Annual Report

2021
Our purpose

To provide
trusted energy
that enhances
people’s lives,
while caring for
each other and
the earth

Contents
1 2021 Highlights
2 Message to Shareholders
9 2022 Corporate Guidance
10 Advisories
14 Management’s Discussion and
Analysis
82 Management’s Statement of
Responsibility for Financial Reporting
83 Management’s Report on Internal
Control over Financial Reporting
84 Independent Auditor’s Report
87 Audited Consolidated Financial
Statements and Notes
136 Supplemental Financial and
Operating Information
160 Share Trading Information

161 Leadership and Board Members

2021 Highlights
Adjusted funds from operations Production
($ millions) (mboe/d)

Earnings (loss) Shareholder returns

($ millions) ($ millions)

Accelerated debt Leveraged physically Executed on key

reduction and returns integrated assets to strategic initiatives
to shareholders maximize value

> Fortified balance sheet through > Generated record annual Oil Sands > Assumed operatorship of Syncrude
highest annual pace of debt adjusted funds from operations > Increased ownership in Terra Nova
reduction > Achieved record In Situ production and moved forward with the Asset
> Increased dividend by 100% in the > Delivered industry-leading refinery Life Extension Project
fourth quarter utilization > Achieved annual targeted free
> Repurchased 5.5% of Suncor’s > Generated second-highest annual funds flow growth through key
common shares, the highest annual adjusted funds from operations strategic initiatives
rate of common share repurchases > Invested in clean technology and
low-emissions energy

1 Includes the impacts of the Government of Alberta’s mandatory production curtailments.

2 Includes the impacts of the COVID-19 pandemic.
3 Non-GAAP financial measures or contains non-GAAP financial measures. Refer to the Advisories section of this Annual Report and Suncor’s Management’s Discussion and Analysis (MD&A) dated February 23, 2022.
4 Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted operating earnings (loss) and adjusted funds from (used in)
operations, respectively, to better distinguish the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains
unchanged and therefore no prior periods were restated.
5 Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair
value in other income (loss) 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.
6 Dividends and share repurchases per share divided by average share price.

Annual Report 2021 Suncor Energy Inc. 1

Message to Shareholders

Mark Little
President and
Chief Executive Officer

2021 was a pivotal year for Suncor, which saw us clearly in the company’s history – 11% higher than the previous
articulating our strategy, strengthening our balance record achieved in the first quarter of 2014. We’re focused
sheet and re-focusing on operational excellence. Reliable on growing the business through investments in high-
performance and strong execution across all assets return initiatives that enhance margins, improve business
during the year was, however, impacted by late December processes and optimize performance.
operational incidents at Syncrude and Firebag. We Confidence in our ability to generate sustainable and
continue to enhance our integrated business model, increasing cash flow led us to accelerate debt reduction
optimizing the value captured from every barrel produced and our share repurchase program while doubling our
as demonstrated by increased realizations and margins dividend. In doing so, we delivered competitive returns to
during the year. our investors, and returned 38% of our adjusted funds from
When combined with higher crude oil and refined product operations or 10% cash yield to shareholders based on our
realizations from the improved business environment, 2021 average market capitalization, in the form of dividends
we generated adjusted operating earnings of $3.8 billion and share buybacks.
and $10.3 billion in adjusted funds from operations – the
second-highest adjusted funds from operations in the
company’s history. On a per share basis, fourth quarter
adjusted funds from operations were the highest ever

The benefits of our integrated model

Long-life, Integrated value chain Midstream and logistics Maximize refinery

low-decline facilitates production of network captures output through
assets higher-value products global-based pricing strong sales channels

2 Annual Report 2021 Suncor Energy Inc.

 Focus on improving operations and increasing
cash flow generation
We increased annual production by approximately declines and the sale of our interest in Golden Eagle. The
5.3% to 731,700 barrels of oil equivalent per day (boe/d). E&P business delivered $1.5 billion in adjusted funds from
The completed debottlenecking project at Firebag and operations and continues to provide us with geographic
increased production from MacKay River, led to Oil Sands diversification across high-margin, low-risk basins and
production of 644,200 boe/d, 9% higher than 2020 and the consistent cash flow. In 2021, we restructured the Terra
second-highest Oil Sands production on record – even as Nova project ownership and moved forward with the Asset
we completed the largest annual maintenance program in Life Extension (ALE) Project. We anticipate a safe return to
the company’s history. At the end of the year, we resumed operations before the end of 2022.
two-train operations at Fort Hills and we’re on track to We also reached a conditional agreement to increase our
operate the Fort Hills asset at average utilization rates of interest in White Rose (by 12.5% to approximately 40%),
90% throughout 2022. We upgraded 73% of production subject to a number of conditions including an economic
to higher-value synthetic crude oil, and leveraged the restart decision for the West White Rose project by mid-
integration of Suncor’s upstream and downstream 2022. Our investment decisions in these projects are based
businesses to maximize value. on their capacity for accretive free funds flow generation
Our Exploration and Production (E&P) assets averaged and high returns.
87,500 boe/d production, reflecting natural reservoir

Annual Report 2021 Suncor Energy Inc. 3

 Record Oil Sands Adjusted
Funds From Operations

Record production
from In Situ

Syncrude operatorship

Our downstream business continues to be industry- over a year ago – in which we evaluated ourselves against
leading in both performance and cash flow generation. leading global supermajors. The resulting insights
As consumer demand recovered during the year, our prompted us to make key changes to strengthen our
refinery crude throughput of 415,500 barrels per day processes and talent moving forward. These included re-
(bbls/d) helped realize $3.3 billion in adjusted funds from structuring the senior leadership talent on the executive
operations. Refinery utilization of 89% was over 12% higher team to include more people with deep operational
than the Canadian average and approximately 4% higher experience at the table. We also created a stronger and
than the North American average1. Strong downstream centralized Operational Risk Management organization,
performance contributes to our ability to deliver reliable led by experienced operators to centralize control and
energy and be there for our customers – like we were leadership for analyzing process hazards and driving
during the floods in British Columbia – as we fulfil our improvements and standardization. Even though it is still
purpose: to provide trusted energy that enhances people’s early days in our journey, these are fundamental changes
lives, while caring for each other and the earth. to increase competitiveness and drive excellence. A fatality
at our Oil Sands Base plant in early 2022 underscores the
Our operational excellence journey was advanced through
critical importance of this work.
a benchmarking exercise – led by our operations leaders

Structural Downstream
Advantage

Geographical advantage

Feedstock flexibility

Heavy crude capabilities

Competitive sales channels

1 Sources: Canada Energy Regulator and U.S. Energy Administration.

4 Annual Report 2021 Suncor Energy Inc.
 Competitive returns for shareholders
The operational and financial achievements of 2021 and increased our share repurchase program, repurchasing
translated into a significant improvement in the strength $2.3 billion of our common shares (5.5% of the company’s
of Suncor’s balance sheet. We were able to reduce our net common shares or 84 million common shares) during 2021.
debt to 2019 levels, a reduction of 18% or $3.7 billion. And The progress made during the year and management’s
we delivered competitive shareholder returns, sending back confidence in the company’s ability to generate sustainable
$3.9 billion through share repurchases and dividends. We and increasing cash flow and deliver on our strategy were
increased the dividend by 100% in the fourth quarter of behind these decisions.
2021, to an annualized rate of $1.68 per common share –

Maximized shareholder returns and fortified balance sheet

Annual Report 2021 Suncor Energy Inc. 5

The road to $2.15B free funds flow growth – 9 strategic initiatives

1 Supply, marketing and 4 Mine optimization – 7 Co-generation at

trading optimization Digital mine & Base Plant & Forty Mile
autonomous haulage Wind Power Project
2 Suncor/Syncrude systems (AHS)
interconnecting pipelines 8 Asset debottlenecking
5 Supply chain
3 Tailings management – management 9 Digital technology
Permanent Aquatic adoption – leveraging
Storage Structure (PASS) 6 Business process big data to create value
transformation

Structural, long-term improvements drive value

Despite the volatility of recent times, we remain committed consistent processes enterprise-wide to drive savings and
to the structural long-term improvements and strategic make better and faster decisions. An example of this work
investments we are making to our business to increase is our business process transformation initiative, as we
productivity and lower our overall cost structure – leverage technology to standardize our data and processes
investments central to both our 2021 performance and our into one overarching system. Standard systems and
long-term resiliency. Becoming the operator of Syncrude on processes may appear mundane, but the savings from this
September 30, was a critical step in this journey – driving initiative are significant. Annual free funds flow generation
improved performance, greater integration, efficiencies and is expected to increase by $250 million by 2023, largely
competitiveness across our Oil Sands assets. In total, we resulting from efficiencies realized as automated systems
expect to capture $300 million of annual gross synergies replace complex and time-consuming manual processes
and we’re on track to realize $100 million of these annual and eliminate organizational silos.
gross synergies in 2022. Physically connecting these assets The interconnecting pipelines and digital transformation
– via the interconnecting pipelines between the Syncrude represent components of our long-term strategy to grow
site and Oil Sands Base – also adds to the company’s the business by focusing not on mega-projects, but on
operational flexibility and will support stronger reliability. low-capital intensity investment that helps reduce costs and
As part of our evolution, we continue to harness digital improve margin capture. Exiting 2021, we have realized
technology capabilities to improve the safety, reliability, approximately $465 million in annual incremental value
productivity and environmental performance of our from these initiatives and expect to build on this value with
operations. Growing our digital capability means we can an additional $400 million in 2022.
use real-time data analytics to improve reliability, create

6 Annual Report 2021 Suncor Energy Inc.

 Energy pathways, partnerships support
long-term resilience
2021 also saw us formalize our strategic objective to be a In addition, we’re partnering with others to help as we look
net-zero GHG emissions company by 2050. A company- to develop our reliable and abundant sources of energy
wide team, with support and input from Suncor’s Board responsibly and expand into other promising opportunities
of Directors, did a ground-up refresh and review of the to increase shareholder returns. This past year saw us
company’s entire business to develop a concrete – and announce a new proposed partnership with ATCO to
economic – path forward. The goal is to advance pragmatic advance a world-scale clean hydrogen project, and we
and highly economic investments in line with – or synergistic increased our investment in carbon capture and storage
with – our core capabilities. We identified areas where technology with an equity investment in Svante Inc. and
we have existing lines of business and expertise that we the Varennes Carbon Recycling biofuels facility. We also
can leverage – for example in hydrogen, electricity and were a founding member of the new Oil Sands Pathways
low-carbon fuels – alongside ways to lower emissions and to Net Zero alliance, a consortium of Canadian oil sands
costs in our base business. We also had to meet two key companies with a common interest to find realistic and
criteria: to drive investor returns by improving the cost workable solutions to the challenge of climate change.
performance and margin capture of our base business while A partnership of which I am particularly proud is Astisiy, our
strengthening our overall environmental performance. historic collaboration between Suncor and eight Indigenous
Our strategy outlines three complementary approaches communities in the Regional Municipality of Wood Buffalo
to get to net-zero: reducing emissions from our base that acquired a 15% stake in the Northern Courier Pipeline.
business through energy efficiency, fuel switching and The pipeline, which connects the Fort Hills asset to Suncor’s
carbon capture and storage; expanding lines of business East Tank Farm asset, is now operated by Suncor. This
in the low emissions power, renewable fuels and hydrogen investment and agreement, unprecedented in this industry,
sectors; and working with our customers, suppliers and is the result of years of collaboration and negotiations
other stakeholders on reducing emissions. Our competitive among all partners, and is expected to provide long-term,
advantage is our ability to leverage our existing experience stable revenues that will benefit the communities for
and expertise across all three avenues. decades to come.

Historic partnership between First Nations, Métis communities and Suncor

• Athabasca Chipewyan First Nation • Fort McKay Métis Nation

• Chipewyan Prairie First Nation • McMurray Métis

• Conklin Métis Local 193 • Fort McMurray #468

First Nation
• Fort Chipewyan Métis Local #125
• Willow Lake Métis Nation

Annual Report 2021 Suncor Energy Inc. 7

 Looking ahead
We enter 2022 with clear objectives and remain steadfast in
our focus on safety, operational excellence, capital and cost
I remember and pay tribute
discipline, increasing shareholder returns and delivering a
more resilient future for Suncor. to Mel Benson, a member of
We anticipate continued strong markets driven by rising the Beaver Lake Cree Nation
consumer demand and are targeting upstream production and a former Suncor Board
of 750,000 to 790,000 boe/d, approximately 5% higher than member for 21 years, who we
2021 levels.
lost this past October.
We’ll continue to invest in the business to grow cash flow
with a planned capital spend of $4.7 billion – 6% lower than
our previously announced $5 billion capital program ceiling.
To the Suncor team, thank you for your hard work, innovation
Spending will be directed towards sustaining projects, such as
and for continuing to evolve and learn as we work with our
planned maintenance and tailings optimizations, and economic
diverse stakeholders. When I look at our people – and what
investments in the Base Plant Cogeneration, Forty Mile Wind
we have already achieved – I know we can create and deliver
Power and Terra Nova Asset Life Extension projects and In
strong value for you, our shareholders. On behalf of all of us
Situ well pads that are expected to generate high returns. We
at Suncor, thank you for your continued support.
remain committed to creating shareholder value. We plan to do
this by strengthening our balance sheet through sustainable
dividend increases, ongoing debt reduction and continued
share buybacks from excess free funds flow.
As I close, I would like to express my gratitude to Suncor’s
Board of Directors who challenge the executive leadership
team to improve our operations, financial performance Mark Little
and responsibly grow, and who are outstanding stewards President and Chief Executive Officer
of stakeholders’ interests. In so doing, I remember and pay Suncor Energy
tribute to Mel Benson, a member of the Beaver Lake Cree
Nation and a former Suncor Board member for 21 years,
who we lost this past October.

8 Annual Report 2021 Suncor Energy Inc.

2022 Corporate Guidance

The following table highlights forecasts from Suncor’s 2022 Full Year Outlook and
actual results for the year ended December 31, 2021. For further details regarding
Suncor’s 2022 Full Year Outlook, including certain assumptions, see www.suncor.com/
guidance. See also the Advisories section of this Annual Report.

2021 Full Year Outlook Actual Year Ended 2022 Full Year Outlook
October 27, 2021 December 31, 2021 February 2, 2022

Oil Sands operations (bbls/d)1 410,000 – 445,000 426,500 395,000 – 435,000

Fort Hills (bbls/d) Suncor working interest of 54.11% 45,000 – 55,000 50,700 85,000 – 100,000

Syncrude (bbls/d) Suncor working interest of 58.74% 170,000 – 185,000 167,000 175,000 – 190,000

Exploration and Production (boe/d) 80,000 – 95,000 87,500 75,000 – 85,000

Oil Sands operations cash operating costs ($/bbl) $26.00 – $28.50 $25.90 $25.00 – $28.00

Fort Hills cash operating costs ($/bbl) $37.00 – $42.00 $41.35 $23.00 – $27.00

Syncrude cash operating costs ($/bbl) $32.00 – $35.00 $35.20 $31.00 – $34.00

Refinery utilization2 90% – 96% 89% 92% – 96%

1 Oil Sands operations production includes synthetic crude oil, diesel and bitumen and excludes Fort Hills PFT bitumen and Syncrude synthetic crude oil
production. These ranges reflect the integrated upgrading and bitumen production performance risk.

2 Refinery utilization is based on the following crude processing capacities: Montreal – 137,000 bbls/d; Sarnia – 85,000 bbls/d; Edmonton – 146,000 bbls/d;
and Commerce City – 98,000 bbls/d.

Capital Expenditures1

2022 Full Year Outlook % Economic

($ millions) February 2, 2022 Investment 2

Upstream Oil Sands 3,200 – 3,350 25%

Upstream Exploration and Production 400 – 450 95%

Total Upstream 3,600 – 3,800 30%

Downstream 700 – 850 10%

Corporate 200 – 250 75%

Total 4,700 30%

1 Capital expenditures exclude capitalized interest of approximately $180 million.

2 Economic Investment capital expenditures include capital investments that result in an increase in value through adding reserves, improving processing
capacity, utilization, cost or margin, including associated infrastructure. Balance of capital expenditures represents Asset Sustainment and Maintenance
capital expenditures, which include capital investments that deliver on existing value by: ensuring compliance or maintaining relations with regulators and
other stakeholders; maintaining current processing capacity; and delivering existing developed reserves.

Annual Report 2021 Suncor Energy Inc. 9

Advisories
All financial information in the preceding sections of this Annual Report is reported in Canadian dollars, unless otherwise
noted. Production volumes are presented on a working interest basis, before royalties, unless otherwise noted, except for
Libya, which is presented on an economic basis. References to “we”, “our”, “Suncor”, or “the company” mean Suncor Energy
Inc., and the company’s subsidiaries and interests in associates and jointly controlled entities, unless the context requires
otherwise. The use of such terms in any statement herein does not mean that they apply to Suncor Energy Inc. or any
particular affiliate, and does not waive the corporate separateness of any affiliate. For further clarity, Suncor Energy Inc.
does not directly operate or own assets in the U.S.

Forward-Looking Information
The preceding sections of this Annual Report contain 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 are based on Suncor’s current expectations, estimates, projections and
assumptions that were made by the company in light of 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; 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. All statements and information that
address expectations or projections about the future, and 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, future financing and capital activities, and the expected impact of future commitments are
forward looking statements. Some of the forward looking statements 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”, “future”, “promise”, “forecast”, “potential”, “opportunity”, “would”
and similar expressions. Forward looking statements in the preceding sections of this Annual Report include references to:
• Suncor’s strategic objective to become a net-zero GHG emissions company by 2050 and the plans Suncor has to achieve
this objective;
• The company’s expectation that it will operate the Fort Hills asset at average utilization rates of 90% throughout 2022;
• Expectations about Terra Nova and the ALE Project, including the expectation that Terra Nova will have a safe return to
operations before the end of 2022;
• Suncor’s strategies, including: its continued commitment to structural long-term improvements and strategic investments
with the goal of increasing productivity and lowering its overall cost structure; that it will remain steadfast in its focus on
safety, operational excellence, capital and cost discipline to increase shareholder returns and deliver a more resilient future
for Suncor; and Suncor’s commitment to create shareholder value and the manner in which it intends to do so;
• Expectations about Syncrude, including the expectation that Suncor will capture $300 million of annual gross synergies
and that it is on track to realize $100 million of these gross annual synergies in 2022 and that the physically connection
between the assets will add to the company’s operational flexibility and will support stronger reliability;
• Statements regarding the Oil Sands Pathways to Net Zero alliance, including the goals, expectations regarding timing
and the expected pathways the alliance will take to address GHG emissions;
• Suncor’s expectation that the Northern Courier Pipeline will provide the eight Indigenous communities (which Suncor
has partnered with) long-term, stable revenue for decades to come;
• Suncor’s expectation that it will increase annual free funds flow generation by $250 million by 2023 as a result of
efficiencies from standard systems and processes;
• The expected benefits from Suncor’s digital transition and interconnecting pipelines, including the $400 million of annual
incremental value expected to be realized from initiatives in 2022;
• Statements about Suncor’s free funds flow growth and the 9 strategic initiatives that it expects to contribute to such free
funds flow growth;

10 Annual Report 2021 Suncor Energy Inc.

• Expectations regarding proposed pipelines;
• Suncor’s reserves and reserves life estimates and nameplate capacities;
• Suncor’s expectation regarding its technology investments, including the potential benefits therefrom, as well as
expectations regarding Suncor’s proposed partnership with ATCO on a world-scale clean hydrogen project, its equity
investment in Svante Inc., its investment in the Varennes Carbon Recycling biofuels facility and the economic investments
in the Base Plant Cogeneration, Forty Mile Wind Power and Terra Nova Asset Life Extension projects and In Situ well pads
that are expected to generate high returns; and
• Suncor’s outlook for 2022 and beyond, Suncor’s 2022 Corporate Guidance, Suncor’s planned capital spend of $4.7 billion
and projects to which Suncor’s 2022 capital expenditures are anticipated to be directed.
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. The financial and operating performance of the company’s reportable operating segments, specifically
Oil Sands, Exploration and Production, and Refining and Marketing, may be affected by a number of factors.
Factors that affect our Oil Sands segment include, but are not limited to, volatility in the prices for crude oil and other
production, and the related impacts of fluctuating light/heavy and sweet/sour crude oil differentials; changes in the
demand for refinery feedstock and diesel fuel, including the possibility that refiners that process our proprietary
production will be closed, experience equipment failure or other accidents; our ability to operate our Oil Sands facilities
reliably in order to meet production targets; the output of newly commissioned facilities, the performance of which may
be difficult to predict during initial operations; our dependence on pipeline capacity and other logistical constraints, which
may affect our ability to distribute our products to market and which may cause the company to delay or cancel planned
growth projects in the event of insufficient takeaway capacity; our ability to finance Oil Sands economic investment and
asset sustainment and maintenance capital expenditures; the availability of bitumen feedstock for upgrading operations,
which can be negatively affected by poor ore grade quality, unplanned mine equipment and extraction plant maintenance,
tailings storage, and in situ reservoir and equipment performance, or the unavailability of third party bitumen; changes
in operating costs, including the cost of labour, natural gas and other energy sources used in oil sands processes; and
our ability to complete projects, including planned maintenance events, both on time and on budget, which could be
impacted by competition from other projects (including other oil sands projects) for goods and services and demands on
infrastructure in Alberta’s Wood Buffalo region and the surrounding area (including housing, roads and schools).
Factors that affect our Exploration and Production segment include, but are not limited to, volatility in crude oil and natural
gas prices; operational risks and uncertainties associated with oil and gas activities, including unexpected formations or
pressures, premature declines of reservoirs, fires, blow outs, equipment failures and other accidents, uncontrollable flows
of crude oil, natural gas or well fluids, and pollution and other environmental risks; adverse weather conditions, which
could disrupt output from producing assets or impact drilling programs, resulting in increased costs and/or delays in
bringing on new production; political, economic and socio economic risks associated with Suncor’s foreign operations,
including the unpredictability of operating in Libya due to ongoing political unrest; and market demand for mineral rights
and producing properties, potentially leading to losses on disposition or increased property acquisition costs.
Factors that affect our Refining and Marketing segment include, but are not limited to, fluctuations in demand and supply
for refined products that impact the company’s margins; market competition, including potential new market entrants;
our ability to reliably operate refining and marketing facilities in order to meet production or sales targets; and risks and
uncertainties affecting construction or planned maintenance schedules, including the availability of labour and other
impacts of competing projects drawing on the same resources during the same time period.
Additional risks, uncertainties and other factors that could influence the financial and operating performance of all of
Suncor’s operating segments and activities include, but are not limited to, changes in general economic, market and
business conditions, such as commodity prices, interest rates and currency exchange rates (including as a result of
demand and supply effects resulting from the COVID-19 pandemic and the actions of OPEC+); fluctuations in supply and
demand for Suncor’s products; the successful and timely implementation of capital projects, including growth projects
and regulatory projects; risks associated with the development and execution of Suncor’s projects and the commissioning
and integration of new facilities; the possibility that completed maintenance activities may not improve operational
performance or the output of related facilities; the risk that projects and initiatives intended to achieve cash flow growth
and/or reductions in operating costs may not achieve the expected results in the time anticipated or at all; 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; actions by government authorities, including
the imposition or reassessment of, or changes to, taxes, fees, royalties, duties, tariffs, allotment and other government-

Annual Report 2021 Suncor Energy Inc. 11

imposed compliance costs, and mandatory production curtailment orders and changes thereto; changes to laws and
government policies that could impact the company’s business, including environmental (including climate change), royalty
and tax laws and policies; the ability and willingness of parties with whom we have material relationships to perform their
obligations to us; the unavailability of, or outages to, third party infrastructure that could cause disruptions to production or
prevent the company from being able to transport its products; the occurrence of a protracted operational outage, a major
safety or environmental incident, or unexpected events such as fires (including forest fires), equipment failures and other
similar events affecting Suncor or other parties whose operations or assets directly or indirectly affect Suncor; the potential
for security breaches of Suncor’s information technology and infrastructure by malicious persons or entities, and the
unavailability or failure of such systems to perform as anticipated as a result of such breaches; security threats and terrorist
or activist activities; the risk that competing business objectives may exceed Suncor’s capacity to adopt and implement
change; risks and uncertainties associated with obtaining regulatory, third party and stakeholder approvals outside of
Suncor’s control for the company’s operations, projects, initiatives, and exploration and development activities and the
satisfaction of any conditions to approvals; the potential for disruptions to operations and construction projects as a result
of Suncor’s relationships with labour unions that represent employees at the company’s facilities; our ability to find new oil
and gas reserves that can be developed economically; the accuracy of Suncor’s reserves and future production estimates;
Suncor’s ability to access capital markets at acceptable rates or to issue securities at acceptable prices; maintaining an
optimal debt to cash flow ratio; the success of the company’s risk management activities using derivatives and other
financial instruments; the cost of compliance with current and future environmental laws, including climate change laws;
risks relating to increased activism and public opposition to fossil fuels and oil sands; risks and uncertainties associated
with closing a transaction for the purchase or sale of a business, asset or oil and gas property, including estimates of the
final consideration to be paid or received; the ability and willingness of counterparties to comply with their obligations in a
timely manner; risks associated with joint arrangements in which the company has an interest; risks associated with land
claims and Indigenous consultation requirements; the risk that the company may be subject to litigation; the impact of
technology and risks associated with developing and implementing new technologies; and 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 that is needed to reduce the margin of error and increase the level of accuracy. The
foregoing list of important factors is not exhaustive.
Many of these risk factors and other assumptions related to Suncor’s forward-looking statements are discussed in further
detail throughout the MD&A, including under the heading Risk Factors, and the company’s most recent Annual Information
Form dated February 23, 2022 available at www.sedar.com and Form 40 F dated February 24, 2022 available at www.sec.gov,
which risk factors are incorporated by reference herein. Readers are also referred to the risk factors and assumptions
described in other documents that Suncor files from time to time with securities regulatory authorities. Copies of these
documents are available without charge from the company.
The forward looking statements contained in this Annual Report are made as of the date of this Annual Report. Except as
required by applicable securities laws, we assume no obligation to update publicly or otherwise revise any forward looking
statements or the foregoing risks and assumptions affecting such forward looking statements, whether as a result of new
information, future events or otherwise.
Suncor’s corporate guidance is based on the following assumptions around oil prices: WTI, Cushing of US$80.00/bbl; Brent,
Sullom Voe of US$84.00/bbl; and WCS, Hardisty of US$68.00/bbl. In addition, the guidance is based on the assumption of a
natural gas price (AECO C Spot) of Cdn$3.75 per gigajoule, US$/Cdn$ exchange rate of $0.80 and synthetic crude oil sales
from Oil Sands operations of 310,000 to 330,000 bbls/d. Assumptions for the Oil Sands operations, Syncrude and Fort Hills
2022 production outlook include those relating to reliability and operational efficiency initiatives that the company expects
will minimize unplanned maintenance in 2022. Assumptions for the Exploration and Production 2022 production outlook
include those relating to reservoir performance, drilling results and facility reliability. Factors that could potentially impact
Suncor’s 2022 corporate guidance include, but are not limited to: Bitumen supply – Bitumen supply may be dependent on
unplanned maintenance of mine equipment and extraction plants, bitumen ore grade quality, tailings storage and in situ
reservoir performance; Third party infrastructure – Production estimates could be negatively impacted by issues with third
party infrastructure, including pipeline or power disruptions, that may result in the apportionment of capacity, pipeline or
third party facility shutdowns, which would affect the company’s ability to produce or market its crude oil; Performance
of recently commissioned facilities or well pads – Production rates while new equipment is being brought into service
are difficult to predict and can be impacted by unplanned maintenance; Unplanned maintenance – Production estimates
could be negatively impacted if unplanned work is required at any of our mining, extraction, upgrading, in situ processing,
refining, natural gas processing, pipeline, or offshore assets; Planned maintenance events – Production estimates,
including production mix, could be negatively impacted if planned maintenance events are affected by unexpected events
or are not executed effectively. The successful execution of maintenance and start up of operations for offshore assets, in
particular, may be impacted by harsh weather conditions, particularly in the winter season; Commodity prices – Declines

12 Annual Report 2021 Suncor Energy Inc.

in commodity prices may alter our production outlook and/or reduce our capital expenditure plans; Foreign operations –
Suncor’s foreign operations and related assets are subject to a number of political, economic and socio economic risks;
Government Action –Further action by the Government of Alberta regarding production curtailment may impact Suncor’s
Corporate Guidance and such impact may be material; and COVID-19 Pandemic – Suncor’s Corporate Guidance is subject
to a number of external factors beyond our control that could significantly influence this outlook, including the status of
the COVID-19 pandemic and future waves, and any associated policies around current business restrictions, shelter-in-
place orders, or gatherings of individuals. As a result of the volatile business environment and the uncertain pace of an
economic recovery it is challenging to determine the overall outlook for crude oil and refined product demand, which
remains dependent on the status of the COVID-19 pandemic.

Non-GAAP Financial Measures

Certain financial measures used in the preceding sections of this Annual Report, namely adjusted operating earnings
(loss), adjusted funds from operations, Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude
cash operating costs, free funds flow and net debt, are not prescribed by GAAP. Adjusted operating earnings (loss) is
a non GAAP financial measure that adjusts net earnings (loss) for significant items that are not indicative of operating
performance. Management uses adjusted operating earnings (loss) to evaluate operating performance because
management believes it provides better comparability between periods. Adjusted operating earnings (loss) is defined in
the Advisories – Non GAAP Financial Measures section of the MD&A and is reconciled to GAAP measures in the Financial
Information section of Suncor’s annual management’s discussion and analysis for each respective year, each of which
are available on the company’s profile at www.sedar.com and such sections are incorporated by reference herein. Oil
Sands operations cash operating costs, Fort Hills cash operating costs and Syncrude cash operating costs are defined in
the Advisories – Non GAAP Financial Measures section of the MD&A and reconciled to GAAP measures in the Segment
Results and Analysis section of the MD&A, each of which are available on the company’s profile at www.sedar.com and such
sections are incorporated by reference herein. Adjusted funds from (used in) operations is a non GAAP financial measure
that adjusts a GAAP measure – cash flow provided by operating activities – for changes in non cash working capital, which
management uses to analyze operating performance and liquidity. Adjusted funds from (used in) operations is defined
and reconciled in the Advisories – Non GAAP Financial Measures section of Suncor’s annual management’s discussion
and analysis for each respective year each of which are available on the company’s profile at www.sedar.com and such
sections are incorporated by reference herein.. Free funds flow is calculated by taking adjusted funds from operations and
subtracting capital expenditures, including capitalized interest. Management uses free funds flow to measure the capacity
of the company to increase returns to shareholders and to grow Suncor’s business. Net debt is a non-GAAP financial
measures that management uses to analyze the financial condition of the company. Net debt is equal to total debt less
cash and cash equivalents (a GAAP measure). Net debt is defined and reconciled in the Advisories – Non GAAP Financial
Measures section of the MD&A, which section is available on the company’s profile at www.sedar.com and incorporated
by reference herein. 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
financial 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.
Beginning in the fourth quarter of 2021, the company changed the label of operating earnings (loss) and funds from (used
in) operations to adjusted operating earnings (loss) and adjusted funds from (used in) operations respectively, to better
distinguish the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the
measures. The composition of the measures remains unchanged and therefore no prior periods were restated.

Reserves
Reserves information presented herein is presented as Suncor’s working interests (operating and non operating) before
deduction of royalties, and without including any royalty interests of Suncor, and is at December 31, 2021. For more
information on Suncor’s reserves, including definitions of proved and probable reserves, Suncor’s interest, the location of
the reserves and the product types reasonably expected, please see Suncor’s most recent Annual Information Form dated
February 23, 2022 available at www.sedar.com and www.sec.gov. Reserves data is based upon evaluations conducted by
independent qualified reserves evaluators.

Measurement Conversions
Certain crude oil and natural gas liquids volumes have been converted to mcfe on the basis of one bbl to six mcf. Also,
certain natural gas volumes have been converted to boe or mboe on the same basis. Refer to the Advisories –
Measurement Conversions section of the MD&A.

Annual Report 2021 Suncor Energy Inc. 13

Management’s Discussion
and Analysis
February 23, 2022

This Management’s Discussion and Analysis (MD&A) should

be read in conjunction with Suncor’s December 31, 2021
audited Consolidated Financial Statements and the
accompanying notes. Additional information about Suncor
filed with Canadian securities regulatory authorities and the
United States Securities and Exchange Commission (SEC),
including quarterly and annual reports and Suncor’s Annual
Information Form dated February 23, 2022 (the 2021 AIF),
which is also filed with the SEC under cover of Form 40-F, is
available online at www.sedar.com, www.sec.gov and on
our website at www.suncor.com. Information on or
connected to our website, even if referred to in this MD&A,
does not constitute part of this MD&A.
Suncor Energy Inc. has numerous direct and indirect
subsidiaries, partnerships and joint arrangements
(collectively, affiliates), which own and operate assets and
conduct activities in different jurisdictions. The terms “we”,
“our”, “Suncor”, or “the company” are used herein for
simplicity of communication and only mean there is an
affiliation with Suncor Energy Inc., without necessarily
identifying the specific nature of the affiliation. The use of
such terms in any statement herein does not mean they
apply to Suncor Energy Inc. or any particular affiliate, and
does not waive the corporate separateness of any affiliate.
For further clarity, Suncor Energy Inc. does not directly
operate or own assets in the U.S. For a list of abbreviations
that may be used in this MD&A, refer to the
Advisories – Common Abbreviations section of this MD&A.

14 Annual Report 2021 Suncor Energy Inc.

MD&A – Table of Contents
16 Financial and Operating Summary
19 Suncor Overview
23 Financial Information
27 Segment Results and Analysis
42 Fourth Quarter 2021 Analysis
44 Quarterly Financial Data
47 Capital Investment Update
49 Financial Condition and Liquidity
54 Accounting Policies and Critical
Accounting Estimates
57 Risk Factors
68 Other Items
69 Advisories

Basis of Presentation Beginning in the fourth quarter of 2021, the company changed the label of
operating earnings (loss) and funds from (used in) operations to adjusted
Unless otherwise noted, all financial information has been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued operating earnings (loss) and adjusted funds from (used in) operations,
by the International Accounting Standards Board (IASB). respectively, to better distinguish the non-GAAP financial measures from the
comparable GAAP measures and better reflect the purpose of the measures.
All financial information is reported in Canadian dollars, unless otherwise The composition of the measures remains unchanged and therefore no prior
noted. Production volumes are presented on a working-interest basis, before periods were restated.
royalties, except for production volumes from the company ’s Libya operations,
which are on an economic basis. Measurement Conversions
Non-GAAP Financial Measures Crude oil and natural gas liquids volumes have been converted to mcfe on
the basis of one bbl to six mcf in this MD&A. Also, certain natural gas volumes
Certain financial measures in this MD&A – namely adjusted operating earnings
have been converted to boe or mboe on the same basis. Refer to the
(loss), adjusted funds from (used in) operations, metrics contained in return on
Advisories – Measurement Conversions section of this MD&A.
capital employed (ROCE) and ROCE excluding impairments, price realizations,
Oil Sands operations cash operating costs, Fort Hills cash operating costs,
Syncrude cash operating costs, refining and marketing margin, refining operating Risks and Forward-Looking Information
expense, free funds flow, discretionary free funds flow (deficit), net debt, total The company ’s business, reserves, financial condition and results of
debt, and last-in, first-out (LIFO) inventory valuation methodology and related operations may be affected by a number of factors, including, but not limited
per share or per barrel amounts or metrics that contain such measures – are not to, the factors described in the Risk Factors section of this MD&A.
prescribed by generally accepted accounting principles (GAAP). Adjusted
operating earnings (loss), Oil Sands operations cash operating costs, Fort Hills This MD&A contains forward-looking information based on Suncor ’s current
cash operating costs, Syncrude cash operating costs and LIFO inventory valuation expectations, estimates, projections and assumptions. This information is subject
methodology are defined in the Advisories – Non-GAAP Financial Measures to a number of risks and uncertainties, including those discussed in this
section of this MD&A and reconciled to the most directly comparable GAAP
MD&A and Suncor ’s other disclosure documents filed with Canadian securities
measures in the Financial Information and Segment Results and Analysis sections
of this MD&A. ROCE, ROCE excluding impairments, price realizations, adjusted regulatory authorities and the SEC, many of which are beyond the company ’s
funds from (used in) operations, free funds flow, discretionary free funds flow control. Readers of this information are cautioned that actual results may
(deficit), net debt, total debt, refining and marketing margin, and refining differ materially from those expressed or implied by forward-looking information
operating expense are defined and reconciled, where applicable, to the most contained herein. Refer to the Advisories – Forward-Looking Information
directly comparable GAAP measures in the Advisories – Non-GAAP Financial section of this MD&A for information on the material risk factors and assumptions
Measures section of this MD&A. underlying the forward-looking information contained herein.

Annual Report 2021 Suncor Energy Inc. 15

1. Financial and Operating Summary
Financial Summary
Year ended December 31 ($ millions, except per share amounts) 2021 2020 2019

Gross revenues 41 133 24 900 39 866

Royalties (2 001) (238) (1 522)
Operating revenues, net of royalties 39 132 24 662 38 344
Net earnings (loss) 4 119 (4 319) 2 899
(1)
per common share 2.77 (2.83) 1.86
(2)(3)(4)
Adjusted operating earnings (loss) 3 805 (2 213) 4 418
(5)
per common share 2.56 (1.45) 2.83
(2)(3)
Adjusted funds from operations 10 257 3 876 10 818
(5)
per common share 6.89 2.54 6.94
Cash flow provided by operating activities 11 764 2 675 10 421
(5)
per common share 7.91 1.75 6.69
Dividends paid on common shares 1 550 1 670 2 614
per common share(5) 1.05 1.10 1.68
Weighted average number of common shares in millions – basic 1 488 1 526 1 559
Weighted average number of common shares in millions – diluted 1 489 1 526 1 561
(2)
ROCE (%) 8.6 (6.9) 4.9
(2)(6)
ROCE excluding impairments and impairment reversals (%) 8.2 (2.9) 10.0
(7)
Capital expenditures 4 411 3 806 5 436
Asset sustainment and maintenance 3 057 2 388 3 227
Economic investment 1 354 1 418 2 209
(2)
Discretionary free funds flow (deficit) 5 590 (228) 4 914
Balance sheet (at December 31)
Total assets 83 739 84 616 89 435
(2)
Net debt 16 149 19 814 16 010
(8)
Total long-term liabilities 36 726 38 310 36 856
(1) Represented on a basic and diluted per share basis.
(2) Non-GAAP financial measures or contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(3) Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted
operating earnings (loss) and adjusted funds from (used in) operations, respectively, to better distinguish the non-GAAP financial measures from
the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore
no prior periods were restated.
(4) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(5) Represented on a basic per share basis.
(6) ROCE excluding impairments and impairment reversals would have been 8.2% in 2019, excluding the impacts of the $1.116 billion deferred tax
recovery for the Alberta corporate income tax rate change in the second quarter of 2019.
(7) Excludes capitalized interest of $144 million in 2021, $120 million in 2020 and $122 million in 2019.
(8) Includes long-term debt, long-term lease liabilities, other long-term liabilities, provisions and deferred income taxes.

16 Annual Report 2021 Suncor Energy Inc.

Operating Summary
Year ended December 31 2021 2020 2019
(1)
Production volumes
Oil Sands – Upgraded – net SCO and diesel (mbbls/d) 468.6 466.2 485.6
Oil Sands – Non-upgraded bitumen (mbbls/d) 175.6 127.2 184.8
Exploration and Production (mboe/d) 87.5 101.7 106.8
Total 731.7 695.1 777.2
(2)(3)(4)
Average price realizations ($/boe)
SCO and diesel 77.73 43.83 70.68
(2)
Non-upgraded bitumen 53.80 22.37 45.71
Oil Sands crude sales basket (all products) 70.96 39.29 63.70
Exploration and Production Canada – Crude oil and natural gas liquids ($/bbl) 84.70 49.69 84.86
(5)
Exploration and Production International ($/boe) 82.16 50.28 81.22
Refinery crude oil processed (mbbls/d) 415.5 407.0 438.9
(6)
Refinery utilization (%)
Eastern North America 91 91 92
Western North America 87 86 98
Total 89 88 95
(3)(7)
Refining and marketing gross margin – FIFO ($/bbl) 36.85 25.30 40.45
(3)(7)
Refining and marketing gross margin – LIFO ($/bbl) 30.90 28.65 36.80
(1) Beginning in 2020, the company revised the presentation of its production volumes to aggregate production from each asset into the categories
of “Upgraded production” and “Non-upgraded bitumen production” to better reflect the integration among the company’s assets with no impact to
overall production volumes. Comparative periods have been updated to reflect this change.
(2) Beginning in 2020, the company revised the presentation of its Oil Sands price realizations to aggregate price realizations from each asset into the
categories of “SCO and diesel” and “Non-upgraded bitumen” to better reflect the integration among the company’s assets with no impact to
overall price realizations. Comparative periods have been updated to reflect this change. Beginning in 2020, the company revised its “Non­
upgraded bitumen” price realization to include midstream activities employed to optimize its logistics capacity and more accurately reflect the
performance of the product stream. Comparative periods have been restated to reflect this change.
(3) Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(4) Net of transportation costs, but before royalties.
(5) Exploration and Production International price realizations include the company’s U.K. and Norway assets and exclude Libya for all periods presented.
(6) Refinery utilization is the amount of crude oil run through crude distillation units, expressed as a percentage of the nameplate capacity of these units.
The Edmonton refinery crude processing capacity has increased to 146,000 bbls/d in 2021 from 142,000 bbls/d in 2020.
(7) Beginning in 2020, refining and marketing gross margins have been revised to better reflect the refining, product supply and rack forward
businesses. Prior periods have been restated to reflect this change.

Annual Report 2021 Suncor Energy Inc. 17

Financial and Operating Summary

Segment Summary
Year ended December 31 ($ millions) 2021 2020 2019

Net earnings (loss)

Oil Sands 2 147 (3 796) (427)
Exploration and Production 1 285 (832) 1 005
Refining and Marketing 2 178 866 3 000
Corporate and Eliminations (1 491) (557) (679)
Total 4 119 (4 319) 2 899
(1)(2)
Adjusted operating earnings (loss)
Oil Sands 2 151 (2 265) 1 672
Exploration and Production 890 13 1 141
Refining and Marketing 2 170 882 2 922
Corporate and Eliminations (1 406) (843) (1 317)
Total 3 805 (2 213) 4 418
(1)
Adjusted funds from (used in) operations
Oil Sands 6 846 1 986 6 061
Exploration and Production 1 478 1 054 2 143
Refining and Marketing 3 255 1 708 3 863
Corporate and Eliminations (1 322) (872) (1 249)
Total adjusted funds from operations 10 257 3 876 10 818
Change in non-cash working capital 1 507 (1 201) (397)
Cash flow provided by operating activities 11 764 2 675 10 421
(1) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.

18 Annual Report 2021 Suncor Energy Inc.

2. Suncor Overview
Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. Suncor’s operations include oil sands
development, production and upgrading; offshore oil and gas; petroleum refining in Canada and the U.S.; and the company’s Petro­
Canada retail and wholesale distribution networks (including Canada’s Electric Highway™, a coast-to-coast network of fast­
charging electric vehicle stations). Suncor is developing petroleum resources while advancing the transition to a low-emissions
future through investment in power, renewable fuels and hydrogen. Suncor also conducts energy trading activities focused
principally on the marketing and trading of crude oil, natural gas, byproducts, refined products and power. Suncor has been
recognized for its performance and transparent reporting on the Dow Jones Sustainability index, FTSE4Good and CDP. Suncor is
also listed on the UN Global Compact 100 stock index. Suncor’s common shares (symbol: SU) are listed on the Toronto Stock
Exchange (TSX) and the New York Stock Exchange (NYSE).

For a description of Suncor’s business segments, refer to the Segment Results and Analysis section of this MD&A.

Suncor’s Strategy
Delivering competitive and sustainable returns to shareholders is a top priority of the company and we aim to maximize
shareholder returns by focusing on operational excellence, underpinned by safety above all else, capital discipline through
investments in high-value projects, and our commitment to environmental stewardship and sustainability. We believe that our
commitment to capital discipline, our balance sheet strength and financial health provides the foundation for our capital allocation
framework, supporting long-term value creation and increasing returns to shareholders. We believe that Suncor is well
positioned to execute on these priorities due to the company’s competitive advantages: financial strength, an industry-leading
long-life, low-decline oil sands reserves base, an offshore business that provides geographically diversified cash flow, a highly
efficient, tightly integrated downstream business supported by competitive sales channels, and our investment in sustainability,
technology and innovation.

Key components of Suncor’s strategy include:

• Free funds flow growth through high-return investments – Suncor’s growth and development plan is focused on highly
economic projects and initiatives that are synergistic with our core capabilities and are expected to create long-term value for
the company through free funds flow growth. The company’s significant long-life, low-decline reserves base combined with
our industry expertise allows the company to execute improvement strategies at existing assets, such as digital mine
optimization, innovative tailings technology advancements and the replacement of the coke-fired boilers at Oil Sands Base
with a cogeneration facility. Further structural cost savings are being realized through supply chain optimization initiatives
and investments in technology for our marketing and trading business and core business systems, aimed at improving
operational efficiencies, structurally lowering costs and improving margin capture.

• Optimize value through integration and secured market access – From the ground to the gas station, Suncor optimizes
profit along each step of the value chain, through the regional strength of the company’s Oil Sands assets and the integration
with its midstream and refining assets. Our broad asset base and operational flexibility allows us to optimize the production
of higher-value SCO in the upstream, while our extensive logistics assets and sales channels, enhanced by our trading
and marketing expertise, drives additional value as equity barrels move down the value chain. Through this midstream and
marketing network and our geographical diversity, the company is able to maximize crude production and refinery
utilization by securing sales outlets while receiving global-based pricing for the majority of its production.

• Maximize value and structurally lower costs through operational excellence and reliability – Suncor aims to get the
most out of its assets through a focus on operational excellence, which means operating in a way that is safe, reliable, cost­
efficient and environmentally responsible, while continuing to practice capital discipline. We believe that focusing on
investments that generate structural reductions to our capital requirements, with a continued focus on improved productivity
and reliability, will drive down overall cost structures and sustainment capital requirements and are expected to help us
achieve maximum value from our operations. Suncor assuming operatorship of the Syncrude asset on September 30, 2021,
was a critical step towards structural cost reductions by driving greater integration, efficiencies and competitiveness
across the company’s Oil Sands assets. The interconnecting pipelines between Oil Sands Base and Syncrude add to the
company’s regional oil sands advantage, providing operational flexibility and supporting stronger reliability.

Annual Report 2021 Suncor Energy Inc. 19

Suncor Overview

• Be an industry leader in sustainable development and the global energy expansion – Suncor’s integrated approach to
sustainability includes leadership and industry collaboration in environmental performance, enhanced social responsibility
and safety, underpinned by strong governance and our commitment to creating value for our stakeholders. Our objective
is to be a net-zero greenhouse gas (GHG) emissions company by 2050 and we have set ambitious near-term goals to reduce
emissions across our value chain. We aim to substantially contribute to society’s net-zero goals by reducing emissions
across our base business, growing our low-emissions energy business, and working with others to reduce emissions. We
are expanding our low-emissions energy business by pursuing investments that are technologically mature, economically
viable and synergistic with our existing integrated value chain. Our investments in the energy expansion will complement our
existing core capabilities; increasing low carbon power generation, expanding into clean hydrogen production, and growing
our existing renewable liquid fuels business.

• Technology and people-enabled – Suncor is focused on shifting our culture and leveraging technology to improve
performance and reliability, which are central to our operational excellence journey. Unleashing the full potential of our
people and technology will be critical in achieving our environmental, operational and financial goals.

2021 Highlights
Suncor exceeded its return to shareholder targets for the • In 2021, demonstrating management’s confidence in the
year, repurchasing its common shares at the highest annual company’s ability to generate cash flows, the company
rate in the company’s history, and increasing the dividend cancelled $2.8 billion in bi-lateral credit facilities that were
by 100% in the fourth quarter, returning a total of no longer required, as they were entered into in March
$3.9 billion to shareholders. and April of 2020 to ensure access to adequate financial
• Suncor paid $1.6 billion of dividends in 2021, demonstrating resources in connection with the COVID-19 pandemic.
management’s confidence in the company’s ability to
In 2021, Suncor generated $10.3 billion of adjusted funds
generate sustainable and increasing cash flows and its from operations(1), the second-highest in the company’s
commitment to increasing shareholder returns. The history, reflecting the ability of its integrated business to
company increased its dividend per share by 100% in the deliver strong results. Cash flow provided by operating
fourth quarter, reinstating the quarterly dividend to activities in 2021 was the highest in the company’s history.
$0.42 per share, returning it to 2019 levels.
• In 2021, Suncor generated $10.257 billion in adjusted
• In 2021, the company accelerated its share repurchase funds from operations, or $6.89 per common share,
target, repurchasing the company’s common shares at the compared to $3.876 billion, or $2.54 per common share,
highest annual rate in the company’s history. In 2021, in the prior year. Cash flow provided by operating activities,
since the start of the company’s normal course issuer bid which includes changes in non-cash working capital, was
program (NCIB) in February 2021, the company $11.764 billion, or $7.91 per common share, in 2021,
repurchased $2.3 billion in common shares, representing compared to $2.675 billion, or $1.75 per common share,
approximately 84 million of its common shares at an in the prior year. The increased cash flows were a result of
average price of $27.45 per common share, or the the improved business environment and higher crude
equivalent of 5.5% of Suncor’s common shares as at oil production and refinery throughput in the current year,
January 31, 2021. despite the largest annual maintenance program in the
company’s history being successfully executed during the
• Subsequent to the end of the year, the company
year.
repurchased an additional 0.5% of its common shares up
to February 7, 2022, and renewed its NCIB, beginning • Suncor’s adjusted operating earnings(1) in 2021 were
February 8, 2022, and ending February 7, 2023, for the $3.805 billion, compared to an adjusted operating loss of
repurchase of up to approximately 5% of Suncor’s issued $2.213 billion in the prior year. Net earnings were $4.119
and outstanding common shares as at January 31, 2022. billion in 2021, compared to a net loss of $4.319 billion in
the prior year.
In 2021, Suncor accelerated its net debt(1) reduction targets,
reducing debt at the highest annual pace in the company’s Oil Sands delivered record annual adjusted funds from
history, returning to 2019 levels of net debt. operations of over $6.8 billion, including record In Situ
production, maximizing value through strong reliability
• In 2021, Suncor executed on its net debt reduction
and leveraging the strength of its integrated operations,
targets, reducing debt at the highest-ever annual pace,
while successfully executing the largest annual
resulting in a reduction of net debt by $3.7 billion to maintenance program in the company’s history.
$16.1 billion, returning to 2019 net debt levels. The
company continues to reduce its debt to achieve its 2025 • Oil Sands delivered record annual adjusted funds from
and 2030 targets, and subsequent to the end of the year, operations of $6.846 billion, driven by improved crude oil
completed an early redemption of its outstanding prices and strong reliability across its assets in 2021,
US$182 million 4.50% notes, originally scheduled to compared to $1.986 billion in the prior year.
mature in the second quarter of 2022.

(1) Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

20 Annual Report 2021 Suncor Energy Inc.

• In 2021, Suncor delivered total Oil Sands production of Exploration & Production (E&P) reinforces its focus on
644,200 bbls/d, the second highest Oil Sands production capital discipline by targeting low-cost projects that deliver
in the company’s history, driven by record performance significant returns, cash flow and long-term value.
from the company’s In Situ assets, including at Firebag, • In 2021, Suncor and the co-owners of the Terra Nova
following an increase to the nameplate capacity of the project finalized an agreement to restructure the project
facility in the prior year. ownership and move forward with the Asset Life Extension
• SCO production was 468,600 bbls/d in 2021, the second­ (ALE) Project, which is expected to extend production life
highest in the company’s history, driven by combined by approximately 10 years. As a result of the agreement,
upgrader utilization of 87% despite the impacts of Suncor increased its ownership in the project by
significant turnaround maintenance during the year, approximately 10% to 48%. The Terra Nova Floating,
demonstrating the value of the company’s asset integration Production, Storage and Offloading facility is dry-docked
and flexibility and reflecting a continued focus on in Spain undergoing maintenance work and is expected to
maximizing the value of its barrels. Non-upgraded bitumen sail back to Canada and return to operations before the
production was 175,600 bbls/d in 2021, an increase of end of 2022.
38% compared to the prior year, with the increase in non­ • Buzzard Phase 2, which will extend production life of the
upgraded bitumen production to market further supported existing Buzzard field, achieved first oil in the fourth quarter
by strong mining performance at Oil Sands Base, which of 2021. Buzzard Phase 2 is expected to reach its peak
resulted in less Firebag volumes utilized at the Upgrader production in 2022, adding approximately 12,000 boe/d
and overall higher Oil Sands operations production gross (approximately 3,500 boe/d net to Suncor) to existing
volumes. Buzzard production.
• Fort Hills resumed two-train operations late in the fourth • The company completed the sale of its 26.69% working
quarter of 2021. The company is on track to operate the interest in the Golden Eagle Area Development for gross
Fort Hills asset at average utilization rates of 90% proceeds of US$250 million net of closing adjustments and
throughout 2022. other closing costs, in addition to future contingent
• In 2021, the company focused on the safety and reliability consideration of up to US$50 million. The effective date of
of its operations by successfully executing the largest the sale was January 1, 2021. The sale reinforces Suncor’s
annual maintenance program in the company’s history continued focus on capital discipline and enables the
across its asset base, including the significant five-year company to allocate resources to core assets and maximize
planned turnaround at Oil Sands Base plant Upgrader 2 shareholder returns.
and significant turnaround activities at Syncrude. Suncor’s Refining and Marketing (R&M) segment achieved
The company made meaningful progress towards driving refinery utilization of 89% in 2021, consistently
synergies between its regional Oil Sands assets, while outperforming the Canadian refining industry average,
furthering its sustainability goals. despite turnarounds being completed across all of its
refineries and continued weakness in Canadian demand.
• On September 30, 2021, Suncor assumed the role of
• Suncor leveraged its refinery product mix, midstream
operator of the Syncrude asset, a critical step towards
logistics flexibility, strong domestic sales network including
driving greater integration, efficiencies and
integration with its retail network, export capabilities and
competitiveness across all Suncor-operated assets in the
storage capacity to deliver refinery crude throughput of
region, further strengthening the company’s regional oil
415,500 bbls/d in 2021, and industry-leading utilization
sands advantage. The joint venture owners expect that
rates of 89%, compared to 407,000 bbls/d and 88% in the
Suncor assuming operatorship will capture increased value
prior year.
for the owners through improved operational performance,
efficiency and competitiveness. • The company’s Canadian refineries outperformed the
Canadian refining industry average by over 12%(1) during
• During the year, Suncor, together with eight Indigenous
the year, despite turnarounds being completed across all of
communities, announced the formation of Astisiy Limited
the company’s refineries.
Partnership (Astisiy), which acquired a 15% equity
interest in the Northern Courier Pipeline. The Northern • R&M delivered $3.255 billion and $2.170 billion in adjusted
Courier Pipeline, which connects the Fort Hills asset to funds from operations and adjusted operating earnings
Suncor’s East Tank Farm, is now operated by Suncor and is in 2021, respectively, compared to $1.708 billion and
expected to provide the eight Indigenous communities $882 million, respectively, in the prior year. In 2021, the
with reliable income for decades. impact of the FIFO method of inventory valuation, relative
to an estimated LIFO method, had a positive impact to
adjusted operating earnings and adjusted funds from
operations of $795 million after-tax, compared to a
negative after-tax impact of $384 million in 2020.

(1) Source: Canada Energy Regulator – https://www.cer-rec.gc.ca/en/data-analysis/energy-commodities/crude-oil-petroleum-products/statistics/

weekly-crude-run-summary-data/index.html.

Annual Report 2021 Suncor Energy Inc. 21

Suncor Overview

The company announced its strategic objective to be a • In 2021, Suncor, together with industry partners
net-zero GHG emissions company by 2050 and advanced representing over 90% of Canada’s oil sands production,
its goal with strategic investments in new technologies announced the Oil Sands Pathways to Net Zero alliance,
that are synergistic with its existing integrated energy whose initiative is aimed at working collectively with the
value chain. federal and Alberta governments to achieve net-zero
• The company announced its new strategic objective to GHG emissions from oil sands operations by 2050.
become a net-zero GHG emissions company by 2050 and
• During 2021, the company increased its investments in
to substantially contribute to society’s net-zero ambitions.
clean technology, including an equity investment in
The company set near-term absolute emissions reduction
Svante Inc., a Canadian carbon capture company that
goals to align with its objective to reach net-zero emissions
plans to develop technology to capture CO2 from industrial
and plans to meet its goals by reducing its base business
processes at reduced costs, and increased its investment
emissions, investing in low-emissions ventures and
in the Varennes Carbon Recycling facility.
technologies and taking actions that reduce others’
emissions.

22 Annual Report 2021 Suncor Energy Inc.

3. Financial Information
Net Earnings (Loss) • A loss of $80 million ($60 million after-tax) in 2021 for
early repayment of long-term debt, recorded in financing
Suncor’s net earnings in 2021 were $4.119 billion, compared
expenses in the Corporate and Eliminations segment.
to a net loss of $4.319 billion in 2020. Net earnings (loss) were
impacted by the same factors that influenced adjusted • A gain of $227 million ($227 million after-tax) in 2021 on
operating earnings (loss), which are described below. Other the sale of the company’s interest in the Golden Eagle Area
items affecting net earnings (loss) in 2021 and 2020 included: Development, in the E&P segment.
• An unrealized foreign exchange gain on the revaluation of • In 2020, the company recorded non-cash impairment
U.S. dollar denominated debt of $113 million ($101 million charges of $1.821 billion ($1.376 billion after-tax) on its
after-tax) recorded in financing expenses in 2021, share of the Fort Hills assets, in the Oil Sands segment, and
compared to a gain of $312 million ($286 million after-tax) $1.119 billion ($845 million after-tax) against its share of
in 2020. the White Rose and Terra Nova assets, in the E&P segment,
due to a decline in forecasted crude oil prices in 2020 as
• In 2021, the company recorded a non-cash impairment
a result of decreased global demand due to the impacts of
reversal of $221 million ($168 million after-tax) against its
the COVID-19 pandemic, the high degree of uncertainty
share of the Terra Nova assets, in the E&P segment, as a
surrounding the future of the West White Rose Project and
result of the Terra Nova ALE Project moving forward and
changes to their respective capital, operating and
the benefit of royalty and financial support from the
production plans.
Government of Newfoundland and Labrador.
• In 2020, the company recorded a provision to
• A restructuring charge of $168 million ($126 million
transportation expense for $186 million ($142 million
after-tax) in 2021 related to workforce reductions, recorded
after-tax) related to the Keystone XL pipeline project in the
in operating, selling and general expenses in the
Oil Sands segment.
Corporate and Eliminations segment.

Adjusted Operating Earnings (Loss)

Consolidated Adjusted Operating Earnings (Loss) Reconciliation(1)(2)

Year ended December 31 ($ millions) 2021 2020 2019

Net earnings (loss) 4 119 (4 319) 2 899

Unrealized foreign exchange gain on U.S. dollar denominated debt (101) (286) (590)
(2)
Unrealized (gain) loss on risk management activities (4) 29 60
(3)
Asset (reversal) impairments (168) 2 221 3 352
Restructuring charge 126 — —
Loss on early repayment of long-term debt 60 — —
(4)
Gain on significant disposals (227) — (187)
Provision for pipeline project — 142 —
(5)
Impact of income tax adjustments on deferred income taxes — — (1 116)
(1)(2)
Adjusted operating earnings (loss) 3 805 (2 213) 4 418
(1) Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(3) During 2019, the company recorded non-cash impairment charges of $3.716 billion ($2.803 billion after-tax) on its share of the Fort Hills assets, in
the Oil Sands segment, due to a decline in forecasted heavy crude oil prices and $521 million ($393 million after-tax) against White Rose, in the
E&P segment, due to increased capital cost estimates at the West White Rose Project.
(4) In 2019, Suncor sold its 37% interest in Canbriam Energy Inc., in the E&P segment, for proceeds of $151 million ($139 million after-tax). 2019 also
included a gain of $65 million ($48 million after-tax) in the E&P segment related to the sale of certain non-core assets.
(5) In 2019, the company recorded a $1.116 billion deferred income tax recovery associated with the Government of Alberta’s enactment of legislation
for a staged reduction of the corporate income tax rate from 12% to 8%.

