Suncor Energy Inc. · TSX:SU
Suncor Energy — Investor Presentation (October 2017)
40 slides from Suncor Energy's investor presentation, Oct 25, 2017
Slide 1: Suncor Energy Investor Information
Suncor Energy Investor Information Published October 25, 2017 Fort Hills haul trucks
Slide 2: Canada's leading integrated energy company
2 Canada’s leading integrated energy company $86B Enterprise value September 30, 2017 1 35+ years 2P Reserve life index as at Dec. 31, 2016 2 668mboepd 99% Oil production YTD 2017 462mbpd Refining capacity >530mbpd Product sales YTD 2017 >1530 Retail sites In North America Oda 1, 2 See Slide Notes a
Slide 3: Investment proposition – growing shareholder returns
3 Investment proposition – growing shareholder returns Growth Cash generation Strong production1 increase from projects in flight Significant upside FFO3 sensitivity to WTI, based on TTM4 actuals US$49 WTI, 0.76 C$/US$, US$16.39 NYH crack spread (mbpd) (C$ billion) 800 $14 10% $12 700 Planned CAGR2
Slide 4: The foundation of our strategy
4 The foundation of our strategy Operational excellence Optimizing the base business Suncor’s upgrader reliability journey Multi year journey to reach >90% reliability • Safety as a core value 91% 90% 90% Excluding • Disciplined cost management Alberta 83% forest fire 81% impact1 79% • Leader in sus
Slide 5: Growing production
5 Growing production Suncor’s production growth forecast1,2 (mbpd) ~10% Hebron 2016-2019 planned CAGR3 per share 800 E&P 700 Fort Hills 600 Syncrude 500 400 Base Mine 300 U1 U2 200 Base 100 In situ FB 0 2015 2016 2017 2018 2019 Guidance midpoint Planned Planned Planned major maintenance4 1, 2, 3,4 S
Slide 6: Cost reductions across the corporation
6$37.05 R&M Cost reductions across the corporation E&P $37.05 R&M Oil $37.05 Sands E&P Poly. R&M (R&M) $37.05 Company OS&G below 2014 levels while production increases ~30% Consistent reductions in operating costs C$/bbl R&M Oil Sands Poly. E&P (E&P) $37.05 E&P Poly. Oil R&M Oil (R&M) (Oil Sands San
Slide 7: Generating discretionary free cash flow
7 Generating discretionary free cash flow1 FFO2 consistently exceeds sustaining capital, associated 2017 sustaining capital and dividend capitalized interest and dividends (C$ billions) break-even8 $8 ~US$ 40.00 WTI $6.8 $6 Break-even $6.0 $4 $1.6 $1.9 $2 $2.7 $2.3 $0 2015 2016 2017 E WTI US$3 $48.7
Slide 8: Near-term flexible capital allocation plan
8 Near-term flexible capital allocation plan1 Production Production growth Balance sheet Capital 1 growth Dividend3 Buybacks3 post 2019 leverage metrics to 20192 Defer $40 WTI $4.0B debottlenecking and Upper range None USD pre-engineering on replication 10% Invest in $50-$55 Grow with $1-$2B debottl
Slide 9: Returning cash to shareholders
9 Returning cash to shareholders 15 consecutive years of dividend increases plus opportunistic share buybacks $120 Buyback per share1,2,3,5 $2.50 Dividend per share1 WTI US$ $100 $2.00 $80 (C$/share) $1.50 (US$/bbl) Actual buybacks/share as at September 30, 20175 $60 $1.00 Dividends $40 expected to
Slide 10: Meaningful, growing and sustainable dividend
10 Meaningful, growing and sustainable dividend Dividend growth leader Sustainable dividend growth Five year dividend growth relative to global peers 1 (Q3 2012 – Q3 2017) Dividend growth since 2010 200% 200% 120 100 $94.90 $97.95 $94.20 80 Suncor 100% $79.50 $93.00 100% 60 $48.75 40 $43.35 0% 20 0%
Slide 11: Strong balance sheet
11 Strong balance sheet Conservative debt targets Debt metrics - as at September 30, 2017 <3x Net debt to FFO1 1.6x Net debt to FFO1 20-30% Total debt to capitalization 26% Total debt to capitalization Investment grade credit rating $8.3B Liquidity A— DBRS Rating Limited (A Low) Stable Cash & cash e
Slide 12: Suncor offers growth comparable to tight oil
12 Suncor offers growth comparable to tight oil Sustainable production growth through the downturn Year-over-year change, oil sands only for Suncor 60% Capital discipline allowed Suncor to 40% consistently grow production through the 14% 9% crude price cycle 20% 6% 9% 7% 10% 0% Weak oil prices limit
Slide 13: Returning cash in line with supermajors
13 Returning cash in line with supermajors Total cash (dividends + buybacks) returned to shareholders US$/bbl $20 $15 Continued focus on capital discipline $16 $13 allows sustainable cash returns for $11 $12 shareholders through the crude price cycle $8 $6 $6 Scarce cash returns to shareholders $4 a
