EX-99.3 4 a05-18956_1ex99d3.htm EXHIBIT 99

EXHIBIT 99.3

 

Interim Unaudited Financial Statements of Suncor Energy Inc. for the Third fiscal
quarter ended September 30, 2005

 


consolidated statements of earnings

(unaudited)

 

 

 

 

Third quarter

 

Nine months ended Sept 30

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

Revenues (note 12)

 

3 142

 

2 326

 

7 583

 

6 344

 

Expenses

 

 

 

 

 

 

 

 

 

Purchases of crude oil and products

 

1 311

 

806

 

3 166

 

2 114

 

Operating, selling and general (note 6)

 

534

 

396

 

1 462

 

1 241

 

Energy marketing and trading activities (note 3)

 

230

 

118

 

573

 

295

 

Transportation and other costs

 

35

 

40

 

102

 

96

 

Depreciation, depletion and amortization (note 2)

 

174

 

183

 

507

 

536

 

Accretion of asset retirement obligations

 

8

 

6

 

23

 

19

 

Exploration

 

29

 

10

 

48

 

48

 

Royalties (note 9)

 

172

 

153

 

410

 

381

 

Taxes other than income taxes

 

160

 

140

 

406

 

404

 

Loss (gain) on disposal of assets

 

—

 

3

 

(1

)

3

 

Project start-up costs

 

7

 

1

 

13

 

23

 

Financing expenses (income) (notes 2 and 4)

 

(58

)

(47

)

(30

)

65

 

 

 

2 602

 

1 809

 

6 679

 

5 225

 

Earnings Before Income Taxes

 

540

 

517

 

904

 

1 119

 

Provision for Income Taxes (note 2)

 

 

 

 

 

 

 

 

 

Current

 

(16

)

19

 

37

 

43

 

Future

 

215

 

161

 

316

 

321

 

 

 

199

 

180

 

353

 

364

 

Net Earnings

 

341

 

337

 

551

 

755

 

Per Common Share (dollars), (note 5)

 

 

 

 

 

 

 

 

 

Basic

 

0.75

 

0.74

 

1.21

 

1.67

 

Diluted

 

0.73

 

0.73

 

1.18

 

1.64

 

Cash dividends

 

0.06

 

0.06

 

0.18

 

0.17

 

 

See accompanying notes.

 

16


 

consolidated balance sheets

(unaudited)

 

 

 

 

 

 

September 30

 

 

 

December 31

 

($ millions)

 

 

 

 

2005

 

 

 

2004

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

85

 

 

 

88

 

Accounts receivable

 

 

 

1 266

 

 

 

627

 

Inventories

 

 

 

456

 

 

 

423

 

Future income taxes

 

 

 

89

 

 

 

57

 

Total current assets

 

 

 

1 896

 

 

 

1 195

 

Property, plant and equipment, net (note 2)

 

 

 

12 179

 

 

 

10 326

 

Deferred charges and other

 

 

 

473

 

 

 

320

 

Total assets

 

 

 

14 548

 

 

 

11 841

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Short-term debt

 

 

 

4

 

 

 

30

 

Accounts payable and accrued liabilities (note 9)

 

 

 

1 916

 

 

 

1 306

 

Income taxes payable

 

 

 

8

 

 

 

32

 

Taxes other than income taxes

 

 

 

21

 

 

 

41

 

Total current liabilities

 

 

 

1 949

 

 

 

1 409

 

Long-term debt

 

 

 

3 336

 

 

 

2 217

 

Accrued liabilities and other

 

 

 

925

 

 

 

749

 

Future income taxes (note 2)

 

 

 

2 893

 

 

 

2 545

 

Shareholders’ equity (see below)

 

 

 

5 445

 

 

 

4 921

 

Total liabilities and shareholders’ equity

 

 

 

14 548

 

 

 

11 841

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

 

Number

 

 

 

 

 

(thousands)

 

 

 

(thousands)

 

 

 

Share capital

 

457 288

 

723

 

454 241

 

651

 

Contributed surplus

 

 

 

43

 

 

 

32

 

Cumulative foreign currency translation

 

 

 

(83

)

 

 

(55

)

Retained earnings (note 2)

 

 

 

4 762

 

 

 

4 293

 

 

 

 

 

5 445

 

 

 

4 921

 

 

See accompanying notes.

 

17


 

consolidated statements of cash flows

(unaudited)

 

 

 

Third quarter

 

Nine months
ended Sept 30

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

Operating Activities

 

 

 

 

 

 

 

 

 

Cash flow from operations

 

651

 

585

 

1 250

 

1 489

 

Decrease (increase) in operating working capital

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(429

)

43

 

(604

)

(176

)

Inventories

 

44

 

37

 

4

 

(66

)

Accounts payable and accrued liabilities

 

154

 

47

 

607

 

301

 

Taxes payable

 

(19

)

9

 

(47

)

6

 

Cash flow from operating activities

 

401

 

721

 

1 210

 

1 554

 

Cash Used in Investing Activities

 

(836

)

(478

)

(2 354

)

(1 175

)

Net Cash Surplus (Deficiency) Before Financing Activities

 

(435

)

243

 

(1 144

)

379

 

Financing Activities

 

 

 

 

 

 

 

 

 

Increase (decrease) in short-term debt

 

(6

)

(25

)

(26

)

(19

)

Net increase (decrease) in other long-term debt

 

483

 

(109

)

1 141

 

(577

)

Issuance of common shares under stock option plan

 

10

 

7

 

62

 

27

 

Dividends paid on common shares

 

(26

)

(27

)

(77

)

(72

)

Deferred revenue

 

11

 

11

 

41

 

11

 

Cash provided by (used in) financing activities

 

472

 

(143

)

1 141

 

(630

)

Increase (Decrease) in Cash and Cash Equivalents

 

37

 

100

 

(3

)

(251

)

Effect of Foreign Exchange on Cash and Cash Equivalents

 

—

 

(2

)

—

 

(2

)

Cash and Cash Equivalents at Beginning of Period

 

48

 

37

 

88

 

388

 

Cash and Cash Equivalents at End of Period

 

85

 

135

 

85

 

135

 

 

See accompanying notes.

 

18

 


consolidated statements of changes in shareholders’ equity

(unaudited)

 

 

 

 

 

 

 

Cumulative

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

Share

 

Contributed

 

Currency

 

Retained

 

($ millions)

 

 

Capital

 

Surplus

 

Translation

 

Earnings

 

At December 31, 2003, as previously reported

 

604

 

7

 

(26

)

3 294

 

Retroactive adjustment for change in accounting policy, net of tax (note 2)

 

—

 

—

 

—

 

14

 

At December 31, 2003, as restated

 

604

 

7

 

(26

)

3 308

 

Net earnings

 

—

 

—

 

—

 

755

 

Dividends paid on common shares

 

—

 

—

 

—

 

(72

)

Issued for cash under stock option plan

 

27

 

—

 

—

 

—

 

Issued under dividend reinvestment plan

 

5

 

—

 

—

 

(5

)

Stock-based compensation expense

 

—

 

19

 

—

 

—

 

Foreign currency translation adjustment

 

—

 

—

 

(10

)

—

 

At September 30, 2004

 

636

 

26

 

(36

)

3 986

 

At December 31, 2004, as previously reported

 

651

 

32

 

(55

)

4 269

 

Retroactive adjustment for change in accounting policy, net of tax (note 2)

 

—

 

—

 

—

 

24

 

At December 31, 2004, as restated

 

651

 

32

 

(55

)

4 293

 

Net earnings

 

—

 

—

 

—

 

551

 

Dividends paid on common shares

 

—

 

—

 

—

 

(77

)

Issued for cash under stock option plan

 

67

 

(5

)

—

 

—

 

Issued under dividend reinvestment plan

 

5

 

—

 

—

 

(5

)

Stock-based compensation expense

 

—

 

16

 

—

 

—

 

Foreign currency translation adjustment

 

—

 

—

 

(28

)

—

 

At September 30, 2005

 

723

 

43

 

(83

)

4 762

 

 

See accompanying notes.