Annual Report 2021 Suncor Energy Inc. 23

Financial Information

Bridge Analysis of Adjusted Operating (Loss) Earnings ($ millions)(1)(2)

(1) For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(3) The bridge factor for Inventory Valuation is comprised of changes in the first-in, first-out (FIFO) inventory valuation and short-term commodity risk
management activities reported in the R&M segment, and changes in the intersegment elimination of profit reported in the Corporate and
Eliminations segment.

Suncor’s consolidated adjusted operating earnings increased offset by an increase in accounts receivable related to an
to $3.805 billion in 2021, compared to an adjusted operating increase in crude oil price realizations during the year.
loss of $2.213 billion in the prior year. In 2021, crude oil and
refined production realizations increased significantly Results for 2020 Compared with 2019
compared to the prior year, which was significantly impacted Suncor’s net loss in 2020 was $4.319 billion, compared to net
by the COVID-19 pandemic and an increase in OPEC+ crude earnings of $2.899 billion in 2019. Net (loss) earnings were
supply. The improving business environment in 2021 also impacted by the same factors impacting adjusted operating
resulted in a net favourable inventory valuation change on (loss) earnings described below, as well as the net earnings
crude feedstock costs. Adjusted operating earnings in 2021 adjustments impacting 2020 and 2019, which are described in
were also favourably impacted by higher overall crude detail above.
production and refinery throughput.
Suncor’s consolidated adjusted operating loss in 2020 was
These factors were partially offset by an increase in royalties, $2.213 billion, compared to adjusted operating earnings of
primarily associated with higher crude price realizations, and $4.418 billion in 2019. In 2020, crude oil and refined product
increased operating and transportation expenses. The prior realizations decreased significantly, with 2020 crude oil
year adjusted operating loss was negatively impacted by the and crack spread benchmarks declining by more than 30%
significant decline in transportation fuel demand and a net compared to the prior year due to the impacts of the COVID-19
inventory valuation loss, partially offset by cost reductions in pandemic and OPEC+ supply issues. The decline in consumer
response to the COVID-19 pandemic. demand for refined products resulted in lower crude oil
demand and lower overall upstream production volumes and
Adjusted Funds from Operations and Cash refinery crude throughput as the company managed its
Flow Provided by Operating Activities operations to meet demand levels. 2020 results were also
impacted by a FIFO inventory valuation loss on the decline in
Adjusted funds from operations for 2021 were $10.257 billion,
value of refinery feedstock. Adjusted operating losses were
compared to $3.876 billion in 2020, and were impacted by
minimized by the decrease in costs associated with lower
the same factors as adjusted operating earnings (loss)
production as well as cost-reduction initiatives executed in
described above.
2020. Adjusted operating earnings in 2019 included insurance
Cash flow provided by operating activities, which includes proceeds related to the company’s assets in Libya.
changes in non-cash working capital, was $11.764 billion in
Adjusted funds from operations for 2020 were $3.876 billion,
2021, compared to $2.675 billion in 2020, reflecting a source of
compared to $10.818 billion in 2019, and were impacted by the
cash in working capital in the current year, compared to a use of
same factors as adjusted operating (loss) earnings described
cash in the prior year. The source of cash in 2021 was primarily
above.
due to a net increase in taxes payable related to the company’s
2021 income tax expense, which is payable in early 2022, Cash flow provided by operating activities, which includes
receipt of the company’s 2020 federal income tax refund, and changes in non-cash working capital, was $2.675 billion in
an increase in accounts payable and accrued liabilities, partially 2020, compared to $10.421 billion in 2019, reflecting a larger

24 Annual Report 2021 Suncor Energy Inc.

use of cash in working capital compared to 2019, which was income tax receivable balances resulting from the carry-back
primarily due to a decrease in accounts payable balances of tax losses, which was received in 2021.
associated with lower operating costs and an increase in

Business Environment
Commodity prices, refining crack spreads and foreign exchange rates are important factors that affect the results of Suncor’s
operations.

Average for the year ended December 31 2021 2020 2019

WTI crude oil at Cushing (US$/bbl) 67.95 39.40 57.05

Dated Brent Crude (US$/bbl) 70.75 41.65 64.30
Dated Brent/Maya crude oil FOB price differential (US$/bbl) 6.85 6.35 6.45
MSW at Edmonton (Cdn$/bbl) 80.30 45.60 69.20
WCS at Hardisty (US$/bbl) 54.90 26.85 44.25
Light/heavy differential for WTI at Cushing less WCS at Hardisty (US$/bbl) (13.05) (12.55) (12.80)
SYN-WTI differential (US$/bbl) (1.65) (3.15) (0.60)
Condensate at Edmonton (US$/bbl) 68.25 37.15 52.85
Natural gas (Alberta spot) at AECO (Cdn$/mcf) 3.65 2.25 1.75
Alberta Power Pool Price (Cdn$/MWh) 101.95 46.70 54.90
(1)
New York Harbor 2-1-1 crack (US$/bbl) 19.40 11.75 19.90
(1)
Chicago 2-1-1 crack (US$/bbl) 17.75 8.05 17.05
(1)
Portland 2-1-1 crack (US$/bbl) 23.15 14.05 24.45
(1)
Gulf Coast 2-1-1 crack (US$/bbl) 18.00 9.90 19.15
U.S. Renewable Volume Obligation (US$/bbl) 6.77 2.48 1.20
Exchange rate (US$/Cdn$) 0.80 0.75 0.75
Exchange rate (end of period) (US$/Cdn$) 0.79 0.78 0.77
(1) 2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of
diesel. The crack spreads presented here generally approximate the regions into which the company sells refined products through retail and
wholesale channels.

In 2021, crude oil and crack spread benchmarks improved can also be affected by bitumen quality premiums and
compared to 2020, which was significantly impacted by an discounts and spot sales, and the price differential between
unprecedented decline in transportation fuel demand due to Hardisty, Alberta, and U.S. Gulf Coast benchmarks.
the impacts of the COVID-19 pandemic.
The company leverages the expertise of its marketing and
Suncor’s sweet SCO price realizations are influenced primarily logistics business to optimize midstream capacity to the U.S.
by the price of WTI at Cushing and by the supply and demand Gulf Coast and this is reflected in bitumen and sour SCO price
for sweet SCO from Western Canada. Sweet SCO price realizations. Bitumen prices were unfavourably impacted by
realizations were favourably impacted in 2021 and reflected the widening of heavy crude oil differentials in 2021 compared
an increase in WTI at Cushing, which averaged US$67.95/bbl to 2020, but were higher on an absolute basis due to the
compared to US$39.40/bbl in the prior year. Suncor also increase in WTI prices.
produces sour SCO, the price of which is influenced by various
crude benchmarks, including, but not limited to, MSW at Suncor’s price realizations for production from E&P Canada
Edmonton and WCS at Hardisty, and which can also be affected and E&P International assets are influenced primarily by the
by prices negotiated for spot sales. Prices for MSW at price for Brent crude, which increased to US$70.75/bbl in 2021,
Edmonton increased to $80.30/bbl in 2021 compared to compared to US$41.65/bbl in 2020.
$45.60/bbl in 2020, and prices for WCS at Hardisty increased
Suncor’s refining and marketing gross margins are primarily
to US$54.90/bbl in 2021, from US$26.85/bbl in 2020.
influenced by 2-1-1 benchmark crack spreads, which are
Bitumen production that Suncor does not upgrade is blended industry indicators approximating the gross margin on a barrel
with diluent or SCO to facilitate delivery through pipeline of crude oil that is refined to produce gasoline and distillates.
systems. Net bitumen price realizations are, therefore, Market crack spreads are based on quoted near-month
influenced by both prices for Canadian heavy crude oil (WCS contracts for WTI and spot prices for gasoline and diesel and
at Hardisty is a common reference), prices for diluent do not necessarily reflect the margins at a specific refinery.
(Condensate at Edmonton) and SCO. Bitumen price realizations Suncor’s realized refining and marketing gross margins are

Annual Report 2021 Suncor Energy Inc. 25

Financial Information

influenced by actual crude oil feedstock costs, refinery determined by or referenced to U.S. dollar benchmark prices,
configuration, product mix and realized market prices unique while the majority of Suncor’s expenditures are realized in
to Suncor’s refining and marketing business. In addition, Canadian dollars. A decrease in the value of the Canadian dollar
the U.S. regulatory renewable blending obligations influence relative to the U.S. dollar will increase the revenues received
the benchmark cracks, which may increase their volatility, while from the sale of commodities. An increase in the value of the
the cost of regulatory compliance is not deducted in Canadian dollar relative to the U.S. dollar will decrease revenues
calculating the benchmark cracks. received from the sale of commodities. In 2021, the Canadian
Suncor has developed an indicative 5-2-2-1 index based on dollar strengthened in relation to the U.S. dollar as the average
publicly available pricing data to more accurately reflect exchange rate increased to US$0.80 per one Canadian dollar
Suncor’s realized refining and marketing gross margin. This from US$0.75 per one Canadian dollar in 2020. The increase in
internal index is a single value calculated based on a notional the Canadian dollar relative to the U.S. dollar had a negative
five barrels of crude oil of varying grades refined to produce impact on price realizations for the company in 2021 when
two barrels each of gasoline and distillate and one barrel of compared to 2020.
secondary product to approximate Suncor’s unique set of
Conversely, some of Suncor’s assets and liabilities, notably
refinery configurations; overall crude slate and product mix;
approximately 60% of the company’s debt, are denominated
and the benefit of its location, quality and grade differentials,
in U.S. dollars and translated to Suncor’s reporting currency
and marketing margins. The internal index is calculated by
(Canadian dollars) at each balance sheet date. A decrease in
taking the product value of refined products less the crude
the value of the Canadian dollar, relative to the U.S. dollar, from
value of refinery feedstock excluding the impact of FIFO
the previous balance sheet date increases the amount of
inventory accounting methodology. The product value
Canadian dollars required to settle U.S. dollar denominated
incorporates the New York Harbor 2-1-1 crack, Chicago 2-1-1
obligations, while an increase in the value of the Canadian
crack, WTI benchmarks and seasonal factors. The seasonal
factor applies an incremental US$6.50/bbl in the first and fourth dollar, relative to the U.S. dollar, decreases the amount of
quarters and US$5.00/bbl in the second and third quarters Canadian dollars required to settle U.S. dollar denominated
and reflects the location, quality and grade differentials for obligations.
refined products sold in the company’s core markets during the Economic Sensitivities(1)(2)
winter and summer months, respectively. The crude value
The following table illustrates the estimated effects that
incorporates the SYN, WCS and WTI benchmarks.
changes in certain factors would have had on 2021 net
Crack spreads are based on current crude feedstock prices, earnings and adjusted funds from operations(3) if the listed
whereas actual earnings are accounted for on a FIFO basis in changes had occurred.
accordance with IFRS where a delay exists between the time Impact
on
that feedstock is purchased and when it is processed and
Impact 2021
when products are sold to a third party. A FIFO loss normally on Adjusted
reflects a declining price environment for crude oil and finished 2021 Funds from
(Estimated change, in $ millions) Net Earnings Operations(3)
products, whereas FIFO gains reflect an increasing price
environment for crude oil and finished products. The company’s Crude oil +US$1.00/bbl 200 200
realized refining and marketing gross margins are also (4)
Natural gas +Cdn$0.10/mcf (25) (25)
presented on a LIFO basis, which is consistent with how
industry benchmarks and the Suncor 5-2-2-1 index are WTI – narrowing light/heavy
calculated and with how management evaluates performance. differential +US$1.00/bbl 15 15
In 2021, the New York Harbor 2-1-1 and Chicago 2-1-1 2-1-1 crack spreads
benchmark crack spreads increased compared to 2020 due to +US$1.00/bbl 140 140
increased demand for transportation fuels and to compensate
Foreign exchange +$0.01
for increased costs associated with renewable blending US$/Cdn$ related to
regulatory obligations. The Suncor 5-2-2-1 index was operating activities(5) (180) (180)
US$26.55/bbl in 2021 compared to US$19.95/bbl in 2020,
primarily related to the increase in benchmark crack spreads. Foreign exchange on U.S. dollar
denominated debt +$0.01 US$/Cdn$ 150 —
The cost of natural gas used in Suncor’s Oil Sands and Refining
(1) Each line item in this table shows the effects of a change in that
operations is primarily referenced to Alberta spot prices at
variable only, with other variables being held consistent.
AECO. The average AECO benchmark increased to $3.65/mcf
(2) Changes for a variable imply that all such similar variables are
in 2021, from $2.25/mcf in the prior year.
impacted, such that Suncor’s average price realizations increase
Excess electricity produced in Suncor’s Oil Sands operations uniformly. For instance, “Crude oil +US$1.00/bbl” implies that price
realizations influenced by WTI, Brent, SCO, WCS, par crude at
business is sold to the Alberta Electric System Operator, with
Edmonton and condensate all increase by US$1.00/bbl.
the proceeds netted against the Oil Sands operations cash
(3) Non-GAAP financial measure. See the Advisories – Non-GAAP Financial
operating costs per barrel metric. The Alberta power pool price
Measures section of this MD&A.
increased to an average of $101.95/MWh in 2021 from
(4) The company’s exposure to natural gas costs is partially mitigated by
$46.70/MWh in the prior year.
increased revenue from power sales, which is not included in the
The majority of Suncor’s revenues from the sale of oil and above sensitivity.
natural gas commodities are based on prices that are (5) Excludes the foreign exchange impact on U.S. dollar denominated debt.

26 Annual Report 2021 Suncor Energy Inc.

4. Segment Results and Analysis
Suncor has classified its operations into the following segments:

Oil Sands Exploration and Production

Suncor’s Oil Sands segment, with assets located in the Suncor’s E&P segment consists of offshore operations off the
Athabasca oil sands of northeast Alberta, produces bitumen east coast of Canada and in the North Sea, the Norwegian Sea
from mining and in situ operations. Bitumen is either upgraded and the Norwegian North Sea, and onshore assets in Libya
into SCO for refinery feedstock and diesel fuel, or blended and Syria. This segment also includes the marketing and risk
with diluent for refinery feedstock or direct sale to market management of crude oil and natural gas.
through the company’s midstream infrastructure and its
• E&P Canada operations include Suncor’s 48% working
marketing activities. The segment includes the marketing,
interest in Terra Nova, which Suncor operates. Production
supply, transportation and risk management of crude oil,
at Terra Nova has been shut in since the fourth quarter
natural gas, power and byproducts. The Oil Sands segment
of 2019. In the third quarter of 2021, a new ownership
includes:
agreement was finalized that increased Suncor’s working
• Oil Sands operations refer to Suncor’s owned and interest from 37.675% to 48%, and a decision was made to
operated mining, extraction, upgrading, in situ and related move forward with the ALE Project. The company is
logistics, blending and storage assets in the Athabasca anticipating a safe and reliable return to operations before
oil sands region. Oil Sands operations consist of: the end of 2022. Suncor also holds non-operated interests
in Hibernia (20% in the base project and 19.485% in the
• Oil Sands Base operations include the Millennium
Hibernia Southern Extension Unit), White Rose (27.5% in
and North Steepbank mining and extraction
the base project and 26.125% in the extensions), and
operations, integrated upgrading facilities known as
Hebron (21.034%). Suncor increased its non-operated
Upgrader 1 and Upgrader 2, and the associated
interest in the Hibernia Southern Extension Unit from
infrastructure for these assets – including utilities,
19.19% in 2020 to 19.485% in 2021 through
energy, reclamation and storage facilities and the
redetermination. In 2021, Suncor entered into a conditional
interconnecting pipelines between Suncor’s Oil Sands
agreement to increase its interest in the White Rose
Base operations and Syncrude.
assets by 12.5% to approximately 40% on a go-forward
• In Situ operations include oil sands bitumen basis, subject to a number of conditions including an
production from Firebag and MacKay River and economic restart decision by the operator on the West
supporting infrastructure, including central processing White Rose Project by mid-2022. In addition, the company
facilities, cogeneration units, product transportation holds interests in several exploration licences and
infrastructure, diluent import capabilities, storage significant discovery licences offshore Newfoundland and
assets and a cooling and blending facility. In Situ also Labrador.
includes development opportunities that may support
• E&P International operations include Suncor’s non­
future in situ production, including Meadow Creek
operated interests in Buzzard (29.89%), Oda (30%), the
(75%), Lewis (100%), OSLO (77.78%), Gregoire (100%),
Fenja Project (17.5%) and the Rosebank future development
various interests in Chard (25% to 50%), and a non­
project (40%). In the fourth quarter of 2021, Suncor sold
operated interest in Kirby (10%). In Situ production is
its 26.69% working interest in the Golden Eagle Area
either upgraded by Oil Sands Base, or blended with
Development located in the U.K. sector of the North Sea.
diluent and marketed directly to customers.
Buzzard and Rosebank are located in the U.K. sector of the
• Fort Hills includes Suncor’s 54.11% interest in the Fort Hills North Sea, while Oda and the Fenja Project are located in
mining and extraction operation, which the company the Norwegian North Sea and the Norwegian Sea,
operates, and the East Tank Farm Development, in which respectively. In addition, Suncor owns, pursuant to
Suncor holds a 51% interest and operates. exploration and production sharing agreements (EPSAs),
working interests in the exploration and development of
• Syncrude refers to Suncor’s 58.74% interest in the oil
oilfields in the Sirte Basin in Libya. Production in Libya
sands mining and upgrading operation, which the company
was steady in 2021, albeit at reduced rates. The timing of
operates. Suncor assumed the role of operator of the a return to normal operations in Libya remains uncertain
Syncrude joint operation on September 30, 2021. due to continued political unrest. Suncor also owns,
pursuant to a production sharing contract, an interest in
the Ebla gas development in Syria, which has been
suspended, indefinitely, since 2011 due to political unrest
in the country.

Annual Report 2021 Suncor Energy Inc. 27

Segment Results and Analysis

Refining and Marketing includes the sale of product between the company’s
segments, primarily relating to crude refining feedstock
Suncor’s Refining and Marketing segment consists of two sold from Oil Sands to Refining and Marketing.
primary operations: the Refining and Supply and Marketing
operations discussed below, as well as the infrastructure Oil Sands
supporting the marketing, supply and risk management of
refined products, crude oil, natural gas, power and byproducts.
2021 Highlights
This segment also includes the trading of crude oil, refined • Oil Sands delivered record annual adjusted funds from
products, natural gas and power. operations(1) of $6.846 billion, driven by improved crude
oil prices and strong reliability across its assets in 2021,
• Refining and Supply operations refine crude oil and
compared to $1.986 billion in the prior year.
intermediate feedstock into a wide range of petroleum
and petrochemical products. Refining and Supply consists • In 2021, Suncor delivered total Oil Sands production of
of: 644,200 bbls/d, the second-highest Oil Sands production
• Eastern North America operations include a in the company’s history, driven by record performance
137 mbbls/d refinery located in Montreal, Quebec, from the company’s In Situ assets, including at Firebag,
and an 85 mbbls/d refinery located in Sarnia, Ontario. following an increase to the nameplate capacity of the
facility in the prior year.
• Western North America operations include a
146 mbbls/d refinery located in Edmonton, Alberta, • SCO production was 468,600 bbls/d in 2021, the second
and a 98 mbbls/d refinery in Commerce City, Colorado. highest in the company’s history, driven by combined
upgrader utilization of 87% despite the impacts of
• Other Refining and Supply assets include interests in significant turnaround maintenance during the year,
a petrochemical plant and a sulphur recovery facility in demonstrating the value of the company’s asset integration
Montreal, Quebec, product pipelines and terminals and flexibility and reflecting a continued focus on
throughout Canada and the U.S., and the St. Clair maximizing the value of its barrels. Non-upgraded bitumen
ethanol plant in Ontario. production was 175,600 bbls/d in 2021, an increase of
• Marketing operations sell refined petroleum products to 38% compared to the prior year, with the increase in non­
retail customers primarily through a combination of upgraded bitumen production to market further supported
company-owned Petro-Canada™ locations, branded­ by strong mining performance at Oil Sands Base, which
dealers in Canada and company-owned locations in the resulted in less Firebag volumes utilized at the Upgrader
U.S. marketed under other international brands. This and overall higher Oil Sands operations production
includes Canada’s Electric Highway™, a coast-to-coast volumes.
network of fast-charging electric vehicle stations. The • On September 30, 2021, Suncor assumed the role of
company’s marketing operations also sells refined operator of the Syncrude asset, a critical step towards
petroleum products through a nationwide commercial
driving greater integration, efficiencies and
road transportation network in Canada, and to other
competitiveness across all Suncor-operated assets in the
commercial and industrial customers, including other retail
region, further strengthening the company’s regional oil
sellers, in Canada and the U.S.
sands advantage. The joint venture owners expect that
Corporate and Eliminations Suncor assuming operatorship will capture increased value
for the owners through improved operational performance,
The Corporate and Eliminations segment includes the efficiency and competitiveness.
company’s investments in renewable energy projects and
other activities not directly attributable to any other operating • Fort Hills resumed two-train operations late in the fourth
segment. quarter of 2021. The company is on track to operate the
Fort Hills asset at average utilization rates of 90%
• Renewable Energy includes interests in four wind farm throughout 2022.
operations in Ontario and Western Canada: Adelaide, Chin
Chute, Magrath and SunBridge as well as the Forty Mile • In 2021, the company focused on the safety and reliability
Wind Power Project, which was restarted in early 2021 and of its operations by successfully executing the largest
is currently planned for completion in late 2022. annual maintenance program in the company’s history
across its asset base, including the significant five-year
• Corporate activities include stewardship of Suncor’s debt
planned turnaround at Oil Sands Base plant Upgrader 2
and borrowing costs, expenses not allocated to the
and significant turnaround activities at Syncrude. Due to
company’s businesses, and investments in clean
the impacts of the COVID-19 pandemic in the
technology, such as Suncor’s investment in Enerkem Inc.,
Fort McMurray region the company responded quickly
LanzaJet, Inc., Svante Inc. and the Varennes Carbon
and decisively by staggering its planned turnarounds at
Recycling facilit.
Oil Sands Base plant Upgrader 2 and Syncrude, to support
• Intersegment revenues and expenses are removed from the safe and efficient completion of the turnaround
consolidated results in Eliminations. Intersegment activity activities at the two assets.

(1) Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

28 Annual Report 2021 Suncor Energy Inc.

• During the year, Suncor, together with eight Indigenous costs through implementation of digital technologies that will
communities, announced the formation of Astisiy, which facilitate the transition to the workplace of the future, bolster
acquired a 15% equity interest in the Northern Courier operational excellence and drive additional value. Through the
Pipeline. The Northern Courier Pipeline, which connects advancement of Suncor’s digital transformation, the company
the Fort Hills asset to Suncor’s East Tank Farm, is now continues to work to reduce the cost structure of running
operated by Suncor and is expected to provide the eight its business while increasing productivity. Looking ahead, the
Indigenous communities with reliable income for decades. company aims to lower aggregate Oil Sands cash operating
• In 2021, Suncor, together with industry partners costs per barrel, driven by higher production volumes and
representing over 90% of Canada’s oil sands production, cost-reduction synergies.
announced the Oil Sands Pathways to Net Zero alliance Capital allocation continues to focus on asset sustainment
whose initiative is aimed at working collectively with the and maintenance projects designed to maintain safe and
federal and Alberta governments to achieve net-zero reliable operations, as well as advancing high-value economic
GHG emissions from oil sands operations by 2050. The investment projects. The Oil Sands capital program in 2022
Pathways initiative will explore several parallel pathways is heavily weighted towards asset sustainment and
to address GHG emissions, including the creation of a
maintenance activities that reinforce the safety, long-term
Carbon Capture, Utilization and Storage trunkline
reliability and efficiency of the assets, including the first major
connected to a carbon sequestration hub to enable multi­
turnaround at Firebag in 10 years.
sector ‘tie-in’ projects as well as the implementation of
other next-generation technologies. At Syncrude, planned economic spend in 2022 includes the
Mildred Lake West Extension project, which is expected to
Strategy and Investment Update sustain Syncrude’s current production levels by extending the
Suncor holds one of the largest resource positions in the life of the North Mine using existing extraction and upgrading
Athabasca oil sands. The company has developed a unique facilities while minimizing the environmental impacts of
asset base within the Athabasca oil sands and has established building new infrastructure. The project is expected to come
a regional advantage given the close proximity of the online in late 2025.
company’s assets to one another, which the company can
Planned economic spend for the company’s In Situ assets will
leverage to maximize the value of its production volumes. The
be focused on maintaining production capacity at existing
company is committed to delivering safe, reliable, low-cost
facilities through continued development of reserves by
production, while moving forward in the areas of technology
building new well pads. Suncor is also working on developing
and innovation and environmental sustainability. The Oil Sands
regional advantage is strengthened by the company’s incremental debottlenecks to maximize the value of the Firebag
marketing and trading expertise, including the midstream asset. Debottlenecking capacity and timing will depend on
and logistics network, which secures market access, optimizes economic conditions, and can be supported by integrated well
price realizations associated with the marketing of crude oil, pad development and Solvent steam-assisted gravity
byproducts and natural gas supply, manages inventory levels, drainage (SAGD) technologies.
and limits the impacts of external market factors, including The company continues to invest in projects that are
pipeline disruptions, lack of egress or outages at refining economically robust, sustainably focused and technologically
customers. progressive. The investment to replace the coke-fired boilers
Suncor remains focused on operational excellence and with a cogeneration facility at Oil Sands Base is expected to
increasing the reliability and utilization across our assets. The provide reliable steam generation required for Suncor’s
company will continue to operate in a safe and reliable manner, extraction and upgrading activities, at a lower cost and with
while optimizing production. The company is committed to significantly lower carbon emissions. The cogeneration facility
maximizing utilization of our Upgraders to produce the highest­ is also expected to generate electricity that will be transmitted
value barrels, and this will be further enabled by optimizing to Alberta’s power grid, lowering the carbon intensity of the
transfers on the interconnecting pipelines between Suncor’s Alberta power grid while delivering value to Suncor.
Oil Sands Base and Syncrude. In 2022, the company expects Construction of the cogeneration facility at Oil Sands Base
increased production at each asset, strong upgrader was restarted in 2021 and the facility is expected to be in
utilization and higher margins for the company. service between 2024 and 2025.

The company’s regional oil sands advantage was further The company’s ability to leverage technology and innovation
reinforced during the year with the company taking over as is at the core of our strategy. Deploying additional technology
operator of the Syncrude asset on September 30, 2021. With projects at the company’s Oil Sands assets, such as digital
the assumption of operatorship, the company is on track to mine optimization and the deployment of autonomous haulage
realize the expected $100 million of annual gross synergies systems (AHS) is expected to improve operational efficiencies
for the joint venture owners in 2022, with an additional and drive additional value for the company.
$200 million expected to be realized through 2023-2024.
These initiatives, combined with continued advancement of
The primary focus for cost management in 2022 will be to digital technologies, will contribute in part to the company’s
continue efforts to sustainably reduce controllable operating incremental free funds flow target.

Annual Report 2021 Suncor Energy Inc. 29

Segment Results and Analysis

Financial Highlights
Year ended December 31 ($ millions) 2021 2020 2019

Gross revenues 19 920 10 617 18 347

Less: Royalties (1 523) (95) (917)
Operating revenues, net of royalties 18 397 10 522 17 430
Net earnings (loss) 2 147 (3 796) (427)
Adjusted for:
Unrealized loss on risk management activities(1) 4 13 50
(2)
Asset impairment — 1 376 2 959
Provision for pipeline project — 142 —
Impact of income tax rate adjustment on deferred taxes(3) — — (910)
Adjusted operating earnings (loss)(4) 2 151 (2 265) 1 672
(4)
Adjusted funds from operations 6 846 1 986 6 061
(1) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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) In 2019, the company recorded impairment charges of $3.716 billion ($2.803 billion after-tax) on its share of the Fort Hills assets due to continued
volatility in the crude oil price environment, resulting in a decline in forecasted long-term heavy crude oil prices.
(3) In 2019, the company recorded a $910 million deferred income tax recovery in the Oil Sands segment associated with the Government of Alberta’s
substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.
(4) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

Bridge Analysis of Adjusted Operating (Loss) Earnings ($ millions)(1)(2)

(1) For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.

The Oil Sands segment had adjusted operating earnings of production, partially offset by higher royalties associated with
$2.151 billion in 2021, compared to an adjusted operating loss higher crude price realizations and increased operating
of $2.265 billion in 2020. The increase was primarily due to expenses.
higher realized crude prices, as crude benchmarks were
Oil Sands net earnings were $2.147 billion in 2021, compared
significantly impacted in the prior year as a result of the
to a net loss of $3.796 billion in 2020. In addition to the factors
COVID-19 pandemic and OPEC+ supply issues, and increased impacting adjusted operating earnings (loss) described
above, net earnings for 2021 included a $5 million ($4 million
after-tax) unrealized loss on risk management activities,

30 Annual Report 2021 Suncor Energy Inc.

compared to a loss of $18 million ($13 million after-tax) in (4) Both Oil Sands operations and Syncrude produce diesel, which is
2020. 2020 net earnings also included the impact of a non-cash internally consumed in mining operations, and Fort Hills and Syncrude
use internally produced diesel from Oil Sands Base within their
impairment charge of $1.821 billion ($1.376 billion after-tax)
mining operations. In 2021, Oil Sands operations production volumes
on its share of the Fort Hills assets due to a decline in forecasted included 9,500 bbls/d of internally consumed diesel, of which
crude oil prices in 2020 as a result of decreased global 7,200 bbls/d was consumed at Oil Sands Base, 1,500 bbls/d was
demand due to the COVID-19 pandemic and changes to its consumed at Fort Hills and 800 bbls/d was consumed at Syncrude.
capital, operating and production plans. In 2020, the company Syncrude production volumes included 2,600 bbls/d of internally
consumed diesel.
also recorded a provision to transportation expense for
(5) Internal feedstock transfers between Oil Sands operations and
$186 million ($142 million after-tax) related to the Keystone XL
Syncrude through the interconnecting pipelines are included in gross
pipeline project. SCO and bitumen production volumes. In 2021, Oil Sands operations
included 2,600 bbls/d of SCO and 600 bbls/d of bitumen that was
Adjusted funds from operations for the Oil Sands segment
transferred to Suncor’s share of Syncrude through the interconnecting
were $6.846 billion in 2021, compared to $1.986 billion in 2020, pipelines. Syncrude production included 200 bbls/d of SCO and
and were influenced by the same factors that impacted 2,600 bbls/d of bitumen that was transferred to Oil Sands Base
adjusted operating earnings (loss) noted above. through the interconnecting pipelines.

The company’s net SCO production was 468,600 bbls/d in

Production Volumes(1)(2)
2021 compared to 466,200 bbls/d in 2020, marking the second­
Year ended December 31 (mbbls/d) 2021 2020 2019
best year of SCO production in the company’s history. During
(3)
SCO and diesel production 483.5 477.5 497.0 2021, the company achieved a combined upgrader utilization
rate of 87% compared to 85% in the prior year, reflecting
Internally consumed diesel
and internal transfers(4)(5) (14.9) (11.3) (11.4) maintenance activities in both periods. In 2021, Suncor
completed the largest annual planned maintenance program
Upgraded production – net SCO in the company’s history, including the significant five-year
and diesel 468.6 466.2 485.6 planned turnaround at Oil Sands Base plant Upgrader 2 and
Bitumen production 178.8 127.2 184.8 significant turnaround activities at Syncrude.
(5)
Internal bitumen transfers (3.2) — — Non-upgraded bitumen production increased to 175,600 bbls/d
Non-upgraded bitumen in 2021 from 127,200 bbls/d in the prior year, with the increase
production 175.6 127.2 184.8 driven by record production from the company’s In Situ
assets, including at Firebag. During the year, the increase in
Total Oil Sands production 644.2 593.4 670.4 non-upgraded bitumen production to market was further
(1) Bitumen from Oil Sands Base operations is upgraded, while bitumen supported by strong mining performance at Oil Sands Base,
production from In Situ operations is either upgraded or sold which resulted in less Firebag volumes utilized at the Upgrader
directly to customers, including Suncor’s own refineries, with SCO
and overall higher Oil Sands operations production volumes.
and diesel yields of approximately 79% of bitumen feedstock input.
Fort Hills finished bitumen is sold directly to customers, including The prior year was impacted by maintenance activities at
Suncor’s own refineries. The majority of the bitumen produced at Firebag and MacKay River.
Syncrude is upgraded to sweet SCO and a small amount of diesel, at
an approximate yield of 85%. The increase in non-upgraded bitumen production was
(2) Beginning in 2020, the company revised the presentation of its partially offset by a decrease in production at Fort Hills in 2021
production volumes to aggregate production from each asset into compared to the prior year, reflecting a change in the mine
the categories of “Upgraded production” and “Non-upgraded bitumen ramp-up strategy. The strategy was principally focused
production” to better reflect the integration among the company’s on building ore inventory levels which are required to operate
assets with no impact to overall production volumes. Comparative
the plant at 90% of nameplate capacity on a two-train
periods have been updated to reflect this change.
operation. The additional overburden removal was required
(3) Combined upgrader utilization rates are calculated using total
upgraded production, inclusive of internally consumed diesel and earlier than expected to provide full access to exposed ore and
internal transfers. maintain slope integrity. The company executed the mine
ramp-up strategy and resumed two-train operations late in
the fourth quarter of 2021, and the company is on track to
operate the Fort Hills asset at average utilization rates of 90%
throughout 2022. Higher production from Fort Hills in 2020
reflected Fort Hills operating on two primary extraction trains
early in the year.

Annual Report 2021 Suncor Energy Inc. 31

Segment Results and Analysis

Sales Volumes and Mix(1) Royalties

Year ended December 31 (mbbls/d) 2021 2020 2019 Royalties for the Oil Sands segment were higher in 2021
SCO and diesel 465.7 467.9 483.6 compared to 2020, primarily due to higher crude price
realizations, increased royalties for In Situ operations due to
Non-upgraded bitumen 183.8 125.6 187.5 Firebag reaching the higher post-payout phase of its royalty
Total 649.5 593.5 671.1 agreement, and increased sales volumes.
(1) Beginning in 2020, the company revised the presentation of its sales Expenses and Other Factors
volumes to aggregate sales from each asset into the categories of
“SCO and diesel” and “Non-upgraded bitumen” to better reflect the Total Oil Sands operating and transportation expenses for
integration among the company’s assets with no impact to overall 2021 were higher relative to 2020, as described in detail below.
sales volumes. Comparative periods have been updated to reflect See the Cash Operating Costs section below for further
this change.
details. In 2020, the relief provided under the Government of
SCO and diesel sales volumes were 465,700 bbls/d in 2021, Canada’s Emergency Wage Subsidy (CEWS) program, in addition
compared to 467,900 bbls/d in 2020, reflecting a build of to safe-mode costs associated with the deferral of capital
inventory in 2021, compared to a slight draw in the prior year. projects and additional costs incurred in response to the
Non-upgraded bitumen sales volumes increased to COVID-19 pandemic have been included in operating and
183,800 bbls/d in 2021, from 125,600 bbls/d in the prior year, transportation expenses by asset. These recoveries and costs,
consistent with the increase in production, and reflecting a draw however, have been excluded from the company’s cash
of inventory in 2021, compared to a build of inventory in the operating costs per barrel metrics for comparability purposes.
prior year.
At Oil Sands operations, operating costs increased compared
Price Realizations(1)(2)(3) to the prior year, primarily due to increased natural gas prices,
Year ended December 31 increased maintenance costs and higher production.
Net of transportation costs, but
before royalties ($/bbl) 2021 2020 2019 At Fort Hills, operating costs in 2021 increased when compared
SCO and diesel 77.73 43.83 70.68 to the prior year, reflecting increased mine activity to remove
overburden and increase ore inventory in preparation for the
Non-upgraded bitumen 53.80 22.37 45.71
transition back to a two-train operation in the fourth quarter
Crude sales basket of 2021. Operating costs during 2021 were also impacted by
(all products) 70.96 39.29 63.70 higher natural gas prices compared to the prior year and
Crude sales basket, relative increased maintenance costs.
to WTI (14.20) (13.51) (12.00)
Syncrude operating costs in 2021 increased compared to the
(1) Contains non-GAAP financial measures. See the Advisories – Non-
prior year, primarily due to higher maintenance costs,
GAAP Financial Measures section of this MD&A.
production and natural gas prices.
(2) Beginning in 2020, the company revised the presentation of its price
realizations to aggregate price realizations from each asset into In 2021, increased natural gas prices resulted in an increase of
the categories of “SCO and diesel” and “Non-upgraded bitumen” to
better reflect the integration among the company’s assets with no Oil Sands segment operating costs by $295 million compared
impact to overall price realizations. Comparative periods have been to 2020.
updated to reflect this change.
(3) Beginning in 2020, the company revised its “Non-upgraded bitumen”
Oil Sands transportation costs in 2021 increased from the
price realization to include midstream activities employed to prior year, primarily due to higher sales volumes.
optimize its logistics capacity and more accurately reflect the
performance of the product stream. Comparative periods have been DD&A and exploration expenses for 2021 were comparable to
restated to reflect this change. 2020.
Oil Sands price realizations increased in 2021 compared to
2020, in line with the improved commodity price environment.
The prior year was impacted by the significant decline in
transportation fuel demand due to the impacts of the COVID-19
pandemic and OPEC+ supply issues at the beginning of 2020.
Price realizations improved in 2021, in line with increased
commodity demand, optimism relating to vaccine rollouts and
OPEC+ supply management actions.

32 Annual Report 2021 Suncor Energy Inc.

Cash Operating Costs at Fort Hills and Syncrude also include, but are not limited to, excess
power revenue from cogeneration units and an adjustment to reflect
Year ended December 31 2021 2020 2019
internally produced diesel from Oil Sands operations at the cost of
Oil Sands operating, selling production.
and general expense (OS&G) 8 056 7 169 8 027 (3) Oil Sands operations excess power capacity and other includes, but
is not limited to, the operational revenue impacts of excess power
Oil Sands operations cash from cogeneration units and the natural gas expense recorded as
operating costs(1) part of a non-monetary arrangement involving a third-party processor.
reconciliation
(4) Beginning in 2020, Oil Sands operations cash operating costs are
Oil Sands operations OS&G 4 710 4 292 4 639 based on production volumes, which include internally consumed
diesel produced at Oil Sands Base and consumed at Fort Hills,
Non-production costs(2) (199) (107) (179) Syncrude and Oil Sands Base, while prior periods presented exclude
internally consumed diesel at Oil Sands Base from production
Excess power capacity and volumes. Prior periods were not restated due to the immaterial
other(3) (375) (248) (241) impact of the change in presentation. Also, beginning in 2020,
Syncrude cash operating costs are based on production volumes,
Inventory changes 21 (3) 48 which include internally consumed diesel, while prior periods
Oil Sands operations cash presented exclude internally consumed diesel from production. Prior
periods were not restated due to the immaterial impact of the
operating costs(1) ($ millions) 4 157 3 934 4 267
change in presentation.
Oil Sands operations (5) Beginning in 2020, the company revised the methodology for
production volumes(4) calculating Syncrude cash operating costs to better align with the
(mbbls/d) 439.2 380.9 414.5 Oil Sands operations and Fort Hills cash operating costs methodology.
Prior period Syncrude cash operating costs had previously included
Oil Sands operations cash future development costs and have been restated to reflect this
operating costs(1) ($/bbl) 25.90 28.20 28.20 change.

Fort Hills cash operating Oil Sands operations cash operating costs per barrel(1) in
costs(1) reconciliation 2021 decreased to $25.90, compared to $28.20 in the prior
year due to increased production, partially offset by higher
Fort Hills OS&G 897 761 921
operating, selling and general expenses, as detailed above.
(2)
Non-production costs (118) (52) (115) Total Oil Sands operations cash operating costs increased to
Inventory changes (15) (11) 9 $4.157 billion from $3.934 billion in the prior year.

Fort Hills cash operating Oil Sands operations non-production costs, which are excluded
costs(1) ($ millions) 764 698 815 from cash operating costs, were higher in the current year
compared to the prior year, as the prior year included relief
Fort Hills production volumes
provided under the CEWS program, partially offset by safe-
(mbbls/d) 50.7 58.1 85.3
mode and COVID-19 response costs. The current year non­
Fort Hills cash operating production costs were also impacted by higher share-based
costs(1) ($/bbl) 41.35 32.80 26.15 compensation expenses associated with the increase in the
Syncrude cash operating company’s share price in the current year compared to the prior
costs(1) reconciliation year.

Syncrude OS&G 2 449 2 116 2 467 Excess power capacity and other costs at Oil Sands operations
(2) for 2021 were higher than the prior year, due mainly to an
Non-production costs (234) (66) (156)
increase in excess power revenues resulting from higher power
Syncrude cash operating prices.
costs(1)(5) ($ millions) 2 215 2 050 2 311
Fort Hills cash operating costs per barrel(1) averaged $41.35 in
Syncrude production
2021, compared to $32.80 in 2020, reflecting higher operating,
volumes(4) (mbbls/d) 172.4 165.7 172.3
selling and general expenses, as detailed above, and decreased
Syncrude cash operating production. Non-production costs were higher in 2021
costs(1) ($/bbl) 35.20 33.80 36.75 compared to the prior year primarily due to the prior year
(1) Non-GAAP financial measures. Related per barrel amounts contain including the relief provided under the CEWS program, partially
non-GAAP financial measures. See the Advisories – Non-GAAP Financial offset by safe-mode and COVID-19 response costs, an increase
Measures section of this MD&A. in excess power revenues resulting from higher power
(2) Significant non-production costs include, but are not limited to, share- prices, and a larger adjustment for internally sourced diesel,
based compensation adjustments, research costs, project startup
which is adjusted to reflect internally produced diesel from
costs and adjustments to reflect the cost of internal transfers in the
receiving asset at the cost of production. In addition, for 2020, non- Oil Sands operations at the cost of production.
production costs include safe-mode costs associated with the
Syncrude cash operating costs per barrel(1) averaged $35.20 in
deferral of capital projects and additional costs incurred in response
to the COVID-19 pandemic. Non-production costs in 2020 also include 2021, compared to $33.80 in the previous year, due to an
the relief provided under the CEWS program. Non-production costs increase in operating, selling and general expenses, as detailed

(1) Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

Annual Report 2021 Suncor Energy Inc. 33

Segment Results and Analysis

above, partially offset by higher production volumes. Non­ Strategy and Investment Update
production costs were higher in 2021 compared to 2020, as the
The E&P segment delivers geographically diversified cash
prior year included the relief provided under the CEWS
flows and focuses primarily on low-cost projects that deliver
program, and were also impacted by higher long-term
significant returns, cash flow and long-term value. The E&P
incentive expenses in the current year compared to the prior
business is strengthened by the company’s marketing and
year. Suncor’s share of total Syncrude cash operating costs
trading expertise, which secures market access in both
increased to $2.215 billion from $2.050 billion in 2020.
domestic and international markets, optimizes price
Planned Maintenance realizations, manages inventory levels and limits the impacts
of external market factors.
Significant planned turnaround activities at Firebag are
scheduled to commence the second quarter of 2022 and are The company continues to exercise capital discipline, carefully
expected to be completed in the third quarter. Planned annual evaluating future projects and being disciplined in the
coker maintenance at Oil Sands Base Upgrader 2 is scheduled deployment of capital. In 2021, a decision was made to
to commence in the second quarter of 2022 and is expected to
restructure the Terra Nova project ownership and move
be completed in the third quarter. Additional maintenance is
forward with the ALE Project. As a result of the agreement,
scheduled at Upgrader 1 in the third and fourth quarters
Suncor increased its ownership in the project by approximately
of 2022. Planned maintenance is scheduled to commence at
10% to 48% in exchange for a cash payment from the exiting
Syncrude late in the first quarter of 2022, and planned
owners. The agreement also includes the previously disclosed
turnaround activities are scheduled to commence in the third
royalty and financial support from the Government of
quarter of 2022. Planned maintenance is scheduled at Fort Hills
in the second and fourth quarters of 2022. The anticipated Newfoundland and Labrador. The Terra Nova Floating,
impact of these maintenance events has been reflected in the Production, Storage and Offloading facility is dry-docked in
company’s 2022 guidance. Spain undergoing maintenance work and is expected to sail
back to Canada for a safe return to operations before the end
of 2022. The Terra Nova ALE Project, which is expected to
Exploration and Production extend the life of the Terra Nova field by approximately a
2021 Highlights decade, adding an additional 70 million barrels of resource for
the partnership, is expected to provide significant returns to
• E&P adjusted funds from operations(1) increased to Suncor and many benefits to the Newfoundland and Labrador
$1.478 billion in 2021, compared to $1.054 billion in the and Canadian economies in the form of taxes, royalties and
prior year. E&P adjusted operating earnings(1) increased to employment.
$890 million in 2021, compared to $13 million in the
prior year, and E&P net earnings increased to $1.285 billion At West White Rose, in 2021, Suncor entered into a conditional
in 2021, compared to a net loss of $832 million in the agreement to increase its interest in the White Rose assets
prior year. subject to a number of conditions, including an economic
restart decision for the West White Rose Project by mid-2022.
• In 2021, Suncor and the co-owners of the Terra Nova
Should the conditions be met, Suncor has agreed to increase its
project finalized an agreement to restructure the project
ownership interest in the White Rose assets by 12.5% to
ownership and move forward with the ALE Project, which is
expected to extend production life by approximately approximately 40% in exchange for a cash payment by the
10 years. As a result of the agreement, Suncor increased operator to Suncor.
its ownership in the project by approximately 10% to 48%. The company continues to focus on strategic production
• Buzzard Phase 2, which will extend production life of the growth of its E&P assets, with ongoing development activities
existing Buzzard field, achieved first oil in the fourth quarter offshore the east coast of Canada and in the U.K. North Sea
of 2021. Buzzard Phase 2 is expected to reach its peak intended to leverage existing facilities and infrastructure to
production in 2022, adding approximately 12,000 boe/d provide incremental production and extend the productive life
gross (approximately 3,500 boe/d net to Suncor) to existing of existing fields. These development activities are planned
Buzzard production. to continue in 2022, but are expected to be limited to
development drilling at Hebron, Hibernia, Fenja and Oda. The
• The company completed the sale of its 26.69% working
Rosebank future development project, which is one of the
interest in the Golden Eagle Area Development for gross
proceeds of US$250 million net of closing adjustments and largest remaining resources in the U.K. North Sea, is currently
other closing costs, in addition to future contingent in the pre-sanction phase.
consideration of up to US$50 million. The effective date of
the sale was January 1, 2021. The sale reinforces Suncor’s
continued focus on capital discipline and enables the
company to allocate resources to core assets and maximize
shareholder returns.

(1) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

34 Annual Report 2021 Suncor Energy Inc.

Financial Highlights
Year ended December 31 ($ millions) 2021 2020 2019
(1)
Gross revenues 2 736 1 851 3 372
(1)
Less: Royalties (236) (95) (302)
Operating revenues, net of royalties 2 500 1 756 3 070
Net earnings (loss) 1 285 (832) 1 005
Adjusted for:
Asset (reversal) impairment(2) (168) 845 393
(3)
Gain on significant disposals (227) — (187)
(4)
Impact of income tax rate adjustments on deferred income taxes — — (70)
Adjusted operating earnings(5) 890 13 1 141
Adjusted funds from operations(5) 1 478 1 054 2 143
(1) Production, revenues and royalties from the company’s Libya operations have been presented in the E&P section of this MD&A on an economic
basis and exclude an equal and offsetting gross up of revenues and royalties of $242 million in 2021, $48 million in 2020 and $303 million in 2019,
which is required for presentation purposes in the company’s financial statements under the working-interest basis.
(2) During 2019, the company recorded non-cash impairment charges of $521 million ($393 million after-tax) against White Rose due to increased
capital cost estimates at the West White Rose Project.
(3) 2019 included a gain of $65 million ($48 million after-tax) related to the sale of certain non-core assets. Also in 2019, Suncor sold its 37% interest in
Canbriam Energy Inc. for total proceeds and an equivalent gain of $151 million ($139 million after-tax), which had previously been written down
to nil in 2018 following the company’s assessment of forward natural gas prices and the impact on estimated future cash flows.
(4) In 2019, the company recorded a $70 million deferred income tax recovery in the E&P segment associated with the Government of Alberta’s
substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.
(5) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

Bridge Analysis of Adjusted Operating Earnings ($ millions)(1)

(1) For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.

Adjusted operating earnings were $890 million for E&P in Net earnings for E&P were $1.285 billion in 2021, compared to
2021, compared to $13 million in the prior year, with the a net loss of $832 million in 2020. In addition to the factors
increase due to higher realized crude prices and lower DD&A impacting adjusted operating earnings described above, net
and exploration expense, partially offset by lower production earnings in 2021 included a non-cash impairment reversal of
volumes and higher royalties. In 2021, crude oil and refined $221 million ($168 million after-tax) against the company’s
production realizations increased significantly compared to the share of the Terra Nova assets and a gain of $227 million
($227 million after-tax) on the sale of the company’s interest in
prior year, which was significantly impacted by the COVID-19
the Golden Eagle Area Development. Net earnings in 2020
pandemic and an increase in OPEC+ crude supply.
included non-cash impairment charges of $1.119 billion

Annual Report 2021 Suncor Energy Inc. 35

Segment Results and Analysis

($845 million after-tax) against the company’s share of the Price realizations at E&P Canada and E&P International
White Rose and Terra Nova assets. increased in 2021 from the prior year, in line with the improved
commodity price environment. The prior year was impacted
Adjusted funds from operations were $1.478 billion in 2021,
by the significant decline in transportation fuel demand due to
compared to $1.054 billion in 2020. The increase was largely
the impacts of the COVID-19 pandemic. Price realizations
due to the same factors that impacted adjusted operating
improved in 2021, in line with increased commodity demand,
earnings described above, excluding the impacts of DD&A and
optimism relating to vaccine rollouts and OPEC+ supply
exploration expense.
management actions.
Volumes(1)
Royalties
Year ended December 31 2021 2020 2019
E&P royalties in 2021 were higher than the prior year primarily
E&P Canada (mbbls/d) 54.4 59.7 59.9 due to the increase in price realizations.
E&P International Expenses and Other Factors
(mboe/d) 33.1 42.0 46.9
Operating expenses for 2021 were comparable to the prior
Total production year.
(mboe/d) 87.5 101.7 106.8
DD&A and exploration expenses in 2021 decreased from the
Total sales volumes prior year as a result of the absence of DD&A on the company’s
(mboe/d) 82.8 102.6 106.0 White Rose assets in 2021, as a result of impairment charges
(1) Beginning in 2020, the company revised the presentation of its in the fourth quarter of 2020, lower DD&A on the Golden Eagle
production volumes to aggregate production from each asset into Area Development asset as a result of the asset sale that
the categories of “E&P Canada” and “E&P International” to simplify the
occurred during the year, lower sales volumes and a decline in
presentation. Comparative periods have been updated to reflect
this change. exploration activities.

E&P Canada production volumes averaged 54,400 bbls/d in Non-Cash Asset Impairment Reversal
2021, compared to 59,700 bbls/d the prior year, primarily due
During the third quarter of 2021, the company recorded a
to natural declines. Both periods were impacted by the absence
non-cash impairment reversal of $221 million ($168 million
of production from Terra Nova as the asset has remained off­
after-tax) on its share of the Terra Nova assets as a result of the
line since the fourth quarter of 2019.
ALE Project moving forward and the benefit of royalty and
E&P International production volumes averaged 33,100 boe/d financial support from the Government of Newfoundland and
in 2021, compared to 42,000 boe/d in 2020, with the decrease Labrador.
primarily related to natural declines at Buzzard and Oda,
partially offset by increased liftings in Libya in 2021 compared Planned Maintenance of Operated Assets
to 2020. There are no other planned maintenance activities at
Terra Nova once the asset returns to operations, which is
E&P sales volumes averaged 82,800 mboe/d in 2021, compared
expected to occur before the end of 2022.
to 102,600 mboe/d in the prior year, consistent with the
decrease in production and including a build of inventory in
the U.K. and in Canada associated with the timing of cargo Refining and Marketing
sales at year-end.
2021 Highlights
Price Realizations(1)
Year ended December 31 • Suncor leveraged its refinery product mix, midstream
Net of transportation costs, but logistics flexibility, strong domestic sales network including
before royalties 2021 2020 2019 integration with its retail network, export capabilities and
E&P Canada – Crude oil and storage capacity to deliver refinery crude throughput of
natural gas liquids ($/bbl) 84.70 49.69 84.86 415,500 bbls/d in 2021, and industry-leading utilization
rates of 89%, compared to 407,000 bbls/d and 88% in the
E&P International(2) ($/boe) 82.16 50.28 81.22
prior year.
(1) Contains non-GAAP financial measures. See the Advisories – Non-
GAAP Financial Measures section of this MD&A. • The company’s Canadian refineries outperformed the
(2) E&P International price realizations include the company's U.K. and Canadian refining industry average by over 12%(1) during
Norway assets and exclude Libya for all periods presented. the year, despite turnarounds being completed across all of
the company’s refineries.

(1) Source: Canada Energy Regulator – https://www.cer-rec.gc.ca/en/data-analysis/energy-commodities/crude-oil-petroleum-products/statistics/

weekly-crude-run-summary-data/index.html.

36 Annual Report 2021 Suncor Energy Inc.

• R&M delivered $3.255 billion in adjusted funds from The R&M business is strengthened by the company’s
operations(1) in 2021, compared to $1.708 billion in the marketing and trading expertise, by optimizing the supply of
prior year. R&M adjusted operating earnings(1) increased crude and natural gas liquids feedstock to the company’s four
to $2.170 billion in 2021, compared to $882 million in the refineries, managing crude inventory levels during refinery
prior year, and R&M net earnings increased to $2.178 billion turnarounds and periods of unplanned maintenance, as well
in 2021, compared to $866 million in the prior year. In as managing external impacts from pipeline disruptions. The
2021, the impact of the FIFO method of inventory valuation, marketing and logistics organization also moves Suncor’s
relative to an estimated LIFO(2) method, had a positive refinery production to market and ensures supply to Suncor’s
impact to net earnings, adjusted operating earnings and branded retail and wholesale marketing channels. The
adjusted funds from operations of $795 million after-tax, business ensures reliable natural gas supply to Suncor’s
compared to a negative after-tax impact of $384 million upstream and downstream operations and generates
in 2020. incremental revenue through trading and asset optimization.
Through Suncor’s midstream and logistics network, the
Strategy and Investment Update
company secures market access, optimizes price realizations
The R&M business is a key component of Suncor’s integrated associated with refined products and crude oil supply, manages
business model and serves to maximize Suncor’s integrated inventory levels and limits the impacts of external market
returns by extending the value chain from oil sands production factors.
to the end customer, providing the vital link between Suncor’s
resource base and consumer demand for high-quality refined The company continues to pursue midstream opportunities to
products. The company’s integrated model is supported by the expand the company’s market reach, strengthen the
unique advantages of our R&M business, including the key company’s sales channels and maximize price realizations,
structural advantages of our refineries, our extensive including increasing incremental revenue through increased
marketing and logistics capabilities and secured market products trading activities and exploring additional pipeline
access, enhanced by our marketing and trading expertise. arrangements that provide feedstock optionality to our
refineries.
The company’s refineries are equipped with several key
structural advantages, including Suncor’s feedstock advantage, Suncor continues to focus on operational excellence, including
which enables the company to process a heavy crude slate maximizing reliability and utilization, while practicing
with a high-quality output, while operating in geographically operating cost and capital discipline. In 2022, Suncor expects
advantaged markets with consistent access to low cost refinery throughput to return to 2019 levels, positioning the
feedstock. The company aims to achieve consistent operational company to capture improving margins and demand,
excellence at its refineries through strong reliability and supported by its secured and competitive sales channels. The
industry-leading refinery utilizations, allowing the company to R&M capital program in 2022 is heavily weighted towards asset
provide a reliable supply of products to its secured and sustainment and maintenance activities focused on ongoing
competitive sales channels, while also operating at optimal sustainment and enhancement to refinery operations, further
levels of utilization to provide reliable offtake for a portion of driving reliable operations. The company plans to make
the production from the Oil Sands segment. The company’s economic investments in expansions of its retail and wholesale
sales channels include the Petro-Canada™ brand, Canada’s #1 network, further supporting the company’s connection to its
fuel brand,(3) with nearly 1,600 retail sites and over customers and increasing its sales channels.
300 PETRO-PASS™ sites located in key metropolitan areas
Suncor remains committed to supporting consumers’
across Canada.
transition to a low-emissions future through investments in
initiatives designed to provide low-carbon solutions to our
customers. Canada’s Electric Highway™, the coast-to-coast
network of fast-charging electric vehicle stations across
Canada, is one way that we are supporting consumers’
transition to a low-emissions future.

(1) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) The estimated impact of the LIFO method is a non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this
MD&A.
(3) Based on Kent (a Kalibrate company) survey data for year-end 2020.

Annual Report 2021 Suncor Energy Inc. 37

Segment Results and Analysis

Financial Highlights
Year ended December 31 ($ millions) 2021 2020 2019

Operating revenues 22 915 15 272 22 304

Net earnings 2 178 866 3 000
Adjusted for:
Unrealized (gain) loss on risk management activities(1) (8) 16 10
(2)
Impact of income tax rate adjustments on deferred taxes — — (88)
(3)
Adjusted operating earnings 2 170 882 2 922
(3)
Adjusted funds from operations 3 255 1 708 3 863
(1) Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains)
losses on derivative financial instruments that are recorded at fair value in other income (loss) 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) In 2019, the company recorded an $88 million deferred income tax recovery in the R&M segment associated with the Government of Alberta’s
substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.
(3) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

Bridge Analysis of Adjusted Operating Earnings ($ millions)(1)(2)

(1) For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains)
losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.

R&M contributed annual adjusted operating earnings of after-tax) unrealized gain on risk management activities,
$2.170 billion in 2021, compared with $882 million in 2020. compared to a $21 million ($16 million after-tax) loss in the
The increase was primarily due to a significant increase in prior year.
crude and refined product benchmarks compared to the prior
R&M achieved an annual adjusted funds from operations of
year, which resulted in a FIFO inventory valuation gain
$3.255 billion in 2021, compared to $1.708 billion in 2020, due
compared to a FIFO inventory valuation loss in the prior year,
primarily to the same factors that impacted adjusted
and an increase in refining and marketing margins, partially
operating earnings described above.
offset by an increase in operating expenses.

Net earnings in 2021 were $2.178 billion compared to net

earnings of $866 million in 2020, and were impacted by the
same factors as adjusted operating earnings described above.
In addition to the factors impacting adjusted operating
earnings, net earnings in 2021 included a $10 million ($8 million

38 Annual Report 2021 Suncor Energy Inc.

Volumes Total refined product sales increased to 528,400 bbls/d in
Year ended December 31 2021 2020 2019 2021, compared to 503,400 bbls/d in 2020. Strong utilizations
during the year, increased demand and secured sales channels
Crude oil processed (mbbls/d)
positioned the company to capture the improved business
Eastern North America 202.8 201.0 203.3 environment.
Western North America 212.7 206.0 235.6 Refining and Marketing Gross Margins(1)
Total 415.5 407.0 438.9 Refining and marketing gross margins were influenced by the
(1)(2) following:
Refinery utilization (%)
• On a LIFO(2) basis, Suncor’s refining and marketing gross
Eastern North America 91 91 92
margin increased to $30.90/bbl in 2021, from $28.65/bbl in
Western North America 87 86 98 the prior year due to improved benchmark crack spreads
Total 89 88 95 and the widening of heavy crude oil differentials, partially
offset by the impact a stronger Canadian dollar in relation
Refined product sales (mbbls/d) to the U.S. dollar. Suncor’s refining and marketing gross
Gasoline 225.8 214.1 246.6 margin also reflects Suncor’s feedstock advantage,
which enables the company to process heavier crude oil,
Distillate(3) 228.5 215.7 218.1
marketing and logistics capabilities and strong sales
Other 74.1 73.6 74.7 channels within its integrated retail and wholesale
Total 528.4 503.4 539.4 networks.

