EX-99.10 11 a2223197zex-99_10.htm EX.99.10
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EXHIBIT 99-10

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") promulgated by the United States Securities and Exchange Commission. Disclosures pertaining to the audited consolidated financial statements as at and for the year ended December 31, 2014 (the "2014 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 2014 Financial Statements are attached as Exhibit 99.1 to Suncor's annual report on Form 40-F for the year ended December 31, 2014 (the "Form 40-F").

Reserves Data

        Reserve estimates included herein are estimates only and can be significantly impacted by a variety of internal and external factors. For more information to 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 Data" section in Suncor's 2014 Annual Information Form (the "2014 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, 2014, which is attached as Exhibit 99.2 to the Form 40-F (the "2014 Management's Discussion and Analysis").

        The reserve data presented herein may differ in relation to the format and the basis from which volumes are economically determined under Subpart 1200 and National Instrument 51-101 — "Standards of Disclosure of Oil and Gas Activities" ("NI 51-101"), as disclosed in the 2014 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 2014 Financial Statements, the 2014 Management's Discussion and Analysis and the 2014 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").

 
  SCO
(mmbbls)
  Bitumen
(mmbbls)
  Crude Oil and NGLs(3)
(mmbbls)
  Natural Gas
(bcf)
  Total
(mmboe)
 
At December 31, (net reserves, constant
prices and costs)
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  

Proved Developed

                                                             

Oil Sands

    1 700     1 804     143     153                     1 843     1 957  

Exploration and Production

                    170     171     36     38     176     177  
                                           

    1 700     1 804     143     153     170     171     36     38     2 019     2 134  
                                           

Proved Undeveloped

                                                             

Oil Sands

    452     516     1 444     1 566                     1 897     2 082  

Exploration and Production

                    64     46     1     6     64     47  
                                           

    452     516     1 444     1 566     64     46     1     6     1 961     2 129  
                                           

Proved

                                                             

Oil Sands

    2 152     2 320     1 588     1 719                     3 740     4 040  

Exploration and Production

                    234     216     37     44     241     223  
                                           

    2 152     2 320     1 588     1 719     234     216     37     44     3 981     4 263  
                                           

Reconciliation of Net Proved Oil and Gas Reserves

(net reserves,
constant prices and costs)
  Balance
December 31
2012
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions   Balance
December 31
2013
 

Oil Sands

                                                 

SCO (mmbbls)

    2 333     30     1         69     (112 )       2 320  

Bitumen (mmbbls)

    885     1     1         856     (23 )       1 719  

Exploration and Production

                                                 

Crude oil and NGLs(3) (mmbbls)

    251     12             2     (37 )   (12 )   216  

Natural gas (bcf)

    546     10             6     (61 )   (457 )   44  
                                   

Total (mmboe)

    3 560     45     2         928     (182 )   (89 )   4 263  
                                   

 

(net reserves,
constant prices and costs)
  Balance
December 31
2013
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions   Balance
December 31
2014
 

Oil Sands

                                                 

SCO (mmbbls)

    2 320     (62 )               (106 )       2 152  

Bitumen (mmbbls)

    1 719     (92 )               (39 )       1 588  

Exploration and Production

                                                 

Crude oil and NGLs(3) (mmbbls)

    216     53             1     (32 )   (4 )   234  

Natural gas (bcf)

    44     8             6     (7 )   (14 )   37  
                                   

Total (mmboe)

    4 263     (100 )           2     (178 )   (6 )   3 981  
                                   

Notes to Reserve Data:

(1)
Definitions

a.
Net reserves, in relation to Suncor's production and reserves, represents the Company's working interest (operated and non-operated) 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 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, either upward or downward, 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 (old) 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. The change in Oil Sands for 2013 was driven primarily by the addition of reserves as a result of the Fort Hills project sanction in October of 2013.

Capitalized Costs

 
  At December 31, 2014   At December 31, 2013  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Exploration and evaluation assets(1)

    1 581     667     2 248     2 040     732     2 772  

Oil and gas properties(2)

    12 584     16 651     29 235     10 770     14 753     25 523  

Plant and equipment(2)

    41 427     1 016     42 443     41 357     907     42 264  

— accumulated provision(2)

    (13 032 )   (8 021 )   (21 053 )   (12 124 )   (6 704 )   (18 828 )
                           

Total

    42 560     10 313     52 873     42 043     9 688     51 731  
                           

(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 18 of the 2014 Financial Statements.

