EX-99.11 12 a2240152zex-99_11.htm EX-99.11
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Exhibit 99.11

Supplementary Oil and Gas Disclosures (unaudited)

        The following disclosures are presented in accordance with United States Financial Accounting Standards Board ("FASB") Topic 932 — "Extractive Activities — Oil and Gas" and Subpart 1200 of Regulation S-K ("Subpart 1200") of the United States Securities and Exchange Commission. Disclosures pertaining to the audited consolidated financial statements as at and for the year ended December 31, 2019 (the "2019 Consolidated Financial Statements") of Suncor Energy Inc. ("Suncor" or the "company") were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and Canadian generally accepted accounting principles contained within Part 1 of the Chartered Professional Accountants Canada Handbook, which differ in material respects from financial statements prepared in accordance with United States generally accepted accounting principles. The 2019 Consolidated Financial Statements are attached as Exhibit 99.1 to Suncor's annual report on Form 40-F for the year ended December 31, 2019 (the "Form 40-F").

Reserves Data

        Reserves data included herein are estimates only and can be significantly impacted by a variety of internal and external factors. For more information on the risks involved when estimating reserves, see the discussion in the "Statement of Reserves Data and Other Oil and Gas Information — Significant Risk Factors and Uncertainties Affecting Reserves" section in Suncor's 2019 Annual Information Form (the "2019 AIF"), which is contained in the Form 40-F. Readers should also see Suncor's Management's Discussion and Analysis for the year ended December 31, 2019, which is attached as Exhibit 99.2 to the Form 40-F (the "2019 Management's Discussion and Analysis").

        The reserves data presented herein, with an effective date of December 31, 2019, may differ in relation to the format and the basis from which volumes are economically determined under National Instrument 51-101 — "Standards of Disclosure for Oil and Gas Activities" ("NI 51-101"), as disclosed in the 2019 AIF. Subpart 1200 requires disclosure of net proved reserves, after royalties, using the average of the first-day-of-the-month prices for the twelve-month period prior to the end of the reporting period, whereas NI 51-101 requires disclosure of gross and net reserves, estimated using forecast prices and costs.

Net Proved Oil and Gas Reserves(1)(2)

        The majority of Suncor's oil and gas reserves are in Canada. In order to align with the company's segmented information in the 2019 Consolidated Financial Statements, the 2019 Management's Discussion and Analysis and the 2019 AIF, the company presents the following supplementary oil and gas disclosures by showing amounts associated with its Oil Sands segment, which are exclusively in Canada and produce synthetic crude oil ("SCO") and bitumen, separate from other Canadian operations, which are aggregated with Suncor's international operations (collectively, "Exploration and Production") and produce crude oil, natural gas and natural gas liquids ("NGLs"). Exploration and Production reserves are in offshore Canada, offshore UK, and offshore Norway.


 
  SCO
(mmbbls)
  Bitumen
(mmbbls)
  Crude Oil(3)
(mmbbls)
  Natural Gas
(bcf)
  Total
(mmboe)
 
At December 31, (net reserves,
constant prices and costs)
  2019   2018   2019   2018   2019   2018   2019   2018   2019   2018  

Proved Developed

                                                             

Oil Sands

    2,032     2,183     951     1,003                     2,984     3,186  

Exploration and Production

                    110     91     1     1     111     91  
                                           

    2,032     2,183     951     1,003     110     91     1     1     3,094     3,277  
                                           

Proved Undeveloped

                                                             

Oil Sands

    542     522     581     602                     1,123     1,123  

Exploration and Production

                    49     67     9     10     51     69  
                                           

    542     522     581     602     49     67     9     10     1,173     1,193  
                                           

Proved

                                                             

Oil Sands

    2,574     2,704     1,532     1,605                     4,106     4,309  

Exploration and Production

                    160     158     11     11     161     160  
                                           

    2,574     2,704     1,532     1,605     160     158     11     11     4,267     4,469  
                                           

Reconciliation of Net Proved Oil and Gas Reserves

(net reserves,
constant prices and costs)
  Balance at
December 31
2017
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions(6)   Balance at
December 31
2018
 

Oil Sands

                                                 

SCO (mmbbls)

    2,737     52         71           (156 )       2,704  

Bitumen

    1,640     12         18           (65 )       1,605  

Exploration and Production

                                               

Crude oil(3) (mmbbls)

    140     16         7     27     (33 )       158  

Natural gas (bcf)

    6     1         10         (3 )   (3 )   11  
                                   

Total (mmboe)

    4,519     80         98     28     (254 )   (1 )   4,469  
                                   

 

(net reserves,
constant prices and costs)
  Balance at
December 31
2018
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions   Balance at
December 31
2019
 