Refining and marketing gross • On a FIFO basis, Suncor’s refining and marketing gross
margin – FIFO(4)(5) ($/bbl) 36.85 25.30 40.45 margin increased to $36.85/bbl in 2021, from $25.30/bbl
in the prior year due to the same factors noted above, in
Refining and marketing gross
addition to FIFO inventory valuation impacts. In 2021,
margin – LIFO(4)(5) ($/bbl) 30.90 28.65 36.80
the impact of the FIFO method of inventory valuation,
Refining operating relative to an estimated LIFO(2) accounting method,
expense(5) ($/bbl) 5.95 5.50 5.35 resulted in an after-tax gain of $795 million. In 2020, FIFO
(1) Refinery utilization is the amount of crude oil and natural gas plant resulted in an after-tax loss of $384 million, for an overall
liquids run through crude distillation units, expressed as a percentage favourable year-over-year impact of $1.064 billion after-tax,
of the capacity of these units. including the impact of short-term commodity risk
(2) The Edmonton refinery crude processing capacity has increased to management activities.
146,000 bbls/d in 2021 from 142,000 bbls/d in 2020.
(3) Beginning in 2020, to better reflect the increasing integration of the Expenses and Other Factors
company’s assets, the company revised the presentation of its refined R&M operating and transportation expenses increased
product sales volumes to include Oil Sands diesel that is purchased
compared to the prior year. The increase was primarily due to
and marketed by the Refining and Marketing segment.
increased natural gas and power prices in the current year,
(4) Beginning in 2020, refining and marketing gross margins have been
cost reductions in response to the COVID-19 pandemic
revised to better reflect the refining, product supply and rack
forward businesses. Prior periods have been restated to reflect this impacting the prior year, including the relief provided under
change. the CEWS program, a higher share-based compensation
(5) Contains non-GAAP financial measures. See the Advisories – Non- expense in the current year as a result of an increase in the
GAAP Financial Measures section of this MD&A. company’s share price and increased throughput. Refining
Refinery crude throughput increased to 415,500 bbls/d and operating expense per barrel(1) was $5.95 in 2021, compared to
refinery utilization averaged 89% in 2021, compared to refinery $5.50 in the prior year, with the increase primarily due to
crude throughput of 407,000 bbls/d and refinery utilization increased absolute costs, partially offset by higher crude
of 88% in 2020, reflecting strong utilizations across all refineries throughput.
in 2021, despite the impacts of planned turnaround activities DD&A expense in 2021 was comparable to the prior year.
across all of its refineries during the year. The prior year
reflected reduced rates as a result of a decrease in consumer Planned Maintenance
demand for transportation fuels due to the impacts of the
Planned turnaround maintenance is scheduled for the
COVID-19 pandemic.
Edmonton, Montreal and Sarnia refineries in the second
quarter of 2022. The anticipated impact of these maintenance
events has been reflected in the company’s 2022 guidance.

(1) Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) The estimated impact of the LIFO method is a non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this
MD&A.

Annual Report 2021 Suncor Energy Inc. 39

Segment Results and Analysis

Corporate and Eliminations Strategy and Investment Update

Delivering competitive and sustainable returns to shareholders
2021 Highlights is a top priority of the company and we aim to maximize
• Suncor exceeded its return to shareholder targets for the shareholder returns by focusing on operational excellence,
year, returning a total of $3.9 billion to shareholders, underpinned by safety above all else, capital discipline through
through $1.6 billion of dividends paid and $2.3 billion in investments in high-value projects and technology, and our
share repurchases, repurchasing the company’s common commitment to environmental stewardship and sustainability.
shares at the highest rate in the company’s history. In 2021,
Suncor continues to progress its digital transformation and
since the start of the NCIB program in February 2021,
implement new digital technologies across the enterprise to
the company repurchased approximately 84 million of its
help improve the safety, productivity, reliability and
common shares at an average price of $27.45 per common
environmental performance of our operations. The company
share, or the equivalent of 5.5% of Suncor’s common
anticipates this will enable operational efficiencies that will
shares as at January 31, 2021.
provide further structural cost savings. In 2022, the company
• Demonstrating management’s confidence in the company’s expects to continue to advance its digital transformation
ability to generate sustainable and increasing cash flows through initiatives such as supply chain optimization initiatives
and its commitment to increasing shareholder returns, the and core business systems aimed at improving operational
company increased its dividend per share by 100% in the efficiencies, which are expected to contribute to Suncor’s
fourth quarter, reinstating the quarterly dividend to $0.42 incremental free funds flow targets. The company anticipates
per common share, returning it to 2019 levels. that the implementation of digital technologies will improve the
safety of our company, facilitate the transition to the
• In 2021, Suncor accelerated its net debt(1) reduction,
workplace of the future, bolster operational excellence and
reducing debt at the highest ever annual pace, resulting
drive additional value.
in a reduction of net debt by $3.7 billion to $16.1 billion,
returning to 2019 net debt levels. Returning cash to shareholders and strengthening the
balance sheet continues to be a top priority for Suncor; proven
• In 2021, demonstrating management’s confidence in the
company’s ability to generate cash flows, the company by the company’s progress in 2021 related to debt reductions,
cancelled $2.8 billion in bi-lateral credit facilities that were dividend increase and share repurchases. The company will
no longer required, as they were entered into in March remain disciplined in its plans to reduce debt towards its 2025
and April of 2020 to ensure access to adequate financial targeted net debt range of $12–$15 billion. Looking ahead in
resources in connection with the COVID-19 pandemic. 2022, the company plans to allocate its annual free funds flow,
after its dividend, evenly between share buybacks and debt
• Subsequent to the end of the year, the company continued reductions. Subsequent to the end of the year, a renewal of the
to make meaningful progress towards its net debt company’s NCIB was approved, beginning February 8, 2022,
reduction and shareholder return targets by completing and ending February 7, 2023, for the repurchase of up to
an early redemption of its outstanding US$182 million approximately 5% of Suncor’s issued and outstanding common
4.50% notes, originally scheduled to mature in the second shares as at January 31, 2022.
quarter of 2022, and repurchasing an additional 0.5% of
its common shares up to February 7, 2022. The company In 2021, Suncor announced its new strategic objective to
also renewed its NCIB, beginning February 8, 2022, and become a net-zero GHG emissions company by 2050 and to
ending February 7, 2023, for the repurchase of up to substantially contribute to society’s net-zero ambitions. To align
approximately 5% of Suncor’s issued and outstanding with this objective, the company has set a near-term goal to
common shares as at January 31, 2022. reduce annual emissions by 10 megatonnes across its value
chain by 2030 to replace its previous goal of reducing its
• In 2021, company announced its new strategic objective
emissions intensity by 30% by 2030. Suncor plans to achieve
to become a net-zero GHG emissions company by 2050 and
this by making pragmatic and highly economic investments
to substantially contribute to society’s net-zero ambitions.
that are in line with, or synergistic with, our core capabilities,
The company set near-term absolute emissions reduction
including leveraging our existing expertise in low-carbon
goals to align with its objective to reach net-zero emissions
power, renewable fuels and expanding into clean hydrogen
and plans to meet its goals by reducing its base business
production. This includes construction of the Forty Mile Wind
emissions, investing in low-emissions ventures and
Power Project, a 200 MW renewable energy power project in
technologies and taking actions that reduce others’
southern Alberta, which is expected to generate significant
emissions.
value through sustainable power generation and retention of
• During 2021, the company increased its investments in the generated carbon credits for utilization in Suncor’s
clean technology, including an equity investment in upstream business. The project is currently under construction
Svante Inc., a Canadian carbon capture company that and is expected to be completed and operational late in
plans to develop technology to capture CO2 from industrial 2022, contributing to the company’s incremental free funds
processes at reduced costs, and increased its investment flow and emissions reduction goals, while meeting growing
in the Varennes Carbon Recycling facility. customer demand for lower-carbon energy.

(1) Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

40 Annual Report 2021 Suncor Energy Inc.

Investments in new technologies that leverage Suncor’s existing biofuels business and demonstrates Suncor’s
existing core capabilities, and provide new sustainable energy commitment to being a leader in the global energy expansion.
sources, are key to Suncor’s expansion of its low-emissions
energy business. Strategic equity investments with two biofuel In 2021, Suncor invested in Svante Inc., a Canadian carbon
companies that are currently progressing renewable fuel capture company. With support from Suncor and other
technology projects are examples of how the company is companies, Svante Inc. is accelerating the commercial
progressing this goal. The first investment, the Varennes deployment of its technology to capture CO2 from heavy­
Carbon Recycling facility, a biofuel plant in Varennes, Quebec, emitting industries like cement, steel, and oil and gas
that is currently under construction, is designed to convert production at a lower cost than current methods. Carbon
commercial and industrial non-recyclable waste into biofuels capture is a strategic technology area for Suncor to reduce
and renewable chemicals. In addition, the company also owns greenhouse gas emissions in Suncor’s base business and
an equity investment in LanzaJet, Inc., a company working to produce blue hydrogen as an energy product. In addition,
bring sustainable aviation fuel and renewable diesel to the
Suncor and ATCO Ltd. announced a partnership on a potential
commercial market. Fabrication of a commercial biorefinery
world-scale clean hydrogen project to be developed in
plant near Soperton, Georgia, is well underway and is expected
Alberta, Canada. A sanctioning decision is expected in 2024
to be on-stream in late-2022 and will allow Suncor to supply
sustainable low-emissions aviation fuel to customers. From a and the facility could be operational as early as 2028, provided
design perspective, both projects are being constructed using it has the required regulatory and fiscal support to render it
a design that is expected to be able to be replicated, enabling economic. The project would significantly advance Suncor and
quick expansion to capture the sizable growth opportunities Alberta’s hydrogen strategy, generate substantial economic
projected for renewable liquid fuels should economics be activity and make a large contribution towards Suncor and
attractive. Suncor believes these investments complement its society’s net-zero ambitions.

Financial Highlights
Year ended December 31 ($ millions) 2021 2020 2019
Net loss (1 491) (557) (679)
Adjusted for:
Unrealized foreign exchange gain on U.S. dollar denominated debt (101) (286) (590)
Restructuring charge 126 — —
Loss on early repayment of long-term debt 60 — —
Impact of income tax rate adjustments on deferred income taxes(1) — — (48)
Adjusted operating loss(2) (1 406) (843) (1 317)
Corporate and Renewables (1 262) (936) (1 113)
Eliminations – Intersegment profit (eliminated) realized (144) 93 (204)
Adjusted funds used in operations(2) (1 322) (872) (1 249)
(1) In 2019, the company recorded a $48 million deferred income tax recovery associated with the Government of Alberta’s substantive enactment of
legislation for the staged reduction of the corporate income tax rate from 12% to 8%.
(2) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

Corporate and Renewables Eliminations – Intersegment Profit Realized (Eliminated)

Corporate incurred an adjusted operating loss of $1.262 billion Eliminations reflect the deferral or realization of profit on crude
in 2021, compared with an adjusted operating loss of $936 million oil sales from Oil Sands to Suncor’s refineries. Consolidated
in 2020, with the increased adjusted operating loss primarily profits are only realized when the refined products produced
due to a share-based compensation expense in 2021 versus a from internal purchases of crude feedstock have been sold to
share-based compensation recovery in 2020. The adjusted third parties. In 2021, the company deferred $144 million of
operating loss in 2020 included favourable income tax after-tax intersegment profit, compared to a realization of profit
settlements and relief provided under the CEWS program. of $93 million in the prior year. The deferral of profit in 2021
Suncor capitalized $144 million of its borrowing costs in 2021, was driven by the increase in Oil Sands price realizations in
2021, as lower margin crude refinery feedstock sourced
compared to $120 million in 2020, as part of the cost of major
internally from Oil Sands was sold and replaced by higher
development assets and construction projects in progress.
margin crude inventory, resulting in a deferral of profit at the
Year ended December 31 2021 2020 2019 enterprise level.
Renewable Energy power Adjusted funds used in operations for the Corporate and
generation marketed Eliminations segment were $1.322 billion in 2021, compared
(gigawatt hours)(1) 183 200 184 to $872 million in 2020, and were influenced by the same factors
(1) Power generated includes curtailed production for which the that impacted adjusted operating loss, adjusted for the
company was compensated. non-cash component of share-based compensation expense.

Annual Report 2021 Suncor Energy Inc. 41

5. Fourth Quarter 2021 Analysis
Financial and Operational Highlights Net Earnings (Loss)
Three months ended December 31 Suncor’s consolidated net earnings for the fourth quarter of
($ millions, except as noted) 2021 2020 2021 were $1.553 billion, compared to a net loss of $168 million
Net earnings (loss) for the prior year quarter. Net earnings were primarily
influenced by the same factors that impacted adjusted
Oil Sands 896 (293)
operating earnings described subsequently in this section.
Exploration and Production 465 (379) Other items affecting net earnings (loss) over these periods
Refining and Marketing 450 268 included:

Corporate and Eliminations (258) 236 • The unrealized foreign exchange gain on the revaluation
of U.S. dollar denominated debt recorded in financing
Total 1 553 (168) expenses was $25 million ($21 million after-tax) for the
Adjusted operating earnings fourth quarter of 2021, compared to a gain of $602 million
(loss)(1)(2) ($539 million after-tax) for the fourth quarter of 2020.

Oil Sands 898 (130) • The unrealized gain on risk management activities
recorded in other income (loss) was $14 million ($11 million
Exploration and Production 238 44
after-tax) for the fourth quarter of 2021, compared to a
Refining and Marketing 437 280 $44 million ($33 million after-tax) loss for the fourth quarter
of 2020.
Corporate and Eliminations (279) (303)
• The gain of $227 million ($227 million after-tax) on the
Total 1 294 (109)
sale of the company’s interest in the Golden Eagle Area
Adjusted funds from (used in) Development, which was completed early in the fourth
operations(1) quarter of 2021 and recorded in the E&P segment.
Oil Sands 2 175 729 • During the fourth quarter of 2020, the company recorded
non-cash impairment charges of $559 million ($423 million
Exploration and Production 425 312
after-tax) against its share of the White Rose assets, in the
Refining and Marketing 765 415 E&P segment, as a result of the high degree of uncertainty
Corporate and Eliminations (221) (235) surrounding the future of the West White Rose Project.
• In the fourth quarter of 2020, the company recorded a
Total adjusted funds from
operations 3 144 1 221 provision to transportation expense for $186 million
($142 million after-tax) related to the Keystone XL pipeline
Changes in non-cash working project in the Oil Sands segment.
capital (529) (407)
Cash flow provided by operating Adjusted Funds From Operations and Cash
activities 2 615 814 Flow provided by Operating Activities
Production volumes (mboe/d) Adjusted funds from operations were $3.144 billion ($2.17 per
common share) in the fourth quarter of 2021, compared to
Oil Sands – Upgraded – net SCO
$1.221 billion ($0.80 per common share) in the fourth quarter
and diesel 515.0 514.3
of 2020. Adjusted funds from operations were influenced by
Oil Sands – Non-upgraded the same factors impacting adjusted operating earnings (loss)
bitumen 150.9 157.2 noted below.
Exploration and Production 77.4 97.7 Cash flow provided by operating activities, which includes
changes in non-cash working capital, was $2.615 billion ($1.80
Total 743.3 769.2
per common share) for the fourth quarter of 2021, compared
(1) Non-GAAP financial measures. See the Advisories – Non-GAAP to $814 million ($0.53 per common share) in the prior year
Financial Measures section of this MD&A.
quarter. In addition to the factors noted below, cash flow
(2) Beginning in 2021, the company revised its calculation of adjusted provided by operating activities was further impacted by a use
operating earnings (loss), a non-GAAP financial measure, to exclude
of cash associated with the company’s working capital
unrealized (gains) losses on derivative financial instruments that are
recorded at fair value in other income (loss) to better align the balances in both periods. The use of cash in the fourth quarter
earnings impact of the activity with the underlying items being risk- of 2021 was primarily due to an increase in accounts
managed. Prior period comparatives have been restated to reflect this receivable related to increased sales and an increase in crude
change. oil price realizations during the quarter, and a decrease in
accounts payable and accrued liabilities, partially offset by an
increase in taxes payable related to the company’s 2021 income
tax expense, which is payable in early 2022.

42 Annual Report 2021 Suncor Energy Inc.

Segmented Analysis E&P International production was 29,800 boe/d in the fourth
quarter of 2021, compared to 40,900 boe/d in the prior year
Oil Sands quarter. Production volumes decreased in the current
The Oil Sands segment had adjusted operating earnings of quarter primarily due to the absence of production from the
$898 million in the fourth quarter of 2021, compared to an Golden Eagle Area Development, as the sale of the asset was
adjusted operating loss of $130 million in the prior year quarter. completed early in the fourth quarter of 2021, and natural
The increase was primarily due to higher realized crude declines.
prices, as crude benchmarks were lower in the prior year
E&P sales volumes decreased to 67,200 boe/d in the fourth
quarter as a result of the COVID-19 pandemic, partially offset
by an increase in royalties and operating expenses. quarter of 2021, compared to 98,800 boe/d in the prior year
quarter, due to the decrease in production and a build of
The company’s net SCO production of 515,000 bbls/d in the inventory at E&P Canada associated with the timing of cargo
fourth quarter of 2021 was comparable to 514,300 bbls/d in the
sales at year-end.
prior year quarter, resulting in a combined upgrader
utilization rate of 96% in the fourth quarter of 2021 compared Refining and Marketing
to 95% in the prior year quarter. Increased SCO production R&M adjusted operating earnings in the fourth quarter of
at Oil Sands Base, with increased In Situ bitumen production 2021 increased to $437 million from $280 million in the prior
being diverted to upgrading to maximize higher-value SCO year quarter. The increase was primarily due to higher refining
production, was largely offset by lower production at Syncrude and marketing margins as a result of significantly higher
due to unplanned maintenance, which was completed
crack spread benchmarks in the fourth quarter of 2021
subsequent to the quarter. Production in the prior year quarter
compared to the prior year quarter. Adjusted operating
was impacted by planned maintenance at Oil Sands Base,
earnings included a FIFO inventory valuation gain of
which was completed early in the quarter.
$106 million after-tax on the increase in crude and refined
The company’s non-upgraded bitumen production was product benchmarks in the fourth quarter of 2021, compared
150,900 bbls/d in the fourth quarter of 2021, compared to to a $44 million after-tax gain in the prior year quarter.
157,200 bbls/d in the prior year quarter, with the decrease Adjusted operating earnings were unfavourably impacted by
primarily due to lower production at Fort Hills, which resumed increased operating expenses in the fourth quarter of 2021
two-train operations late in the fourth quarter of 2021. The
compared to the prior year quarter.
company is on track to operate the Fort Hills asset at average
utilization rates of 90% throughout 2022. Refinery crude throughput increased to 447,000 bbls/d and
refinery utilization was 96% in the fourth quarter of 2021,
In the fourth quarter of 2021, non-upgraded bitumen
compared to refinery crude throughput of 438,000 bbls/d and
production from the company’s In Situ assets was comparable
refinery utilization of 95% in the prior year quarter, reflecting
to the prior year quarter, with an overall increase in production
strong utilizations across all refineries. Refined product sales in
volumes being offset by increased Firebag bitumen production
being diverted to upgrading. The fourth quarter of 2021 was the fourth quarter of 2021 increased to 550,100 bbls/d,
impacted by fewer maintenance activities at Firebag compared compared to 508,800 bbls/d in the prior year quarter. Strong
to the prior year quarter. utilizations during the quarter, increased demand and secured
sales channels positioned the company to capture the
SCO and diesel sales volumes were 496,100 bbls/d in the
improved business environment.
fourth quarter of 2021, compared to 495,600 bbls/d in the
prior year quarter, consistent with the increase in upgraded Corporate and Eliminations
production. Corporate and Eliminations incurred an adjusted operating
Non-upgraded bitumen sales volumes increased to loss of $279 million for the fourth quarter of 2021, compared
176,700 bbls/d in the fourth quarter of 2021, compared to to an adjusted operating loss of $303 million for the prior year
139,600 bbls/d in the prior year quarter, due to a draw in quarter, with the increased loss attributable to favourable tax
inventory in the fourth quarter of 2021 compared to a build of settlements in the prior year quarter, partially offset by a
inventory in the prior year quarter, partially offset by the decrease in interest expense on long-term debt as a result of
decrease in production in the current quarter. debt repayments that occurred throughout 2021. Suncor
Exploration and Production capitalized $38 million of its borrowing costs in the fourth
quarter of 2021 as part of the cost of major development assets
Adjusted operating earnings for the E&P segment in the
and construction projects in progress, compared to $26 million
fourth quarter of 2021 increased to $238 million compared to
in the prior year quarter.
$44 million in the prior year quarter, with the increase
primarily due to higher realized crude prices and lower DD&A, Eliminations reflect the deferral or realization of profit or loss
partially offset by lower sales volumes. on crude oil sales from Oil Sands to Suncor’s refineries.
Production volumes for E&P Canada were 47,600 bbls/d in the Consolidated profits and losses are only realized when the
fourth quarter of 2021, compared to 56,800 bbls/d in the refined products produced from internal purchases of crude
prior year quarter, primarily due to natural declines. Both feedstock have been sold to third parties. During the fourth
periods were impacted by the absence of production from quarter of 2021, the company realized $25 million of after-tax
Terra Nova as the asset has remained off-line since the fourth intersegment profit compared to a deferral of $21 million of
quarter of 2019. after-tax intersegment profit in the prior year quarter.

Annual Report 2021 Suncor Energy Inc. 43

6. Quarterly Financial Data
Financial Summary
Three months ended Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 Mar 31
($ millions, unless otherwise noted) 2021 2021 2021 2021 2020 2020 2020 2020

Total production (mboe/d)

Oil Sands 665.9 605.1 615.7 690.6 671.5 519.0 553.7 630.1
Exploration and Production 77.4 93.5 84.0 95.3 97.7 97.2 101.8 109.7
743.3 698.6 699.7 785.9 769.2 616.2 655.5 739.8
Revenues and other income
Operating revenues, net of royalties 11 149 10 145 9 159 8 679 6 615 6 427 4 229 7 391
Other income (loss) 10 68 (66) (43) (21) 30 16 365
11 159 10 213 9 093 8 636 6 594 6 457 4 245 7 756
Net earnings (loss) 1 553 877 868 821 (168) (12) (614) (3 525)
(1)
per common share (dollars) 1.07 0.59 0.58 0.54 (0.11) (0.01) (0.40) (2.31)
(2)(3)
Adjusted operating earnings (loss) 1 294 1 043 722 746 (109) (338) (1 345) (421)
(3)(4)(5)
per common share (dollars) 0.89 0.71 0.48 0.49 (0.07) (0.22) (0.88) (0.28)
Adjusted funds from operations(2) 3 144 2 641 2 362 2 110 1 221 1 166 488 1 001
per common share(4)(5) (dollars) 2.17 1.79 1.57 1.39 0.80 0.76 0.32 0.66
Cash flow provided by (used in) operating
activities 2 615 4 718 2 086 2 345 814 1 245 (768) 1 384
(5)
per common share (dollars) 1.80 3.19 1.39 1.54 0.53 0.82 (0.50) 0.91
(4)
ROCE (%) for the twelve months ended 8.6 4.5 1.9 (1.4) (6.9) (10.2) (7.5) (1.3)
ROCE excluding impairments and impairment
reversals(4)(6) (%) for the twelve months ended 8.2 4.9 2.6 (0.6) (2.9) (1.3) 1.0 7.0
After-tax unrealized foreign exchange gain
(loss) on U.S. dollar denominated debt 21 (257) 156 181 539 290 478 (1 021)
Common share information (dollars)
Dividend per common share 0.42 0.21 0.21 0.21 0.21 0.21 0.21 0.47
Share price at the end of trading
Toronto Stock Exchange (Cdn$) 31.65 26.26 29.69 26.27 21.35 16.26 22.89 22.46
New York Stock Exchange (US$) 25.03 20.74 23.97 20.90 16.78 12.23 16.86 15.80
(1) Represented on a basic and diluted per share basis.
(2) Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A. Adjusted operating earnings (loss) for each
quarter are defined in the Non-GAAP Financial Measures Advisory section and reconciled to GAAP measures in the Consolidated Financial
Information and Segment Results and Analysis sections of each Quarterly Report to Shareholders issued by Suncor (Quarterly Reports) in respect
of the relevant quarter. Adjusted Funds from operations for each quarter are defined and reconciled to GAAP measures in the Non-GAAP Financial
Measures Advisory section of each Quarterly Report in respect of the relevant quarter, with such information being incorporated by reference
herein and available on SEDAR at www.sedar.com.
(3) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(4) Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A. Non-GAAP measures included in
ROCE and ROCE excluding impairments are defined and reconciled to GAAP measures in the Non-GAAP Financial Measures Advisory section of each
Quarterly Report in respect of the relevant quarter, with such information being incorporated by reference herein and available on SEDAR at
www.sedar.com.
(5) Represented on a basic per share basis.
(6) ROCE excluding impairments would have been 5.1% for the first quarter of 2020 excluding the impacts of the $1.116 billion deferred tax recovery
for the Alberta corporate income tax rate change in the second quarter of 2019.

44 Annual Report 2021 Suncor Energy Inc.

Business Environment
Three months ended Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 Mar 31
(average for the period ended, except as noted) 2021 2021 2021 2021 2020 2020 2020 2020

WTI crude oil at Cushing US$/bbl 77.15 70.55 66.05 57.80 42.65 40.95 27.85 46.10
Dated Brent crude US$/bbl 79.70 73.45 68.85 60.85 44.20 43.00 29.20 50.15
Dated Brent/Maya FOB price differential US$/bbl 8.60 7.80 6.20 4.70 3.30 3.50 2.70 15.95
MSW at Edmonton Cdn$/bbl 93.25 83.75 77.25 66.55 50.25 51.30 30.20 52.00
WCS at Hardisty US$/bbl 62.50 56.95 54.60 45.40 33.35 31.90 16.35 25.60
Light/heavy crude oil differential for WTI
at Cushing less WCS at Hardisty US$/bbl (14.65) (13.60) (11.45) (12.40) (9.30) (9.05) (11.50) (20.50)
SYN-WTI (differential) premium US$/bbl (1.80) (1.60) 0.35 (3.50) (3.05) (2.45) (4.55) (2.70)
Condensate at Edmonton US$/bbl 79.10 69.20 66.40 58.00 42.55 37.55 22.20 46.20
Natural gas (Alberta spot) at AECO Cdn$/mcf 4.70 3.60 3.10 3.15 2.65 2.25 2.00 2.05
Alberta Power Pool Price Cdn$/MWh 107.30 100.35 104.50 95.45 46.15 43.85 29.90 67.05
(1)
New York Harbor 2-1-1 crack US$/bbl 20.65 20.90 20.35 15.60 9.85 10.20 12.20 14.75
(1)
Chicago 2-1-1 crack US$/bbl 16.90 20.45 20.25 13.40 7.95 7.75 6.75 9.75
(1)
Portland 2-1-1 crack US$/bbl 25.35 26.70 24.55 15.80 13.15 12.55 12.20 18.30
(1)
Gulf Coast 2-1-1 crack US$/bbl 19.65 19.55 18.25 14.45 9.00 8.55 9.00 13.00
U.S. Renewable Volume Obligation US$/bbl 6.10 7.33 8.13 5.50 3.48 2.64 2.21 1.58
Exchange rate US$/Cdn$ 0.79 0.79 0.81 0.79 0.77 0.75 0.72 0.74
Exchange rate (end of period) US$/Cdn$ 0.79 0.78 0.81 0.80 0.78 0.75 0.73 0.71
(1) 2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of
diesel. The crack spreads presented here generally approximate the regions into which the company sells refined products through retail and
wholesale channels.

Significant or Unusual Items Impacting Net Earnings (Loss) forward and the benefit of royalty and financial support
Trends in Suncor’s quarterly revenue, net earnings (loss) and from the Government of Newfoundland and Labrador.
adjusted funds from operations are driven primarily by
• During the third quarter of 2021, the company recorded a
production volumes, which can be significantly impacted by
loss of $80 million ($60 million after-tax) for early
major maintenance events, changes in commodity prices and
repayment of long-term debt in financing expenses in the
crude price differentials, refining crack spreads and foreign
Corporate and Eliminations segment.
exchange rates as described in the Financial Information
section of this MD&A. Trends in Suncor’s quarterly net earnings • During the first quarter of 2021, the company recorded a
(loss) and adjusted funds from operations are also affected restructuring charge of $168 million ($126 million after-tax)
by other significant events impacting operations, such as the related to workforce reductions in operating, selling and
COVID-19 pandemic beginning in the first quarter of 2020, general expenses in the Corporate and Eliminations
operational incidents and the Government of Alberta’s segment.
mandatory production curtailments that were implemented
• During the fourth quarter of 2020, the company recorded
during 2019 and suspended effective December 2020.
non-cash impairment charges of $559 million ($423 million
In addition to the impacts of changes in production volumes after-tax) against its share of the White Rose assets, in the
and business environment, net earnings (loss) over the last E&P segment, as a result of the high degree of uncertainty
eight quarters were affected by the following events or surrounding the future of the West White Rose Project.
significant adjustments:
• During the fourth quarter of 2020, the company recorded
• During the fourth quarter of 2021, the company recorded a provision to transportation expense for $186 million
a gain of $227 million ($227 million after-tax) on the sale ($142 million after-tax) related to the Keystone XL pipeline
of the company’s interest in the Golden Eagle Area project in the Oil Sands segment.
Development, in the E&P segment.
• During the first quarter of 2020, the company recorded
• During the third quarter of 2021, the company recorded a non-cash impairment charges of $1.821 billion
non-cash impairment reversal of $221 million ($168 million ($1.376 billion after-tax) on its share of the Fort Hills
after-tax) against its share of the Terra Nova assets, in the assets, in the Oil Sands segment, and $560 million
E&P segment, as a result of the ALE Project moving ($422 million after-tax) against its share of the White Rose

Annual Report 2021 Suncor Energy Inc. 45

Quarterly Financial Data

and Terra Nova assets, in the E&P segment, due to a benchmarks and demand for crude oil and refined
decline in forecasted crude oil prices in 2020 as a result of products due to COVID-19 mitigation efforts. The full
decreased global demand due to the impacts of the hydrocarbon inventory write-down amount of $536 million
COVID-19 pandemic and changes to their respective ($397 million after-tax) was included in net earnings but
capital, operating and production plans. was excluded from adjusted operating earnings and
• During the first quarter of 2020, the company recorded a adjusted funds from operations in the first quarter of 2020,
hydrocarbon inventory write-down to net realizable value and realized through adjusted operating earnings and
of $240 million ($177 million after-tax) in the Oil Sands adjusted funds from operations in the second quarter of
segment, and $296 million ($220 million after-tax) in the 2020 when the product was sold.
R&M segment, as a result of a significant decline in

46 Annual Report 2021 Suncor Energy Inc.

7. Capital Investment Update
Capital and Exploration Expenditures by Segment
Year ended December 31 ($ millions) 2021 2020 2019

Oil Sands 3 168 2 736 3 522

Exploration and Production 270 489 1 070
Refining and Marketing 825 515 818
Corporate and Eliminations 292 186 148
Total capital and exploration expenditures 4 555 3 926 5 558
Less: capitalized interest on debt (144) (120) (122)
4 411 3 806 5 436

Capital and Exploration Expenditures by Type, Excluding Capitalized Interest

Asset Sustainment Economic
Year ended December 31, 2021 ($ millions) and Maintenance(1) Investment(2) Total

Oil Sands
Oil Sands Base 1 216 420 1 636
In Situ 132 298 430
Fort Hills 253 — 253
Syncrude 652 97 749
Exploration and Production — 242 242
Refining and Marketing 751 73 824
Corporate and Eliminations 53 224 277
3 057 1 354 4 411
(1) Asset sustainment and maintenance capital expenditures include capital investments that deliver on existing value by ensuring compliance or
maintaining relations with regulators and other stakeholders, maintaining current processing capacity, and delivering existing developed reserves.
(2) Economic investment capital expenditures include capital investments that result in an increase in value through adding reserves, improving
processing capacity, utilization, cost or margin, including associated infrastructure.

In 2021, Suncor’s capital expenditures on property, plant and Activity in 2021 included the following:
equipment and exploration activities totalled $4.411 billion,
Oil Sands Base
excluding capitalized borrowing costs of $144 million, of which
30% was directed towards economic investment activities Oil Sands Base asset sustainment and maintenance capital
and 70% towards asset sustainment and maintenance activities, expenditures were $1.216 billion in 2021 and were primarily
meeting its planned capital spending program guidance for focused on ensuring continued safe, reliable and efficient
the year. operations. The company’s planned maintenance program in
2021 included coker annual planned maintenance in the spring
The company’s 2021 capital expenditures were focused on the and the significant five-year planned turnaround at Upgrader 2
safety and reliability of the company’s operations, heavily in the fall.
weighted towards asset sustainment and maintenance
activities through the largest annual maintenance program in Oil Sands Base economic capital of $420 million in 2021 was
the company’s history, which included significant planned primarily focused on progressing the investment in low-carbon
turnaround activities across all of its refineries, at Oil Sands power generation by replacing its coke-fired boilers with a
operations, including a significant planned turnaround at new cogeneration facility.
Oil Sands Base plant Upgrader 2, and a planned turnaround In Situ
at Syncrude’s largest coker. In 2020, due to the impacts of the
In Situ capital expenditures were $430 million in 2021, of
COVID-19 pandemic, the company deferred, suspended and
which $298 million was directed towards economic investment
cancelled certain capital projects or changed the scope of
activities, which focused on the ongoing design and
work to reduce costs and to comply with COVID-19 safety
construction of well pads to develop additional reserves that
measures.
are expected to maintain existing production levels at Firebag
and MacKay River in future years as production from existing

Annual Report 2021 Suncor Energy Inc. 47

Capital Investment Update

well pads declines. Asset sustainment and maintenance Suncor anticipates 2022 capital expenditures to be directed to
capital expenditures of $132 million were primarily directed the following projects and initiatives:
towards the company’s planned maintenance program, Oil Sands operations
including planned maintenance at Firebag. For 2022, plans for economic investment include capital to
Fort Hills progress low-carbon power generation to replace the coke­
fired boilers at Oil Sands Base, which is expected to be in­
Fort Hills capital expenditures were $253 million in 2021, all
service between 2024 and 2025. Additional investment to
directed towards asset sustainment and capital expenditures maintain production capacity at existing facilities includes the
related to mine and tailings development to support ongoing continued development of reserves by building new well
operations. pads at In Situ.

Syncrude Asset sustainment and maintenance capital expenditures for

2022 include spend on tailings management and the significant
Syncrude capital expenditures were $749 million in 2021, the
planned turnaround at Firebag, planned maintenance at
majority of which was directed toward asset sustainment and
Upgrader 1 and planned coker annual maintenance at
maintenance capital expenditures that focused on improving Upgrader 2.
asset reliability and included the planned turnaround at
Fort Hills
Syncrude’s largest coker.
Asset sustainment and maintenance capital expenditures for
Exploration and Production 2022 will focus on ongoing development of mining and tailings
E&P capital and exploration expenditures were $242 million in management projects to preserve production capacity.
2021, and were focused on economic investment projects, Syncrude
including development drilling at Hebron, and development For 2022, plans for economic investment will include capital to
work at Buzzard Phase 2, the Fenja project and Terra Nova progress the Mildred Lake Extension-West mining project.
related to the ALE Project. The Terra Nova Floating, Production, Sustaining capital expenditures for 2022 will focus on planned
Storage and Offloading facility is dry-docked in Spain maintenance and reliability programs aimed at maintaining
undergoing maintenance work and is expected to sail back to production capacity, which includes planned maintenance in
Canada and return to operations before the end of 2022. tailings and a major planned turnaround.
Exploration and Production
Refining and Marketing
Capital expenditures for 2022 are expected to include
R&M capital expenditures were $824 million in 2021, and were
economic investments at Terra Nova, Hebron, Hibernia, Fenja,
primarily related to the ongoing sustainment of, and
Oda, Buzzard and the Rosebank future development project.
enhancement to, refinery and retail operations. This included
planned turnaround activities across all of the company’s Refining and Marketing
refineries during the year. The company expects that sustaining capital will focus on
ongoing sustainment and enhancement to refinery and retail
Corporate operations, including planned maintenance activities across the
Corporate capital expenditures were $277 million in 2021, company’s refineries. Economic investment projects will be
primarily directed towards economic investment projects primarily focused on the company’s retail and wholesale
related to the company’s information technology and other network.
corporate initiatives, and the Forty Mile Wind Power Project. Corporate
For 2022, the company plans to continue to make economic
investments in digital technology initiatives and the Forty Mile
Wind Power Project in southern Alberta, which is planned for
completion in late 2022.

48 Annual Report 2021 Suncor Energy Inc.

8. Financial Condition and Liquidity
Liquidity and Capital Resources
At December 31 ($ millions, except as noted) 2021 2020 2019

Cash flow provided by (used in)

Operating activities 11 764 2 675 10 421
Investing activities (3 977) (4 524) (5 088)
Financing activities (7 464) 1 786 (5 537)
Foreign exchange loss on cash and cash equivalents (3) (12) (57)
Increase (decrease) in cash and cash equivalents 320 (75) (261)
Cash and cash equivalents, end of year 2 205 1 885 1 960
(1)(2)
Return on Capital Employed (%) 8.6 (6.9) 4.9
(1)
Net debt to adjusted funds from operations (times) 1.6 5.1 1.5
(1)
Total debt to total debt plus shareholders’ equity (%) 33.4 37.8 29.9
(1)(3)
Net debt to net debt plus shareholders’ equity (%) 30.6 35.7 27.6
(1)(3)
Net debt to net debt plus shareholders’ equity – excluding leases (%) 26.6 32.1 23.7
(1) Non-GAAP financial measures or contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.
(2) ROCE would have been 8.2% for the twelve months ended December 31, 2021, excluding the impact of the impairment reversal of $221 million
($168 million after-tax) in the third quarter of 2021. ROCE would have been (2.9%) for the twelve months ended December 31, 2020, excluding the
impact of impairments of $559 million ($423 million after-tax) in the fourth quarter of 2020 and $1.821 billion ($1.376 billion after-tax) and $560 million
($422 million after-tax) in the first quarter of 2020. ROCE would have been 10.0% for the twelve months ended December 31, 2019, excluding the
impact of impairments of $3.716 billion ($2.803 billion after-tax) and $521 million ($393 million after-tax) in the fourth quarter of 2019.
(3) Beginning in the first quarter of 2021, the company has added two supplemental debt metrics that reflect additional information that management
uses to evaluate capital management.

Cash Flow Provided by Operating Activities was partially offset by increased capital expenditures in the
Cash flow provided by operating activities was $11.764 billion current year related to the largest annual maintenance
in 2021 compared to $2.675 billion in 2020. The increase was program in the company’s history. In 2020, the company
primarily due to higher crude oil and refined product reduced, deferred or cancelled certain capital projects in
realizations reflecting the improved business environment response to the COVID-19 pandemic.
and higher crude production and refinery crude throughput.
Cash Flow (Used in) Provided by Financing Activities
These factors were partially offset by an increase in royalties,
primarily associated with higher crude price realizations, Cash flow used in financing activities was $7.464 billion in
and increased operating expenses. The prior year was 2021, compared to cash flow provided by financing activities
negatively impacted by the significant decline in transportation of $1.786 billion in 2020. Cash flow used in financing activities
fuel demand, partially offset by cost reductions in response in 2021 was primarily related to the decrease in short-term
to the COVID-19 pandemic, including the relief provided under debt and net long-term debt and increased share repurchases.
the CEWS program.
Capital Resources
The current period cash flow provided by operating activities
Suncor’s capital resources consist primarily of cash flow
reflects a source of cash in working capital, primarily due to a
provided by operating activities, cash and cash equivalents
net increase in taxes payable related to the company’s 2021
and available credit facilities, including commercial paper.
income tax expense, which is payable in early 2022, and an
Suncor’s management believes the company will have sufficient
increase in accounts payable and accrued liabilities, partially
capital resources to fund its planned 2022 capital spending
offset by an increase in accounts receivable related to an
program of $4.7 billion and to meet current and future working
increase in crude oil price realizations during the year. The
capital requirements through cash and cash equivalents
prior period cash flow provided by operating activities reflects
balances, cash flow provided by operating activities, available
a use of cash in working capital.
committed credit facilities, issuing commercial paper, if needed,
Cash Flow Used in Investing Activities and accessing capital markets. The company’s cash flow
Cash flow used in investing activities was $3.977 billion in provided by operating activities depends on a number of
2021 compared to $4.524 billion in 2020. The decrease was factors, including commodity prices, production and sales
primarily due to a decrease in investing working capital related volumes, refining and marketing margins, operating expenses,
to the timing of payments and proceeds from the sale of the taxes, royalties, foreign exchange rates and demand for
company’s interest in the Golden Eagle Area Development. This transportation fuels.

Annual Report 2021 Suncor Energy Inc. 49

Financial Condition and Liquidity

The company has invested excess cash in short-term financial Total Debt to Total Debt Plus Shareholders’ Equity
instruments that are presented as cash and cash equivalents. Suncor is subject to financial and operating covenants related
The objectives of the company’s short-term investment to its bank debt and public market debt. Failure to meet the
portfolio are to ensure the preservation of capital, maintain terms of one or more of these covenants may constitute an
adequate liquidity to meet Suncor’s cash flow requirements Event of Default as defined in the respective debt agreements,
and deliver competitive returns derived from the quality and potentially resulting in accelerated repayment of one or
diversification of investments within acceptable risk more of the debt obligations. The company is in compliance
parameters. The maximum weighted average term to maturity with its financial covenant that requires total debt to not exceed
of the short-term investment portfolio is not expected to 65% of its total debt plus shareholders’ equity. At December 31,
exceed six months, and all investments will be with 2021, total debt to total debt plus shareholders’ equity was
counterparties with investment grade debt ratings. 33.4% (December 31, 2020 – 37.8%), a decrease from the prior
year due to lower debt levels and higher shareholders’
Available Sources of Liquidity equity as a result of increased net earnings. The company is
currently in compliance with all operating covenants as at
Cash and Cash Equivalents December 31, 2021.
Included in cash and cash equivalents of $2.205 billion at
Change in Net Debt(1)
December 31, 2021, are short-term investments with weighted
average days to maturity of approximately 20 days. In 2021, ($ millions)

the company earned approximately $1 million of interest Total debt(1) – December 31, 2020 21 699
income on these investments. Net decrease in long-term debt (1 028)
Net decrease in short-term debt (2 256)
Financing Activities
Increase in lease liability 308
Suncor’s interest on debt and lease liabilities (before capitalized
interest) in 2021 was $995 million, a decrease from Lease payments (325)
$1.050 billion in 2020, due to a significant decrease in Foreign exchange on debt, and other (44)
short-term debt during the year and the net reduction of Total debt(1) – December 31, 2021 18 354
long-term debt that occurred over the course of 2021. Less: Cash and cash
equivalents – December 31, 2021 2 205
Available lines of credit at December 31, 2021, decreased to
$4.247 billion compared to $6.043 billion at December 31, 2020. Net debt(1) – December 31, 2021 16 149
The decrease in liquidity was primarily due to the cancellation (1) Non-GAAP financial measures. See the Advisories – Non-GAAP
of $2.8 billion in bi-lateral credit facilities that were no longer Financial Measures section of this MD&A.
required as they were entered into in March and April of 2020 At December 31, 2021, Suncor’s net debt was $16.149 billion,
to ensure access to adequate financial resources in connection compared to $19.814 billion at December 31, 2020. During
with the COVID-19 pandemic, and a reduction in the size of the 2021, net debt decreased by $3.665 billion, primarily due to a
company’s syndicated credit facilities. The decrease was net decrease in short-term and long-term debt, lease principal
partially offset by increased credit availability as a result of a payments made in 2021 and an increase in cash and cash
lower commercial paper balance. As of December 31, 2021, equivalents relative to the prior year, partially offset by
Suncor had approximately $6.5 billion of liquidity. additional leases entered into in 2021.

A summary of total and unutilized credit facilities at For the year ended December 31, 2021, the company’s net
December 31, 2021, is as follows: debt to adjusted funds from operations measure was 1.6 times,
which is lower than management’s maximum target of less
($ millions) 2021
than 3.0 times.
Fully revolving and expires in 2025 3 000
Subsequent to the end of the year, the company completed an
Fully revolving and expires in 2024 2 531 early redemption of its outstanding US$182 million 4.50%
notes, originally scheduled to mature in the second quarter
Can be terminated at any time at the option
of the lenders 1 420 of 2022.

Total credit facilities 6 951 Credit Ratings

Credit facilities supporting outstanding The company’s credit ratings impact its cost of funds and
commercial paper (1 284) liquidity. In particular, the company’s ability to access unsecured
funding markets and to engage in certain activities on a
Credit facilities supporting standby letters of
credit (1 147) cost-effective basis is primarily dependent upon maintaining a
strong credit rating. A lowering of the company’s credit
(1)
Total unutilized credit facilities 4 520 rating may also have potentially adverse consequences for
(1) Available credit facilities for liquidity purposes were $4.247 billion at the company’s funding capacity or access to the capital
December 31, 2021 (December 31, 2020 – $6.043 billion). markets, may affect the company’s ability, and the cost, to
enter into normal course derivative or hedging transactions,
and may require the company to post additional collateral
under certain contracts.

50 Annual Report 2021 Suncor Energy Inc.

As at February 23, 2022, the company’s long-term senior debt in the period beginning February 8, 2021, and ending
ratings are: February 7, 2022, from 44,000,000 common shares, or
approximately 2.9% of Suncor’s issued and outstanding
Long-Term
Long-Term Senior Debt Rating Outlook common shares as at January 31, 2021, to 76,250,000 common
shares, or approximately 5% of Suncor’s issued and
Standard & Poor’s BBB+ Negative
outstanding common shares as at January 31, 2021.
Dominion Bond Rating Service A (low) Stable
During the fourth quarter of 2021, and following the Board’s
Moody’s Investors Service Baa1 Stable approval to increase the company’s share repurchase program
to up to approximately 7% of the company’s public float,
As at February 23, 2022, the company’s commercial paper Suncor received approval from the TSX to amend its existing
ratings are: NCIB effective as of the close of markets on October 29, 2021,
Cdn U.S. to purchase common shares through the facilities of the
Program Program TSX, NYSE and/or alternative trading systems. The notice
Commercial Paper Rating Rating
provided that Suncor may increase the maximum number of
Standard & Poor’s A-1 (low) A-2 common shares that may be repurchased in the period
beginning February 8, 2021, and ending February 7, 2022,
Dominion Bond Rating Service R-1 (low) Not rated
from 76,250,000 shares, or approximately 5% of Suncor’s issued
Moody’s Investors Service Not rated P2 and outstanding common shares as at January 31, 2021, to
106,700,000, or approximately 7% of Suncor’s public float as
Refer to the Description of Capital Structure – Credit Ratings at January 31, 2021.
section of Suncor’s 2021 AIF for a description of credit ratings
listed above. Subsequent to the fourth quarter of 2021, and following the
Board’s approval to renew the company’s share repurchase
Common Shares program to repurchase up to approximately 5% of the
company’s common shares, the TSX accepted a notice filed by
Outstanding Shares Suncor to renew its NCIB to purchase the company’s common
(thousands) December 31, 2021 shares through the facilities of the TSX, NYSE and/or alternative
Common shares 1 441 251 trading systems. The notice provides that, beginning
February 8, 2022, and ending February 7, 2023, Suncor may
Common share options – exercisable 28 421 purchase for cancellation up to 71,650,000 common shares,
Common share options – which is equal to approximately 5% of Suncor’s issued and
non-exercisable 8 669 outstanding common shares as at the date thereof. As at
January 31, 2022, Suncor had 1,435,748,494 common shares
As at February 23, 2022, the total number of common shares issued and outstanding.
outstanding was 1,431,430,756 and the total number of
exercisable and non-exercisable common share options Pursuant to Suncor’s previous NCIB, as amended on
outstanding was 32,937,645. Once exercisable, each October 29, 2021, Suncor agreed that it would not purchase
outstanding common share option may be exercised for one more than 106,700,000 common shares between February 8,
common share. 2021, and February 7, 2022. Between February 8, 2021, and
February 7, 2022, and pursuant to Suncor’s previous NCIB
Share Repurchases (as amended), Suncor repurchased 91,046,656 common shares
In the first quarter of 2021, the TSX accepted a notice filed by on the open market for approximately $2.554 billion, at a
Suncor to commence an NCIB to repurchase common shares weighted average price of $28.06 per share.
through the facilities of the TSX, NYSE and/or alternative trading
systems. The notice provided that, beginning February 8, 2021, Between February 8, 2022, and February 23, 2022, and
and ending February 7, 2022, Suncor may purchase for pursuant to Suncor’s current NCIB (as renewed), Suncor
cancellation up to 44,000,000 common shares, which is equal to repurchased 3,224,200 shares on the open market for
approximately 2.9% of Suncor’s 1,525,150,794 issued and approximately $120 million, at a weighted average price of
outstanding common shares as at January 31, 2021. $37.21 per share.

During the third quarter of 2021, and following the Board’s The actual number of common shares that may be repurchased
approval to increase the company’s share repurchase program under the NCIB and the timing of any such purchases will be
to up to approximately 5% of the company’s outstanding determined by Suncor. Suncor believes that, depending on the
common shares, Suncor received approval from the TSX to trading price of its common shares and other relevant
amend its existing NCIB effective as of the close of markets on factors, repurchasing its common shares represents an
July 30, 2021, to repurchase common shares through the attractive investment opportunity and is in the best interests
facilities of the TSX, NYSE and/or alternative trading systems. of the company and its shareholders. The company does not
The amended notice provided that Suncor may increase the expect that the decision to allocate cash to repurchase
maximum number of common shares that may be repurchased shares will affect its long-term strategy.

Annual Report 2021 Suncor Energy Inc. 51

Financial Condition and Liquidity

At December 31 ($ millions, except as noted) 2021 2020 2019

Share repurchase activities (thousands of common shares)

Shares repurchased 83 959 7 527 55 298
Share repurchase cost 2 304 307 2 274
Weighted average repurchase price per share (dollars per share) 27.45 40.83 41.12

Contractual Obligations, Commitments, The company does not believe it has any guarantees or off­
Guarantees and Off-Balance Sheet balance sheet arrangements that have, or are reasonably likely
to have, a current or future material effect on the company’s
Arrangements
financial condition or financial performance, including liquidity
In addition to the enforceable and legally binding obligations and capital resources.
in the table below, Suncor has other obligations for goods and
services that were entered into in the normal course of In the normal course of business, the company is obligated to
business, which may terminate on short notice, including make future payments, including contractual obligations
commitments for the purchase of commodities for which an and non-cancellable commitments.
active, highly liquid market exists, and which are expected to be
re-sold shortly after purchase.

Payment due by period

($ millions) 2022 2023 2024 2025 2026 Thereafter Total

(1)
Long-term debt 969 1 295 720 1 403 1 724 18 836 24 947
Decommissioning and
restoration costs(2) 305 354 407 401 348 12 012 13 827
Long-term contracts, pipeline
capacity and energy services
commitments(3) 1 957 1 555 1 470 1 323 1 263 8 228 15 796
(3)
Exploration work commitments — 20 — 64 1 454 539
(4)
Lease obligations 459 407 372 342 318 2 633 4 531
(5)
Other long-term obligations 4 18 18 18 18 — 76
Total 3 694 3 649 2 987 3 551 3 672 42 163 59 716
(1) Includes long-term debt and interest payments on long-term debt. Refer to note 21 and note 27 of Suncor’s 2021 audited Consolidated Financial
Statements.
(2) Represents the undiscounted and uninflated amount of decommissioning and restoration costs. Refer to note 24 of Suncor’s 2021 audited
Consolidated Financial Statements.
(3) Refer to note 32 of Suncor’s 2021 audited Consolidated Financial Statements.
(4) Refer to note 21 and note 27 of Suncor’s 2021 audited Consolidated Financial Statements.
(5) Includes Libya EPSA signature bonus and merger consent. Please refer to note 22 of Suncor’s 2021 audited Consolidated Financial Statements.

Transactions with Related Parties

The company enters into transactions with related parties in
the normal course of business. These transactions primarily
include sales to associated entities in the company’s R&M
segment. For more information on these transactions and for
a summary of Compensation of Key Management Personnel,
refer to note 31 of the 2021 audited Consolidated Financial
Statements.

52 Annual Report 2021 Suncor Energy Inc.

Financial Instruments the year ended December 31, 2021, the pre-tax earnings
impact of risk management and trading activities was
The company uses derivative financial instruments, such as
$155 million (2020 – pre-tax earnings of $175 million).
physical and financial contracts, to manage certain exposures
to fluctuations in interest rates, commodity prices and Gains or losses related to derivatives are recorded as Other
foreign currency exchange rates as part of its overall risk Income in the Consolidated Statements of Comprehensive
management program, as well as for trading purposes. For Income.

($ millions) 2021 2020

Fair value outstanding, beginning of year (121) (39)

Cash settlements – paid (received) during the year 178 (257)
Changes in fair value recognized in earnings during the year (155) 175
Fair value outstanding, end of year (98) (121)

The fair value of derivative financial instruments is recorded on the Consolidated Balance Sheets.

Fair value of derivative contracts at

December 31 ($ millions) 2021 2020

Accounts receivable 123 153

Accounts payable (221) (274)
(98) (121)

Risks Associated with Derivative Financial Instruments to market volatility, as well as the need for stable cash flow to
Suncor may be exposed to certain losses in the event that finance future growth. Commodity risk management and
counterparties to derivative financial instruments are unable trading activities are governed by a separate risk management
to fulfil their obligations under these contracts. The company group that reviews and monitors practices and policies and
minimizes this risk by entering into agreements with provides independent verification and valuation of these
investment grade counterparties. Risk is also minimized activities.
through regular management review of the potential exposure
For further details on our derivative financial instruments,
to and credit ratings of such counterparties. Suncor’s
including assumptions made in the calculation of fair value, a
exposure is limited to those counterparties holding derivative
sensitivity analysis of the effect of changes in commodity prices
contracts with net positive fair values at a reporting date.
on our derivative financial instruments, and additional
Suncor’s risk management activities are subject to periodic discussion of exposure to risks and mitigation activities, refer
reviews by management to determine appropriate hedging to note 27 of the company’s 2021 audited Consolidated
requirements based on the company’s tolerance for exposure Financial Statements.

Annual Report 2021 Suncor Energy Inc. 53

9. Accounting Policies and Critical Accounting Estimates
Suncor’s significant accounting policies are described in operations and a significant increase in economic uncertainty,
note 3 of the audited Consolidated Financial Statements for with fluctuating demand for commodities leading to volatile
the year ended December 31, 2021. prices and currency exchange rates, and a decline in long-term
interest rates. Our operations and business are particularly
Recently Announced Accounting sensitive to a reduction in the demand for, and prices of,
Pronouncements commodities that are closely linked to Suncor’s financial
performance, including crude oil, refined petroleum products
The standards, amendments and interpretations that are
(such as jet fuel and gasoline), natural gas and electricity.
issued, but not yet effective up to the date of authorization of
The potential direct and indirect impacts of the economic
the company’s consolidated financial statements, and that
volatility have been considered in management’s estimates,
may have an impact on the disclosures and financial position
and assumptions at period-end have been reflected in our
of the company are disclosed below. The company intends to
results with any significant changes described in the relevant
adopt these standards, amendments and interpretations
financial statement note.
when they become effective.
The COVID-19 pandemic is an evolving situation that is
Deferred Tax Related to Assets and expected to continue to have widespread implications for our
Liabilities Arising from a Single Transaction business environment, operations and financial condition.
In May 2021, the IASB issued Deferred Tax related to Assets Management cannot reasonably estimate the length or severity
and Liabilities arising from a Single Transaction (Amendments to of this pandemic, or the extent to which the disruption may
IAS 12). The amendments narrowed the scope of the initial materially impact our consolidated statements of
recognition exemption to exclude transactions that give rise comprehensive income (loss), consolidated balance sheets
to equal and offsetting temporary differences. The and consolidated statements of cash flows.
amendments are effective January 1, 2023, with early adoption
permitted. The company does not anticipate any significant Climate Change
impact from these amendments on the consolidated financial Climate change and the transition to a lower-carbon economy
statements as a result of the initial application. from carbon-based sources to alternative energy were
considered in preparing the consolidated financial statements.
Definition of Accounting Estimates These may have significant impacts on the currently reported
In February 2021, the IASB issued Definition of Accounting amounts of the company’s assets and liabilities discussed
Estimates (Amendments to IAS 8). The amendments introduced below and on similar assets and liabilities that may be
a definition of accounting estimates and included other recognized in the future.
amendments to help entities distinguish changes in accounting
The financial statement areas that require significant estimates
estimates from changes in accounting policies. The
and judgments are as follows:
amendments are effective January 1, 2023, with early adoption
permitted. The company does not anticipate any significant Oil and Gas Reserves
impact from these amendments on the consolidated financial The company’s estimate of oil and gas reserves is considered
statements as a result of the initial application. in the measurement of depletion, depreciation, impairment,
and decommissioning and restoration obligations. The
Significant Accounting Estimates and estimation of reserves is an inherently complex process and
Judgments involves the exercise of professional judgment. All reserves
The preparation of financial statements in accordance with have been evaluated at December 31, 2021, by independent
IFRS requires management to make estimates and judgments qualified reserves evaluators. Oil and gas reserves estimates
that affect reported assets, liabilities, revenues, expenses, are based on a range of geological, technical and economic
gains, losses and disclosures of contingencies. These estimates factors, including projected future rates of production,
and judgments are subject to change based on experience projected future commodity prices, engineering data, and the
and new information. timing and amount of future expenditures, all of which are
subject to uncertainty. Estimates reflect market and regulatory
COVID-19 conditions existing at December 31, 2021, which could differ
significantly from other points in time throughout the year, or
On January 30, 2020, the World Health Organization declared
future periods. Changes in market and regulatory conditions
the COVID-19 outbreak a Public Health Emergency of
and assumptions, as well as climate change, and the evolving
International Concern and, on March 10, 2020, declared it to
worldwide demand for energy and global advancement of
be a pandemic. Actions taken around the world to help mitigate
alternative sources of energy that are not sourced from fossil
the spread of COVID-19 include restrictions on travel,
fuels can materially impact the estimation of net reserves. The
quarantines in certain areas, and forced closures for certain
timing in which global energy markets transition from carbon­
types of public places and businesses. These measures have
based sources to alternative energy is highly uncertain.
and may continue to have significant disruption to business

54 Annual Report 2021 Suncor Energy Inc.

Oil and Gas Activities Decommissioning and Restoration Costs
The company is required to apply judgment when designating The company recognizes liabilities for the future
the nature of oil and gas activities as exploration, evaluation, decommissioning and restoration of Exploration and
development or production, and when determining whether Evaluation assets and Property, Plant and Equipment based
the costs of these activities shall be expensed or capitalized. on estimated future decommissioning and restoration costs.
Management applies judgment in assessing the existence and
Exploration and Evaluation Costs
extent as well as the expected method of reclamation of the
Certain exploration and evaluation costs are initially capitalized company’s decommissioning and restoration obligations at the
with the intent to establish commercially viable reserves. The end of each reporting period. Management also uses
company is required to make judgments about future events judgment to determine whether the nature of the activities
and circumstances and applies estimates to assess the performed is related to decommissioning and restoration
economic viability of extracting the underlying resources. The activities or normal operating activities.
costs are subject to technical, commercial and management
review to confirm the continued intent to develop the project. Actual costs are uncertain and estimates may vary as a result
Level of drilling success or changes to project economics, of changes to relevant laws and regulations related to the use
resource quantities, expected production techniques, of certain technologies, the emergence of new technology,
production costs and required capital expenditures are operating experience, prices and closure plans. The estimated
important judgments when making this determination. timing of future decommissioning and restoration may
Management uses judgment to determine when these costs change due to certain factors, including reserves life. Changes
are reclassified to Property, Plant and Equipment based on to estimates related to future expected costs, discount rates,
several factors, including the existence of reserves, appropriate inflation assumptions, and timing may have a material impact
approvals from regulatory bodies, joint arrangement partners on the amounts presented. In addition, climate change, and
and the company’s internal project approval process. the evolving worldwide demand for energy and global
advancement of alternative sources of energy that are not
Determination of Cash Generating Units (CGUs) sourced from fossil fuels could result in a change in
A CGU is the lowest grouping of integrated assets that assumptions used in determining the carrying value of the
generate identifiable cash inflows that are largely independent liabilities. The timing in which global energy markets transition
of the cash inflows of other assets or groups of assets. The from carbon-based sources to alternative energy is highly
allocation of assets into CGUs requires significant judgment uncertain.
and interpretations with respect to the integration between
assets, the existence of active markets, similar exposure to Employee Future Benefits
market risks, shared infrastructure, and the way in which The company provides benefits to employees, including
management monitors the operations. pensions and other post-retirement benefits. The cost of
defined benefit pension plans and other post-retirement
Asset Impairment and Reversals benefits received by employees is estimated based on actuarial
Management applies judgment in assessing the existence of valuation methods that require professional judgment.
impairment and impairment reversal indicators based on Estimates typically used in determining these amounts include,
various internal and external factors. as applicable, rates of employee turnover, future claim costs,
discount rates, future salary and benefit levels, the return on
The recoverable amount of CGUs and individual assets is
plan assets, mortality rates and future medical costs.
determined based on the higher of fair value less costs of
Changes to these estimates may have a material impact on
disposal or value-in-use calculations. The key estimates the
the amounts presented.
company applies in determining the recoverable amount
normally include estimated future commodity prices, discount Other Provisions
rates, expected production volumes, future operating and The determination of other provisions, including, but not
development costs, income taxes, and refining margins. In limited to, provisions for royalty disputes, onerous contracts,
determining the recoverable amount, management may also litigation and constructive obligations, is a complex process that
be required to make judgments regarding the likelihood of involves judgment about the outcomes of future events, the
occurrence of a future event. Changes to these estimates and interpretation of laws and regulations, and estimates on the
judgments will affect the recoverable amounts of CGUs and timing and amount of expected future cash flows and
individual assets and may then require a material adjustment discount rates.
to their related carrying value. In addition, climate change,
and the evolving worldwide demand for energy and global Income Taxes
advancement of alternative sources of energy that are not Management evaluates tax positions, annually or when
sourced from fossil fuels could result in a change in circumstances require, which involves judgment and could be
assumptions used in determining the recoverable amount subject to differing interpretations of applicable tax legislation.
and could affect the carrying value and useful life of the related The company recognizes a tax provision when a payment to tax
assets. The timing in which global energy markets transition authorities is considered probable. However, the results of
from carbon-based sources to alternative energy is highly audits and reassessments and changes in the interpretations
uncertain. of standards may result in changes to those positions and,

Annual Report 2021 Suncor Energy Inc. 55

Accounting Policies and Critical Accounting Estimates

potentially, a material increase or decrease in the company’s outflow of funds to a taxation authority. The company records
assets, liabilities and net earnings. a provision for the amount that is expected to be settled,
which requires judgment as to the ultimate outcome. Deferred
Deferred tax assets are recognized when it is considered
tax liabilities could be impacted by changes in the company’s
probable that deductible temporary differences will be
judgment of the likelihood of a future outflow and estimates of
recovered in the foreseeable future. To the extent that future
the expected settlement amount, timing of reversals, and the
taxable income and the application of existing tax laws in each
tax laws in the jurisdictions in which the company operates.
jurisdiction differ significantly from the company’s estimate,
the ability of the company to realize the deferred tax assets
could be impacted.

