Suncor Energy Inc. · TSX:SU
Suncor Energy — Investor Presentation (October 2018)
44 slides from Suncor Energy's investor presentation, Oct 31, 2018
Slide 1: Suncor Energy Investor Information
Suncor Energy Investor Information Published October 31, 2018
Slide 2: Canada's leading integrated energy company
2 Canada’s leading integrated energy company $95B Enterprise value as at Sept. 30, 2018 1 ~940mbpd Oil production capacity ~550mbpd Upgrading capacity nameplate2 capacity as at Sept. 30, 2018 nameplate2 capacity as at Sept. 30, 2018 31+ years 2P Reserve life index as at Dec. 31, 2017 3 ~460mbpd Refi
Slide 3: Near-term investment proposition – growing shareholder returns
3 Near-term 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 (mbpd) US$63.92 WTI, 0.78 C$/US$, US$18.80 NYH 3-2-1 crack spread 900 Hebron 800 ~9% E&P (C$ b
Slide 4: The Suncor advantage
4 The Suncor advantage Financial flexibility Long life & low decline Strong balance sheet Financial Cost and carbon competitive — 1.3x A low ~36yrs $34.50 Oil Sands 2P 2017 sustaining capex Net debt to FFO1 Baa1 Reserve Life Index2 + cash cost / bbl3 50+ years of operations 16 years of dividend incr
Slide 5: The value of Suncor's integrated model
5 The value of Suncor’s integrated model Example of our ability to optimize operations & achieve incremental margins under changing market conditions Positive FFO1 impact under IMO2 2020 Expect IMO2 regulatory change will enhance demand for diesel as marine fuel and reduce demand for residual (bunke
Slide 6: Multiyear focus on structural free funds flow growth
6 Multiyear focus on structural free funds flow growth1,2 Production growth4 Growth Free funds In situ replication flow growth projects1,4 Opportunistic Production share buybacks Debottlenecks, cost growth reductions & margin Fort Hills & Hebron improvements ~4% anticipated ~5% anticipated productio
Slide 7: Capital discipline – flexible capital allocation plan
7 Capital discipline – flexible capital allocation plan1 $10/bbl increase in Brent price would generate approximately $2.2 billion of additional FFO 2 Capital commitment Discretionary capital Balance Sustained Production sheet price growth to leverage Sustaining Buyback4 outlook* 20203 Dividend4 Gro
Slide 8: Medium-term investment proposition – free funds flow growth
8 Medium-term investment proposition – free funds flow growth1 Free funds flow2 improvement potential for years 2020 to 2023 inclusive 3 Excluding commodity price changes & independent of production growth $2.0B Potential to deliver incremental free funds flow2 of ~$500M/year Growth Margin Opex savi
Slide 9: Longer term organic growth - Replication
9 Longer term organic growth - Replication1 Targeting less than $50 WTI (USD) cost of capital breakeven1 Planned phases of 40 mbpd next ~10 generation in situ facilities (replication) Phases in regulatory process 7 2 approved and 5 submitted 2023 Potential first oil from first phase Months expected
Slide 10: In situ – cost reduction history and enhanced future designs
10 In situ – cost reduction history and enhanced future designs Structural cost savings Next generation well pad design $/bbl SOR Simplified sustaining well pad design currently being deployed $26 4 New in situ well pad compared to previous Suncor designs 9100 $13 2 230 3 0.7 625 25 $0 0 2012 2013 2
Slide 11: Disciplined cost management
11 Disciplined cost management Total OS&G ~5% below 2014 levels while production increased ~30% Consistent reductions in unit operating costs C$/bbl 40% Oil Sands1 Driven by seasonal planned maintenance 685 mbpd $37.05 30% $37.00 $33.80 20% Production $27.85 $26.50 $25.50 10% $23.80 535 mbpd 0% $9.6
Slide 12: The foundation of our strategy
12 The foundation of our strategy Operational excellence Optimizing the base business Autonomous Haul Trucks – operationalizing technology • Safety as a core value Less equipment, reduced human exposure & more layers of safety • Industry leading reliability ~10% productivity improvement1 by optimizi
Slide 13: Generating discretionary free funds flow
13 Generating discretionary free funds flow1 FFO2 consistently exceeds sustaining capital, associated capitalized interest and dividends (C$ billions) $12 Expected Impacts to 2018 FFO2 Fort Hills & Hebron ramp-up $10 • Full opex costs $9.1 • Partial production $8 Higher interest expense $6.8 $6 • Lo
Slide 14: Returning cash to shareholders
14 Returning cash to shareholders 16 consecutive years of dividend increases1 & opportunistic share buybacks with renewed NCIB2 Dividend increase Shares repurchased3 Dividend + buyback yield5 12.5% Q1 2018 $3.3B From May 1, 2017 – Sept. 30, 2018 6% Trailing twelve months as of Sept. 30, 2018 Dividen
