Suncor Energy Inc. · TSX:SU
Suncor Energy — Investor Presentation (April 2017)
34 slides from Suncor Energy's investor presentation, Apr 26, 2017
Slide 1: Suncor Energy Investor Information
COVER PHOTOGRAPH – HEBRON TOP SIDE SUNCOR ENERGY INVESTOR INFORMATION PUBLISHED APRIL 26, 2017
Slide 2: Investment Proposition
2 INVESTMENT PROPOSITION GROWTH CASH GENERATION STRONG PRODUCTION1 INCREASE FROM PROJECTS INFLIGHT (MBPD) SIGNIFICANT UPSIDE FFO3 SENSITIVITY TO BRENT, BASED ON TTM4 ACTUALS US$48 BRENT, 0.76 C$/US$, US$14.25 NYH CRACK SPREAD (C$ BILLION) 800 $12 10% $10 700 PLANNED CAGR2 PER SHARE (2016-19) $8 600
Slide 3: The Foundation of Our Strategy
3 THE FOUNDATION OF OUR STRATEGY OPERATIONAL EXCELLENCE 0.54 >90% 7% 30% Q1 2017 RIF1 RELIABILITY OF OIL SANDS REDUCTION IN CASH COSTS2 TARGET REDUCTION IN OPERATIONS AND DOWNSTREAM Q1 2017 VS Q1 2016 GHG INTENSITY BY 2030 ASSETS IN Q1 2017 SAFETY RELIABILITY COST MANAGEMENT SUSTAINABILITY CAPITAL D
Slide 4: Growing Production
4 GROWING PRODUCTION SUNCOR’S PRODUCTION GROWTH FORECAST1 (MBPD) ~10% HEBRON 2016-2019 PLANNED CAGR2 PER SHARE 800 E&P 700 SYNCRUDE 600 500 FORT HILLS 400 BASE OS 300 FIREBAG MACKAY 200 BASE MINE 100 PLANNED U2 FB U1 MAINTENANCE3 0 2015 2016 2017 2018 2019 GUIDANCE MIDPOINT PLANNED PLANNED 1, 2, 3 S
Slide 5: Cost Reductions
5 COST REDUCTIONS COMPANY OS&G BELOW 2014 LEVELS, EVEN AS PRODUCTION INCREASES ~30% OIL SANDS OPERATIONS CASH OPERATING COSTS2 C$/BBL 40.0% $39.05 30.0% PRODUCTION1 $37.05 $37.00 $33.80 20.0% 10.0% $27.85 $26.50 0.0% $22.55 OS&G1 -10.0% -20.0% 2014 2015 2016 2017E 2011 2012 2013 2014 2015 2016 Q1 20
Slide 6: Generating Discretionary Free Cash Flow
6 GENERATING DISCRETIONARY FREE CASH FLOW1 FUNDS FROM OPERATIONS2 CONSISTENTLY EXCEED SUSTAINING CAPITAL, ASSOCIATED CAPITALIZED INTEREST AND DIVIDENDS (C$ BILLIONS) $10 $9.4 $9.1 $8 $6.8 $6 $6.0 $4 $1.1 $1.5 $1.6 $1.9 $2 $3.8 $3.1 $2.7 $2.3 $5.2 $0 2013 2014 2015 2016 2017E WTI US$3 $97.95 $93.00 $
Slide 7: Superior Cash Generation per Produced Barrel
7 SUPERIOR CASH GENERATION PER PRODUCED BARREL FUNDS FROM OPERATIONS PER BARREL VERSUS CANADIAN PEERS (FFO1,2/BPD) Q2 2014 US $103.00 SUNCOR WTI CENOVUS, CNRL, HUSKY, IMPERIAL 60 (US$/BBL) 40 Q1 2016 US$ 33.50 20 0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 20
Slide 8: Strong Balance Sheet
8 STRONG BALANCE SHEET CONSERVATIVE DEBT TARGETS DEBT METRICS - AS AT MARCH 31 2017 <3X NET DEBT TO FFO1 1.8X NET DEBT TO FFO1 20-30% TOTAL DEBT TO CAPITALIZATION 27% TOTAL DEBT TO CAPITALIZATION INVESTMENT GRADE CREDIT RATING LIQUIDITY A — DBRS RATING LIMITED (A LOW) STABLE $10.6B CASH & CASH EQUIV