Deferred tax liabilities are recognized when there are taxable

temporary differences that will reverse and result in a future

56 Annual Report 2021 Suncor Energy Inc.

10. Risk Factors
Suncor is committed to a proactive program of enterprise risk such as Suncor. Suncor’s production from Oil Sands includes
management intended to enable decision-making through significant quantities of bitumen and SCO that may trade at a
consistent identification and assessment of risks inherent to discount to light and medium crude oil. Bitumen and SCO are
its assets, activities and operations. Some of these risks are typically more expensive to produce and process. In addition,
common to operations in the oil and gas industry as a whole, the market prices for these products may differ from the
while some are unique to Suncor. The realization of any of established market indices for light and medium grades of
the following risks could have a material adverse effect on crude oil. As a result, the price received for bitumen and SCO
Suncor’s business, financial condition, reserves and results may differ from the benchmark they are priced against.
of operations.
Wide differentials or a prolonged period of low and/or volatile
commodity prices, particularly for crude oil, could have a
Volatility of Commodity Prices
material adverse effect on Suncor’s business, financial
Suncor’s financial performance is closely linked to prices for
condition, reserves and results of operations, and may also
crude oil in the company’s upstream business and prices for
lead to the impairment of assets, or to the cancellation or
refined petroleum products in the company’s downstream
deferral of Suncor’s growth projects.
business and, to a lesser extent, to natural gas and electricity
prices in the company’s upstream business where natural gas Commodity prices could be materially and adversely affected
and electricity are both inputs and outputs of production by the outbreak of epidemics, pandemics and other public
processes. The prices for all of these commodities can be health crises in geographic areas in which Suncor has
influenced by global and regional supply and demand factors, operations, suppliers, customers or employees, including the
which are factors that are beyond the company’s control and COVID-19 pandemic and the ongoing uncertainty as to the
can result in a high degree of price volatility. extent and duration of the pandemic, as well as uncertainty
surrounding new variations or mutations of the COVID-19 virus.
Crude oil prices are also affected by, among other things,
Actions that have and may be taken by governmental
global economic health (particularly in emerging markets),
authorities in response to the ongoing COVID-19 pandemic
market access constraints, regional and international supply
have resulted, and may continue to result in, among other
and demand imbalances, political developments and
things, increased volatility in commodity prices. In particular,
government action, decisions by OPEC+ regarding quotas on
the COVID-19 pandemic has resulted in, and may continue to
its members, compliance or non-compliance with quotas
result in, a reduction in the demand for, and prices of,
agreed upon by OPEC+ members and other countries, and
commodities that are closely linked to Suncor’s financial
weather. Many of the factors that can cause volatility have
performance, including crude oil, refined petroleum products
been, and may continue to be, affected by the impacts of the
(such as jet fuel and gasoline), natural gas and electricity,
COVID-19 pandemic. These factors impact the various types of
and also increases the risk that storage for crude oil and
crude oil and refined products differently and can impact
refined petroleum products could reach capacity in certain
differentials between light and heavy grades of crude oil
geographic locations in which we operate. While vaccines are
(including blended bitumen), and between conventional oil
being distributed, there is uncertainty as to the timing, level of
and SCO.
adoption, duration of efficacy and effectiveness of vaccines
Refined petroleum product prices and refining margins are against current or future variants or mutations. This continues
also affected by, among other things, crude oil prices, the the risk and uncertainty as to the extent and duration of the
availability of crude oil and other feedstock, levels of refined COVID-19 pandemic and the resultant impact on commodity
product inventories, regional refinery availability, market demand and prices. A prolonged period of decreased demand
access, marketplace competitiveness, regulatory compliance for, and prices of, these commodities, and any applicable
costs and other local market factors. Natural gas prices in North storage constraints, could also result in us voluntarily curtailing
America are affected by, among other things, supply and or shutting in production and a decrease in our refined
demand, inventory levels, weather and prices for alternative product volumes and refinery utilization rates. Additionally,
energy sources. Decreases in product margins or increases in commodity prices could remain under pressure for a prolonged
natural gas prices could have a material adverse effect on period. This could result in reduced utilization and/or the
Suncor’s business, financial condition, reserves and results suspension of operations at certain of our facilities, buyers of
of operations. our products declaring force majeure or bankruptcy, the
unavailability of storage, and disruptions of pipeline and other
In addition, oil and natural gas producers in North America, transportation systems for our products, which would further
and particularly in Canada, may receive discounted prices for negatively impact Suncor’s production or refined product
their production relative to certain international prices, due in volumes, and could have a material adverse effect on Suncor’s
part to constraints on the ability to transport and sell such business, financial condition, reserves and results
products to international markets. A failure to resolve such of operations.
constraints may result in continued discounted or reduced
commodity prices realized by oil and natural gas producers

Annual Report 2021 Suncor Energy Inc. 57

Risk Factors

Carbon Risk absolute operational GHG emissions of the company may rise
as a result of growth, mergers and acquisition activities, and
Public support for climate change action and receptivity to
changes in the operatorship of assets by Suncor or affiliates,
alternative or renewable energy technologies has grown in
which is particularly relevant in 2021 given that Suncor assumed
recent years. Governments in Canada and around the world
operatorship of Syncrude in 2021. Increases in GHG emissions
have responded to these shifting societal attitudes by adopting
may impact the profitability of the company’s projects, as
ambitious emissions reduction targets and supporting
Suncor will be subject to incremental levies and taxes. There is
legislation, including measures relating to carbon pricing,
also a risk that Suncor could face litigation initiated by third
clean energy and fuel standards, and alternative energy
parties relating to climate change, including litigation
incentives and mandates. There has also been increased
pertaining to GHG emissions, the production, sale, or
activism and public opposition to fossil fuels, and oil sands
promotion of fossil fuels and petroleum products, and/or
in particular.
disclosure. For example, the Board of County Commissioners
Existing and future laws and regulations in support of a of Boulder County, the Board of County Commissioners of San
transition to low-carbon energy and climate change action Miguel County and the City of Boulder, all of Colorado, have
may impose significant constraints on fossil fuel development. brought an action against Suncor and certain of its subsidiaries
Concerns over climate change, fossil fuel extraction, GHG seeking, among other things, compensation for impacts they
emissions, and water and land-use practices could lead allege with respect to climate change. In addition, the
governments to enact additional or more stringent laws and mechanics of implementation and enforcement of the Alberta
regulations applicable to Suncor and other companies in the Oil Sands Emissions Limit Act (OSELA) and the federal
energy industry in general, and in the oil sands industry in government’s stated intention to cap and reduce emissions
particular. These risks to the oil sands industry can be offset from the oil and gas sector by setting five-year targets to
over time through the commercialization and implementation achieve net zero by 2050 are currently under review and it is
of low-carbon technologies (e.g., carbon capture, utilization not yet possible to predict the impact on Suncor. However, such
and sequestration) and by increasing growth in low-carbon impact could be material.
energies such as hydrogen, renewable fuels and power.
These developments and future developments could adversely
Changes to environmental regulations, including regulations impact the demand for Suncor’s products, the ability of
relating to climate change, could impact the demand for the Suncor to maintain and grow its production and reserves, and
company’s products or could require increased capital Suncor’s reputation, and could have a material adverse
expenditures, operating expenses, abandonment and effect on Suncor’s business, financial condition, reserves and
reclamation obligations, and distribution costs. These potential results of operations.
added costs may not be recoverable in the marketplace and
may result in some current operations or growth projects Greenhouse Gas Emissions and Targets
becoming less profitable or uneconomic. Such regulatory Among other sustainability goals, Suncor has set a strategic
changes could require Suncor to invest further into the objective of net-zero emissions by 2050 and a target to reduce
development of technologies or other energy products. Such GHG emissions through our value chain by 10 megatonnes
technology development or growth projects could require a by 2030. Our ability to deliver GHG emissions reductions is
significant investment of capital and resources, and any delay subject to numerous risks and uncertainties, and our actions
in or failure to identify, develop and deploy such technologies taken in implementing these objectives may also expose us to
or obtain regulatory approvals for these technology projects certain additional and/or heightened financial and operational
could prevent Suncor from being able to successfully risks.
compete with other companies. More stringent GHG emissions
regulations in the jurisdictions in which Suncor operates may A reduction in GHG emissions relies on, among other things,
also make it difficult for Suncor to compete with companies our ability to implement and improve energy efficiency at all of
operating in other jurisdictions with less costly regulations. our facilities, future development and growth opportunities,
In addition, legislation or policies that limit the purchase of development and deployment of new technologies, ability to
production from the oil sands may be adopted in domestic sequester and capture carbon, investment in low-carbon power
and/or foreign jurisdictions, which, in turn, may limit the world and hydrogen, as well as a transition to low-carbon fuels. In
market for Suncor’s upstream production and reduce the the event that we are unable to implement these strategies and
prices the company receives for its petroleum products, and technologies as planned without negatively impacting our
could result in delayed development, stranded assets or the expected operations or business plans, or in the event that
company being unable to further develop its hydrocarbon such strategies or technologies do not perform as expected, we
resources. The complexity, breadth and velocity of changes in may be unable to meet our GHG targets on the current
GHG emissions regulations make it difficult to predict the timelines, or at all.
potential impact to Suncor. In addition, achieving our GHG emissions reduction targets
Suncor continues to monitor international and domestic could require significant capital expenditures and resources,
efforts to address climate change. While GHG regulations and with the potential that the costs required to achieve our target
targets will continue to become more stringent, and while and goals materially differ from our original estimates and
Suncor continues its efforts to reduce its GHG emissions, the expectations, and these differences may be material. In
addition, while the intent is to improve efficiency and increase

58 Annual Report 2021 Suncor Energy Inc.

the offering of low-carbon energy, the shift in resources and increase to both water quality concerns and water containment
focus towards emissions reduction could have a negative concerns at Suncor mine sites, which impacts current
impact on our operating results. The overall final cost of operations and reclamation and closure planning. Suncor
investing in and implementing an emissions reduction strategy believes that an integrated water management approach to
and technologies in furtherance of such strategy, and the support operations and successful reclamation and closure
resultant change in the deployment of our resources and focus, requires the release of treated oil sands mine water to the
could have a material adverse effect on Suncor’s business, environment. The absence of an effective regulatory framework
financial condition, reserves and results of operations. in this area could impact operations and the success and
timing of closure and reclamation plans, which could have a
Environmental Compliance material adverse effect on Suncor’s business, financial
condition, reserves and results of operations.
Tailings Management and Water Release
Each oil sands mine is required under the Alberta Energy Alberta’s Land-Use Framework
Regulator’s Tailings Directive to seek approval for its updated The implementation of, and compliance with, the terms of the
fluid tailings management plans. If a mine fails to meet a Alberta’s Land-Use Framework through the Lower Athabasca
condition of its approved plan, the applicable company could Regional Plan (LARP) may adversely impact Suncor’s current
be subject to enforcement actions, including being required to properties and projects in northern Alberta due to, among
curtail production, and financial consequences, including other things, environmental limits and thresholds. The impact
being subject to a compliance levy or being required to post of the LARP on Suncor’s operations may be outside of the
additional security under the Mine Financial Security control of the company, as Suncor’s operations could be
Program (MFSP). The full impact of the Tailings Management impacted as a result of restrictions imposed due to the
Framework (TMF), the Tailings Directive and updates to the dam cumulative impact of development by the other operators in
regulations, including the financial consequences of exceeding the area and not solely in relation to Suncor’s direct impact. The
compliance levels, is not yet fully known, as certain associated uncertainty of changes in Suncor’s future development and
policy updates and regulation updates are still under existing operations required as a result of the LARP, and/or any
development. Such updates could also restrict the technologies updates or changes to the LARP, could have a material
that the company may employ for tailings management and adverse effect on Suncor’s business, financial condition,
reclamation, which could adversely impact the company’s reserves and results of operations.
business plans. There could also be risks if the company’s
Alberta Environment and Parks Water Licences
tailings management operations fail to operate as anticipated.
The occurrence of any of the foregoing could have a material Suncor currently relies on water obtained under licences from
adverse effect on Suncor’s business, financial condition, Alberta Environment and Parks to provide domestic and
reserves and results of operations. utility water for the company’s Oil Sands business. Water
licences, like all regulatory approvals, contain conditions to be
The five-year review for the TMF is planned for 2022, which met in order to maintain compliance with the licence. There
will have the potential to significantly impact progress on fluid can be no assurance that the licences to withdraw water will
tailings management and water release, as well as all not be rescinded or that additional conditions will not be added.
associated aspects of TMF implementation, such as pit lakes, It is also possible that regional water management approaches
closure and reclamation, and the MFSP. The Alberta may require water-sharing agreements between stakeholders.
government has also been working to update the provincial In addition, any changes or expansions of the company’s
water release policy tools and the updates are expected to be projects may rely on securing licences for additional water
completed in 2023. In addition, work being done to develop withdrawal, and there can be no assurance that these licences
the Federal Oil Sands Mind Effluent Regulation (OSMER) is will be granted in a timely manner or that they will be granted
ongoing with Environment and Climate Change Canada. If on terms favourable to Suncor. There is also a risk that future
implemented, OSMER is expected to assist companies with laws or changes to existing laws or regulations relating to
returning water to the Athabasca River. water access could cause capital expenditures and operating
expenses relating to water licence compliance to increase. The
The review of the TMF may result in changes to the TMF that
occurrence of any of the foregoing could have a material
are adverse to Suncor. In addition, there can be no assurances
adverse effect on Suncor’s business, financial condition,
that the provincial water release policy tools or OSMER will
reserves and results of operations.
be updated or implemented, as the case may be, in accordance
with expected timelines, if at all, or that if updated or Commerce City Refinery Water Permit
implemented, they will permit Suncor to release water to the The Commerce City refinery’s water discharge permit is
environment as required to support successful closure currently subject to a renewal process. New and additional
and reclamation. proposed requirements, including those related to per- and
In order to support successful closure and reclamation, polyfluoroalkyl substances, could have a material adverse effect
Suncor supports an integrated water management approach on Suncor’s business, financial condition and results
for effective operations, successful reclamation and closure, of operations.
and positive environmental outcomes. The inability to release
sufficient water to the environment continues to result in an

Annual Report 2021 Suncor Energy Inc. 59

Risk Factors

Biodiversity growing inland production and refinery outages could create

Species at risk exist in the areas where Suncor owns and widening differentials that could impact the profitability of
operates its leases. For example, woodland caribou have been product sales. Market access for refined products may also be
identified as “threatened” under the Species at Risk Act constrained by insufficient takeaway capacity, which could
(Canada). In response to the Government of Canada’s Recovery create a supply/demand imbalance. The occurrence of any of
Strategy for Woodland Caribou, provincial caribou range the foregoing could have a material adverse effect on the
plans are being developed through sub-regional planning. company’s business, financial condition, reserves and results
Suncor has existing, planned and potential future projects of operations.
within caribou ranges in Alberta. The development and
implementation of sub-regional plans in these areas may have Major Operational Incidents (Safety,
an impact on the pace and amount of development in these Environmental and Reliability)
areas and could potentially increase costs due to restoration or Each of Suncor’s primary operating businesses – Oil Sands,
offsetting requirements, which could have a material adverse E&P and Refining and Marketing – requires significant levels of
effect on Suncor’s business, financial condition, reserves investment in the design, operation, maintenance and
and results of operations. decommissioning of facilities, and carries the additional
economic risk associated with operating reliably or enduring a
Pursuant to the Alberta Wetland Policy, development in
protracted operational outage. The breadth and level of
wetland areas may be obligated to avoid wetlands or mitigate
integration of Suncor’s operations adds complexity.
the development’s effects on wetlands. Certain Suncor
operations and growth projects will be affected by aspects of The company’s businesses also carry the risks associated with
the policy where avoidance is not possible and wetland poor or substandard environmental and safety performance,
reclamation or replacement may be required, which could which is closely scrutinized by governments, the public and the
have a material adverse effect on Suncor’s business, financial media, and could result in a suspension of or inability to
condition, reserves and results of operations. obtain regulatory approvals and permits, or, in the case of a
major environmental or safety incident, delays in resuming
Air and Water Quality Management
normal operations, fines, civil suits or criminal charges against
A number of Canadian federal, provincial and U.S. federal and
the company.
state air and water quality regulations and frameworks are
in place currently and being developed, changed and/or In general, Suncor’s operations are subject to operational
implemented, which could have an impact on the company’s hazards and risks such as, among others, fires (including forest
existing operations and planned projects including by, among fires), explosions, blow-outs, power outages, prolonged
other things, requiring the company to invest additional periods of extreme cold or extreme heat, severe winter climate
capital or incur additional operating and compliance expenses, conditions, flooding, droughts and other extreme weather
including, among other things, potentially requiring the conditions, railcar incidents or derailments, the migration of
company to retrofit equipment to meet new requirements harmful substances such as, among others, oil spills, gaseous
and increase monitoring and mitigation plans. The full impact leaks or a release of deleterious substances, loss of tailings
of these regulations and frameworks is not yet known; dam integrity, pollution and other environmental risks, and
however, they could have a material adverse effect on Suncor’s accidents, any of which can interrupt operations or cause
business, financial condition, reserves and results personal injury or death, or damage to property, equipment
of operations. (including information technology and related data and
controls systems), and the environment.
Market Access
The reliable operation of production and processing facilities
The markets for bitumen blends or heavy crude oil are more
at planned levels and Suncor’s ability to produce higher-value
limited than those for light crude oil, making them more
products can also be impacted by, among other things,
susceptible to supply and demand changes and imbalances
failure to follow the company’s policies, standards and
(whether as a result of the availability, proximity, and capacity
operating procedures or operate within established operating
of pipeline facilities, railcars or otherwise). Heavy crude oil
parameters, equipment failure through inadequate
generally receives lower market prices than light crude oil, due
maintenance, unanticipated erosion or corrosion of facilities,
principally to the lower quality and value of the refined
manufacturing and engineering flaws, and labour shortage or
product yield and the higher cost to transport the more viscous
interruption. The company is also subject to operational
product on pipelines, and this price differential can be
risks such as sabotage, terrorism, trespass, theft and malicious
amplified due to supply and demand imbalances.
software, network or cyberattacks.
Market access for Suncor’s oil sands production may be
In addition to the foregoing factors that affect Suncor’s
constrained by insufficient pipeline takeaway capacity,
business generally, each business unit is susceptible to
including the lack of new pipelines due to an inability to
additional risks due to the nature of its business, including,
secure required approvals and negative public perception. In
among others, the following:
order to secure future market access, financial commitments
could be made for projects that do not proceed. There is a • Suncor’s Oil Sands business is susceptible to loss of
risk that constrained market access for oil sands production, production, slowdowns, shutdowns or restrictions on its

60 Annual Report 2021 Suncor Energy Inc.

 ability to produce higher-value products, due to the Government/Regulatory Policy
failure of any one or more interdependent component
Suncor’s businesses operate under federal, provincial,
systems, and other risks inherent to oil sands operations;
territorial, state and municipal laws in numerous countries.
• For Suncor’s E&P businesses, there are risks and The company is also subject to regulation and intervention by
uncertainties associated with drilling for oil and natural governments in oil and gas industry matters, such as, among
gas, the operation and development of such properties others, land tenure, royalties, taxes (including income taxes),
and wells (including encountering unexpected formations, government fees, production rates (including restrictions on
pressures or the presence of hydrogen sulphide), production such as the mandatory production curtailments
premature declines of reservoirs, sour gas releases, imposed by the Government of Alberta in 2019 and 2020),
uncontrollable flows of crude oil, natural gas or well fluids environmental protection, water, wildlife, fish, air quality, safety
and other accidents; performance, the reduction of GHG and other emissions, the
export of crude oil, natural gas and other products, interactions
• Suncor’s E&P offshore operations occur in areas subject to with foreign governments, the awarding or acquisition of
hurricanes and other extreme weather conditions, such exploration and production rights, oil sands leases or other
as winter storms, pack ice, icebergs and fog. The interests, the imposition of specific drilling obligations, control
occurrence of any of these events could result in production over the development, reclamation and abandonment of
shut-ins, the suspension of drilling operations, damage fields and mine sites, mine financial security requirements,
to or destruction of the equipment involved and injury or approval of logistics infrastructure, and possibly expropriation
death of rig personnel. Harsh weather conditions, or cancellation of contract rights. As part of ongoing
particularly in the winter season, may also impact the operations, the company is also required to comply with a
successful execution of maintenance and startup of large number of environmental, health and safety regulations
operations. Suncor’s E&P offshore operations could be under a variety of Canadian, U.S., U.K., Norwegian and other
indirectly affected by catastrophic events occurring at other foreign, federal, provincial, territorial, state and municipal laws
third-party offshore operations, which could give rise to and regulations. Failure to comply with applicable laws and
liability, damage to the company’s equipment, harm regulations may result in, among other things, the imposition
to individuals, force a shutdown of facilities or operations, of fines and penalties, production constraints, a compulsory
or result in a shortage of appropriate equipment or shutdown of facilities or suspension of operations (temporarily
specialists required to perform planned operations; and or permanently), reputational damage, delays, increased
• Suncor’s Refining and Marketing operations are subject to costs, denial of operating and growth permit applications,
all of the risks normally inherent in the operation of censure, liability for cleanup costs and damages, and the loss
refineries, terminals, pipelines and other distribution of important licences and permits.
facilities and service stations, including, among others, Before proceeding with certain projects, including changes to
loss of production, slowdowns or shutdowns due to existing operations, Suncor must obtain various federal,
equipment failures, unavailability of feedstock, price and provincial, territorial, state and municipal permits and
quality of feedstock, or other incidents. regulatory approvals, and must also obtain licences to operate
Suncor is also subject to risks relating to the health and safety certain assets. These processes can involve, among other
of our people, as well as the potential for a slowdown or things, Indigenous and stakeholder consultation, government
temporary suspension of our operations in locations impacted intervention, environmental impact assessments and public
by an outbreak such as the COVID-19 pandemic. Such a hearings and may be subject to conditions, including security
suspension in operations could also be mandated by deposit obligations and other commitments. Compliance can
governmental authorities in response to the COVID-19 also be affected by the loss of skilled staff, inadequate
pandemic. This could negatively impact Suncor’s production internal processes and compliance auditing.
or refined product volumes and refinery utilization rates for a Failure to obtain, comply with, satisfy the conditions of or
sustained period of time, all of which could have a material maintain regulatory permits, licences and approvals, or failure
adverse effect on Suncor’s business, financial condition and to obtain them on a timely basis or on satisfactory terms,
results of operations. could result in prosecution, fines, delays, abandonment or
Although the company maintains a risk management program, restructuring of projects, impacts to production, reputational
which includes an insurance component, such insurance may damage and increased costs, all of which could have a material
not provide comprehensive coverage in all circumstances, nor adverse effect on Suncor’s business, financial condition,
are all such risks insurable. The company self-insures some reserves and results of operations. Suncor’s businesses can
risks, and the company’s insurance coverage does not cover all also be indirectly impacted by a third party’s inability to obtain
the costs arising out of the allocation of liabilities and risk of regulatory approval for a shared infrastructure project or a
loss arising from Suncor operations. third-party infrastructure project on which a portion of Suncor’s
business depends.
The occurrence of any of the foregoing could have a material
adverse effect on Suncor’s business, financial condition, Changes in government policy, regulation or other laws, or
reserves and results of operations. the interpretation thereof, or the revocation of existing
approvals or permits by the government or opposition to

Annual Report 2021 Suncor Energy Inc. 61

Risk Factors

Suncor’s projects or third-party pipeline and infrastructure Security and Terrorist Threats
projects that delays or prevents necessary permits or regulatory
Security threats and terrorist or activist activities may impact
approvals, or which makes current operations or growth
Suncor’s personnel, which could result in injury, death,
projects less profitable or uneconomic could materially impact
extortion, hostage situations and/or kidnapping, including
Suncor’s operations, existing and planned projects, financial
unlawful confinement. A security threat, terrorist attack or
condition, reserves and results of operations.
activist incident targeted at a facility or office owned or
operated by Suncor could result in the interruption or cessation
Digital and Cybersecurity
of key elements of Suncor’s operations and may result in
The efficient operation of Suncor’s business is dependent on property damage. Outcomes of such incidents could have a
computer hardware, software and networked systems, material adverse effect on Suncor’s business, financial
including the systems of cloud providers and third parties condition, reserves and results of operations.
with which Suncor conducts business. Digital transformation
continues to increase the number of, and complexity of, such Competition
systems. In the ordinary course of Suncor’s business, Suncor
The global petroleum industry is highly competitive in many
collects and stores sensitive data, including intellectual
aspects, including the exploration for and the development of
property, proprietary business information and personal
new sources of supply, the acquisition of crude oil and
information of the company’s employees and retail customers.
natural gas interests, and the refining, distribution and
Suncor’s operations are also dependent upon a large and
marketing of refined petroleum products. Suncor competes in
complex information framework. Suncor relies on industry­
virtually every aspect of its business with other energy
accepted security measures, controls and technology to protect
companies. The petroleum industry also competes with other
Suncor’s information systems and securely maintain
industries in supplying energy, fuel and related products to
confidential and proprietary information stored on the
consumers. The increasing volatility of the political and social
company’s information systems, and has adopted a continuous
landscape at provincial, federal, territorial, state, municipal and
process to identify, assess and manage threats to the
international levels adds complexity.
company’s information systems. While Suncor has an
information and cybersecurity program in place, the measures, For Suncor’s Oil Sands and E&P businesses, it is difficult to
controls and technology on which the company relies may assess the number, level of production and ultimate timing of
not be adequate due to the increasing volume, sophistication all potential new projects or when existing production levels
and rapidly evolving nature of cyber threats. Suncor’s may increase. Although current commodity pricing and
information technology and infrastructure, including process increased regulatory requirements have slowed certain larger
control systems, may be vulnerable to attacks by malicious projects in the short term, an increase in the level of activity
persons or entities motivated by, among others, geopolitical, may have an impact on regional infrastructure, including
financial or activist reasons, or breached due to employee error, pipelines, and could place stress on the availability and cost of
malfeasance or other disruptions, including natural disasters all resources required to build and run new and existing oil
and acts of war. Although the company maintains a risk sands operations.
management program, which includes an insurance
For Suncor’s Refining and Marketing business, management
component that may provide coverage for the operational
expects that fluctuations in demand for refined products,
impacts from an attack to, or breach of, Suncor’s information
margin volatility and overall marketplace competitiveness will
technology and infrastructure, including process control
continue. In addition, to the extent that the company’s
systems, the company does not maintain stand-alone cyber
downstream business unit participates in new product
insurance. Furthermore, not all cyber risks are insurable. As a
markets, it could be exposed to margin risk and volatility from
result, Suncor’s existing insurance may not provide adequate
either cost and/or selling price fluctuations.
coverage for losses stemming from a cyberattack to, or
breach of, its information technology and infrastructure. There is a risk that increased competition could cause costs to
increase, put further strain on existing infrastructure and
Any such attack or breach could compromise Suncor’s
cause margins for refined and unrefined products to be volatile,
networks, and the information Suncor stores could be
and impact demand for Suncor’s products, which could have
accessed, publicly disclosed, lost, stolen or compromised. Any
a material adverse effect on Suncor’s business, financial
such attack, breach, access, disclosure or loss of information
condition and results of operations.
could result in legal claims or proceedings, liability under laws
that protect the privacy of personal information, regulatory
Portfolio Development and Execution
penalties, disruptions to Suncor’s operations, decreased
performance and production, increased costs, damage to There are certain risks associated with the development and
Suncor’s reputation, physical harm to people or the execution of Suncor’s complex and integrated portfolio of
environment or other negative consequences to Suncor or projects and the commissioning and integration of new facilities
third parties, which could have a material adverse effect on within its existing asset base.
Suncor’s business, financial condition and results of operations.

62 Annual Report 2021 Suncor Energy Inc.

Portfolio development and execution risk consists of four Cumulative Impact and Pace of Change
related primary risks:
To achieve its business objectives, Suncor must operate
• Development – a failure to select the right projects and efficiently, reliably and safely, and, at the same time, deliver
identify effective scope and solution; growth and sustaining projects safely, on budget and on
schedule. The ability to achieve these two sets of objectives is
• Engineering – a failure in the specification, design or critically important for Suncor to deliver value to shareholders
technology selection; and stakeholders. These ambitious business objectives
• Construction – a failure to build the project in the approved compete for resources, and it may negatively impact the
time, in accordance with design, and at the agreed cost; company should there be inadequate consideration of the
and cumulative impacts of prior and parallel initiatives on people,
processes and systems. There is a risk that measures
• Commissioning and startup – a failure of the facility to undertaken to achieve these objectives may exceed Suncor’s
meet agreed performance targets, including operating capacity to adopt and implement change. The occurrence of
costs, efficiency, yield and maintenance costs. any of the foregoing could have a material adverse effect on
Portfolio development and execution can also be impacted by, Suncor’s business, financial condition, reserves and results
among other things, the effect of changing government of operations.
regulations and public expectations in relation to the impact
of oil sands development on the environment, which could
Skills, Resource Shortage and Reliance on
significantly impact the company’s ability to obtain the Key Personnel
necessary environmental and other regulatory approvals; the The successful operation of Suncor’s businesses will depend
complexity and diversity of Suncor’s portfolio, including joint upon the availability of, and competition for skilled labour and
venture assets; the accuracy of project cost and schedule materials supply. There is a risk that the company may have
estimates; the availability and cost of materials, equipment, difficulty sourcing and retaining the skilled labour in certain
qualified personnel and logistics infrastructure; maintaining talent segments for current and future operations. Although
adequate quality management and risks associated with Suncor has maintained a healthy overall attrition rate over
logistics and offshore fabrication, including the cost of the last decade, Suncor sees acute supply-demand gap
materials, and equipment fabricated offshore may be impacted potential in some critical talent segments. The labour market
by tariffs, duties and quotas; complexities and risks associated is also in flux, which combined with the challenges recruiting to
with constructing projects within operating environments our industry and post-pandemic trend of burnout and
and confined construction areas; the commissioning and employees reassessing their careers, increases the potential
integration of new facilities within the company’s existing asset risk in attrition and the need for targeted talent remains a risk
base could cause delays in achieving guidance, targets and to be managed. The increasing age of the company’s existing
objectives; risks relating to restarting projects placed in safe workforce, and changing skillset requirements as technology
mode, including increased capital costs; and the impact of continues to evolve, add further pressure. The availability of
weather conditions. competent and skilled contractors for current and future
operations is also a risk depending on market conditions.
The occurrence of any of the foregoing could have a material
Materials may also be in short supply due to smaller labour
adverse effect on Suncor’s business, financial condition,
forces in many manufacturing operations or due to supply
reserves and results of operations.
chain disruptions related to the COVID-19 pandemic. Suncor’s
Technology Risk ability to operate safely and effectively and complete all
projects on time and on budget has the potential to be
There are risks associated with sustainability, growth and
significantly impacted by these risks and this impact could
capital projects that rely largely or partly on new technologies
be material.
and the incorporation of such technologies into new or
existing operations, including that the results of the application The company’s success also depends in large measure on
of new technologies may differ from simulated, test or pilot certain key personnel. The loss of the services of such key
environments, or that third-party intellectual property personnel could have a material adverse effect on Suncor’s
protections may impede the development and implementation business, financial condition, reserves and results of
of new technology. The success of projects incorporating operations. The contributions of the existing management
new technologies cannot be assured. Advantages accrue to team to the immediate and near-term operations of the
companies that can develop and adopt emerging technologies company are likely to continue to be of central importance for
in advance of competitors. The inability to develop, implement the foreseeable future.
and monitor new technologies may impact the company’s
ability to develop its new or existing operations in a profitable Labour Relations
manner or comply with regulatory requirements, which Hourly employees at Suncor’s oil sands facilities (excluding
could have a material adverse effect on Suncor’s business, MacKay River and Fort Hills), all of the company’s refineries and
financial condition, reserves and results of operations. the majority of the company’s terminal and distribution
operations and certain of the company’s E&P operations are
represented by labour unions or employee associations.

Annual Report 2021 Suncor Energy Inc. 63

Risk Factors

Approximately 25% of the company’s employees were covered provided by operating activities, available committed credit
by collective agreements at the end of 2021. Negotiations for facilities, issuing commercial paper and, if needed, accessing
four collective agreements will take place in 2022. Any work capital markets. This ability is dependent on, among other
interruptions involving the company’s employees (including factors, commodity prices, the overall state of the capital
as a result of a strike, lockout or pandemic), contract trades markets, and financial institutions and investor appetite for
utilized in the company’s projects or operations, or any jointly investments in the energy industry generally, and the
owned facilities operated by another entity present a company’s securities in particular. Investors and stakeholders
significant risk to the company and could have a material increasingly compare companies based on climate-related
adverse effect on Suncor’s business, financial condition and performance. Failure to achieve the company’s net-zero and
results of operations. GHG emissions reduction targets and goals, or a perception
among financial institutions and investors that such targets and
Joint Arrangement Risk goals are insufficient, could adversely affect the company’s
Suncor has entered into joint arrangements and other reputation and ability to attract capital. The company’s ability
contractual arrangements with third parties, including to access capital may also be adversely affected in the event
arrangements where other entities operate assets in which that financial institutions, investors, rating agencies and/or
Suncor has ownership or other interests and arrangements lenders adopt more restrictive decarbonization policies. The
where Suncor operates assets in which other entities have COVID-19 pandemic had a significant impact on global capital
ownership or other interests. These joint arrangements include, markets and the availability of liquidity. While access to
among others, those with respect to Syncrude, Fort Hills, In capital has returned to pre-pandemic levels, the disruption
Situ assets, and operations in Suncor’s E&P Canada and E&P and volatility in global capital markets may re-occur. To the
International businesses. The success and timing of activities extent that external sources of capital become limited or
relating to assets and projects operated by others, or unavailable or available on unfavourable terms, the ability to
developed jointly with others, depend upon a number of make capital investments and maintain existing properties may
factors that are outside of Suncor’s control, including, among be constrained.
others, the timing and amount of capital expenditures; the If the company finances capital expenditures in whole or in
timing and amount of operational and maintenance part with debt, that may increase its debt levels above industry
expenditures; the operator’s expertise, financial resources and standards for oil and gas companies of similar size. Depending
risk management practices; the approval of other participants; on future development and growth plans, additional debt
and the selection of technology. financing may be required that may not be available or, if
These co-owners may have objectives and interests that do available, may not be available on favourable terms, including
not coincide with and may conflict with Suncor’s interests. Major higher interest rates and fees. Neither the Articles of Suncor
capital and operating expenditure decisions affecting joint nor its bylaws limit the amount of indebtedness that may be
arrangements may require agreement among the co-owners, incurred; however, Suncor is subject to covenants in its existing
while certain operational decisions may be made solely at credit facilities and seeks to avoid an unfavourable cost of
the discretion of the operator of the applicable assets. While debt. The level of the company’s indebtedness, and the level
joint venture counterparties may generally seek consensus with of indebtedness relative to the company’s ability to generate
respect to major decisions concerning the direction and cash flow, from time to time, could impair its ability to obtain
operation of the assets and the development of projects, no additional financing on a timely basis to take advantage of
assurance can be provided that the future demands or business opportunities that may arise and could negatively
expectations of the parties relating to such assets and projects affect its credit ratings.
will be met satisfactorily or in a timely manner. Failure to Suncor is required to comply with financial and operating
satisfactorily meet demands or expectations by all of the covenants under existing credit facilities and debt securities.
parties may affect the company’s participation in the operation Covenants are reviewed based on actual and forecast results
of such assets or in the development of such projects, the and the company has the ability to make changes to its
company’s ability to obtain or maintain necessary licences or development plans, capital structure and/or dividend policy to
approvals, or the timing for undertaking various activities. In comply with covenants under the credit facilities. If Suncor
addition, disputes may arise pertaining to the timing, scope, does not comply with the applicable covenants under its credit
funding and/or capital commitments with respect to projects facilities and debt securities, there is a risk that repayment
that are being jointly developed. could be accelerated and/or the company’s access to capital
The occurrence of any of the foregoing could have a material could be restricted or only be available on unfavourable terms.
adverse effect on Suncor’s business, financial condition, Rating agencies regularly evaluate the company, including its
reserves and results of operations. subsidiaries. Their ratings of Suncor’s long-term and short-term
debt are based on a number of factors, including the
Financial Risks company’s financial strength, as well as factors not entirely
Access to Capital within its control, including conditions affecting the oil and gas
industry generally, and the wider state of the economy.
Suncor expects that future capital expenditures will be
Credit ratings may be important to customers or counterparties
financed out of cash and cash equivalents balances, cash flow
when Suncor competes in certain markets and when it seeks

64 Annual Report 2021 Suncor Energy Inc.

to engage in certain transactions, including some commodity Interest Rate Risk
sales or purchase transactions or those involving over-the­ The company is exposed to fluctuations in short-term Canadian
counter derivatives. There is a risk that one or more of Suncor’s and U.S. interest rates as Suncor maintains a portion of its
credit ratings could be downgraded, which could potentially debt capacity in revolving and floating rate credit facilities and
limit its access to private and public credit markets and increase commercial paper, and invests surplus cash in short-term
the company’s cost of borrowing. debt instruments and money market instruments, which are
The occurrence of any of the foregoing could have a material off-setting exposures to some degree. Suncor may also be
adverse effect on Suncor’s business, financial condition, exposed to higher interest rates when debt instruments are
reserves and results of operations. maturing and require refinancing, or when new debt capital
needs to be raised. The company is also exposed to changes in
Energy Trading and Risk Management Activities and the interest rates if derivative instruments are used to manage
Exposure to Counterparties the debt portfolio. Unfavourable changes in interest rates could
The nature of Suncor’s energy trading and risk management have a material adverse effect on Suncor’s business, financial
activities, which may make use of derivative financial condition and results of operations.
instruments to manage its exposure to commodity price and
Royalties and Taxes
other market risks, creates exposure to financial risks, which
include, but are not limited to, unfavourable movements in Suncor is subject to royalties and taxes imposed by
commodity prices, interest rates or foreign exchange that could governments in numerous jurisdictions.
result in a financial or opportunity loss to the company; a Royalties can be impacted by changes in crude oil and natural
lack of counterparties, due to market conditions or other gas pricing, production volumes, sales volumes, and capital
circumstances that could leave the company unable to liquidate and operating costs, by changes to existing legislation or
or offset a position, or unable to do so at or near the previous production sharing contracts, and by results of regulatory
market price; and counterparty default risk. audits of prior year filings and other such events. The final
The occurrence of any of the foregoing could have a material determination of these events may have a material impact on
adverse effect on Suncor’s business, financial condition and the company’s royalties expense.
results of operations. An increase in Suncor’s royalties expense, income taxes,
Exchange Rate Fluctuations property taxes, carbon taxes, levies, tariffs, duties, quotas,
border taxes, other taxes and government-imposed compliance
The company’s 2021 audited Consolidated Financial Statements
costs could have a material adverse effect on Suncor’s
are presented in Canadian dollars. The majority of Suncor’s
business, financial condition, reserves and results
revenues from the sale of oil and natural gas commodities are
of operations.
based on prices that are determined by, or referenced to,
U.S. dollar benchmark prices, while the majority of Suncor’s Dividends and Share Repurchases
expenditures are realized in Canadian dollars. Suncor also has Suncor’s payment of future dividends on its common shares
assets and liabilities, including approximately 60% of the and future share repurchases by Suncor of its common shares
company’s debt, that are denominated in U.S. dollars and will be dependent on, among other things, legislative and
translated to Suncor’s reporting currency (Canadian dollars) at stock exchange requirements, the prevailing business
each balance sheet date. Suncor’s financial results, therefore, environment, the company’s financial condition, results of
can be affected significantly by the exchange rates between the operations, cash flow, the need for funds to finance ongoing
Canadian dollar and the U.S. dollar. The company also operations and growth projects, debt covenants and other
undertakes operations administered through international business considerations as the company’s Board considers
subsidiaries, and, therefore, to a lesser extent, Suncor’s results relevant. There can be no assurance that Suncor will continue
can be affected by the exchange rates between the Canadian to pay dividends or repurchase shares in the future.
dollar and the euro, the British pound and the Norwegian
krone. These exchange rates may vary substantially and may E&P Reserves Replacement
give rise to favourable or unfavourable foreign currency
Suncor’s future offshore production, and therefore its cash
exposure. A decrease in the value of the Canadian dollar
flows and results of operations from E&P, are highly dependent
relative to the U.S. dollar will increase the revenues received
upon success in exploiting its current reserves base and
from the sale of commodities. An increase in the value of the
acquiring or discovering additional reserves. Without additions
Canadian dollar relative to the U.S. dollar will decrease revenues
to its E&P reserves through exploration, acquisition or
received from the sale of commodities. A decrease in the
development activities, Suncor’s production from its offshore
value of the Canadian dollar relative to the U.S. dollar from
assets will decline over time as reserves are depleted. The
the previous balance sheet date increases the amount of
business of exploring for, developing or acquiring reserves is
Canadian dollars required to settle U.S. dollar denominated
capital intensive. To the extent Suncor’s cash flow is insufficient
obligations. As at December 31, 2021, the Canadian dollar
to fund capital expenditures and external sources of capital
strengthened in relation to the U.S. dollar to $0.79 from $0.78
become limited or unavailable, Suncor’s ability to make the
at the start of 2021. Exchange rate fluctuations could have a
necessary capital investments to maintain and expand its
material adverse effect on Suncor’s business, financial
reserves will be impaired. In addition, Suncor may be unable
condition, reserves and results of operations.

Annual Report 2021 Suncor Energy Inc. 65

Risk Factors

to develop or acquire additional reserves to replace its crude If a dispute arises in the company’s foreign operations, the
oil and natural gas production at acceptable costs. company may be subject to the exclusive jurisdiction of foreign
courts or may not be able to subject foreign persons to the
Uncertainties Affecting Reserves Estimates jurisdiction of a court in Canada or the U.S. In addition, as a
There are numerous uncertainties inherent in estimating result of activities in these areas and a continuing evolution of
quantities of reserves, including many factors beyond the an international framework for corporate responsibility and
company’s control. Suncor’s actual production, revenues, accountability for international crimes, there is a risk the
royalties, taxes, and development and operating expenditures company could also be exposed to potential claims for alleged
with respect to the company’s reserves will vary from its breaches of international or local law.
estimates, and such variances could be material. The impact that future potential terrorist attacks, regional
hostilities or political violence, such as that experienced in
Third-Party Service Providers Libya and Syria, may have on the oil and gas industry, and on
Suncor’s businesses are reliant on the operational integrity of our operations in particular, is not known at this time. This
a large number of third-party service providers, including uncertainty may affect operations in unpredictable ways,
input and output commodity transport (pipelines, rail, trucking, including disruptions of fuel supplies and markets, particularly
marine) and utilities associated with various Suncor and crude oil, and the possibility that infrastructure facilities,
jointly owned facilities, including electricity. A disruption in including pipelines, production facilities, processing plants
service or limited availability by one of these third parties can and refineries, could be direct targets of, or collateral damage
also have a dramatic impact on Suncor’s operations and growth of, an act of terror, political violence or war. Suncor may be
plans. Pipeline constraints that affect takeaway capacity or required to incur significant costs in the future to safeguard
supply of inputs, such as hydrogen and power, could impact its assets against terrorist activities or to remediate potential
the company’s ability to produce at capacity levels. Disruptions damage to its facilities. There can be no assurance that Suncor
in pipeline service could adversely affect commodity prices, will be successful in protecting itself against these risks and
Suncor’s price realizations, refining operations and sales the related safety and financial consequences.
volumes, or limit the company’s ability to produce and deliver
production. These interruptions may be caused by the Despite Suncor’s training and policies around bribery and
inability of the pipeline to operate or by the oversupply of other forms of corruption, there is a risk that Suncor, or some
feedstock into the system that exceeds pipeline capacity. of its employees or contractors, could be charged with
Short-term operational constraints on pipeline systems arising bribery or corruption. Any of these violations could result in
from pipeline interruption and/or increased supply of crude onerous penalties. Even allegations of such behaviour could
oil have occurred in the past and could occur in the future. impair Suncor’s ability to work with governments or
There is a risk that third-party outages could impact Suncor’s non-government organizations and could result in the formal
production or price realizations, which could have a material exclusion of Suncor from a country or area, sanctions, fines,
adverse effect on Suncor’s business, financial condition project cancellations or delays, the inability to raise or borrow
and results of operations. capital, reputational impacts and increased investor concern.

The occurrence of any of the foregoing could have a material

Foreign Operations adverse effect on Suncor’s business, financial condition,
The company has operations in a number of countries with reserves and results of operations.
different political, economic and social systems. As a result, the
company’s operations and related assets are subject to a Land Claims and Indigenous Consultation
number of risks and other uncertainties arising from foreign Indigenous Peoples have claimed Indigenous title and rights to
government sovereignty over the company’s international portions of Western Canada. In addition, Indigenous Peoples
operations, which may include, among other things, currency have filed claims against industry participants relating in part
restrictions and restrictions on repatriation of funds; loss of to land claims, which may affect the company’s business.
revenue, property and equipment as a result of expropriation,
nationalization, terrorism, war, insurrection, and geopolitical The requirement to consult with Indigenous Peoples in respect
and other political risks; increases in taxes and government of oil and gas projects and related infrastructure has
royalties; compliance with existing and emerging anti­ increased in recent years, and the Canadian federal
corruption laws, including the Corruption of Foreign Public government and the provincial government in Alberta have
Officials Act (Canada), the Foreign Corrupt Practices Act (United committed to renew their relationships with the Indigenous
States), and Bribery Act (United Kingdom); renegotiation of Peoples of Canada. In particular, the federal government has
contracts with government entities and quasi-government stated it fully supports the United Nations Declaration on
agencies; changes in laws and policies governing operations the Rights of Indigenous Peoples (the Declaration). On
of foreign-based companies; and economic and legal sanctions December 3, 2020, the federal government introduced
(such as restrictions against countries experiencing political Bill C-15, An Act respecting the United Nations Declaration on the
violence, or countries that other governments may deem to Rights of Indigenous Peoples (Bill C-15), as a means of adopting
sponsor terrorism). the Declaration into Canadian law while stating that the
legislative framework will “ensure sustained and continued
efforts to uphold the rights of Indigenous Peoples now and in

66 Annual Report 2021 Suncor Energy Inc.

the future.” On June 21, 2021, Bill C-15 received Royal Assent. against such litigation, the success of which cannot
For its part, Suncor stated support for Bill C-15. At the same be guaranteed.
time, Suncor also expressed a desire for the government to
clarify the ambiguity around Bill C-15 and to provide clear Control Environment
guidelines. Given Bill C-15’s recent adoption, it is unknown how Based on their inherent limitations, disclosure controls and
Bill C-15 will ultimately be implemented and interpreted as a procedures and internal controls over financial reporting may
part of Canadian law, and it therefore also remains unclear what not prevent or detect misstatements, and even those
its corresponding impact will be on the Crown’s duty to controls determined to be effective can provide only reasonable
consult with Indigenous Peoples. assurance with respect to financial statement preparation
and presentation. Failure to adequately prevent, detect and
At this point Suncor is unable to assess the effect, if any, that
correct misstatements could have a material adverse effect on
any such land claims, consultation requirements with
how Suncor’s business, financial condition and results of
Indigenous Peoples or the implementation of Bill C-15 into
operations are reported.
Canadian law may have on Suncor’s business; however, the
impact could have a material adverse effect on Suncor’s
business, financial condition, reserves and results
Insurance Coverage
of operations. Suncor maintains insurance coverage as part of its risk
management program. However, such insurance may not
Litigation Risk provide comprehensive coverage in all circumstances, nor are
There is a risk that Suncor or entities in which it has an all such risks insurable. The company self-insures some
interest may be subject to litigation, and claims under such risks, and the company’s insurance coverage does not cover
litigation may be material. Various types of claims may be all the costs arising out of the allocation of liabilities and risk of
raised in these proceedings, including, but not limited to, loss arising from Suncor operations.
environmental damage, climate change and the impacts Suncor’s insurance policies are generally renewed on an
thereof, breach of contract, product liability, antitrust, bribery annual basis and, depending on factors such as market
and other forms of corruption, tax, patent infringement, conditions, the premiums, policy limits and/or deductibles for
disclosure, employment matters and in relation to an attack, certain insurance policies can vary substantially. In some
breach or unauthorized access to Suncor’s information instances, certain insurance may become unavailable or
technology and infrastructure. Litigation is subject to available only for reduced amounts of coverage. Significantly
uncertainty and it is possible that there could be material increased costs could lead the company to decide to reduce, or
adverse developments in pending or future cases. possibly eliminate, coverage. In addition, insurance is
Unfavourable outcomes or settlements of litigation could purchased from a number of third-party insurers, often in
encourage the commencement of additional litigation. Suncor layered insurance arrangements, some of whom may
may also be subject to adverse publicity and reputational discontinue providing insurance coverage for their own policy
impacts associated with such matters, regardless of whether or strategic reasons. Should any of these insurers refuse to
Suncor is ultimately found liable. There is a risk that the continue to provide insurance coverage, the company’s overall
outcome of such litigation may be materially adverse to the risk exposure could be increased.
company and/or the company may be required to incur
significant expenses or devote significant resources in defence

Annual Report 2021 Suncor Energy Inc. 67

11. Other Items
Control Environment The effectiveness of our internal control over financial
reporting as at December 31, 2021, was audited by KPMG LLP,
Based on their evaluation as of December 31, 2021, Suncor’s
an independent registered public accounting firm, as stated
Chief Executive Officer and Chief Financial Officer concluded
in their report, which is included in our audited Consolidated
that the company’s disclosure controls and procedures (as
Financial Statements for the year ended December 31, 2021.
defined in Rules 13a-15(e) and 15d-15(e) under the United
States Securities Exchange Act of 1934, as amended (the Based on their inherent limitations, disclosure controls and
Exchange Act)), are effective to ensure that information procedures and internal control over financial reporting may
required to be disclosed by the company in reports that are not prevent or detect misstatements, and even those controls
filed or submitted to Canadian and U.S. securities authorities determined to be effective can provide only reasonable
is recorded, processed, summarized and reported within the assurance with respect to financial statement preparation
time periods specified in Canadian and U.S. securities laws. and presentation.
In addition, as of December 31, 2021, there were no changes
in the internal control over financial reporting (as defined in Corporate Guidance
Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred There have been no changes to the corporate guidance
during the year ended December 31, 2021, that have materially ranges previously issued on February 2, 2022. For further
affected, or are reasonably likely to materially affect, the details and advisories regarding Suncor’s 2022 corporate
company’s internal control over financial reporting. guidance, see www.suncor.com/guidance.
Management will continue to periodically evaluate the
company’s disclosure controls and procedures and internal
control over financial reporting and will make any modifications
from time to time as deemed necessary.

68 Annual Report 2021 Suncor Energy Inc.

12. Advisories
Non-GAAP Financial Measures
Certain financial measures in this MD&A – namely adjusted operating earnings (loss), adjusted funds from (used in) operations,
measures contained in ROCE and ROCE excluding impairments, price realizations, free funds flow, discretionary free funds flow
(deficit), Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs, refining and
marketing margin, refining operating expense, net debt, total debt, LIFO inventory valuation methodology and related per share
or per barrel amounts or metrics that contain such measures – are not prescribed by GAAP. These non-GAAP financial measures
are included because management uses the information to analyze business performance, leverage and liquidity, and it may
be useful to investors on the same basis. These non-GAAP financial measures do not have any standardized meaning and,
therefore, are unlikely to be comparable to similar measures presented by other companies. Therefore, these non-GAAP financial
measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with
GAAP. Except as otherwise indicated, these non-GAAP financial measures are calculated and disclosed on a consistent basis from
period to period. Specific adjusting items may only be relevant in certain periods.

Beginning in the fourth quarter of 2021, the company changed the label of operating earnings (loss) and funds from (used in)
operations to adjusted operating earnings (loss) and adjusted funds from (used in) operations, respectively, to better distinguish
the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the measures. The
composition of the measures remains unchanged and therefore no prior periods were restated.

(a) Adjusted Operating Earnings (Loss)

Adjusted operating earnings (loss) is a non-GAAP financial measure that adjusts net earnings (loss) for significant items that are
not indicative of operating performance. Management uses adjusted operating earnings (loss) to evaluate operating
performance because management believes it provides better comparability between periods. For the years ended December 31,
2021, December 31, 2020, and December 31, 2019, consolidated adjusted operating earnings (loss) are reconciled to net
earnings (loss) in the Financial Information section of this MD&A and adjusted operating earnings (loss) for each segment are
reconciled to net earnings (loss) in the Segment Results and Analysis section of this MD&A. Adjusted operating earnings (loss) for
the three months ended December 31, 2021, and December 31, 2020, are reconciled to net earnings (loss) below.

(b) Bridge Analyses of Adjusted Operating Earnings (Loss)

Throughout this MD&A, the company presents charts that illustrate the change in adjusted operating earnings (loss) from the
comparative period through key variance factors. These factors are analyzed in the Adjusted Operating Earnings (Loss) narratives
following the bridge analyses in particular sections of this MD&A. These bridge analyses are presented because management
uses this presentation to evaluate performance.

• The factor for Sales Volumes and Mix is calculated based on sales volumes and mix for the Oil Sands and E&P segments and
throughput volumes for the R&M segment.

• The factor for Price, Margin and Other Revenue includes upstream price realizations before royalties, with the exception of
Libya, which is net of royalties, and upstream marketing and logistics. Also included are refining and marketing margins, other
operating revenue, and the net impacts of sales and purchases of third-party crude, including product purchased for use
as diluent in the company’s Oil Sands operations and subsequently sold as part of diluted bitumen.

• The factor for Royalties excludes the impact of Libya, as royalties in Libya are taken into account in Price, Margin and Other
Revenue as described above.

• The factor for Inventory Valuation includes the after-tax impact of the FIFO method of inventory valuation in the company’s
R&M segment, as well as the impact of the deferral or realization of profit or loss on crude oil sales from the Oil Sands
segment to Suncor’s refineries, as both represent inventory valuation adjustments, and downstream short-term commodity
risk management activities.

• The factor for Operating and Transportation Expense includes project startup costs, operating, selling and general expense,
and transportation expense.

• The factor for Financing Expense and Other includes financing expenses, other income, operational foreign exchange gains
and losses, changes in gains and losses on disposal of assets that are not adjusted operating earnings (loss) adjustments,
changes in statutory income tax rates, and other income tax adjustments.

• The factor for DD&A and Exploration Expense includes depreciation, depletion and amortization expense, and exploration
expense.

Annual Report 2021 Suncor Energy Inc. 69

Advisories

(c) Return on Capital Employed (ROCE) and ROCE Excluding Impairments

ROCE is a non-GAAP financial measure that management uses to analyze operating performance and the efficiency of Suncor’s
capital allocation process. ROCE is calculated using the non-GAAP financial measures adjusted net earnings and average capital
employed. Adjusted net earnings is calculated by taking net earnings (loss) and adjusting after-tax amounts for unrealized
foreign exchange on U.S. dollar denominated debt and net interest expense. Average capital employed is calculated as a twelve­
month average of the capital employed balance at the beginning of the twelve-month period and the month-end capital
employed balances throughout the remainder of the twelve-month period. Figures for capital employed at the beginning and
end of the twelve-month period are presented to show the changes in the components of the calculation over the twelve-month
period.

Year ended December 31

($ millions, except as noted) 2021 2020 2019

Adjustments to net earnings (loss)

Net earnings (loss) 4 119 (4 319) 2 899
(Deduct) add after-tax amounts for:
Unrealized foreign exchange gain on U.S. dollar denominated debt (101) (286) (590)
Net interest expense 645 698 638
Adjusted net earnings (loss)(1) A 4 663 (3 907) 2 947
Capital employed – beginning of twelve-month period
Net debt(2) 19 814 16 010 15 129
Shareholders’ equity 35 757 42 042 44 005
55 571 58 052 59 134
Capital employed – end of twelve-month period
Net debt(2) 16 149 19 814 16 010
Shareholders’ equity 36 614 35 757 42 042
52 763 55 571 58 052
Average capital employed B 54 069 56 239 60 402
(3)
ROCE (%) A/B 8.6 (6.9) 4.9
(1) Total before-tax impact of adjustments is $738 million for the twelve months ended December 31, 2021, $618 million for the twelve months ended
December 31, 2020, and $250 million for the twelve months ended December 31, 2019.
(2) Net debt is a non-GAAP financial measure.
(3) ROCE would have been 8.2% for the twelve months ended December 31, 2021, excluding the impact of the impairment reversal of $221 million
($168 million after-tax) in the third quarter of 2021. ROCE would have been (2.9%) for the twelve months ended December 31, 2020, excluding the
impact of impairments of $559 million ($423 million after-tax) in the fourth quarter of 2020 and $1.821 billion ($1.376 billion after-tax) and $560 million
($422 million after-tax) in the first quarter of 2020. ROCE would have been 10.0% for the twelve months ended December 31, 2019, excluding the
impact of impairments of $3.716 billion ($2.803 billion after-tax) and $521 million ($393 million after-tax) in the fourth quarter of 2019.

