Suncor Energy Inc. · TSX:SU
Suncor Energy — Investor Day (May 2024)
44 slides from Suncor Energy's investor day presentation, May 21, 2024
Slide 1: 2024 Investor Day
2024 Investor Day May 21, 2024 1
Slide 2: Agenda
Agenda 1 Winning proposition Rich Kruger Chief Executive Officer 40+ years experience Kris Smith Chief Financial Officer 25+ years experience 2 Driving improvement – Upstream – Downstream – Corporate Peter Zebedee Dave Oldreive Executive VP, Oil Sands Executive VP, Downstream 3 Maximizing returns 25
Slide 3: Executive summary
Executive summary Continued Focus on the Fundamentals • Significant progress, priority on safety, operational execution, reliability Free Funds Flow improvement of $3.3B by 2026E (@ US$75 WTI) • WTI breakeven reduction of $10/bbl US by 2026E to ~$43/bbl US No significant spend on Base Mine replaceme
Slide 4: Suncor's strategy to win
Suncor’s strategy to win Creating value through our unparalleled, integrated upstream and downstream asset base, underpinned by large scale, long-life oil sands resources Deliver industry Achieve a cost Leverage integration Decarbonize base Grow free cash flow leading performance structure that to m
Slide 5: There is integration...and there is "Suncor Integration"
There is integration...and there is “Suncor Integration” Fort Hills East Coast Edmonton Base Plant Montreal Syncrude Retail 7.2 Bboe 2P reserves 25+ years In Situ Logistics & Trading Reserve life index Sarnia Commerce City Upstream production Refining capacity Product sales Edmonton Oil Sands mining
Slide 6: Today's Suncor…focused, competitive, results-oriented
Today’s Suncor…focused, competitive, results-oriented • New, high-quality, aligned Executive Leadership Team • Top-to-Bottom . . . “Focus on the Fundamentals” Strategy • Clearer, simpler strategies, objectives and priorities • Smaller, more focused above-field support organization “Winning” mindset
Slide 7: Proof points…past 12-month results
Proof points…past 12-month results • Step-function safety improvement • Significant “above-field” cost reductions • 2023 safest year in company history • 22% reduction, 1,800 total people, achieved in 5 months • No SIFa’s for 1st time since 2015, LT down 50% • $450M annual cost savings in 2024+ • In
Slide 8: Lower breakeven $10/bbl US by 2026E
Lower breakeven $10/bbl US by 2026E WTI breakeven1 Contribution US$/bbl $53* Downstream Upstream ($4) ($2) Corporate ($4) $43 Business Environment Basis WTI US $75 WCS US $59 2-1-1 US $27 AECO CA $3 30 2023 2024E 2025E 2026E Future FX 0.74 * Excludes the approximate US$2/bbl benefit from the Fort Hi
Slide 9: Increasing shareholder value
Increasing shareholder value Upstream production1 Free Funds Flow (@ US$75 WTI) kbpd $B 900 10 8 800 +$3.3B 6 4 700 2 600 0 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E normalized3 Fort Hills acquisition tax benefits SUNCOR ENERGY 1,2,3 9
Slide 10: Driving improvement: Upstream
Driving improvement Upstream SUNCOR ENERGY 10
Slide 11: Upstream performance improvement
Upstream performance improvement WTI breakeven reduction US$/bbl $10 Total Upstream 5 yr avg. AFFO $10.1B1 0 Upstream Downstream Corporate Targeted reductions SUNCOR ENERGY 1 11
Slide 12: Driving operating leverage
Driving operating leverage Upstream production1 Upstream OS&G per barrel2 kbpd $/bbl 900 38 36 800 34 700 32 600 30 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E SUNCOR ENERGY 1,2,3 12
Slide 13: Fewer, bigger trucks
Fewer, bigger trucks • Displacing higher-cost contractors and rentals • Benefits • Safety improvements • 20% lower cost vs outsourced • Better productivity 200T - 320T contractor trucks 400T owned trucks 100+ US$1.00 55 contractor per barrel new trucks trucks breakeven Impact: $325M/yr cost savings
Slide 14: Faster, fuller fleet
Faster, fuller fleet Hauling • Advanced technology implementation Truck productivity (t/working hr) Best in region t/working hr Truck productivity (t/working hr) by truck model Mine 1 Mine 2 Mine 3 Mine 5 • ‘Mine Connect’ digital tool Mine 4 Mine Connect (Enterprise) Variance & benchmarking 2K Fleet
