Management's Discussion and Analysis for the first quarter ended March 31, 2020

Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. We are strategically focused on developing one of the world's largest petroleum resource basins – Canada's Athabasca oil sands. In addition, we explore for, acquire, develop, produce and market crude oil in Canada and internationally; we transport and refine crude oil, and we market petroleum and petrochemical products primarily in Canada. We also operate a renewable energy business and conduct energy trading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products, and power.

For a description of Suncor's segments, refer to Suncor's Management's Discussion and Analysis for the year ended December 31, 2019, dated February 26, 2020 (the 2019 annual MD&A).

This Management's Discussion and Analysis (MD&A) should be read in conjunction with Suncor's unaudited interim Consolidated Financial Statements for the three months ended March 31, 2020, Suncor's audited Consolidated Financial Statements for the year ended December 31, 2019 and the 2019 annual MD&A.

Additional information about Suncor filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC), including quarterly and annual reports and Suncor's Annual Information Form dated February 26, 2020 (the 2019 AIF), which is also filed with the SEC under cover of Form 40-F, is available online at www.sedar.com, www.sec.gov and our website www.suncor.com. Information contained in or otherwise accessible through our website does not form part of this MD&A, and is not incorporated into this document by reference.

References to "we", "our", "Suncor", or "the company" mean Suncor Energy Inc., and the company's subsidiaries and interests in associates and jointly controlled entities, unless the context otherwise requires.

Unless otherwise noted, all financial information has been prepared in accordance with Canadian generally accepted accounting principles (GAAP), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB), which is within the framework of International Financial Reporting Standards (IFRS) as issued by the IASB.

All financial information is reported in Canadian dollars, unless otherwise noted. Production volumes are presented on a working-interest basis, before royalties, except for Libya, which is on an economic basis.

References to Oil Sands operations exclude Suncor's interests in Fort Hills and Syncrude.

Certain financial measures in this MD&A – namely operating earnings (loss), funds from (used in) operations, return on capital employed (ROCE), Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs, refining and marketing margin, refining operating expense, free funds flow, discretionary free funds flow, and last-in, first-out (LIFO) inventory valuation methodology and related per share or per barrel amounts – are not prescribed by GAAP. Operating earnings (loss) is defined in the Non-GAAP Financial Measures Advisory section of this MD&A and reconciled to the most directly comparable GAAP measures in the Consolidated Financial Information and Segment Results and Analysis sections of this MD&A. Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating

costs and LIFO are defined in the Non-GAAP Financial Measures Advisory section of this MD&A and reconciled to the most directly comparable GAAP measures in the Segment Results and Analysis section of this MD&A. Funds from (used in) operations, ROCE, free funds flow, discretionary free funds flow, refining and marketing margin, and refining operating expense are defined and reconciled, where applicable, to the most directly comparable GAAP measures in the Non-GAAP Financial Measures Advisory section of this MD&A.

The company's business, reserves, financial condition and results of operations may be affected by a number of factors, including, but not limited to, the factors described below and within the Forward-Looking Information section of this MD&A. This MD&A contains forward-looking information based on Suncor's current expectations, estimates, projections and assumptions. This information is subject to a number of risks and uncertainties, including those discussed in this MD&A, the 2019 annual MD&A and Suncor's other disclosure documents filed with Canadian securities regulatory authorities and the SEC, many of which are beyond the company's control. Users of this information are cautioned that actual results may differ materially. Refer to the Forward-Looking Information section of this MD&A for information on the material risk factors and assumptions underlying our forward-looking information contained in this MD&A.

Suncor's business, financial condition and results of operations could be materially and adversely affected by the outbreak of epidemics, pandemics and other public health crises in geographic areas in which we have operations, suppliers, customers or employees, including the recent global outbreak of COVID-19. The recent COVID-19 pandemic, and actions that may be taken by governmental authorities in response thereto, has resulted, and may continue to result in, among other things: increased volatility in financial markets and foreign currency exchange rates; disruptions to global supply chains; labour shortages; reductions in trade volumes; temporary operational restrictions and restrictions on gatherings greater than a certain number of individuals, shelter-in- place declarations and quarantine orders, business closures and travel bans; an overall slowdown in the global economy; political and economic instability; and civil unrest. In particular, the COVID-19 pandemic has resulted in, and may continue to result in, a reduction in the demand for, and prices of, commodities that are closely linked to Suncor's financial performance, including crude oil, refined petroleum products (such as jet fuel and gasoline), natural gas and electricity, and also increases the risk that storage for crude oil and refined petroleum products could reach capacity in certain geographic locations in which we operate. A prolonged period of decreased demand for, and prices of, these commodities, and any applicable storage constraints, could also result in us voluntarily curtailing or shutting in production and a decrease in our refined product volumes and refinery utilization rates, which could adversely impact our business, financial condition and results of operations. Suncor is also subject to risks relating to the health and safety of our people, as well as the potential for a slowdown or temporary suspension of our operations in locations impacted by an outbreak, increased labour and fuel costs, and regulatory changes. Such a suspension in operations could also be mandated by governmental authorities in response to the COVID-19 pandemic. This could negatively impact Suncor's production or refined product volumes and refinery utilization rates for a sustained period of time, which would adversely impact our business, financial condition and results of operations.

Continued Weakness and Volatility in Commodity and Petroleum Products Prices

Recent market events and conditions, including excess global crude oil and petroleum products supply as a result of decreased global demand due to the COVID-19 pandemic and actions taken by OPEC+ countries to set and maintain increased production levels during March and April of 2020 have caused significant weakness and volatility in commodity and petroleum products prices. Notwithstanding recent agreements among OPEC+ countries to reduce production levels, commodity prices could remain under pressure for a prolonged period and be volatile. This could result in reduced utilization and/or the suspension of operations at certain of our facilities, buyers of our products declaring force majeure or bankruptcy, the unavailability of storage, and disruptions of pipeline and other transportation systems for our products, which would further negatively impact Suncor's production or refined product volumes, and could adversely impact our business, financial condition and results of operations.

prices and currency exchange rates, and a decline in long-term interest rates. Our operations and business are particularly sensitive to a reduction in the demand for, and prices of, commodities that are closely linked to Suncor's financial performance, including crude oil, refined petroleum products (such as jet fuel and gasoline), natural gas and electricity. The potential direct and indirect impacts of the economic downturn have been considered in management's estimates, and assumptions at period end have been reflected in our results with any significant changes described in the relevant notes to the company's unaudited interim Consolidated Financial Statements for the three months ended March 31, 2020.

The COVID-19 pandemic is an evolving situation that will continue to have widespread implications for our business environment, operations and financial condition.

The company has taken action to address the decline in demand by pacing our operations to meet current demand levels, flexing product mix from gasoline to diesel, leveraging our midstream, trading and marketing expertise, and maximizing upstream production integration with our refineries. In addition, the company has strengthened its liquidity in the first quarter of 2020 and will continue to take the necessary actions to protect the financial health of the company and the safety of our people, customers and communities.

The guidance revisions announced on May 5, 2020, in conjunction with those announced on March 23, 2020, reflect the challenge in determining the duration of the impact of the COVID-19 pandemic. These include reductions to the company's capital program and annual operating expenditures across the business and, in response to the rapid reduction in refined product demand, reductions to the company's refinery utilization rates and total Oil Sands volumes to align to downstream utilizations.

The pace of an economic recovery is challenging to determine with the overall outlook for oil demand dependent on how successful nations are at combating the pandemic and loosening social restrictions. The company expects its financial results for the year to experience a material decline relative to the results in Suncor's audited Consolidated Financial Statements for the year ended December 31, 2019. Due to the COVID-19 pandemic, since March 31, 2020, as expected there have been further declines in crude oil and refined product demand and pricing, which will impact the company's second quarter results.

Certain crude oil and natural gas liquids volumes have been converted to mcfe on the basis of one bbl to six mcf. Also, certain natural gas volumes have been converted to boe or mboe on the same basis. Any figure presented in mcfe, boe or mboe may be misleading, particularly if used in isolation. A conversion ratio of one bbl of crude oil or natural gas liquids to six mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, conversion on a 6:1 basis may be misleading as an indication of value.

For a list of abbreviations that may be used in this MD&A, refer to the Common Abbreviations section of this MD&A.


	Three months ended March 31
($ millions)	2020		2019

Net (loss) earnings

Oil Sands	(1 953	)	189

Exploration and Production	(427	)	492

Refining and Marketing	(55	)	1 009

Corporate and Eliminations	(1 090	)	(220	)

Total	(3 525	)	1 470

Operating (loss) earnings⁽¹⁾

Oil Sands	(400	)	189

Exploration and Production	(5	)	492

Refining and Marketing	165		1 009

Corporate and Eliminations	(69	)	(481	)

Total	(309	)	1 209

Funds from (used in) operations⁽¹⁾

Oil Sands	691		1 184

Exploration and Production	173		702

Refining and Marketing	224		1 253

Corporate and Eliminations	(87	)	(554	)

Total	1 001		2 585

Decrease (increase) in non-cash working capital	383		(1 037	)

Cash flow provided by operating activities	1 384		1 548

Capital and exploration expenditures⁽²⁾

Asset sustainment and maintenance	739		419

Economic investment	543		456

Total	1 282		875


	Three months ended March 31
	2020	2019

Production volumes by segment

Oil Sands – SCO (mbbls/d)	503.6	523.4

Oil Sands – Bitumen (mbbls/d)	126.5	133.8

Exploration and Production (mboe/d)	109.7	107.1

Total (mboe/d)	739.8	764.3

Refinery utilization (%)	95	96

Refinery crude oil processed (mbbls/d)	439.5	444.9

Suncor's consolidated net loss for the first quarter of 2020 was $3.525 billion, compared to net earnings of $1.470 billion for the prior year quarter. The net loss was primarily caused by the same factors that resulted in the operating loss described subsequently in this section of this MD&A.


	Three months ended March 31
($ millions)	2020		2019

Net (loss) earnings	(3 525	)	1 470

Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt	1 021		(261	)

Asset impairment⁽²⁾	1 798		—

Inventory write-down to net realizable value⁽³⁾	397		—

Operating (loss) earnings⁽¹⁾	(309	)	1 209

(1): Operating (loss) earnings is a non-GAAP financial measure. All reconciling items are presented on an after-tax basis. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(2): During the first quarter of 2020, the company recorded non-cash after-tax impairment charges of $1.376 billion on its share of the Fort Hills assets, in the Oil Sands segment, and $422 million against its share of the White Rose and Terra Nova assets, in the E&P segment, due to a decline in forecasted crude oil prices as a result of decreased global demand due to the COVID-19 pandemic and changes to their respective capital, operating and production plans. Refer to the Segment Results and Analysis section of this MD&A for further details on this item.
(3): During the first quarter of 2020, the company recorded an after-tax inventory write-down to net realizable value of $177 million in the Oil Sands segment and $220 million in the R&M segment as a result of a significant decline in benchmarks and demand for crude oil and refined products due to COVID-19 mitigation efforts.

