Suncor accelerates increased returns to shareholders
October 27 2021 - 5:15PM
Given the strength of the company and confidence in the execution
of Suncor Energy’s strategic plans, the Board of Directors has
approved the acceleration of increased returns to shareholders by
the reinstatement of the dividend to 2019 levels. The reinstatement
to $0.42 per common share from $0.21 per share is a 100% increase
in the quarterly dividend, commencing with the dividend payable on
December 24, 2021 to shareholders of record at the close of
business on December 3, 2021. The dividend increase is enabled
through disciplined capital spending and allocation, as well as
progress in generating an incremental $2 billion of free funds flow
by 2025.
In addition, the Board has also authorized a
further 2% increase in the normal course issuer bid (NCIB) to
purchase by February 7, 2022 up to approximately 7% (107 million
shares) of Suncor’s public float as at January 31, 2021.
2021 Performance to Date
Operational initiatives and higher commodity prices than expected
have accelerated the achievement of two key objectives, namely
increasing return of capital to shareholders and reducing net debt.
Highlights include:
- Safe and reliable operating performance continues to
strengthen, including:
- In Q3, Downstream demand has returned to near 2019 levels and
is expected to continue to strengthen, enabling industry leading
refinery utilization rates and cash generation going forward;
- Significant progress has been achieved on overburden removal at
Fort Hills and the project is on track to ramp to full rates by the
end of 2021; and
- Our remaining upstream assets are performing at strong
operating levels with all 2021 planned major maintenance
successfully completed.
- Substantial progress has been made on the company’s plan to
realize $2 billion of incremental annual free funds flow by 2025 as
outlined on Investor Day, with approximately $465 million on track
to be achieved in 2021 and similar progress expected to continue in
2022. As outlined on Investor Day, this annual free funds flow
increase for 2021 is being achieved through increased revenue and
margin, and increased productivity on tailings asset retirement
spend.
- As at September 30, 2021 net debt has been reduced by $3.1
billion in 2021. With expected free funds flow in the fourth
quarter and the receipt of the Golden Eagle asset sales proceeds in
October, the net debt balance by year end 2021 is anticipated to be
near $15 billion, an approximate $5 billion reduction in 2021, $1
billion lower than the December 31, 2019 net debt level and near
the top of 2025 target net debt range set out Investor Day. Net
debt reduction will continue to be a focus as we further fortify
the balance sheet, accelerating the pace of deleveraging outlined
on Investor Day.
- Share buybacks for the year-to-date period ending September 30,
2021 totalled $1.7 billion for approximately 63 million shares, or
4.1% of the outstanding shares at January 31, 2021, significantly
higher than assumed in the Investor Day scenario.
- As part of our disciplined capital allocation, we will continue
to execute on our Environment, Social and Governance (ESG)
strategic initiatives and invest in energy expansion at mid teens
returns to achieve our 10 Megatonne (MT) emission reduction target
by 2030.
2022 Guidance We will release our
detailed 2022 Guidance as usual in December 2021.
For 2022, our business environment assumptions are
significantly improved relative to those discussed at Investor Day
due to the substantial improvements in market conditions. Our key
assumptions are: WTI at Cushing of US$70/bbl; New York Harbor 2-1-1
crack of US$21/bbl; AECO-C Spot of $3.80 CDN$/mcf and a US$ FX rate
of $0.80. 2022 Capital guidance is expected to be approximately
$4.7 billion, $300 million below the $5.0 billion annual cap
outlined at Investor Day. We are expecting to renew the NCIB upon
expiry of the current program in February 2022 and further fortify
the balance sheet with additional net debt reduction in 2022. After
funding the capital program and dividend, we plan to allocate
available free funds flow half towards share buybacks and half
towards debt reduction.
This dividend increase demonstrates Suncor
Energy’s Board of Directors and Executive Management team’s
commitment to increasing the return of capital to shareholders and
accelerating performance relative to our plan.
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 statements and expectations
regarding: Suncor's incremental $2 billion of free funds flow by
2025 target including Suncor's expectation that it is on track to
achieve $465 million of this in 2021 with similar progress expected
to continue in 2022; statements about the NCIB, including the
amount and timing of purchases and Suncor's expectation that it
will renew the NCIB upon expiry of the current program in February
2022; Suncor's expectation that Downstream demand will continue to
strength which will enable industry leading refinery utilization
rates and cash generation going forward; Suncor's expectation that
the Fort Hills project is on track to ramp to full rates by the end
of 2021; Suncor's expected net debt balances by year end 2021 to be
near $15 billion and the belief that net debt reduction will
continue to be a focus for Suncor and that there will be additional
net debt reduction in 2022; Suncor's anticipated capital allocation
plans of allocating half of available free funds flow towards share
buybacks and half towards debt reduction; Suncor's expectation that
it will continue to execute on its ESG strategic initiatives and
invest in energy expansion at mid teens returns to achieve its 10
MT emission reduction target by 2030; Suncor's commitment to
increasing the return of capital to shareholders and accelerating
performance relative to its previously communicated plan; and
Suncor's full year 2022 outlook on capital guidance as well as
business outlook assumptions for WTI at Cushing, New York Harbor
2-1-1 crack, AECO-C Spot and the Cdn$/US$ exchange rate.
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;
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 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 Management's Discussion and Analysis for
the third quarter of 2021 dated October 27, 2021 (MD&A), its
Annual Information Form and Annual Report to Shareholders, each
dated February 24, 2021, Form 40-F dated February 25, 2021, and
other documents Suncor 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 calling 1-800-558-9071,
or by email request to invest@suncor.com or by referring 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. Non-GAAP Financial
Measures
Certain financial measures referred to in this
news release (free funds flow) are not prescribed by GAAP. Free
funds flow is defined and reconciled, as applicable, to the most
directly comparable GAAP measures in the Non-GAAP Financial
Measures Advisory section of the MD&A. This non-GAAP financial
measure is included because management uses this information to
analyze business performance, leverage and liquidity and it may be
useful to investors on the same basis. This non-GAAP measure does
not have a standardized meaning and therefore is 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.
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.
For more information about Suncor, visit our web
site at suncor.com, follow us on Twitter @Suncor
Media inquiries: 1-833-296-4570
media@suncor.com
Investor inquiries: 800-558-9071
invest@suncor.com
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