 

 

19


 

schedules of segmented data

(unaudited)

 

 

 

Third quarter

 

 

 

 

 

 

 

Energy Marketing and Refining —

 

Refining and Marketing —

 

Corporate and

 

 

 

 

 

Oil Sands

 

Natural Gas

 

Canada

 

U.S.A

 

Eliminations

 

Total

 

($ millions)

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

623

 

847

 

168

 

135

 

982

 

785

 

924

 

437

 

—

 

—

 

2 697

 

2 204

 

Energy marketing and trading activities

 

—

 

—

 

—

 

—

 

234

 

121

 

—

 

—

 

—

 

—

 

234

 

121

 

Net insurance proceeds (note 12)

 

211

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

211

 

—

 

Intersegment revenues

 

163

 

110

 

6

 

5

 

—

 

—

 

—

 

—

 

(169

)

(115

)

—

 

—

 

Interest

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

1

 

—

 

—

 

—

 

1

 

 

 

997

 

957

 

174

 

140

 

1 216

 

906

 

924

 

438

 

(169

)

(115

) 

3 142

 

2 326

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of crude oil and products

 

8

 

33

 

—

 

—

 

740

 

533

 

731

 

353

 

(168

)

(113

)

1 311

 

806

 

Operating, selling and general

 

281

 

193

 

25

 

22

 

114

 

105

 

48

 

23

 

66

 

53

 

534

 

396

 

Energy marketing and trading activities

 

—

 

—

 

—

 

—

 

230

 

118

 

—

 

—

 

—

 

—

 

230

 

118

 

Transportation and other costs

 

23

 

27

 

5

 

5

 

1

 

1

 

6

 

7

 

—

 

—

 

35

 

40

 

Depreciation, depletion and amortization

 

112

 

126

 

36

 

29

 

18

 

18

 

6

 

9

 

2

 

1

 

174

 

183

 

Accretion of asset retirement obligations

 

7

 

5

 

1

 

1

 

—

 

—

 

—

 

—

 

—

 

—

 

8

 

6

 

Exploration

 

—

 

—

 

29

 

10

 

—

 

—

 

—

 

—

 

—

 

—

 

29

 

10

 

Royalties

 

136

 

122

 

36

 

31

 

—

 

—

 

—

 

—

 

—

 

—

 

172

 

153

 

Taxes other than income taxes

 

20

 

18

 

1

 

—

 

86

 

90

 

53

 

32

 

—

 

—

 

160

 

140

 

Loss (gain) on disposal of assets

 

—

 

4

 

—

 

—

 

—

 

(1

)

—

 

—

 

—

 

—

 

—

 

3

 

Project start-up costs

 

7

 

1

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

7

 

1

 

Financing expenses

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(58

)

(47

)

(58

)

(47

)

 

 

594

 

529

 

133

 

98

 

1 189

 

864

 

844

 

424

 

(158

)

(106

) 

2 602

 

1 809

 

Earnings (loss) before income taxes

 

403

 

428

 

41

 

42

 

27

 

42

 

80

 

14

 

(11

)

(9

)

540

 

517

 

Income taxes

 

(150

)

(165

)

(17

)

(19

)

(10

)

(13

)

(30

)

1

 

8

 

16

 

(199

)

(180

)

Net earnings (loss)

 

253

 

263

 

24

 

23

 

17

 

29

 

50

 

15

 

(3

)

7

 

341

 

337

 

 

 

20


(unaudited)

 

 

 

Third quarter

 

 

 

 

 

 

 

Energy Marketing and Refining —

 

Refining and Marketing —

 

Corporate and

 

 

 

 

 

Oil Sands

 

Natural Gas

 

Canada

 

U.S.A

 

Eliminations

 

Total

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

CASH FLOW BEFORE FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from (used in) operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

253

 

263

 

24

 

23

 

17

 

29

 

50

 

15

 

(3

)

7

 

341

 

337

 

Exploration expenses

 

—

 

—

 

29

 

10

 

—

 

—

 

—

 

—

 

—

 

—

 

29

 

10

 

Non-cash items included in earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

112

 

126

 

36

 

29

 

18

 

18

 

6

 

9

 

2

 

1

 

174

 

183

 

Income taxes

 

150

 

165

 

17

 

19

 

10

 

13

 

30

 

(1

)

8

 

(35

)

215

 

161

 

Loss (gain) on disposal of assets

 

—

 

4

 

—

 

—

 

—

 

(1

)

—

 

—

 

—

 

—

 

—

 

3

 

Stock-based compensation expense

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

6

 

10

 

6

 

10

 

Other

 

2

 

(5

)

(2

)

(2

)

(1

)

2

 

(4

)

(1

)

(61

)

(70

)

(66

)

(76

)

Overburden removal outlays

 

(68

)

(51

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(68

)

(51

)

Increase (decrease) in deferred credits and other

 

(4

)

7

 

—

 

1

 

—

 

(9

)

—

 

(1

)

24

 

10

 

20

 

8

 

Total cash flow from (used in) operations

 

445

 

509

 

104

 

80

 

44

 

52

 

82

 

21

 

(24

)

(77

)

651

 

585

 

Decrease (increase) in operating working capital

 

(230

)

18

 

(14

)

26

 

22

 

(9

)

118

 

82

 

(146

)

19

 

(250

)

136

 

Total cash flow from (used in) operating activities

 

215

 

527

 

90

 

106

 

66

 

43

 

200

 

103

 

(170

)

(58

)

401

 

721

 

Cash from (used in) investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and exploration expenditures

 

(563

)

(305

)

(87

)

(53

)

(114

)

(67

)

(95

)

(52

)

(17

)

(8

)

(876

)

(485

)

Proceeds from property loss

 

44

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

44

 

—

 

Deferred maintenance shutdown expenditures

 

(4

)

(1

)

(3

)

—

 

—

 

4

 

(3

)

(1

)

—

 

—

 

(10

)

2

 

Deferred outlays and other investments

 

—

 

—

 

—

 

—

 

1

 

—

 

—

 

—

 

2

 

—

 

3

 

—

 

Proceeds from disposals

 

—

 

2

 

2

 

3

 

1

 

—

 

—

 

—

 

—

 

—

 

3

 

5

 

Total cash (used in) investing activities

 

(523

)

(304

)

(88

)

(50

)

(112

)

(63

)

(98

)

(53

)

(15

)

(8

)

(836

)

(478

)

Net cash surplus (deficiency) before financing activities

 

(308

)

223

 

2

 

56

 

(46

)

(20

)

102

 

50

 

(185

)

(66

)

(435

)

243

 

 

 

21

 


(unaudited)

 

 

 

Nine months ended September 30

 

 

 

Oil Sands

 

Natural Gas

 

Energy Marketing and Refining — Canada

 

Refining and Marketing — U.S.A.

