Suncor Energy Inc. · TSX:SU
Suncor Energy — Q3 2016 Earnings Presentation
35 slides from Suncor Energy's earnings presentation, Dec 20, 2016
Slide 1: Investor Information
Cover Photograph – Fort Hills overburden removal Investor Information Published December 20, 2016
Slide 2: Suncor investment thesis
2 Suncor investment thesis Growth from inflight projects Cash generation upside sensitivity Production1 increase Benchmarked off YTD 2016 $3623M CFOPs3 and US$41.80 realized Brent pricing, (mbpd) 0.76 C$/US$, US$13.95 NYH crack spread (C$ billion) 850 8 YTD Sensitivity 6% 750 CFOPs sensitivity to pl
Slide 3: Suncor value proposition
3 Suncor value proposition Operational excellence Optimizing the base business • safety as a core value • industry leading reliability • disciplined cost management • leader in sustainability Capital discipline Rigorous capital allocation process • vast portfolio of high quality organic growth oppor
Slide 4: Strong production growth through the end of the decade
4 Strong production growth through the end of the decade Suncor’s production growth forecast1 (mbpd) Hebron 800 E&P 700 600 Syncrude 500 Fort Hills 400 Base Oil Sands 300 Firebag MacKay 200 Base Mine 100 Major Oil Sands U2 FB U1 Turnarounds3 0 2015 2016 2017 2018 2019 Guidance mid-point Planned Plan
Slide 5: Generating discretionary free cash flow
5 Generating discretionary free cash flow1 Cash flow from operations consistently exceeds sustaining capex, capitalized interest and dividends (C$ billions) 2013 2014 2015 2016 E2, 3 2017 E2 WTI USD4 $97.95 $93.00 $48.75 $43.00 $52.00 NYH 3-2-1 USD5 $23.90 $19.65 $19.70 $13.50 $13.50 Sustaining Capi
Slide 6: Exceeding cost reduction expectations
6 Exceeding cost reduction expectations Operating, selling and general expenses C$ billions Expected to exceed 2016 target $~1.3B reduction $9.5 $9.4 $400M $9.0 $~1B $8.6 $500M $8.1 Syncrude additions (COS/Murphy) 2014 2015 2015 2016 Original 20161 Original 20162 New 20162 Cost reductions Original c
Slide 7: Oil Sands cash operating costs declining
7 Oil Sands cash operating costs declining Oil Sands operations cash operating costs1 C$/bbl Cost reduction focus areas $37.00 Operational Improved reliability, increased scale, $33.80 maintenance planning, energy inputs Productivity $27.85 Workforce reduction, technology application $27.15 YTD Busi
Slide 8: Driving down cost through continuous improvement
8 Driving down cost through continuous improvement Significant in situ drilling and downhole pump maintenance cost reductions Pacesetting drilling improvements Firebag drilling & pump maintenance costs (Annual % decrease vs 2012 cost baseline) • Customized drilling rig 2012 0% 2013 2014 2015 2016 YT
Slide 9: Next generation of in situ sustaining pad developments
9 Next generation of in situ sustaining pad developments Pad facilities Largest capital efficiency improvements resulting in significant well pad cost reductions Drilling and completions Ongoing technology integration and process optimizations considerably reducing execution time and costs Allocatio
Slide 10: Disciplined capital allocation
10 Disciplined capital allocation “Let me be clear - for us, having cash available to invest doesn't mean we're going to run out and spend it. We remain steadfast in our commitment to exercise discipline in allocating that capital.” Steve Williams, CEO, Barclays Conference 9/7/2016 Capital allocatio
Slide 11: Track record of counter-cyclical acquisitions and divestments