Suncor's first quarter 2020 operating loss was $309 million ($0.20 per common share), compared to operating earnings of $1.209 billion ($0.77 per common share) in the prior year quarter. In the first quarter of 2020, crude oil and refined product realizations declined significantly due to the decline in global commodity benchmarks and demand as a result of the COVID-19 pandemic and OPEC+'s initial plan to increase production. The weak business environment further impacted the operating loss due to a net inventory valuation loss, with the FIFO loss as a result of the declining value of refinery feedstock costs, partially offset by the elimination of intersegment losses on inventory. The operating loss in the current quarter compared to operating earnings in the prior year quarter was further impacted by the absence of insurance proceeds related to the company's assets in Libya which were recognized in the prior year quarter.

The after-tax share-based compensation impact on results was a recovery of $62 million during the first quarter of 2020, compared to an expense of $124 million during the prior year quarter, as a result of a decrease in the company's share price through the period, compared to an increase in the prior year quarter.

Commodity prices, refining crack spreads and foreign exchange rates are important factors that affect the results of Suncor's operations.


	Average for the three months ended March 31
		2020		2019

WTI crude oil at Cushing	US$/bbl	46.10		54.90

Dated Brent crude	US$/bbl	50.15		63.20

Dated Brent/Maya crude oil FOB price differential	US$/bbl	15.95		5.00

MSW at Edmonton	Cdn$/bbl	52.00		66.45

WCS at Hardisty	US$/bbl	25.60		42.50

Light/heavy differential for WTI at Cushing less WCS at Hardisty	US$/bbl	(20.50	)	(12.40	)

SYN-WTI differential	US$/bbl	(2.70	)	(2.30	)

Condensate at Edmonton	US$/bbl	46.20		50.55

Natural gas (Alberta spot) at AECO	Cdn$/mcf	2.05		2.55

Alberta Power Pool Price	Cdn$/MWh	67.05		70.75

New York Harbor 2-1-1 crack⁽¹⁾	US$/bbl	14.75		19.10

Chicago 2-1-1 crack⁽¹⁾	US$/bbl	9.75		15.30

Portland 2-1-1 crack⁽¹⁾	US$/bbl	18.30		19.35

Gulf Coast 2-1-1 crack⁽¹⁾	US$/bbl	13.00		17.85

Exchange rate	US$/Cdn$	0.74		0.75

Exchange rate (end of period)	US$/Cdn$	0.71		0.75

(1): 2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of diesel. The crack spreads presented here generally approximate the regions into which the company sells refined products through retail and wholesale channels.

In the first quarter of 2020, actions taken around the world to mitigate the spread of COVID-19, combined with OPEC+'s initial plan to increase global supply resulted in significant weakness and volatility in commodity prices. The simultaneous demand and supply shocks significantly impacted the crude oil and refined product benchmarks in the latter part of the first quarter of 2020, compared to the prior year quarter.

Suncor's sweet SCO price realizations are influenced primarily by the price of WTI at Cushing and by the supply and demand for sweet SCO from Western Canada, which influences SCO differentials. Price realizations in the first quarter of 2020 for SCO were unfavourably impacted by a decrease in WTI at Cushing to an average of US$46.10/bbl, compared to US$54.90/bbl in the prior year quarter, and the widening of SCO differentials in the current quarter. Suncor also produces sour SCO, the price of which is influenced by various crude benchmarks, including, but not limited to, MSW at Edmonton and WCS at Hardisty, and which can also be affected by prices negotiated for spot sales. Prices for MSW at Edmonton decreased to $52.00/bbl in the first quarter of 2020 compared to $66.45/bbl in the prior year quarter, and prices for WCS at Hardisty decreased to an average of US$25.60/bbl in the first quarter of 2020, from US$42.50/bbl in the prior year quarter.

Bitumen production that Suncor does not upgrade is blended with diluent or SCO to facilitate delivery on pipeline systems. Net bitumen price realizations are, therefore, influenced by both prices for Canadian heavy crude oil (WCS at Hardisty is a common reference), prices for diluent (Condensate at Edmonton) and SCO. Bitumen price realizations can also be affected by bitumen quality and spot sales. Bitumen prices were unfavourably impacted by the significant widening of heavy crude oil differentials in the first quarter of 2020 and the comparable strength of diluent pricing.

Suncor's price realizations for production from East Coast Canada and International assets are influenced primarily by the price for Brent crude, which decreased to US$50.15/bbl in the first quarter of 2020, compared to US$63.20/bbl in the prior year quarter.

Suncor's refining and marketing margins are primarily influenced by 2-1-1 benchmark crack spreads, which are industry indicators approximating the gross margin on a barrel of crude oil that is refined to produce gasoline and distillates. Market crack spreads are based on quoted near-month contracts for WTI and spot prices for gasoline and diesel and do not

necessarily reflect the margins at a specific refinery. Suncor's realized refining and marketing margins are influenced by actual crude oil feedstock costs, refinery configuration, product mix and realized marketing prices unique to Suncor's refining and marketing business.

Suncor has designed an indicative 5-2-2-1 index based on publicly available pricing data to more accurately reflect Suncor's actual realized refining and marketing margins. The internal index is a single value that approximates the gross margin on five barrels of crude oil of varying grades that is refined to produce two barrels of both gasoline and distillate and one barrel of secondary product to reflect Suncor's unique set of refinery configurations and overall crude slate and product mix, as well as the benefit of its location, quality and grade differentials. The internal index is calculated by taking the product value of refined products less the crude value of refinery feedstock excluding the impact of FIFO accounting. The product value is influenced by New York Harbor 2-1-1 crack, Chicago 2-1-1 crack, WTI benchmarks and seasonal factors. The seasonal factor is an estimate of US$6.50/bbl in the first and fourth quarters and US$5.00/bbl in the second and third quarters and reflects the location, quality, and grade differentials for refined products sold in the company's core markets during the winter and summer months, respectively. The crude value is influenced by SYN, WCS, and WTI benchmarks.

Crack spreads are based on current crude feedstock prices, whereas actual earnings are accounted for on a FIFO basis in accordance with IFRS where a delay exists between the time that feedstock is purchased and when it is processed and when products are sold to a third party. A FIFO loss normally reflects a declining price environment for crude oil and finished products, whereas FIFO gains reflect an increasing price environment for crude oil and finished products. The company's realized refining and marketing margins are also presented on a LIFO basis, which is consistent with how industry benchmarks and the Suncor 5-2-2-1 index are calculated and with how management evaluates performance.

In the first quarter of 2020, the 2-1-1 benchmark crack spreads declined compared to the prior year quarter due to decreased demand for transportation fuels at the end of the quarter, particularly gasoline and jet fuel, as a result of the COVID-19 pandemic. The Suncor 5-2-2-1 index was US$25.60/bbl in the first quarter of 2020, compared to US$26.15/bbl in the first quarter of 2019, as widening crude differentials were more than offset by lower benchmark cracking margins.

The cost of natural gas used in Suncor's Oil Sands and Refining operations is primarily referenced to Alberta spot prices at AECO. The average AECO benchmark decreased to $2.05/mcf in the first quarter of 2020, from $2.55/mcf in the prior year quarter.

Excess electricity produced in Suncor's Oil Sands operations and at Fort Hills is sold to the Alberta Electric System Operator, with the proceeds netted against the cash operating cost per barrel metric. The Alberta power pool price decreased to an average of $67.05/MWh in the first quarter of 2020, compared to $70.75/MWh in the prior year quarter.

The majority of Suncor's revenues from the sale of oil and natural gas commodities are based on prices that are determined by or referenced to U.S. dollar benchmark prices, while the majority of Suncor's expenditures are realized in Canadian dollars. The Canadian dollar weakened in relation to the U.S. dollar in the first quarter of 2020, as the average exchange rate decreased to US$0.74 per one Canadian dollar from US$0.75 per one Canadian dollar in the prior year quarter. This rate decrease had a positive impact on price realizations for the company during the first quarter of 2020 when compared to the prior year quarter.

Suncor also has assets and liabilities, including approximately 69% of the company's debt, that are denominated in U.S. dollars and translated to Suncor's reporting currency (Canadian dollars) at each balance sheet date. A decrease in the value of the Canadian dollar, relative to the U.S. dollar, from the previous balance sheet date increases the amount of Canadian dollars required to settle U.S. dollar denominated obligations, while an increase in the value of the Canadian dollar, relative to the U.S. dollar, decreases the amount of Canadian dollars required to settle U.S. dollar denominated obligations.


	Three months ended March 31
($ millions)	2020		2019

Gross revenues	3 317		4 181

Less: Royalties	(25	)	(198	)

Operating revenues, net of royalties	3 292		3 983

Net (loss) earnings	(1 953	)	189

Adjusted for:

Impairment⁽¹⁾	1 376		—

Inventory write-down to net realizable value⁽²⁾	177		—

Operating (loss) earnings⁽³⁾	(400	)	189

Funds from operations⁽³⁾	691		1 184

(1): During the first quarter of 2020, the company recorded non-cash after-tax impairment charges of $1.376 billion on its share of the Fort Hills assets due to a decline in forecasted crude oil prices as a result of decreased global demand due to the COVID-19 pandemic and changes to its respective capital, operating and production plans.
(2): During the first quarter of 2020, the company recorded an after-tax inventory write-down to net realizable value of $177 million as a result of a significant decline in benchmarks and demand for crude oil and refined products due to COVID-19 mitigation efforts.
(3): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

The Oil Sands segment had an operating loss of $400 million in the first quarter of 2020, compared to operating earnings of $189 million in the prior year quarter. The decrease was primarily due to significantly lower realized crude prices driven by declining demand due to COVID-19 mitigation measures and OPEC+'s initial plan to increase production, partially offset by marketing and logistics gains and lower royalties as a result of lower realized crude prices.


	Three months ended March 31
(mbbls/d)	2020		2019

Upgraded product (SCO and diesel)	342.0		350.2

Internally consumed diesel⁽²⁾	(10.2	)	(9.0	)

Total Oil Sands operations upgraded product	331.8		341.2

In Situ non-upgraded bitumen	45.8		55.4

Total Oil Sands operations production	377.6		396.6

Fort Hills bitumen	80.7		78.4

Total Fort Hills bitumen production	80.7		78.4

Syncrude (sweet SCO and diesel)	174.4		184.9

Internally consumed diesel⁽²⁾	(2.6	)	(2.7	)

Total Syncrude production	171.8		182.2

Total Oil Sands production	630.1		657.2

(1): Bitumen production from Oil Sands Base is upgraded, while bitumen production from In Situ operations is either upgraded or sold directly to customers, including Suncor's own refineries, with SCO and diesel yields of approximately 79% of bitumen feedstock input. Fort Hills finished bitumen is sold directly to customers. Essentially all of the bitumen produced at Syncrude is upgraded to sweet SCO and a small amount of diesel, at an approximate yield of 85%.
(2): Both Oil Sands operations and Syncrude produce diesel, which is internally consumed in mining operations, and Fort Hills uses internally produced diesel from Oil Sands Base within its mining operations. Of the 10,200 bbls/d of internally consumed diesel at Oil Sands operations in the first quarter of 2020, 8,500 bbls/d was consumed at Oil Sands Base and 1,700 bbls/d, net, was consumed at Fort Hills. Oil Sands operations utilization rates are calculated using gross production. Syncrude utilization rates are calculated using intermediate sour production.