 

Corporate and
Eliminations

 

Total

 

($ millions)

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

1 636

 

2 350

 

429

 

358

 

2 634

 

2 227

 

1 910

 

1 098

 

1

 

1

 

6 610

 

6 034

 

Energy marketing and trading activities

 

—

 

—

 

—

 

—

 

585

 

316

 

—

 

—

 

—

 

(8

)

585

 

308

 

Net insurance proceeds (note 12)

 

387

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

387

 

—

 

Intersegment revenues

 

316

 

302

 

19

 

63

 

—

 

—

 

—

 

—

 

(335

)

(365

)

—

 

—

 

Interest

 

—

 

—

 

—

 

—

 

—

 

—

 

1

 

1

 

—

 

1

 

1

 

2

 

 

 

2 339

 

2 652

 

448

 

421

 

3 219

 

2 543

 

1 911

 

1 099

 

(334

)

(371

)

7 583

 

6 344

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of crude oil and products

 

29

 

75

 

—

 

—

 

1 959

 

1 544

 

1 513

 

859

 

(335

)

(364

)

3 166

 

2 114

 

Operating, selling and general

 

733

 

657

 

69

 

61

 

339

 

297

 

119

 

94

 

202

 

132

 

1 462

 

1 241

 

Energy marketing and trading activities

 

—

 

—

 

—

 

—

 

573

 

303

 

—

 

—

 

—

 

(8

)

573

 

295

 

Transportation and other costs

 

68

 

63

 

16

 

16

 

4

 

2

 

14

 

15

 

—

 

—

 

102

 

96

 

Depreciation, depletion and amortization

 

329

 

377

 

97

 

86

 

54

 

51

 

18

 

16

 

9

 

6

 

507

 

536

 

Accretion of asset retirement obligations

 

18

 

15

 

4

 

3

 

1

 

1

 

—

 

—

 

—

 

—

 

23

 

19

 

Exploration

 

10

 

15

 

38

 

33

 

—

 

—

 

—

 

—

 

—

 

—

 

48

 

48

 

Royalties

 

317

 

289

 

93

 

92

 

—

 

—

 

—

 

—

 

—

 

—

 

410

 

381

 

Taxes other than income taxes

 

34

 

54

 

2

 

2

 

258

 

260

 

112

 

88

 

—

 

—

 

406

 

404

 

Loss (gain) on disposal of assets

 

—

 

7

 

—

 

(3

)

(1

)

(1

)

—

 

—

 

—

 

—

 

(1

)

3

 

Project start-up costs

 

13

 

23

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

13

 

23

 

Financing expenses

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(30

)

65

 

(30

)

65

 

 

 

1 551

 

1 575

 

319

 

290

 

3 187

 

2 457

 

1 776

 

1 072

 

(154

)

(169

)

6 679

 

5 225

 

Earnings (loss) before income taxes

 

788

 

1 077

 

129

 

131

 

32

 

86

 

135

 

27

 

(180

)

(202

)

904

 

1 119

 

Income taxes

 

(301

)

(344

)

(52

)

(51

)

(13

)

(30

)

(48

)

(3

)

61

 

64

 

(353

)

(364

)

Net earnings (loss)

 

487

 

733

 

77

 

80

 

19

 

56

 

87

 

24

 

(119

)

(138

)

551

 

755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

10 990

 

8 744

 

1 159

 

819

 

1 880

 

1 274

 

1 239

 

549

 

(720

)

14

 

14 548

 

11 400

 

 

 

22


(unaudited)

 

 

 

Nine months ended September 30

 

 

 

Oil Sands

 

Natural Gas

 

Energy Marketing
and Refining —Canada

 

Refining and
Marketing —
U.S.A.

 

Corporate and
Eliminations

 

Total

 

($millions)

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW BEFORE FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from (used in) operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

487

 

733

 

77

 

80

 

19

 

56

 

87

 

24

 

(119

)

(138

)

551

 

755

 

Exploration expenses

 

—

 

—

 

38

 

33

 

—

 

—

 

—

 

—

 

—

 

—

 

38

 

33

 

Non-cash items included in earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

329

 

377

 

97

 

86

 

54

 

51

 

18

 

16

 

9

 

6

 

507

 

536

 

Income taxes

 

301

 

344

 

52

 

51

 

13

 

30

 

48

 

3

 

(98

)

(107

)

316

 

321

 

Loss (gain) on disposal of assets

 

—

 

7

 

—

 

(3

)

(1

)

(1

)

—

 

—

 

—

 

—

 

(1

)

3

 

Stock-based compensation expense

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

16

 

19

 

16

 

19

 

Other

 

25

 

(13

)

4

 

6

 

7

 

(5

)

(1

)

(9

)

(54

)

(19

)

(19

)

(40

)

Overburden removal outlays

 

(220

)

(163

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(220

)

(163

)

Increase (decrease) in deferred credits and other

 

(10

)

10

 

—

 

—

 

—

 

—

 

—

 

2

 

72

 

13

 

62

 

25

 

Total cash flow from (used in) operations

 

912

 

1 295

 

268

 

253

 

92

 

131

 

152

 

36

 

(174

)

(226

)

1 250

 

1 489

 

Decrease (increase) in operating working capital

 

(110

)

26

 

(41

)

(11

)

(11

)

—

 

74

 

38

 

48

 

12

 

(40

)

65

 

Total cash flow from (used in) operating activities

 

802

 

1 321

 

227

 

242

 

81

 

131

 

226

 

74

 

(126

)

(214

)

1 210

 

1 554

 

Cash from (used in) investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and exploration expenditures

 

(1 443

)

(779

)

(241

)

(160

)

(306

)

(132

)

(258

)

(97

)

(41

)

(25

)

(2 289

)

(1 193

)

Acquisition of Denver refinery and related assets

 

—

 

—

 

—

 

—

 

—

 

—

 

(62

)

—

 

—

 

—

 

(62

)

—

 

Proceeds from property loss

 

44

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

44

 

—

 

Deferred maintenance shutdown expenditures

 

(64

)

(1

)

(3

)

—

 

—

 

(21

)

(4

)

(7

)

—

 

—

 

(71

)

(29

)

Deferred outlays and other investments

 

(1

)

(3

)

—

 

—

 

(1

)

(12

)

—

 

—

 

1

 

8

 

(1

)

(7

)

Proceeds from disposals

 

21

 

42

 

2

 

10

 

2

 

2

 

—

 

—

 

—

 

—

 

25

 

54

 

Total cash (used in) investing activities

 

(1 443

)

(741

)

(242

)

(150

)

(305

)

(163

)

(324

)

(104

)

(40

)

(17

)

(2 354

)

(1 175

)

Net cash surplus (deficiency) before financing activities

 

(641

)

580

 

(15

)

92

 

(224

)

(32

)

(98

)

(30

)

(166

)

(231

)

(1 144

)

379

 

 

 

23


 

notes to the consolidated financial statements

(unaudited)

 

1. ACCOUNTING POLICIES

 

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and follow the same accounting policies and methods of computation as, and should be read in conjunction with, the most recent annual financial statements, except for the accounting policy changes as described in note 2, Changes in Accounting Policies.