Slide 9: Committed to Returning Cash to Shareholders
9 COMMITTED TO RETURNING CASH TO SHAREHOLDERS 15 YEARS OF CONSECUTIVE ANNUAL DIVIDEND INCREASES ACROSS PRICE AND BUSINESS CYCLES $120 $2.50 BUYBACK PER SHARE1,2 DIVIDEND PER SHARE1 ESTIMATED BUYBACK PER SHARE3 $100 WTI USD $2.00 $80 $1.50 (C$/SHARE) (US$/BBL) $60 $1.00 DIVIDENDS $40 EXPECTED TO GROW
Slide 10: Vast Portfolio of High Quality Opportunities
10 VAST PORTFOLIO OF HIGH QUALITY OPPORTUNITIES CONTINUED GROWTH AND MARGIN OPPORTUNITIES POST 2019 IN SITU MINING UPGRADING/REFINING E&P • SYNCRUDE UPGRADING BEYOND GROWTH, • MEADOW CREEK • FORT HILLS SECONDARY 90% RELIABILITY • ODA OPTIMIZATION & • LEWIS EXTRACTION • MONTREAL COKER • ROSEBANK DEBO
Slide 11: Syncrude's Journey to Reliable Operations
11 SYNCRUDE’S JOURNEY TO RELIABLE OPERATIONS SYNCRUDE RELIABILITY1 SUNCOR’S UPGRADER RELIABILITY JOURNEY TARGETING >90% ASSET RELIABILITY BY 2020 MULTI YEAR JOURNEY TO REACH >90% RELIABILITY 97% 95% EXCLUDING 91% ALBERTA 90% EXCLUDING FOREST FIRE ALBERTA IMPACT2 83% 82% 81% FOREST FIRE 78% 79% IMPAC
Slide 12: Fort Hills Progress as at April 26, 2017
12 FORT HILLS PROGRESS AS AT APRIL 26, 2017 KEY METRICS1 83% CONSTRUCTION COMPLETE • PEAK SITE WORKFORCE LEVEL REACHED IN Q4 2016 50.8% • REMAINING CONSTRUCTION FOCUS IS ON UTILITIES AND SECONDARY EXTRACTION • MAJORITY OF REMAINING BULK CONSTRUCTION TO OCCUR DURING WARMER SUNCOR WORKING INTEREST SEA
Slide 13: Fort Hills – Phased Completion and Commissioning
13 FORT HILLS – PHASED COMPLETION AND COMMISSIONING MAJOR AREA COMPLETIONS SUPPORT A RELIABLE PRODUCTION RAMP UP THROUGH 2018 MAJOR PROJECT AREAS TURNED OVER TO 4/6 OPERATIONS MINING MINE DEVELOPMENT AND 6 MONTHS PRE-STRIPPING ORE PREPARATION PLANT EARLY COMMISSIONING MAJOR SITE INFRASTRUCTURE COMMI
Slide 14: Next Generation SAGD Platform
14 NEXT GENERATION SAGD PLATFORM1 AGILE CAPITAL DEPLOYMENT WITH PRE-ENGINEERED OPTIMIZED DESIGNS OPTIMIZED CENTRAL PROCESSING FACILITY & STANDARDIZED WELL PAD MODEL LEVERAGE INTERNAL OFF-SHORE TECHNOLOGY AND KNOWLEDGE TO SIMPLIFY FLOW SHEET SIGNIFICANT REDUCTION OF EQUIPMENT AND BULK MATERIALS TECHN
Slide 15: Replication – Next Phase of Oil Sands Organic Growth
15 REPLICATION1 – NEXT PHASE OF OIL SANDS ORGANIC GROWTH FIRST ENERGY COMPANY TO RECEIVE APPROVAL FOR MULTIPLE DEVELOPMENT PHASES UNDER NEW ALBERTA ENERGY REGULATOR SUBMISSION PROCESS FOR MEADOW CREEK EAST PHASES OF 40 MBPD NEXT GENERATION SAGD 9+ FACILITIES (REPLICATION) MEADOW CREEK EAST PHASES AP
Slide 16: Increasing Value