(2)
Oil and Gas Properties, Plant and Equipment and the accumulated provision largely represent amounts associated with proved properties. See note 17 of the 2014 Financial Statements.

Costs Incurred for Property Acquisition, Exploration and Development Activities

 
  Year ended December 31, 2014   Year ended December 31, 2013  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Unproved property acquisition

        1     1         2     2  

Proved property acquisition

                         

Exploration(1)

    161     296     457     196     308     504  

Development(2)

    4 237     1 819     6 056     4 322     1 247     5 569  
                           

Total

    4 398     2 116     6 514     4 518     1 557     6 075  
                           

(1)
Includes amounts capitalized to Exploration and Evaluation as well as those charged to Exploration Expense on the Consolidated Balance Sheets and the Consolidated Statements of Comprehensive Income, respectively, of the 2014 Financial Statements.

(2)
Includes amounts capitalized to Property, Plant and Equipment on the Consolidated Balance Sheets of the 2014 Financial Statements that relate to the Company's decommissioning and restoration activities.

Results of Operations for Oil- and Gas-Producing Activities

 
  At December 31, 2014   At December 31, 2013  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Operating revenues, net of royalties

    13 579     4 043     17 622     12 230     5 217     17 447  

Other Income

    115     217     332     64     381     445  
                           

    13 694     4 260     17 954     12 294     5 598     17 892  

Purchases of crude oil and products

    355     459     814     460     568     1 028  

Operating, selling and general

    6 042     558     6 600     5 852     676     6 528  

Transportation

    541     90     631     482     127     609  

Depreciation, depletion, amortization and impairment

    4 035     1 349     5 384     2 439     1 804     4 243  

Exploration

    96     271     367     115     207     322  

Gain (loss) on disposal of assets

    3     (82 )   (79 )       (130 )   (130 )

Voyageur upgrader project charges

                82         82  

Finance expenses

    153     72     225     135     33     168  
                           

Earnings before Income Taxes

    2 469     1 543     4 012     2 729     2 313     5 042  

Income taxes

    693     890     1 583     689     1 313     2 002  
                           

Net Earnings

    1 776     653     2 429     2 040     1 000     3 040  
                           

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 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, and adjusted for decommissioning and restoration activities and 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 NGLs, and natural gas reserves provided herein will be recovered. Actual SCO, bitumen, crude oil and NGLs, 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
  B.C. Gas
Westcoast
Station 2
  National
Balancing
Point
North Sea
 
 
  US$/bbl
  US$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/mmbtu
  Cdn$/mmbtu
  Cdn$/mmbtu
 

2014

    101.70     94.99     82.80     95.98     103.40     4.40     4.09     9.52  

2013

    109.05     96.90     73.66     91.50     103.39     3.10     3.06     10.74  
                                   


 
  At December 31, 2014   At December 31, 2013  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Future cash inflows

    309 703     25 774     335 477     297 638     24 014     321 652  

Future production costs

    (154 238 )   (6 122 )   (160 360 )   (146 172 )   (4 925 )   (151 097 )

Future development costs

    (74 774 )   (4 394 )   (79 168 )   (76 042 )   (2 508 )   (78 550 )

Future income tax expenses

    (18 212 )   (8 103 )   (26 315 )   (16 649 )   (11 486 )   (28 135 )
                           

Future net cash flows

    62 479     7 155     69 634     58 775     5 095     63 870  

Annual 10% Discount Factor

    (39 279 )   (2 337 )   (41 616 )   (38 402 )   (1 085 )   (39 487 )
                           

Standardized measure of discounted future net cash flows

    23 200     4 818     28 018     20 373     4 010     24 383  
                           

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

($ millions)
  2014   2013  

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

    24 383     25 092  

Sales and transfers of oil and gas produced

    (8 679 )   (8 463 )

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

    5 310     2 193  

Net change due to extensions, discoveries and improved recovery

    47     (38 )

Net change due to acquisitions and dispositions

    (72 )   (888 )

Net change due to revisions in quantity estimates

    52     999  

Previously estimated development costs incurred during the period

    5 209     4 363  

Changes in estimated future development costs

    (2 646 )   (1 743 )

Accretion of discount

    2 213     2 180  

Net change in income taxes

    2 201     688  
           

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

    28 018     24 383  
           



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