 

In the opinion of management, these interim consolidated financial statements contain all adjustments of a normal and recurring nature necessary to present fairly Suncor Energy Inc.’s (Suncor) financial position at September 30, 2005 and the results of its operations and cash flows for the three and nine month periods ended September 30, 2005 and 2004.

 

Certain prior period comparative figures have been reclassified to conform to the current period presentation.

 

2. CHANGES IN ACCOUNTING POLICIES

 

(a) Preferred Securities

 

On January 1, 2005 the company retroactively adopted the Canadian accounting standard related to disclosure and presentation of financial instruments. Accordingly, the company’s preferred securities, which were redeemed in March, 2004, have been reclassified as long-term debt. The company has also restated its property, plant and equipment and depreciation, depletion and amortization to reflect the capitalized interest that would have been incurred and amortized had the preferred securities been classified as debt during the period in which they were outstanding. The impact of adopting this accounting standard is as follows:

 

Change in Consolidated Balance Sheets

 

 

 

As at September 30

 

($ millions, increase)

 

2005

 

2004

 

Property, plant and equipment

 

36

 

38

 

Total assets

 

36

 

38

 

 

 

 

 

 

 

Future income tax liabilities

 

13

 

14

 

Retained earnings

 

23

 

24

 

Total liabilities and shareholders’ equity

 

36

 

38

 

 

Change in Consolidated Statements of Earnings

 

 

 

Third quarter

 

Nine months ended September 30

 

($ millions, increase/(decrease))

 

2005

 

2004

 

2005

 

2004

 

Depreciation, depletion and amortization

 

—

 

—

 

1

 

2

 

Financing expenses

 

—

 

—

 

—

 

15

 

Future income taxes

 

—

 

—

 

—

 

(5

)

Net earnings

 

—

 

—

 

(1

)

(12

)

Per common share — basic (dollars)

 

—

 

—

 

—

 

—

 

Per common share — diluted (dollars)

 

—

 

—

 

—

 

—

 

 

(b) Consolidation of Variable Interest Entities

 

On January 1, 2005 the company prospectively adopted Canadian Accounting Guideline 15 — “Consolidation of Variable Interest Entities (VIEs)”. Accordingly, the company has consolidated the VIE related to the sale of equipment as described in note 11(c) of the company’s 2004 Annual Report. The impact of adopting this standard was an increase to property, plant and equipment of $14 million, an increase to materials and supplies inventory of $8 million and an increase to long-term debt of $22 million.

 

 

24


3. ENERGY MARKETING AND TRADING ACTIVITIES

 

The company uses physical and financial energy contracts, including swaps, forwards and options to gain market information and earn trading and marketing revenues. The results of these activities are reported as revenue and as energy trading and marketing expenses in the Consolidated Statement of Earnings.

 

Physical energy marketing contracts involve activities intended to enhance prices and satisfy physical deliveries to customers. For the quarter ended September 30, 2005 these activities resulted in a net pretax gain of $1 million (2004 — pretax gain of $2 million). For the nine months ended September 30, 2005 physical energy marketing contracts resulted in a net pretax gain of $10 million (2004 — pretax gain of $7 million).

 

In addition to the financial derivatives used for hedging activities, the company also enters into various financial energy contracts for trading activities. The following information presents all positions for the financial instruments only. These energy trading activities are accounted for using the mark-to-market method and as such all financial instruments are recorded at fair value at each balance sheet date. For the quarter ended September 30, 2005, a net pretax gain of $3 million (2004 — pretax gain of $3 million) resulted from the settlement and revaluation of the financial energy contracts. For the nine months ended September 30, 2005 a net pretax gain of $4 million (2004 — pretax gain of $9 million) was recorded. The above amounts do not include the impact of related general and administrative costs.

 

The fair value of unsettled (unrealized) energy trading assets and liabilities are as follows:

 

 

 

September 30

 

December 31

 

($ millions)

 

 

2005

 

2004

 

Energy trading assets

 

114

 

26

 

Energy trading liabilities

 

101

 

9

 

 

The source of the valuations of the above contracts is based on actively quoted prices and internal model valuations.

 

4. FINANCING EXPENSES (INCOME)

 

 

 

Third Quarter

 

Nine months ended
September 30

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

Interest on debt

 

39

 

36

 

110

 

121

 

Capitalized interest

 

(34

)

(17

)

(91

)

(40

)

Net interest expense

 

5

 

19

 

19

 

81

 

Foreign exchange (gain) on long-term debt

 

(64

)

(77

)

(42

)

(22

)

Other foreign exchange (gain) loss

 

1

 

11

 

(7

)

6

 

Total financing expenses (income)

 

(58

)

(47

)

(30

)

65

 

 

5. RECONCILIATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE

 

 

 

Third Quarter

 

Nine months ended
September 30

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

Net earnings

 

341

 

337

 

551

 

755

 

 

 

 

 

 

 

 

 

 

 

(millions of common shares)

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares

 

457

 

453

 

456

 

453

 

Options issued under stock-based compensation plans

 

11

 

7

 

9

 

9

 

Weighted-average number of diluted common shares

 

468

 

460

 

465

 

462

 

 

 

 

 

 

 

 

 

 

 

(dollars per common share)

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (b)

 

0.75

 

0.74

 

1.21

 

1.67

 

Diluted earnings per share (c)

 

0.73

 

0.73

 

1.18

 

1.64

(a)

 

Note: An option will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the option.

(a) For the nine months ended September 30, 2004, diluted earnings per share is net earnings divided by the weighted-average number of diluted common shares. Interest on subordinated debentures, the revaluation of US$ subordinated debentures and the redemption of subordinated debentures by the issuance of common shares have an anti-dilutive impact, therefore they are not included in the calculation of diluted earnings per share.

 

(b) Basic earnings per share is net earnings divided by the weighted-average number of common shares.

 

(c) Diluted earnings per share is the net earnings, divided by the weighted-average number of diluted common shares.

 

25


 

6. STOCK-BASED COMPENSATION

 

A common share option gives the holder the right, but not the obligation, to purchase common shares at a predetermined price over a specified period of time.

 

After the date of grant, employees that hold options must earn the right to exercise them. This is done by the employee fulfilling a time requirement for service to the company, and with respect to certain options, is subject to accelerated vesting should the company meet predetermined performance criteria. Once this right has been earned, these options are considered vested.

 

The predetermined price at which an option can be exercised is equal to or greater than the market price of the common shares on the date the option is granted.

 

A performance vesting share unit is an award entitling employees to receive cash to varying degrees contingent upon Suncor’s shareholder return relative to a peer group of companies.

 

(a) Stock Option Plans

 

Under the SunShare long-term incentive plan, the company granted 314,000 options to new employees in the third quarter of 2005, for a total of 991,000 options granted in the nine months ended September 30, 2005 (256,000 options granted during the third quarter of 2004; 1,452,000 options granted in the nine months ended September 30, 2004).