Slide 15: Strong balance sheet
15 Strong balance sheet Conservative debt targets Debt metrics - as at Sept. 30, 2018 <3x Net debt to FFO1 1.3x Net debt to FFO1 20-30% Total debt to capitalization 27% Total debt to capitalization Investment grade credit rating $6.0B Liquidity A DBRS Rating Limited (A Low) Stable Cash & cash equiva
Slide 16: Generating industry-leading FFO per barrel
16 Generating industry-leading FFO1 per barrel Suncor delivers leading FFO1 per barrel2 despite Canadian oil differential headwinds, demonstrating the value of our integrated business and global competitiveness Oil sands Supermajors U.S. E&P Proven advantage of Suncor’s unique Suncor continued to re
Slide 17: Return on capital employed past the inflection point
17 Return on capital employed1 past the inflection point Suncor's spending on major capital projects Fort Hills and Hebron completed The 50 year long life, low decline production profile of Fort Hills has begun Return on capital employed has reached an inflection point and is expected to rise2 ROCE1
Slide 18: Suncor's integrated model
18 Suncor’s integrated model Minimal YTD impact of differentials1 at < 1% of FFO2 as at September 30, 2018 (-$22/bbl USD YTD L/H3 differential & -$1/bbl USD YTD Synthetic4 benchmark differential) Revenue made on NOT Exposed the value of 100 % E&P production attracting Brent based pricing Suncor’s un
Slide 19: Market access for Oil Sands production
19 Market access for Oil Sands production Logistical flexibility to move production to market including Fort Hills barrels Pipeline Current and forecasted gross pipeline capacity1 Feeder lines ~750 TMPL Fort McMurray 300 mbpd capacity1 142 TMEP (Proposed)2 Edmonton +590 mbpd capacity Hardisty Expres
Slide 20: Regional synergies for existing assets
20 Regional synergies for existing assets 100% WI Fort Joint ownership Hills Regional synergy opportunities1 P Upgrader feedstock optionality Syncrude Joslyn Turnaround planning optimization C Unplanned outage impact mitigations Firebag In Situ Process and technology sharing MacKay River Syncrude In
Slide 21: Syncrude – Following a proven reliability journey
21 Syncrude – Following a proven reliability journey Suncor’s base plant upgrader reliability 91% 91% Multi year journey to reach >90% reliability 90%1 Reliability step-change after 4 years 83% Not a gradual profile 81% interconnect pipeline 80% Firebag to basemine 79% fully operational Suncor began
Slide 22: Fort Hills advantages
22 Fort Hills 54.11% Advantages Suncor working interest1 ~$17/bbl Q3 price realization vs. OSO bitumen4 (location and quality benefits) 194 mbpd ~20% Condensate blending ratio Nameplate capacity tested and proven in Q2 20182 Trucks and operations are AHS ready 105 mbpd Lower GHG intensity versus all
Slide 23: Fort Hills – ramp-up exceeding expectations
23 Fort Hills – ramp-up exceeding expectations Secondary extraction Mining FSU* Train 1 (Jan 27 start-up) Ore preparation SRU** Train 1 (Jan 27 start-up) Primary extraction FSU* Train 2 (Mar 23 start-up) Bitumen Bitumen shipped Froth SRU** Train 2 to market (Sept 2017 start-up) (April 26 start-up) F
Slide 24: Fort Hills – designed for safe, reliable, low-cost ramp-up and operations
24 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 25: Fort Hills – leading edge extraction technologies
25 Fort Hills – leading edge extraction technologies Secondary extraction – Paraffinic Froth Treatment (PFT) Bitumen froth mixed with solvents to remove water and minerals Partially upgraded Reduced carbon due to reduced asphaltenes content >75% bitumen Shipped directly to Less diluent required ~20%
Slide 26: ESG leadership
26 ESG leadership Environment Regulatory & policy leadership GHG & water performance Technology & innovation Operate under one of the most stringent, >60% reduction in Oil Sands Base GHG $350M in technology investments in 2017 transparent and compliance-focused emissions intensity since 1990 Signifi
Slide 27: Suncor's tailings reclamation – PASS
27 Suncor’s tailings reclamation – PASS fines/clay PASS technology aims to rapidly dewater and treat tailings to accelerate 3% sand Produced reclamation and lower our environmental footprint water 76% 20% tailings bitumen components Advancing execution, with regulatory approval received October 2017
Slide 28: Appendix
28 Appendix SuNCoR)
Slide 29: 2018 Capital and production guidance
29 2018 Capital and production guidance1 2018 Capital2 Growth capital3 Production4 $ millions percent boepd Upstream 4,300 – 4,500 30% 415,000 – 430,000 Oil Sands operations Downstream 850 – 900 0% 60,000 – 70,000 Fort Hills Corporate 50 – 100 0% 140,000 – 145,000 Syncrude 105,000 – 115,000 E&P 415,