Oil Sands

                                                 

SCO (mmbbls)

    2,704     33                 (164 )       2,574  

Bitumen

    1,605     (6 )   2             (68 )       1,532  

Exploration and Production

                                                 

Crude oil(3) (mmbbls)

    158     30     1         5     (35 )       160  

Natural gas (bcf)

    11     1             1     (2 )       11  
                                   

Total (mmboe)

    4,469     57     2         5     (267 )       4,267  
                                   

Notes to Reserves Data:

(1)
Definitions

a.
Net reserves, in relation to Suncor's production and reserves, represents the company's working interest share after deduction of royalty obligations, plus the company's royalty interests in production and reserves.

b.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty (at least a 90% probability that the quantities actually recovered will equal or exceed the estimate) to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations.

c.
Proved developed oil and gas reserves are those quantities that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and can be expected to be recovered through extraction equipment and infrastructure installed and operational at the time of the reserves estimate for projects that extract oil and gas by means not involving a well.

d.
Proved undeveloped oil and gas reserves are those quantities that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(2)
Reserve data tables may not add due to rounding.

(3)
Natural gas liquids reserves are not significant and have been presented in combination with crude oil reserves.

(4)
Revisions of previous estimates include changes to proved reserves, resulting from new information (except for an increase in proved acreage) normally obtained from development drilling and production history or resulting from a change in economic factors, such as changes in constant prices used for the reserve evaluation.

(5)
Extensions and discoveries are additions to proved reserves from proved acreage of previously discovered reservoirs through additional drilling in periods subsequent to discovery or discovery of new fields with proved reserves or of new reservoirs of proved reserves in old fields.

(6)
Dispositions are reductions in reserves estimates as a result of selling all or a portion of an interest in oil and gas properties. During 2018, the company disposed of its northeast B.C. mineral landholdings, including associated production.

Capitalized Costs

 
  At December 31, 2019   At December 31, 2018  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Exploration and evaluation assets(1)

    2,178     250     2,428     2,100     219     2,319  

Oil and gas properties(2)(3)

    18,795     21,801     40,596     17,083     20,763     37,846  

Plant and equipment(2)(3)

    66,451     1,074     67,525     63,213     1,104     64,317  

— accumulated provision(2)

    (30,581 )   (15,298 )   (45,879 )   (22,654 )   (14,075 )   (36,729 )
                           

Total

    56,843     7,827     64,670     59,742     8,011     67,753  
                           

(1)
Exploration and evaluation assets largely represent amounts associated with unproved properties, but may include properties with proved reserves for which Suncor's Board of Directors have not sanctioned development. See note 17 of the 2019 Consolidated Financial Statements.

(2)
Oil and Gas Properties, Plant and Equipment and the accumulated provision largely represent amounts associated with proved properties. See note 15 of the 2019 Consolidated Financial Statements. Includes amounts capitalized to Property, Plant and Equipment on the Consolidated Balance Sheets of the 2019 Consolidated Financial Statements that relate to the company's right-of-use assets under IFRS 16. See note 16 of the 2019 Consolidated Financial Statements.

(3)
Includes amounts capitalized to Property, Plant and Equipment on the Consolidated Balance Sheets of the 2019 Consolidated Financial Statements that relate to the company's decommissioning and restoration activities.

Costs Incurred for Property Acquisition, Exploration and Development Activities

 
  Year ended December 31, 2019   Year ended December 31, 2018  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Unproved property acquisition

                    32     32  

Proved property acquisition

                1,143     82     1,225  

Exploration(1)

    204     248     452     73     179     252  

Development(2)

    3,580     992     4,572     3,398     800     4,198  
                           

Total

    3,784     1,240     5,024     4,614     1,093     5,707  
                           

(1)
Includes amounts capitalized to Exploration and Evaluation on the Consolidated Balance Sheets as well as those charged to Exploration Expense on the Consolidated Statements of Comprehensive Income, of the 2019 Consolidated Financial Statements.

(2)
Includes amounts capitalized to Property, Plant and Equipment on the Consolidated Balance Sheets of the 2019 Consolidated Financial Statements that relate to the company's decommissioning and restoration activities.

