All financial figures are unaudited and in Canadian dollars unless
noted otherwise. Certain financial measures referred to in this
document are not prescribed by Canadian generally accepted
accounting principles (GAAP). For a description of these measures,
see Non-GAAP Financial Measures in Suncor's 2009 second quarter
Management's Discussion and Analysis. This document makes reference
to barrels of oil equivalent (boe). A boe conversion ratio of six
thousand cubic feet of natural gas: one barrel of crude oil is
based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Accordingly, boe measures may be
misleading, particularly if used in isolation. CALGARY, July 22
/PRNewswire-FirstCall/ -- Suncor Energy Inc. today reported a
second quarter 2009 net loss of $51 million ($0.06 per common
share), compared to net earnings of $829 million ($0.89 per common
share) in the second quarter of 2008. Excluding unrealized foreign
exchange gain on the company's U.S. dollar denominated long-term
debt, mark-to-market accounting losses on commodity derivatives,
and costs related to start-up or deferral of growth projects,
second quarter 2009 earnings were $185 million ($0.20 per common
share), compared to $920 million ($0.99 per common share) in the
second quarter of 2008. Cash flow used in operations was $342
million in the second quarter of 2009, compared to cash flow from
operations of $1.405 billion in the second quarter of 2008. The
decrease in earnings and cash flow was primarily due to lower price
realizations, as benchmark commodity prices were significantly
weaker in the second quarter of 2009 compared to the same period in
2008, and operating expenses were higher at oil sands due to
increased production and sales. These were partially offset by the
increased production in our oil sands business segment, reduced
natural gas royalty expense due to lower benchmark commodity
prices, and increased refined product sales in our downstream
business segment. Net loss for the first six months of 2009 was
$240 million, compared to net earnings of $1.537 billion for the
same period in 2008. Excluding unrealized foreign exchange impacts
on the company's U.S. dollar denominated long-term debt,
mark-to-market accounting losses on commodity derivatives, and
costs related to start-up or deferral of growth projects, earnings
for the first six months of 2009 were $410 million, compared to
$1.725 billion in the same period for 2008. Cash flow from
operations for the first six months of 2009 was $137 million,
compared to $2.566 billion in the first six months of 2008. The
year-to-date decreases in earnings and cash flow from operations
were primarily due to the same factors that impacted second quarter
results. Suncor's total upstream production averaged 336,100
barrels of oil equivalent (boe) per day during the second quarter
of 2009, compared to 212,300 boe per day in the second quarter of
2008. Oil sands production contributed an average 301,000 barrels
per day (bpd) in the second quarter of 2009, compared to second
quarter 2008 production of 174,600 bpd. The increased production
was primarily due to improved upgrader reliability in the second
quarter of 2009. In addition, in the comparative quarter of 2008 a
planned maintenance shutdown of one of our upgraders and a
regulatory cap on our Firebag in-situ operations impacted
production. Natural gas production this most recent quarter
averaged 211 million cubic feet equivalent (mmcfe) per day,
compared to 226 mmcfe per day in the second quarter of 2008. Oil
sands cash operating costs averaged $31.30 per barrel in the second
quarter of 2009, compared to $50.85 per barrel during the second
quarter of 2008. The decrease in cash operating costs per barrel
was primarily due to increased production and a decrease in natural
gas input prices. "During the second quarter, we saw the fruits of
last year's labour," said Rick George, president and chief
executive officer. "For the second quarter in a row, we experienced
very good reliability at oil sands, which is clearly illustrated
through our production results during the first half of 2009. As we
look to the second half of the year, we are confident that we are
well-positioned to take advantage of any improvement in commodity
prices with more reliable operations." Merger and growth update On
March 23, 2009, Suncor and Petro-Canada (TSX:PCA) (NYSE:PCZ)
announced that they have agreed to merge the two companies. The
merger has received shareholder, court and Competition Bureau
approval and with all the conditions necessary to complete the
transaction satisfied, Suncor and Petro-Canada intend to make the
merger effective August 1, 2009. The combined entity will operate
corporately and trade under the Suncor name while maintaining the
strong brand presence and customer loyalty of Petro-Canada in
refined products. During the second quarter of 2009, work continued
on the Firebag sulphur plant and the Steepbank extraction plant.