70 Annual Report 2021 Suncor Energy Inc.

(d) Adjusted Funds from (Used in) Operations
Adjusted funds from (used in) operations is a non-GAAP financial measure that adjusts a GAAP measure – cash flow provided by
operating activities – for changes in non-cash working capital, which management uses to analyze operating performance and
liquidity. Changes to non-cash working capital can be impacted by, among other factors, the timing of offshore feedstock
purchases and payments for commodity and income taxes, the timing of cash flows related to accounts receivable and accounts
payable, and changes in inventory that management believes reduces comparability between periods.

Exploration and
Oil Sands Production Refining and Marketing

Year ended December 31 ($ millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019
Net earnings (loss) 2 147 (3 796) (427) 1 285 (832) 1 005 2 178 866 3 000
Adjustments for:
Depreciation, depletion, amortization and
impairment 4 585 6 430 8 170 324 2 147 1 505 853 867 823
Deferred income taxes (51) (797) (1 565) 33 (321) (215) 113 (24) (49)
Accretion 240 224 221 58 48 43 6 6 6
Unrealized foreign exchange gain on
U.S. dollar denominated debt — — — — — — — — —
Change in fair value of financial
instruments and trading inventory (66) 81 21 3 (17) 16 50 44 70
(Gain) loss on disposal of assets (4) (1) (14) (227) — (228) (19) (24) (11)
Loss on extinguishment of long-term debt — — — — — — — — —
Share-based compensation 61 (59) 16 5 (9) — 34 (36) 3
Exploration expenses — — — — 80 66 — — —
Settlement of decommissioning and
restoration liabilities (245) (212) (413) (1) (7) (32) (17) (12) (19)
Other 179 116 52 (2) (35) (17) 57 21 40
Adjusted funds from (used in) operations 6 846 1 986 6 061 1 478 1 054 2 143 3 255 1 708 3 863
Change in non-cash working capital
Cash flow provided by operating activities
Corporate
and Eliminations Total

Year ended December 31 ($ millions) 2021 2020 2019 2021 2020 2019
Net earnings (loss) (1 491) (557) (679) 4 119 (4 319) 2 899
Adjustments for:
Depreciation, depletion, amortization and
impairment 88 82 74 5 850 9 526 10 572
Deferred income taxes (39) 23 (89) 56 (1 119) (1 918)
Accretion — — — 304 278 270
Unrealized foreign exchange gain on U.S.
dollar denominated debt (113) (312) (624) (113) (312) (624)
Change in fair value of financial
instruments and trading inventory — — — (13) 108 107
(Gain) loss on disposal of assets (7) 9 — (257) (16) (253)
Loss on extinguishment of long-term debt 80 — — 80 — —
Share-based compensation 105 (134) 25 205 (238) 44
Exploration expenses — — — — 80 66
Settlement of decommissioning and
restoration liabilities — — — (263) (231) (464)
Other 55 17 44 289 119 119
Adjusted funds from (used in) operations (1 322) (872) (1 249) 10 257 3 876 10 818
Change in in non-cash working capital 1 507 (1 201) (397)
Cash flow provided by operating activities 11 764 2 675 10 421

Annual Report 2021 Suncor Energy Inc. 71

Advisories

(e) Free Funds Flow and Discretionary Free Funds Flow (Deficit)
Free funds flow is a non-GAAP financial measure that is calculated by taking adjusted funds from operations and subtracting
capital expenditures, including capitalized interest. Discretionary free funds flow (deficit) is a non-GAAP financial measure that is
calculated by taking adjusted funds from operations and subtracting asset sustainment and maintenance capital, inclusive of
associated capitalized interest, and dividends. Both free funds flow and discretionary free funds flow (deficit) reflect cash available
for increasing distributions to shareholders and to fund growth investments. Management uses free funds flow and
discretionary free funds flow (deficit) to measure the capacity of the company to increase returns to shareholders and to grow
Suncor’s business. The following is a reconciliation of discretionary free funds flow for Suncor’s last three years of operations.

($ millions) 2021 2020 2019

Cash flow provided by operating activities 11 764 2 675 10 421

Deduct (add) change in non-cash working capital 1 507 (1 201) (397)
Adjusted funds from operations 10 257 3 876 10 818
(1)
Asset sustaining and maintenance capital and dividends (4 667) (4 104) (5 904)
Discretionary free funds flow (deficit) 5 590 (228) 4 914
(1) Includes capitalized interest on sustaining capital of $60 million in 2021, $46 million in 2020 and $63 million in 2019.

(f) Oil Sands Operations, Fort Hills and Syncrude Cash Operating Costs
Cash operating costs are calculated by adjusting Oil Sands segment OS&G expense for i) non-production costs that management
believes do not relate to production performance, including, but not limited to, share-based compensation adjustments, CEWS,
COVID-19 related costs and safe-mode costs, research costs and the expense recorded as part of a non-monetary arrangement
involving a third-party processor; ii) revenues associated with excess capacity, including excess power generated and sold that
is recorded in operating revenue; iii) project startup costs; and iv) the impacts of changes in inventory levels and valuation, such
that the company is able to present cost information based on production volumes. Oil Sands operations and Syncrude
production volumes include production of diesel that is internally consumed and feedstock transfers between assets through
the interconnecting pipelines. Beginning in 2020, the company revised the methodology for calculating Syncrude cash operating
costs to better align with the Oil Sands operations and Fort Hills cash operating costs methodology. Prior period Syncrude cash
operating costs had previously included future development costs and have been restated to exclude these costs. Oil Sands
operations, Fort Hills and Syncrude cash operating costs are reconciled in the Segment Results and Analysis – Oil Sands section
of this document. Management uses cash operating costs to measure operating performance.

72 Annual Report 2021 Suncor Energy Inc.

(g) Refining and Marketing Gross Margin and Refining Operating Expense
Refining and marketing gross margins and refining operating expense are non-GAAP financial measures. Refining and marketing
gross margin, on a FIFO basis, is calculated by adjusting R&M segment operating revenue, other income and purchases of
crude oil and products (all of which are GAAP measures) for intersegment marketing fees recorded in intersegment revenues
and the impact of inventory write-downs recorded in purchases of crude oil and products. Refining and marketing gross margin,
on a LIFO basis, is further adjusted for the impacts of FIFO inventory valuation recorded in purchases of crude oil and products
and short-term risk management activities recorded in other income (loss). Refinery operating expense is calculated by adjusting
R&M segment OS&G for i) non-refining costs pertaining to the company’s supply, marketing and ethanol businesses; and ii) non­
refining costs that management believes do not relate to the production of refined products, including, but not limited to,
CEWS, share-based compensation and enterprise shared service allocations. Management uses refining and marketing gross
margin and refining operating expense to measure operating performance on a production barrel basis.

Year ended December 31

($ millions, except as noted) 2021 2020 2019

Refining and marketing gross margin reconciliation

Operating revenues 22 915 15 272 22 304
Purchases of crude oil and products (16 807) (11 243) (15 296)
6 108 4 029 7 008
Other (loss) income (50) 48 75
Non-refining and marketing margin (54) (57) (60)
Refining and marketing gross margin – FIFO 6 004 4 020 7 023
(1)
Refinery production (mbbls) 162 862 158 991 173 705
(2)
Refining and marketing gross margin – FIFO ($/bbl) 36.85 25.30 40.45
FIFO and short-term risk management activities adjustment (972) 532 (628)
Refining and marketing gross margin – LIFO 5 032 4 552 6 395
(2)
Refining and marketing gross margin – LIFO ($/bbl) 30.90 28.65 36.80
Refining operating expense reconciliation
Operating, selling and general expense(3) 2 019 1 759 2 035
(3)
Non-refining costs (1 051) (885) (1 108)
Refining operating expense 968 874 927
(1)
Refinery production 162 862 158 991 173 705
Refining operating expense ($/bbl) 5.95 5.50 5.35
(1) Refinery production is the output of the refining process, and differs from crude oil processed as a result of volumetric adjustments for non-crude
feedstock, volumetric gain associated with the refining process, and changes in unfinished product inventories.
(2) Beginning in 2020, refining and marketing gross margins have been revised to better reflect the refining, product supply and rack forward
businesses. Prior periods have been restated to reflect this change.
(3) Prior period amounts of OS&G have been reclassified to align with the current year presentation of transportation and distribution expense. This
reclassification had no effect on the refining operating expense.

(h) Impact of First-in, First-out (FIFO) Inventory Valuation on Refining and Marketing Net Earnings
GAAP requires the use of a FIFO inventory valuation methodology. For Suncor, this results in a disconnect between the sales
prices for refined products, which reflect current market conditions, and the amount recorded as the cost of sale for the related
refinery feedstock, which reflects market conditions at the time when the feedstock was purchased. This lag between purchase
and sale can be anywhere from several weeks to several months, and is influenced by the time to receive crude after purchase
(which can be several weeks for foreign offshore crude purchases), regional crude inventory levels, the completion of refining
processes, transportation time to distribution channels and regional refined product inventory levels.

Suncor prepares and presents an estimate of the impact of using a FIFO inventory valuation methodology compared to a LIFO
methodology, because management uses the information to analyze operating performance and compare itself against refining
peers that are permitted to use LIFO inventory valuation under United States GAAP (U.S. GAAP).

The company’s estimate is not derived from a standardized calculation and, therefore, may not be directly 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 or U.S. GAAP.

Annual Report 2021 Suncor Energy Inc. 73

Advisories

(i) Net Debt and Total Debt

Net debt and total debt are non-GAAP financial measures that management uses to analyze the financial condition of the
company. Total debt includes short-term debt, current portion of long-term debt, current portion of long-term lease liabilities,
long-term debt and long-term lease liabilities (all of which are GAAP measures). Net debt is equal to total debt less cash and cash
equivalents (a GAAP measure).

At December 31
($ millions, except as noted) 2021 2020 2019

Short-term debt 1 284 3 566 2 155

Current portion of long-term debt 231 1 413 —
Current portion of long-term lease liabilities 310 272 310
Long-term debt 13 989 13 812 12 884
Long-term lease liabilities 2 540 2 636 2 621
Total debt 18 354 21 699 17 970
Less: Cash and cash equivalents 2 205 1 885 1 960
Net debt 16 149 19 814 16 010
Shareholders’ equity 36 614 35 757 42 042
Total debt plus shareholders’ equity 54 968 57 456 60 012
Total debt to total debt plus shareholders’ equity (%) 33.4 37.8 29.9
Net debt to net debt plus shareholders’ equity (%) 30.6 35.7 27.6
Net debt to net debt plus shareholders’ equity – excluding leases (%) 26.6 32.1 23.7

(j) Price Realizations

Price realizations are a non-GAAP measure used by management to measure profitability. Oil Sands price realizations are
presented on a crude product basis and are derived from the Oil Sands segmented statement of net earnings (loss), after
adjusting for items not directly attributable to the revenues associated with production. E&P price realizations are presented on
an asset location basis and are derived from the E&P segmented statement of net earnings (loss), after adjusting for other
E&P assets, such as Libya, for which price realizations are not provided.

Oil Sands Price Realizations

December 31, 2021 December 31, 2020

For the year ended SCO and Crude sales Oil Sands SCO and Crude sales Oil Sands
($ millions, except as noted) Bitumen Diesel basket Segment Bitumen Diesel basket Segment

Operating revenues, net of

royalties 5 092 13 305 18 397 18 397 2 024 8 498 10 522 10 522
Add: Royalties 376 1 147 1 523 1 523 19 76 95 95
Operating revenues 5 468 14 452 19 920 19 920 2 043 8 574 10 617 10 617
Other (loss) income (56) 62 6 6 21 277 298 298
Purchases of crude oil and products (1 231) (213) (1 444) (1 444) (702) (142) (844) (844)
Gross realization adjustment(1) (210) (325) (535) (54) (458) (512)
Gross realizations 3 971 13 976 17 947 1 308 8 251 9 559
Transportation and distribution (359) (767) (1 126) (1 126) (476) (747) (1 223) (1 223)
Transportation and distribution
adjustment(2) — — — 197 — 197
Net transportation and distribution (359) (767) (1 126) (279) (747) (1 026)
Price realization 3 612 13 209 16 821 1 029 7 504 8 533
Sales volumes (mbbls) 67 094 169 983 237 077 45 980 171 211 217 191
Price realization per barrel 53.80 77.73 70.96 22.37 43.83 39.29

74 Annual Report 2021 Suncor Energy Inc.

 December 31, 2019

For the year ended SCO and Crude sales Oil Sands
($ millions, except as noted) Bitumen Diesel basket Segment

Operating revenues, net of royalties 4 656 12 774 17 430 17 430

Add: Royalties 124 793 917 917
Operating revenues 4 780 13 567 18 347 18 347
Other (loss) income (38) 210 172 172
Purchases of crude oil and products (1 164) (243) (1 407) (1 407)
Gross realization adjustment(1) (14) (219) (233)
Gross realizations 3 564 13 315 16 879
Transportation and distribution (449) (844) (1 293) (1 293)
(2)
Transportation and distribution adjustment 15 7 22
Net transportation and distribution (434) (837) (1 271)
Price realization 3 130 12 478 15 608
Sales volumes (mbbls) 68 430 176 494 244 924
Price realization per barrel 45.71 70.68 63.70
(1) Reflects the items not directly attributed to revenues received from the sale of proprietary crude and net non-proprietary activity at its deemed
point of sale.
(2) Reflects adjustments for expenses or credits not directly related to the transportation of the crude product to its deemed point of sale.

E&P Price Realizations

December 31, 2021 December 31, 2020

For the year ended E&P E&P E&P E&P E&P E&P
($ millions, except as noted) International Canada Other(1) Segment International Canada Other(1) Segment

Operating revenues, net of royalties 815 1 447 238 2 500 809 1 058 (111) 1 756
Add: Royalties — 237 241 478 — 94 49 143
Operating revenues 815 1 684 479 2 978 809 1 152 (62) 1 899
Transportation and distribution (25) (44) (43) (112) (34) (65) (1) (100)
Price realization 790 1 640 436 775 1 087 (63)
Sales volumes (mbbls) 9 616 19 386 15 406 21 879
Price realization per barrel 82.16 84.70 50.28 49.69

December 31, 2019

For the year ended E&P E&P E&P

($ millions, except as noted) International Canada Other(1) Segment

Operating revenues, net of royalties 1 309 1 621 140 3 070

Add: Royalties — 302 303 605
Operating revenues 1 309 1 923 443 3 675
Transportation and distribution (35) (39) (6) (80)
Price realization 1 274 1 884 437
Sales volumes (mbbls) 15 650 22 190
Price realization per barrel 81.22 84.86
(1) Reflects other E&P assets, such as Libya, for which price realizations are not provided.

Annual Report 2021 Suncor Energy Inc. 75

Advisories

(k) Adjusted Operating Earnings (Loss)(1) Reconciliations – Fourth Quarter 2021 and 2020
Exploration and Refining and Corporate
For the quarter ended December 31 Oil Sands Production Marketing and Eliminations Total
($ millions) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Net earnings (loss) 896 (293) 465 (379) 450 268 (258) 236 1 553 (168)
Unrealized foreign exchange gain on U.S. dollar
denominated debt — — — — — — (21) (539) (21) (539)
Unrealized loss (gain) on risk management
activities(1) 2 21 — — (13) 12 — — (11) 33
(2)
Gain on significant disposal — — (227) — — — — — (227) —
(3)
Asset Impairments — — — 423 — — — — — 423
Provision for pipeline project(4) — 142 — — — — — — — 142
Adjusted operating earnings (loss) 898 (130) 238 44 437 280 (279) (303) 1 294 (109)
(1) Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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) In the fourth quarter of 2021, the company completed the sale of its 26.69% working interest in the Golden Eagle Area Development, in the E&P
segment, for proceeds of $227 million ($227 million after-tax) net of closing adjustments and other closing costs, in addition to future contingent
consideration of up to US$50 million.
(3) In the fourth quarter of 2020, the company recorded non-cash impairment charges of $559 million ($423 million after-tax) against its share of the
White Rose assets as a result of the high degree of uncertainty surrounding the future of the West White Rose Project.
(4) In the fourth quarter of 2020, the company recorded a provision to transportation expense for $186 million ($142 million after-tax) related to the
Keystone XL pipeline project.

(l) Adjusted Funds from Operations Reconciliations – Fourth Quarter 2021 and 2020
Exploration and Refining and Corporate
For the quarter ended December 31 Oil Sands Production Marketing and Eliminations Total
($ millions) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Net earnings (loss) 896 (293) 465 (379) 450 268 (258) 236 1 553 (168)
Adjustments for:
Depreciation, depletion, amortization and
impairment 1 237 1 058 129 835 243 207 21 20 1 630 2 120
Deferred income taxes (11) (154) (2) (160) 45 (53) (28) 43 4 (324)
Accretion 61 55 15 13 1 1 — — 77 69
Unrealized foreign exchange gain on U.S.
dollar denominated debt — — — — — — (25) (602) (25) (602)
Change in fair value of financial
instruments and trading inventory 8 49 42 5 — (9) — — 50 45
(Gain) loss on disposal of assets (4) 1 (227) — (1) (18) — 9 (232) (8)
Share-based compensation 36 25 4 3 21 15 64 52 125 95
Settlement of decommissioning and
restoration liabilities (71) (41) 1 — (6) (7) — — (76) (48)
Other 23 29 (2) (5) 12 11 5 7 38 42
Adjusted funds from (used in) operations 2 175 729 425 312 765 415 (221) (235) 3 144 1 221
Change in non-cash working capital (529) (407)
Cash flow provided by operating activities 2 615 814

76 Annual Report 2021 Suncor Energy Inc.

Measurement Conversions
Certain crude oil and natural gas liquids volumes have been converted to mcfe or mmcfe on the basis of one bbl to six mcf.
Also, certain natural gas volumes have been converted to boe or mboe on the same basis. Any figure presented in mcfe, mmcfe,
boe or mboe may be misleading, particularly if used in isolation. A conversion ratio of one bbl of crude oil or natural gas
liquids to six mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and
does not necessarily represent 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, conversion on a 6:1 basis may
be misleading as an indication of value.

Common Abbreviations
The following is a list of abbreviations that may be used in this MD&A:

Measurement Places and Currencies

bbl barrel U.S. United States
bbls/d barrels per day U.K. United Kingdom
mbbls/d thousands of barrels per day B.C. British Columbia
boe barrels of oil equivalent
$ or Cdn$ Canadian dollars
boe/d barrels of oil equivalent per day
US$ United States dollars
mboe thousands of barrels of oil equivalent £ Pounds sterling
mboe/d thousands of barrels of oil equivalent per day € Euros
mcf thousands of cubic feet of natural gas
Financial and Business Environment
mcfe thousands of cubic feet of natural gas
DD&A Depreciation, depletion and amortization
equivalent
mmcf millions of cubic feet of natural gas WTI West Texas Intermediate
mmcf/d millions of cubic feet of natural gas per day WCS Western Canadian Select
mmcfe millions of cubic feet of natural gas equivalent SCO Synthetic crude oil
mmcfe/d millions of cubic feet of natural gas equivalent SYN Synthetic crude oil benchmark
per day MSW Mixed Sweet Blend
m3 cubic metres NYMEX New York Mercantile Exchange
MW megawatts
MWh megawatt hour

Annual Report 2021 Suncor Energy Inc. 77

Advisories

Forward-Looking Information

This MD&A contains certain forward-looking statements and • the belief that Suncor’s broad asset base and operational
forward-looking information (collectively, forward-looking flexibility will allow Suncor to optimize the production of
statements) within the meaning of applicable Canadian and U.S. higher-value SCO in the upstream, while its extensive logistics
securities laws and other information based on Suncor’s current assets and sales channels, enhanced by its trading and
expectations, estimates, projections and assumptions that were marketing expertise, drives additional value as equity barrels
made by the company in light of information available at the time move down the value chain and that, through this midstream
the statement was made and consider Suncor’s experience and and marketing network and its geographical diversity, the
its perception of historical trends, including expectations and company is able to maximize crude production and refinery
assumptions concerning: the accuracy of reserves estimates; the utilization by securing sales outlets while receiving
current and potential adverse impacts of the COVID-19 pandemic, global-based pricing for the majority of its production;
including the status of the pandemic and future waves;
• Suncor’s aim to get the most out of its assets through a focus
commodity prices and interest and foreign exchange rates; the
on operational excellence and its belief that focusing on
performance of assets and equipment; capital efficiencies and cost
investments that generate structural reductions to its capital
savings; applicable laws and government policies; future
requirements with a continued focus on improved productivity
production rates; the sufficiency of budgeted capital expenditures
and reliability will drive down overall cost structures and
in carrying out planned activities; the availability and cost of
sustainment capital requirements and are expected to help it
labour, services and infrastructure; the satisfaction by third parties
achieve maximum value for its operations;
of their obligations to Suncor; the development and execution of
projects; and the receipt, in a timely manner, of regulatory and • the expectation that Suncor’s assumption of operatorship of
third-party approvals. All statements and information that the Syncrude asset will be a critical step towards greater
address expectations or projections about the future, and integration, efficiencies and competitiveness across all Suncor­
statements and information about Suncor’s strategy for growth, operated assets in the region, further strengthening the
expected and future expenditures or investment decisions, company’s regional oil sands advantage, the expectation that
commodity prices, costs, schedules, production volumes, operating Suncor assuming operatorship will capture increased value
and financial results, future financing and capital activities, and for the owners through improved operational performance,
the expected impact of future commitments are forward-looking efficiency and competitiveness and expectations regarding the
statements. Some of the forward-looking statements may be realization of $100 million of annual gross synergies for the
identified by words like “expects”, “anticipates”, “will”, “estimates”, joint venture owners in 2022, with an additional $200 million
“plans”, “scheduled”, “intends”, “believes”, “projects”, “indicates”, expected to be realized through 2023-2024;
“could”, “focus”, “vision”, “goal”, “outlook”, “proposed”, “target”,
“objective”, “continue”, “should”, “may”, “potential”, “future”, • statements about Suncor’s strategic objective to be a net-zero
“opportunity”, “would”, “priority” and similar expressions. GHG emissions company by 2050 and its near-term GHG
emissions reduction goal, including Suncor’s aim to
Forward-looking statements in this MD&A include references to: substantially contribute to society’s net-zero goals by reducing
emissions across its base business, growing its low­
• Suncor’s strategy, including its priority to deliver competitive
emissions energy business and working with others to reduce
and sustainable returns to shareholders and its aim to
emissions;
maximize shareholder returns, its plans on how to achieve
this strategy, its belief that its commitment to capital discipline, • Suncor’s belief that its investments in the energy expansion
its balance sheet strength and financial health provides the will complement its existing core capabilities: increasing its
foundation for its capital allocation framework by supporting low-carbon power generation, expanding into clean hydrogen
long-term value creation and returns to shareholders, and production and growing its existing renewable liquid fuels
Suncor’s belief that it is well positioned to execute on these business, and that unleashing the full potential of its people
priorities due to the company’s competitive advantages: and technology will be critical in achieving its environmental,
financial strength, an industry-leading long-life, low-decline operational and financial goals;
oil sands reserves base, an offshore business that provides
geographically diversified cash flow, a highly efficient, tightly • Suncor’s expectation that it will operate the Fort Hills asset at
integrated downstream business supported by competitive average utilization rates of 90% throughout 2022;
sales channels and its investment in sustainability, technology • expectations regarding the acquisition, through Astisiy, of an
and innovation; equity interest in the Northern Courier Pipeline, including
• Suncor’s belief that its growth and development plans will be that it will provide the eight Indigenous communities with
focused on highly economical projects and initiatives that are reliable income for decades;
synergistic with its core capabilities and will create long-term • Suncor’s expectations with respect to the Terra Nova project,
value for the company through free funds flow growth and including with respect to the Asset Life Extension Project that is
Suncor’s belief that it will be able to execute improvement expected to extend production life by approximately a
strategies at existing assets and realize structural cost savings; decade, the expectation that there will be a safe and reliable

78 Annual Report 2021 Suncor Energy Inc.

 return to operations before the end of 2022 and the timing of • expectations for Suncor’s partnership with ATCO Ltd. on a
maintenance work on the Floating, Production, Storage and potential world-scale clean hydrogen project, including the
Offloading facility; expected benefits and timing estimates;

• statements about Buzzard Phase 2, including the expectation • expectations for the Oil Sands segment, including the
that it will extend the production life of the existing field expectation that Suncor will continue to advance incremental
and reach its peak production of 12,000 boe/d gross debottlenecks to maximize the value of the Firebag asset,
(approximately 3,500 boe/d net to Suncor) in 2022; which will depend on economic conditions supported
by integrated well pad development and Solvent SAGD
• statements regarding the Oil Sands Pathways to Net Zero
technologies, the deployment of digital mine optimization
alliance, including its aims, expectations regarding timing and
and AHS and the expected benefits therefrom, and the potential
the expected pathways the alliance will take to address GHG
development opportunities that may support future in situ
emissions;
production, including Meadow Creek, Lewis, OSLO, Gregoire,
• the aim, objectives and potential benefits of Suncor’s clean Chard and Kirby;
energy investments, including Enerkem Inc., LanzaJet, Inc.,
• the expectation that Suncor will remain focused on operational
Svante Inc. and the Varennes Carbon Recycling facility, and
excellence and increasing reliability and utilization across its
Suncor’s belief that these investments complement Suncor’s
assets, will continue to operate in a safe, reliable manner, while
existing product mix and demonstrate Suncor’s involvement in
optimizing production and remain committed to maximizing
the evolving global energy expansion and are key to Suncor’s
utilization of our upgraders to produce the highest-value
emissions reduction goal;
barrels, which will be further enabled by optimizing transfers
• that Suncor will remain disciplined in its plans to reduce debt on the interconnecting pipelines between Suncor’s Oil
towards its 2025 targeted net debt range of $12 – $15 billion Sands Base and Syncrude;
and 2030 targets and the company’s plans to allocate its
• the expectation that the Mildred Lake Extension project will
annual free funds flow, after its dividend, evenly between share
sustain Syncrude’s current production levels by extending the
buybacks and debt reductions;
life of the North Mine using existing extraction and
• statements about Suncor’s incremental free funds flow target upgrading facilities while minimizing the environmental
by 2025, including the projects that are expected to help impacts of building infrastructure and that the project will
Suncor meet this target; come online in late 2025;

• the expectation that capital discipline will continue to focus • expectations for the E&P segment, including the segment’s
on asset sustainment and maintenance projects designed to focus primarily on low-cost projects that deliver significant
maintain safe and reliable operations, as well as advancing returns, cash flow and long-term value, and ongoing
high-value economic investment projects, and will continue development activities offshore the east coast of Canada and
to invest in projects that are economically robust, sustainably in the U.K. North Sea intended to leverage existing facilities
focused and technologically progressive; and infrastructure to provide incremental production, which
are planned to continue in 2022;
• Suncor’s expectation that it will continue to advance its digital
transformation which are expected to contribute to Suncor’s • expectations for the R&M segment, including that the
incremental free funds flow target and facilitate the transition company will continue to pursue midstream opportunities
to the workplace of the future, bolster operational excellence and the anticipated benefits therefrom, the expectation that
and drive additional value; refinery throughput will return to 2019 levels, which will
position the company to capture improving margins and
• Suncor’s expectations for the coke-fired boiler replacement
demand, and that the R&M capital program in 2022 will be
project, including the expectation that the cogeneration units
heavily weighted towards asset sustainment and maintenance
will provide reliable steam generation required for Suncor’s
activities focused on ongoing sustainment and enhancement
extraction and upgrading operations to generate electricity
to refinery operations and the company’s plans to make
that will be transmitted to Alberta’s power grid and provide a
economic investments in expansions of the company’s retail
lower-carbon power alternative while delivering value to
and wholesale network; and
Suncor and the expectation that it will be in-service between
2024 and 2025; • the expectation that well pads under construction will
maintain existing production levels at Firebag and MacKay
• statements about the sanctioned Forty Mile Wind Power
River in future years as production from existing well pads
Project, including the expectation that the project will generate
declines.
significant value through sustainable power generation and
retention of the generated carbon credits for utilization in The anticipated duration and impact of planned maintenance
Suncor’s upstream business and the belief that the project will events, including:
be completed and operational in late 2022, contributing to
• planned turnaround at Firebag, annual coker maintenance at
the company’s incremental free funds flow and emissions
Oil Sands Base Upgrader 2, maintenance and turnaround at
reduction goals while meeting growing customer demand for
Syncrude and maintenance at Fort Hills; and
lower-carbon energy;

Annual Report 2021 Suncor Energy Inc. 79

Advisories

• planned maintenance at the Sarnia, Edmonton and Montreal some that are similar to other oil and gas companies and some
refineries. that are unique to Suncor. Suncor’s actual results may differ
materially from those expressed or implied by its forward-looking
Also:
statements, so readers are cautioned not to place undue reliance
• economic sensitivities; on them.

• Suncor’s belief that its indicative 5-2-2-1 index will continue to The financial and operating performance of the company’s
be an appropriate measure against Suncor’s actual results; reportable operating segments, specifically Oil Sands, E&P and
R&M, may be affected by a number of factors.
• the company’s priority regarding returning value to
shareholders and strengthening the balance sheet, and the Factors that affect Suncor’s Oil Sands segment include, but are
company’s ongoing ability to generate cash flow and not limited to, volatility in the prices for crude oil and other
commitment to return cash to shareholders; production, and the related impacts of fluctuating light/heavy
and sweet/sour crude oil differentials; changes in the demand for
• statements about Suncor’s share repurchase program,
refinery feedstock and diesel fuel, including the possibility that
including its belief that, depending on the trading price of its
refiners that process the company’s proprietary production will be
common shares and other relevant factors, purchasing its own
closed, experience equipment failure or other accidents; Suncor’s
shares represents an attractive investment opportunity and
ability to operate its Oil Sands facilities reliably in order to meet
is in the best interests of the company and its shareholders,
production targets; the output of newly commissioned facilities,
and Suncor’s expectation that the decision to allocate cash to
the performance of which may be difficult to predict during initial
repurchase shares will not affect its long-term strategy;
operations; Suncor’s dependence on pipeline capacity and other
• the company’s belief that it does not have any guarantees or logistical constraints, which may affect the company’s ability to
off-balance sheet arrangements that have, or are reasonably distribute products to market; Suncor’s ability to finance Oil
likely to have, a current or future material effect on the Sands growth and sustaining capital expenditures; the availability
company’s financial condition or financial performance, of bitumen feedstock for upgrading operations, which can be
including liquidity and capital resources; negatively affected by poor ore grade quality, unplanned mine
equipment and extraction plant maintenance, tailings storage,
• Suncor’s planned 2021 capital spending program of and in situ reservoir and equipment performance, or the
$4.7 billion and the belief that the company will have the unavailability of third-party bitumen; changes in operating costs,
capital resources to fund its planned 2021 capital spending including the cost of labour, natural gas and other energy
program and to meet current and future working capital sources used in oil sands processes; and the company’s ability to
requirements through cash and cash equivalents balances, complete projects, including planned maintenance events, both on
cash flow provided by operating activities, available committed time and on budget, which could be impacted by competition
credit facilities, issuing commercial paper and, if needed, from other projects (including other oil sands projects) for goods
accessing capital markets; and services and demands on infrastructure in Alberta’s Wood
• Suncor’s expectations as to how its 2022 capital expenditures Buffalo region and the surrounding area (including housing, roads
will be directed and the expected benefits therefrom; and schools).

• the objectives of the company’s short-term investment Factors that affect Suncor’s E&P segment include, but are not
portfolio and the expectation that the maximum weighted limited to, volatility in crude oil and natural gas prices; operational
average term to maturity of the company’s short-term risks and uncertainties associated with oil and gas activities,
investment portfolio will not exceed six months, and all including unexpected formations or pressures, premature declines
investments will be with counterparties with investment grade of reservoirs, fires, blow-outs, equipment failures and other
debt ratings; accidents, uncontrollable flows of crude oil, natural gas or well
fluids, and pollution and other environmental risks; adverse
• management of debt levels continuing to be a priority for weather conditions, which could disrupt output from producing
Suncor given the company’s long-term growth plans and assets or impact drilling programs, resulting in increased costs
future expected volatility in the commodity pricing and/or delays in bringing on new production; political, economic
environment, and Suncor’s belief that a phased and flexible and socio-economic risks associated with Suncor’s foreign
approach to existing and future projects should assist Suncor operations, including the unpredictability of operating in Libya
in maintaining its ability to manage project costs and debt due to ongoing political unrest; and market demand for mineral
levels; rights and producing properties, potentially leading to losses on
• Suncor’s intention to adopt certain accounting standards, disposition or increased property acquisition costs.
amendments and interpretations when they become effective; Factors that affect Suncor’s R&M segment include, but are not
and limited to, fluctuations in demand and supply for refined products
• expectations with respect to changes to law and government that impact the company’s margins; market competition,
policy. including potential new market entrants; the company’s ability to
reliably operate refining and marketing facilities in order to
Forward-looking statements are not guarantees of future meet production or sales targets; and risks and uncertainties
performance and involve a number of risks and uncertainties, affecting construction or planned maintenance schedules,

80 Annual Report 2021 Suncor Energy Inc.

including the availability of labour and other impacts of competing projects, initiatives, and exploration and development activities
projects drawing on the same resources during the same time and the satisfaction of any conditions to approvals; the potential
period. for disruptions to operations and construction projects as a result
of Suncor’s relationships with labour unions that represent
Additional risks, uncertainties and other factors that could
employees at the company’s facilities; the company’s ability to
influence the financial and operating performance of all of
find new oil and gas reserves that can be developed economically;
Suncor’s operating segments and activities include, but are not
the accuracy of Suncor’s reserves, resources and future production
limited to, changes in general economic, market and business
estimates; market instability affecting Suncor’s ability to borrow in
conditions, such as commodity prices, interest rates and currency
the capital debt markets at acceptable rates or to issue other
exchange rates (including as a result of demand and supply
securities at acceptable prices; maintaining an optimal debt to
effects resulting from the COVID-19 pandemic and the actions of
cash flow ratio; the success of the company’s risk management
OPEC+); fluctuations in supply and demand for Suncor’s products;
activities using derivatives and other financial instruments; the cost
the successful and timely implementation of capital projects,
of compliance with current and future environmental laws,
including growth projects and regulatory projects; risks associated
including climate change laws; risks relating to increased activism
with the development and execution of Suncor’s projects and the
and public opposition to fossil fuels and oil sands; risks and
commissioning and integration of new facilities; the possibility that
uncertainties associated with closing a transaction for the purchase
completed maintenance activities may not improve operational
or sale of a business, asset or oil and gas property, including
performance or the output of related facilities; the risk that projects
estimates of the final consideration to be paid or received; the
and initiatives intended to achieve cash flow growth and/or
ability of counterparties to comply with their obligations in a timely
reductions in operating costs may not achieve the expected results
manner; risks associated with joint arrangements in which the
in the time anticipated or at all; competitive actions of other
company has an interest; risks associated with land claims and
companies, including increased competition from other oil and
Indigenous consultation requirements; the risk that the company
gas companies or from companies that provide alternative sources
may be subject to litigation; the impact of technology and risks
of energy; labour and material shortages; actions by government
associated with developing and implementing new technologies;
authorities, including the imposition or reassessment of, or
and the accuracy of cost estimates, some of which are provided at
changes to, taxes, fees, royalties, duties and other government­
the conceptual or other preliminary stage of projects and prior
imposed compliance costs, and mandatory production curtailment
to commencement or conception of the detailed engineering that
orders and changes thereto; changes to laws and government
is needed to reduce the margin of error and increase the level of
policies that could impact the company’s business, including
accuracy. The foregoing important factors are not exhaustive.
environmental (including climate change), royalty and tax laws
and policies; the ability and willingness of parties with whom Many of these risk factors and other assumptions related to
Suncor has material relationships to perform their obligations to Suncor’s forward-looking statements are discussed in further detail
the company; the unavailability of, or outages to, third-party throughout this MD&A, including under the heading Risk Factors,
infrastructure that could cause disruptions to production or prevent and the company’s 2021 AIF and Form 40-F on file with Canadian
the company from being able to transport its products; the securities commissions at www.sedar.com and the United States
occurrence of a protracted operational outage, a major safety or Securities and Exchange Commission at www.sec.gov. Readers
environmental incident, or unexpected events such as fires are also referred to the risk factors and assumptions described in
(including forest fires), equipment failures and other similar other documents that Suncor files from time to time with
events affecting Suncor or other parties whose operations or assets securities regulatory authorities. Copies of these documents are
directly or indirectly affect Suncor; the potential for security available without charge from the company.
breaches of Suncor’s information technology and infrastructure
The forward-looking statements contained in this MD&A are made
by malicious persons or entities, and the unavailability or failure of
as of the date of this MD&A. Except as required by applicable
such systems to perform as anticipated as a result of such
securities laws, we assume no obligation to update publicly or
breaches; security threats and terrorist or activist activities; the
otherwise revise any forward-looking statements or the foregoing
risk that competing business objectives may exceed Suncor’s
risks and assumptions affecting such forward-looking statements,
capacity to adopt and implement change; risks and uncertainties
whether as a result of new information, future events or otherwise.
associated with obtaining regulatory, third-party and stakeholder
approvals outside of Suncor’s control for the company’s operations,

Annual Report 2021 Suncor Energy Inc. 81

Management’s Statement
of Responsibility for Financial Reporting
The management of Suncor Energy Inc. is responsible for the presentation and preparation of the accompanying consolidated
financial statements of Suncor Energy Inc. and all related financial information contained in the Annual Report, including
Management’s Discussion and Analysis.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board. They include certain amounts that are based on estimates and judgments.

In management’s opinion, the consolidated financial statements have been properly prepared within reasonable limits of
materiality and within the framework of the significant accounting policies adopted by management. If alternate accounting
methods exist, management has chosen those policies it deems the most appropriate in the circumstances. In discharging its
responsibilities for the integrity and reliability of the financial statements, management maintains and relies upon a system of
internal controls designed to ensure that transactions are properly authorized and recorded, assets are safeguarded against
unauthorized use or disposition and liabilities are recognized. These controls include quality standards in hiring and training
of employees, formalized policies and procedures, a corporate code of conduct and associated compliance program designed
to establish and monitor conflicts of interest, the integrity of accounting records and financial information, among others, and
employee and management accountability for performance within appropriate and well-defined areas of responsibility.

The system of internal controls is further supported by the professional staff of an internal audit function who conduct periodic
audits of the company’s financial reporting.

The Audit Committee of the Board of Directors, currently composed of four independent directors, reviews the effectiveness of
the company’s financial reporting systems, management information systems, internal control systems and internal auditors.
It recommends to the Board of Directors the external auditor to be appointed by the shareholders at each annual meeting
and reviews the independence and effectiveness of their work. In addition, it reviews with management and the external auditor
any significant financial reporting issues, the presentation and impact of significant risks and uncertainties, and key estimates
and judgments of management that may be material for financial reporting purposes. The Audit Committee appoints the
independent reserve consultants. The Audit Committee meets at least quarterly to review and approve interim financial
statements prior to their release, as well as annually to review Suncor’s annual financial statements and Management’s Discussion
and Analysis, Annual Information Form/Form 40-F, and annual reserves estimates, and recommend their approval to the Board
of Directors. The internal auditors and the external auditor, KPMG LLP, have unrestricted access to the company, the
Audit Committee and the Board of Directors.

Mark Little Alister Cowan

President and Chief Executive Officer Chief Financial Officer

February 23, 2022

82 Annual Report 2021 Suncor Energy Inc.

The following report is provided by management in respect of the company’s internal control over financial reporting (as
defined in Rule 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934):

Management’s Report on Internal Control

Over Financial Reporting
1. Management is responsible for establishing and maintaining adequate internal control over the company’s financial
reporting.

2. Management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework
(2013) in Internal Control – Integrated Framework to evaluate the effectiveness of the company’s internal control over
financial reporting.

3. Management has assessed the effectiveness of the company’s internal control over financial reporting as at
December 31, 2021, and has concluded that such internal control over financial reporting was effective as of that date.
In addition, based on this assessment, management determined that there were no material weaknesses in internal control
over financial reporting as at December 31, 2021. Because of inherent limitations, systems of internal control over financial
reporting may not prevent or detect misstatements and even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.

4. The effectiveness of the company’s internal control over financial reporting as at December 31, 2021, has been audited by
KPMG LLP, independent auditor, as stated in their report which appears herein.

Mark Little Alister Cowan

President and Chief Executive Officer Chief Financial Officer

February 23, 2022

Annual Report 2021 Suncor Energy Inc. 83

Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Suncor Energy Inc.
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Suncor Energy Inc. (the Company) as of December 31, 2021
and 2020, the related consolidated statements of comprehensive income (loss), changes in equity, and cash flows for each of the
years in the two-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial
statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for each of the
years in the two-year period ended December 31, 2021, in conformity with International Financial Reporting Standards as issued
by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated

84 Annual Report 2021 Suncor Energy Inc.

financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Indicators of impairment loss or reversal related to Oil Sands and Exploration and Production property, plant and equipment
As discussed in Note 3(m) to the consolidated financial statements, when circumstances indicate that a cash generating unit
(“CGU”) may be impaired or a previous impairment reversed, the Company compares the carrying amount of the CGU to its
recoverable amount. Quarterly, the Company analyzes indicators of impairment loss or reversal (“impairment indicators”), such
as significant increases or decreases in forecasted production volumes (which include assumptions related to proved and probable
oil reserves), commodity prices, capital expenditures and operating costs (collectively, “reserve assumptions”). The estimate of
reserve assumptions requires the expertise of independent qualified reserves evaluators. The Company engages independent
qualified reserves evaluators to evaluate the Company’s proved and probable oil reserves. The carrying amount of the Company’s
Oil Sands and Exploration and Production property, plant and equipment balance as of December 31, 2021 was $55,374 million.

We identified the evaluation of the assessment of indicators of impairment loss or reversal related to Oil Sands and Exploration
and Production property, plant and equipment as a critical audit matter. A high degree of subjective auditor judgment was
required to evaluate the reserve assumptions used by the Company in their assessment.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related
to the Company’s assessment of impairment indicators, including controls related to the reserve assumptions. We evaluated the
Company’s reserve assumptions by comparing the current year externally evaluated proved and probable oil reserves to
historical results. We compared the Company’s current year actual production volumes, operating costs and capital expenditures
to those respective assumptions used in the prior year externally evaluated proved and probable oil reserves to assess the
Company’s ability to accurately forecast. We evaluated the Company’s future commodity price estimates by comparing to a
number of publicly available external price curves for the same benchmark pricing. We evaluated the competence, capabilities,
and objectivity of the Company’s independent qualified reserves evaluators engaged by the Company, who evaluated the proved
and probable oil reserves. We evaluated the methodology used by the independent qualified reserves evaluators to evaluate
proved and probable oil reserves for compliance with regulatory standards.

Impairment of the Fort Hills cash generating unit

As discussed in note 16 to the consolidated financial statements, the Company identified an indicator of impairment at
December 31, 2021 for the Fort Hills cash generating unit (“CGU”) and performed an impairment test to determine the recoverable
amount of the CGU based on the fair value less cost of disposal. The estimated recoverable amount of the CGU involves
numerous assumptions, including forecasted production volumes, commodity prices (including foreign exchange rates),
operating costs (“forecasted cash flow assumptions”), and discount rate.

We identified the assessment of the impairment of the Fort Hills CGU as a critical audit matter. A high degree of subjective
auditor judgment was required in evaluating the Company’s forecasted cash flow and discount rate assumptions as minor
changes to these assumptions could have had a significant effect on the Company’s calculation of the recoverable amount of
the CGU. A high degree of subjective auditor judgement was also required to evaluate the externally evaluated proved and
probable oil reserves which were used to assess the Company’s forecasted cash flow assumptions. Additionally, the evaluation of
the impairment of the Fort Hills CGU required involvement of valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested
the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the
Company’s determination of the recoverable amount of the CGU, including controls related to the determination of the forecasted
cash flow assumptions and discount rate. We performed sensitivity analyses over the discount rate and forecasted commodity
price assumptions to assess the impact of those assumptions on the Company’s determination of the recoverable amount of the
CGU. We evaluated the Company’s future commodity price (including foreign exchange rate) estimates by comparing to a
number of publicly available external price curves for the same benchmark pricing. We evaluated the forecasted production
volumes and operating cost assumptions used in the impairment test by comparing to the current year externally evaluated
proved and probable oil reserves as well as to historical results. We assessed differences between management’s forecasted cash
flow assumptions and the externally evaluated proved and probable oil reserves by comparing to recent historical results and
comparable CGUs. We compared the Company’s current year actual production volumes and operating costs to those respective
assumptions used in the prior year externally evaluated proved and probable oil reserves to assess the Company’s ability to
accurately forecast. We evaluated the competence, capabilities and objectivity of the independent qualified reserves evaluators
engaged by the Company, who evaluated the proved and probable oil reserves. We evaluated the methodology used by

Annual Report 2021 Suncor Energy Inc. 85

independent qualified reserves evaluators to evaluate proved and probable oil reserves for compliance with regulatory standards.
We involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s CGU discount rate, by comparing the inputs against publicly available market data for comparable
entities and assessing the resulting discount rate

• evaluating the Company’s estimate of recoverable amount of the CGU by comparing to publicly available market data and
valuation metrics for comparable entities.

Chartered Professional Accountants

We have served as the Company’s auditor since 2019.

Calgary, Canada
February 23, 2022

86 Annual Report 2021 Suncor Energy Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31 ($ millions) Notes 2021 2020

Revenues and Other Income
Operating revenues, net of royalties 6 39 132 24 662
Other income 7 (31) 390
39 101 25 052

Expenses
Purchases of crude oil and products 13 791 9 112
Operating, selling and general(1) 8 and 26 11 366 9 794
(1)
Transportation and distribution 1 479 1 551
Depreciation, depletion, amortization and impairment 15 and 16 5 850 9 526
Exploration 47 186
Gain on disposal of assets 33 (257) (16)
Financing expenses 9 1 255 996
33 531 31 149
Earnings (Loss) before Income Taxes 5 570 (6 097)
Income Tax Expense (Recovery)
Current 10 1 395 (659)
Deferred 10 and 16 56 (1 119)
1 451 (1 778)
Net Earnings (Loss) 4 119 (4 319)

Other Comprehensive Income (Loss)

Items That May be Subsequently Reclassified to Earnings:
Foreign currency translation adjustment (63) (22)
Items That Will Not be Reclassified to Earnings:
Actuarial gain (loss) on employee retirement benefit plans,
net of income taxes 856 (196)

Other Comprehensive Income (Loss) 793 (218)

Total Comprehensive Income (Loss) 4 912 (4 537)

Per Common Share (dollars) 11

Net earnings (loss) – basic and diluted 2.77 (2.83)
Cash dividends 1.05 1.10
(1) Prior period amounts have been reclassified to align with the current year presentation of transportation and distribution expense. For the year
ended December 31, 2020, $133 million was reclassified from operating, selling and general expense to transportation and distribution expense.
This reclassification had no effect on net earnings (loss).

The accompanying notes are an integral part of the consolidated financial statements.

Annual Report 2021 Suncor Energy Inc. 87

Consolidated Balance Sheets

December 31 December 31
($ millions) Notes 2021 2020
Assets
Current assets
Cash and cash equivalents 12 2 205 1 885
Accounts receivable 4 534 3 157
Inventories 14 4 110 3 617
Income taxes receivable 128 727
Total current assets 10 977 9 386
Property, plant and equipment, net 15–17 and 33 65 546 68 130
Exploration and evaluation 18 2 226 2 286
Other assets 19 1 307 1 277
Goodwill and other intangible assets 20 3 523 3 328
Deferred income taxes 10 160 209
Total assets 83 739 84 616

Liabilities and Shareholders’ Equity

Current liabilities
Short-term debt 21 1 284 3 566
Current portion of long-term debt 21 231 1 413
Current portion of long-term lease liabilities 21 310 272
Accounts payable and accrued liabilities 6 503 4 684
Current portion of provisions 24 779 527
Income taxes payable 1 292 87
Total current liabilities 10 399 10 549
Long-term debt 21 13 989 13 812
Long-term lease liabilities 21 2 540 2 636
Other long-term liabilities 22 2 180 2 840
Provisions 24 8 776 10 055
Deferred income taxes 10 and 16 9 241 8 967
Equity 36 614 35 757
Total liabilities and shareholders’ equity 83 739 84 616

The accompanying notes are an integral part of the consolidated financial statements.

Approved on behalf of the Board of Directors:

Mark Little Patricia M. Bedient

Director Director
February 23, 2022

88 Annual Report 2021 Suncor Energy Inc.

Consolidated Statements of Cash Flows

For the years ended December 31 ($ millions) Notes 2021 2020

Operating Activities
Net earnings (loss) 4 119 (4 319)
Adjustments for:
Depreciation, depletion, amortization and impairment 5 850 9 526
Deferred income tax expense (recovery) 10 and 16 56 (1 119)
Accretion 9 304 278
Unrealized foreign exchange gain on U.S. dollar denominated debt 9 (113) (312)
Change in fair value of financial instruments and trading inventory (13) 108
Gain on disposal of assets 33 (257) (16)
Loss on extinguishment of long-term debt 9 and 21 80 —
Share-based compensation 205 (238)
Exploration — 80
Settlement of decommissioning and restoration liabilities (263) (231)
Other 289 119
Decrease (increase) in non-cash working capital 13 1 507 (1 201)
Cash flow provided by operating activities 11 764 2 675

Investing Activities
Capital and exploration expenditures (4 555) (3 926)
Proceeds from disposal of assets 33 335 72
Other investments and acquisitions (28) (113)
Decrease (increase) in non-cash working capital 13 271 (557)
Cash flow used in investing activities (3 977) (4 524)

Financing Activities
Net (decrease) increase in short-term debt (2 256) 1 445
Repayment of long-term debt 21 (2 451) —
Issuance of long-term debt 1 423 2 634
Lease liability payments (325) (335)
Issuance of common shares under share option plans 8 29
Repurchase of common shares 25 (2 304) (307)
Distributions relating to non-controlling interest (9) (10)
Dividends paid on common shares (1 550) (1 670)
Cash flow (used in) provided by financing activities (7 464) 1 786

Increase (Decrease) in Cash and Cash Equivalents 323 (63)

Effect of foreign exchange on cash and cash equivalents (3) (12)
Cash and cash equivalents at beginning of year 1 885 1 960
Cash and Cash Equivalents at End of Year 2 205 1 885

Supplementary Cash Flow Information

Interest paid 980 1 028
Income taxes (received) paid (532) 695

The accompanying notes are an integral part of the consolidated financial statements.

Annual Report 2021 Suncor Energy Inc. 89

Consolidated Statements of Changes in Equity

Accumulated Number of
Other Common
Share Contributed Comprehensive Retained Shares
($ millions) Notes Capital Surplus Income Earnings Total (thousands)
At December 31, 2019 25 167 566 899 15 410 42 042 1 531 874
Net loss — — — (4 319) (4 319) —
Foreign currency translation
adjustment — — (22) — (22) —
Actuarial loss on employee retirement
benefit plans, net of income taxes
of $62 23 — — — (196) (196) —
Total comprehensive (loss) income — — (22) (4 515) (4 537) —
Issued under share option plans 36 (7) — — 29 804
Repurchase of common shares for
cancellation 25 (124) — — (183) (307) (7 527)
Change in liability for share purchase
commitment 25 65 — — 103 168 —
Share-based compensation 26 — 32 — — 32 —
Dividends paid on common shares — — — (1 670) (1 670) —
At December 31, 2020 25 144 591 877 9 145 35 757 1 525 151
Net earnings — — — 4 119 4 119 —
Foreign currency translation
adjustment — — (63) — (63) —
Actuarial gain on employee retirement
benefit plans, net of income taxes
of $277 23 — — — 856 856 —
Total comprehensive (loss) income — — (63) 4 975 4 912 —
Issued under share option plans 8 — — — 8 245
Common shares forfeited — — — — — (186)
Repurchase of common shares for
cancellation 25 (1 382) — — (922) (2 304) (83 959)
Change in liability for share purchase
commitment 25 (120) — — (110) (230) —
Share-based compensation 26 — 21 — — 21 —
Dividends paid on common shares — — — (1 550) (1 550) —
At December 31, 2021 23 650 612 814 11 538 36 614 1 441 251

The accompanying notes are an integral part of the consolidated financial statements.

90 Annual Report 2021 Suncor Energy Inc.

Notes to the Consolidated Financial Statements

1. Reporting Entity and Description of the Business

Suncor Energy Inc. (Suncor or the company) is an integrated energy company headquartered in Calgary, Alberta, Canada.
Suncor’s operations include oil sands development, production and upgrading; offshore oil and gas; petroleum refining in Canada
and the U.S.; and the company’s Petro-Canada retail and wholesale distribution networks (including Canada’s Electric Highway™,
a coast-to-coast network of fast-charging electric vehicle stations). Suncor is developing petroleum resources while advancing
the transition to a low-emissions future through investment in power, renewable fuels and hydrogen. Suncor also conducts energy
trading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products and
power. Suncor has been recognized for its performance and transparent reporting on the Dow Jones Sustainability index,
FTSE4Good and CDP. Suncor is also listed on the UN Global Compact 100 stock index. Suncor’s common shares (symbol: SU) are
listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE).

The address of the company’s registered office is 150 – 6th Avenue S.W., Calgary, Alberta, Canada, T2P 3E3.

2. Basis of Preparation
(a) Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).

During 2021, the company revised the presentation of certain expenses from “transportation” to “transportation and distribution”
and reclassified certain operating, selling and general expenses to transportation and distribution to better reflect the nature
of these expenses. There is no impact on net earnings (loss) and comparative periods have been restated to reflect this change.

Suncor’s accounting policies are based on IFRS issued and outstanding for all periods presented in these consolidated financial
statements. These consolidated financial statements were approved by the Board of Directors on February 23, 2022.

(b) Basis of Measurement

The consolidated financial statements are prepared on a historical cost basis except as detailed in the accounting policies
disclosed in note 3. The accounting policies described in note 3 have been applied consistently to all periods presented in these
consolidated financial statements.

(c) Functional Currency and Presentation Currency

These consolidated financial statements are presented in Canadian dollars, which is the company’s functional currency.

(d) Use of Estimates, Assumptions and Judgments

The timely preparation of financial statements requires that management make estimates and assumptions and use judgment.
Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates and
judgments used in the preparation of the consolidated financial statements are described in note 4.

3. Summary of Significant Accounting Policies

(a) Principles of Consolidation
The company consolidates its interests in entities it controls. Control comprises the power to govern an entity’s financial and
operating policies to obtain benefits from its activities, and is a matter of judgment. All intercompany balances and transactions
are eliminated on consolidation.

(b) Joint Arrangements

Joint arrangements represent arrangements in which two or more parties have joint control established by a contractual
agreement. Joint control only exists when decisions about the activities that most significantly affect the returns of the investee
are unanimous. Joint arrangements can be classified as either a joint operation or a joint venture. The classification of joint
arrangements requires judgment. In determining the classification of its joint arrangements, the company considers the
contractual rights and obligations of each investor and whether the legal structure of the joint arrangement gives the entity
direct rights to the assets and obligations for the liabilities.

Where the company has rights to the assets and obligations for the liabilities of a joint arrangement, such arrangement is
classified as a joint operation and the company’s proportionate share of the joint operation’s assets, liabilities, revenues and
expenses are included in the consolidated financial statements, on a line-by-line basis.

Annual Report 2021 Suncor Energy Inc. 91

Notes to the Consolidated Financial Statements

Where the company has rights to the net assets of an arrangement, the arrangement is classified as a joint venture and accounted
for using the equity method of accounting. Under the equity method, the company’s initial investment is recognized at cost
and subsequently adjusted for the company’s share of the joint venture’s income or loss, less distributions received.

(c) Investments in Associates

Associates are entities for which the company has significant influence, but not control or joint control over the financial and
operational decisions. Investments in associates are accounted for using the equity method of accounting and are initially
recognized at cost and adjusted thereafter for the change in the company’s share of the investee’s profit or loss and Other
Comprehensive Income (OCI) less distributions received until the date that significant influence ceases.

(d) Foreign Currency Translation

Functional currencies of the company’s individual entities are the currency of the primary economic environment in which the
entity operates. Transactions in foreign currencies are translated to the appropriate functional currency at foreign exchange rates
that approximate those on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated to the appropriate functional currency at foreign exchange rates as at the balance sheet date. Foreign exchange
differences arising on translation are recognized in net earnings. Non-monetary assets that are measured in a foreign currency
at historical cost are translated using the exchange rate at the date of the transaction.

In preparing the company’s consolidated financial statements, the financial statements of each entity are translated into
Canadian dollars. The assets and liabilities of foreign operations are translated into Canadian dollars at exchange rates as at the
balance sheet date. Revenues and expenses of foreign operations are translated into Canadian dollars using foreign exchange
rates that approximate those on the date of the underlying transaction. Foreign exchange differences are recognized in OCI.

If the company or any of its entities disposes of its entire interest in a foreign operation, or loses control, joint control or significant
influence over a foreign operation, the accumulated foreign currency translation gains or losses related to the foreign operation
are recognized in net earnings.

(e) Revenues
Revenue from the sale of crude oil, natural gas, natural gas liquids, purchased products, refined petroleum products and power
represent the company’s contractual arrangements with customers. Revenue is recorded when control passes to the customer,
in accordance with specified contract terms. All operating revenue is earned at a point in time and is based on the consideration
that the company expects to receive for the transfer of the goods to the customer. Revenues are usually collected in the month
following delivery except retail gasoline, diesel and ancillary products, which are due upon delivery and, accordingly, the company
does not adjust consideration for the effects of a financing component.

Revenue from oil and natural gas production is recorded net of royalty expense.

International operations conducted pursuant to Production Sharing Contracts (PSCs) are reflected in the consolidated financial
statements based on the company’s working interest. Each PSC establishes the exploration, development and operating costs the
company is required to fund and establishes specific terms for the company to recover these costs and to share in the production
profits. Cost recovery is generally limited to a specified percentage of production during each fiscal year (Cost Recovery Oil).
Any Cost Recovery Oil remaining after costs have been recovered is referred to as Excess Petroleum and is shared between the
company and the respective government. Assuming collection is reasonably assured, the company’s share of Cost Recovery Oil
and Excess Petroleum are reported as revenue when the sale of product to a third party occurs. Revenue also includes income
taxes paid on the company’s behalf by government joint partners.

(f) Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash in banks, term deposits, certificates of deposit and all other highly liquid
investments at the time of purchase.

(g) Inventories
Inventories of crude oil and refined products, other than inventories held for trading purposes, are valued at the lower of cost,
using the first-in, first-out method, and net realizable value. Cost of inventory consists of purchase costs, direct production costs,
direct overhead and depreciation, depletion and amortization. Materials and supplies are valued at the lower of average cost
and net realizable value.

Inventories held for trading purposes are carried at fair value less costs to sell and any changes in fair value are recognized in
Other Income within the respective reporting segment to which the trading activity relates.

(h) Assets Held for Sale

Assets and the associated liabilities are classified as held for sale if their carrying amounts are expected to be recovered through
a disposition rather than through continued use. The assets or disposal groups are measured at the lower of their carrying

92 Annual Report 2021 Suncor Energy Inc.

amount or estimated fair value less costs of disposal. Impairment losses on initial classification as well as subsequent gains or
losses on remeasurement are recognized in Depreciation, Depletion, Amortization and Impairment. When the assets or disposal
groups are sold, the gains or losses on the sale are recognized in Gain on Disposal of Assets. Assets classified as held for sale
are not depreciated, depleted or amortized.