Oil Sands operations production was 377,600 bbls/d in the first quarter of 2020, compared to 396,600 bbls/d in the prior year quarter. The decrease in production was primarily due to the outage and planned maintenance at MacKay River. Due to COVID-19 concerns, MacKay River's planned return to service date has been deferred to the latter part of the second quarter of 2020. The company continued to focus on value over volume by diverting available bitumen production to upgrading to produce higher value SCO barrels, with Oil Sands operations achieving upgrader utilization rates of 98% and 100%, in the first quarter of 2020 and first quarter of 2019, respectively. In the first quarter of 2020, Oil Sands operations produced 331,800 bbls/d of SCO, compared to 341,200 bbls/d in the first quarter of 2019.

Through our regional synergies and asset flexibility we continued to maximize the value of our allotted barrels under the mandatory production curtailment program enacted by the Alberta government. Prior to the decline in demand associated with the COVID-19 pandemic, the company was able to optimize the transfer of its allotted curtailment credits among the company's assets while continuing to focus on higher value SCO production.

Suncor's share of production from Fort Hills was 80,700 bbls/d in the first quarter of 2020, comparable to 78,400 bbls/d in the prior year quarter, with both periods impacted by mandatory production curtailments.

Suncor's share of Syncrude production was 171,800 bbls/d in the first quarter of 2020, compared to 182,200 bbls/d in the prior year quarter, with production in the first quarter of 2020 impacted by unplanned maintenance, which was partially completed in the first quarter of 2020 with the remainder completed in the second quarter of 2020. Prior to the unplanned maintenance, the company was able to optimize production by internally transferring and purchasing third-party curtailment credits.


	Three months ended March 31
(mbbls/d)	2020	2019

Oil Sands operations sales volumes

Sweet SCO	126.8	113.7

Diesel	33.1	29.0

Sour SCO	180.8	182.4

Upgraded product	340.7	325.1

In Situ non-upgraded bitumen	42.4	53.2

Oil Sands operations	383.1	378.3

Fort Hills bitumen	85.1	78.7

Syncrude	171.8	182.2

Total	640.0	639.2

Sales volumes for Oil Sands operations were 383,100 bbls/d in the first quarter of 2020, compared to 378,300 bbls/d in the prior year quarter, and were influenced by the same factors influencing production in addition to a build in inventory associated with the timing of sales in the prior year quarter.

Bitumen sales at Fort Hills increased to 85,100 bbls/d, net to Suncor, in the first quarter of 2020, from 78,700 bbls/d in the prior year quarter, consistent with the increase in production in addition to a draw in inventory.


	Three months ended March 31
	2020	2019

Oil Sands Base

Bitumen production (mbbls/d)	285.3	267.8

Bitumen ore mined (thousands of tonnes per day)	448.4	399.7

Bitumen ore grade quality (bbls/tonne)	0.64	0.67

In Situ

Bitumen production – Firebag (mbbls/d)	190.3	189.4

Steam-to-oil ratio – Firebag	2.5	2.8

Bitumen production – MacKay River (mbbls/d)	—	35.2

Steam-to-oil ratio – MacKay River	—	3.1

Total In Situ bitumen production (mbbls/d)	190.3	224.6

Total Oil Sands operations bitumen production (mbbls/d)	475.6	492.4

Fort Hills

Bitumen production (mbbls/d)	80.7	78.4

Bitumen ore mined (thousands of tonnes per day)	136.7	131.4

Bitumen ore grade quality (bbls/tonne)	0.59	0.60

Syncrude

Bitumen production (mbbls/d)	202.4	210.6

Bitumen ore mined (thousands of tonnes per day)	322.9	341.7

Bitumen ore grade quality (bbls/tonne)	0.63	0.62

Total Oil Sands bitumen production	758.7	781.4

Bitumen production at Oil Sands operations decreased in the first quarter of 2020 to 475,600 bbls/d, compared to 492,400 bbls/d in the prior year quarter. The decrease was primarily due to the continued outage and planned maintenance at MacKay River, which is expected to return to operation in the latter part of the second quarter of 2020, and which was partially offset by increased production at Oil Sands Base.

Bitumen production at Syncrude in the first quarter of 2020 decreased to 202,400 bbls/d, net to Suncor, from 210,600 bbls/d in the prior year quarter. The decrease was primarily due to unplanned maintenance, which was partially completed in the first quarter of 2020 with the remainder completed in the second quarter of 2020. Prior to the outage, the company was able to partially mitigate the impacts of curtailment on production by internally transferring and purchasing third-party curtailment credits.


Net of transportation costs, but before royalties	Three months ended March 31
($/bbl)	2020		2019

Oil Sands operations

SCO and diesel	52.48		64.90

Bitumen	3.72		41.59

Crude sales basket (all products)	47.09		61.62

Crude sales basket, relative to WTI	(14.86	)	(11.58	)

Fort Hills bitumen	12.64		49.95

Syncrude – sweet SCO	57.98		67.90

Syncrude, relative to WTI	(3.97	)	(5.30	)

In the first quarter of 2020, Oil Sands price realizations for all assets were impacted by the significant decline in global crude oil prices and demand as a result of COVID-19 mitigation efforts and OPEC+'s initial plans to increase global oil supply, partially offset by the favourable impact of a weakening Canadian dollar.

Royalties for the Oil Sands segment were lower in the first quarter of 2020 compared to the prior year quarter, primarily due to lower crude price realizations.

Total Oil Sands operating and transportation expenses increased in the first quarter of 2020 compared to the prior year quarter, as described in detail below. See the reconciliation in the Cash Operating Costs section below for further details regarding cash operating costs and a breakdown of non-production costs by asset.

At Oil Sands operations, operating costs increased compared to the prior year quarter, primarily due to higher sales volumes and higher contractor mining costs. The increase was partially offset by a decrease in operating costs associated with the MacKay River outage, lower commodity costs and a share-based compensation recovery compared to a share-based compensation expense in the prior year quarter.

At Fort Hills, operating costs in the first quarter of 2020 increased when compared to the prior year quarter, primarily due to higher mine tonnage and overburden removal costs associated with increased sales volumes, partially offset by lower commodity costs.

Suncor's share of Syncrude operating costs, in the first quarter of 2020, were comparable to the prior year quarter.

DD&A expense for the first quarter of 2020 was higher compared to the prior year due to higher derecognition charges in the first quarter of 2020 associated with the cancellation of projects due to the COVID-19 pandemic.

The first quarter of 2020 included an inventory write-down to net realizable value of $240 million ($177 million after-tax) primarily impacting Oil Sands operations and Fort Hills as a result of a significant decline in benchmarks and demand for crude oil and refined products due to COVID-19 mitigation efforts.


	Three months ended March 31
($ millions, except as noted)	2020		2019

Oil Sands operating, selling and general expense (OS&G)	2 252		1 973

Oil Sands operations cash operating costs⁽¹⁾ reconciliation

Oil Sands operations OS&G	1 303		1 121

Non-production costs⁽²⁾	(82	)	(57	)

Excess power capacity and other⁽³⁾	(91	)	(75	)

Inventory changes	(91	)	85

Oil Sands operations cash operating costs⁽¹⁾	1 039		1 074

Oil Sands operations cash operating costs ($/bbl)⁽¹⁾	29.45		29.95

Fort Hills cash operating costs⁽¹⁾ reconciliation

Fort Hills OS&G	320		233

Non-production costs⁽²⁾	(28	)	(47	)

Inventory changes	(64	)	23

Fort Hills cash operating costs⁽¹⁾	228		209

Fort Hills cash operating costs ($/bbl)⁽¹⁾	31.00		29.60

Syncrude cash operating costs⁽¹⁾ reconciliation

Syncrude OS&G	629		619

Non-production costs⁽²⁾	(47	)	(40	)

Syncrude cash operating costs⁽¹⁾⁽⁴⁾	582		579

Syncrude cash operating costs ($/bbl)⁽¹⁾	36.65		35.35

(1): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(2): Significant non-production costs include, but are not limited to, share-based compensation expense and research expenses. Non-production costs at Fort Hills also include, but are not limited to, excess power revenue from cogeneration units and an adjustment to reflect internally produced diesel from Oil Sands operations at the cost of production.
(3): Oil Sands operations excess power capacity and other includes, but is not limited to, the operational revenue impacts of excess power from a cogeneration unit and the natural gas expense recorded as part of a non-monetary arrangement involving a third-party processor.
(4): Beginning in the first quarter of 2020, the company revised Syncrude cash operating costs to better align with the Oil Sands operations and Fort Hills cash operating costs methodology. Prior period Syncrude cash operating costs had previously included future development costs and have been restated to reflect this change.

Oil Sands operations cash operating costs⁽¹⁾ per barrel decreased to $29.45 in the first quarter of 2020, compared to $29.95 in the prior year quarter, primarily due to lower commodity costs, partially offset by an increase in contractor mining costs. Both periods reflected the impact of optimizing the product mix to higher cost but higher value SCO barrels, relative to lower cost, but lower value, bitumen production. Total Oil Sands operations cash operating costs were $1.039 billion, compared to $1.074 billion in the prior year quarter due to the same factors discussed above.

Excess power capacity and non-production costs increased compared to the prior year quarter, primarily due to safe-mode costs associated with the deferral of capital projects and additional costs incurred in response to COVID-19 mitigation efforts.

Oil Sands operations inventory changes in the first quarter of 2020 reflected a hydrocarbon inventory write-down to net realizable value as a result of the significant decline in crude oil benchmarks and demand due to COVID-19 mitigation efforts, and a draw of inventory volumes in the current quarter.

Fort Hills cash operating costs⁽¹⁾ per barrel were $31.00 in the first quarter of 2020, compared to $29.60 in the prior year quarter, reflecting higher total mine tonnage and overburden removal costs. The Fort Hills partners have agreed to reduce Fort Hills from operating two primary extraction trains to a one-train operation, running at full utilization. This is expected to increase funds flow, compared to running at full rates, as we are able to significantly reduce costs. By the fourth quarter of 2020, the company anticipates that Fort Hills will be fully operational on autonomous haul trucks, which should also provide the company with additional operational flexibility and lower costs.

In the first quarter of 2020, inventory changes at Fort Hills reflected a hydrocarbon inventory write-down to net realizable value as a result of the significant decline in crude benchmarks, and a draw of inventory volumes.