Slide 15: Lower cost maintenance
Lower cost maintenance Annual mobile maintenance spend • Improved maintenance strategy $M 1,300 • Standard practices across all 5 mines 1,200 • Maximize life of components and assets $150M • Reduce labour hours 1,100 • Performance based strategic partnerships with OEMs 1,000 • Leverage scale to achi
Slide 16: Autonomous trucks
Autonomous trucks Base Mine cost savings • World’s largest single mine fleet $M • Better safety performance 200 Best-in-class productivity • Lower costs Further optimization • Best-in-class productivity • Higher speeds Waste tonnage – • Less mine maintenance 100 100% autonomous • Optimized shovel pe
Slide 17: In Situ improvement
In Situ improvement Firebag steam asset reliability +25 kbpd of In Situ improvements Steam reliability improvements 96% Produced water piping modifications 94% Improved management of site water 92% 90% Increased infill drilling to drive down SOR • Optimize non-condensable gas 88% 86% • Remov
Slide 18: Driving improvement: Downstream
Driving improvement Downstream SUNCOR ENERGY 18
Slide 19: Downstream performance improvement
Downstream performance improvement WTI breakeven reduction US$/bbl $10 Downstream 5 yr avg. AFFO $4.3B1 0 Upstream Downstream Corporate Targeted reductions SUNCOR ENERGY 1 19
Slide 20: Better turnarounds
Better turnarounds Industry performance quartiles1 • Competitive turnarounds through: Schedule Cost • Industry benchmarking & gap closure • Risk-based work selection & scope 1st 1st Future state • Disciplined planning • Execution efficiencies 2nd 2nd • “OEMS” enabled 3rd 3rd Downstream Upstream Upst
Slide 21: More uptime
More uptime Refining operational availability 98% • Focused maintenance strategies 1st / 2nd Q1 • Risk-based inspection programs Quartile 96% • Longer intervals, shorter turnarounds 3rd / 4th • “OEMS” enabled Quartile 94% 92% 90% 88% 5-yr avg 1 2024E 2025E 2026E Impact: $100M/yr margin improvement S
Slide 22: Differentiated value capture
Differentiated value capture Supply and trading Power generation capacity MW $M 2,400 300 Incremental Growth 2,000 250 +800 MW of export Logistics 1,600 power capacity 200 150 95 crudes 1,200 260 products Trading 21 countries 800 100 1,200 customers 50 400 Supply 0 0 Existing 2025E Impact: $250M/yr
Slide 23: Higher quality retail sites
Higher quality retail sites High-grading network1 (% of controlled sites) Before 60% 50% 30% retail EBITDA growth by 2027E 40% 30% After 20% 10% 0% Full offering Mid offering Limited offering 2023 2027E Canadian avg Impact: $200M/yr margin improvement SUNCOR ENERGY 1 23
Slide 24: Driving improvement: Corporate
Driving improvement Corporate SUNCOR ENERGY 24
Slide 25: Corporate performance improvement
Corporate performance improvement WTI breakeven reduction US$/bbl $10 0 Upstream Downstream Corporate Targeted reductions SUNCOR ENERGY 25
Slide 26: Driving corporate discipline
Driving corporate discipline Corporate improvement • Above-field reduction • Employees reduced 22% $150 • Contingent workers reduced 50% • Leaders reduced 31% $280 • Reduced # of layers • Increased spans of control $450 • Focused IT cost reductions • Continuing organizational efficiency improveme
Slide 27: Maximizing returns
Maximizing returns SUNCOR ENERGY 27
Slide 28: Growing cash flow
Growing cash flow AFFO AFFO per share1 $B $/sh 20 20 15 15 10 10 5 5 0 0 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E normalized2 normalized2,3 US$75 WTI US$90 WTI US$75 WTI US$90 WTI $40B+ of AFFO 2024E – 2026E (@ US$75 WTI) SUNCOR ENERGY 1,2,3 28
Slide 29: Capital allocation principles
Capital allocation principles 1 Ensure a strong, resilient balance sheet 2 Sustain our existing integrated asset base 3 Pay a reliable and growing dividend 4 Return capital to shareholders via buybacks 5 Selectively invest in high-value growth opportunities SUNCOR ENERGY 29