(i) Exploration and Evaluation Assets

The costs to acquire non-producing oil and gas properties or licences to explore, drill exploratory wells and the costs to evaluate
the commercial potential of underlying resources, including related borrowing costs, are initially capitalized as Exploration and
Evaluation assets. Certain exploration costs, including geological, geophysical and seismic expenditures and delineation on oil
sands properties, are charged to Exploration expense as incurred.

Exploration and Evaluation assets are subject to technical, commercial and management review to confirm the continued intent
to develop and extract the underlying resources. If an area or exploration well is no longer considered commercially viable,
the related capitalized costs are charged to Exploration expense.

When management determines with reasonable certainty that an Exploration and Evaluation asset will be developed, as
evidenced by the classification of proved or probable reserves and the appropriate internal and external approvals, the asset is
transferred to Property, Plant and Equipment.

(j) Property, Plant and Equipment

Property, Plant and Equipment are initially recorded at cost.

The costs to acquire developed or producing oil and gas properties, and to develop oil and gas properties, including completing
geological and geophysical surveys and drilling development wells, and the costs to construct and install development
infrastructure, such as wellhead equipment, well platforms, well pairs, offshore platforms, subsea structures and an estimate of
asset retirement costs, are capitalized as oil and gas properties within Property, Plant and Equipment.

The costs to construct, install and commission, or acquire, oil and gas production equipment, including oil sands upgraders,
extraction plants, mine equipment, processing and power generation facilities, utility plants, and all renewable energy, refining,
and marketing assets, are capitalized as plant and equipment within Property, Plant and Equipment.

Stripping activity required to access oil sands mining resources incurred in the initial development phase is capitalized as part of
the construction cost of the mine. Stripping costs incurred in the production phase are charged to expense as they normally
relate to production for the current period.

The costs of planned major inspection, overhaul and turnaround activities that maintain Property, Plant and Equipment and
benefit future years of operations are capitalized. Recurring planned maintenance activities performed on shorter intervals are
expensed as operating costs. Replacements outside of a major inspection, overhaul or turnaround are capitalized when it is
probable that future economic benefits will be realized by the company and the associated carrying amount of the replaced
component is derecognized.

Borrowing costs relating to assets that take over one year to construct are capitalized as part of the asset. Capitalization of
borrowing costs ceases when the asset is in the location and condition necessary for its intended use, and is suspended when
construction of an asset is ceased for extended periods.

(k) Depreciation, Depletion and Amortization

Exploration and Evaluation assets are not subject to depreciation, depletion and amortization. Once transferred to oil and gas
properties within Property, Plant and Equipment and commercial production commences, these costs are depleted on a unit-of­
production basis over proved developed reserves, with the exception of costs associated with oil sands mines, which are
depreciated on a straight-line basis over the life of the mine, and property acquisition costs, which are depleted over proved
reserves.

Capital expenditures are not depreciated or depleted until assets are substantially complete and ready for their intended use.

Costs to develop oil and gas properties other than certain oil sands mining assets, including costs of dedicated infrastructure, such
as well pads and wellhead equipment, are depleted on a unit-of-production basis over proved developed reserves. A portion of
these costs may not be depleted if they relate to undeveloped reserves. Costs related to offshore facilities are depleted over
proved and probable reserves. Costs to develop and construct oil sands mines are depreciated on a straight-line basis over the
life of the mine.

Annual Report 2021 Suncor Energy Inc. 93

Notes to the Consolidated Financial Statements

Major components of Property, Plant and Equipment are depreciated on a straight-line basis over their expected useful lives.

Oil sands upgraders, extraction plants and mine facilities 20 to 40 years

Oil sands mine equipment 5 to 15 years
Oil sands in situ processing facilities 30 years
Power generation and utility plants 30 to 40 years
Refineries and other processing plants 20 to 40 years
Marketing and other distribution assets 10 to 40 years

The costs of major inspection, overhaul and turnaround activities that are capitalized are depreciated on a straight-line basis
over the period to the next scheduled activity, which varies from two to five years.

Depreciation, depletion and amortization rates are reviewed annually or when events or conditions occur that impact capitalized
costs, reserves or estimated service lives.

Right-of-use assets within Property, Plant and Equipment are depreciated on a straight-line basis over the shorter of the
estimated useful life of the right-of-use asset or the lease term.

(l) Goodwill and Other Intangible Assets

The company accounts for business combinations using the acquisition method. The excess of the purchase price over the fair
value of the identifiable net assets represents goodwill, and is allocated to the cash generating units (CGUs) or groups of CGUs
expected to benefit from the business combination.

Other intangible assets include acquired customer lists, brand value and certain software costs.

Goodwill and brand value have indefinite useful lives and are not subject to amortization. Customer lists are amortized over
their expected useful lives, which range from five to 10 years. Software costs are amortized over their expected useful lives, which
range from five to six years. Expected useful lives of other intangible assets are reviewed on an annual basis.

(m) Impairment of Assets

Non-Financial Assets
Property, Plant and Equipment and Exploration and Evaluation assets are reviewed quarterly to assess whether there is any
indication of impairment. Goodwill and intangible assets that have an indefinite useful life are tested for impairment annually.
Exploration and Evaluation assets are also tested for impairment immediately prior to being transferred to Property, Plant and
Equipment.

If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated as the higher of the fair value
less costs of disposal and value-in-use. In determining fair value less costs of disposal, recent market transactions are
considered, if available. In the absence of such transactions, an appropriate valuation model is used. Value-in-use is assessed
using the present value of the expected future cash flows of the relevant asset. If the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets, the asset is tested as part of a CGU, which is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or
groups of assets. An impairment loss is the amount by which the carrying amount of the individual asset or CGU exceeds its
recoverable amount.

Impairments may be reversed for all CGUs and individual assets, other than goodwill, if there has been a change in the estimates
and judgments used to determine the asset’s recoverable amount since the last impairment loss was recognized. If such
indication exists, the carrying amount of the CGU or asset is increased to its revised recoverable amount, which cannot exceed
the carrying amount that would have been determined, net of depletion, depreciation and amortization, had no impairment been
recognized.

Impairments and impairment reversals are recognized within Depreciation, Depletion, Amortization and Impairment.

Financial Assets
At each reporting date, the company assesses the expected credit losses associated with its financial assets measured at
amortized cost. Expected credit losses are measured as the difference between the cash flows that are due to the company and
the cash flows that the company expects to receive, discounted at the effective interest rate determined at initial recognition.
For trade accounts receivables, the company applies the simplified approach permitted by IFRS 9 Financial Instruments, which
requires lifetime expected credit losses to be recognized from initial recognition of the receivables. To measure expected credit
losses, accounts receivables are grouped based on the number of days the receivables have been outstanding and the internal
credit assessments of the customers. Credit risk for longer term receivables is assessed based on an external credit rating of

94 Annual Report 2021 Suncor Energy Inc.

the counterparty. For longer term receivables with credit risk that has not increased significantly since the date of recognition,
the company measures the expected credit loss as the twelve-month expected credit loss. Expected credit losses are recognized
in net earnings.

(n) Provisions
Provisions are recognized by the company when it has a legal or constructive obligation as a result of past events, it is probable
that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.

Provisions are recognized for decommissioning and restoration obligations associated with the company’s Exploration and
Evaluation assets and Property, Plant and Equipment. Provisions for decommissioning and restoration obligations are measured
at the present value of management’s best estimate of the future cash flows required to settle the present obligation, using
the credit-adjusted risk-free interest rate. The value of the obligation is added to the carrying amount of the associated asset
and amortized over the useful life of the asset. The provision is accreted over time through Financing Expense with actual
expenditures charged against the accumulated obligation. Changes in the future cash flow estimates resulting from revisions to
the estimated timing or amount of undiscounted cash flows are recognized as a change in the decommissioning and restoration
provision and related asset.

(o) Income Taxes

The company follows the liability method of accounting for income taxes whereby deferred income taxes are recorded for the
effect of differences between the accounting and income tax basis of an asset or liability. Deferred income tax assets and liabilities
are measured using enacted or substantively enacted income tax rates as at the balance sheet date that are anticipated to
apply to taxable income in the years in which temporary differences are anticipated to be recovered or settled. Changes to these
balances are recognized in net earnings or in Other Comprehensive Income in the period they occur. Investment tax credits
are recorded as a reduction to the related expenditures.

The company recognizes the financial statement impact of a tax filing position when it is probable, based on the technical
merits, that the position will be sustained upon audit. The company assesses possible outcomes and their associated probabilities.
If the company determines payment is probable, it measures the tax provision at the best estimate of the amount of tax
payable.

(p) Pensions and Other Post-Retirement Benefits

The company sponsors defined benefit pension plans, defined contribution pension plans and other post-retirement benefits.

The cost of pension benefits earned by employees in the defined contribution pension plan is expensed as incurred. The cost of
defined benefit pension plans and other post-retirement benefits are actuarially determined using the projected unit credit
method based on present pay levels and management’s best estimates of demographic and financial assumptions. Pension
benefits earned during the current year are recorded in Operating, Selling and General expense. Interest costs on the net
unfunded obligation are recorded in Financing Expense. Any actuarial gains or losses are recognized immediately through Other
Comprehensive Income and transferred directly to Retained Earnings.

The liability recognized on the balance sheet is the present value of the defined benefit obligations net of the fair value of plan
assets.

(q) Share-Based Compensation Plans

Under the company’s share-based compensation plans, share-based awards may be granted to executives, employees and non­
employee directors. Compensation expense is recorded in Operating, Selling and General expense.

Share-based compensation awards that settle in cash or have the option to settle in cash or shares are accounted for as cash­
settled plans. These are measured at fair value each reporting period using the Black-Scholes options pricing model. The expense
is recognized over the vesting period, with a corresponding adjustment to the outstanding liability. When awards are
surrendered for cash, the cash settlement paid reduces the outstanding liability. When awards are exercised for common
shares, consideration paid by the holder and the previously recognized liability associated with the options are recorded to
Share Capital.

Stock options that give the holder the right to purchase common shares are accounted for as equity-settled plans. The expense
is based on the fair value of the options at the time of grant using the Black-Scholes options pricing model and is recognized
over the vesting periods of the respective options. A corresponding increase is recorded to Contributed Surplus. Consideration
paid to the company on exercise of options is credited to Share Capital and the associated amount in Contributed Surplus is
reclassified to Share Capital.

(r) Financial Instruments

The company classifies its financial instruments into one of the following categories: fair value through profit or loss (FVTPL),
fair value through other comprehensive income, or at amortized cost. This determination is made at initial recognition. All

Annual Report 2021 Suncor Energy Inc. 95

Notes to the Consolidated Financial Statements

financial instruments are initially recognized at fair value on the balance sheet, net of any transaction costs except for financial
instruments classified as FVTPL, where transaction costs are expensed as incurred. Subsequent measurement of financial
instruments is based on their classification. The company classifies its derivative financial instruments and certain investments
as FVTPL, cash and cash equivalents and accounts receivable as financial assets at amortized cost, and accounts payable and
accrued liabilities, debt, and other long-term liabilities as financial liabilities at amortized cost.

In circumstances where the company consolidates a subsidiary in which there are other owners with a non-controlling interest
and the subsidiary has a non-discretionary obligation to distribute cash based on a predetermined formula to the non-controlling
owners, the non-controlling interest is classified as a financial liability rather than equity in accordance with IAS 32 Financial
Instruments: Presentation. The non-controlling interest liability is classified as an amortized cost liability and is presented within
Other Long-Term Liabilities. The balance is accreted based on current period interest expense recorded using the effective interest
method and decreased based on distributions made to the non-controlling owners.

The company uses derivative financial instruments, such as physical and financial contracts, either to manage certain exposures
to fluctuations in interest rates, commodity prices and foreign exchange rates, as part of its overall risk management program.
Earnings impacts from derivatives used to manage a particular risk are reported as part of Other Income in the related reporting
segment.

Certain physical commodity contracts, when used for trading purposes, are deemed to be derivative financial instruments for
accounting purposes. Physical commodity contracts entered into for the purpose of receipt or delivery in accordance with the
company’s expected purchase, sale or usage requirements are not considered to be derivative financial instruments and are
accounted for as executory contracts.

Derivatives embedded in other financial instruments or other host contracts are recorded as separate derivatives when their
risks and characteristics are not closely related to those of the host contract.

(s) Hedging Activities

The company may apply hedge accounting to arrangements that qualify for designated hedge accounting treatment.
Documentation is prepared at the inception of a hedge relationship in order to qualify for hedge accounting. Designated hedges
are assessed at each reporting date to determine if the relationship between the derivative and the underlying hedged item
accomplishes the company’s risk management objectives for financial and non-financial risk exposures.

If the derivative is designated as a fair value hedge, changes in the fair value of the derivative and in the fair value of the
underlying hedged item are recognized in net earnings. If the derivative is designated as a cash flow hedge, the effective portions
of the changes in fair value of the derivative are initially recorded in Other Comprehensive Income and are recognized in net
earnings when the hedged item is realized. Ineffective portions of changes in the fair value of cash flow hedges are recognized
in net earnings immediately. Changes in the fair value of a derivative designated in a fair value or cash flow hedge are recognized
in the same line item as the underlying hedged item.

The company did not apply hedge accounting to any of its derivative instruments for the years ended December 31, 2021
or 2020.

(t) Share Capital

Common shares are classified as equity. Incremental costs directly attributable to the issuance of common shares are recognized
as a deduction from equity, net of any tax effects. When the company repurchases its own common shares, share capital is
reduced by the average carrying value of the shares repurchased. The excess of the purchase price over the average carrying
value is recognized as a deduction from Retained Earnings. Shares are cancelled upon repurchase.

(u) Dividend Distributions

Dividends on common shares are recognized in the period in which the dividends are declared by the company’s Board
of Directors.

(v) Earnings per Share

Basic earnings per share is calculated by dividing the net earnings for the period by the weighted average number of common
shares outstanding during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive
common shares related to the company’s share-based compensation plans. The number of shares included is computed using the
treasury stock method. As these awards can be exchanged for common shares of the company, they are considered potentially
dilutive and are included in the calculation of the company’s diluted net earnings per share if they have a dilutive impact in
the period.

96 Annual Report 2021 Suncor Energy Inc.

(w) Emissions Obligations
Emissions obligations are measured at the weighted average cost per unit of emissions expected to be incurred to settle the
obligation and are recorded in the period in which the emissions occur within Operating, Selling and General expense,
or Purchases.

Purchases of emissions rights are recognized as Other Assets on the balance sheet and are measured at historical cost. Emissions
rights received by way of grant are recorded at a nominal amount.

(x) Leases
At inception of a contract, the company assesses whether a contract is, or contains, a lease based on whether the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset on the site on which it is located, less any lease incentives received. The assets are depreciated
to the earlier of the end of the useful life of the right-of-use asset or the lease term. Judgment is applied to determine the
lease term where a renewal option exists. Right-of-use assets are depreciated using the straight-line method as this most closely
reflects the expected pattern of consumption of the future economic benefits. In addition, the right-of-use assets may be
reduced by impairment losses or adjusted for certain remeasurements of the lease liability.

The company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of
twelve months or less. The lease payments are recognized as an expense when incurred over the lease term. As well, the
company has accounted for each lease component and any non-lease components as a single lease component for crude oil
storage tanks.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company’s incremental
borrowing rate. Lease payments include fixed payments, and variable payments that are based on an index or rate.

Cash payments for the principal portion of the lease liability are presented within the financing activities section and the
interest portion of the lease liability is presented within the operating activities section of the statement of cash flows. Short-term
lease payments and variable lease payments not included in the measurement of the lease liability are presented within the
operating activities section of the statement of cash flows.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if there is a change in the company’s estimate of the amount
expected to be payable under a residual value guarantee, or if the company changes its assessment of whether it will exercise a
purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.

The company has lease contracts which include storage tanks, pipelines, railway cars, vessels, buildings, land, and mobile
equipment for the purpose of production, storage and transportation of crude oil and related products.

(y) Government Grants

Government grants are recognized when the company has reasonable assurance that it has complied with the relevant conditions
of the grant and that it will be received. The company recognizes the grants that compensate the company for expenses
incurred against the financial statement line item that it is intended to compensate, or to other income if the grant is recognized
in a different period than the underlying transaction.

4. Significant Accounting Estimates and Judgments

The preparation of financial statements in accordance with IFRS requires management to make estimates and judgments that
affect reported assets, liabilities, revenues, expenses, gains, losses and disclosures of contingencies. These estimates and
judgments are subject to change based on experience and new information.

COVID-19
On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a Public Health Emergency of International
Concern and, on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of
COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and

Annual Report 2021 Suncor Energy Inc. 97

Notes to the Consolidated Financial Statements

businesses. These measures have and may continue to have significant disruption to business operations and a significant
increase in economic uncertainty, with fluctuating demand for commodities leading to volatile prices and currency exchange
rates, and a decline in long-term interest rates. Our operations and business are particularly sensitive to a reduction in the
demand for, and prices of, commodities that are closely linked to Suncor’s financial performance, including crude oil, refined
petroleum products (such as jet fuel and gasoline), natural gas and electricity. The potential direct and indirect impacts of the
economic volatility have been considered in management’s estimates, and assumptions at period-end have been reflected in
our results with any significant changes described in the relevant financial statement note.

The COVID-19 pandemic is an evolving situation that is expected to continue to have widespread implications for our business
environment, operations and financial condition. Management cannot reasonably estimate the length or severity of this pandemic,
or the extent to which the disruption may materially impact our consolidated statements of comprehensive income (loss),
consolidated balance sheets and consolidated statements of cash flows.

Climate Change
Climate change and the transition to a lower-carbon economy from carbon-based sources to alternative energy were considered
in preparing the consolidated financial statements. These may have significant impacts on the currently reported amounts of
the company’s assets and liabilities discussed below and on similar assets and liabilities that may be recognized in the future.

The financial statement areas that require significant estimates and judgments are as follows:

Oil and Gas Reserves

The company’s estimate of oil and gas reserves is considered in the measurement of depletion, depreciation, impairment, and
decommissioning and restoration obligations. The estimation of reserves is an inherently complex process and involves the
exercise of professional judgment. All reserves have been evaluated at December 31, 2021, by independent qualified reserves
evaluators. Oil and gas reserves estimates are based on a range of geological, technical and economic factors, including projected
future rates of production, projected future commodity prices, engineering data, and the timing and amount of future
expenditures, all of which are subject to uncertainty. Estimates reflect market and regulatory conditions existing at December 31,
2021, which could differ significantly from other points in time throughout the year, or future periods. Changes in market and
regulatory conditions and assumptions, as well as climate change, and the evolving worldwide demand for energy and global
advancement of alternative sources of energy that are not sourced from fossil fuels can materially impact the estimation of net
reserves. The timing in which global energy markets transition from carbon-based sources to alternative energy is highly
uncertain.

Oil and Gas Activities

The company is required to apply judgment when designating the nature of oil and gas activities as exploration, evaluation,
development or production, and when determining whether the costs of these activities shall be expensed or capitalized.

Exploration and Evaluation Costs

Certain exploration and evaluation costs are initially capitalized with the intent to establish commercially viable reserves. The
company is required to make judgments about future events and circumstances and applies estimates to assess the economic
viability of extracting the underlying resources. The costs are subject to technical, commercial and management review to confirm
the continued intent to develop the project. Level of drilling success or changes to project economics, resource quantities,
expected production techniques, production costs and required capital expenditures are important judgments when making
this determination. Management uses judgment to determine when these costs are reclassified to Property, Plant and Equipment
based on several factors, including the existence of reserves, appropriate approvals from regulatory bodies, joint arrangement
partners and the company’s internal project approval process.

Determination of Cash Generating Units (CGUs)

A CGU is the lowest grouping of integrated assets that generate identifiable cash inflows that are largely independent of the
cash inflows of other assets or groups of assets. The allocation of assets into CGUs requires significant judgment and
interpretations with respect to the integration between assets, the existence of active markets, similar exposure to market risks,
shared infrastructure, and the way in which management monitors the operations.

Asset Impairment and Reversals

Management applies judgment in assessing the existence of impairment and impairment reversal indicators based on various
internal and external factors.

The recoverable amount of CGUs and individual assets is determined based on the higher of fair value less costs of disposal or
value-in-use calculations. The key estimates the company applies in determining the recoverable amount normally include
estimated future commodity prices, discount rates, expected production volumes, future operating and development costs,
income taxes, and refining margins. In determining the recoverable amount, management may also be required to make

98 Annual Report 2021 Suncor Energy Inc.

judgments regarding the likelihood of occurrence of a future event. Changes to these estimates and judgments will affect the
recoverable amounts of CGUs and individual assets and may then require a material adjustment to their related carrying value.
In addition, climate change, and the evolving worldwide demand for energy and global advancement of alternative sources of
energy that are not sourced from fossil fuels could result in a change in assumptions used in determining the recoverable
amount and could affect the carrying value and useful life of the related assets. The timing in which global energy markets
transition from carbon-based sources to alternative energy is highly uncertain.

Decommissioning and Restoration Costs

The company recognizes liabilities for the future decommissioning and restoration of Exploration and Evaluation assets and
Property, Plant and Equipment based on estimated future decommissioning and restoration costs. Management applies judgment
in assessing the existence and extent as well as the expected method of reclamation of the company’s decommissioning and
restoration obligations at the end of each reporting period. Management also uses judgment to determine whether the nature
of the activities performed is related to decommissioning and restoration activities or normal operating activities.

Actual costs are uncertain and estimates may vary as a result of changes to relevant laws and regulations related to the use of
certain technologies, the emergence of new technology, operating experience, prices and closure plans. The estimated timing of
future decommissioning and restoration may change due to certain factors, including reserves life. Changes to estimates
related to future expected costs, discount rates, inflation assumptions, and timing may have a material impact on the amounts
presented. In addition, climate change, and the evolving worldwide demand for energy and global advancement of alternative
sources of energy that are not sourced from fossil fuels could result in a change in assumptions used in determining the
carrying value of the liabilities. The timing in which global energy markets transition from carbon-based sources to alternative
energy is highly uncertain.

Employee Future Benefits

The company provides benefits to employees, including pensions and other post-retirement benefits. The cost of defined
benefit pension plans and other post-retirement benefits received by employees is estimated based on actuarial valuation
methods that require professional judgment. Estimates typically used in determining these amounts include, as applicable, rates
of employee turnover, future claim costs, discount rates, future salary and benefit levels, the return on plan assets, mortality
rates and future medical costs. Changes to these estimates may have a material impact on the amounts presented.

Other Provisions
The determination of other provisions, including, but not limited to, provisions for royalty disputes, onerous contracts, litigation
and constructive obligations, is a complex process that involves judgment about the outcomes of future events, the
interpretation of laws and regulations, and estimates on the timing and amount of expected future cash flows and discount
rates.

Income Taxes
Management evaluates tax positions, annually or when circumstances require, which involves judgment and could be subject to
differing interpretations of applicable tax legislation. The company recognizes a tax provision when a payment to tax authorities
is considered probable. However, the results of audits and reassessments and changes in the interpretations of standards may
result in changes to those positions and, potentially, a material increase or decrease in the company’s assets, liabilities and net
earnings.

Deferred tax assets are recognized when it is considered probable that deductible temporary differences will be recovered in
the foreseeable future. To the extent that future taxable income and the application of existing tax laws in each jurisdiction differ
significantly from the company’s estimate, the ability of the company to realize the deferred tax assets could be impacted.

Deferred tax liabilities are recognized when there are taxable temporary differences that will reverse and result in a future outflow
of funds to a taxation authority. The company records a provision for the amount that is expected to be settled, which requires
judgment as to the ultimate outcome. Deferred tax liabilities could be impacted by changes in the company’s judgment of the
likelihood of a future outflow and estimates of the expected settlement amount, timing of reversals, and the tax laws in the
jurisdictions in which the company operates.

5. New IFRS Standards

Recently Announced Accounting Pronouncements
The standards, amendments and interpretations that are issued, but not yet effective up to the date of authorization of the
company’s consolidated financial statements, and that may have an impact on the disclosures and financial position of the
company are disclosed below. The company intends to adopt these standards, amendments and interpretations when they
become effective.

Annual Report 2021 Suncor Energy Inc. 99

Notes to the Consolidated Financial Statements

Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The amendments narrowed the scope of the initial recognition exemption to exclude transactions that give rise to equal and
offsetting temporary differences. The amendments are effective January 1, 2023, with early adoption permitted. The company
does not anticipate any significant impact from these amendments on the consolidated financial statements as a result of the
initial application.

Definition of Accounting Estimates

In February 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendments introduced a
definition of accounting estimates and included other amendments to help entities distinguish changes in accounting estimates
from changes in accounting policies. The amendments are effective January 1, 2023, with early adoption permitted. The company
does not anticipate any significant impact from these amendments on the consolidated financial statements as a result of the
initial application.

6. Segmented Information
The company’s operating segments are reported based on the nature of their products and services and management
responsibility. The following summary describes the operations in each of the segments:

• Oil Sands includes the company’s wholly owned operations in the Athabasca oil sands in Alberta to explore, develop and
produce bitumen, synthetic crude oil and related products, through the recovery and upgrading of bitumen from mining and
in situ operations. This segment also includes the company’s joint interest in the Syncrude oil sands mining and upgrading
operation, and the company’s joint interest in the Fort Hills partnership as well as the marketing, supply, transportation and
risk management of crude oil, natural gas, power and byproducts. The individual operating segments related to mining
operations, In Situ, Fort Hills and Syncrude have been aggregated into one reportable segment (Oil Sands) due to the similar
nature of their business activities, including the production of bitumen, and the single geographic area and regulatory
environment in which they operate.

• Exploration and Production (E&P) includes offshore activity in East Coast Canada, with interests in the Hibernia, Terra Nova,
White Rose and Hebron oilfields, the exploration and production of crude oil and natural gas at Buzzard and Golden Eagle
Area Development (the latter of which the company sold during 2021 – see note 33) in the United Kingdom (U.K.), exploration
and production of crude oil and gas at Oda, and the development of the Fenja field in Norway, as well as the marketing and risk
management of crude oil and natural gas.

• Refining and Marketing includes the refining of crude oil products, and the distribution, marketing, transportation and risk
management of refined and petrochemical products, and other purchased products through the retail and wholesale networks
located in Canada and the United States (U.S.). The segment also includes trading of crude oil, natural gas and power.

The company also reports activities not directly attributable to an operating segment under Corporate and Eliminations. This
includes renewable projects such as the wind power facilities of Chin Chute and Magrath in Alberta, SunBridge in Saskatchewan
and Adelaide in Ontario, the development of the Forty Mile Wind Project in Alberta, as well as other investments in waste-to­
biofuels, chemicals, and carbon capture projects.

Intersegment sales of crude oil and natural gas are accounted for at market values and included, for segmented reporting, in
revenues of the segment making the transfer and expenses of the segment receiving the transfer. Intersegment balances are
eliminated on consolidation. Intersegment profit will not be recognized until the related product has been sold to third parties.

100 Annual Report 2021 Suncor Energy Inc.

 Exploration and Refining and Corporate and
For the years ended December 31 Oil Sands Production Marketing Eliminations Total
($ millions) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Revenues and Other

Income
Gross revenues 15 319 7 792 2 978 1 899 22 808 15 180 28 29 41 133 24 900
Intersegment revenues 4 601 2 825 — — 107 92 (4 708) (2 917) — —
Less: Royalties (1 523) (95) (478) (143) — — — — (2 001) (238)
Operating revenues, net of
royalties 18 397 10 522 2 500 1 756 22 915 15 272 (4 680) (2 888) 39 132 24 662
Other income (loss) 6 298 17 54 (50) 48 (4) (10) (31) 390
18 403 10 820 2 517 1 810 22 865 15 320 (4 684) (2 898) 39 101 25 052
Expenses
Purchases of crude oil and
products 1 444 844 — — 16 807 11 243 (4 460) (2 975) 13 791 9 112
Operating, selling and
general(1) 8 056 7 169 429 476 2 019 1 759 862 390 11 366 9 794
Transportation and
distribution(1) 1 126 1 223 112 100 282 271 (41) (43) 1 479 1 551
Depreciation, depletion,
amortization and
impairment 4 585 6 430 324 2 147 853 867 88 82 5 850 9 526
Exploration 12 57 35 129 — — — — 47 186
(Gain) loss on disposal of
assets (4) (1) (227) — (19) (24) (7) 9 (257) (16)
Financing expenses 359 336 53 47 56 37 787 576 1 255 996
15 578 16 058 726 2 899 19 998 14 153 (2 771) (1 961) 33 531 31 149
Earnings (Loss) before
Income Taxes 2 825 (5 238) 1 791 (1 089) 2 867 1 167 (1 913) (937) 5 570 (6 097)
Income Tax Expense
(Recovery)
Current 729 (645) 473 64 576 325 (383) (403) 1 395 (659)
Deferred (51) (797) 33 (321) 113 (24) (39) 23 56 (1 119)
678 (1 442) 506 (257) 689 301 (422) (380) 1 451 (1 778)
Net Earnings (Loss) 2 147 (3 796) 1 285 (832) 2 178 866 (1 491) (557) 4 119 (4 319)
Capital and Exploration
Expenditures 3 168 2 736 270 489 825 515 292 186 4 555 3 926

(1) Prior period amounts of the Refining and Marketing segment have been reclassified to align with the current year presentation of transportation
and distribution expense. For the year ended December 31, 2020, $133 million was reclassified from operating, selling and general expense to
transportation and distribution expense. This reclassification had no effect on net earnings (loss).

Annual Report 2021 Suncor Energy Inc. 101

Notes to the Consolidated Financial Statements

Disaggregation of Revenue from Contracts with Customers and Intersegment Revenue

The company derives revenue from the transfer of goods mainly at a point in time in the following major commodities, revenue
streams and geographical regions:

For the years ended December 31 2021 2020

($ millions) North America International Total North America International Total

Oil Sands
SCO and diesel 14 452 — 14 452 8 574 — 8 574
Bitumen 5 468 — 5 468 2 043 — 2 043
19 920 — 19 920 10 617 — 10 617
Exploration and Production
Crude oil and natural gas liquids 1 709 1 257 2 966 1 089 806 1 895
Natural gas — 12 12 — 4 4
1 709 1 269 2 978 1 089 810 1 899
Refining and Marketing
Gasoline 9 983 — 9 983 6 585 — 6 585
Distillate 9 832 — 9 832 6 525 — 6 525
Other 3 100 — 3 100 2 162 — 2 162
22 915 — 22 915 15 272 — 15 272
Corporate and Eliminations (4 680) — (4 680) (2 888) — (2 888)
Total Gross Revenue from Contracts
with Customers 39 864 1 269 41 133 24 090 810 24 900

Geographical Information

Operating Revenues, net of Royalties

($ millions) 2021 2020

Canada 32 286 20 588

United States 5 818 3 312
Other foreign 1 028 762
39 132 24 662

Non-Current Assets(1)
December 31 December 31
($ millions) 2021 2020

Canada 68 900 71 040

United States 2 020 1 856
Other foreign 1 682 2 125
72 602 75 021
(1) Excludes deferred income tax assets.

102 Annual Report 2021 Suncor Energy Inc.

7. Other Income
Other income consists of the following:

($ millions) 2021 2020

Energy trading activities

Gains recognized in earnings 43 126
Losses on inventory valuation (10) (25)
Short-term commodity risk management (198) 49
Investment and interest income 64 94
(1)
Insurance proceeds 69 96
Other 1 50
(31) 390
(1) 2021 includes insurance proceeds for the outages at Mackay River and the secondary extraction facilities at Oil Sands Base Plant and 2020 includes
insurance proceeds for MacKay River, both within the Oil Sands segment.

8. Operating, Selling and General Expense

Operating, Selling and General expense consists of the following:

($ millions) 2021 2020

(1)
Contract services 4 090 4 165
Employee costs(1) 3 884 2 813
Materials 880 951
Energy 1 500 1 113
Equipment rentals and leases 418 361
(2)
Travel, marketing and other 594 391
11 366 9 794
(1) The company incurred $8.6 billion of contract services and employee costs for the year ended December 31, 2021 (2020 – $7.5 billion), of which
$8.0 billion (2020 – $7.0 billion) was recorded in Operating, Selling and General expense and $0.6 billion was recorded as Property, Plant and
Equipment (2020 – $0.5 billion). Employee costs include salaries, benefits and share-based compensation.
(2) Prior period amounts have been reclassified to align with the current year presentation of transportation and distribution expense. For the year
ended December 31, 2020, $133 million was reclassified from operating, selling and general expense to transportation and distribution expense.
This reclassification had no effect on net earnings (loss).

Annual Report 2021 Suncor Energy Inc. 103

Notes to the Consolidated Financial Statements

9. Financing Expenses
Financing expenses consist of the following:

($ millions) 2021 2020

Interest on debt 834 884

Interest on lease liabilities 161 166
Capitalized interest at 5.0% (2020 – 4.8%) (144) (120)
Interest expense 851 930
Interest on partnership liability 51 52
Interest on pension and other post-retirement benefits 59 54
Accretion 304 278
Foreign exchange gain on U.S. dollar denominated debt (113) (312)
Operational foreign exchange and other 23 (6)
Loss on extinguishment of long-term debt 80 —
1 255 996

10. Income Taxes

Income Tax Expense (Recovery)
($ millions) 2021 2020

Current:
Current year 1 353 (650)
Adjustments in respect of current income tax of prior years 42 (9)
Deferred:
Origination and reversal of temporary differences 29 (973)
Adjustments in respect of deferred income tax of prior years 23 (52)
Changes in tax rates and legislation 8 (106)
Movement in unrecognized deferred income tax assets (4) 12
Total income tax expense (recovery) 1 451 (1 778)

104 Annual Report 2021 Suncor Energy Inc.

Reconciliation of Effective Tax Rate
The provision for income taxes reflects an effective tax rate that differs from the statutory tax rate. A reconciliation of the
difference is as follows:

($ millions) 2021 2020

Earnings (loss) before income tax 5 570 (6 097)

Canadian statutory tax rate 24.24% 24.96%
Statutory tax 1 350 (1 522)
Add (deduct) the tax effect of:
Non-taxable component of capital gains (12) (45)
Share-based compensation and other permanent items 3 7
Assessments and adjustments 65 (58)
Impact of income tax rates and legislative changes 8 (173)
Non-taxable component of dispositions (66) —
Foreign tax rate differential 111 3
Movement in unrecognized deferred income tax assets (4) 12
Other (4) (2)
Total income tax expense (recovery) 1 451 (1 778)
Effective tax rate 26.1% 29.2%

Deferred Income Tax Balances

The significant components of the company’s deferred income tax (assets) liabilities and deferred income tax expense (recovery)
are comprised of the following:

Deferred Income Tax Expense Deferred Income Tax Liability

(Recovery) (Asset)
December 31 December 31
($ millions) 2021 2020 2021 2020

Property, plant and equipment (260) (1 084) 11 477 11 963

Decommissioning and restoration provision 141 21 (1 936) (2 304)
Employee retirement benefit plans (142) 34 (470) (605)
Tax loss carry-forwards 161 (20) (15) (176)
Other 156 (70) 25 (120)
Net deferred income tax expense (recovery) and liability 56 (1 119) 9 081 8 758

Change in Deferred Income Tax Balances

($ millions) 2021 2020

Net deferred income tax liability, beginning of year 8 758 9 967

Recognized in deferred income tax expense (recovery) 56 (1 119)
Recognized in other comprehensive income 277 (62)
Foreign exchange, acquisition and other (10) (28)
Net deferred income tax liability, end of year 9 081 8 758

Deferred Tax in Shareholders’ Equity

($ millions) 2021 2020

Deferred Tax in Other Comprehensive Income

Actuarial gain (loss) on employment retirement benefit plans 277 (62)
Total income tax expense (recovery) reported in equity 277 (62)

Annual Report 2021 Suncor Energy Inc. 105

Notes to the Consolidated Financial Statements

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit
is probable based on estimated future earnings. Suncor has not recognized a $74 million (2020 – $78 million) deferred income
tax asset on $606 million (2020 – $640 million) of capital losses related to unrealized foreign exchange on U.S. dollar denominated
debt, which can only be utilized against future capital gains.

No deferred tax liability has been recognized at December 31, 2021, on unremitted net earnings of foreign subsidiaries, as the
company is able to control the timing and amount of distributions and is not expected to incur any taxes associated with future
distributions.

11. Earnings (Loss) per Common Share

($ millions) 2021 2020

Net earnings (loss) 4 119 (4 319)

(millions of common shares)

Weighted average number of common shares 1 488 1 526

Dilutive securities:
Effect of share options 1 —
Weighted average number of diluted common shares 1 489 1 526

(dollars per common share)

Basic and diluted earnings (loss) per share 2.77 (2.83)

12. Cash and Cash Equivalents

December 31 December 31
($ millions) 2021 2020

Cash 1 971 1 523

Cash equivalents 234 362
2 205 1 885

13. Supplemental Cash Flow Information

The (increase) decrease in non-cash working capital is comprised of:

($ millions) 2021 2020

Accounts receivable (1 324) 954

Inventories (551) 121
(1)
Accounts payable and accrued liabilities 1 588 (1 605)
(1)
Current portion of provisions 235 122
(2)
Income taxes payable (net) 1 830 (1 350)
1 778 (1 758)
Relating to:
Operating activities 1 507 (1 201)
Investing activities 271 (557)
1 778 (1 758)
(1) Prior period amounts of the current portion of provisions have been reclassified to conform to the current year presentation. For the year ended
December 31, 2020, $133 million was reclassified from accounts payable and accrued liabilities to current portion of provisions. This reclassification
had no effect on the non-cash working capital.
(2) During the twelve months ended December 31, 2021, the increase in taxes payable was primarily related to the company’s 2021 current income
tax expense, which is payable in early 2022.

106 Annual Report 2021 Suncor Energy Inc.

Reconciliation of movements of liabilities to cash flows arising from financing activities:

Current Portion Current Portion

Short-Term of Long-Term Long-Term of Long-Term Long-Term Partnership Dividends
($ millions) Debt Lease Liabilities Lease Liabilities Debt Debt Liability Payable

At December 31, 2019 2 155 310 2 621 — 12 884 455 —

Changes from financing
cash flows:
Net issuance of commercial
paper 1 445 — — — — — —
Gross proceeds from
issuance of long-term debt — — — — 2 651 — —
Debt issuance costs — — — — (17) — —
Dividends paid on common
shares — — — — — — (1 670)
Lease liability payments — (335) — — — — —
Distributions to
non-controlling interest — — — — — (10) —
Non-cash changes:
Dividends declared on
common shares — — — — — — 1 670
Unrealized foreign
exchange gains (34) — — (20) (258) — —
Reclassification of debt — — — 1 433 (1 433) — —
Reclassification of lease
obligations — 297 (297) — — — —
Deferred financing costs — — — — (15) — —
Reassessment of
partnership liability — — — — — (9) —
New leases — — 312 — — — —
At December 31, 2020 3 566 272 2 636 1 413 13 812 436 —

Annual Report 2021 Suncor Energy Inc. 107

Notes to the Consolidated Financial Statements

Current Portion Current Portion

Short-Term of Long-Term Long-Term of Long-Term Long-Term Partnership Dividends
($ millions) Debt Lease Liabilities Lease Liabilities Debt Debt Liability Payable

Changes from financing

cash flows:
Reduction of commercial
paper (2 256) — — — — — —
Gross proceeds from
issuance of long-term debt — — — — 1 446 — —
Debt issuance costs — — — — (23) — —
Repayment of long-term
debt — — — (2 451) — — —
Loss on extinguishment of
long-term debt — — — 80 — — —
Realized foreign exchange
(gains) and losses (79) — — 128 — — —
Dividends paid on common
shares — — — — — — 1 550
Lease liability payments — (325) — — — — —
Distributions to
non-controlling interest — — — — — (9) —
Other — — — 25 — — —
Non-cash changes:
Dividends declared on
common shares — — — — — — (1 550)
Unrealized foreign
exchange losses and
(gains) 53 — — (47) (168) — —
Reclassification of debt — — — 1 083 (1 083) — —
Lease derecognition — — (41) — — — —
Reclassification of lease
obligations — 363 (363) — — — —
Deferred financing costs — — — — 5 — —
New lease liabilities — — 308 — — — —
At December 31, 2021 1 284 310 2 540 231 13 989 427 —

14. Inventories
December 31 December 31
($ millions) 2021 2020

Crude oil(1) 1 501 1 429

Refined products 1 820 1 322
Materials, supplies and merchandise 789 866
4 110 3 617
(1) Includes $110 million of inventories held for trading purposes (2020 – $154 million), which are measured at fair value less costs to sell based on
Level 1 and Level 2 fair value inputs.

During 2021, purchased product inventories of $14.7 billion (2020 – $9.4 billion) were recorded as an expense.

108 Annual Report 2021 Suncor Energy Inc.

15. Property, Plant and Equipment
Oil and Gas Plant and
($ millions) Properties Equipment Total

Cost
At December 31, 2019 40 596 84 568 125 164
Additions 820 2 994 3 814
Transfers from exploration and evaluation 170 — 170
Changes in decommissioning and restoration 1 078 3 1 081
Disposals and derecognition (9) (2 528) (2 537)
Foreign exchange adjustments 54 (88) (34)
At December 31, 2020 42 709 84 949 127 658
Additions 755 3 901 4 656
Transfers from exploration and evaluation — — —
Changes in decommissioning and restoration (1 127) (5) (1 132)
Disposals and derecognition (1 902) (2 652) (4 554)
Foreign exchange adjustments (118) 49 (69)
At December 31, 2021 40 317 86 242 126 559
Accumulated provision
At December 31, 2019 (22 389) (30 135) (52 524)
Depreciation, depletion, amortization and impairment (3 039) (6 166) (9 205)
Disposals and derecognition — 2 205 2 205
Foreign exchange adjustments (45) 41 (4)
At December 31, 2020 (25 473) (34 055) (59 528)
Depreciation, depletion, amortization and impairment (1 216) (4 465) (5 681)
Disposals and derecognition 1 676 2 452 4 128
Foreign exchange adjustments 70 (2) 68
At December 31, 2021 (24 943) (36 070) (61 013)
Net property, plant and equipment
December 31, 2020 17 236 50 894 68 130
December 31, 2021 15 374 50 172 65 546

December 31, 2021 December 31, 2020

Accumulated Net Book Accumulated Net Book
($ millions) Cost Provision Value Cost Provision Value

Oil Sands 87 849 (37 971) 49 878 86 999 (35 059) 51 940
Exploration and Production 21 495 (15 999) 5 496 23 640 (17 424) 6 216
Refining and Marketing 15 989 (6 596) 9 393 15 757 (6 547) 9 210
Corporate and Eliminations 1 226 (447) 779 1 262 (498) 764
126 559 (61 013) 65 546 127 658 (59 528) 68 130

At December 31, 2021, the balance of assets under construction and not subject to depreciation or depletion was $4.6 billion
(December 31, 2020 – $5.0 billion).

Annual Report 2021 Suncor Energy Inc. 109

Notes to the Consolidated Financial Statements

16. Asset Impairments

Oil Sands
Fort Hills assets:
During the fourth quarter of 2021, the company performed an asset impairment test on its Fort Hills cash generating unit (CGU)
due to changes in its mine plan. The impairment test was performed using recoverable amounts based on fair value less cost
of disposal. An expected cash flow approach was used with the following asset-specific assumptions (Level 3 fair value inputs
note 27):

• Western Canada Select (WCS) price forecast of US$55.00/bbl in 2022, US$54.57/bbl in 2023, and an average price of
US$50.86/bbl between 2024 and 2031, escalating at 2% per year thereafter over the life of the project up to 2058, adjusted
for asset-specific location and quality differentials;

• the company’s share of production ranging from 94,000 to 111,000 bbls/d over the life of the project;

• cash operating costs averaging $22.00/bbl to $23.00/bbl over the life of the project (expressed in real dollars), which reflects
operating, selling and general expenses adjusted for non-production costs, including share-based compensation, research
costs, and excess power revenue;

• foreign exchange rate of US$0.80 per one Canadian dollar; and

• risk-adjusted discount rate of 7.5% (after-tax).

Factors including an improved WCS price forecast in the next two years and optimization of the mine plan to exclude high strip
ratio zones were offset by higher operating and capital costs. The recoverable amount of the Fort Hills CGU was $5.5 billion as at
December 31, 2021, which indicated that no impairment loss or reversal was required.

The recoverable amount estimate is most sensitive to price and discount rate. A 5% average decrease in price over the life of the
project would have resulted in an impairment charge of approximately $1.0 billion (after-tax) on the company’s share of the
Fort Hills assets. A 1% increase in the discount rate would have resulted in an impairment charge of approximately $0.5 billion
(after-tax) on the company’s share of the Fort Hills assets.

Exploration and Production

Terra Nova assets:
During the third quarter of 2021, the company finalized an agreement with the co-owners of the Terra Nova Project to restructure
the project ownership and move forward with the Asset Life Extension Project. The agreement increased the company’s working
interest to 48% (previously approximately 38%) and includes royalty and financial support from the Government of Newfoundland
and Labrador. The company received $26 million (net of taxes of $8 million) in cash consideration to acquire the additional 10%
working interest, which was primarily allocated to the asset retirement obligation and property, plant and equipment of the
project. As a result of these events, during the third quarter of 2021, the company performed an impairment reversal test on the
Terra Nova CGU as the recoverable amount of this CGU was sensitive to the financial support from the Government of
Newfoundland and Labrador and revised royalty structure resulting in increased profitability and economic value. The impairment
reversal test was performed using recoverable amounts based on the fair value less cost of disposal. An expected cash flow
approach was used with the key assumptions discussed below (Level 3 fair value inputs – note 27).

As a result of the impairment reversal test, the recoverable amounts were determined to be greater than the carrying values of
the Terra Nova CGU and the company recorded an impairment reversal of $168 million (net of taxes of $53 million) on its share of
the Terra Nova assets in the Exploration and Production segment in the third quarter of 2021. In addition to the financial
support from the government, the recoverable amount was determined based on the following asset-specific assumptions:

• Brent price forecast of US$65.00/bbl in 2023 and US$68.00/bbl in 2024, escalating at 2% per year thereafter over the life of
the project to 2033 and adjusted for asset-specific location and quality differentials;

• the anticipated return to operations before the end of 2022 and the company’s share of production of approximately
6,000 bbls/d (based on its previous 38% working interest) over the life of the project; and

• risk-adjusted discount rate of 9.0% (after-tax).

The recoverable amount of the Terra Nova CGU was $177 million as at September 30, 2021.

No indicators of impairment or reversals of impairment were identified as at December 31, 2021.

Asset Impairments in 2020

The COVID-19 pandemic has resulted in a significant decrease in global demand for crude oil and commodity prices. In response,
the company announced plans to reduce capital and operating costs. As a result of these events, the company performed
asset impairment tests on certain CGUs in its Oil Sands and Exploration and Production segments as at March 31, 2020 as the

110 Annual Report 2021 Suncor Energy Inc.

recoverable amounts of these CGUs were most sensitive to the combined reduction in crude oil prices and changes to their
respective capital and operating plans.

During the fourth quarter of 2020, the Fort Hills partners approved an earlier date for the phased restart of the second primary
extraction train, compared to what was assumed in the first quarter impairment test. As such, the company performed an
impairment reversal assessment as at December 31, 2020. Further, as there is significant doubt on the future of the West White
Rose (WWR) Project, the company also performed an impairment test for the White Rose CGU as at December 31, 2020. The
impairment tests were performed using recoverable amounts based on the fair value less cost of disposal. An expected cash
flow approach was used with the key assumptions discussed below (Level 3 fair value inputs – note 27):

Oil Sands
The company performed an impairment reversal assessment for the Fort Hills CGU using the following asset-specific assumptions
at December 31, 2020:

• Western Canadian Select (WCS) price forecast of US$32.00/bbl in 2021, US$41.15/bbl in 2022, US$47.50/bbl in 2023 and
US$49.50/bbl in 2024, escalating at approximately 2% per year thereafter over the life of the project up to 2064, adjusted for
asset-specific location and quality differentials;

• the company’s share of production averaging 74,000 bbls/d through 2022 while the Fort Hills Project operates on two
primary extraction trains but at a reduced capacity, and then ranging from 97,000 to 105,000 bbls/d over the remaining life
of the project;

• cash operating costs averaging $25.50/bbl through 2022 while the Fort Hills Project operates on two primary extraction
trains but at a reduced capacity, and then ranging from $19.00/bbl to $23.00/bbl thereafter as the project returns to full
capacity over the remaining life of the project (expressed in real dollars). Cash operating costs reflect operating, selling and
general expense adjusted for non-production costs, including share-based compensation, research costs, and excess power
revenue;

• foreign exchange rate of US$0.76 per one Canadian dollar in 2021, and US$0.80 per one Canadian dollar thereafter; and

• risk-adjusted discount rate of 7.5% (after-tax).

Positive factors, including an increase to forecast production as a result of the restart of the second primary extraction train,
improved the WCS price forecast in the next two years, and lower operating costs were offset by lower long-term prices and the
negative impact from a strengthening Canadian dollar. The recoverable amount of the Fort Hills CGU was $5.7 billion as at
December 31, 2020, which indicated that no impairment reversal was required.

The recoverable amount estimate is most sensitive to price and discount rate. A 5% average increase in price over the life of the
project would have resulted in an impairment reversal amount of approximately $1.0 billion (after-tax) on the company’s
share of the Fort Hills assets. A 1% decrease in the discount rate would have resulted in an impairment reversal amount of
approximately $0.9 billion (after-tax) on the company’s share of the Fort Hills assets.

During the first quarter of 2020, the company recorded an impairment of $1.38 billion (net of taxes of $0.44 billion) on its share
of the Fort Hills Project in the Oil Sands segment using the following asset-specific assumptions:

• WCS price forecast of US$9.00/bbl for the remainder of 2020, US$13.60/bbl in 2021, US$32.00/bbl in 2022, US$51.55/bbl in
2023 and US$52.90/bbl in 2024, escalating at 2% per year thereafter over the life of the project up to 2061, adjusted for asset­
specific location and quality differentials;

• the company’s share of production of 47,000 bbls/d while the Fort Hills Project operates on one primary extraction train for
the remainder of 2020 through to 2021, and ramping up to two primary extraction trains during 2022, and then ranging from
96,000 to 106,000 bbls/d over the remaining life of the project;

• cash operating costs averaging $32.00/bbl to $37.00/bbl while the Fort Hills Project operates on one primary extraction train
for the remainder of 2020 through to 2021, and ranging from $22.00/bbl to $24.00/bbl thereafter, as the project returns to
two primary extraction trains over the remaining life of the project (expressed in real dollars). Cash operating costs reflect
operating, selling and general expense adjusted for non-production costs, including share-based compensation, research
costs, and excess power revenue;

• foreign exchange rate of US$0.76 per one Canadian dollar; and

• risk-adjusted discount rate of 7.5% (after-tax).

The recoverable amount of the Fort Hills CGU was $6.4 billion as at March 31, 2020. The recoverable amount estimate is most
sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an increase
to the impairment charge of approximately $1.1 billion (after-tax) on the company’s share of the Fort Hills assets. A 1% increase
in the discount rate would have resulted in an increase to the impairment charge of approximately $1.1 billion (after-tax) on
the company’s share of the Fort Hills assets.

Annual Report 2021 Suncor Energy Inc. 111

Notes to the Consolidated Financial Statements

Exploration and Production

White Rose assets:
In the fourth quarter of 2020, the company reassessed the likelihood of completing the West White Rose (WWR) Project. As a
result of this reassessment, the company performed an impairment test of the White Rose CGU. While the base White Rose Project
will continue to produce in 2021, the company has removed the reserves and forecast revenues for the WWR Project. This
decision reduced planned production from the CGU and increased the expected closure costs relative to the assumptions used
in the first quarter of 2020, with all other assumptions remaining relatively consistent. An after-tax impairment charge of
$423 million (net of taxes of $136 million) was recognized and the White Rose CGU is fully impaired as at December 31, 2020.

During the first quarter of 2020, the company recorded an impairment of $137 million (net of taxes of $45 million) on its share
of the White Rose assets in the Exploration and Production segment using the following asset-specific assumptions:

• Brent price forecast of US$30.00/bbl for the remainder of 2020, US$35.00/bbl in 2021, US$50.00/bbl in 2022 and US$69.00/bbl
in 2023, escalating at 2% per year thereafter over the life of the project to 2036 and adjusted for asset-specific location and
quality differentials;

• the company’s share of production of approximately 9,800 bbls/d over the life of the project;

• the company’s share of future capital expenditures of $1.435 billion, including the WWR expansion; and

• risk-adjusted discount rate of 9.0% (after-tax).

The recoverable amount of the White Rose CGU was $185 million as at March 31, 2020. The recoverable amount estimate was
most sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an
increase to the impairment charge of approximately $83 million (after-tax) on the company’s share of the White Rose assets.
A 1% increase in the discount rate would have resulted in an increase to the impairment charge of approximately $45 million
(after-tax) on the company’s share of the White Rose assets.

Terra Nova assets:

During the first quarter of 2020, the company recorded an impairment of $285 million (net of taxes of $93 million) on its share
of the Terra Nova assets in the Exploration and Production segment using the following asset-specific assumptions:

• Brent price forecast of US$30.00/bbl for the remainder of 2020, US$35.00/bbl in 2021, US$50.00/bbl in 2022 and US$69.00/bbl
in 2023, escalating at 2% per year thereafter over the life of the project to 2031 and adjusted for asset-specific location and
quality differentials;

• the company’s share of production of approximately 6,200 bbls/d over the life of the project, including the benefit of the
asset life extension project; and

• risk-adjusted discount rate of 9.0% (after-tax).

The recoverable amount of the Terra Nova CGU was $24 million as at March 31, 2020.

No indicators of impairment or reversals of impairment were identified as at December 31, 2020.

17. Right-of-Use Assets and Leases

Right-of-use (ROU) assets within Property, Plant and Equipment:
December 31 December 31
($ millions) 2021 2020

Property, plant and equipment, net – excluding ROU assets 62 821 65 306
ROU assets 2 725 2 824
65 546 68 130

112 Annual Report 2021 Suncor Energy Inc.

The following table presents the ROU assets by asset class:

Plant and
($ millions) Equipment

Cost
At January 1, 2020 3 505
Additions and adjustments 312
Disposals (25)
Foreign exchange (6)
At December 31, 2020 3 786
Additions and adjustments 307
Disposals (232)
Foreign exchange —
At December 31, 2021 3 861
Accumulated provision
At January 1, 2020 (610)
Depreciation (375)
Disposals 21
Foreign exchange 2
At December 31, 2020 (962)
Depreciation (396)
Disposals 221
Foreign exchange 1
At December 31, 2021 (1 136)
Net ROU assets
At December 31, 2020 2 824
At December 31, 2021 2 725

Other lease-related items recognized in the Consolidated Statements of Comprehensive

Income (Loss):
For the year ended
December 31
($ millions) 2021 2020

Operating, selling and general

Short-term lease expense 143 181
Variable lease expense 35 39

There were no leases with residual value guarantees. For the year ended December 31, 2021, total cash outflow for leases,
excluding short-term lease expense and variable lease expense, was $486 million (2020 – $501 million).

Annual Report 2021 Suncor Energy Inc. 113

Notes to the Consolidated Financial Statements

18. Exploration and Evaluation Assets

December 31 December 31
($ millions) 2021 2020

Beginning of year 2 286 2 428

Acquisitions and additions 2 176
Transfers to oil and gas assets — (170)
Dry hole expenses — (80)
Disposals and derecognition (54) (70)
Foreign exchange adjustments (8) 2
End of year 2 226 2 286

19. Other Assets

December 31 December 31
($ millions) 2021 2020

Investments 391 323

Prepaids and other 916 954
1 307 1 277

Prepaids and other includes long-term accounts receivable related to deposits paid on Notices of Reassessments that have
been received from the Canada Revenue Agency and are unlikely to be settled within one year.

20. Goodwill and Other Intangible Assets

Refining and
Oil Sands Marketing Other
($ millions) Goodwill Goodwill Intangibles Total

At December 31, 2019 2 752 140 166 3 058

Additions — — 272 272
Amortization — — (2) (2)
At December 31, 2020 2 752 140 436 3 328
Additions — — 213 213
Amortization — — (18) (18)
At December 31, 2021 2 752 140 631 3 523

The company performed a goodwill impairment test at December 31, 2021 on its Oil Sands segment. Recoverable amounts
were based on fair value less costs of disposal calculated using the present value of the segment’s expected future cash flows.

Cash flow forecasts are based on past experience, historical trends, third-party evaluations of the company’s reserves and
resources to determine production profiles and volumes, and estimates of operating costs, maintenance and capital expenditures.
These estimates are validated against the estimates approved through the company’s annual reserves evaluation process and
determine the duration of the underlying cash flows used in the discounted cash flow test. Projected cash flows reflect current
market assessments of key assumptions, including climate change, long-term forecasts of commodity prices, inflation rates,
foreign exchange rates and discount rates specific to the CGU (Level 3 fair value inputs)

Future cash flow estimates are discounted using after-tax risk-adjusted discount rates. The after-tax discount rate applied to
cash flow projections was 7.5% (2020 – 7.5%). The company based its cash flow projections on a West Texas Intermediate price
of US$71.00/bbl in 2022, US$66.81/bbl in 2023, US$63.46/bbl in 2024, US$64.73/bbl in 2025 and escalating at an average of 2%
thereafter, adjusted for applicable quality and location differentials depending on the underlying CGU. The forecast cash flow
period ranged from 50 years to 55 years based on the respective CGU. As a result of this analysis, management did not identify
any impairment of goodwill within the Oil Sands operating segment.

The company also performed a goodwill impairment test of its Refining and Marketing CGUs. The recoverable amounts are
based on fair value less costs of disposal calculated using the present value of the CGUs’ expected future cash flows, based

114 Annual Report 2021 Suncor Energy Inc.

primarily on historical results adjusted for current economic conditions. As a result of this analysis, management did not
identify any impairment of goodwill within the Refining and Marketing segment.

21. Debt and Credit Facilities

Debt and credit facilities are comprised of the following:

Short-Term Debt
December 31 December 31
($ millions) 2021 2020

Commercial paper(1) 1 284 3 566

(1) The commercial paper is supported by a revolving credit facility with a syndicate of lenders. The company is authorized to issue commercial paper
to a maximum of $5.0 billion having a term not to exceed 365 days. The weighted average interest rate as at December 31, 2021 was 0.33%
(December 31, 2020 – 0.39%).

Annual Report 2021 Suncor Energy Inc. 115

Notes to the Consolidated Financial Statements

Long-Term Debt
December 31 December 31
($ millions) 2021 2020

Fixed-term debt(2)(3)
3.10% Series 5 Medium Term Notes, due 2021 — 748
9.25% Debentures, due 2021 (US$300) — 389
(4)(5)
9.40% Notes, due 2021 (US$220) — 281
(4)
4.50% Notes, due 2022 (US$182) 231 224
2.80% Notes, due 2023 (US$450) 569 574
3.60% Notes, due 2024 (US$750) — 953
3.10% Notes, due 2025 (US$550) 696 701
3.00% Series 5 Medium Term Notes, due 2026 699 699
7.875% Debentures, due 2026 (US$275) 359 364
(4)
8.20% Notes, due 2027 (US$59) 78 79
7.00% Debentures, due 2028 (US$250) 320 323
3.10% Series 6 Medium Term Notes, due 2029 748 748
5.00% Series 7 Medium Term Notes, due 2030 1 247 1 247
7.15% Notes, due 2032 (US$500) 631 637
5.35% Notes, due 2033 (US$300) 355 356
5.95% Notes, due 2034 (US$500) 630 636
5.95% Notes, due 2035 (US$600) 731 736
5.39% Series 4 Medium Term Notes, due 2037 599 599
6.50% Notes, due 2038 (US$1 150) 1 451 1 464
6.80% Notes, due 2038 (US$900) 1 156 1 167
6.85% Notes, due 2039 (US$750) 946 953
6.00% Notes, due 2042 (US$152)(4) 149 149
4.34% Series 5 Medium Term Notes, due 2046 300 300
4.00% Notes, due 2047 (US$750) 945 952
3.95% Series 8 Medium Term Notes, due 2051 493 —
3.75% Notes, due 2051 (US$750) 945 —
Total unsecured long-term debt 14 278 15 279

Lease liabilities(6) 2 850 2 908

Deferred financing costs (58) (54)
17 070 18 133

Current portion of long-term debt and lease liabilities

Lease liabilities (310) (272)
Long-term debt (231) (1 413)
(541) (1 685)
Total long-term lease liabilities 2 540 2 636
Total long-term debt 13 989 13 812
(2) The value of debt includes the unamortized balance of premiums or discounts.
(3) Certain securities are redeemable at the option of the company.
(4) Debt acquired through the acquisition of Canadian Oil Sands Limited (COS).
(5) Subsequent to the acquisition of COS, Moody’s Investors Service downgraded COS long-term senior debt rating from Baa3 (negative outlook) to
Ba3 (stable outlook). This triggered a change in the coupon rate of the note from 7.9% to 9.4%.
(6) Interest rates range from 0.4% to 14.2% and maturity dates range from 2022 to 2062.