11 Track record of counter-cyclical acquisitions ( ) and divestments ( ) $100 WTI $80 US$/bbl Non-core UK offshore $60 Fort Hills, Rosebank Petro-Canada 10% additional WI WI $40 Canadian Oil Sands $20 Murphy Syncrude WI $40 NYH 3-2-1 US$/bbl $30 Pioneer retail network $20 Valero Commerce City Conoco
Slide 12: Syncrude's journey to reliable low cost operations
12 Syncrude’s journey to reliable low cost operations Syncrude cash operating costs1 Syncrude utilization C$/bbl (%) 98% Alberta forest fires2 91% 46.75 83% 82% 76% 74% 41.75 70% 40.35 38.80 38.10 37.85 YTD 29.05 Q1/Q3 Average 21% 2011 2012 2013 2014 2015 Q3 2016 2011 2012 2013 2014 2015 Q1 2016 Q2
Slide 13: Fort Hills progress
13 Fort Hills progress1 50.8% Suncor working interest 70% Bitumen > 75% 91mbpd production capacity net to Suncor, planned 30% Diluent < 25 % $84k project cost/flowing barrel estimated at sanction Fort Hills froth screen building >70% construction complete as at September 30, 2016 100% off-site progr
Slide 14: Suncor compares favorably to large integrateds
14 Suncor compares favorably to large integrateds1 Strong production growth Superior capital efficiency 5 Year production growth (Q1 2011 to Q1 2016) Suncor3 15% Peer A Peer B Peer C Peer D Peer E 15% Suncor 4% 4% $4.37 growth per -3% $4.05 $3.77 share -10% $3.55 $3.24 -32% 2011 2012 2013 2014 2015
Slide 15: Leveraging our financial strength
15 Leveraging our financial strength Conservative debt metrics Cost of debt4 in line with large integrateds 800 net debt to CFOPs1 3.0x target below 3x September 30, 2016 Suncor 600 Canadian peers5 total debt to capitalization2 29% target between 20%-30% Large integrateds6 September 30, 2016 400 $9.
Slide 16: Current & Proposed Pipeline Projects: Summary
16 Current & Proposed Pipeline Projects: Summary Market access for Oil Sands production Suncor has approximately 750 mbpd of near-term market access1 mbpd Suncor refinery capacity Fort McMurray mbpd Suncor rail loading capacity 142 Edmonton Rail 30+ Hardisty Vancouver Rail 40+ Pipeline Regina Curren
Slide 17: Refining & Marketing – the value of integration
17 Refining & Marketing – the value of integration Suncor Peers1 R&M net earnings1 Refinery utilization vs. US average High Suncor US$/bbl of capacity Percent of refining capacity Average Low US Average3 100% 15 10 90% 5 0 80% 2012 2013 2014 2015 TTM2 2012 2013 2014 2015 2016 YTD Price realizations
Slide 18: The oil sands leader in addressing climate change
18 The oil sands leader in addressing climate change Provincial climate framework Reducing GHG intensity Oil Sands Advisory Group 0.19 t/bbl Suncor representation on the multidisciplinary committee established to > 550% increase in production advise government on the oil sands aspects of the Climate
Slide 19: Technology development portfolio
19 Technology development portfolio1 Reduce GHG emissions Reduce costs & improve Reduce tailings / water / intensity profitability land footprint Surface process (lean facility development) Enhanced SAGD recovery processes (steam + additives) In Situ Steam generation technology (e.g. DCSG2) Non-stea
Slide 20: Appendix
20 Appendix FC CCCs‘ (a .Hs_"|"":SC—C™EZ—=2 SuNcor )
Slide 21: Canada's leading integrated energy company
21 Canada’s leading integrated energy company $75B enterprise value1 September 30, 2016 35+ years 2P reserve life index as at Dec 31, 2015 2 657 mboepd 99% oil production 462 mbpd refining capacity YTD3 1, 2, 3 See Slide Notes and Advisories.