 

On January 31, 2005, in connection with the achievement of a predetermined performance criterion, 2,062,000 SunShare options vested, representing approximately 25% of the then outstanding unvested options under the SunShare plan. On June 30, 2005, we met an additional predetermined performance criterion under the SunShare plan, resulting in the vesting of 50% of the outstanding, unvested SunShare options on April 30, 2008. As we had been accruing the costs of these options, the impact on net earnings for the third quarter and the nine months ended September 30, 2005 was not significant.

 

Under the company’s other plans, 63,000 options were granted in the third quarter of 2005, for a total of 1,418,000 options granted in the nine months ended September 30, 2005 (1,000 options granted during the third quarter of 2004; 1,285,000 granted in the nine months ended September 30, 2004).

 

The fair values of all common share options granted during the period are estimated as at the grant date using the Black-Scholes option-pricing model. The weighted-average fair values of the options granted during the various periods and the weighted-average assumptions used in their determination are as noted below:

 

 

 

Third Quarter

 

Nine months ended
September 30

 

 

 

2005

 

2004

 

2005

 

2004

 

Quarterly dividend per share

 

$0.06

 

$0.06

 

$0.06

 

$0.06*

 

Risk-free interest rate

 

3.42

%

4.12

%

3.68

%

3.76

%

Expected life

 

5 years

 

6 years

 

6 years

 

6 years

 

Expected volatility

 

28

%

29

%

28

%

29

%

Weighted-average fair value per option

 

$19.17

 

$12.50

 

$14.89

 

$11.84

 

* In 2004, quarterly dividends of $0.05 per share were paid in the first quarter and $0.06 per share were paid in the second and third quarter.

 

Stock-based compensation expense recognized in the third quarter of 2005 related to stock options plans was $6 million (2004 — $10 million). For the nine months ended September 30, 2005 stock-based compensation expense recognized was $16 million (2004 — $19 million).

 

Common share options granted prior to January 1, 2003 are not recognized as compensation expense in the Consolidated Statements of Earnings. The company’s reported net earnings attributable to common shareholders and earnings per share prepared in accordance with the fair value method of accounting for stock-based compensation would have been reduced for all common share options granted prior to 2003 to the pro forma amounts stated below:

 

 

 

Third Quarter

 

Nine months ended September 30

 

($ millions, except per share amounts)

 

 

2005

 

2004

 

2005

 

2004

 

Net earnings — as reported

 

341

 

337

 

551

 

755

 

Less: compensation cost under the fair value method for pre-2003 options

 

2

 

20

 

11

 

41

 

Pro forma net earnings

 

339

 

317

 

540

 

714

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

As reported

 

0.75

 

0.74

 

1.21

 

1.67

 

Pro forma

 

0.74

 

0.70

 

1.18

 

1.58

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

As reported

 

0.73

 

0.73

 

1.18

 

1.64

 

Pro forma

 

0.73

 

0.69

 

1.16

 

1.55

 

 

26


 

(b) Performance Share Units (PSUs)

 

In the third quarter of 2005 the company issued 6,000 PSUs (2004 — Nil). For the nine months ended September 30, 2005, the company issued 451,000 PSUs (2004 — 353,000). Expense recognized in the third quarter of 2005 was $8 million (2004 — $1 million). Expense recognized for the nine months ended September 30, 2005 was $16 million (2004 — $3 million).

 

7. EMPLOYEE FUTURE BENEFITS LIABILITY

 

The company’s pension plans and other post-retirement benefits programs are described in note 9 of the company’s 2004 Annual Report. The following is the status of the net periodic benefit cost for the nine months ended September 30.

 

 

 

Pension Benefits

 

 

 

Third quarter

 

Nine months ended
September 30

 

 

 

2005

 

2004

 

2005

 

2004

 

Current service costs

 

8

 

6

 

24

 

18

 

Interest costs

 

10

 

8

 

29

 

25

 

Expected return on plan assets

 

(7

)

(6

)

(21

)

(18

)

Amortization of net actuarial loss

 

4

 

5

 

15

 

14

 

Net periodic benefit cost

 

15

 

13

 

47

 

39

 

 

 

 

Other Post-retirement Benefits

 

 

 

Third quarter

 

Nine months ended
September 30

 

 

 

2005

 

2004

 

2005

 

2004

 

Current service costs

 

2

 

1

 

5

 

4

 

Interest costs

 

1

 

2

 

5

 

5

 

Amortization of net actuarial loss

 

1

 

—

 

1

 

1

 

Net periodic benefit cost

 

4

 

3

 

11

 

10

 

 

8. SUPPLEMENTAL INFORMATION

 

 

 

Third quarter

 

Nine months ended
September 30

 

($ millions)

 

 

2005

 

2004

 

2005

 

2004

 

Interest paid

 

53

 

47

 

122

 

125

 

Income taxes paid

 

6

 

6

 

61

 

38

 

 

Strategic Crude Oil Hedges at September 30, 2005

 

 

 

Quantity

 

Average Price

 

Revenue Hedged

 

Hedge

 

 

 

(bbl/day)

 

(US$/bbl)(a)

 

(Cdn$ millions)(b)

 

Period(c)

 

Swaps

 

36 000

 

22.77

 

88

 

2005

 

Costless collars

 

7 000

 

50.00 — 92.57

 

148 — 275

 

2006

 

Costless collars

 

7 000

 

50.00 — 92.57

 

148 — 275

 

2007

 

 

Margin Hedges at September 30, 2005

 

 

 

Quantity

 

Average Margin

 

Margin Hedged

 

Hedge

 

 

 

(bbl/day)

 

(US$/bbl)

 

(Cdn$ millions)(b)

 

Period(c)

 

Refined product and crude swaps

 

12 700

 

7.77

 

11

 

2005

(d)

Refined product and crude swaps

 

5 000

 

11.67

 

10

 

2006

(e)

 

27


Natural Gas Hedges at September 30, 2005

 

 

 

Quantity

 

Average Price

 

Revenue Hedged

 

Hedge

 

Revenue

 

 

(GJ/day)

 

(Cdn$/GJ)

 

(Cdn$ millions)

 

Period(c)

 

Costless collars

 

25 000

 

6.91 — 8.11

 

5 — 6

 

2005

(f)

Swaps

 

4 000

 

6.99

 

3

 

2005

 

Costless collars

 

25 000

 

10.76 — 16.13

 

16 — 25

 

2005

(g)

Swaps

 

4 000

 

6.58

 

10

 

2006

 

Costless collars

 

25 000

 

10.76 — 16.13

 

24 — 36

 

2006

(h)

Swaps

 

4 000

 

6.11

 

9

 

2007

 

(a)                                  Average price for crude oil swaps is WTI per barrel at Cushing, Oklahoma.

 

(b)                                 The revenue and margin hedged is translated to Cdn$ at the September 30, 2005 exchange rate and is subject to change as the Cdn$/US$ exchange rate fluctuates during the hedge period.

 

(c)                                  Original hedge term is for the full year unless otherwise noted.

 

(d)                                 For the period October to December 2005, inclusive.

 

(e)                                  For the period January to May 2006, inclusive.

 

(f)                                    For the period October 2005.

 

(g)                                 For the period November to December 2005, inclusive.

 

(h)                                 For the period January to March 2006, inclusive.