The sulphur plant is expected to support sulphur emissions
reductions for existing and planned in-situ development, and the
extraction plant is expected to provide improved reliability and
productivity for the company's oil sands assets. The project cost
for the Steepbank extraction plant is expected to exceed the
previous cost estimate ($850 million +/-10%) with a final estimated
cost of $980 million (+5%) as a result of labour shortages and the
resulting productivity challenges, as well as premiums incurred to
maintain the project schedule. Both of these projects are scheduled
for completion in the third quarter of 2009. For an update on our
significant capital projects currently in progress see page 11 of
Suncor's second quarter report to shareholders. As previously
announced, we deferred the company's growth projects in our revised
2009 capital budget. We do not anticipate any changes to our growth
project plans until after the close of the proposed merger with
Petro-Canada. At that time, all capital projects from both
predecessor companies will be reviewed with capital investment
directed toward projects with the strongest near-term cash flow
potential, highest anticipated return on capital and lowest risk.
Outlook Suncor's outlook provides management's targets for 2009 in
certain key areas of the company's business. Outlook forecasts are
subject to change. Six Month Actuals Ended June 30, 2009 2009 Full
Year Outlook
-------------------------------------------------------------------------
Oil Sands Production (bpd)(1) 289 000 300 000 (+5%/-10%) Sales
Diesel 9% 10% Sweet 39% 38% Sour 48% 49% Bitumen 4% 3% Realization
on crude sales basket(2) WTI @ Cushing less WTI @ Cushing less
Cdn$4.99 per barrel Cdn$4.50 to Cdn$5.50 per barrel Cash operating
costs(3) $32.50 per barrel $33.00 to $38.00 per barrel
-------------------------------------------------------------------------
Natural Gas Production(4) (mmcf equivalent per day) 215 210
(+5%/-5%) Natural gas 91% 92% Liquids 9% 8%
-------------------------------------------------------------------------
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(1) Includes 22,000 bpd in the first six months of 2009 processed
by Suncor for Petro-Canada for which Suncor receives a processing
fee. Volumes received under this arrangement are not included as
purchases for financial statement presentation. (2) Excludes the
impact of hedging activities. (3) Cash operating cost estimates are
based on the following assumptions: (i) production volumes and
sales mix as described in the table above; and (ii) a natural gas
price of $4.50 per gigajoule ($4.75 per mcf) at AECO. This goal
also includes costs incurred for third-party bitumen processing but
does not include costs related to deferral of growth projects.
Based on second quarter results and expectations for the balance of
the year, the natural gas price assumption has been reduced from
the previous $7.10 per gigajoule at AECO. This change in assumption
had no material impact on our cash operating costs per barrel
outlook for 2009. Cash operating costs per barrel is not prescribed
by Canadian generally accepted accounting principles (GAAP). This
non-GAAP financial measure does not have any standardized meaning
and therefore is unlikely to be comparable to similar measures
presented by other companies. Suncor includes this non-GAAP
financial measure because investors may use this information to
analyze operating performance. This information should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. See Non-GAAP
Financial Measures on page 15 of Suncor's second quarter report to
shareholders. (4) Production target includes natural gas liquids
(NGL) and crude oil converted into mmcf equivalent at a ratio of
one barrel of NGL/crude oil: six thousand cubic feet of natural
gas. This conversion ratio is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. This mmcf
equivalent may be misleading, particularly if used in isolation.
The 2009 outlook is based on Suncor's current estimates,
projections and assumptions for the 2009 fiscal year and is subject
to change. Assumptions are based on management's experience and
perception of historical trends, current conditions, anticipated
future developments and other factors believed to be relevant.