Slide 14: Typical attributes of North American oil plays
14 Typical attributes1 of North American oil plays Initial Decline Sustaining Operating Reservoir Recovery Illustrative annual cash flow profiles2 capital rate costs cost risk factor Mining High Very low Very low Medium Very low Very high In situ Medium Low Low Low Low High Offshore High High Medium
Slide 15: Regional synergies for existing assets
15 Regional synergies for existing assets 100% WI Fort Joint ownership Hills Regional synergy opportunities1 T Upgrader feedstock optionality Syncrude Turnaround planning optimization Joslyn C T Unplanned outage impact mitigations Firebag In Situ Process and technology sharing MacKay River Syncrude
Slide 16: Agile capital deployment – next generation SAGD development
16 Agile capital deployment – next generation SAGD development Well pads - saving today CPF - redesigning tomorrow Simplified sustaining well pads, at existing assets, designed with Complete redesign of Central Processing Facility (CPF) for green increased automation field in situ replication New in
Slide 17: Replication – next phase of oil sands organic growth
17 Replication1 – next phase of oil sands organic growth First energy company to receive approval for multiple in situ development phases under the Alberta Energy Regulator’s trial submission process for Meadow Creek East Phases of 40 mbpd next generation in situ ~10 facilities (replication) Phases
Slide 18: Syncrude – cost management and collaboration underway
18 Syncrude – cost management and collaboration underway Operations Suncor secondee, Doreen Cole, appointed as Managing Director replacing the CEO/President Fire learnings addressed with enhanced winterization processes >$125M/year (gross) expected savings 2018 forward1 Operations optimization Appli
Slide 19: Fort Hills – transitioning to operations
19 Fort Hills – transitioning to operations December 2017 Operations First oil1 50.8% 5 of 6 Major project areas operating Suncor working interest 98% Staff hired 98.5 mbpd 20% Secondary extraction turned over to operations Suncor working interest nameplate capacity1,2 95% Mining & primary extractio
Slide 20: Fort Hills – designed for safe, reliable, low-cost ramp-up
20 Fort Hills – designed for safe, reliable, low-cost ramp-up and operations Based on regional benchmarking, Suncor has invested significant capital to meet or exceed ramp-up and performance targets Investments included in pre-sanction design with associated capex1 6-months pre-stripping (~$120M) Ra
Slide 21: Fort Hills – de-risking startup and production
21 Fort Hills – de-risking startup and production Fort Hills froth production 5 of 6 major project areas transitioned to operations Early commissioning of mine, primary extraction and utilities plants Froth production test runs began in September Shipment by truck to Suncor’s base plant for further
Slide 22: Technology development – collaboration is key
22 Technology development – collaboration is key Accelerating technology development and commercialization by leveraging external expertise and solutions Venture capital Evok Innovations - cofounder with $100M of available capital Emerald Technology Ventures - 10 years of investing equity in a clean
Slide 23: ESG leadership
23 ESG leadership Environment Social Governance Resilience through strategy Advancing relations with Leading governance Aboriginal Peoples Stress test carbon strategy against three $500 million equity partnership with First 10 of 11 independent Board members energy futures scenarios Nations on East
Slide 24: Appendix
Appendix SuNCoR)
Slide 25: 2017 Capital and production guidance
25 2017 Capital and production guidance1 2017 Capital2 Growth capital3 Production4 $ millions percent boepd Upstream5 4,735 – 4,875 60% 420,000 – 450,000 Oil Sands operations Downstream 625 – 675 0% 130,000 – 145,000 Syncrude Corporate 40 – 50 0% 115,000 – 125,000 E&P 425,000 – 445,000 Refinery thro
Slide 26: Track record of counter-cyclical acquisitions and divestments
26 Track record of counter-cyclical acquisitions ( ) and divestments ( ) $100 WTI US$/bbl $80 Non-core UK offshore Rosebank $60 Total E&P Canada 30% WI Petro-Canada 10% Fort Hills WI $40 Canadian Oil Sands Murphy Oil $20 37% Syncrude WI 5% Syncrude WI $40 NYH 3-2-1 US$/bbl $30 Pioneer retail network