 

9. ROYALTY ESTIMATE MEASUREMENT UNCERTAINTY

 

Alberta Crown royalties in effect for each Oil Sands project require payments to the Government of Alberta based on annual gross revenues less related transportation costs (R) less allowable costs (C), including the deduction of certain capital expenditures (the 25% R-C royalty), subject to a minimum payment of 1% of R. Firebag is being treated by the government of Alberta as a separate project from the rest of the Oil Sands operations for royalty purposes. The 2004 calendar year was a transitional year for Oil Sands as the remaining amount of prior years’ allowable costs carried forward of approximately $600 million were claimed before the 25% R-C royalty applied to 2004 results.

 

Absolute royalties that may be payable in 2005 are highly sensitive to, among other factors, changes in crude oil and natural gas pricing, timing of the receipt of business interruption insurance proceeds, foreign exchange rates and total capital and operating costs for each project. Oil Sands pretax Crown royalty estimate was $317 million ($196 million after-tax) for the first nine months of 2005 ($186 million after-tax in 2004). The annualized estimate of $546 million ($349 million after-tax) was based on nine months of actual results, together with 2005 forward crude oil pricing as at September 30, 2005, current forecasts of capital and operating costs for the remainder of 2005, a Canadian/US foreign exchange rate of $0.83, and no receipts of business interruption insurance proceeds other than those recorded to date (see note 12). Accordingly, actual results will differ, and these differences may be material.

 

10. ACQUISITION OF REFINERY AND RELATED ASSETS

 

On May 31, 2005, the company acquired all of the issued shares of the Colorado Refining Company, an indirect wholly-owned subsidiary of Valero for cash consideration of $37 million. Additional payments for working capital and associated inventory brought the total purchase price to $62 million. The acquired company’s principal assets are a Denver refinery and a products terminal located in Grand Junction, Colorado. The preliminary allocation of fair value to the assets acquired and liabilities assumed was $79 million for property, plant and equipment, $30 million for inventory, and $41 million for environmental liabilities assumed. The fair value assigned to other liabilities was $6 million. The acquisition was accounted for by the purchase method of accounting.

 

The results of operations for these assets have been included in the consolidated financial statements from the date of acquisition. The new operations have been reported as part of the Refining and Marketing — U.S.A. segment in the Schedules of Segmented Data.

 

11. CREDIT FACILITIES

 

During the second quarter, the company entered into a new $600 million credit facility agreement. The new facility is fully revolving for 364 days and expires in 2006. During the third quarter, the company renewed $200 million of its available credit and term loan facilities.

 

12. SUBSEQUENT EVENT

 

In October, 2005, the Company received $166 million in proceeds related to its business interruption insurance coverage. The business interruption insurance proceeds related to business activity during the nine months ended September 30, 2005 and have accordingly been recognized as revenue in the third quarter. Additional business interruption insurance proceeds will be recorded at the time of unconditional receipt.

 

28


 

highlights

(unaudited)

 

 

 

2005

 

2004

 

Cash Flow from Operations

 

 

 

 

 

 

 

 

 

 

 

(dollars per common share)

 

 

 

 

 

 

For the three months ended September 30

 

 

 

 

 

 

Cash flow from operations (1)

 

1.42

 

1.29

 

 

 

 

 

 

 

For the nine months ended September 30

 

 

 

 

 

 

Cash flow from operations (1)

 

2.74

 

3.29

 

 

 

 

 

 

 

Ratios

 

 

 

 

 

 

 

 

 

 

 

For the twelve months ended September 30

 

 

 

 

 

 

Return on capital employed (%) (2)

 

13.8

 

18.8

 

Return on capital employed (%) (3)

 

10.5

 

16.3

 

Net debt to cash flow from operations (times) (4)

 

1.8

 

1.1

 

Interest coverage on long-term debt (times)

 

 

 

 

 

Net earnings (5)

 

9.8

 

10.0

 

Cash flow from operations (6)

 

12.8

 

12.7

 

 

 

 

 

 

 

As at September 30

 

 

 

 

 

 

Debt to debt plus shareholders’ equity (%) (7)

 

38.0

 

33.7

 

 

 

 

 

 

 

Common Share Information

 

 

 

 

 

 

 

 

 

 

 

As at September 30

 

 

 

 

 

 

Share price at end of trading (dollars per share)

 

 

 

 

 

Toronto Stock Exchange — Cdn$

 

70.42

 

40.40

 

New York Stock Exchange — US$

 

60.53

 

32.01

 

Common share options outstanding (thousands)

 

19 378

 

21 279

 

 

 

 

 

 

 

For the nine months ended September 30

 

 

 

 

 

 

Average number outstanding, weighted monthly (thousands)

 

455 962

 

452 565

 

 

Refer to the Quarterly Operating Summary for a discussion of financial measures not prepared in accordance with generally accepted accounting principles (GAAP).

(1)           Cash flow from operations for the period; divided by the weighted average number of common shares outstanding during the period.

 

(2)           Net earnings (2005 — $884 million; 2004 — $1,056 million) adjusted for after-tax financing expenses (2005 — income of $57 million; 2004 — expense of $18 million) for the twelve month period ended; divided by average capital employed (2005 — $5,929 million; 2004 — $5,724 million). Average capital employed is the sum of shareholders’ equity and short-term debt plus long-term debt less cash and cash equivalents, at the beginning and end of the year, divided by two, less capitalized costs related to major projects in progress (as applicable). Return on capital employed (ROCE) for Suncor operating segments as presented in the Quarterly Operating Summary is calculated in a manner consistent with consolidated ROCE. For a detailed reconciliation of ROCE prepared on an annual basis, see page 51 of Suncor’s 2004 Annual Report to Shareholders.

 

(3)           If capital employed were to include capitalized costs related to major projects in progress (average capital employed including major projects in progress: 2005 — $7,762 million; 2004 — $6,617 million), the return on capital employed would be as stated on this line.

 

(4)           Short-term debt plus long-term debt less cash and cash equivalents, divided by cash flow from operations for the twelve month period then ended.

 

(5)           Net earnings plus income taxes and interest expense, divided by the sum of interest expense and capitalized interest.

 

(6)           Cash flow from operations plus current income taxes and interest expense; divided by the sum of interest expense and capitalized interest.

 

(7)           Short-term debt plus long-term debt; divided by the sum of short-term debt, long-term debt and shareholders’ equity.

