six thousand cubic feet of
natural gas is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given that the value ratio based
on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
For more information about Suncor, visit our web
site at suncor.com, follow us on Twitter @Suncor or Living our
Purpose.
A full copy of Suncor's second quarter 2021 Report
to Shareholders and the financial statements and notes (unaudited)
can be downloaded at
https://www.suncor.com/en-ca/investor-centre/financial-reports.
To listen to the conference call discussing
Suncor's second quarter results, visit suncor.com/webcasts.
Media inquiries: 1-833-296-4570
media@suncor.com
Investor inquiries: 800-558-9071
invest@suncor.com
1 Beginning in the first quarter of 2021, the
company has revised its calculation of operating earnings, a
non-GAAP financial measure, to exclude unrealized (gains) losses on
derivative financial instruments that are recorded at fair value to
better align the earnings impact of the activity with the
underlying items being risk-managed. Prior period comparatives have
been restated to reflect this change. 2 Sources: IHS Markit and
Statistics Canada.
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