Slide 30: Committed to a strong, resilient balance sheet…
Committed to a strong, resilient balance sheet… Long-term debt maturities $B $8.8B maturities Repaid $7.8B in last 3 years $2.6B maturities CAD USD 13-year Investment grade $7B+ 0.6x avg debt tenor credit rating liquidity Net Debt* to AFFO * Excludes capitalized leases SUNCOR ENERGY 30
Slide 31: …as well as to capital discipline
…as well as to capital discipline Capital expenditures* Projects near completion: $B % • Base Plant cogeneration (2024E) 7 70 • U1 drum replacement (2025E) 6 60 • Haul truck & shovel fleet strategy (2025E) 5 50 % of AFFO (US$75 WTI) • Mildred Lake Expansion West (2025E) 4 40 • West White Rose (2026E
Slide 32: $3.3B incremental free funds flow (@ US$75 WTI)
$3.3B incremental free funds flow (@ US$75 WTI) Free Funds Flow Free Funds Flow per share1 $B $/sh 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E normalized2 normalized2,3 US$75 WTI US$90 WTI US$75 WTI US$90 WTI SUNCOR ENERGY 1,2,3 32
Slide 33: Free funds flow allocation framework
Free funds flow allocation framework • Committed to reliable, growing dividend: targeting 3 – 5% annual growth • Ensure financial resilience: targeting 1.0x Net Debt* to AFFO @ US$50 WTI • Current Net Debt* less than $9B • Return substantial free funds to shareholders via buybacks Timing Buybacks To
Slide 34: 27% of current market cap returned 2024E to 2026E
27% of current market cap returned 2024E to 2026E (@ US$75 WTI)1 Share buybacks $B 10 8 6 4 2 0 2024E 2025E 2026E US$75 WTI US$90 WTI $18.5B of total cash return 2024E to 2026E (@ US$75 WTI) Note: Cash returns include dividends and share buybacks SUNCOR ENERGY 1 34
Slide 35: Closing comments
Closing comments SUNCOR ENERGY 35
Slide 36: Our commitment to you…
Our commitment to you… Continue to drive positive change at Suncor Provide “Proof Points” as we proceed Maximize the value of our unparallelled integrated asset base Execute on our tangible improvement plans Grow free cash flow per share and significantly increase shareholder returns SUNCOR ENERGY 3
Slide 37: Improvement initiatives
Improvement initiatives Indicative Free Funds Flow contribution 2024E to 2026E (@ US$75 WTI) $B 4.5 4.0 3.5 3.0 2.5 +$3.3B 2.0 1.5 1.0 0.5 0.0 Additional Fleet & In Situ Upstream Turnarounds Refining Supply Retail Corporate Other 1 Inflation Total production equipment & Cogen other reliability & Tra
Slide 38: Appendix
Appendix SUNCOR ENERGY 38
Slide 39: Business environment assumptions
Business environment assumptions (US$ per barrel, unless otherwise noted) US$75 WTI US$90 WTI 2024 Guidance WTI 75.00 90.00 76.00 Brent 79.00 94.00 80.00 WTI-WCS (16.00) (16.00) (16.00) AECO (C$/GJ) 3.00 3.00 3.00 New York Harbor 2-1-1 crack 27.00 32.00 27.00 Exchange rate average (CAD/USD) 0.74 0.7
Slide 40: Calculating breakeven at year-end 2023
Calculating breakeven at year-end 2023 WTI breakeven1 US$/bbl $53* $52 0 Total expenses Sustaining capital Dividends Downstream margin 2023 breakeven (OS&G, royalties, taxes, etc.) + capitalized interest & other normalized * Excludes the approximate US$2/bbl benefit from the Fort Hills acquisition t
Slide 41: Notes
Notes SUNCOR ENERGY 41
Slide 42: Advisories & Slide Notes
Advisories & Slide Notes Forward-Looking Statements – This presentation contains certain “forward- - expectations regarding corporate cost reductions, growing adjusted - expected capital efficiencies and cost savings; looking statements” and forward-looking information (collectively, “forward- funds
Slide 43: Advisories & Slide Notes
Advisories & Slide Notes - risks inherent in marketing operations (including credit risks); profitability of Suncor’s operations Slide 19 ------------------------------------------------------------------- - imprecision of reserves estimates and estimates of recoverable quantities 1. $4.3B of Downst
Slide 44: Visit us at the Investor Centre on suncor.com
Visit us at the Investor Centre on suncor.com invest@suncor.com SUNCOR ENERGY 44