 

29


 

quarterly operating summary

(unaudited)

 

 

 

For the quarter ended

 

Nine months ended

 

Total year

 

 

 

Sep 30

 

June 30

 

Mar 31

 

Dec 31

 

Sep 30

 

Sep 30

 

Sep 30

 

Dec 31

 

 

 

2005

 

2005

 

2005

 

2004

 

2004

 

2005

 

2004

 

2004

 

OIL SANDS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base operations

 

125.2

 

119.5

 

121.2

 

206.9

 

230.2

 

122.0

 

218.4

 

215.6

 

Firebag

 

23.0

 

8.7

 

18.7

 

15.6

 

7.3

 

16.8

 

9.4

 

10.9

 

Total production

 

148.2

 

128.2

 

139.9

 

222.5

 

237.5

 

138.8

 

227.8

 

226.5

 

Sales (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Light sweet crude oil

 

69.9

 

48.3

 

75.3

 

115.3

 

113.5

 

64.4

 

114.5

 

114.9

 

Diesel

 

10.6

 

9.0

 

11.8

 

25.5

 

28.7

 

10.5

 

28.6

 

27.9

 

Light sour crude oil

 

41.7

 

54.2

 

38.5

 

80.9

 

76.3

 

44.8

 

73.2

 

75.1

 

Bitumen

 

22.3

 

9.6

 

18.4

 

11.0

 

7.9

 

16.8

 

7.8

 

8.4

 

Total sales

 

144.5

 

121.1

 

144.0

 

232.7

 

226.4

 

136.5

 

224.1

 

226.3

 

Average sales price (1),(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Light sweet crude oil

 

52.08

 

39.20

 

45.41

 

50.55

 

46.03

 

46.34

 

43.98

 

45.60

 

Other (diesel, light sour crude oil and bitumen)

 

59.70

 

50.47

 

47.31

 

39.62

 

42.29

 

52.48

 

38.96

 

39.13

 

Total

 

56.01

 

45.98

 

46.44

 

44.68

 

44.08

 

49.72

 

41.45

 

42.28

 

Total*

 

67.95

 

57.24

 

54.80

 

54.40

 

52.72

 

60.21

 

48.17

 

49.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH OPERATING COSTS AND TOTAL OPERATING COSTS — BASE OPERATIONS

 

Cash costs

 

18.00

 

16.30

 

15.10

 

10.90

 

9.00

 

16.50

 

9.45

 

9.80

 

Natural gas

 

4.60

 

2.65

 

4.70

 

2.20

 

1.40

 

4.00

 

1.90

 

2.00

 

Imported bitumen

 

—

 

—

 

0.10

 

0.10

 

0.10

 

—

 

0.20

 

0.15

 

Cash operating costs (2),(c)

 

22.60

 

18.95

 

19.90

 

13.20

 

10.50

 

20.50

 

11.55

 

11.95

 

Firebag start-up costs

 

—

 

—

 

—

 

—

 

—

 

—

 

0.40

 

0.30

 

Total cash operating costs (3),(c)

 

22.60

 

18.95

 

19.90

 

13.20

 

10.50

 

20.50

 

11.95

 

12.25

 

Depreciation, depletion and amortization

 

9.00

 

9.45

 

9.05

 

6.25

 

5.70

 

9.20

 

6.00

 

6.10

 

Total operating costs (4),(c)

 

31.60

 

28.40

 

28.95

 

19.45

 

16.20

 

29.70

 

17.95

 

18.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH OPERATING COSTS AND TOTAL OPERATING COSTS — FIREBAG

 

Cash costs

 

6.85

 

18.95

 

8.90

 

7.00

 

14.90

 

9.70

 

9.30

 

8.30

 

Natural gas

 

13.70

 

16.40

 

10.10

 

10.45

 

11.90

 

12.80

 

11.70

 

11.20

 

Cash operating costs (5),(c)

 

20.55

 

35.35

 

19.00

 

17.45

 

26.80

 

22.50

 

21.00

 

19.50

 

Depreciation, depletion and amortization

 

4.10

 

7.60

 

4.75

 

5.55

 

7.45

 

4.95

 

6.35

 

6.00

 

Total operating costs (6),(c)

 

24.65

 

42.95

 

23.75

 

23.00

 

34.25

 

27.45

 

27.35

 

25.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the period ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital employed (i)

 

4 492

 

4 303

 

4 231

 

4 169

 

4 182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the twelve months ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on capital employed (j)

 

17.1

 

17.2

 

19.6

 

22.9

 

22.8

 

 

 

 

 

 

 

Return on capital employed (j)****

 

12.8

 

13.4

 

15.9

 

18.8

 

19.0

 

 

 

 

 

 

 

 

30


(unaudited)

 

 

 

 

For the quarter ended

 

Nine months ended

 

Total year

Dec 31

2004

 

 

 

Sep 30

2005

 

June 30

2005

 

Mar 31

2005

 

Dec 31

2004

 

Sep 30

2004

 

Sep 30

2005

 

Sep 30

2004

 

 

 

 

 

 

 

 

 

 

 

 

NATURAL GAS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross production **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (d)

 

200

 

175

 

191

 

193

 

201

 

189

 

203

 

200

 

Natural gas liquids (a)

 

2.2

 

2.2

 

3.0

 

2.9

 

2.6

 

2.5

 

2.3

 

2.5

 

Crude oil (a)

 

0.7

 

1.0

 

0.9

 

1.0

 

1.0

 

0.9

 

1.0

 

1.0

 

Total gross production (e)

 

36.3

 

32.4

 

35.7

 

36.1

 

37.1

 

34.8

 

37.1

 

36.8

 

Average sales price (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (f)

 

8.32

 

7.29

 

6.81

 

7.02

 

6.49

 

7.50

 

6.60

 

6.70

 

Natural gas (f) *

 

8.34

 

7.26

 

6.74

 

6.98

 

6.53

 

7.47

 

6.66

 

6.73

 

Natural gas liquids (b)

 

58.00

 

52.52

 

38.32

 

46.46

 

42.06

 

48.52

 

41.31

 

42.82

 

Crude oil — Conventional (b)

 

63.77

 

63.86

 

61.40

 

55.26

 

55.43

 

62.99

 

48.85

 

50.41

 

Net wells drilled

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conventional — Exploratory ***

 

4

 

—

 

5

 

—

 

3

 

9

 

10

 

10

 

                      — Development

 

2

 

2

 

5

 

5

 

3

 

9

 

11

 

16

 

 

 

6

 

2

 

10

 

5

 

6

 

18

 

21

 

26

 

(for the period ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital employed (i)

 

598

 

564

 

490

 

448

 

410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the twelve months ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on capital employed (j)

 

22.7

 

22.5

 

26.2

 

27.1

 

30.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ENERGY MARKETING AND REFINING — CANADA

 

 

 

 

 

 

 

 

 

Refined product sales (g)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gasoline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

4.2

 

4.8

 

4.6

 

4.8

 

4.6

 

4.5

 

4.5

 

4.6

 

Other

 

4.2

 

4.1

 

4.0

 

4.1

 

4.3

 

4.1

 

4.1

 

4.1

 

Jet fuel

 

0.9

 

0.8

 

0.9

 

1.0

 

1.0

 

0.9

 

0.9

 

0.9

 

Diesel

 

3.7

 

3.3

 

2.7

 

3.3

 

3.0

 

3.2

 

3.0

 

3.1

 

Total transportation fuel sales

 

13.0

 

13.0

 

12.2

 

13.2

 

12.9

 

12.7

 

12.5

 

12.7

 

Petrochemicals

 

0.7

 

0.8

 

0.8

 

0.8

 

0.7

 

0.7

 

0.8

 

0.8

 

Heating oils

 

0.2

 

0.3

 

0.8

 

0.5

 

0.2

 

0.4

 

0.4

 

0.4

 

Heavy fuel oils

 

0.8

 

1.4

 

1.0

 

0.8

 

0.5

 

1.1

 

0.7

 

0.7

 

Other

 

0.9

 

0.6

 

0.3

 

0.3

 