116 Annual Report 2021 Suncor Energy Inc.

Subsequent to the fourth quarter of 2021, the company completed an early redemption of its outstanding US$182 million 4.50%
notes, originally scheduled to mature in the second quarter of 2022.

During the fourth quarter of 2021, the company repaid its US$300 million (book value of $371 million) senior unsecured notes
at maturity with a coupon of 9.25%, for US$314 million ($388 million), including US$14 million ($17 million) of accrued interest.

In the third quarter of 2021, the company completed an early redemption of its US$750 million (book value of $951 million) senior
unsecured notes with a coupon interest of 3.60% originally scheduled to mature on December 1, 2024, for US$822 million
($1.0 billion), including US$9 million ($11 million) of accrued interest, resulting in a debt extinguishment loss of $80 million
($60 million after tax).

On March 4, 2021, the company issued US$750 million of senior unsecured notes maturing on March 4, 2051. The notes have a
coupon of 3.75% and were priced at US$99.518 per US$100 principal amount for an effective yield of 3.777%. The company also
issued $500 million of senior unsecured Series 8 medium-term notes on March 4, 2021, maturing on March 4, 2051. The notes
have a coupon of 3.95% and were priced at $98.546 per $100 principal amount for an effective yield of 4.034%. Interest on the
3.75% and 3.95% notes is paid semi-annually.

In the first quarter of 2021, the company completed an early redemption of its $750 million senior unsecured Series 5 medium­
term notes with a coupon of 3.10%, originally scheduled to mature on November 26, 2021, for $770 million, including $8 million
of accrued interest, resulting in a debt extinguishment loss of $12 million ($9 million after-tax). The company also completed an
early redemption of its US$220 million (book value of $278 million) senior unsecured notes with a coupon of 9.40%, originally
scheduled to mature on September 1, 2021, for US$230 million ($290 million), including US$2 million ($2 million) of accrued
interest, resulting in a debt extinguishment loss of $10 million ($8 million after-tax).

In 2020, the company issued $1.25 billion of senior unsecured Series 7 Medium Term Notes maturing on April 9, 2030. The
Series 7 Medium Term Notes have a coupon of 5.00% and were priced at $99.697 per $100 principal amount for an effective
yield of 5.039%. Interest on the Series 7 Medium Term Notes is paid semi-annually.

In 2020, the company issued US$450 million of senior unsecured notes maturing on May 15, 2023. The notes have a coupon of
2.80% and were priced at US$99.903 per US$100 principal amount for an effective yield of 2.834%. The company also issued
US$550 million of senior unsecured notes in 2020 maturing on May 15, 2025. The notes have a coupon of 3.10% and were
priced at US$99.949 per US$100 principal amount for an effective yield of 3.111%. Interest on the 2.80% and 3.10% notes is paid
semi-annually.

Scheduled Debt Repayments

Scheduled principal repayments as at December 31, 2021 for lease liabilities, short-term debt and long-term debt are as follows:

($ millions) Repayment

2022 1 816
2023 828
2024 232
2025 907
2026 1 244
Thereafter 13 482
18 509

Credit Facilities
In the second quarter of 2021, the company reduced the size of each tranche of its syndicated credit facilities by US$500 million
and $500 million to US$2.0 billion and $3.0 billion, respectively, and extended the maturity from April 2022 and April 2023 to
June 2024 and June 2025, respectively.

Effective March 5, 2021, the company terminated $2.8 billion of bilateral credit facilities as these credit facilities were no longer
required. The terminated credit facilities had a two-year term and were entered into in March and April 2020 to ensure access to
adequate financial resources in connection with the COVID-19 pandemic should they have been required.

Annual Report 2021 Suncor Energy Inc. 117

Notes to the Consolidated Financial Statements

A summary of available and unutilized credit facilities is as follows:

($ millions) 2021

Fully revolving and expires in 2025 3 000

Fully revolving and expires in 2024 2 531
Can be terminated at any time at the option of the lenders 1 420
Total credit facilities 6 951
Credit facilities supporting outstanding commercial paper (1 284)
Credit facilities supporting standby letters of credit (1 147)
(1)
Total unutilized credit facilities 4 520
(1) Available credit facilities for liquidity purposes at December 31, 2021 decreased to $4.247 billion, compared to $6.043 billion at December 31, 2020.

22. Other Long-Term Liabilities

December 31 December 31
($ millions) 2021 2020

Pensions and other post-retirement benefits (note 23) 1 207 2 004

Share-based compensation plans (note 26) 291 143
(1)
Partnership liability (note 27) 427 436
Deferred revenue 29 35
(2)
Libya Exploration and Production Sharing Agreement (EPSA) signature bonus 74 74
Other 152 148
2 180 2 840
(1) The company paid $60 million in 2021 (2020 – $62 million) in distributions to the partners of the East Tank Farm Development, of which $51 million
(2020 – $52 million) was allocated to interest expense and $9 million (2020 – $10 million) to the principal.
(2) As part of the 2009 acquisition of Petro-Canada, the company assumed the remaining US$500 million obligation for a signature bonus relating to
Petro-Canada’s ratification of six EPSAs in Libya. At December 31, 2021, the carrying amount of the Libya EPSAs’ signature bonus was $78 million
(December 31, 2020 – $78 million). The current portion is $4 million (December 31, 2020 – $4 million) and is recorded in Accounts Payable and
Accrued Liabilities.

23. Pensions and Other Post-Retirement Benefits

The company’s defined benefit pension plans provide pension benefits at retirement based on years of service and final average
earnings (if applicable). These obligations are met through funded registered retirement plans and through unregistered
supplementary pensions that are funded through retirement compensation arrangements, and/or paid directly to recipients.
The company’s contributions to the funded plans are deposited with independent trustees who act as custodians of the plans’
assets, as well as the disbursing agents of the benefits to recipients. Plan assets are managed by a pension committee on behalf
of beneficiaries. The committee retains independent managers and advisors.

Asset-liability matching studies are performed by a third-party consultant to set the asset mix by quantifying the risk-and-return
characteristics of possible asset mix strategies. Investment and contribution policies are integrated within this study, and
areas of focus include asset mix as well as interest rate sensitivity.

Funding of the registered retirement plans complies with applicable regulations that require actuarial valuations of the pension
funds at least once every three years in Canada and the U.K., and every year in the United States and Germany. The most
recent valuations for the registered Canadian plans and U.K. plans were performed as at December 31, 2019. The company uses
a measurement date of December 31 to value the plan assets and remeasure the accrued benefit obligation for accounting
purposes.

The company’s other post-retirement benefits programs are unfunded and include certain health care and life insurance
benefits provided to retired employees and eligible surviving dependants.

The company reports its share of Syncrude’s defined benefit and defined contribution pension plans and Syncrude’s other post­
retirement benefits plan.

118 Annual Report 2021 Suncor Energy Inc.

The company also provides a number of defined contribution plans, including a U.S. 401(k) savings plan, that provide for an
annual contribution of 5% to 11.5% of each participating employee’s pensionable earnings.

Defined Benefit Obligations and Funded Status

Other
Post-Retirement
Pension Benefits Benefits
($ millions) 2021 2020 2021 2020

Change in benefit obligation

Benefit obligation at beginning of year 8 682 7 708 690 631
Current service costs 302 272 19 15
Plan participants’ contributions 17 17 — —
Benefits paid (350) (316) (27) (24)
Interest costs 222 238 18 19
Foreign exchange (6) 1 — —
Settlements 11 5 — —
Actuarial remeasurement:
Experience gain arising on plan liabilities (1) (26) (1) (6)
Actuarial (gain) loss arising from changes in demographic
assumptions (2) 50 — 12
Actuarial (gain) loss arising from changes in financial
assumptions (572) 733 (27) 43
Benefit obligation at end of year 8 303 8 682 672 690

Change in plan assets

Fair value of plan assets at beginning of year 7 305 6 693 — —
Employer contributions (11) 132 — —
Plan participants’ contributions 17 17 — —
Benefits paid (325) (290) — —
Foreign exchange (5) (1) — —
Settlements 11 5 — —
Administrative costs (2) (2) — —
Income on plan assets 181 203 — —
Actuarial remeasurement:
Return on plan assets greater than discount rate 530 548 — —
Fair value of plan assets at end of year 7 701 7 305 — —
Net unfunded obligation 602 1 377 672 690

In June 2020, the Government of Alberta issued an amendment to the Employment Pension Plans Regulation to provide
additional forms of relief to administrators of Alberta-registered pension plans. The amendment allowed for a temporary
increase to the limit of funding excess to reduce or eliminate current service contributions for a single fiscal year for purposes
of a contribution holiday. The company was approved for funding relief starting in late 2020 for both the defined benefit plan and
the defined contribution plan based on funding levels in the defined benefit plan. In 2021, employer contributions reflect the
contribution holiday and a transfer of funds from the defined benefit plan to the defined contribution plan, with the company
resuming cash contributions near the end of the year. The company expects to make cash contributions to its defined benefit
pension plans in 2022 of $189 million.

Of the total net unfunded obligations as at December 31, 2021, 98% relates to Canadian pension plans and other post­
retirement benefits obligation (December 31, 2020 – 96%). The weighted average duration of the defined benefit obligation
under the Canadian pension plans and other post-retirement plans is 15.1 years (2020 – 15.8 years).

Annual Report 2021 Suncor Energy Inc. 119

Notes to the Consolidated Financial Statements

The net unfunded obligation is recorded in Accounts Payable and Accrued Liabilities and Other Long-Term Liabilities (note 22) in
the Consolidated Balance Sheets.

Other
Post-Retirement
Pension Benefits Benefits
($ millions) 2021 2020 2021 2020

Analysis of amount charged to earnings:

Current service costs 302 272 19 15
Interest costs 41 35 18 19
Defined benefit plans expense 343 307 37 34
Defined contribution plans expense 94 83 — —
Total benefit plans expense charged to earnings 437 390 37 34

Components of defined benefit costs recognized in Other Comprehensive Income:

Other
Post-Retirement
Pension Benefits Benefits
($ millions) 2021 2020 2021 2020

Return on plan assets (excluding amounts included in net

interest expense) (530) (548) — —
Actuarial (gain) arising from experience on plan liabilities (1) (26) (1) (6)
Actuarial (gain) loss arising from changes in financial
assumptions (572) 733 (27) 43
Actuarial (gain) loss arising from changes in demographic
assumptions (2) 50 — 12
Actuarial (gain) loss recognized in other comprehensive income (1 105) 209 (28) 49

Actuarial Assumptions
The cost of the defined benefit pension plans and other post-retirement benefits received by employees is actuarially determined
using the projected unit credit method of valuation that includes employee service to date and present pay levels, as well as
the projection of salaries and service to retirement.

The significant weighted average actuarial assumptions were as follows:

Other
Post-Retirement
Pension Benefits Benefits
December 31 December 31 December 31 December 31
(%) 2021 2020 2021 2020

Discount rate 2.90 2.50 2.90 2.50

Rate of compensation increase 3.00 3.00 3.00 3.00

The discount rate assumption is based on the interest rate on high-quality bonds with maturity terms equivalent to the benefit
obligations.

The defined benefit obligation reflects the best estimate of the mortality of plan participants both during and after their
employment. The mortality assumption is based on a standard mortality table adjusted for actual experience over the past
five years.

In order to measure the expected cost of other post-retirement benefits, it was assumed that the health care costs would
increase annually by 5%.

120 Annual Report 2021 Suncor Energy Inc.

Assumed discount rates and health care cost trend rates may have a significant effect on the amounts reported for pensions
and other post-retirement benefits obligations for the company’s Canadian plans. A change of these assumptions would have
the following effects:
Pension Benefits
($ millions) Increase Decrease

1% change in discount rate

Effect on the aggregate service and interest costs (24) 31
Effect on the benefit obligations (1 155) 1 515

Other
Post-Retirement
Benefits
($ millions) Increase Decrease

1% change in discount rate

Effect on the benefit obligations (80) 99
1% change in health care cost
Effect on the aggregate service and interest costs 1 (1)
Effect on the benefit obligations 36 (31)

Plan Assets and Investment Objectives

The company’s long-term investment objective is to secure the defined pension benefits while managing the variability and
level of its contributions. The portfolio is rebalanced periodically, as required, to the plans’ target asset allocation as prescribed
in the Statement of Investment Policies and Procedures approved by the Board of Directors. Plan assets are restricted to those
permitted by legislation, where applicable. Investments are made through pooled, mutual, segregated or exchange traded
funds.

The company’s weighted average pension plan asset allocations, based on market values as at December 31, are as follows:

(%) 2021 2020

Equities 48 50
Fixed income 38 38
Plan assets, comprised of:
– Real Estate 14 12
Total 100 100

Equity securities do not include any direct investments in Suncor shares. The fair value of equity and fixed income securities is
based on the trading price of the underlying fund. The fair value of real estate investments is based on independent third-party
appraisals.

Annual Report 2021 Suncor Energy Inc. 121

Notes to the Consolidated Financial Statements

24. Provisions
Decommissioning
($ millions) and Restoration(1) Royalties Other(2) Total

At December 31, 2019 8 898 133 276 9 307

Liabilities incurred 967 16 190 1 173
Change in discount rate 402 — — 402
Changes in estimates (268) (71) 5 (334)
Liabilities settled (231) (7) (4) (242)
Accretion 278 — — 278
Foreign exchange (2) — — (2)
At December 31, 2020 10 044 71 467 10 582
Less: current portion (250) (71) (206) (527)
9 794 — 261 10 055
At December 31, 2020 10 044 71 467 10 582
Liabilities incurred 104 137 171 412
Change in discount rate (1 260) — — (1 260)
Changes in estimates (76) (12) (13) (101)
Liabilities settled (263) 26 (84) (321)
Accretion 304 — — 304
Asset disposals (61) — — (61)
Foreign exchange — — — —
At December 31, 2021 8 792 222 541 9 555
Less: current portion (266) (222) (291) (779)
8 526 — 250 8 776
(1) Represents decommissioning and restoration provisions associated with the retirement of Property, Plant and Equipment and Exploration and
Evaluation assets. The total undiscounted and uninflated amount of estimated future cash flows required to settle the obligations at December 31,
2021 was approximately $13.8 billion (December 31, 2020 – $14.1 billion). A weighted average credit-adjusted risk-free interest rate of 3.70% was
used to discount the provision recognized at December 31, 2021 (December 31, 2020 – 3.10%). The credit-adjusted risk-free interest rate used reflects
the expected time frame of the provisions. Payments to settle the decommissioning and restoration provisions occur on an ongoing basis and will
continue over the lives of the operating assets, which can exceed 50 years.
(2) Includes legal and environmental provisions. It also includes a provision, with the offset being recorded to transportation expense, for $187 million
(after-tax $142 million) related to the Keystone XL pipeline project and a restructuring provision remaining for $88 million.

Sensitivities
Changes to the discount rate would have the following impact on Decommissioning and Restoration liabilities:

As at December 31 2021 2020

1% Increase (1 497) (1 919)

1% Decrease 2 113 2 806

122 Annual Report 2021 Suncor Energy Inc.

25. Share Capital
Authorized
Common Shares
The company is authorized to issue an unlimited number of common shares without nominal or par value.

Preferred Shares
The company is authorized to issue an unlimited number of senior and junior preferred shares in series, without nominal or par
value.

Normal Course Issuer Bid

During the first quarter of 2021, the company announced its intention to commence a new Normal Course Issuer Bid (the
2021 NCIB) to repurchase common shares through the facilities of the Toronto Stock Exchange (TSX), New York Stock Exchange
(NYSE) and/or alternative trading systems. Pursuant to the 2021 NCIB, the company may repurchase for cancellation up to
44,000,000 common shares between February 8, 2021, and February 7, 2022.

During the third quarter of 2021, Suncor received approval from the TSX to amend the 2021 NCIB effective as of the close of
markets on July 30, 2021. The amended notice provides that Suncor may increase the maximum number of common shares that
may be repurchased under the 2021 NCIB from 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 were amended.

During the fourth quarter of 2021, Suncor received approval from the TSX to amend its existing NCIB effective as of the close of
markets on October 29, 2021. 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 76,250,000 shares, or
approximately 5% of Suncor’s issued and outstanding common shares as at January 31, 2021, to 106,700,000, or approximately
7% of Suncor’s public float as at January 31, 2021. No other terms of the NCIB have been amended.

For the twelve months ended December 31, 2021, the company repurchased 84.0 million common shares under the 2021 NCIB
at an average price of $27.45 per share, for a total repurchase cost of $2.3 billion.

Subsequent to the fourth quarter of 2021, the TSX accepted a notice filed by Suncor to renew its NCIB to purchase the company’s
common shares through the facilities of the TSX, NYSE and/or alternative trading systems. The notice provides that, beginning
February 8, 2022, and ending February 7, 2023, Suncor may purchase for cancellation up to 71,650,000 common shares, which is
equal to approximately 5% of Suncor’s issued and outstanding common shares as at the date hereof. As at January 31, 2022,
Suncor had 1,435,748,494 common shares issued and outstanding.

The following table summarizes the share repurchase activities during the period:

($ millions, except as noted) 2021 2020

Share repurchase activities (thousands of common shares)

Shares repurchased 83 959 7 527
Amounts charged to
Share capital 1 382 124
Retained earnings 922 183
Share repurchase cost 2 304 307
Average repurchase cost per share 27.45 40.83

Under an automatic repurchase plan agreement with an independent broker, the company has recorded the following liability
for share repurchases that may take place during its internal blackout period:

December 31 December 31
($ millions) 2021 2020

Amounts charged to
Share capital 120 —
Retained earnings 110 —
Liability for share purchase commitment 230 —

Annual Report 2021 Suncor Energy Inc. 123

Notes to the Consolidated Financial Statements

26. Share-Based Compensation

Share-Based Compensation Expense
Reflected in the Consolidated Statements of Comprehensive Income within Operating, Selling and General expense are the
following share-based compensation amounts:

($ millions) 2021 2020

Equity-settled plans 21 32
Cash-settled plans 301 (28)
Total share-based compensation expense 322 4

Liability Recognized for Share-Based Compensation

Reflected in the Consolidated Balance Sheets within accounts payable and accrued liabilities and other long-term liabilities are
the following fair value amounts for the company’s cash-settled plans:

December 31 December 31
($ millions) 2021 2020

Current liability 153 117

Long-term liability (note 22) 291 143
Total Liability 444 260

The intrinsic value of the vested awards at December 31, 2021 was $200 million (December 31, 2020 – $149 million).

Stock Option Plans

Suncor grants stock option awards as a form of retention and incentive compensation.

Stock options granted by the company provide the holder with the right to purchase common shares at the market price on the
grant date, subject to fulfilling vesting terms. Options granted have a seven-year life, vest annually over a three-year period
and are accounted for as equity-settled awards.

The weighted average fair value of options granted during the period and the weighted average assumptions used in their
determination are as noted below:

2021 2020

Annual dividend per share (dollars) 1.05 1.10

Risk-free interest rate 0.49% 1.35%
Expected life 5 years 5 years
Expected volatility 40% 24%
Weighted average fair value per option (dollars) 5.40 4.51

The expected life is based on historical stock option exercise data and current expectations. The expected volatility considers
the historical volatility in the price of Suncor’s common shares over a period similar to the life of the options, and is indicative of
future trends.

The following table presents a summary of the activity related to Suncor’s stock option plans:

2021 2020
Weighted Weighted
Average Average
Number Exercise Price Number Exercise Price
(thousands) ($) (thousands) ($)

Outstanding, beginning of year 38 373 39.65 33 882 39.70

Granted 3 457 22.71 6 341 38.95
Exercised as options for common shares (245) 29.82 (804) 35.73
Forfeited/expired (4 495) 37.62 (1 046) 39.91
Outstanding, end of year 37 090 38.39 38 373 39.65
Exercisable, end of year 28 421 39.87 26 943 39.10

124 Annual Report 2021 Suncor Energy Inc.

For the options outstanding at December 31, 2021, the exercise price ranges and weighted average remaining contractual lives
are shown below:

Outstanding Exercisable
Weighted
Average
Remaining Weighted Weighted
Contractual Average Average
Number Life Exercise Price Number Exercise Price
Exercise Prices ($) (thousands) (years) ($) (thousands) ($)

22.63-24.99 3 378 6 22.65 30 22.88

25.00-29.99 9 6 29.29 — —
30.00-34.99 4 694 1 30.23 4 672 30.23
35.00-39.99 9 537 3 38.99 6 024 38.95
40.00-44.99 19 292 3 42.71 17 516 42.68
45.00-49.99 52 4 48.15 51 48.16
50.00-54.27 128 3 52.39 128 52.39
Total 37 090 3 38.39 28 421 39.87

Common shares authorized for issuance by the Board of Directors that remain available for the granting of future options:

(thousands) 2021 2020

25 037 8 999

Share Unit Plans

Suncor grants share units as a form of retention and incentive compensation. Share unit plans are accounted for as cash-settled
awards.

(a) Performance Share Units (PSUs)

A PSU is a time-vested award entitling employees to receive varying degrees of cash (0% – 200% of the company’s share price at
time of vesting) contingent upon Suncor’s total shareholder return (stock price appreciation and dividend income) relative to
a peer group of companies. Cash payments for awards granted in 2019 and onwards are contingent upon Suncor’s total
shareholder return and annual return on capital employed performance. PSUs vest approximately three years after the grant
date.

(b) Restricted Share Units (RSUs)

A RSU is a time-vested award entitling employees to receive cash calculated based on an average of the company’s share price
leading up to vesting. RSUs vest approximately three years after the grant date.

In 2022, Syncrude’s Long Term Incentive Plans (LTIP) of approximately $123 million will be converted into Suncor RSUs at a
conversion price of $30.93.

(c) Deferred Share Units (DSUs)

A DSU is redeemable for cash or a common share for a period of time after a unitholder ceases employment or Board
membership. The DSU Plan is limited to executives and members of the Board of Directors. Members of the Board of Directors
receive an annual grant of DSUs as part of their compensation and may elect to receive their fees in cash only or in increments of
50% or 100% allocated to DSUs. Executives may elect to receive their annual incentive bonus in cash only or in increments of
25%, 50%, 75% or 100% allocated to DSUs.

Annual Report 2021 Suncor Energy Inc. 125

Notes to the Consolidated Financial Statements

The following table presents a summary of the activity related to Suncor’s share unit plans:

(thousands) PSU RSU DSU

Outstanding, December 31, 2019 2 193 13 602 1 287

Granted 1 232 6 567 289
Redeemed for cash (1 086) (4 707) (191)
Forfeited/expired (54) (367) —
Outstanding, December 31, 2020 2 285 15 095 1 385
Granted 1 285 11 954 164
Redeemed for cash (751) (4 609) (167)
Forfeited/expired (53) (1 003) —
Outstanding, December 31, 2021 2 766 21 437 1 382

Stock Appreciation Rights (SARs)

A SAR entitles the holder to receive a cash payment equal to the difference between the stated exercise price and the market
price of the company’s common shares on the date the SAR is exercised, and is accounted for as a cash-settled award.

SARs have a seven-year life and vest annually over a three-year period.

The following table presents a summary of the activity related to Suncor’s SARs plan:

2021 2020
Weighted Weighted
Average Average
Number Exercise Price Number Exercise Price
(thousands) ($) (thousands) ($)

Outstanding, beginning of year 509 39.25 385 39.83

Granted 10 22.63 132 37.41
Exercised — — (7) 36.38
Forfeited/expired (56) 37.78 (1) 39.08
Outstanding, end of year 463 39.06 509 39.25
Exercisable, end of year 357 39.68 307 39.09

27. Financial Instruments and Risk Management

The company’s financial instruments consist of cash and cash equivalents, accounts receivable, derivative contracts, substantially
all accounts payable and accrued liabilities, debt, and certain portions of other assets and other long-term liabilities.

Non-Derivative Financial Instruments

The fair values of cash and cash equivalents, accounts receivable, short-term debt, and accounts payable and accrued liabilities
approximate their carrying values due to the short-term maturities of those instruments.

The company’s long-term debt and long-term financial liabilities are recorded at amortized cost using the effective interest
method. At December 31, 2021, the carrying value of fixed-term debt accounted for under amortized cost was $14.2 billion
(December 31, 2020 – $15.2 billion) and the fair value at December 31, 2021 was $17.4 billion (December 31, 2020 – $18.8 billion).
The decrease in carrying value and fair value of debt is mainly due to repayment of debt during the year. The estimated fair
value of long-term debt is based on pricing sourced from market data, which is considered a Level 2 fair value input.

Suncor entered into a partnership with Fort McKay First Nation (FMFN) and Mikisew Cree First Nation (MCFN) in 2018 where
FMFN and MCFN acquired a combined 49% partnership interest in the East Tank Farm Development. The partnership liability is
recorded at amortized cost using the effective interest method. At December 31, 2021, the carrying value of the Partnership
liability accounted for under amortized cost was $436 million (December 31, 2020 – $445 million).

126 Annual Report 2021 Suncor Energy Inc.

Derivative Financial Instruments
(a) Non-Designated Derivative Financial Instruments
The company uses derivative financial instruments, such as physical and financial contracts, to manage certain exposures to
fluctuations in interest rates, commodity prices and foreign currency exchange rates, as part of its overall risk management
program, as well as for trading purposes.

The changes in the fair value of non-designated derivatives are as follows:

($ millions) 2021 2020

Fair value outstanding, beginning of year (121) (39)

Cash settlements – paid (received) during the year 178 (257)
Changes in fair value recognized in earnings during the year (note 7) (155) 175
Fair value outstanding, end of year (98) (121)

(b) Fair Value Hierarchy

To estimate the fair value of derivatives, the company uses quoted market prices when available, or third-party models and
valuation methodologies that utilize observable market data. In addition to market information, the company incorporates
transaction-specific details that market participants would utilize in a fair value measurement, including the impact of non­
performance risk. However, these fair value estimates may not necessarily be indicative of the amounts that could be realized or
settled in a current market transaction. The company characterizes inputs used in determining fair value using a hierarchy that
prioritizes inputs depending on the degree to which they are observable. The three levels of the fair value hierarchy are as follows:

• Level 1 consists of instruments with a fair value determined by an unadjusted quoted price in an active market for identical
assets or liabilities. An active market is characterized by readily and regularly available quoted prices where the prices are
representative of actual and regularly occurring market transactions to assure liquidity.

• Level 2 consists of instruments with a fair value that is determined by quoted prices in an inactive market, prices with
observable inputs, or prices with insignificant non-observable inputs. The fair value of these positions is determined using
observable inputs from exchanges, pricing services, third-party independent broker quotes, and published transportation
tolls. The observable inputs may be adjusted using certain methods, which include extrapolation over the quoted price
term and quotes for comparable assets and liabilities.

• Level 3 consists of instruments with a fair value that is determined by prices with significant unobservable inputs. As at
December 31, 2021, the company does not have any derivative instruments measured at fair value Level 3.

In forming estimates, the company utilizes the most observable inputs available for valuation purposes. If a fair value
measurement reflects inputs of different levels within the hierarchy, the measurement is categorized based upon the lowest
level of input that is significant to the fair value measurement.

The following table presents the company’s derivative financial instrument assets and liabilities measured at fair value for each
hierarchy level as at December 31, 2021 and 2020.
Total Fair
($ millions) Level 1 Level 2 Level 3 Value

Accounts receivable 63 90 — 153

Accounts payable (202) (72) — (274)
Balance at December 31, 2020 (139) 18 — (121)
Accounts receivable 35 88 — 123
Accounts payable (134) (87) — (221)
Balance at December 31, 2021 (99) 1 — (98)

During the year ended December 31, 2021, there were no transfers between Level 1 and Level 2 fair value measurements.

Annual Report 2021 Suncor Energy Inc. 127

Notes to the Consolidated Financial Statements

Offsetting Financial Assets and Liabilities

The company enters into arrangements that allow for offsetting of derivative financial instruments and accounts receivable
(payable), which are presented on a net basis on the balance sheet, as shown in the table below as at December 31, 2021 and 2020.

Financial Assets
Gross
Gross Liabilities Net Amounts
($ millions) Assets Offset Presented

Fair value of derivative assets 2 890 (2 737) 153

Accounts receivable 2 999 (1 398) 1 601
Balance at December 31, 2020 5 889 (4 135) 1 754
Fair value of derivative assets 6 527 (6 404) 123
Accounts receivable 5 048 (2 734) 2 314
Balance at December 31, 2021 11 575 (9 138) 2 437

Financial Liabilities
Gross
Gross Assets Net Amounts
($ millions) Liabilities Offset Presented

Fair value of derivative liabilities (3 011) 2 737 (274)

Accounts payable (2 385) 1 398 (987)
Balance at December 31, 2020 (5 396) 4 135 (1 261)
Fair value of derivative liabilities (6 625) 6 404 (221)
Accounts payable (4 205) 2 734 (1 471)
Balance at December 31, 2021 (10 830) 9 138 (1 692)

Risk Management
The company is exposed to a number of different risks arising from financial instruments. These risk factors include market
risks, comprising commodity price risk, foreign currency risk and interest rate risk, as well as liquidity risk and credit risk.

The company maintains a formal governance process to manage its financial risks. The company’s Commodity Risk Management
Committee (CRMC) is charged with the oversight of the company’s trading and credit risk management activities. These activities
are intended to manage risk associated with open price exposure of specific volumes in transit or storage, enhance the
company’s operations, and enhance profitability through informed market calls, market diversification, economies of scale,
improved transportation access, and leverage of assets, both physical and contractual. The CRMC, acting under the authority of
the company’s Board of Directors, meets regularly to monitor limits on risk exposures, review policy compliance and validate risk­
related methodologies and procedures.

1) Market Risk
Market risk is the risk or uncertainty arising from market price movements and their impact on the future performance of the
business. The market price movements that could adversely affect the value of the company’s financial assets, liabilities and
expected future cash flows include commodity price risk, foreign currency exchange risk and interest rate risk.

(a) Commodity Price Risk

Suncor’s financial performance is closely linked to crude oil and refined product prices (including pricing differentials for various
product types) and, to a lesser extent, natural gas and electricity prices. The company may reduce its exposure to commodity
price risk through a number of strategies. These strategies include entering into derivative contracts to limit exposure to changes
in crude oil and refined product prices during transportation and natural gas prices.

An increase of US$10/bbl of crude oil as at December 31, 2021 would increase pre-tax earnings for the company’s outstanding
derivative financial instruments by approximately $58 million (2020 – $95 million increase).

(b) Foreign Currency Exchange Risk

The company is exposed to foreign currency exchange risk on revenues, capital expenditures, or financial instruments that are
denominated in a currency other than the company’s functional currency (Canadian dollars). As crude oil is priced in U.S. dollars,
fluctuations in US$/Cdn$ exchange rates may have a significant impact on revenues. This exposure is partially offset through
the issuance of U.S. dollar denominated debt. A 1% strengthening in the Cdn$ relative to the US$ as at December 31, 2021 would

128 Annual Report 2021 Suncor Energy Inc.

increase pre-tax earnings related to the company’s U.S. dollar denominated long-term debt, commercial paper and working
capital by approximately $133 million (2020 – $182 million).

(c) Interest Rate Risk

The company is exposed to interest rate risk as changes in interest rates may affect future cash flows and the fair values of its
financial instruments. The primary exposure is related to its revolving-term debt of commercial paper and future debt issuances.

To manage the company’s exposure to interest rate volatility, the company may periodically enter into interest rate swap
contracts to fix the interest rate of future debt issuances. As at December 31, 2021, the company had no outstanding forward
interest rate swaps. The weighted average interest rate on total debt, including lease liabilities, for the year ended December 31,
2021 was 5.0% (2020 – 5.3%).

The company’s net earnings are sensitive to changes in interest rates on the floating rate portion of the company’s debt, which
are offset by cash balances. To the extent interest expense is not capitalized, if interest rates applicable to floating rate instruments
increased by 1%, it is estimated that the company’s pre-tax earnings would increase by approximately $9 million primarily due
to a higher cash balance compared to the short-term debt balance (2020 – approximately $17 million decrease). This assumes that
the amount and mix of fixed and floating rate debt remains unchanged from December 31, 2021. The proportion of floating
interest rate exposure at December 31, 2021 was 7.0% of total debt outstanding (2020 – 16.4%).

2) Liquidity Risk
Liquidity risk is the risk that Suncor will not be able to meet its financial obligations when due. The company mitigates this risk
by forecasting spending requirements as well as cash flow from operating activities, and maintaining sufficient cash, credit
facilities, and debt shelf prospectuses to meet these requirements. The company’s available credit facilities decreased by
$2.0 billion during the year ended December 31, 2021, primarily due to the cancellation of $2.8 billion in bi-lateral credit facilities
that were no longer required as they were entered into in March and April 2020 to ensure access to adequate financial resources
in connection with the COVID-19 pandemic, and a reduction in the size of the company’s syndicated credit facilities. Suncor’s
cash and cash equivalents and total credit facilities at December 31, 2021 were $2.2 billion and $7.0 billion, respectively. Of
Suncor’s $7.0 billion in total credit facilities, $4.5 billion were unutilized at December 31, 2021. In addition, Suncor has $4.50 billion
of unused capacity under a Canadian debt shelf prospectus and an unused capacity of US$4.25 billion under a U.S. universal
shelf prospectus. The ability of the company to raise additional capital utilizing these shelf prospectuses is dependent on market
conditions. The company believes it has sufficient funding through the use of these facilities and access to capital markets to
meet its future capital requirements.

Surplus cash is invested into a range of short-dated money market securities. Investments are only permitted in high credit
quality government or corporate securities. Diversification of these investments is managed through counterparty credit limits.

The following table shows the timing of cash outflows related to trade and other payables and debt.

December 31, 2020

Trade and Gross
Other Derivative Lease
($ millions) Payables(1) Liabilities(2) Debt(3) Liabilities

Within one year 4 410 2 849 5 773 474

2 to 3 years 37 162 2 233 771
4 to 5 years 37 — 3 009 631
Over 5 years — — 17 834 2 779
4 484 3 011 28 849 4 655

December 31, 2021

Trade and Gross
Other Derivative Lease
($ millions) Payables(1) Liabilities(2) Debt(3) Liabilities

Within one year 6 282 6 466 2 253 459

2 to 3 years 37 159 2 015 779
4 to 5 years 37 — 3 127 660
Over 5 years — — 18 836 2 633
6 356 6 625 26 231 4 531
(1) Trade and other payables exclude net derivative liabilities of $221 million (2020 – $274 million).
(2) Gross derivative liabilities of $6.625 billion (2020 – $3.011 billion) are offset by gross derivative assets of $6.404 billion (2020 – $2.737 billion),
resulting in a net amount of $221 million (2020 – $274 million).
(3) Debt includes short-term debt, long-term debt and interest payments on fixed-term debt.

Annual Report 2021 Suncor Energy Inc. 129

Notes to the Consolidated Financial Statements

3) Credit Risk
Credit risk is the risk that a customer or counterparty will fail to perform an obligation or fail to pay amounts due, causing a
financial loss. The company’s credit policy is designed to ensure there is a standard credit practice throughout the company to
measure and monitor credit risk. The policy outlines delegation of authority, the due diligence process required to approve a new
customer or counterparty and the maximum amount of credit exposure per single entity. Before transactions begin with a new
customer or counterparty, its creditworthiness is assessed, and a credit rating and a maximum credit limit are assigned. The
assessment process is outlined in the credit policy and considers both quantitative and qualitative factors. The company
constantly monitors the exposure to any single customer or counterparty along with the financial position of the customer or
counterparty. If it is deemed that a customer or counterparty has become materially weaker, the company will work to reduce the
credit exposure and lower the assigned credit limit. Regular reports are generated to monitor credit risk and the Credit
Committee meets quarterly to ensure compliance with the credit policy and review the exposures.

A substantial portion of the company’s accounts receivable are with customers in the oil and gas industry and are subject to
normal industry credit risk. While the industry has experienced credit downgrades due to the COVID-19 pandemic, Suncor has
not been significantly affected as the majority of Suncor’s customers are large and established downstream companies with
investment grade credit ratings. At December 31, 2021, substantially all of the company’s trade receivables were current.

The company may be exposed to certain losses in the event that counterparties to derivative financial instruments are unable to
meet the terms of the contracts. The company’s exposure is limited to those counterparties holding derivative contracts owing
to the company at the reporting date. At December 31, 2021, the company’s net exposure was $123 million (December 31,
2020 – $153 million).

130 Annual Report 2021 Suncor Energy Inc.

28. Capital Structure Financial Policies
The company’s primary capital management strategy is to maintain a conservative balance sheet, which supports a solid
investment grade credit rating profile. This objective affords the company the financial flexibility and access to the capital it
requires to execute on its growth objectives.

The company’s capital is primarily monitored by reviewing the ratios of net debt to adjusted funds from operations(2) and total
debt to total debt plus shareholders’ equity.

Net debt to adjusted funds from operations(2) is calculated as short-term debt plus total long-term debt less cash and cash
equivalents, divided by adjusted funds from operations for the year then ended.

Total debt to total debt plus shareholders’ equity is calculated as short-term debt plus total long-term debt divided by short-term
debt plus total long-term debt plus shareholders’ equity. This financial covenant under the company’s various banking and
debt agreements shall not be greater than 65%.

The company’s financial covenant is reviewed regularly and controls are in place to maintain compliance with the covenant. The
company complied with financial covenants for the years ended December 31, 2021 and 2020. The company’s financial
measures, as set out in the following schedule, were unchanged from 2020. The company believes that achieving its capital
target helps to provide the company access to capital at a reasonable cost by maintaining solid investment grade credit ratings.
Total debt to total debt plus shareholders’ equity was 33.4% at December 31, 2021 and decreased due to lower debt levels and
higher shareholders’ equity as a result of increased net earnings. The company operates in a fluctuating business environment
and ratios may periodically fall outside of management’s targets. The company addresses these fluctuations by capital
expenditure reductions and sales of non-core assets to ensure net debt achieves management’s targets.

Capital
Measure December 31 December 31
($ millions) Target 2021 2020

Components of ratios
Short-term debt 1 284 3 566
Current portion of long-term debt 231 1 413
Current portion of long-term lease liabilities 310 272
Long-term debt 13 989 13 812
Long-term lease liabilities 2 540 2 636
(1)
Total debt 18 354 21 699
Less: Cash and cash equivalents 2 205 1 885
(1)
Net debt 16 149 19 814
Shareholders’ equity 36 614 35 757
Total capitalization (total debt plus shareholders’ equity) 54 968 57 456
(2)
Adjusted funds from operations 10 257 3 876
Net debt to adjusted funds from operations <3.0 times 1.6 5.1
Total debt to total debt plus shareholders’ equity 20% – 35% 33.4% 37.8%
(1) Total debt and net debt are non-GAAP financial measures.
(2) Adjusted funds from operations is calculated as cash flow from operating activities before changes in non-cash working capital, and is a non-GAAP
financial measure.

Annual Report 2021 Suncor Energy Inc. 131

Notes to the Consolidated Financial Statements

29. Joint Arrangements

Joint Operations
The company’s material joint operations as at December 31 are set out below:

Country of
Incorporation and
Principal Place of Ownership % Ownership %
Material Joint Operations Principal Activity Business 2021 2020

Oil Sands
Operated by Suncor:
Fort Hills Energy Limited Partnership Oil sands development Canada 54.11 54.11
Meadow Creek Oil sands development Canada 75.00 75.00
(1)
Syncrude Oil sands development Canada 58.74 —
Non-operated:
Syncrude(1) Oil sands development Canada — 58.74
Exploration and Production
Operated by Suncor:
Terra Nova(2) Oil and gas production Canada 48.00 37.68
Non-operated:
Buzzard Oil and gas production United Kingdom 29.89 29.89
Fenja Development JV Oil and gas production Norway 17.50 17.50
Golden Eagle Area Development(3) Oil and gas production United Kingdom — 26.69
Hibernia and the Hibernia South
Extension Unit(4) Oil and gas production Canada 19.48-20.00 19.19-20.00
Hebron Oil and gas production Canada 21.03 21.03
Harouge Oil Operations Oil and gas production Libya 49.00 49.00
North Sea Rosebank Project Oil and gas production United Kingdom 40.00 40.00
Oda Oil and gas production Norway 30.00 30.00
White Rose and the White Rose
Extensions(5) Oil and gas production Canada 26.13-27.50 26.13-27.50
(1) Suncor became the operator of the Syncrude project effective September 30, 2021.
(2) In the third quarter of 2021, Suncor finalized an agreement with the co-owners of the Terra Nova Project to restructure the project ownership and
move forward with the Asset Life Extension Project. The agreement increased the company’s working interest to 48.00%.
(3) Suncor sold its 26.69% working interest in the Golden Eagle Area Development in the fourth quarter of 2021.
(4) In the first quarter of 2021, the first redetermination of the Hibernia South Extension Unit increased the company’s interest by 0.29% (from 19.19%
to approximately 19.48%).
(5) In the third quarter of 2021, Suncor entered into a conditional agreement to increase its interest by 12.50% to approximately 40.00% in the White
Rose asset subject to the sanctioning of the West White Rose Project.

Joint Ventures and Associates

The company does not have any joint ventures or associates that are considered individually material. Summarized aggregate
financial information of the joint ventures and associates, which are all included in the company’s Refining and Marketing
operations, are shown below:

Joint ventures Associates

($ millions) 2021 2020 2021 2020

Net earnings (loss) 5 (10) (2) 9

Total comprehensive earnings (loss) 5 (10) (2) 9
Carrying amount as at December 31 63 58 66 68

132 Annual Report 2021 Suncor Energy Inc.

30. Subsidiaries
Material subsidiaries, each of which is wholly owned, either directly or indirectly, by the company as at December 31, 2021 are
shown below:

Material Subsidiaries Principal Activity

Canadian Operations
Suncor Energy Oil Sands Limited Partnership This partnership holds most of the company’s Oil Sands
operations assets.
Suncor Energy Ventures Corporation A subsidiary which indirectly owns a 36.74% ownership in the
Syncrude joint operation.
Suncor Energy Ventures Partnership A subsidiary which owns a 22% ownership in the Syncrude
joint operation.
Suncor Energy Products Partnership This partnership holds substantially all of the company’s
Canadian refining and marketing assets.
Suncor Energy Marketing Inc. Through this subsidiary, production from the upstream
Canadian businesses is marketed. This subsidiary also
administers Suncor’s energy trading activities and power
business, markets certain third-party products, procures
crude oil feedstock and natural gas for its downstream
business, and procures and markets natural gas liquids
(NGLs) and liquefied petroleum gas (LPG) for its downstream
business.
U.S. Operations
Suncor Energy (U.S.A.) Marketing Inc. A subsidiary that procures, markets and trades crude oil, in
addition to procuring crude oil feedstock for the company’s
refining operations.
Suncor Energy (U.S.A.) Inc. A subsidiary through which the company’s U.S. refining and
marketing operations are conducted.
International Operations
Suncor Energy UK Limited A subsidiary through which the majority of the company’s
North Sea operations are conducted.

The table does not include wholly owned subsidiaries that are immediate holding companies of the operating subsidiaries. For
certain foreign operations of the company, there are restrictions on the sale or transfer of production licences, which would
require approval of the applicable foreign government.

31. Related Party Disclosures

Related Party Transactions
The company enters into transactions with related parties in the normal course of business, which includes purchases of
feedstock, distribution of refined products, and sale of refined products and byproducts. These transactions are with joint
ventures and associated entities in the company’s Refining and Marketing operations, including pipeline, refined product and
petrochemical companies. A summary of the significant related party transactions as at and for the years ended December 31,
2021 and 2020 are as follows:

($ millions) 2021 2020

(1)
Sales 1 011 458
Purchases 247 130
Accounts receivable 70 26
Accounts payable and accrued liabilities 17 16
(1) Includes sales to Petroles Cadeko Inc. of $411 million (2020 – $93 million) and Parachem Chemicals Inc. of $343 million (2020 – $173 million).

Annual Report 2021 Suncor Energy Inc. 133

Notes to the Consolidated Financial Statements

Compensation of Key Management Personnel

Compensation of the company’s Board of Directors and members of the Executive Leadership Team for the years ended
December 31 is as follows:

($ millions) 2021 2020

Salaries and other short-term benefits 8 9

Pension and other post-retirement benefits 3 3
Share-based compensation 47 (9)
58 3

32. Commitments, Contingencies and Guarantees

(a) Commitments
Future payments under the company’s commitments, including service arrangements for pipeline transportation agreements
and for other property and equipment, are as follows:

Payment Due by Period

($ millions) 2022 2023 2024 2025 2026 Thereafter Total

Commitments
Product transportation and storage 1 150 1 210 1 211 1 128 1 135 7 814 13 648
Energy services 159 160 151 112 66 75 723
Exploration work commitments — 20 — 64 1 454 539
Other 648 185 108 83 62 339 1 425
1 957 1 575 1 470 1 387 1 264 8 682 16 335

In addition to the commitments in the above table, the company has other obligations for goods and services and raw materials
entered into in the normal course of business, which may terminate on short notice. Such obligations include commodity
purchase obligations which are transacted at market prices.

(b) Contingencies
Legal and Environmental Contingent Liabilities and Assets
The company is defendant and plaintiff in a number of legal actions that arise in the normal course of business. The company
believes that any liabilities or assets that might arise pertaining to such matters would not have a material effect on its consolidated
financial position.

The company may also have environmental contingent liabilities, beyond decommissioning and restoration liabilities (recognized
in note 24), which are reviewed individually and are reflected in the company’s consolidated financial statements if material
and more likely than not to be incurred. These contingent environmental liabilities primarily relate to the mitigation of
contamination at sites where the company has had operations. For any unrecognized environmental contingencies, the company
believes that any liabilities that might arise pertaining to such matters would not have a material effect on its consolidated
financial position.

Costs attributable to these commitments and contingencies are expected to be incurred over an extended period of time and to
be funded from the company’s cash flow from operating activities. Although the ultimate impact of these matters on net
earnings cannot be determined at this time, the impact is not expected to be material.

Contingent assets are only disclosed when the inflow of economic benefits is probable. When the economic benefit becomes
virtually certain, the asset is no longer contingent and is recognized in the consolidated financial statements.

(c) Guarantees
At December 31, 2021, the company has provided loan guarantees to certain retail licensees and wholesale marketers. Suncor’s
maximum potential amount payable under these loan guarantees is $134 million.

The company has also agreed to indemnify holders of all notes and debentures and the company’s credit facility lenders (see
note 21) for added costs relating to withholding taxes. Similar indemnity terms apply to certain facility and equipment leases.
There is no limit to the maximum amount payable under these indemnification agreements. The company is unable to determine

134 Annual Report 2021 Suncor Energy Inc.

the maximum potential amount payable as government regulations and legislation are subject to change without notice. Under
these agreements, the company has the option to redeem or terminate these contracts if additional costs are incurred.

The company also has guaranteed its working-interest share of certain joint operation undertakings related to transportation
services agreements entered into with third parties. The guaranteed amount is limited to the company’s share in the joint
arrangement. As at December 31, 2021, the probability is remote that these guarantee commitments will impact the company.

33. Sale of Golden Eagle Area Development

During the fourth quarter of 2021, the company completed the sale of its 26.69% working interest in the Golden Eagle Area
Development for gross proceeds of US$250 million net of closing adjustments and other closing costs, resulting in a gain on sale
of $227 million ($227 million after-tax). In addition, contingent consideration of up to US$50 million is receivable in the second
half of 2023, if between July 2021 and June 2023 the Dated Brent average crude price equals or exceeds US$55/bbl, upon which
US$25 million is receivable; or if the Dated Brent average crude price equals or exceeds US$65/bbl, upon which US$50 million is
receivable.

The company completed the sale on October 22, 2021 with an effective date of January 1, 2021. The Golden Eagle Area
Development is reported within the Exploration and Production segment.

Annual Report 2021 Suncor Energy Inc. 135

Supplemental Financial and Operating Information
Quarterly Financial Summary
(unaudited)

For the Quarter Ended Total For the Quarter Ended Total
Mar 31 June 30 Sept 30 Dec 31 Year Mar 31 June 30 Sept 30 Dec 31 Year
($ millions, except per share amounts) 2021 2021 2021 2021 2021 2020 2020 2020 2020 2020

Operating revenues, net of royalties 8 679 9 159 10 145 11 149 39 132 7 391 4 229 6 427 6 615 24 662
Net earnings (loss)
Oil Sands 326 441 484 896 2 147 (1 953) (1 019) (531) (293) (3 796)
Exploration and Production 163 250 407 465 1 285 (427) (51) 25 (379) (832)
Refining and Marketing 707 375 646 450 2 178 (55) 269 384 268 866
Corporate and Eliminations (375) (198) (660) (258) (1 491) (1 090) 187 110 236 (557)
Total 821 868 877 1 553 4 119 (3 525) (614) (12) (168) (4 319)
Adjusted operating earnings (loss)(A)(B)(C)
Oil Sands 299 465 489 898 2 151 (448) (1 148) (539) (130) (2 265)
Exploration and Production 163 250 239 238 890 (5) (51) 25 44 13
Refining and Marketing 714 361 658 437 2 170 101 145 356 280 882
Corporate and Eliminations (430) (354) (343) (279) (1 406) (69) (291) (180) (303) (843)
Total 746 722 1 043 1 294 3 805 (421) (1 345) (338) (109) (2 213)
Adjusted funds from (used in) operations(A)(B)
Oil Sands 1 400 1 680 1 591 2 175 6 846 691 10 556 729 1 986
Exploration and Production 285 411 357 425 1 478 173 309 260 312 1 054
Refining and Marketing 962 581 947 765 3 255 224 475 594 415 1 708
Corporate and Eliminations (537) (310) (254) (221) (1 322) (87) (306) (244) (235) (872)
Total 2 110 2 362 2 641 3 144 10 257 1 001 488 1 166 1 221 3 876
Change in non-cash working capital 235 (276) 2 077 (529) 1 507 383 (1 256) 79 (407) (1 201)
Cash flow provided by (used in) operating activities 2 345 2 086 4 718 2 615 11 764 1 384 (768) 1 245 814 2 675
Per common share
Net earnings (loss)(D) 0.54 0.58 0.59 1.07 2.77 (2.31) (0.40) (0.01) (0.11) (2.83)
Adjusted operating earnings (loss)(A)(B)(C)(E) 0.49 0.48 0.71 0.89 2.56 (0.28) (0.88) (0.22) (0.07) (1.45)
(E)
Cash dividends 0.21 0.21 0.21 0.42 1.05 0.47 0.21 0.21 0.21 1.10
Adjusted funds from operations(A)(B)(E) 1.39 1.57 1.79 2.17 6.89 0.66 0.32 0.76 0.80 2.54
Cash flow provided by (used in) operating activities(E) 1.54 1.39 3.19 1.80 7.91 0.91 (0.50) 0.82 0.53 1.75
Capital and exploration expenditures (including capitalized interest)
Oil Sands 539 834 935 860 3168 1010 437 661 628 2736
Exploration and Production 69 64 64 73 270 179 131 99 80 489
Refining and Marketing 120 375 142 188 825 92 86 156 181 515
Corporate and Eliminations 75 74 80 63 292 39 44 25 78 186
Total capital and exploration expenditures 803 1347 1221 1184 4555 1320 698 941 967 3926

For the Twelve Months Ended For the Twelve Months Ended
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31
2021 2021 2021 2021 2020 2020 2020 2020
Return on capital employed(A) (1.4) 1.9 4.5 8.6 (1.3) (7.5) (10.2) (6.9)
Return on capital employed – excluding impairments
and impairment reversals(A) (%) (0.6) 2.6 4.9 8.2 7.0 1.0 (1.3) (2.9)

(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures
section of this Annual Report.
(B) Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted
operating earnings (loss) and adjusted funds from (used in) operations respectively, to better distinguish the non-GAAP financial measures from
the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore
no prior periods were restated.
(C) Beginning in the first quarter of 2021, the company revised its adjusted operating earnings non-GAAP financial measure to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(D) Represents on a basic and diluted per share basis.
(E) Represents on a basic per share basis.
See accompanying footnotes and definitions to the operating summaries.

136 Annual Report 2021 Suncor Energy Inc.

Quarterly Operating Summary
(unaudited)

For the Quarter Ended Total For the Quarter Ended Total
Mar 31 June 30 Sept 30 Dec 31 Year Mar 31 June 30 Sept 30 Dec 31 Year
Oil Sands 2021 2021 2021 2021 2021 2020 2020 2020 2020 2020

Production Volumes
Oil Sands – upgraded – net SCO and diesel (mbbls/d)
Oil Sands operations 329.6 326.8 221.0 332.7 301.6 331.8 319.4 252.3 309.7 303.1
Syncrude 190.3 110.4 184.5 182.3 167.0 171.8 117.2 158.5 204.6 163.1
Total Oil Sands – upgraded – net SCO and
diesel production 519.9 437.2 405.5 515.0 468.6 503.6 436.6 410.8 514.3 466.2
Oil Sands – non-upgraded bitumen (mbbls/d)
Oil Sands operations 119.5 133.2 148.8 95.4 124.9 45.8 69.8 65.6 94.8 69.1
Fort Hills 51.2 45.3 50.8 55.5 50.7 80.7 47.3 42.6 62.4 58.1
Total Oil Sands – non-upgraded bitumen 170.7 178.5 199.6 150.9 175.6 126.5 117.1 108.2 157.2 127.2
Total Oil Sands production volumes
(mbbls/d) 690.6 615.7 605.1 665.9 644.2 630.1 553.7 519.0 671.5 593.4
Oil Sands Sales Volumes (mbbls/d)
Upgraded – net SCO and diesel 515.2 433.9 418.6 496.1 465.7 512.5 443.1 420.1 495.6 467.9
Non-upgraded bitumen 180.2 183.5 194.4 176.7 183.8 127.5 116.4 119.1 139.6 125.6
Total Oil Sands sales volumes 695.4 617.4 613.0 672.8 649.5 640.0 559.5 539.2 635.2 593.5
(1)(A)
Oil Sands operations cash operating costs ($ millions)
Cash costs 858 910 884 952 3 603 958 850 864 900 3 571
Natural gas 115 111 135 193 554 81 81 88 114 363
973 1 021 1 019 1 145 4 157 1 039 931 952 1 014 3 934
Oil Sands operations cash operating costs(1)(A) ($/bbl)*
Cash costs 20.60 21.25 25.20 23.40 22.45 27.15 23.55 28.85 23.50 25.60
Natural gas 2.70 2.60 3.85 4.70 3.45 2.30 2.25 2.90 3.00 2.60
23.30 23.85 29.05 28.10 25.90 29.45 25.80 31.75 26.50 28.20
Fort Hills cash operating costs(1)(A) ($ millions)
Cash costs 156 159 178 214 706 216 143 129 169 657
Natural gas 14 11 14 19 58 12 8 8 13 41
170 170 192 233 764 228 151 137 182 698
Fort Hills cash operating costs(1)(A) ($/bbl)*
Cash costs 33.95 38.60 38.00 41.85 38.20 29.40 33.40 33.05 29.40 30.90
Natural gas 3.10 2.75 2.90 3.70 3.15 1.60 1.95 2.15 2.15 1.90
37.05 41.35 40.90 45.55 41.35 31.00 35.35 35.20 31.55 32.80
Syncrude cash operating costs(1)(A) ($ millions)
Cash costs 537 493 521 561 2 111 561 399 494 521 1 974
Natural gas 24 27 22 30 104 21 18 15 22 76
561 520 543 591 2 215 582 417 509 543 2 050
(1)(A)
Syncrude cash operating costs ($/bbl)*
Cash costs 30.85 47.65 29.75 31.80 33.55 35.30 36.70 33.30 27.30 32.55
Natural gas 1.40 2.60 1.30 1.70 1.65 1.35 1.65 1.05 1.15 1.25
32.25 50.25 31.05 33.50 35.20 36.65 38.35 34.35 28.45 33.80

(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary
Information – Non-GAAP Financial Measures section of this Annual Report.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 137

Quarterly Operating Summary (continued)
(unaudited)

For the Quarter Ended Total For the Quarter Ended Total
Mar 31 June 30 Sept 30 Dec 31 Year Mar 31 June 30 Sept 30 Dec 31 Year
(A)(B)
Oil Sands Segment Operating Netbacks 2021 2021 2021 2021 2021 2020 2020 2020 2020 2020

Bitumen ($/bbl)
Average price realized 47.57 55.54 65.53 67.47 59.16 28.24 20.69 29.56 34.06 28.44
Royalties (0.83) (3.65) (7.99) (9.50) (5.53) (0.44) (0.21) (0.36) (0.25) (0.32)
Transportation costs (5.04) (5.34) (5.62) (5.42) (5.36) (7.22) (6.73) (5.28) (5.16) (6.07)
Net operating expenses (13.88) (15.55) (18.10) (20.92) (17.13) (21.90) (20.97) (17.85) (19.84) (20.14)
Operating netback 27.82 31.00 33.82 31.63 31.14 (1.32) (7.22) 6.07 8.81 1.91

SCO and diesel ($/bbl)

Average price realized 69.40 81.34 84.80 93.87 82.24 57.54 31.39 50.72 51.34 48.19
Royalties (3.10) (4.01) (9.33) (10.64) (6.75) (0.35) (0.35) (0.82) (0.31) (0.45)
Transportation costs (4.18) (4.84) (4.59) (4.49) (4.51) (4.35) (4.91) (4.54) (3.75) (4.36)
Net operating expenses (26.64) (32.04) (33.44) (29.34) (30.16) (30.11) (29.58) (31.49) (26.94) (29.45)
Operating netback 35.48 40.45 37.44 49.40 40.82 22.73 (3.45) 13.87 20.34 13.93

Average Oil Sands Segment ($/bbl)

Average price realized 63.73 73.67 78.69 86.94 75.71 51.70 29.16 46.04 47.54 44.01
Royalties (2.50) (3.90) (8.91) (10.36) (6.41) (0.42) (0.32) (0.72) (0.31) (0.44)
Transportation costs (4.41) (4.99) (4.91) (4.74) (4.75) (4.92) (5.29) (4.70) (4.06) (4.72)
Net operating expenses (23.34) (27.14) (28.58) (27.13) (26.48) (28.47) (27.79) (28.47) (25.38) (27.48)
Operating netback 33.48 37.64 36.29 44.71 38.07 17.89 (4.24) 12.15 17.79 11.37

(A) Contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP Financial
Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

138 Annual Report 2021 Suncor Energy Inc.

Quarterly Operating Summary (continued)
(unaudited)

For the Quarter Ended Total For the Quarter Ended Total
Mar 31 June 30 Sept 30 Dec 31 Year Mar 31 June 30 Sept 30 Dec 31 Year
Exploration and Production 2021 2021 2021 2021 2021 2020 2020 2020 2020 2020

Production Volumes
E&P Canada (mbbs/d) 58.0 57.5 54.4 47.6 54.4 62.2 62.3 57.1 56.8 59.7
E&P International (mboe/d) 37.3 26.5 39.1 29.8 33.1 47.5 39.5 40.1 40.9 42.0
Total production volumes (mboe/d) 95.3 84.0 93.5 77.4 87.5 109.7 101.8 97.2 97.7 101.7
Total sales volumes (mboe/d) 84.2 103.8 76.3 67.2 82.8 107.2 108.7 96.0 98.8 102.6

Operating Netbacks(A)(B)
E&P Canada ($/bbl)
Average price realized 76.09 82.24 92.88 101.87 87.04 69.50 27.55 58.77 56.44 52.62
Royalties (9.24) (13.26) (11.88) (14.59) (12.20) (4.06) (0.96) (5.70) (6.83) (4.30)
Transportation costs (2.18) (1.59) (2.65) (3.45) (2.34) (2.13) (4.68) (2.56) (2.19) (2.93)
Operating costs (11.27) (10.27) (12.87) (13.42) (11.74) (13.23) (10.40) (13.23) (12.21) (12.23)
Operating netback 53.40 57.12 65.48 70.41 60.76 50.08 11.51 37.28 35.21 33.16
E&P International (excluding Libya) ($/boe)
Average price realized 72.05 80.41 89.19 102.80 84.76 66.22 32.63 56.56 54.93 52.51
Transportation costs (2.54) (1.59) (3.90) (2.66) (2.60) (2.50) (1.83) (2.50) (2.10) (2.23)
Operating costs (8.05) (13.20) (10.30) (10.19) (10.40) (6.56) (7.01) (7.29) (7.51) (7.06)
Operating netback 61.46 65.62 74.99 89.95 71.76 57.16 23.79 46.77 45.32 43.22

(A) Contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP Financial
Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 139

Quarterly Operating Summary (continued)
(unaudited)

For the Quarter Ended Total For the Quarter Ended Total
Mar 31 June 30 Sept 30 Dec 31 Year Mar 31 June 30 Sept 30 Dec 31 Year
Refining and Marketing 2021 2021 2021 2021 2021 2020 2020 2020 2020 2020

Refined product sales (mbbls/d) 548.1 463.3 551.5 550.1 528.4 531.5 438.8 534.0 508.8 503.4
Crude oil processed (mbbls/d) 428.4 325.3 460.3 447.0 415.5 439.5 350.4 399.7 438.0 407.0
Rack forward sales volume (ML) 4,866 4,791 5,414 5,359 20,430 5,136 4,164 5,285 4,918 19,503
Utilization of refining capacity (%)(C) 92 70 99 96 89 95 76 87 95 88
Refining and marketing margin –
first-in, first-out (FIFO)(A) ($/bbl) 40.75 38.00 35.75 33.60 36.85 23.35 20.95 30.75 25.75 25.30
Refining and marketing margin –
last-in, first-out (LIFO)(A) ($/bbl) 30.30 29.05 33.80 30.00 30.90 35.60 28.55 25.00 25.05 28.65
Rack forward gross margin (cpl)(A)(B) 6.75 8.30 7.10 6.40 7.10 5.85 7.35 7.50 7.70 7.10
(A)
Refining operating expense ($/bbl) 5.75 6.65 5.45 6.10 5.95 5.65 5.80 5.40 5.20 5.50
(A)(B)
Rack forward operating expense (cpl) 2.80 3.10 2.80 2.95 2.90 2.90 3.15 2.70 3.00 2.95

Eastern North America

Refined product sales (mbbls/d)
Transportation fuels
Gasoline 115.6 97.5 114.1 113.5 110.2 112.7 76.0 120.2 105.5 103.6
Distillate 95.8 86.4 93.7 103.1 94.7 94.8 84.2 93.4 94.9 91.9
Total transportation fuel sales 211.4 183.9 207.8 216.6 204.9 207.5 160.2 213.6 200.4 195.5
Petrochemicals 12.9 12.4 10.3 13.8 12.4 9.9 9.4 8.2 8.9 9.1
Asphalt 12.0 16.5 22.4 20.6 17.9 11.0 13.4 19.1 15.9 14.9
Other 25.6 15.4 21.7 21.2 21.0 27.8 23.4 18.7 24.3 23.5
Total refined product sales 261.9 228.2 262.2 272.2 256.2 256.2 206.4 259.6 249.5 243.0
Crude oil supply and refining
Processed at refineries (mbbls/d) 200.5 183.7 212.3 214.3 202.8 213.1 169.2 208.7 212.6 201.0
Utilization of refining capacity (%) 90 83 96 97 91 96 76 94 96 91

Western North America

Refined product sales (mbbls/d)
Transportation fuels
Gasoline 117.0 103.5 122.4 119.2 115.6 121.6 99.6 113.2 107.4 110.5
Distillate 149.9 110.5 140.1 134.8 133.8 133.9 106.1 127.2 128.0 123.8
Total transportation fuel sales 266.9 214.0 262.5 254.0 249.4 255.5 205.7 240.4 235.4 234.3
Asphalt 6.0 8.8 13.8 10.1 9.7 8.7 14.4 17.4 9.9 12.6
Other 13.3 12.3 13.0 13.8 13.1 11.1 12.3 16.6 14.0 13.5
Total refined product sales 286.2 235.1 289.3 277.9 272.2 275.3 232.4 274.4 259.3 260.4
Crude oil supply and refining
Processed at refineries (mbbls/d) 227.9 141.6 248.0 232.7 212.7 226.4 181.2 191.0 225.4 206.0
Utilization of refining capacity(C) (%) 93 58 102 95 87 94 76 80 94 86
(A) Contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP Financial
Measures section of this Annual Report.
(B) In Q2 2021, the company began disclosing refinery rack forward margin and operating expenses to increase transparency into Suncor’s integrated
model and aligns with how management evaluates the performance of the business. Rack forward encompasses Suncor’s retail and wholesale
business. As an integrated oil and gas company, transfer prices are used to attribute margin to the value chain. The company’s transfer prices
affecting the refining, supply and rack forward businesses employ replacement cost methodology, which may differ from those subject to supply
agreements negotiated by independent market participants. Rack Forward margins may include any incremental location differentials above
replacement supply cost, as well as the applicable retail and wholesale channel margins generated within those markets.
(C) The Edmonton refinery crude processing capacity has increased to 146,000 bbls/d in 2021 from 142,000 bbls/d in 2020.