16 RESILIENT TO THE L/H1 SPREAD DUE TO BITUMEN INTEGRATION ROYALTY PAID ON BITUMEN PRODUCTION BASIS REVENUE MADE ON PRODUCT VALUE BASIS BITUMEN: ~700 MBPD BITUMEN: ~30 MBPD IN SITU2 PROCESSED AT SUNCOR REFINERIES $$$$ ~230 MBPD SSP: ~143 MBPD UPGRADED AT SYNCRUDE3 $$$ BASE MINE2 ~290 MBPD INCREASING
Slide 17: Increasing Extraction Temperature
17 IN SITU EXTRACTION TECHNOLOGY1 LANDSCAPE A BASIS FOR SUNCOR’S PATH TO NEXT GENERATION IN SITU RECOVERY DECREASE COST AND ENERGY USE BY LOWERING TEMPERATURES AND REPLACING WATER WITH SOLVENT SAGD ES-SAGD2 INCREASING EXTRACTION TEMPERATURE SA-SAGD2 SAP2 PHASER2 SUPERHEAT SOLVENT SAVEX2 NSOLV™ & EAS
Slide 18: Corporate Resilience in a Low Carbon Economy
18 CORPORATE RESILIENCE IN A LOW CARBON ECONOMY MANAGEMENT ALIGNED WITH SHAREHOLDERS ON NEED FOR CARBON TRANSPARENCY CLIMATE DISCLOSURE METHODOLOGY OIL DEMAND DISCLOSURE PROVIDES INSIGHT INTO HOW WE SEE THE BASE BUSINESS PLAN EVALUATED AGAINST THREE SUNCOR EXPECTS ABSOLUTE DEMAND WILL GROW ENERGY TR
Slide 19: Appendix
19 APPENDIX Suncor)
Slide 20: Canada's Leading Integrated Energy Company
20 CANADA’S LEADING INTEGRATED ENERGY COMPANY $81B ENTERPRISE VALUE1 MARCH 31, 2017 35+ YEARS 2P RESERVE LIFE INDEX2 AS AT DEC. 31, 2016 725 99% OIL PRODUCTION MBOEPD Q1 2017 462 MBPD REFINING CAPACITY 1, 2 SEE SLIDE NOTES AND ADVISORIES.
Slide 21: Returning Cash to Shareholders
21 RETURNING CASH TO SHAREHOLDERS DIVIDEND GROWTH LEADER DIVIDEND GROWTH LEADER FIVE YEAR DIVIDEND GROWTH RELATIVE TO GLOBAL PEERS1 (Q1 2012 – Q1 2017) % DIVIDEND GROWTH, 2010 BASELINE 200% 200% 120 100 $94.90 $94.20 $97.95 80 SUNCOR 100% $79.50 $93.00 SUNCOR 100% 60 $48.75 40 $43.35 0% 20 0% 0 2010
Slide 22: 2017 Capital and Production Guidance
22 2017 CAPITAL AND PRODUCTION GUIDANCE1 2017 CAPITAL2 GROWTH CAPITAL3 PRODUCTION4 $ MILLIONS PERCENT BOEPD UPSTREAM5 4,135 – 4,475 50% 420,000 – 450,000 OIL SANDS OPERATIONS DOWNSTREAM 625 – 675 0% 135,000 – 150,000 SYNCRUDE CORPORATE 40 – 50 0% 110,000 – 120,000 E&P 425,000 – 445,000 REFINERY THRO
Slide 23: Oil Sands Production Expected to be >700 MBPD by 2019
23 OIL SANDS PRODUCTION EXPECTED TO BE > 700 MBPD BY 20191 GROWTH DEBOTTLENECKS AND BROWNFIELD EXPANSIONS EXPECTED TO RAISE TOTAL OIL SANDS PRODUCTION FROM 463 MBPD (2015) TO GREATER THAN 700 MBPD (2019) FIREBAG • FURTHER POTENTIAL DEBOTTLENECK OPPORTUNITIES4 • 23 MBPD DEBOTTLENECK COMPLETED IN Q4 2
Slide 24: Market Access for Oil Sands Production
24 MARKET ACCESS FOR OIL SANDS PRODUCTION SUNCOR CURRENTLY HAS APPROXIMATELY 750 MBPD OF NEAR-TERM MARKET ACCESS1 PROPOSED PROJECTS COULD PROVIDE SUNCOR WITH EXPANDED PIPELINE CONNECTIVITY TO MARKETS PIPELINE CURRENT AND FORECASTED GROSS PIPELINE CAPACITY2 GATHERING LINES TMPL FORT MCMURRAY 300 MBPD