Syncrude cash operating costs⁽¹⁾ per barrel were $36.65 in the first quarter of 2020, compared to $35.35 in the prior year quarter, with the increase due primarily to the decrease in production volumes.

The COVID-19 pandemic has resulted in a significant decrease in global demand for crude oil and commodity prices. In response, the company announced plans to reduce capital and operating costs, and to temporarily reduce Fort Hills from operating two primary extraction trains to a one-train operation. As a result of these events, the company performed an asset impairment test on its Fort Hills cash generating units (CGU) in its Oil Sands segment as at March 31, 2020. As a result of the impairment test, the company recorded a $1.376 billion (net of taxes of $0.44 billion) non-cash impairment on its share of the Fort Hills project using the following asset-specific assumptions:

The recoverable amount of the Fort Hills CGU was $6.4 billion as at March 31, 2020. The recoverable amount estimate is most sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an increase to the impairment charge of approximately $1.1 billion (after-tax). A 1% increase in the discount rate would have resulted in an increase to the impairment charge of approximately $1.1 billion (after-tax) on the company's share of the Fort Hills assets.

As a result of the COVID-19 pandemic, the company continues to assess planned maintenance schedules. Planned maintenance at Oil Sands operations Upgrader 1 is scheduled for the second and fourth quarters of 2020 and at Upgrader 2 in the second and third quarters of 2020. Planned maintenance at Syncrude is scheduled to occur in the second quarter of 2020. The anticipated impact of these maintenance events have been reflected in the company's 2020 guidance.


	Three months ended March 31
($ millions)	2020		2019

Gross revenues⁽¹⁾	539		876

Less: Royalties⁽¹⁾	(22	)	(112	)

Operating revenues, net of royalties	517		764

Net (loss) earnings	(427	)	492

Adjusted for:

Asset impairment⁽²⁾	422		—

Operating (loss) earnings⁽³⁾	(5	)	492

Funds from operations⁽³⁾	173		702

(1): Production, revenues and royalties from the company's Libya operations have been presented in the E&P section of this MD&A on an economic basis and exclude an equal and offsetting gross up of revenues and royalties of $61 million in the first quarter of 2019, which is required for presentation purposes in the company's financial statements under the working-interest basis. In the first quarter of 2020, there were no Libya sales included in production revenues or royalties.
(2): During the first quarter of 2020, the company recorded non-cash after-tax impairment charges of $422 million against its share of the White Rose and Terra Nova assets due to a decline in forecasted crude oil prices as a result of decreased global demand due to the COVID-19 pandemic and changes to their respective capital, operating and production plans.
(3): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Operating loss for the E&P segment in the first quarter of 2020 was $5 million, compared to operating earnings of $492 million in the prior year quarter, with the decline primarily due to the absence of insurance proceeds related to the company's assets in Libya which were recognized in the prior year quarter, significantly lower realized crude prices due to COVID-19 mitigation measures and OPEC+'s initial plans to increase global supply, decreased sales volumes and higher exploration expense, partially offset by lower royalties.


	Three months ended March 31
	2020	2019

E&P Canada

Terra Nova (mbbls/d)	—	13.2

Hibernia (mbbls/d)	25.1	25.7

White Rose (mbbls/d)	7.5	1.1

Hebron (mbbls/d)	29.6	18.3

	62.2	58.3

E&P International

Buzzard (mboe/d)	31.3	36.7

Golden Eagle (mboe/d)	8.2	10.2

Norway – Oda (mboe/d)	8.0	0.2

Libya (mbbls/d)	—	1.7

	47.5	48.8

Total Production (mboe/d)	109.7	107.1

Total Sales Volumes (mboe/d)	107.2	111.8

Production volumes for E&P Canada were 62,200 boe/d in the first quarter of 2020, compared to 58,300 boe/d in the prior year quarter. The increase in production was primarily due to Hebron, as six new production wells came online throughout 2019, and White Rose, where a production interruption impacted volumes produced during the prior year quarter. The increase in production was partially offset by lower volumes at Terra Nova, reflecting the regulatory order to shut in production in the fourth quarter of 2019.

E&P International production was 47,500 boe/d in the first quarter of 2020, and was comparable to 48,800 boe/d in the prior year quarter. The first quarter of 2020 reflected increased production at Oda, which ramped up production to 8,000 boe/d after achieving first oil in the first quarter of 2019, which was more than offset by natural production declines in the U.K.

E&P sales volumes decreased to 107,200 boe/d in the first quarter of 2020, compared to 111,800 boe/d in the prior year quarter, due to the timing of sales volumes for E&P Canada.

Price realizations at E&P Canada and E&P International were impacted by the significant decline in global crude oil prices and demand as a result of COVID-19 mitigation efforts and OPEC+'s initial plans to increase global oil supply, partially offset by the favourable impact of a weakening Canadian dollar.

E&P royalties in the first quarter of 2020 were lower than the prior year quarter due to the decrease in price realizations.

Operating and transportation expenses for the first quarter of 2020 were comparable to the prior year quarter.

DD&A expense in the first quarter of 2020 was favourable when compared to the first quarter of 2019, primarily due to lower production rates in the U.K., partially offset by an increase in production in Norway.

Exploration expense in the first quarter of 2020 was higher than the prior year quarter as a result of exploration charges for non-commercial drilling in Norway and East Coast Canada. There are no additional planned exploration wells in 2020.

The COVID-19 pandemic has resulted in a significant decrease in global demand for crude oil and commodity prices. In response to this, the company announced plans to reduce capital and operating costs. As a result of these events, the company performed asset impairment tests on certain CGUs in its E&P segment as at March 31, 2020 as the recoverable amount of these CGUs were most sensitive to the combined reduction in crude oil prices and changes to their respective capital and operating plans. The impairment tests were performed using recoverable amounts based on the fair value less cost of disposal. As a result of the impairment tests, the company recorded impairment of $285 million (net of taxes of $93 million) on its share of the Terra Nova assets and $137 million (net of taxes of $45 million) on its share of the White Rose assets using the following asset-specific assumptions:

The recoverable amount of the Terra Nova CGU is $24 million as at March 31, 2020.

The recoverable amount of the White Rose CGU is $185 million as at March 31, 2020. The recoverable amount estimate is most sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an increase to the impairment charge of approximately $83 million (after-tax). A 1% increase in the discount rate would have resulted in an increase to the impairment charge of approximately $45 million (after-tax) on the company's share of the White Rose assets.

There are no significant maintenance events scheduled for the second quarter of 2020. Suncor is currently evaluating alternate options for the Terra Nova Asset Life Extension, as Spain is no longer able to accommodate the planned dry dock work due to that country's COVID-19 response.


	Three months ended March 31
($ millions)	2020		2019

Operating revenues	4 587		5 204

Net (loss) earnings	(55	)	1 009

Adjusted for:

Inventory write-down to net realizable value⁽¹⁾	220		—

Operating earnings⁽²⁾	165		1 009

Funds from operations⁽²⁾	224		1 253

(1): During the first quarter of 2020, the company recorded an after-tax inventory write-down to net realizable value of $220 million as a result of a significant decline in benchmarks and demand for crude oil and refined products due to COVID-19 mitigation efforts.
(2): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

R&M operating earnings in the first quarter of 2020 were $165 million, compared to $1.009 billion in the prior year quarter. The decrease was primarily due to a FIFO inventory valuation loss due to a significant decline in crude and refined product benchmarks compared to the prior year quarter, which included a FIFO inventory valuation gain. Operating earnings were positively impacted by higher refining and marketing margins, which existed for a majority of the quarter until the outbreak of COVID-19 intensified in Canada.


	Three months ended March 31
	2020	2019

Crude oil processed (mbbls/d)

Eastern North America	213.1	216.2

Western North America	226.4	228.7

Total	439.5	444.9

Refinery utilization⁽¹⁾ (%)

Eastern North America	96	97

Western North America	94	95

Total	95	96

Refined product sales (mbbls/d)

Gasoline	234.3	246.7

Distillate	228.7	221.8

Other	68.5	74.3

Total	531.5	542.8

Refining and marketing margin – FIFO⁽²⁾⁽³⁾ ($/bbl)	23.35	49.65

Refining and marketing margin – LIFO⁽²⁾⁽³⁾ ($/bbl)	35.60	35.25

Refining operating expense⁽²⁾ ($/bbl)	5.65	5.60

(1): Refinery utilization is the amount of crude oil and natural gas plant liquids run through crude distillation units, expressed as a percentage of the capacity of these units.
(2): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(3): Beginning in the first quarter of 2020, refining and marketing margins have been revised to better reflect the refining, product supply and rack forward businesses. Prior periods have been restated to reflect this change.

Refinery crude throughput was 439,500 bbls/d in the first quarter of 2020, compared to 444,900 bbls/d in the prior year quarter. Both periods achieved strong utilization rates at 95% and 96%, respectively. The company reduced refinery throughput at the end of the quarter as a result of the decrease in product demand associated with the COVID-19 pandemic.

Refined product sales in the first quarter of 2020 were 531,500 bbls/d, compared with 542,800 bbls/d in the prior year quarter with the decrease primarily attributable to a significant decline in demand late in the quarter due to COVID-19 mitigation efforts. In response to the decline in demand for transportation fuels late in the quarter, the company was able to optimize higher value distillate sales.

Operating expenses and DD&A in the first quarter of 2020 were comparable compared to the first quarter of 2019.

The first quarter of 2020 included an inventory write-down to net realizable value of $296 million ($220 million after-tax) as a result of a significant decline in benchmarks and demand for crude oil and refined products due to COVID-19 mitigation efforts.

There are no significant maintenance events scheduled for the second quarter of 2020. The anticipated impact of maintenance events scheduled in the third and fourth quarters of 2020 have been reflected in the company's 2020 guidance. As a result of COVID-19 related considerations, Suncor's planned maintenance schedules will continue to be assessed.


	Three months ended March 31
($ millions)	2020		2019

Net loss	(1 090	)	(220	)

Adjusted for:

Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt	1 021		(261	)

Operating loss⁽¹⁾	(69	)	(481	)

Corporate	*(211*	)	(302	)

Eliminations	*142*		(179	)

Funds used in operations⁽¹⁾	(87	)	(554	)

(1): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Corporate incurred an operating loss of $211 million for the first quarter of 2020, compared to an operating loss of $302 million for the prior year quarter, with the decreased loss attributable to a share-based compensation recovery incurred in the first quarter of 2020, as compared to a share-based compensation expense in the prior year quarter, and an operational foreign exchange gain, as compared to an operational foreign exchange loss in the prior year quarter. Suncor capitalized $38 million of its borrowing costs in the first quarter of 2020 as part of the cost of major development assets and construction projects in progress, compared to $28 million in the prior year quarter.