Slide 22: 2016 Capital and production guidance
22 2016 Capital and production guidance1 2016 Capital2 Growth capital3 Upstream production4 $ millions Percent boepd Upstream5 5,100 – 5,230 70% 375,000 – 385,000 Oil Sands Operations Downstream 675 – 720 5% 120,000 – 130,000 Syncrude6 Corporate 25 – 50 5% 110,000 – 115,000 E&P 425,000 – 435,000 Ref
Slide 23: 2017 Capital and production guidance
23 2017 Capital and production guidance1 2017 Capital2 Growth capital3 Upstream production4 $ millions Percent boepd Upstream5 4,135 – 4,475 50% 420,000 – 450,000 Oil Sands Operations Downstream 625 – 675 0% 150,000 – 165,000 Syncrude Corporate 40 – 50 0% 95,000 – 105,000 E&P 425,000 – 445,000 Refin
Slide 24: Oil Sands production expected to exceed 700 mbpd by 2019
24 Oil Sands production expected to exceed 700 mbpd by 20191 Debottlenecks, brownfield expansions and growth projects expected to raise total Oil Sands production from 463 mbpd (2015) to greater than 700 mbpd. Firebag • Further potential debottleneck opportunities5 • 23 mbpd debottleneck completed i
Slide 25: Comparing typical attributes of North American oil plays
25 Comparing typical attributes of North American oil plays1 Illustrative annual cash flow profile based off peak production at Fort Hills of 91 mbpd (Suncor WI)2 Tight Oil SAGD Mining & Offshore Upgrading Initial Capital Low Medium High High Reinvestment Cycle Short Long Ultra long Medium Operating
Slide 26: Meeting commitments to both equity and debt holders
26 Meeting commitments to both equity and debt holders Leading global peer group1 Manageable debt maturity profile2 Five year dividend growth (Q2 2011 – Q2 2016) 200% 2016 6.7 (Credit facilities) 3.1 (Cash) 2018 3.1 0.3 Suncor 100% 2020 1.4 2022 0.2 0% 2024 1.0 2026 1.1 -100% 0.1 2028 0.3 2030 2032
Slide 27: High quality mining, in situ and upgrading oil sands portfolio
27 High quality mining, in situ and upgrading oil sands portfolio1 Base Plant Syncrude 350,000 bpd capacity Syncrude operated Suncor working interest 100% 188,000 bpd capacity (SU WI) 1,662 mmbbls 2P reserves Suncor working interest 53.74% 2,264 mmbbls 2P reserves (SU WI)2 Firebag Fort Hills 203,000
Slide 28: Offshore oil projects with ~415 million barrels of 2P reserves
28 Offshore oil projects with ~415 million barrels of 2P reserves1 Terra Nova Hibernia Suncor Energy operated ExxonMobil operated Suncor working interest 37.675% Suncor working interest 20.0%2 44.4 mmboe 2P reserves (SU WI) 92.0 mmboe 2P reserves (SU WI)3 White Rose Buzzard Husky Energy operated Nex
Slide 29: Canada's largest refining & marketing business
29 Canada’s largest refining & marketing business Edmonton Refinery Sarnia Refinery 142,000 bpd capacity 85,000 bpd capacity 100% oil sands feedstock1 ~75% oil sands feedstock1 Commerce City Refinery Montreal Refinery 98,000 bpd capacity 137,000 bpd capacity ~20% oil sands feedstock1 Receiving crude
Slide 30: Advisories
30 Advisories Forward-Looking Statements – This presentation contains risk of war, hostilities, civil insurrection, political instability and measures presented herein do not have any standardized certain “forward-looking statements” within the meaning of the terrorist threats; assumptions regarding
Slide 31: Slide Notes
31 Slide Notes Slide 2-------------------------------------------------------------------------- Looking Statements in the Advisories. is indicative of CFOPs based on the midpoint of 2017 (1) Production excludes North America onshore, Libya and (3) U1 (Upgrader 1) and U2 (Upgrader 2) and FB (Firebag
Slide 32: Slide Notes (continued)
32 Slide Notes (continued) Slide 10----------------------------------------------------------------------- Statements in the Advisories. (6) Large integrated peers in alphabetical order, not (1) Refers to participation agreements with Fort McKay and Slide 12 -----------------------------------------
Slide 33: Slide Notes (continued)
33 Slide Notes (continued) Slide 17------------------------------------------------------------------------ (3) There can be no assurance this goal will be achieved or approximately $265 million of sustaining capital for (1) Net earnings per barrel of capacity. Peers include: Alon, that the anticipa
Slide 34: Slide Notes (continued)
34 Slide Notes (continued) Slide 24------------------------------------------------------------------------ $0.29/share. All dividends are at the discretion of and therefore does not reflect the modified Suncor WI. (1) Includes Oil Sands projects that are subject to sanction Suncor’s Board of Direct
Slide 35: Investor Relations Contacts
Investor Relations Contacts Steve Douglas David Burdziuk Leigh MacComb Peter Walls Vice President IR Manager IR Analyst IR Associate IR [email protected] [email protected] [email protected] [email protected] Visit us at the Investor Centre on suncor.com 1-800-558-9071 [email protected]