Slide 25: Refining & Marketing – The Value of Integration
25 REFINING & MARKETING – THE VALUE OF INTEGRATION R&M 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 Q1 2017 PRICE REALIZATI
Slide 26: Typical Attributes of North American Oil Plays
26 TYPICAL ATTRIBUTES OF NORTH AMERICAN OIL PLAYS1 FORT HILLS TIGHT OIL OFFSHORE 50 YEARS ILLUSTRATIVE ANNUAL CASH FLOW PROFILE BASED OFF NAMEPLATE CAPACITY AT FORT HILLS OF 98 MBPD (SUNCOR WI)2 MINING & TIGHT OIL SAGD OFFSHORE UPGRADING INITIAL CAPITAL LOW MEDIUM HIGH HIGH REINVESTMENT CYCLE SHORT
Slide 27: High Quality Mining, In Situ and Upgrading Portfolio
27 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 28: Offshore with >410 Million Barrels of 2P Reserves
28 OFFSHORE WITH >410 MILLION BARRELS OF 2P RESERVES1 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 OP
Slide 29: Canada's Largest Refining & Marketing Business
29 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 RECEIVING CRUDE
Slide 30: Advisories
30 Advisories Forward-Looking Statements – This presentation contains certain and other laws or regulations or the interpretations of such laws or information to analyze business performance, leverage and liquidity “forward-looking statements” within the meaning of the United regulations; applicable
Slide 31: Slide Notes
31 Slide Notes Slide 2-------------------------------------------------------------- which is a non-GAAP measure. See Non-GAAP Measures in the (3) WTI pricing for 2013-2016 are actual averages for each (1) Production excludes North America onshore, Libya and Syria Advisories. respective year. The WT
Slide 32: Slide Notes (continued)
32 Slide Notes (continued) Slide 8--------------------------------------------------------------- Statements in the Advisories. Statements in the Advisories. (1) Funds from operations (FFO) was previously referred to as (2) Suncor’s capital intensity includes the impact of acquiring an (2) Figure in
Slide 33: Slide Notes (continued)
33 Slide Notes (continued) Slide 22------------------------------------------------------------- pipeline will be built with the capacity indicated or at all. See Slide 27 ------------------------------------------------------------ (1) Full guidance is available at suncor.com/guidance. See Forward-
Slide 34: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS STEVE DOUGLAS DAVID BURDZIUK LEIGH MACCOMB PETER WALLS VICE PRESIDENT IR MANAGER IR SENIOR ANALYST IR ASSOCIATE IR SDOUGLAS@SUNCOR.COM DBURDZIUK@SUNCOR.COM LMACCOMB@SUNCOR.COM PWALLS@SUNCOR.COM VISIT US AT THE INVESTOR CENTRE ON SUNCOR.COM 1-800-558-9071 INVEST@SUNCOR.COM