Eliminations reflect the deferral or realization of profit or loss on crude oil sales from Oil Sands to Suncor's refineries. Consolidated profits and losses are only realized when the refined products produced from internal purchases of crude feedstock have been sold to third parties. During the first quarter of 2020, the company's realization of intersegment profit and elimination of unrealized losses amounted to $142 million after tax, compared to a deferral of $179 million of after tax intersegment profit in the prior year quarter. The realization of deferred profit and elimination of unrealized losses in the first quarter of 2020 was driven by the decrease in Oil Sands price realizations over the quarter, as higher margin crude refinery feedstock inventory sourced internally from Oil Sands was sold and replaced by lower margin feedstock inventory. The deferral of profit in the prior year quarter was driven by the increase in Oil Sands price realizations over that quarter.


	Three months ended March 31
($ millions)	2020		2019

Oil Sands	1 010		584

Exploration and Production	179		228

Refining and Marketing	92		82

Corporate and Eliminations	39		9

Total capital and exploration expenditures	1 320		903

Less: capitalized interest on debt	(38	)	(28	)

	1 282		875

Capital and Exploration Expenditures by Type, excluding capitalized interest


	Three months ended March 31, 2020
($ millions)	Asset Sustainment and Maintenance(1)	Economic Investment(2)	Total

Oil Sands

Oil Sands Base	386	76	*462*

In Situ	137	198	*335*

Fort Hills	87	8	95

Syncrude	63	34	97

Exploration and Production	3	162	165

Refining and Marketing	49	41	90

Corporate and Eliminations	14	24	38

	739	543	1 282

(1): Asset sustainment and maintenance capital expenditures include capital investments that deliver on existing value by ensuring compliance or maintaining relations with regulators and other stakeholders, maintaining current processing capacity, and delivering existing developed reserves.
(2): Economic investment capital expenditures include capital investments that result in an increase in value through adding reserves, improving processing capacity, utilization, cost or margin, including associated infrastructure.

To preserve the financial health and resiliency of the company and navigate the current business environment, the company has decided to further reduce the 2020 capital expenditure range to $3.6 billion to $4.0 billion, representing a further capital reduction of $400 million at mid-point compared to the previous guidance. Combined with the March 23, 2020 guidance updates, capital guidance has been reduced by $1.9 billion or approximately 33% compared to the company's original 2020 plan. In order to achieve this, the company will concentrate on sustaining projects that are designed to maintain safe and reliable operations and proceed with select late stage, high-value and low capital economic investment projects. The bi-directional interconnecting pipelines between Syncrude and Oil Sands Base and the deployment of autonomous haul trucks at Fort Hills will continue to be funded and are expected to be completed in the second half of 2020. Investments in technology for our supply and trading business and core business systems are also expected to proceed on schedule. Other economic investments have been significantly reduced in 2020 or deferred, including the cogeneration facility at Oil Sands Base and the Forty Mile Wind Power Project. The operator of the West White Rose Project has announced that work has been suspended for at least one year, as has the Terra Nova Asset Life Extension project.

In the first quarter of 2020, the company spent $1.282 billion on capital expenditures, excluding capitalized interest, an increase from $875 million in the prior year quarter, with the increase driven by increased asset sustainment and maintenance capital expenditures related to an increase in planned maintenance activities at Oil Sands Base and In Situ, as well as increased economic investment capital expenditures at Oil Sands Base.

Oil Sands Base capital expenditures were $462 million in the first quarter of 2020, the majority of which was focused on the continued development of tailings infrastructure and the company's autonomous haul trucks. Oil Sands Base expenditures also included increased economic investment to progress low-carbon power cogeneration to replace the coke-fired boilers and continued construction of the bi-directional interconnecting pipelines between Syncrude and Oil Sands Base.

In Situ capital expenditures were $335 million in the first quarter of 2020, and were primarily directed towards the rebuild at the MacKay River central processing facility as well as economic investment activities, including well pad construction.

Capital expenditures at Fort Hills were $95 million in the first quarter of 2020, primarily focused on sustaining capital activities on mine and tailings development.

Syncrude capital expenditures were $97 million in the first quarter of 2020, the majority of which was for asset sustainment expenditures focused on maintaining existing assets.

Capital and exploration expenditures at E&P were $165 million in the first quarter of 2020 and were primarily focused on economic investment projects, including development drilling at Hibernia, Hebron and Buzzard, and development work on Terra Nova, Fenja and the West White Rose Projects.

Drilling activity at Hebron is ongoing with the completion of one production and one water injection well during the first quarter of 2020.

Suncor is currently evaluating alternate options for the Terra Nova Asset Life Extension, as Spain is no longer able to accommodate the planned dry dock work due to that country's COVID-19 response.

R&M capital expenditures were $90 million and were primarily related to the ongoing sustainment and enhancement to refinery and retail operations, and other economic investment projects on logistics and our retail and wholesale network.

Corporate capital expenditures were $38 million, primarily directed towards the company's information technology initiatives.


	Twelve months ended March 31
	2020		2019

Return on Capital Employed⁽¹⁾ (%)

Excluding major projects in progress⁽²⁾	(1.4	)	8.3

Including major projects in progress	(1.3	)	8.2

Net debt to funds from operations⁽³⁾⁽⁴⁾ (times)	2.0		1.6

Interest coverage on long-term debt (times)

Earnings basis⁽⁵⁾	(2.4	)	7.1

Funds from operations basis⁽⁴⁾⁽⁶⁾	9.1		14.1

Total debt to total debt plus shareholders' equity (%)	35.0		30.2

(1): Non-GAAP financial measure. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(2): ROCE excluding major projects in progress would have been 5.4% for the twelve months ended March 31, 2020, excluding the impact of impairments of $1.798 billion after-tax in the first quarter of 2020, the impacts of impairments of $3.352 billion after-tax in the fourth quarter of 2019 and the impacts of $1.116 billion deferred tax recovery for the Alberta corporate income tax rate change in the second quarter of 2019.
(3): Net debt is equal to total debt less cash and cash equivalents.
(4): Funds from operations and metrics that use funds from operations are non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(5): Equal to net earnings plus income taxes and interest expense, divided by the sum of interest expense and capitalized interest on debt.
(6): Equal to funds from operations plus current income taxes and interest expense, divided by the sum of interest expense and capitalized interest on debt.

The COVID-19 pandemic has had a significant impact on global capital markets and the availability of liquidity towards the end of the first quarter of 2020. The disruption and volatility in global capital markets that has resulted is expected to continue for some time and could increase our cost of capital and adversely affect our ability to access the capital markets on a timely basis, or at all.

In addition, recent market events and conditions, including excess global crude oil and petroleum product supply as a result of the COVID-19 pandemic and as a result of initial plans by certain OPEC+ countries to set and maintain increased production levels as well as decreased global demand, have caused significant weakness and volatility in commodity prices, including transportation fuels and products that the company sells.

In response to these developments, the company has decided to further reduce the 2020 capital expenditure range to $3.6 billion to $4.0 billion, representing a further capital reduction of $400 million at mid-point compared to the previous guidance. Combined with the March 23, 2020 guidance updates, capital guidance has been reduced by $1.9 billion or approximately 33% compared to the company's original 2020 plan, and operating costs across the business by $1 billion or approximately 10% compared to 2019 levels. As of March 31, 2020, Suncor had significantly increased its liquidity by securing an additional $2.5 billion of credit facilities for a 24-month term with its key banking partners. Subsequent to the first quarter of 2020, the company issued $1.25 billion of 5.00% senior unsecured 10-year medium term notes and secured $300 million in additional credit facilities. This increased financial flexibility will help ensure the company has access to adequate financial resources should it be required.

Suncor's capital resources consist primarily of cash flow provided by operating activities, cash and cash equivalents, and available lines of credit. Suncor's management believes the company will have the capital resources to fund its planned 2020 capital spending program of $3.6 billion to $4.0 billion and to meet current and future working capital requirements, through cash and cash equivalents balances, cash flow provided by operating activities, available committed credit facilities, issuing commercial paper and, if needed, accessing capital markets. The company's cash flow provided by operating activities depends on a number of factors, including commodity prices, production and sales volumes, refining and marketing margins, operating expenses, taxes, royalties and foreign exchange rates.

The company has invested cash in short-term financial instruments that are presented as cash and cash equivalents. The objectives of the company's short-term investment portfolio are to ensure the preservation of capital, maintain adequate

liquidity to meet Suncor's cash flow requirements and deliver competitive returns derived from the quality and diversification of investments within acceptable risk parameters. The maximum weighted average term to maturity of the short-term investment portfolio is not expected to exceed six months, and all investments will be with counterparties with investment grade debt ratings.

For the three months ended March 31, 2020, cash and cash equivalents increased to $2.226 billion, from $1.960 billion at December 31, 2019, with cash flow provided by operating activities and an increase in short-term indebtedness partially offset by the planned use of cash related to the company's capital and exploration expenditures, dividend requirements and the repurchase of Suncor's own shares under its NCIB in the first quarter of 2020.

As at March 31, 2020, the weighted average days to maturity of the company's short-term investment portfolio was approximately 21 days.

Available credit facilities for liquidity purposes at March 31, 2020 increased to $5.891 billion, compared to $4.701 billion at December 31, 2019. The increase in liquidity was primarily due to an additional $2.5 billion of credit facilities secured in the first quarter of 2020, and the weakening of the Canadian dollar compared to the U.S. dollar since December 31, 2019, partially offset by increased short-term indebtedness. This increased financial flexibility will help ensure that the company has access to adequate financial resources should it be required.

In the first quarter of 2020, Standard & Poor's downgraded Suncor's long-term senior debt rating to BBB+, with a Stable Outlook, and Dominion Bond Rating Service placed all of its ratings of North American Oil and Gas issuers, including Suncor, "Under Review with Negative Implications". Subsequent to the end of the first quarter of 2020, Moody's Investors Service affirmed the company's Baa1 rating, with a Stable Outlook, on long-term debt.

Management of debt levels and liquidity continues to be a priority for Suncor given the company's long-term growth plans and future expected volatility in the pricing environment. Suncor believes a phased and flexible approach to existing and future growth projects should assist the company in maintaining its ability to manage project costs and debt levels. The disciplined actions around liquidity and capital spending that the company has taken to address the recent economic downturn will help sustain the financial health of the company.

Subsequent to the first quarter of 2020, the company issued $1.25 billion of 5.00% senior unsecured Series 7 Medium Term Notes maturing on April 9, 2030 and secured $300 million in additional credit facilities.

Suncor is subject to financial and operating covenants related to its bank debt and public market debt. Failure to meet the terms of one or more of these covenants may constitute an "event of default" as defined in the respective debt agreements, potentially resulting in accelerated repayment of one or more of the debt obligations. The company is in compliance with its financial covenant that requires total debt to not exceed 65% of its total debt plus shareholders' equity. At March 31, 2020, total debt to total debt plus shareholders' equity was 35.0% (December 31, 2019 – 29.9%) and increased due to higher debt levels and lower shareholders' equity as a result of impairment charges and an inventory valuation write-down to net realizable value recorded in the first quarter of 2020. The company continues to be in compliance with all operating covenants under its debt agreements.