Slide 27: Vast portfolio of high quality opportunities
27 Vast portfolio of high quality opportunities1 Continued growth and margin opportunities post 2019 In situ Mining Upgrading/Refining E&P • Syncrude upgrading reliability Growth, • Meadow Creek • Fort Hills secondary beyond 90% • Oda optimization & • Lewis extraction • Montreal Coker • Rosebank deb
Slide 28: High quality mining, in situ and upgrading portfolio
28 High quality mining, in situ and upgrading portfolio1 Base Plant Syncrude 350,000 bpd capacity Syncrude operated Suncor working interest 100% 188,000 bpd coking capacity (SU WI) 1,619 mmbbls 2P reserves Suncor working interest 53.74% 1,316 mmbbls 2P reserves (SU WI) Firebag Fort Hills 203,000 bpd
Slide 29: Market access for Oil Sands production
29 Market access for Oil Sands production Suncor currently has approximately 750 mbpd of near-term market access1 Proposed projects would provide Suncor with expanded pipeline connectivity to markets Pipeline Current and forecasted gross pipeline capacity2 Gathering lines TMPL Fort McMurray 300 mbpd
Slide 30: Canada's largest Refining & Marketing business
30 Canada’s largest Refining & Marketing business Edmonton refinery Sarnia refinery 142,000 bpd capacity 85,000 bpd capacity 100% oil sands feedstock1 ~75% oil sands feedstock1 Commerce City refinery Montreal refinery 98,000 bpd capacity 137,000 bpd capacity ~20% oil sands feedstock1 ~30% oil sands
Slide 31: Refining & Marketing – the value of integration
31 Refining & Marketing – the value of integration R&M annual net earnings1 Suncor peers1 Refinery utilization vs. US average Suncor US$/bbl of capacity Percent of refining capacity High US Average2 $15 Average Low 100% $10 90% $5 $0 80% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 YTD 2017 Pri
Slide 32: Offshore with >410 million barrels of 2P reserves
32 1 Offshore with >410 million barrels of 2P reserves Terra Nova Hibernia Suncor Energy operated ExxonMobil operated Suncor working interest 37.675% Suncor working interest 20.0%2 43 mmboe 2P reserves (SU WI) 88 mmboe 2P reserves (SU WI) White Rose Buzzard Husky Energy operated Nexen Petroleum UK o
Slide 33: E&P – value over volume
33 E&P – value over volume $1.3B of FFO1, $515M of operating earnings1 and $487M of capex YTD 2017 2016 East Coast oil production2 mboe/d Largest East Coast oil producer 60 Owner in all regional assets 50 $11.20/bbl YTD 2017 operating cost3 40 30 20 $40.35/bbl YTD 2017 operating netback4 10 0 Suncor
Slide 34: Advisories
34 Advisories Forward-Looking Statements – This presentation contains Suncor; changes in royalty, tax, environmental and other laws or prepared in accordance with GAAP. All non-GAAP measures are certain “forward-looking statements” within the meaning of the regulations or the interpretations of such
Slide 35: Slide Notes
35 Slide Notes Slide 2------------------------------------------------------------- at the discretion of Suncor’s Board of Directors. Actual results Q3 2017 Quarterly Report to Shareholders and Annual Report for (1) Market capitalization + debt - cash and cash equivalents. may differ materially. See
Slide 36: Slide Notes (continued)
36 Slide Notes (continued) Slide 8-------------------------------------------------------------- (4) Large integrated peers in alphabetical order: BP plc., Chevron Slide 18------------------------------------------------------------- (1) Based on current business plans, which are subject to change.
Slide 37: Slide Notes (continued)
37 Slide Notes (continued) Slide 25------------------------------------------------------------ level as estimates of reserves for all properties due to the effects (FIFO) basis consistent with IFRS accounting policy. See Non- (1) Full guidance is available at suncor.com/guidance. See Forward- of ag
Slide 38: Notes
38 Notes SuNCoR)
Slide 39: Notes
39 Notes SuNCoR)
Slide 40: Investor Relations contacts
Investor Relations contacts Steve Douglas David Burdziuk Valerie Roberts Ever Motis Vice President IR Manager IR Senior Analyst IR Associate IR sdouglas@suncor.com dburdziuk@suncor.com vroberts@suncor.com emotis@suncor.com Visit us at the Investor Centre on suncor.com 1-800-558-9071 invest@suncor.co