Assumptions of the 2009 outlook include implementing reliability
and operational efficiency initiatives that are expected to
minimize unplanned maintenance in 2009. Factors that could
potentially impact Suncor's operations and financial performance in
2009 include: - Bitumen supply. Ore grade quality, unplanned mine
equipment and extraction plant maintenance, tailings storage and
in-situ reservoir performance could impact 2009 production targets.
Production could also be impacted by the availability of
third-party bitumen. - Performance of recently commissioned
upgrading facilities. Production rates while new equipment is being
lined out are difficult to predict and can be impacted by unplanned
maintenance. - Unplanned maintenance. Production estimates could be
impacted if unplanned work is required at any of our mining,
production, upgrading, refining or pipeline assets. - Crude oil
hedges. Suncor has hedging agreements for approximately 60% of
targeted production in 2009 and for 50,000 bpd in 2010. See
Commodity and Treasury Hedging Activities on page 12 of Suncor's
second quarter report to shareholders. For additional information
on risk factors that could cause actual results to differ, please
see page 19 of Suncor's 2008 annual report. Notice -
Forward-Looking Information This document contains certain
forward-looking statements and other information that are based on
Suncor's current expectations, estimates, projections and
assumptions that were made by the company in light of its
experience and its perception of historical trends. All statements
and other information that address expectations or projections
about the future, including statements about Suncor's strategy for
growth, expected and future expenditures, commodity prices, costs,
schedules, production volumes, operating and financial results and
expected impact of future commitments, are forward-looking
statements. Some of the forward-looking statements may be
identified by words like "expects," "anticipates," "estimates,"
"plans," "scheduled," "intends," "believes," "projects,"
"indicates," "could," "focus," "vision," "goal," "outlook,"
"proposed," "target," "objective," and similar expressions. These
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 and readers are cautioned
not to place undue reliance on them. Suncor's outlook includes a
production range of +5%/-10% based on our current expectations,
estimates, projections and assumptions. Uncertainties in the
estimating process and the impact of future events may cause actual
results to differ, in some cases materially, from our estimates.
Assumptions are based on management's experience and perception of
historical trends, current conditions, anticipated future
developments and other factors believed to be relevant. For a
description of assumptions and risk factors specifically related to
the 2009 outlook, see page 3 of our second quarter 2009 report to
Shareholders. The risks, uncertainties and other factors that could
influence actual results include but are not limited to, market
instability affecting Suncor's ability to borrow in the capital
debt markets at acceptable rates; availability of third-party
bitumen; success of hedging strategies, maintaining a desirable
debt to cash flow ratio; changes in the general economic, market
and business conditions; fluctuations in supply and demand for
Suncor's products; commodity prices, interest rates and currency
exchange rates; Suncor's ability to respond to changing markets and
to receive timely regulatory approvals; the successful and timely
implementation of capital projects including growth projects and
regulatory projects (for example, the emissions reduction
modifications at our Firebag in-situ development); the accuracy of
cost estimates, some of which are provided at the conceptual or
other preliminary stage of projects and prior to commencement or
conception of the detailed engineering needed to reduce the margin
of error and increase the level of accuracy; the integrity and
reliability of Suncor's capital assets; the cumulative impact of
other resource development; the cost of compliance with current and
future environmental laws; the accuracy of Suncor's reserve,
resource and future production estimates and its success at
exploration and development drilling and related activities; the
maintenance of satisfactory relationships with unions, employee
associations and joint venture partners; competitive actions of
other companies, including increased competition from other oil and
gas companies or from companies that provide alternative sources of
energy; labour and material shortages; uncertainties resulting from
potential delays or changes in plans with respect to projects or
capital expenditures; actions by governmental authorities including
the imposition of taxes or changes to fees and royalties, changes
in environmental and other regulations (for example, the Government
of Alberta's review of the unintended consequences of the proposed