1.0

 

0.5

 

1.0

 

0.8

 

Total refined product sales

 

15.6

 

16.1

 

15.1

 

15.6

 

15.3

 

15.4

 

15.4

 

15.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Margins (h)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Refining (7)

 

9.2

 

7.3

 

4.8

 

7.9

 

8.8

 

7.2

 

8.1

 

8.0

 

Refining (7) *

 

10.1

 

7.6

 

4.8

 

7.8

 

8.8

 

7.5

 

8.3

 

8.1

 

Retail (8)

 

5.4

 

3.8

 

4.7

 

4.5

 

3.7

 

4.6

 

4.3

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil supply and refining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processed at Sarnia refinery (g)

 

10.7

 

11.1

 

10.1

 

11.3

 

11.6

 

10.6

 

11.0

 

11.1

 

Utilization of refining capacity (j)

 

96

 

100

 

91

 

101

 

104

 

96

 

99

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the period ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital employed (i)

 

547

 

507

 

525

 

512

 

528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the twelve months ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on capital employed (j)

 

7.7

 

10.1

 

8.4

 

14.6

 

11.2

 

 

 

 

 

 

 

Return on capital employed (j) ****

 

5.6

 

8.1

 

7.3

 

13.6

 

10.8

 

 

 

 

 

 

 

 

 

31


 

(unaudited)

 

 

 

 

For the quarter ended

 

Nine months ended

 

Total year

Dec 31

2004

 

 

 

Sep 30

2005

 

June 30

2005

 

Mar 31

2005

 

Dec 31

2004

 

Sep 30

2004

 

Sep 30

2005

 

Sep 30

2004

 

 

 

 

 

 

 

 

 

 

 

 

REFINING AND MARKETING — U.S.A.

 

 

 

 

 

 

 

 

 

 

 

 

 

Refined product sales (g)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gasoline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

0.7

 

0.7

 

0.7

 

0.7

 

0.7

 

0.7

 

0.7

 

0.7

 

Other

 

8.9

 

5.0

 

3.8

 

3.9

 

4.3

 

5.9

 

3.7

 

3.8

 

Jet fuel

 

0.8

 

0.7

 

0.7

 

0.6

 

0.7

 

0.8

 

0.5

 

0.5

 

Diesel

 

3.9

 

3.1

 

2.6

 

2.5

 

2.5

 

3.2

 

2.2

 

2.2

 

Total transportation fuel sales

 

14.3

 

9.5

 

7.8

 

7.7

 

8.2

 

10.6

 

7.1

 

7.2

 

Asphalt

 

1.8

 

1.9

 

1.6

 

1.1

 

1.9

 

1.8

 

1.6

 

1.5

 

Other

 

1.2

 

1.2

 

0.7

 

0.7

 

0.8

 

1.1

 

0.5

 

0.6

 

Total refined product sales

 

17.3

 

12.6

 

10.1

 

9.5

 

10.9

 

13.5

 

9.2

 

9.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Margins (h)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Refining (7)

 

8.9

 

9.5

 

6.3

 

7.7

 

5.1

 

8.5

 

6.4

 

6.7

 

Refining (7) *

 

8.9

 

9.5

 

6.3

 

7.7

 

5.3

 

8.5

 

6.6

 

6.8

 

Retail (8)

 

7.5

 

4.3

 

3.3

 

6.0

 

4.2

 

5.0

 

5.1

 

5.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil supply and refining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processed at Denver refinery (g)

 

14.9

 

11.4

 

9.2

 

9.5

 

9.5

 

12.3

 

8.6

 

8.8

 

Utilization of refining capacity (j)

 

104

 

102

 

96

 

100

 

99

 

102

 

90

 

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the period ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital employed (i)

 

354

 

349

 

262

 

232

 

241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(for the twelve months ended)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on capital employed (j)

 

32.2

 

17.6

 

14.5

 

12.2

 

10.0

 

 

 

 

 

 

 

Return on capital employed (j) ****

 

21.6

 

13.8

 

12.2

 

11.0

 

9.6

 

 

 

 

 

 

 

 

 

32


 

 

Non GAAP Financial Measures

 

Certain financial measures referred to in the Highlights and Quarterly Operating Summary are not prescribed by generally accepted accounting principles (GAAP). Suncor includes cash flow from operations, return on capital employed and cash and total operating costs per barrel data because investors may use this information to analyze operating performance, leverage and liquidity. The additional information should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

 

 

Definitions

 

(1)

Average sales price

—

This operating statistic is calculated before royalties and net of related transportation costs (including or excluding the impact of hedging activities as noted).

 

 

 

 

(2)

Cash operating costs — Base operations

—

Include cash costs that are defined as operating, selling and general expenses (excluding inventory changes), accretion expense, taxes other than income taxes and the cost of bitumen imported from third parties. Per barrel amounts are based on mining production volumes. For a reconciliation of this non GAAP financial measure see Management’s Discussion and Analysis.

 

 

 

 

(3)

Total cash operating costs — Base operations

—

Include cash operating costs — Base operations as defined above and cash start-up costs for in-situ operations. Per barrel amounts are based on mining production volumes.

 

 

 

 

(4)

Total operating costs — Base operations

—

Include total cash operating costs — Base operations as defined above and non-cash operating costs.  Per barrel amounts are based on mining production volumes.

 

 

 

 

(5)

Cash operating costs — Firebag

—

Include cash costs that are defined as operating, selling and general expenses (excluding inventory changes), accretion expense and taxes other than income taxes. Per barrel amounts are based on in-situ production volumes.

 

 

 

 

(6)

 Total operating costs — Firebag

—

Include cash operating costs — Firebag as defined above and non-cash operating costs. Per barrel amounts are based on in-situ production volumes.

 

 

 

 

(7)

Refining margin

—

This operating statistic is calculated as the average wholesale unit price from all products less average unit cost of crude oil.

 

 

 

 

(8)

Retail margin

—

This operating statistic is calculated as the average street price of Sunoco (Energy, Marketing and Refining — Canada) and Phillips 66-branded (Refining and Marketing — U.S.A.) retail gasoline net of federal excise tax, as applicable, and other adjustments, less refining gasoline transfer price.

 

 

Explanatory Notes

 

*

Excludes the impact of hedging activities.

 

 

**

Currently all Natural Gas production is located in the Western Canada Sedimentary Basin.

 

 

***

Excludes exploratory wells in progress.

 

 

****

If capital employed were to include capitalized costs related to major projects in progress, the return on capital employed would be as stated on this line.

 

 

(a)

thousands of barrels per day

 

(e)

thousands of barrels of oil

 

(h)

cents per litre

 

 

 

 

equivalent per day

 

 

 

(b)

dollars per barrel

 

 

 

 

(i)

$ millions

 

 

 

(f)

dollars per thousand cubic feet

 

 

 

(c)

dollars per barrel rounded

 

 

 

 

(j)

percentage

 

to the nearest $0.05

 

(g)

thousands of cubic metres per day

 

 

 

 

 

 

 

 

 

 

 

(d)

millions of cubic feet per day

 

 

 

 

 

 

 

 

 

Metric conversion

 

Crude oil, refined products, etc.

 

1m 3 (cubic metre) = approx. 6.29 barrels

 

 

 

 

33