Our economic performance - Suncor's 2013 Report on Sustainability

Economic performance - Suncor's 2013 Report on Sustainability

Our economic performance - Suncor's 2013 Report on Sustainability

Our economic performance - Suncor's 2013 Report on Sustainability

View the latest Report on Sustainability

Our economic performance

Here is a look at the main indicators of Suncor's internal economic performance:

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Production

Suncor’s total upstream production averaged 549,100 barrels of oil equivalent per day (boe/d) in 2012, compared to 546,000 boe/d in 2011. Oil Sands production (excluding Syncrude) averaged 324,800 barrels per day (bbls/d) in 2012, compared to 304,700 bbls/d in 2011.

The most significant production change: a 75% growth in production at Suncor’s Firebag in situ operations, due to the ramp up of Firebag Stage 3 and the commissioning of Firebag Stage 4 facilities in 2012. Annual bitumen production from Firebag increased to 104,000 bbls/d in 2012, from 59,500 bbls/d in 2011. However, Suncor’s production was impacted by planned and unplanned maintenance in Oil Sands as well as planned maintenance related to the Terra Nova dockside maintenance program.

Production numbers in Suncor's Annual Report are for upstream volumes only, and include production from non-operated assets. This differs from production numbers used in Suncor's Report on Sustainability. The report includes only operated facilities, and captures gross production on a facility basis, which is a measure of total throughput. Financial reporting is concerned with only saleable products.

Net Production — Economic Performance

Earnings

Suncor reported net earnings of $2.783 billion in 2012, compared to $4.304 billion in 2011. Operating earnings* for 2012 were $4.890 billion, compared to $5.674 billion in 2011.

Factors that reduced Suncor’s operating earnings in 2012 included:

  • reduced production volumes from the Exploration & Production segment (primarily due to unplanned maintenance)
  • lower average price realizations from Oil Sands operations (due primarily to lower premiums for sweet synthetic crude oil [SCO] relative to West Texas Intermediate [WTI], and wider light/heavy differentials that impacted prices for sour SCO and bitumen), offset by an increase in production and strong refining margins

Factors that reduced Suncor’s net earnings in 2012 include those described above for the reduction in operating earnings. Suncor also recorded after-tax impairments (net of reversals), write-offs and provisions of $2.176 billion. Given Suncor’s view of the challenging economic outlook for the Voyageur upgrader project, at December 2012, Suncor performed an impairment test. Based on an assessment of future net cash flows, the company recorded an after-tax impairment charge of $1.487 billion. Due to political unrest and international sanctions against Syria, Suncor also recorded an after-tax impairment (net of reversals) and write-offs for assets in Syria of $517 million.

Cash flow from operations* for 2012 was $9.745 billion*, compared to $9.746 billion in 2011. These strong financial results were due primarily by lower price realizations in the Oil Sands segment, partially offset by strong refining margins. Lower production in the Exploration & Production segment was offset by the increase in production from the Oil Sands segment.

Operating costs

Despite a challenging year in terms of reliability for upgrading facilities, Suncor’s underlying cost discipline and performance trends were positive. Oil Sands cash operating costs (excluding Syncrude) per barrel were $37.05 per barrel in 2012 compared to $39.05 per barrel in 2011. Suncor continued to work towards higher reliability in 2012 with the completion of planned maintenance at Upgraders 1 and 2.

Share prices and dividends

Suncor's common share price closed at $32.71 on the Toronto Stock Exchange on Dec. 31, 2012, an increase of approximately 11% from the year before. Suncor shareholders received more than $2.2 billion in cash from the company during 2012 through share repurchases and dividends. The company increased its quarterly dividend by 18% to $0.13 per common share. Our focus remains on building long-term shareholder value.

Balance sheet and financial position

Suncor’s balance sheet remains strong and primed for future growth. Significant cash flow from the company’s integrated operations, along with a disciplined approach to spending, has solidified the company’s financial position. Cash flow from operations in 2012 exceeded capital and exploration expenditures (including capitalized interest) and were higher than net debt at year end.

*Non-GAAP financial measure. Please see Legal Notice.