See accompanying footnotes and definitions to the operating summaries.

140 Annual Report 2021 Suncor Energy Inc.

Five-Year Financial Summary
(unaudited)

($ millions) 2021 2020 2019 2018 2017

Operating revenues, net of royalties 39 132 24 662 38 344 38 542 31 954

Net earnings (loss)
Oil Sands 2 147 (3 796) (427) 945 994
Exploration and Production 1 285 (832) 1 005 807 721
Refining and Marketing 2 178 866 3 000 3 154 2 622
Corporate and Eliminations (1 491) (557) (679) (1 613) 121
Total 4 119 (4 319) 2 899 3 293 4 458
Adjusted operating earnings (loss)(A)(B)(C)
Oil Sands 2 151 (2 265) 1 672 841 934
Exploration and Production 890 13 1 141 897 735
Refining and Marketing 2 170 882 2 922 3 150 2 128
Corporate and Eliminations (1 406) (843) (1 317) (624) (614)
Total 3 805 (2 213) 4 418 4 264 3 183
(A)(B)
Adjusted funds from (used in) operations
Oil Sands 6 846 1 986 6 061 4 964 4 734
Exploration and Production 1 478 1 054 2 143 1 779 1 756
Refining and Marketing 3 255 1 708 3 863 3 798 2 823
Corporate and Eliminations (1 322) (872) (1 249) (369) (174)
Total 10 257 3 876 10 818 10 172 9 139
Change in non-cash working capital 1 507 (1 201) (397) 408 (173)
Cash flow provided by operating activities 11 764 2 675 10 421 10 580 8 966
Capital and exploration expenditures (including
capitalized interest)
Oil Sands 3 168 2 736 3 522 3 546 5 059
Exploration and Production 270 489 1 070 946 824
Refining and Marketing 825 515 818 856 634
Corporate and Eliminations 292 186 148 58 34
Total capital and exploration expenditures 4 555 3 926 5 558 5 406 6 551
Total assets 83 739 84 616 89 435 89 579 89 494
(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures
section of this Annual Report.
(B) Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted
operating earnings (loss) and adjusted funds from (used in) operations respectively, to better distinguish the non-GAAP financial measures from
the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore
no prior periods were restated.
(C) Beginning in the first quarter of 2021, the company revised its adjusted operating earnings non-GAAP financial measure to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 141

Five-Year Financial Summary (continued)
(unaudited)

2021 2020 2019 2018 2017

(D)
Total Suncor Employees (number at year end) (%) 16 922 12 591 12 889 12 480 12 381
Dollars per common share
Net earnings (loss)(E) 2.77 (2.83) 1.86 2.03 2.68
(A)(B)(C)(F)
Adjusted operating earnings (loss) 2.56 (1.45) 2.83 2.63 1.92
(F)
Cash dividends 1.05 1.10 1.68 1.44 1.28
(A)(B)(F)
Adjusted funds from operations 6.89 2.54 6.94 6.27 5.50
Cash flow provided by operating activities(F) 7.91 1.75 6.69 6.54 5.40
Ratios
Return on capital employed(A) (%) 8.6 (6.9) 4.9 8.0 6.7
Return on capital employed – excluding
impairments and impairment reversals(A) (%) 8.2 (2.9) 10.0 8.2 8.6
(A)
Total debt to total debt plus shareholders’ equity (%) 33.4 37.8 29.9 28.3 26.0
(A)
Net debt to net debt plus shareholders’ equity (%) 30.6 35.7 27.6 25.6 22.1
Net debt to adjusted funds from operations
(times)(A)(B)(C) 1.6 5.1 1.5 1.5 1.4
(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures
section of this Annual Report.
(B) Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted
operating earnings (loss) and adjusted funds from (used in) operations respectively, to better distinguish the non-GAAP financial measures from
the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore
no prior periods were restated.
(C) Beginning in the first quarter of 2021, the company revised its adjusted operating earnings non-GAAP financial measure to exclude unrealized
(gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) 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.
(D) In 2021, Suncor became operator of the Syncrude asset and the additional Syncrude employees are reflected in our total employees.
(E) Represents on a basic and diluted per share basis.
(F) Represents on a basic per share basis.

See accompanying footnotes and definitions to the operating summaries.

142 Annual Report 2021 Suncor Energy Inc.

Five-Year Operating Summary
(unaudited)

Oil Sands 2021 2020 2019 2018 2017

(A)
Production Volumes
Oil Sands – upgraded – net SCO and diesel (mbbls/d)
Oil Sands operations 301.6 303.1 313.3 280.3 317.7
Syncrude 167.0 163.1 172.3 144.2 134.3
Total Oil Sands – upgraded – net SCO and diesel
production 468.6 466.2 485.6 424.5 452.0
Oil Sands – non-upgraded bitumen (mbbls/d)
Oil Sands operations 124.9 69.1 99.5 138.0 111.7
Fort Hills 50.7 58.1 85.3 66.1 —
Total Oil Sands – non-upgraded bitumen production 175.6 127.2 184.8 204.1 111.7
Total Oil Sands production volumes (mbbls/d) 644.2 593.4 670.4 628.6 563.7
Oil Sands Sales Volumes (mbbls/d)
Upgraded – net SCO and diesel 465.7 467.9 483.6 431.7 453.3
Non-upgraded bitumen 183.8 125.6 187.5 191.3 110.6
Total Oil Sands sales volumes 649.5 593.5 671.1 623.0 563.9
(1)(B)
Oil Sands operations cash operating costs ($ millions)
Cash costs 3 603 3 571 3 993 3 657 3 444
Natural gas 554 363 274 215 286
4 157 3 934 4 267 3 872 3 730
Oil Sands operations cash operating costs(1)(B) ($/bbl)*
Cash costs 22.45 25.60 26.35 23.85 21.95
Natural gas 3.45 2.60 1.85 1.40 1.85
25.90 28.20 28.20 25.25 23.80
(1)(B)
Fort Hills cash operating costs ($ millions)
Cash costs 706 657 778 738 —
Natural gas 58 41 37 29 —
764 698 815 767 —
Fort Hills cash operating costs(1)(B) ($/bbl)*
Cash costs 38.20 30.90 24.95 30.00 —
Natural gas 3.15 1.90 1.20 1.20 —
41.35 32.80 26.15 31.20 —
(1)(B)
Syncrude cash operating costs ($ millions)
Cash costs 2 111 1 974 2 242 2 347 2 044
Natural gas 104 76 69 82 66
2 215 2 050 2 311 2 429 2 110
Syncrude cash operating costs(1)(B) ($/bbl)*
Cash costs 33.55 32.55 35.65 44.60 41.70
Natural gas 1.65 1.25 1.10 1.55 1.35
35.20 33.80 36.75 46.15 43.05
(A) Beginning in 2020, the company revised the presentation of its production volumes to aggregate production from each asset into the categories
of “Upgraded production” and “Non-upgraded bitumen production” to better reflect the integration among the company’s assets with no impact to
overall production volumes. Comparative periods have been updated to reflect this change.
(B) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary
Information – Non-GAAP Financial Measures section of this Annual Report.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 143

Five-Year Operating Summary (continued)
(unaudited)

Oil Sands Segment Operating Netbacks(A)(B)(C) 2021 2020 2019 2018 2017

Bitumen ($/bbl)
Average price realized 59.16 28.44 52.05 37.10 38.32
Royalties (5.53) (0.32) (1.70) (1.70) (0.71)
Transportation costs (5.36) (6.07) (6.34) (4.43) (4.85)
Net operating expenses (17.13) (20.14) (15.88) (14.42) (9.59)
Operating netback 31.14 1.91 28.13 16.55 23.17
SCO and diesel ($/bbl)
Average price realized 82.24 48.19 75.43 73.23 65.67
Royalties (6.75) (0.45) (4.49) (1.77) (1.98)
Transportation costs (4.51) (4.36) (4.75) (4.91) (2.84)
Net operating expenses (30.16) (29.45) (30.76) (34.81) (30.03)
Operating netback 40.82 13.93 35.43 31.74 30.82
Average Oil Sands segment ($/bbl)
Average price realized 75.71 44.01 68.89 62.13 60.30
Royalties (6.41) (0.44) (3.74) (1.75) (1.72)
Transportation costs (4.75) (4.72) (5.19) (4.76) (3.23)
Net operating expenses (26.48) (27.48) (26.61) (28.55) (26.03)
Operating netback 38.07 11.37 33.35 27.07 29.32
(A) Contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP Financial
Measures section of this Annual Report.
(B) Beginning in 2020, due to increasing integration of the company’s assets, the company revised the presentation of its operating netbacks from an
individual asset view to an aggregate product view of bitumen, SCO and diesel to better reflect the integration among the company’s assets. Prior
period amounts have been restated to reflect this change. Also, the company leverages the expertise of its marketing and logistics business to
optimize midstream capacity to the U.S. Gulf Coast and this is reflected in bitumen price realizations. 2018 and 2019 amounts have been restated
to reflect this change while 2017 amounts have not been restated as the impact of this change is considered immaterial for those comparative
periods.
(C) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

144 Annual Report 2021 Suncor Energy Inc.

Five-Year Operating Summary (continued)
(unaudited)

Exploration and Production 2021 2020 2019 2018 2017

(B)
Production Volumes
E&P Canada (mbbs/d) 54.4 59.7 59.9 53.9 53.7
E&P International (mboe/d) 33.1 42.0 46.9 49.5 67.9
Total production volumes (mboe/d) 87.5 101.7 106.8 103.4 121.6
Total sales volumes (mboe/d) 82.8 102.6 106.0 102.8 120.8
(A)(C)(D)
Operating Netbacks
E&P Canada ($/bbl)
Average price realized 87.04 52.62 86.62 90.04 71.06
Royalties (12.20) (4.30) (13.62) (13.31) (14.26)
Transportation costs (2.34) (2.93) (1.76) (2.22) (1.90)
Operating costs (11.74) (12.23) (13.45) (14.43) (11.24)
Operating netback 60.76 33.16 57.79 60.08 43.66
E&P International (excluding Libya) ($/boe)
Average price realized 84.76 52.51 83.73 89.10 67.25
Transportation costs (2.60) (2.23) (2.51) (2.18) (1.81)
Operating costs (10.40) (7.06) (6.45) (6.27) (4.62)
Operating netback 71.76 43.22 74.77 80.65 60.82
(A) Contains non-GAAP financial measures. See the Annual Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP
Financial Measures section of this Annual Report.
(B) Beginning in 2020, the company revised the presentation of its production volumes to aggregate production from each asset into the categories
of Exploration and Production Canada and Exploration and Production International to simplify the presentation. Comparative periods have been
updated to reflect this change.
(C) Beginning in 2019, operating netback includes Norway and all the prior periods presented exclude Norway.
(D) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 145

Five-Year Operating Summary (continued)
(unaudited)

Refining and Marketing 2021 2020 2019 2018 2017

Refined product sales (mbbls/d) 528.4 503.4 539.4 527.4 530.5
Crude oil processed (mbbls/d) 415.5 407.0 438.9 430.8 441.2
Rack forward sales volume (ML) 20 430 19 503 21 220 20 904 19 890
Utilization of refining capacity (%)(E) 89 88 95 93 96
Refining and marketing margin – first-in,
first-out (FIFO)(A)(B) ($/bbl) 36.85 25.30 40.45 42.80 33.80
Refining and marketing margin – last-in,
first-out (LIFO)(A)(B) ($/bbl) 30.90 28.65 36.80 46.60 32.95
Rack forward gross margin (cpl)(A)(C) 7.10 7.10 4.90 6.10 6.10
(A)
Refining operating expense ($/bbl) 5.95 5.50 5.35 5.35 5.05
Rack forward operating expense (cpl)(A)(C) 2.90 2.95 3.00 3.10 3.05
Eastern North America
Refined product sales (mbbls/d)
Transportation fuels
Gasoline 110.2 103.6 119.8 117.8 117.5
Distillate(D) 94.7 91.9 102.9 95.8 86.8
Total transportation fuel sales 204.9 195.5 222.7 213.6 204.3
Petrochemicals 12.4 9.1 10.6 11.3 12.2
Asphalt 17.9 14.9 16.1 15.5 16.8
Other 21.0 23.5 22.1 26.0 33.4
Total refined product sales 256.2 243.0 271.5 266.4 266.7
Crude oil supply and refining
Processed at refineries (mbbls/d) 202.8 201.0 203.3 208.1 206.4
Utilization of refining capacity (%) 91 91 92 94 93
Western North America
Refined product sales (mbbls/d)
Transportation fuels
Gasoline 115.6 110.5 126.8 127.8 125.4
Distillate(D) 133.8 123.8 115.2 107.6 112.5
Total transportation fuel sales 249.4 234.3 242.0 235.4 237.9
Asphalt 9.7 12.6 12.1 13.3 12.3
Other 13.1 13.5 13.8 12.3 13.6
Total refined product sales 272.2 260.4 267.9 261.0 263.8
Crude oil supply and refining
Processed at refineries (mbbls/d) 212.7 206.0 235.6 222.7 234.8
Utilization of refining capacity (%)(E) 87 86 98 93 98
Retail outlets 1,804 1,800 1,786 1,766 1,749
(A) Contains non-GAAP financial measures. See the Operating Metrics Reconciliation and the Operating Summary Information – Non-GAAP Financial
Measures section of this Annual Report.
(B) In 2020, refining and marketing margin was restated for prior periods to better reflect the refining, product supply and rack forward businesses.
(C) In 2021, the company began disclosing refinery rack forward margin and operating expenses to increase transparency into Suncor’s integrated
model and aligns with how management evaluates the performance of the business. Rack forward encompasses Suncor’s retail and wholesale
business. As an integrated oil and gas company, transfer prices are used to attribute margin to the value chain. The company’s transfer prices
affecting the refining, supply and rack forward businesses employ replacement cost methodology, which may differ from those subject to supply
agreements negotiated by independent market participants. Rack forward margins may include any incremental location differentials above
replacement supply cost, as well as the applicable retail and wholesale channel margins generated within those markets.
(D) Beginning in 2020, to better reflect the increasing integration of the company’s assets, the company revised the presentation of its refined product
sales volumes to include Oil Sands diesel that is purchased and marketed by the Refining and Marketing segment.
(E) The Edmonton refinery crude processing capacity has increased to 146,000 bbls/d in 2021 from 142,000 bbls/d in 2020.

See accompanying footnotes and definitions to the operating summaries.

146 Annual Report 2021 Suncor Energy Inc.

Operating Metrics Reconciliation
(unaudited)

Oil Sands Operating Netbacks(A)(B)

($ millions, except per barrel amounts)

December 31, 2021 September 30, 2021

SCO and Oil Sands SCO and Oil Sands
For the quarter ended Bitumen Diesel Segment Bitumen Diesel Segment

Operating revenues, net of royalties 1 344 3 971 5 315 1 478 2 995 4 473
Add: royalties 155 486 641 145 359 504
Operating revenues 1 499 4 457 5 956 1 623 3 354 4 977
Other income 7 4 11 1 75 76
Purchases of crude oil and products (320) (87) (407) (387) (55) (442)
(2)
Gross realization adjustment (88) (92) (65) (109)
Gross realizations 1 098 4 282 1 172 3 265
Royalties (155) (486) (641) (145) (359) (504)
Transportation and distribution (88) (205) (293) (100) (177) (277)
Operating, selling and general (434) (1 700) (2 134) (422) (1 582) (2 004)
Operating, selling and general adjustment(4) 94 361 99 294
Net operating expenses (340) (1 339) (323) (1 288)
Operating netback 515 2 252 604 1 441
Sales volumes (mbbls) 16 260 45 644 17 888 38 507
Operating netback per barrel 31.63 49.40 33.82 37.44

June 30, 2021 March 31, 2021

SCO and Oil Sands SCO and Oil Sands
For the quarter ended Bitumen Diesel Segment Bitumen Diesel Segment

Operating revenues, net of royalties 1 280 3 136 4 416 990 3 203 4 193
Add: royalties 62 158 220 14 144 158
Operating revenues 1 342 3 294 4 636 1 004 3 347 4 351
Other (loss) income (71) (8) (79) 7 (9) (2)
Purchases of crude oil and products (321) (24) (345) (203) (47) (250)
(2)
Gross realization adjustment (22) (50) (35) (74)
Gross realizations 928 3 212 773 3 217
Royalties (62) (158) (220) (14) (144) (158)
Transportation (89) (191) (280) (82) (194) (276)
OS&G (360) (1 585) (1 945) (325) (1 648) (1 973)
OS&G adjustment(4) 101 317 100 413
Net operating expenses (259) (1 268) (225) (1 235)
Operating netback 518 1 595 452 1 644
Sales volumes (mbbls) 16 700 39 489 16 246 46 343
Operating netback per barrel 31.00 40.45 27.82 35.48
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 147

Operating Metrics Reconciliation (continued)
(unaudited)

Oil Sands Operating Netbacks(A)(B)

($ millions, except per barrel amounts)

December 31, 2020 September 30, 2020

SCO and Oil Sands SCO and Oil Sands
For the quarter ended Bitumen Diesel Segment Bitumen Diesel Segment
Operating revenues, net of royalties 634 2 429 3 063 523 2 008 2 531
Add: royalties 4 14 18 4 32 36
Operating revenues 638 2 443 3 081 527 2 040 2 567
Other (loss) income (9) (4) (13) 23 17 40
Purchases of crude oil and products (128) (47) (175) (143) (28) (171)
Gross realization adjustment(2) (63) (51) (83) (69)
Gross realizations 438 2 341 324 1 960
Royalties (4) (14) (18) (4) (32) (36)
Royalties adjustment(5) 1 — — —
Royalties (3) (14) (4) (32)
Transportation (256) (170) (426) (61) (175) (236)
Transportation adjustment(3) 189 — 3 —
Net transportation expenses (67) (170) (58) (175)
OS&G (261) (1 478) (1 739) (190) (1 460) (1 650)
OS&G adjustment(4) 6 250 (5) 243
Net operating expenses (255) (1 228) (195) (1 217)
Operating netback 113 929 67 536
Sales volumes (mbbls) 12 837 45 601 10 949 38 646
Operating netback per barrel 8.81 20.34 6.07 13.87

June 30, 2020 March 31, 2020

SCO and Oil Sands SCO and Oil Sands
For the quarter ended Bitumen Diesel Segment Bitumen Diesel Segment
Operating revenues, net of royalties 338 1 298 1 636 529 2 763 3 292
Add: royalties 2 14 16 9 16 25
Operating revenues 340 1 312 1 652 538 2 779 3 317
Other (loss) income (19) 42 23 26 222 248
Purchases of crude oil and products (69) (22) (91) (362) (45) (407)
Gross realization adjustment(2) (34) (65) 126 (273)
Gross realizations 218 1 267 328 2 683
Royalties (2) (14) (16) (9) (16) (25)
Royalties adjustment(5) — — 3 —
Net royalties (2) (14) (6) (16)
Transportation (73) (199) (272) (86) (203) (289)
Transportation adjustment(3) 2 — 3 —
Net transportation expenses (71) (199) (83) (203)
OS&G (194) (1 334) (1 528) (384) (1 868) (2 252)
OS&G adjustment(4) (28) 141 130 465
Net operating expenses (222) (1 193) (254) (1 403)
Operating netback (77) (139) (15) 1 061
Sales volumes (mbbls) 10 589 40 326 11 605 46 638
Operating netback per barrel (7.22) (3.45) (1.32) 22.73
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

148 Annual Report 2021 Suncor Energy Inc.

Operating Metrics Reconciliation (continued)
(unaudited)

Oil Sands Netbacks(A)(B)(C)

($ millions, except per barrel amounts)
December 31, 2021 December 31, 2020
SCO and Oil Sands SCO and Oil Sands
For the year ended Bitumen Diesel Segment Bitumen Diesel Segment

Operating revenues, net of royalties 5 092 13 305 18 397 2 024 8 498 10 522
Add: royalties 376 1147 1 523 19 76 95
Operating revenues 5 468 14 452 19 920 2 043 8 574 10 617
Other income (loss) (56) 62 6 21 277 298
Purchases of crude oil and products (1 231) (213) (1 444) (702) (142) (844)
Gross realization adjustment(2) (210) (325) (54) (458)
Gross realizations 3 971 13 976 1 308 8 251
Royalties (376) (1 147) (1 523) (19) (76) (95)
Royalties adjustment(5) — — 4 —
Net royalties (376) (1 147) (15) (76)
Transportation (359) (767) (1 126) (476) (747) (1 223)
Transportation adjustment(3) — — 197 —
Net transportation expenses (359) (767) (279) (747)
OS&G (1 541) (6 515) (8 056) (1 029) (6 140) (7 169)
OS&G adjustment(4) 394 1 385 103 1 099
Net operating expenses (1 147) (5 130) (926) (5 041)
Operating netback 2 089 6 932 88 2 387
Sales volumes (mbbls) 67 094 169 983 45 980 171 211
Operating netback per barrel 31.14 40.82 1.91 13.93
December 31, 2019 December 31, 2018
SCO and Oil Sands SCO and Oil Sands
For the year ended Bitumen Diesel Segment Bitumen Diesel Segment

Operating revenues, net of royalties 4 656 12 774 17 430 3 965 11 380 15 345
Add: royalties 124 793 917 119 279 398
Operating revenues 4 780 13 567 18 347 4 084 11 659 15 743
Other income (38) 210 172 95 292 387
Purchases of crude oil and products (1 164) (243) (1 407) (1 448) (115) (1 563)
Gross realization adjustment(2) (14) (219) (140) (303)
Gross realizations 3 564 13 315 2 591 11 533
Royalties (124) (793) (917) (119) (279) (398)
Royalties adjustment(5) 8 — — —
Net royalties (116) (793) (119) (279)
Transportation (449) (844) (1 293) (396) (748) (1 144)
Transportation adjustment(3) 15 7 87 (25)
Net transportation expenses (434) (837) (309) (773)
OS&G (1 242) (6 785) (8 027) (1 264) (6 313) (7 577)
OS&G adjustment(4) 157 1 355 257 830
Net operating expenses (1 085) (5 430) (1 007) (5 483)
Operating netback 1 929 6 255 1 156 4 998
Sales volumes (mbbls) 68 430 176 494 69 830 157 499
Operating netback per barrel 28.13 35.43 16.55 31.74
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Beginning in 2020, due to increasing integration of the company’s assets, the company revised the presentation of its operating netbacks from an
individual asset view to an aggregate product view of bitumen, and SCO and diesel to better reflect the integration among the company’s assets. Prior
period amounts have been restated to reflect this change. Also, the company leverages the expertise of its marketing and logistics business to optimize
midstream capacity to the U.S. Gulf Coast and this is reflected in bitumen price realizations. 2018 and 2019 amounts have been restated to reflect this
change while 2017 amounts have not been restated as the impact of this change is considered immaterial for those comparative periods.
(C) Netbacks are based on sales volumes.
See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 149

Operating Metrics Reconciliation (continued)
(unaudited)

Oil Sands Netbacks(A)(B)(C)

($ millions, except per barrel amounts)

December 31, 2017

SCO and Oil Sands
For the year ended Bitumen Diesel Segment
Operating revenues, net of royalties 2 003 10 916 12 919
Add: royalties 28 327 355
Operating revenues 2 031 11 243 13 274
Other income 9 67 76
Purchases of crude oil and products (458) (165) (623)
Gross realization adjustment(2) (36) (278)
Gross realizations 1 546 10 867
Royalties (28) (327) (355)
Transportation (202) (625) (827)
Transportation adjustment(3) 7 155
Net transportation expenses (195) (470)
OS&G (484) (5 778) (6 262)
OS&G adjustment(4) 96 809
Net operating expenses (388) (4 969)
Operating netback 935 5 101
Sales volumes (mbbls) 40 365 165 473
Operating netback per barrel 23.17 30.82
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Beginning in 2020, due to increasing integration of the company’s assets, the company revised the presentation of its operating netbacks from an
individual asset view to an aggregate product view of bitumen, and SCO and diesel to better reflect the integration among the company’s assets. Prior
period amounts have been restated to reflect this change. Also, the company leverages the expertise of its marketing and logistics business to
optimize midstream capacity to the U.S. Gulf Coast and this is reflected in bitumen price realizations. 2018 and 2019 amounts have been restated
to reflect this change while 2017 amounts have not been restated as the impact of this change is considered immaterial for those comparative
periods.
(C) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

150 Annual Report 2021 Suncor Energy Inc.

Operating Metrics Reconciliation (continued)
(unaudited)

Exploration and Production Operating Netbacks(A)(B)

($ millions, except per barrel amounts)

December 31, 2021 December 31, 2020

E&P E&P E&P E&P E&P E&P
For the quarter ended International Canada Other(6) Segment International Canada Other(6) Segment

Operating revenues, net of royalties 215 324 92 631 193 263 14 470
Add: royalties — 54 53 107 — 36 49 85
Operating revenues 215 378 145 738 193 299 63 555
Royalties — (54) (53) (107) — (36) (49) (85)
Transportation (6) (11) — (17) (7) (12) (1) (20)
OS&G (28) (61) (7) (96) (32) (71) (11) (114)
(7)
Non-production costs 8 11 5 6
Operating netback 189 263 159 186
Sales volumes (mboe) 2 111 3 724 3 511 5 294
Operating netback per barrel 89.95 70.41 45.32 35.21

September 30, 2021 September 30, 2020

E&P E&P E&P E&P E&P E&P
For the quarter ended International Canada Other(6) Segment International Canada Other(6) Segment

Operating revenues, net of royalties 185 372 78 635 201 281 — 482
Add: royalties — 55 54 109 — 30 — 30
Operating revenues 185 427 132 744 201 311 — 512
Royalties — (55) (54) (109) — (30) — (30)
Transportation (8) (13) (2) (23) (9) (15) — (24)
OS&G (29) (66) (6) (101) (33) (77) (8) (118)
(7)
Non-production costs 7 9 7 8
Operating netback 155 302 166 197
Sales volumes (mboe) 2 058 4 613 3 552 5 281
Operating netback per barrel 74.99 65.48 46.77 37.28
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 151

Operating Metrics Reconciliation (continued)
(unaudited)

Exploration and Production Operating Netbacks(A)(B)

($ millions, except per barrel amounts)

June 30, 2021 June 30, 2020

E&P E&P E&P E&P E&P E&P
For the quarter ended International Canada Other(6) Segment International Canada Other(6) Segment

Operating revenues, net of royalties 211 434 43 688 133 154 — 287
Add: royalties — 84 134 218 — 6 — 6
Operating revenues 211 518 177 906 133 160 — 293
Royalties — (84) (134) (218) — (6) — (6)
Transportation (4) (10) (6) (20) (7) (26) — (33)
OS&G (43) (75) (4) (122) (34) (68) (9) (111)
(7)
Non-production costs 8 11 5 7
Operating netback 172 360 97 67
Sales volumes (mboe) 2 619 6 301 4 086 5 803
Operating netback per barrel 65.62 57.12 23.79 11.51

March 31, 2021 March 31, 2020

E&P E&P E&P E&P E&P E&P
For the quarter ended International Canada Other(6) Segment International Canada Other(6) Segment

Operating revenues, net of royalties 204 317 25 546 282 360 (125) 517
Add: royalties — 44 — 44 — 22 — 22
Operating revenues 204 361 25 590 282 382 (125) 539
Royalties — (44) — (44) — (22) — (22)
Transportation (7) (10) (35) (52) (11) (12) — (23)
OS&G (33) (66) (11) (110) (32) (85) (16) (133)
(7)
Non-production costs 10 12 4 12
Operating netback 174 253 243 275
Sales volumes (mboe) 2 828 4 748 4 257 5 501
Operating netback per barrel 61.46 53.40 57.16 50.08
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

152 Annual Report 2021 Suncor Energy Inc.

Operating Metrics Reconciliation (continued)
(unaudited)

Exploration and Production Operating Netbacks(A)(B)(C)

($ millions, except per barrel amounts)

December 31, 2021 December 31, 2020

E&P E&P E&P E&P E&P E&P
For the year ended International(B) Canada Other(6) Segment International(B) Canada Other(6) Segment
Operating revenues,
net of royalties 815 1 447 238 2 500 809 1 058 (111) 1 756
Add: royalties — 237 241 478 — 94 49 143
Operating revenues 815 1 684 479 2 978 809 1 152 (62) 1 899
Royalties — (237) (241) (478) — (94) (49) (143)
Transportation (25) (44) (43) (112) (34) (65) (1) (100)
OS&G (133) (268) (28) (429) (131) (301) (44) (476)
Non-production costs(7) 33 43 21 33
Operating netback 690 1 178 665 725
Sales volumes (mboe) 9 616 19 386 15 406 21 879
Operating netback per barrel 71.76 60.76 43.22 33.16

December 31, 2019 December 31, 2018

E&P E&P E&P E&P E&P E&P
For the year ended International(B) Canada Other(6) Segment International(B) Canada Other(6) Segment
Operating revenues,
net of royalties 1 309 1 621 140 3 070 1 515 1 479 223 3 217
Add: royalties — 302 303 605 — 257 395 652
Operating revenues 1 309 1 923 443 3 675 1 515 1 736 618 3 869
Royalties — (302) (303) (605) — (257) (395) (652)
Transportation (35) (39) (6) (80) (37) (43) (5) (85)
OS&G (120) (346) (59) (525) (129) (328) (50) (507)
Non-production costs(7) 19 46 23 50
Operating netback 1 173 1 282 1 372 1 158
Sales volumes (mboe) 15 650 22 190 17 006 19 283
Operating netback per barrel 74.77 57.79 80.65 60.08

December 31, 2017

E&P E&P E&P
For the year ended International(B) Canada Other(6) Segment
Operating revenues, net of royalties 1 557 1 057 297 2 911
Add: royalties — 266 310 576
Operating revenues 1 557 1 323 607 3 487
Royalties — (266) (310) (576)
Transportation (42) (35) (9) (86)
OS&G (127) (248) (52) (427)
Non-production costs(7) 20 39
Operating netback 1 408 813
Sales volumes (mboe) 23 157 18 623
Operating netback per barrel 60.82 43.66
(A) Non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures section of this Annual Report.
(B) Beginning in 2019, international operating netback includes Norway and all the prior periods presented exclude Norway.
(C) Netbacks are based on sales volumes.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 153

Operating Metrics Reconciliation (continued)
(unaudited)

Refining and Marketing

($ millions, except per barrel amounts)

For the quarter ended

Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31
Refining and marketing gross margin reconciliation 2021 2021 2021 2021 2020 2020 2020 2020

Operating revenues 5 013 4 938 6 341 6 623 4 587 2 759 4 050 3 876
Purchases of crude oil and products (3 275) (3 712) (4 710) (5 110) (3 958) (1 701) (2 840) (2 744)
1 738 1 226 1 631 1 513 629 1 058 1 210 1 132
Other (loss) income (45) 6 (9) (2) 86 (26) (2) (10)
(8)
Non-refining and marketing margin (13) (14) (13) (14) 283 (312) (14) (14)
(A)
Refining and marketing gross margin – FIFO 1 680 1 218 1 609 1 497 998 720 1 194 1 108
Refinery production (mbbls)(9) 41 211 32 050 45 026 44 575 42 729 34 369 38 857 43 036
Refining and marketing gross margin – FIFO ($/bbl)(A) 40.75 38.00 35.75 33.60 23.35 20.95 30.75 25.75
FIFO and short-term risk management
activities adjustment(B) (432) (288) (91) (161) 524 261 (223) (30)
(A)
Refining and marketing gross margin – LIFO 1 248 930 1 518 1 336 1 522 981 971 1 078
Refining and marketing gross margin – LIFO ($/bbl)(A)(B)(C) 30.30 29.05 33.80 30.00 35.60 28.55 25.00 25.05

Rack forward gross margin(D)

Refining and marketing gross margin – FIFO(A) 1 680 1 218 1 609 1 497 998 720 1 194 1 108
Refining and supply gross margin (1 351) (820) (1 225) (1 154) (697) (413) (796) (728)
Rack forward gross margin(A)(10) 329 398 384 343 301 307 398 380
Sales volume (ML) 4 866 4 791 5 414 5 359 5 136 4 164 5 285 4 918
(A)
Rack forward gross margin (cpl) 6.75 8.30 7.10 6.40 5.85 7.35 7.50 7.70

Refining and rack forward operating expense reconciliation

Operating, selling and general(E) 479 472 502 566 480 390 417 472
(A)(D)(11)
Less: Rack forward operating expense A 136 148 151 159 150 131 143 148
(12)
Less: Other operating expenses 106 111 105 135 89 60 64 100
Refining operating expense(A) B 237 213 246 272 241 199 210 224
Refinery production (mbbls)(9) C 41 211 32 050 45 026 44 575 42 729 34 369 38 857 43 036
(A)
Refining operating expense ($/bbl) B/C 5.75 6.65 5.45 6.10 5.65 5.80 5.40 5.20
Sales volume (ML) D 4 866 4 791 5 414 5 359 5,136 4,164 5 285 4,918
Rack forward operating expense (cpl)(A)(D) A/D 2.80 3.10 2.80 2.95 2.90 3.15 2.70 3.00
(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures
section of this Annual Report.
(B) Refining and marketing margin – LIFO excludes the impact of short-term risk management activities.
(C) The Suncor 5-2-2-1 index is most comparable to the company’s realized refining and marketing margin presented on a LIFO basis.
(D) In Q2 2021, the company began disclosing refinery rack forward margin and operating expenses to increase transparency into Suncor’s integrated
model and aligns with how management evaluates the performance of the business. Rack forward encompasses Suncor’s retail and wholesale
business. As an integrated oil and gas company, transfer prices are used to attribute margin to the value chain. The company’s transfer prices
affecting the refining, supply and rack forward businesses employ replacement cost methodology, which may differ from those subject to supply
agreements negotiated by independent market participants. Rack forward margins may include any incremental location differentials above
replacement supply cost, as well as the applicable retail and wholesale channel margins generated within those markets.
(E) Prior period amounts of operating, selling and general expense have been reclassified to align with the current year presentation of transportation
and distribution expense. This reclassification had no effect on the refining operating expense.

See accompanying footnotes and definitions to the operating summaries.

154 Annual Report 2021 Suncor Energy Inc.

Operating Metrics Reconciliation (continued)
(unaudited)

Refining and Marketing

($ millions, except per barrel amounts)

For the year ended

Refining and marketing gross margin reconciliation 2021 2020 2019 2018 2017

Operating revenues 22 915 15 272 22 304 23 778 19 755

Purchases of crude oil and products (16 807) (11 243) (15 296) (16 656) (14 011)
6 108 4 029 7 008 7 122 5 744
Other (loss) income (50) 48 75 68 16
(8)
Non-refining and marketing margin (54) (57) (60) 48 136
Refining and marketing gross margin – FIFO(A)(B) 6 004 4 020 7 023 7 238 5 896
Refinery production (mbbls)(9) 162 862 158 991 173 705 169 138 174 461
(A)(B)
Refining and marketing gross margin – FIFO ($/bbl) 36.85 25.30 40.45 42.80 33.80
(C)
FIFO and short-term risk management activities adjustment (972) 532 (628) 644 (148)
(A)(B)
Refining and marketing gross margin – LIFO 5 032 4 552 6 395 7 882 5 748
(A)(B)(C)(D)
Refining and marketing gross margin – LIFO ($/bbl) 30.90 28.65 36.80 46.60 32.95

Rack forward gross margin(E)

Refining and marketing gross margin – FIFO(A) 6 004 4 020 7 023 7 238 5 896
Refining and supply gross margin (4 550) (2 634) (5 982) (5 958) (4 679)
(A)(10)
Rack forward gross margin 1 454 1 386 1 041 1 280 1 217
Sales volume (ML) 20 430 19 503 21 220 20 904 19 890
(A)
Rack forward gross margin (cpl) 7.10 7.10 4.90 6.10 6.10

Refining and rack forward operating expense reconciliation

Operating, selling and general(F) 2 019 1 759 2 035 1 834 1 865
(A)(E)(11)
Less: Rack forward operating expense 594 572 633 627 607
(12)
Less: Other operating expenses 457 313 475 305 377
(A)
Refining operating expense 968 874 927 902 881
Refinery production (mbbls)(9) 162 862 158 991 173 705 169 138 174 461
Refining operating expense ($/bbl)(A) 5.95 5.50 5.35 5.35 5.05
Sales volume (ML) 20 430 19 503 21 220 20 904 19 890
(A)(E)
Rack forward operating expense (cpl) 2.90 2.95 3.00 3.10 3.05
(A) Non-GAAP financial measures or contains non-GAAP financial measures. See the Operating Summary Information – Non-GAAP Financial Measures
section of this Annual Report.
(B) In 2020, refining and marketing margin was restated for prior periods to better reflect the refining, product supply and rack forward businesses.
Impact of inventory write-down is excluded until product is sold.
(C) Refining and marketing margin – LIFO excludes the impact of short-term risk management activities.
(D) The Suncor 5-2-2-1 index is most comparable to the company’s realized refining and marketing margin presented on a LIFO basis.
(E) In Q22021, the company began disclosing refinery rack forward margin and operating expenses to increase transparency into Suncor’s integrated
model and aligns with how management evaluates the performance of the business. Rack forward encompasses Suncor’s retail and wholesale
business. As an integrated oil and gas company, transfer prices are used to attribute margin to the value chain. The company’s transfer prices
affecting the refining, supply and rack forward businesses employ replacement cost methodology, which may differ from those subject to supply
agreements negotiated by independent market participants. Rack forward margins may include any incremental location differentials above
replacement supply cost, as well as the applicable retail and wholesale channel margins generated within those markets.
(F) Prior period amounts of operating, selling and general expense have been reclassified to align with the current year presentation of transportation
and distribution expense. This reclassification had no effect on the refining operating expense.

See accompanying footnotes and definitions to the operating summaries.

Annual Report 2021 Suncor Energy Inc. 155

Operating Metrics Reconciliation (continued)
(unaudited)

Refining and Marketing

Suncor custom 5-2-2-1 index(13)

Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31

(average for the quarter ended) 2021 2021 2021 2021 2020 2020 2020 2020
WTI crude oil at Cushing (US$/bbl) 57.80 66.05 70.55 77.15 46.10 27.85 40.95 42.65
SYN crude oil at Edmonton (US$/bbl) 54.30 66.40 68.95 75.35 43.40 23.30 38.50 39.60
WCS at Hardisty (US$/bbl) 45.40 54.60 56.95 62.50 25.60 16.35 31.90 33.35
New York Harbor 2-1-1 crack (US$/bbl)(A) 15.60 20.35 20.90 20.65 14.75 12.20 10.20 9.85
Chicago 2-1-1 crack (US$/bbl)(A) 13.40 20.25 20.45 16.90 9.75 6.75 7.75 7.95

Product value (US$/bbl)

New York Harbor 2-1-1 crack(B) 40% 29.35 34.55 36.60 39.10 24.35 16.00 20.45 21.00
Chicago 2-1-1 crack(C) 40% 28.50 34.50 36.40 37.60 22.35 13.85 19.50 20.25
WTI 20% 11.55 13.20 14.10 15.45 9.20 5.55 8.20 8.55
Seasonality factor 6.50 5.00 5.00 6.50 6.50 5.00 5.00 6.50
75.90 87.25 92.10 98.65 62.40 40.40 53.15 56.30

Crude value (US$/bbl)

SYN 40% 21.70 26.55 27.60 30.15 17.35 9.30 15.40 15.85
WCS 40% 18.15 21.85 22.80 25.00 10.25 6.55 12.75 13.35
WTI 20% 11.55 13.20 14.10 15.45 9.20 5.55 8.20 8.55
51.40 61.60 64.50 70.60 36.80 21.40 36.35 37.75
Suncor custom 5-2-2-1 index (US$/bbl) 24.50 25.65 27.60 28.05 25.60 19.00 16.80 18.55
Suncor custom 5-2-2-1 index (Cdn$/bbl)(D) 31.05 31.50 34.80 35.35 34.40 26.35 22.35 24.50

(average for the year ended) 2021 2020 2019 2018 2017
WTI crude oil at Cushing (US$/bbl) 67.95 39.40 57.05 64.80 50.95
SYN crude oil at Edmonton (US$/bbl) 66.30 36.25 56.45 58.60 49.68
WCS at Hardisty (US$/bbl) 54.90 26.85 44.25 38.50 38.95
New York Harbor 2-1-1 crack (US$/bbl)(A) 19.40 11.75 19.90 19.40 18.20
(A)
Chicago 2-1-1 crack (US$/bbl) 17.75 8.05 17.05 17.35 16.80

Product value (US$/bbl)

New York Harbor 2-1-1 crack(B) 40% 34.95 20.45 30.80 33.70 27.65
(C)
Chicago 2-1-1 crack 40% 34.30 19.00 29.65 32.85 27.10
WTI 20% 13.60 7.90 11.40 12.95 10.20
Seasonality factor 5.75 5.75 5.75 5.75 5.75
88.60 53.10 77.60 85.25 70.70

Crude value (US$/bbl)

SYN 40% 26.50 14.50 22.60 23.45 19.85
WCS 40% 21.95 10.75 17.70 15.40 15.60
WTI 20% 13.60 7.90 11.40 12.95 10.20
62.05 33.15 51.70 51.80 45.65
Suncor custom 5-2-2-1 index (US$/bbl) 26.55 19.95 25.90 33.45 25.05
Suncor custom 5-2-2-1 index (Cdn$/bbl)(D) 33.30 26.75 34.35 43.35 32.50
(A) 2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of diesel.
(B) Product value of the New York Harbor 2-1-1 crack is calculated by adding the values of the New York Harbor 2-1-1 crack and WTI, multiplying it by
40% and rounding to the nearest nickel.
(C) Product value of the Chicago 2-1-1 crack is calculated by adding the values of the Chicago 2-1-1 crack and WTI, multiplying it by 40% and rounding
to the nearest nickel.
(D) The Suncor 5-2-2-1 index is most comparable to the company’s realized refining and marketing margins presented on a LIFO basis.

See accompanying footnotes and definitions to the quarterly operating summaries.

156 Annual Report 2021 Suncor Energy Inc.

Operating Summary Information

Non-GAAP Financial Measures

Certain financial measures in this Supplemental Financial and Operating Information – namely adjusted operating earnings (loss), adjusted funds
from (used in) operations (previously referred to as cash flow from (used in) operations), metrics contained in return on capital employed (ROCE) and
ROCE excluding impairments, Oil Sands operations cash operating costs (previously referred to as Oil Sands cash operating costs), Syncrude cash
operating costs, Fort Hills cash operating costs, refining and marketing gross margin, rack forward gross margin, refining operating expense, rack
forward operating expense, net debt, total debt and netbacks – are not prescribed by generally accepted accounting principles (GAAP). Suncor
uses this information to analyze business performance, leverage and liquidity and includes these financial measures because investors may find
such measures useful on the same basis. These non-GAAP financial measures do not have any standardized meaning and, therefore, are unlikely to
be comparable to similar measures presented by other companies. The additional information should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.

Adjusted operating earnings (loss), Oil Sands operations cash operating costs, Fort Hills cash operating costs and Syncrude cash operating costs
for each quarter in 2021 and 2020 are defined in the Non-GAAP Financial Measures Advisory section and reconciled to the most directly comparable
GAAP measures in the Consolidated Financial Information and Segment Results and Analysis sections of each respective quarterly Report to
Shareholders in respect of the relevant quarter (Quarterly Reports). Adjusted funds from (used in) operations, metrics contained in ROCE and ROCE
excluding impairments, net debt and total debt for each quarter in 2021 and 2020 are defined and reconciled to the most directly comparable
GAAP measures in the Non-GAAP Financial Measures Advisory section of each respective Quarterly Report. Adjusted operating earnings (loss),
adjusted funds from (used in) operations, metrics contained in ROCE and ROCE excluding impairments, Oil Sands operations cash operating costs,
Syncrude cash operating costs, Fort Hills cash operating costs, refining and marketing gross margin, refining operating expense, net debt and
total debt for the years ended December 31, 2018 and 2017 are defined and reconciled in Suncor’s Management’s Discussion and Analysis for the
year ended December 31, 2019, and for the years ended December 31, 2021, 2020 and 2019 are defined and reconciled in Suncor’s Management’s
Discussion and Analysis for the year ended December 31, 2021, which is contained in the annual report (the 2021 MD&A). Refining and marketing
gross margin, refining operating expense, rack forward gross margin and rack forward operating expense for each quarter in 2021 and 2020 and for
the years ended December 31, 2021, 2020, 2019, 2018 and 2017 are reconciled to the most directly comparable GAAP measures in the Operating
Metrics Reconciliation section of this Supplemental Financial and Operating Information. Operating netbacks for each quarter in 2021 and 2020 and
for the years ended December 31, 2021, 2020, 2019, 2018 and 2017 are defined below and are reconciled to the most directly comparable GAAP
measures in the Operating Metrics Reconciliation section of this Supplemental Financial and Operating Information. The remainder of the non­
GAAP financial measures not otherwise mentioned in this paragraph are defined and reconciled in the 2021 MD&A.

Beginning in the fourth quarter of 2021, the company changed the label of operating earnings (loss) and funds from (used in) operations to
adjusted operating earnings (loss) and adjusted funds from (used in) operations respectively, to better distinguish the non-GAAP financial measures
from the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and
therefore no prior periods were restated.

Oil Sands Operating Netbacks

Oil Sands operating netbacks are a non-GAAP measure, presented on a crude product and sales barrel basis, and are derived from the Oil Sands
segmented statement of net earnings (loss), after adjusting for items not directly attributable to the revenues and costs associated with production
and delivery. Management uses Oil Sands operating netbacks to measure crude product profitability on a sales barrel basis.

Exploration and Production (E&P) Operating Netbacks

E&P operating netbacks are a non-GAAP measure, presented on an asset location and sales barrel basis, and are derived from the E&P segmented
statement of net earnings (loss), after adjusting for items not directly attributable to the costs associated with production and delivery.
Management uses E&P operating netbacks to measure asset profitability by location on a sales barrel basis.

Annual Report 2021 Suncor Energy Inc. 157

Operating Summary Information

Definitions
(1) Cash operating costs are calculated by adjusting Oil Sands segment OS&G expense for i) non-production costs that management believes
do not relate to production performance, including, but not limited to, share-based compensation adjustments, Canada Emergency Wage
Subsidy (CEWS), COVID-19 related costs and safe-mode costs, research costs and the expense recorded as part of a non-monetary arrangement
involving a third-party processor; ii) revenues associated with excess capacity, including excess power generated and sold that is recorded
in operating revenue; iii) project startup costs; and iv) the impacts of changes in inventory levels and valuation, such that the company is able
to present cost information based on production volumes. Oil Sands operations and Syncrude production volumes include production of
diesel that is internally consumed and feedstock transfers between assets through the interconnecting pipelines.
(2) Reflects the items not directly attributed to revenues received from the sale of proprietary crude and net non-proprietary activity at its
deemed point of sale.
(3) Reflects adjustments for expenses or credits not directly related to the transportation of the crude product to its deemed point of sale.
(4) Reflects adjustments for general and administrative costs not directly attributed to the production of each crude product type, as well as the
revenues associated with excess power generated and sold that is recorded in operating revenue.
(5) Reflects adjustments for royalties not related to crude products.
(6) Reflects other E&P assets, such as Norway (up to Q4 2018), and Libya, for which netbacks are not provided.
(7) Reflects adjustments for general and administrative costs not directly attributed to production.
(8) Reflects adjustments for intersegment marketing fees and impact of inventory write-downs.
(9) Refinery production is the output of the refining process and differs from crude oil processed as a result of volumetric adjustments for non­
crude feedstock, volumetric gain associated with the refining process and changes in unfinished product inventories.
(10) Rack forward operating revenues, other income less purchases of crude oil and products.
(11) Rack forward operating expense reflects operating, selling and general expenses associated with retail and wholesale operations.
(12) Reflects operating, selling and general expenses associated with the company’s ethanol businesses, certain general and administrative
costs not directly attributable to refinery production, and CEWS amounts.
(13) The custom 5-2-2-1 index is designed to represent Suncor’s Refining and Marketing business based on publicly available pricing data and
approximates the gross margin on five barrels of crude oil of varying grades that is refined to produce two barrels of both gasoline and
distillate and one barrel of secondary product. The index is a single value that is calculated by taking the product value of refined products less
the crude value of refinery feedstock incorporating the company’s refining, product supply and rack forward businesses, but excluding the
impact of first-in, first-out accounting. The product value is influenced by New York Harbor 2-1-1 crack, Chicago 2-1-1 crack, WTI benchmarks
and seasonal factors. The seasonal factor is an estimate and reflects the location, quality and grade differentials for refined products sold
in the company’s core markets during the winter and summer months. The crude value is influenced by SYN, WCS, and WTI benchmarks.

Explanatory Note
* Users are cautioned that the Oil Sands operations cash operating costs, Fort Hills cash operating costs and Syncrude cash costs per barrel
measure may not be fully comparable to similar information calculated by other entities due to differing operations of each entity as well as
their respective accounting policy choices.

158 Annual Report 2021 Suncor Energy Inc.

Abbreviations

bbl – barrel
bbls/d – barrels per day
mbbls – thousands of barrels
mbbls/d – thousands of barrels per day
boe – barrels of oil equivalent
boe/d – barrels of oil equivalent per day
mboe – thousands of barrels of oil equivalent
mboe/d – thousands of barrels of oil equivalent per day
SCO – synthetic crude oil
WTI – West Texas intermediate
SYN – sweet synthetic crude oil
WCS – Western Canadian Select

Metric Conversion
Crude oil, refined products, etc. 1m3 (cubic metre) = approx. 6.29 barrels

Annual Report 2021 Suncor Energy Inc. 159

Share Trading Information
(unaudited)

Common shares are listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol SU.

For the Quarter Ended For the Quarter Ended

Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31
2021 2021 2021 2021 2020 2020 2020 2020

Share ownership
Average number outstanding,
weighted monthly (thousands)(A) 1 522 488 1 502 088 1 477 495 1 451 867 1 528 133 1 525 151 1 525 151 1 525 151
Share price (dollars)
Toronto Stock Exchange
High 29.55 31.38 30.47 34.35 45.12 29.39 24.59 24.40
Low 21.07 24.81 21.90 26.29 14.02 19.70 16.24 14.28
Close 26.27 29.69 26.26 31.65 22.46 22.89 16.26 21.35
New York Stock Exchange – US$
High 23.69 25.73 24.73 26.97 34.56 21.95 18.28 19.16
Low 16.40 19.65 17.10 20.73 9.61 13.98 12.20 10.67
Close 20.90 23.97 20.74 25.03 15.80 16.86 12.23 16.78
Shares traded (thousands)
Toronto Stock Exchange 729 993 477 714 547 056 641 968 521 750 610 952 509 022 681 553
New York Stock Exchange 573 565 392 546 458 594 466 418 446 897 465 730 389 680 517 459
Per common share information
(dollars)
Net earnings (loss) attributable to
common shareholders 0.54 0.58 0.59 1.07 (2.31) (0.40) (0.01) (0.11)
Dividend per common share 0.21 0.21 0.21 0.42 0.47 0.21 0.21 0.21
(A) The company had approximately 5 412 registered holders of record of common shares as at January 31, 2022.

Information for Security Holders Outside Canada

Cash dividends paid to shareholders resident in countries other than Canada (non-Canadian shareholders) are subject to
Canadian withholding tax. The statutory rate of Canadian withholding tax on dividends is 25%, subject to reduction under an
applicable tax treaty between Canada and another country. For example, under the tax treaty between Canada and the United
States, the withholding tax rate is generally reduced to 15% on dividends paid to residents of the United States that are eligible for
the benefit of that tax treaty. The Canada Revenue Agency has released forms, applicable after 2012, for non-Canadian
shareholders to evidence entitlement to a reduced withholding tax rate under a tax treaty. The agents responsible for withholding
tax on dividends will generally need to have a duly completed form from a non-Canadian shareholder on file by a particular
dividend record date in order for such agents to withhold tax at an applicable treaty-reduced rate, rather than the full statutory
rate of 25%. Non-Canadian shareholders are encouraged to contact their broker (or other applicable agent) regarding the
completion and delivery of these forms.

As shareholders are responsible to ensure compliance with Canadian tax laws and regulations, shareholders are strongly
encouraged to seek professional tax and legal counsel with respect to any and all tax matters.

160 Annual Report 2021 Suncor Energy Inc.

Leadership and Board Members as at December 31, 2021

Leadership Board of Directors

Mark Little Michael Wilson

President and Chief Executive Officer Chair of the Board
Bragg Creek, Alberta
Alister Cowan
Chief Financial Officer Mark Little
President and Chief Executive Officer
Bruno Francoeur Suncor Energy Inc.
Executive Vice President, Business & Operations Services Calgary, Alberta

Paul Gardner Patricia Bedient(1)(2)

Chief People Officer Chair, Audit Committee
Sammamish, Washington
Mike MacSween
Executive Vice President, Mining & Upgrading John Gass(2)(3)
Chair, Human Resources and Compensation Committee
Martha Hall Findlay(A) Palm Coast, Florida
Chief Sustainability Officer
Jean Paul (JP) Gladu(3)(4)
Kris Smith Thunder Bay, Ontario
Executive Vice President, Downstream
Dennis Houston(3)(4)
Arlene Strom (A) Spring, Texas
Chief Legal Officer, General Counsel and Corporate Secretary
Brian MacDonald(1)(2)
Shelley Powell Naples, Florida
Senior Vice President, Exploration & Production and In Situ
Maureen McCaw(1)(4)
Chair, Environment, Health, Safety and Sustainable
Development Committee
Edmonton, Alberta

Lorraine Mitchelmore(1)(4)
Calgary, Alberta

Eira Thomas(2)(3)
Chair, Governance Committee
West Vancouver, British Columbia

Russell Girling(1)(4)
Calgary, Alberta

(A) (1)
Effective February 1, 2022, Martha Hall Findlay was appointed a new Audit committee member
role as Chief Climate Officer and Arlene Strom was appointed to Chief (2)
Governance committee member
Sustainability Officer, General Counsel and Corporate Secretary. (3)
Human resources and compensation committee member
(4)
Environment, health, safety and sustainable development committee
member

Annual Report 2021 Suncor Energy Inc. 161

Suncor Energy Inc.
150 – 6 Avenue S.W.
Calgary, Alberta, Canada T2P 3E3
T: 403-296-8000
202112-125

suncor.com