($ millions, except as noted)	March 31 2020	December 31 2019

Short-term debt	3 756	2 155

Current portion of long-term debt	—	—

Current portion of long-term lease liabilities	302	310

Long-term debt	13 765	12 884

Long-term lease liabilities	2 615	2 621

Total debt	20 438	17 970

Less: Cash and cash equivalents	2 226	1 960

Net debt	18 212	16 010

Shareholders' equity	37 965	42 042

Total debt plus shareholders' equity	58 403	60 012

Total debt to total debt plus shareholders' equity (%)	35.0	29.9


($ millions)	Three months ended March 31, 2020

Total debt – beginning of period	17 970

Increase in long-term debt	—

Increase in short-term debt	1 386

Increase in lease liability	57

Lease payments	(82	)

Foreign exchange on debt, and other	1 107

Total debt – March 31, 2020	20 438

Less: Cash and cash equivalents – March 31, 2020	2 226

Net debt – March 31, 2020	18 212

The company's total debt increased in the first quarter of 2020 due to an increase in short-term indebtedness, unfavourable foreign exchange rates on U.S. dollar denominated debt compared to December 31, 2019 and leases entered into during the period, partially offset by lease principal payments made during the first quarter of 2020. As at March 31, 2020, the company had no debt maturities in 2020, $1.5 billion due in 2021, and $257 million due in 2022.

As at May 1, 2020, the total number of common shares outstanding was 1,525,150,794 and the total number of exercisable and non-exercisable common share options outstanding was 39,139,294. Once exercisable, each outstanding common share option is convertible into one common share.

In May 2019, Suncor renewed its NCIB to continue to repurchase its common shares through the facilities of the Toronto Stock Exchange (TSX), New York Stock Exchange and/or alternative trading platforms between May 6, 2019 and May 5, 2020. The TSX subsequently accepted a notice filed by Suncor of its intention to amend the NCIB effective as of December 30, 2019 pursuant to which Suncor was permitted to increase the maximum number of common shares that may be purchased for cancellation between May 6, 2019 and May 5, 2020 to 78,549,178 common shares.

During the first quarter of 2020, Suncor repurchased and cancelled 7,527,370 common shares at an average price of $40.83 per common share, for a total of $307 million, compared to the prior year quarter when the company repurchased and cancelled 11,951,027 common shares at an average price of $42.99 per common share, for a total of $514 million. Given the current business environment and aligned with our disciplined capital allocation strategy, share repurchases have been suspended and the company has decided not to renew its NCIB at this time.

Contractual Obligations, Commitments, Guarantees, and Off-Balance Sheet Arrangements

In the normal course of business, the company is obligated to make future payments, including contractual obligations and non-cancellable commitments. Suncor has included these items in the Financial Condition and Liquidity section of the 2019 annual MD&A. Suncor does not believe that it has any guarantees or off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the company's financial performance or financial condition, results of operations, liquidity or capital expenditures.

Subsequent to March 31, 2020, the company increased its commitments by approximately $1.25 billion as a result of debt issued in the second quarter of 2020.

Trends in Suncor's quarterly revenue, earnings and funds from operations are driven primarily by production volumes, which can be significantly impacted by major maintenance events, changes in commodity prices, including widening of crude differentials, refining crack spreads, foreign exchange rates and other significant events impacting operations, such as the COVID-19 global pandemic beginning in the first quarter of 2020 and the Government of Alberta's mandatory production curtailments implemented during 2019.


Three months ended ($ millions, unless otherwise noted)	Mar 31 2020		Dec 31 2019		Sept 30 2019		June 30 2019	Mar 31 2019	Dec 31 2018		Sept 30 2018	June 30 2018

Total production (mboe/d)

Oil Sands	630.1		662.3		670.0		692.2	657.2	740.8		651.7	547.6

Exploration and Production	109.7		115.9		92.3		111.7	107.1	90.2		92.1	114.1

	739.8		778.2		762.3		803.9	764.3	831.0		743.8	661.7

Revenues and other income

Operating revenues, net of royalties	7 391		9 487		9 803		10 071	8 983	8 561		10 847	10 327

Other income	365		111		93		27	414	384		16	101

	7 756		9 598		9 896		10 098	9 397	8 945		10 863	10 428

Net (loss) earnings	(3 525	)	(2 335	)	1 035		2 729	1 470	(280	)	1 812	972

per common share – basic (dollars)	(2.31	)	(1.52	)	0.67		1.74	0.93	(0.18	)	1.12	0.60

per common share – diluted (dollars)	(2.31	)	(1.52	)	0.67		1.74	0.93	(0.18	)	1.11	0.59

Operating (loss) earnings⁽¹⁾	(309	)	782		1 114		1 253	1 209	580		1 557	1 190

per common share – basic⁽¹⁾ (dollars)	(0.20	)	0.51		0.72		0.80	0.77	0.36		0.96	0.73

Funds from operations⁽¹⁾	1 001		2 553		2 675		3 005	2 585	2 007		3 139	2 862

per common share – basic⁽¹⁾ (dollars)	0.66		1.66		1.72		1.92	1.64	1.26		1.94	1.75

Cash flow provided by operating activities	1 384		2 304		3 136		3 433	1 548	3 040		4 370	2 446

per common share – basic (dollars)	0.91		1.50		2.02		2.19	0.98	1.90		2.70	1.50

ROCE⁽¹⁾ (%) for the twelve months ended	(1.3	)	4.9		9.7		10.4	8.2	8.0		9.7	8.3

ROCE⁽¹⁾⁽²⁾, excluding major projects in progress (%) for twelve months ended	(1.4	)	5.1		9.9		10.6	8.3	8.2		10.4	9.5

After-tax unrealized foreign exchange (loss) gain on U.S. dollar denominated debt	(1 021	)	235		(127	)	221	261	(637	)	195	(218	)

Common share information (dollars)

Dividend per common share	0.465		0.42		0.42		0.42	0.42	0.36		0.36	0.36

Share price at the end of trading

Toronto Stock Exchange (Cdn$)	22.46		42.56		41.79		40.85	43.31	38.13		49.98	53.50

New York Stock Exchange (US$)	15.80		32.80		31.58		31.16	32.43	27.97		38.69	40.68

(1): Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(2): ROCE excluding major projects in progress would have been 5.4% for the twelve months ended March 31, 2020, excluding the impact of impairments of $1.798 billion after-tax in the first quarter of 2020, the impacts of impairments of $3.352 billion after-tax in the fourth quarter of 2019 and the impacts of $1.116 billion deferred tax recovery for the Alberta corporate income tax rate change in the second quarter of 2019.


(average for the three months ended)		Mar 31 2020		Dec 31 2019		Sept 30 2019		June 30 2019		Mar 31 2019		Dec 31 2018		Sept 30 2018		June 30 2018

WTI crude oil at Cushing	US$/bbl	46.10		56.95		56.45		59.85		54.90		58.85		69.50		67.90

Dated Brent crude	US$/bbl	50.15		63.30		61.90		68.85		63.20		67.80		75.25		74.40

Dated Brent/Maya FOB price differential	US$/bbl	15.95		9.30		5.20		6.90		5.00		4.35		10.20		12.40

MSW at Edmonton	Cdn$/bbl	52.00		68.10		68.35		73.40		66.45		42.70		82.10		80.95

WCS at Hardisty	US$/bbl	25.60		41.10		44.20		49.20		42.50		19.50		47.35		48.65

Light/heavy crude oil differential for WTI at Cushing less WCS at Hardisty	US$/bbl	(20.50	)	(15.85	)	(12.25	)	(10.65	)	(12.40	)	(39.35	)	(22.15	)	(19.25	)

SYN-WTI (differential) premium	US$/bbl	(2.70	)	(0.70	)	0.40		0.15		(2.30	)	(21.60	)	(0.90	)	(0.65	)

Condensate at Edmonton	US$/bbl	46.20		53.00		52.00		55.90		50.55		45.30		66.80		68.50

Natural gas (Alberta spot) at AECO	Cdn$/mcf	2.05		2.50		0.95		1.05		2.55		1.60		1.20		1.20

Alberta Power Pool Price	Cdn$/MWh	67.05		46.95		46.85		56.35		70.75		55.55		54.45		56.00

New York Harbor 2-1-1 crack⁽¹⁾	US$/bbl	14.75		18.50		19.75		22.40		19.10		18.75		19.50		21.45

Chicago 2-1-1 crack⁽¹⁾	US$/bbl	9.75		14.45		17.05		21.55		15.30		16.25		19.90		19.10

Portland 2-1-1 crack⁽¹⁾	US$/bbl	18.30		25.75		23.85		29.15		19.35		24.25		22.05		28.75

Gulf Coast 2-1-1 crack⁽¹⁾	US$/bbl	13.00		17.10		20.00		21.70		17.85		17.45		19.30		20.50

Exchange rate	US$/Cdn$	0.74		0.76		0.76		0.75		0.75		0.76		0.77		0.77

Exchange rate (end of period)	US$/Cdn$	0.71		0.77		0.76		0.76		0.75		0.73		0.77		0.76

(1): 2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of diesel. The crack spreads presented here generally approximate the regions into which the company sells refined products through retail and wholesale channels.

Suncor's significant accounting policies and a summary of recently announced accounting standards are described in the Accounting Policies and Critical Accounting Estimates section of Suncor's 2019 annual MD&A and in note 2 of Suncor's unaudited interim Consolidated Financial Statements for the three months ended March 31, 2020.

The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect reported assets, liabilities, revenues and expenses, gains and losses, and disclosures of contingencies. These estimates and assumptions are subject to change based on experience and new information. Critical accounting estimates are those that require management to make assumptions about matters that are highly uncertain at the time the estimate is made. Critical accounting estimates are also those estimates which, where a different estimate could have been used or where changes in the estimate that are reasonably likely to occur, would have a material impact on the company's financial condition, changes in financial condition or financial performance. Critical accounting estimates and judgments are reviewed annually by the Audit Committee of the Board of Directors. A detailed description of Suncor's critical accounting estimates is provided in note 4 to the audited Consolidated Financial Statements for the year ended December 31, 2019 and in the Accounting Policies and Critical Accounting Estimates section of Suncor's 2019 annual MD&A.

On January 30, 2020, the World Health Organization declared the Coronavirus disease (COVID-19) outbreak a Public Health Emergency of International Concern and, on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. These measures have and will continue to have significant disruption to business operations and a significant increase in economic uncertainty, with reduced demand for commodities leading to volatile prices and currency exchange rates, and a decline in long-term interest rates. Our operations and business are particularly sensitive to a reduction in the demand for, and prices of, commodities that are closely linked to Suncor's financial performance, including crude oil, refined petroleum products (such as jet fuel and gasoline), natural gas and electricity. The potential direct and indirect impacts of the economic downturn have been considered in management's estimates, and assumptions at period end have been reflected in our results with any significant changes described in the relevant notes to the company's unaudited interim Consolidated Financial Statements for the three months ended March 31, 2020.