Results of Operations for Oil and Gas Producing Activities(1)(2)

 
  Year ended December 31, 2019   Year ended December 31, 2018  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Operating revenues, net of royalties

    17,430     3,070     20,500     15,345     3,217     18,562  

Other income (loss)

    172     430     602     387     (68 )   319  
                           

    17,602     3,500     21,102     15,732     3,149     18,881  

Purchases of crude oil and products

    1,407         1,407     1,563         1,563  

Operating, selling and general

    8,027     525     8,552     7,577     507     8,084  

Transportation

    1,293     80     1,373     1,144     85     1,229  

Depreciation, depletion, amortization and impairment

    8,170     1,505     9,675     4,024     967     4,991  

Exploration

    127     129     256     44     78     122  

(Gain) loss on disposal of assets

    (14 )   (228 )   (242 )   (108 )   91     (17 )

Finance expenses

    318     73     391     320     46     366  
                           

(Loss) earnings before income taxes

    (1,726 )   1,416     (310 )   1,168     1,375     2,543  

Income taxes — (recovery) expense

    (1,299 )   411     (888 )   223     568     791  
                           

Net (loss) earnings

    (427 )   1,005     578     945     807     1,752  
                           

(1)
Beginning in 2019, results from the company's Energy Trading business are included within each of the respective operating business segments to which the respective trading activity relates. The Energy Trading business was previously reported within the Corporate, Energy Trading and Eliminations segment. Prior periods have been restated to reflect this change.

(2)
The company adopted IFRS 16 on January 1, 2019 using the modified retrospective transition approach and, therefore, prior periods have not been restated. See note 5 of the 2019 Consolidated Financial Statements for further information.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

        The standardized measure of discounted future net cash flows relating to Suncor's proved oil and gas reserves are calculated in accordance with FASB Topic 932 — "Extractive Activities — Oil and Gas". Future cash inflows are estimated using the trailing twelve-month average price, which are also used in estimating the entity's proved oil and gas reserves. Future development and production costs, including the associated decommissioning and restoration activities, are calculated by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. The appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, were applied to the future pretax net cash flows, less the tax basis of the properties involved. A prescribed rate of 10% is applied to discount the future net cash flows.

        The calculation of the standardized measure of discounted future net cash flows is based upon information prepared by the company's independent qualified reserves evaluators (which includes decommissioning and restoration activities), and adjusted for future income taxes.

        It should not be assumed that the estimates of future net cash flows presented in the tables below represent the fair market value of the reserves. There is no assurance that the price and cost assumptions will be attained and variances could be material. Future changes to income tax, royalty and environmental regulations could also have a significant impact on the respective assumptions. There is no guarantee that the estimates for SCO, bitumen, crude oil, and natural gas reserves provided herein will be recovered. Actual SCO, bitumen, crude oil, and natural gas reserves may be greater than or less than the estimates provided herein.


        The following twelve-month average prices were used to calculate the standardized measure of discounted future net cash flows:

Year
  Brent
North Sea
  WTI
Cushing
Oklahoma
  WCS
Hardisty
Alberta
  Light
Sweet
Edmonton
Alberta
  Pentanes Plus
Edmonton
Alberta
  AECO
Gas
  National
Balancing
Point
North Sea
 
 
  US$/bbl
  US$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/mmbtu
  Cdn$/mmbtu
 

2019

    63.15     55.69     57.22     67.66     68.70     1.66     6.69  

2018

    71.54     65.56     50.44     70.07     79.39     1.46     10.03  
                               

 

 
  At December 31, 2019   At December 31, 2018  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Future cash inflows

    251,040     13,218     264,258     247,927     14,259     262,186  

Future production costs

    (145,374 )   (3,960 )   (149,334 )   (132,241 )   (3,446 )   (135,687 )

Future development costs

    (52,917 )   (3,287 )   (56,204 )   (56,071 )   (3,175 )   (59,246 )

Future income tax expenses

    (10,716 )   (1,764 )   (12,480 )   (14,491 )   (1,988 )   (16,479 )
                           

Future net cash flows

    42,033     4,207     46,240     45,124     5,650     50,774  

10% Discount Factor

    (22,655 )   (308 )   (22,963 )   (23,280 )   (1,227 )   (24,507 )
                           

Standardized measure of discounted future net cash flows

    19,378     3,899     23,277     21,844     4,423     26,267  
                           

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

($ millions)
  2019   2018  

Standardized measure of discounted future net cash flows — beginning of year

    26,267     21,831  

Sales and transfers of oil and gas produced

    (8,005 )   (6,998 )

Net changes in sales prices and operating costs related to future production

    (5,673 )   6,277  

Net change due to extensions, discoveries and improved recovery

    2,632     3,923  

Net change due to acquisition and dispositions

        1,228  

Net change due to revisions in quantity estimates

    (834 )   1,630  

Previously estimated development costs incurred during the period

    4,077     3,805  

Changes in estimated future development costs

    (314 )   (6,010 )

Accretion of discount

    2,773     2,210  

Net change in income taxes

    2,353     (1,629 )
           

Standardized measure of discounted future net cash flows — end of year

    23,277     26,267  
           



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