Slide 30: High quality mining, in situ and upgrading portfolio
30 High quality mining, in situ and upgrading portfolio1 Base Plant Syncrude 350,000 bpd capacity Syncrude operated Suncor working interest 100% 205,600 bpd coking capacity (SU WI) 1,488 mmbbls 2P reserves1 Suncor working interest 58.74% 1,370 mmbbls 2P reserves (SU WI) 1,2 Firebag Fort Hills 203,00
Slide 31: Typical attributes of North American oil plays
31 Typical attributes1 of North American oil plays Initial Decline Sustaining Operating Reservoir Recovery Illustrative annual FFO2 profiles3 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 Very
Slide 32: Canada's largest Refining & Marketing business
32 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 33: Refining & Marketing – the value of integration
33 Refining & Marketing – the value of integration R&M annual net earnings1 Suncor peers1 Refinery utilization vs. US average Suncor US$/bbl of capacity High Percent of refining capacity Median US Average2 $15 Low 100% $10 90% Full refinery turnaround at $5 Edmonton refinery in Q2 $0 80% 2012 2013 2
Slide 34: Offshore with >415 million barrels of 2P reserves
34 Offshore with >415 million barrels of 2P reserves1 Terra Nova Hibernia Suncor Energy operated ExxonMobil operated Suncor working interest 37.675% Suncor working interest 20%2 41 mmboe 2P reserves (SU WI) 73 mmboe 2P reserves (SU WI) White Rose Buzzard Husky Energy operated Nexen Petroleum UK oper
Slide 35: E&P – Investing in high value, low risk projects
35 E&P – Investing in high value, low risk projects Current offshore performance Sanctioned projects1 mboe/d 120 Oda (Norway) • 30% working interest 100 Hebron • 11 mbbls/d anticipated net peak production 80 White Rose • First oil expected 2019 60 Hibernia 40 Terra Nova 20 Golden Eagle Fenja (Norway
Slide 36: Track record of counter-cyclical acquisitions and divestments
36 Track record of counter-cyclical acquisitions ( ) and divestments ( ) Total E&P Canada $100 WTI US$/bbl 1 10% Fort Hills WI $80 $ Non -core UK offshore Canadian Oil Sands 2 37% Syncrude WI $60 7 Petro -Canada 6 1 5 2 3 4 Rosebank $40 3 30% WI $20 Murphy Oil 4 5% Syncrude WI $40 NYH 3-2-1 US$/bbl
Slide 37: Notes
37 Notes SuNCoR)
Slide 38: Advisories
38 Advisories Forward-Looking Statements – This presentation contains certain labour, services, and infrastructure; the satisfaction by third parties of useful information by investors. “forward-looking statements” within the meaning of the United States their obligations to Suncor; the impact of ro
Slide 39: Slide Notes
39 Slide Notes Slide 2------------------------------------------------------------- (8) Refers to average WTI crude prices for 2017 and estimated (10) Capacity refers to nameplate capacity as at September 30, (1) Market capitalization + debt - cash and cash equivalents. average WTI crude oil price f
Slide 40: Slide Notes (continued)
40 Slide Notes (continued) Slide 7-------------------------------------------------------------- Slide 10------------------------------------------------------------- Measures in the Advisories. (1) Based on current business plans, which are subject to change. (1) Refers to in situ sustaining capita
Slide 41: Slide Notes (continued)
41 Slide Notes (continued) Slide 14------------------------------------------------------------- Slide 15--------------------------------------------------------------- (4) Based on current business plan and business environment (1) Annualized dividend increases for 16 years assumes (1) Funds from o
Slide 42: Slide Notes (continued)
42 Slide Notes (continued) Slide 21------------------------------------------------------------- Slide 26 ------------------------------------------------------------- midpoint of 2018 guidance and the associated business (1) Excludes the impact of operations being shut-in due to forest (1) Source:
Slide 43: Slide Notes (continued)
43 Slide Notes (continued) Slide 33------------------------------------------------------------ Slide 35---------------------------------------------------------- (1) Net earnings per barrel of capacity. Peers include: Alon, CVR (1) Actual peak production and first oil dates may vary from those Refi
Slide 44: Investor Relations contacts
Investor Relations contacts Trevor Bell David Burdziuk Valerie Roberts Kinga Uto Vice President IR Director IR Senior Analyst IR Senior ESG Analyst IR tgbell@suncor.com dburdziuk@suncor.com vroberts@suncor.com kuto@suncor.com Visit us at the Investor Centre on suncor.com 1-800-558-9071 invest@suncor