The COVID-19 pandemic is an evolving situation that will continue to have widespread implications for our business environment, operations and financial condition. Management cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact our consolidated statements of comprehensive (loss) income, consolidated balance sheets and consolidated statements of cash flows in fiscal 2020.

Suncor periodically enters into derivative contracts such as forwards, futures, swaps, options and costless collars to manage exposure to fluctuations in commodity prices and foreign exchange rates, and to optimize the company's position with respect to interest payments. The company also uses physical and financial energy derivatives to earn trading profits. For more information on Suncor's financial instruments and the related financial risk factors, see note 26 of the audited Consolidated Financial Statements for the year ended December 31, 2019, note 9 to the unaudited interim Consolidated Financial Statements for the three months ended March 31, 2020, and the Financial Condition and Liquidity section of the 2019 annual MD&A.

Based on their evaluation as at March 31, 2020, Suncor's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to ensure that information required to be disclosed by the company in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as at March 31, 2020, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three-month period ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting. Management will continue to periodically evaluate the company's disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.

Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Suncor has updated its previously announced 2020 guidance (which was originally disclosed via press release on December 2, 2019), as set forth in Suncor's press releases dated March 23, 2020 and May 5, 2020, both of which are also available on www.sedar.com.

Certain financial measures in this MD&A – namely operating earnings (loss), ROCE, funds from (used in) operations, free funds flow, discretionary free funds flow, Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs, refining and marketing margin, refining operating expense, LIFO inventory valuation methodology and related per share or per barrel amounts – are not prescribed by GAAP. These non-GAAP financial measures are included because management uses the information to analyze business performance, leverage and liquidity, and it may be useful to investors on the same basis. These non-GAAP financial measures do not have any standardized meaning and, therefore, are unlikely to be comparable to similar measures presented by other companies. Therefore, these non-GAAP financial measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Except as otherwise indicated, these non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.

Operating earnings (loss) is a non-GAAP financial measure that adjusts net earnings (loss) for significant items that are not indicative of operating performance. Management uses operating earnings (loss) to evaluate operating performance because management believes it provides better comparability between periods. Operating earnings (loss) are reconciled to net earnings (loss) in the Consolidated Financial Information and Segment Results and Analysis sections of this MD&A.

Throughout this MD&A, the company presents charts that illustrate the change in operating earnings (loss) from the comparative period through key variance factors. These factors are analyzed in the Operating Earnings (loss) narratives following the bridge analyses in particular sections of this MD&A. These bridge analyses are presented because management uses this presentation to evaluate performance.

ROCE is a non-GAAP financial measure that management uses to analyze operating performance and the efficiency of Suncor's capital allocation process. Average capital employed is calculated as a twelve-month average of the capital employed balance at the beginning of the twelve-month period and the month-end capital employed balances throughout the remainder of the twelve-month period. Figures for capital employed at the beginning and end of the twelve-month period are presented to show the changes in the components of the calculation over the twelve-month period.

The company presents two ROCE calculations – one including and one excluding the impacts on capital employed for major projects in progress. Major projects in progress includes accumulated capital expenditures and capitalized interest for significant projects still under construction or in the process of being commissioned, and acquired assets that are still being evaluated. Management uses ROCE excluding the impacts of major projects in progress on capital employed to assess performance of operating assets.


For the twelve months ended March 31 ($ millions, except as noted)		2020		2019

Adjustments to net earnings

Net (loss) earnings		(2 096	)	3 974

Add after-tax amounts for:

Unrealized foreign exchange loss on U.S. dollar denominated debt		692		399

Net interest expense		633		610

	A	(771	)	4 983

Capital employed – beginning of twelve-month period

Net debt		17 298		15 603

Shareholders' equity		44 262		45 483

		61 560		61 086

Capital employed – end of twelve-month period

Net debt		18 212		17 298

Shareholders' equity		37 965		44 262

		56 177		61 560

Average capital employed	B	59 346		60 671

ROCE – including major projects in progress (%)	A/B	(1.3	)	8.2

Average capitalized costs related to major projects in progress	C	3 062		534

ROCE – excluding major projects in progress (%)⁽¹⁾	A/(B-C)	(1.4	)	8.3

(1): ROCE excluding major projects in progress would have been 5.4% for the twelve months ended March 31, 2020, excluding the impact of impairments of $1.798 billion after-tax in the first quarter of 2020, the impacts of impairments of $3.352 billion after-tax in the fourth quarter of 2019 and the impacts of $1.116 billion deferred tax recovery for the Alberta corporate income tax rate change in the second quarter of 2019.

Funds from (used in) operations is a non-GAAP financial measure that adjusts a GAAP measure – cash flow provided by (used in) operating activities – for changes in non-cash working capital, which management uses to analyze operating performance and liquidity. Changes to non-cash working capital can be impacted by, among other factors, the timing of offshore feedstock purchases and payments for commodity and income taxes, the timing of cash flows related to accounts receivable and accounts payable, and changes in inventory which management believes reduces comparability between periods.

Funds from (used in) operations for each quarter are separately defined and reconciled to the cash flow provided by operating activities measure in the Non-GAAP Financial Measures Advisory section of each respective management's discussion and analysis or quarterly report to shareholders, as applicable, for the related quarter.


Three months ended March 31	Oil Sands				Exploration and Production				Refining and Marketing				Corporate and Eliminations				Total
($ millions)	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019

Net (loss) earnings	(1 953	)	189		(427	)	492		(55	)	1 009		(1 090	)	(220	)	(3 525	)	1 470

Adjustments for:

Depreciation, depletion, amortization and impairment	3 065		992		828		247		232		203		21		20		4 146		1 462

Deferred income taxes	(444	)	60		(128	)	(33	)	(10	)	5		62		(29	)	(520	)	3

Accretion	56		58		11		11		2		2		—		—		69		71

Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt	—		—		—		—		—		—		1 096		(280	)	1 096		(280	)

Change in fair value of financial instruments and trading inventory	163		6		(136	)	(4	)	98		70		—		—		125		72

Gain loss on disposal of assets	(1	)	(4	)	—		—		(3	)	(1	)	—		—		(4	)	(5	)

Share-based compensation	(86	)	(34	)	(11	)	(5	)	(51	)	(24	)	(178	)	(46	)	(326	)	(109	)

Exploration	—		—		70		2		—		—		—		—		70		2

Settlement of decommissioning and restoration liabilities	(99	)	(112	)	(4	)	(1	)	(3	)	(1	)	—		—		(106	)	(114	)

Other	(10	)	29		(30	)	(7	)	14		(10	)	2		1		(24	)	13

Funds from (used in) operations	691		1 184		173		702		224		1 253		(87	)	(554	)	1 001		2 585

Decrease (increase) in non-cash working capital																	383		(1 037	)

Cash flow provided by operating activities																	1 384		1 548

Free funds flow is a non-GAAP financial measure that is calculated by taking funds from operations and subtracting capital expenditures, including capitalized interest. Discretionary free funds flow is a non-GAAP financial measure that is calculated by taking funds from operations and subtracting asset sustainment and maintenance capital, inclusive of associated capitalized interest, and dividends. Both free funds flow and discretionary free funds flow reflects cash available for increasing distributions to shareholders and to fund growth investments. Management uses free funds flow and discretionary free funds flow to measure the capacity of the company to increase returns to shareholders and to grow Suncor's business.

Oil Sands operations, Syncrude and Fort Hills cash operating costs are non-GAAP financial measures. Oil Sands operations cash operating costs are calculated by adjusting Oil Sands segment OS&G expense (a GAAP measure based on sales volumes) for i) costs pertaining to Fort Hills and Syncrude operations; ii) non-production costs that management believes do not relate to the production performance of Oil Sands operations, including, but not limited to, share-based compensation adjustments, research and the expense recorded as part of a non-monetary arrangement involving a third-party processor; iii) revenues associated with excess capacity, including excess power generated and sold that is recorded in operating revenue; iv) project startup costs; and v) the impacts of changes in inventory levels, such that the company is able to present cost information based on production volumes. Beginning in the first quarter of 2020, the company revised Syncrude cash operating costs to better align with the Oil Sands operations and Fort Hills cash operating costs methodology. Prior period Syncrude cash operating costs had previously included future development costs and have been restated to exclude these costs. Syncrude and Fort Hills cash operating costs are calculated by adjusting Syncrude OS&G expense and Fort Hills OS&G expense, respectively, for non-production costs that management believes do not relate to the production performance of Syncrude operations or Fort Hills operations, respectively, including, but not limited to, share-based compensation, research and project startup costs, if applicable. Oil Sands operations, Fort Hills and Syncrude cash operating costs are reconciled in the Segment Results and Analysis – Oil Sands section of this MD&A. Management uses cash operating costs to measure operating performance.

Refining and marketing margin and refining operating expense are non-GAAP financial measures. Refining and marketing margin is calculated by adjusting R&M segment operating revenue, other income and purchases of crude oil and products (all of which are GAAP measures) for non-refining margin pertaining to the company's supply, marketing and ethanol businesses, as well as removing the impact of marketing and logistics gains and losses. Refinery operating expense is calculated by adjusting R&M segment OS&G for i) non-refining costs pertaining to the company's supply, marketing and ethanol businesses; and ii) non-refining costs that management believes do not relate to the production of refined products, including, but not limited to, share-based compensation and enterprise shared service allocations. Management uses refining and marketing margin and refining operating expense to measure operating performance on a production barrel basis.


	Three months ended March 31
($ millions, except as noted)	2020		2019

Refining and marketing margin reconciliation

Gross margin, operating revenue less purchases of crude oil and products	629		2 140

Other income	86		15

Non-refining margin	283		(13	)

Refining and marketing margin	998		2 142

Refinery production⁽¹⁾ (mbbls)	42 729		43 143

Refining and marketing margin – FIFO⁽²⁾ ($/bbl)	23.35		49.65

Refining and marketing margin – LIFO⁽²⁾ ($/bbl)	35.60		35.25

Refining operating expense reconciliation

Operating, selling and general expense	511		536

Non-refining costs	(270	)	(294	)

Refining operating expense	241		242

Refinery production⁽¹⁾ (mbbls)	42 729		43 143

Refining operating expense ($/bbl)	5.65		5.60

(1): Refinery production is the output of the refining process, and differs from crude oil processed as a result of volumetric adjustments for non-crude feedstock, volumetric gain associated with the refining process, and changes in unfinished product inventories.
(2): Beginning in the first quarter of 2020, refining and marketing margins have been revised to better reflect the refining, product supply and rack forward businesses. Prior periods have been restated to reflect this change.