Crown royalty regime, the Government of Canada's current review of
greenhouse gas emission regulations); the ability and willingness
of parties with whom we have material relationships to perform
their obligations to us; and the occurrence of unexpected events
such as fires, blowouts, freeze-ups, equipment failures and other
similar events affecting Suncor or other parties whose operations
or assets directly or indirectly affect Suncor. The foregoing
important factors are not exhaustive. The forward-looking
statements and information relating to the proposed transaction
between Suncor and Petro-Canada are based on certain key
expectations and assumptions made by us, including expectations and
assumptions concerning: the accuracy of reserve and resource
estimates; customer demand for the merged company's products;
commodity prices and interest and foreign exchange rates; planned
synergies, capital efficiencies and cost-savings; applicable
royalty rates and tax laws; future production rates; the
sufficiency of budgeted capital expenditures in carrying out
planned activities; the availability and cost of labour and
services; and the receipt, in a timely manner, of regulatory and
other third party approvals in respect of the proposed merger. In
addition, forward-looking statements and information concerning the
anticipated completion of the proposed transaction and the
anticipated timing for completion of the transaction are provided
in reliance on certain assumptions that we believe are reasonable
at this time, including; the timing of receipt of the necessary
regulatory and other third party approvals; and the time necessary
to satisfy the conditions to the closing of the transaction. These
dates may change for a number of reasons, including the inability
to secure necessary regulatory, court or other third party
approvals in the time assumed or the need for additional time to
satisfy the conditions to the completion of the transaction. As a
result of the foregoing, readers should not place undue reliance on
the forward-looking statements and information concerning these
times. Although we believe that the expectations and assumptions on
which such forward-looking statements and information are based are
reasonable, undue reliance should not be placed on the
forward-looking statements and information because we can give no
assurance that they will prove to be correct. Since forward-looking
statements and information relating to the proposed transaction
address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number
of factors and risks. There are risks also inherent in the nature
of the proposed transaction, including: failure to realize
anticipated synergies or cost savings; risks regarding the
integration of the two entities; incorrect assessments of the
values of the other entity; and failure to obtain any required
regulatory and other third party approvals (or to do so in a timely
manner). The foregoing important factors are not exhaustive. Many
of these risk factors are discussed in further detail throughout
Suncor's second quarter 2009 Management's Discussion and Analysis
and in the company's Annual Information Form/Form 40-F on file with
Canadian securities commissions at http://www.sedar.com/ and the
United States Securities and Exchange Commission (SEC) at
http://www.sec.gov/. Readers are also referred to the risk factors
described in other documents that Suncor files from time to time
with securities regulatory authorities. Copies of these documents
are available upon request without charge from the company. Suncor
Energy Inc. is an integrated energy company headquartered in
Calgary, Alberta. Suncor's oil sands business, located near Fort
McMurray, Alberta, extracts and upgrades oil sands and markets
refinery feedstock and diesel fuel, while operations throughout
western Canada produce natural gas. Suncor also operates a refining
and marketing business which includes refining, retail, pipeline
and distribution operations in Ontario, Canada and in Colorado and
Wyoming in the United States. Suncor's common shares (symbol: SU)
are listed on the Toronto and New York stock exchanges. Suncor
Energy (U.S.A.) Inc. is an authorized licensee of the Shell(R) and
Phillips 66(R) brand and marks in the state of Colorado. Sunoco in
Canada is separate and unrelated to Sunoco in the United States,
which is owned by Sunoco, Inc. of Philadelphia. A full copy of
Suncor's second quarter report to shareholders and the financial
statements and notes (unaudited) can be obtained at
http://www.suncor.com/financialreporting or by calling
1-800-558-9071 toll-free in North America. To listen to the
conference call discussing Suncor's second quarter results, visit
http://www.suncor.com/webcasts. DATASOURCE: Suncor Energy Inc.
CONTACT: about Suncor Energy Inc. please visit our web site at
http://www.suncor.com/; Investor inquiries: John Rogers, (403)
269-8670; Media inquiries: Shawn Davis, (403) 920-8379
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