Impact of First-in, First-out (FIFO) Inventory Valuation on Refining and Marketing Net Earnings (Loss)

GAAP requires the use of a FIFO inventory valuation methodology. For Suncor, this results in a disconnect between the sales prices for refined products, which reflect current market conditions, and the amount recorded as the cost of sale for the related refinery feedstock, which reflects market conditions at the time the feedstock was purchased. This lag between purchase and sale can be anywhere from several weeks to several months, and is influenced by the time to receive crude after purchase (which can be several weeks for foreign offshore crude purchases), regional crude inventory levels, the completion of refining processes, transportation time to distribution channels, and regional refined product inventory levels.

Suncor prepares and presents an estimate of the impact of using a FIFO inventory valuation methodology compared to a LIFO methodology, because management uses the information to analyze operating performance and compare itself against refining peers that are permitted to use LIFO inventory valuation under United States GAAP (U.S. GAAP).

The company's estimate is not derived from a standardized calculation and, therefore, may not be directly comparable to similar measures presented by other companies, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP or U.S. GAAP.


Measurement		Places and Currencies
bbl	barrel	U.S.	United States
bbls/d	barrels per day	U.K.	United Kingdom
mbbls/d	thousands of barrels per day
		$ or Cdn$	Canadian dollars
boe	barrels of oil equivalent	US$	United States dollars
boe/d	barrels of oil equivalent per day
mboe	thousands of barrels of oil equivalent
mboe/d	thousands of barrels of oil equivalent per day	Financial and Business Environment
		Q1	Three months ended March 31
GJ	Gigajoule	DD&A	Depreciation, depletion and amortization
		WTI	West Texas Intermediate
mcf	thousands of cubic feet of natural gas	WCS	Western Canadian Select
mcfe	thousands of cubic feet of natural gas equivalent	SCO	Synthetic crude oil
mmcf	millions of cubic feet of natural gas	SYN	Synthetic crude oil benchmark
mmcf/d	millions of cubic feet of natural gas per day	MSW	Mixed Sweet Blend
mmcfe	millions of cubic feet of natural gas equivalent	NYMEX	New York Mercantile Exchange
mmcfe/d	millions of cubic feet of natural gas equivalent per day	YTD	Year to date
MW	megawatts
MWh	megawatts per hour

This MD&A contains certain forward-looking information and forward-looking statements (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements and other information are based on Suncor's current expectations, estimates, projections and assumptions that were made by the company in light of information available at the time the statement was made and consider Suncor's experience and its perception of historical trends, including expectations and assumptions concerning: the accuracy of reserves estimates; the current and potential adverse impacts of the novel coronavirus pandemic; commodity prices and interest and foreign exchange rates; the performance of assets and equipment; capital efficiencies and cost-savings; applicable laws and government policies; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour, services and infrastructure; the satisfaction by third parties of their obligations to Suncor; the development and execution of projects; and the receipt, in a timely manner, of regulatory and third-party approvals. All statements and information that address expectations or projections about the future, and other statements and information about Suncor's strategy for growth, expected and future expenditures or investment decisions, commodity prices, costs, schedules, production volumes, operating and financial results, future financing and capital activities, and the expected impact of future commitments are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects", "anticipates", "will", "estimates", "plans", "scheduled", "intends", "believes", "projects", "indicates", "could", "focus", "vision", "goal", "outlook", "proposed", "target", "objective", "continue", "should", "may", "future", "potential", "opportunity", "would", "priority", "strategy" and similar expressions. Forward-looking statements in this MD&A include references to:

Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Suncor. Suncor's actual results may differ materially from those expressed or implied by its forward-looking statements, so readers are cautioned not to place undue reliance on them. The financial and operating performance of the company's reportable operating segments, specifically Oil Sands, E&P, and R&M, may be affected by a number of factors.

Factors that affect Suncor's Oil Sands segment include, but are not limited to, volatility in the prices for crude oil and other production, and the related impacts of fluctuating light/heavy and sweet/sour crude oil differentials; changes in the demand for refinery feedstock and diesel fuel, including the possibility that refiners that process the company's proprietary production will be closed, experience equipment failure or other accidents; Suncor's ability to operate its Oil Sands facilities reliably in order to meet production targets; the output of newly commissioned facilities, the performance of which may be difficult to predict during initial operations; Suncor's dependence on pipeline capacity and other logistical constraints, which may affect the company's ability to distribute products to market and which may cause the company to delay or cancel planned growth projects in the event of insufficient takeaway capacity; Suncor's ability to finance Oil Sands economic investment and asset sustainment and maintenance capital expenditures; the availability of bitumen feedstock for upgrading operations, which can be negatively affected by poor ore grade quality, unplanned mine equipment and extraction plant maintenance, tailings storage, and in situ reservoir and equipment performance, or the unavailability of third-party bitumen; changes in operating costs, including the cost of labour, natural gas and other energy sources used in oil sands processes; and the company's ability to complete projects, including planned maintenance events, both on time and on budget, which could be impacted by competition from other projects (including other oil sands projects) for goods and services and demands on infrastructure in Alberta's Wood Buffalo region and the surrounding area (including housing, roads and schools).

Factors that affect Suncor's E&P segment include, but are not limited to, volatility in crude oil and natural gas prices; operational risks and uncertainties associated with oil and gas activities, including unexpected formations or pressures, premature declines of reservoirs, fires, blow-outs, equipment failures and other accidents, uncontrollable flows of crude oil, natural gas or well fluids, and pollution and other environmental risks; adverse weather conditions, which could disrupt output from producing assets or impact drilling programs, resulting in increased costs and/or delays in bringing on new production; political, economic and socio-economic risks associated with Suncor's foreign operations, including the unpredictability of operating in Libya due to ongoing political unrest; and market demand for mineral rights and producing properties, potentially leading to losses on disposition or increased property acquisition costs.

Factors that affect our R&M segment include, but are not limited to, fluctuations in demand and supply for refined products that impact the company's margins; market competition, including potential new market entrants; the company's ability to reliably operate refining

and marketing facilities in order to meet production or sales targets; and risks and uncertainties affecting construction or planned maintenance schedules, including the availability of labour and other impacts of competing projects drawing on the same resources during the same time period.

Additional risks, uncertainties and other factors that could influence the financial and operating performance of all of Suncor's operating segments and activities include, but are not limited to, changes in general economic, market and business conditions, such as commodity prices, interest rates and currency exchange rates (including as a result of demand and supply effects resulting from the COVID-19 virus pandemic and the actions of OPEC and non-OPEC countries); fluctuations in supply and demand for Suncor's products; the successful and timely implementation of capital projects, including growth projects and regulatory projects; risks associated with the development and execution of Suncor's major projects and the commissioning and integration of new facilities; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; the risk that projects and initiatives intended to achieve cash flow growth and/or reductions in operating costs may not achieve the expected results in the time anticipated or at all; competitive actions of other companies, including increased competition from other oil and gas companies or from companies that provide alternative sources of energy; labour and material shortages; actions by government authorities, including the imposition or reassessment of, or changes to, taxes, fees, royalties, duties and other government-imposed compliance costs; changes to laws and government policies that could impact the company's business, including environmental (including climate change), royalty and tax laws and policies; the ability and willingness of parties with whom Suncor has material relationships to perform their obligations to the company; the unavailability of, or outages to, third-party infrastructure that could cause disruptions to production or prevent the company from being able to transport its products; the occurrence of a protracted operational outage, a major safety or environmental incident, or unexpected events such as fires (including forest fires), equipment failures and other similar events affecting Suncor or other parties whose operations or assets directly or indirectly affect Suncor; the potential for security breaches of Suncor's information technology and infrastructure by malicious persons or entities, and the unavailability or failure of such systems to perform as anticipated as a result of such breaches; security threats and terrorist or activist activities; the risk that competing business objectives may exceed Suncor's capacity to adopt and implement change; risks and uncertainties associated with obtaining regulatory, third-party and stakeholder approvals outside of Suncor's control for the company's operations, projects, initiatives and exploration and development activities and the satisfaction of any conditions to approvals; the potential for disruptions to operations and construction projects as a result of Suncor's relationships with labour unions that represent employees at the company's facilities; the company's ability to find new oil and gas reserves that can be developed economically; the accuracy of Suncor's reserves, resources and future production estimates; market instability affecting Suncor's ability to borrow in the capital debt markets at acceptable rates or to issue other securities at acceptable prices; maintaining an optimal debt to cash flow ratio; the success of the company's marketing and logistics activities using derivatives and other financial instruments; the cost of compliance with current and future environmental laws, including climate change laws; risks relating to increased activism and public opposition to fossil fuels and oil sands; risks and uncertainties associated with closing a transaction for the purchase or sale of a business, asset or oil and gas property, including estimates of the final consideration to be paid or received; the ability of counterparties to comply with their obligations in a timely manner; risks associated with joint arrangements in which the company has an interest; risks associated with land claims and Aboriginal consultation requirements; the risk that the company may be subject to litigation; the impact of technology and risks associated with developing and implementing new technologies; and the accuracy of cost estimates, some of which are provided at the conceptual or other preliminary stage of projects and prior to commencement or conception of the detailed engineering that is needed to reduce the margin of error and increase the level of accuracy. The foregoing important factors are not exhaustive.

Many of these risk factors and other assumptions related to Suncor's forward-looking statements are discussed in further detail throughout this MD&A, and in the company's 2019 annual MD&A, the 2019 AIF and Form 40-F on file with Canadian securities commissions at www.sedar.com and the United States Securities and Exchange Commission at www.sec.gov. Readers are also referred to the risk factors and assumptions described in other MD&As that Suncor files from time to time with securities regulatory authorities. Copies of these MD&As are available without charge from the company.

The forward-looking statements contained in this MD&A are made as of the date of this MD&A. Except as required by applicable securities laws, we assume no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing risks and assumptions affecting such forward-looking statements, whether as a result of new information, future events or otherwise.


	Three months ended March 31
Net of transportation costs, but before royalties	2020	2019

Exploration and Production

E&P Canada – Crude oil and natural gas liquids ($/bbl)	67.37	84.60

E&P International ($/boe)	63.72	83.14


(thousands)		March 31, 2020

Common shares		1 525 151

Common share options – exercisable		26 550

Common share options – non-exercisable		12 754


	Three months ended March 31
($ millions, except as noted)	2020	2019

Share repurchase activities (thousands of common shares)	7 527	11 951

Weighted average repurchase price per share (dollars per share)	40.83	42.99

Share repurchase cost	307	514


1.	Advisories	7
2.	First Quarter Highlights	10
3.	Consolidated Financial Information	11
4.	Segment Results and Analysis	16
5.	Capital Investment Update	28
6.	Financial Condition and Liquidity	30
7.	Quarterly Financial Data	34
8.	Other Items	36
9.	Non-GAAP Financial Measures Advisory	38
10.	Common Abbreviations	42
11.	Forward-Looking Information	43


	Three months ended Mar 31
($ millions)	2020		2019

Funds from operations	1 001		2 585

Asset sustaining and maintenance capital and dividends	(1 463	)	(1 096	)

Discretionary free funds flow	(462	)	1 489