Views
3 years ago

View Report - SocialFunds.com

View Report - SocialFunds.com

A vibrant oil sands

A vibrant oil sands industry acts as an engine for the larger economy, creating well paying jobs, promoting economic growth and providing governments and suppliers with valuable revenues. But we are not immune to external forces and, when the economy falters, we are forced to reconsider our plans and priorities. economic performance Suncor was the first company to develop the oil sands, creating an industry that is now a key contributor to Canada’s prosperity. What makes Suncor unique is that we combine our long-term growth strategy with a broad vision of responsible development. Consider it a study in contrasts. For 2007 and most of 2008, commodity prices remained strong, the oil sands industry approved record levels of capital spending and the economy thrived. But the global credit crisis that emerged in the fall of 2008, combined with significantly reduced world oil prices, changed everything. The market volatility is perhaps best summed up in the following statistic: crude oil prices ranged from a high of $147 USD per barrel in July 2008, to a low of $31 USD per barrel in December of that year. Like everyone else, Suncor had to act swiftly and decisively. We suspended construction on our major growth projects and reduced our capital spending plans for 2009, originally projected at approximately $6 billion, to $3 billion. These were difficult, but necessary, decisions to protect the long-term value of our assets. We remain committed to strategically and responsibly growing our business—only the timetable has changed. A snapshot of Suncor’s corporate performance as well as the shared economic benefits generated by our operations in 2007 and 2008: Corporate Performance Oil sands production averaged 228,000 barrels per day (bpd) in 2008, compared to 235,600 bpd in 2007 and Suncor Energy Inc. 14 economic performance

Suncor Energy’s refining and marketing operations provide a vital link between our large Canadian resource base and the growing North American energy market. We process oil sands crude into the high-quality refined products that consumers demand. 260,000 bpd in 2006. Production declines were due primarily to planned and unplanned maintenance activities at our oil sands facilities. Suncor reported net earnings of $2.983 billion in 2007 and $2.137 billion in 2008. However, Suncor recorded a net loss of $215 million in the fourth quarter of 2008. The earnings loss was primarily due to significant decreases in benchmark commodity prices. Suncor’s common shares closed at $23.72 on the Toronto Stock Exchange on December 31, 2008, a decrease of approximately 56 percent on a splitadjusted basis over the year before. The decline reflected the general downward trend in global equity markets and, more specifically, the decline in benchmark commodity prices for Suncor’s core products. Our focus remains on building long-term shareholder value. From 2003 to 2008, Suncor’s share price increased by nearly 46 percent. Shared Economic Benefits Between 2006 and 2008, Suncor paid $2.6 billion in royalties to the Alberta government, including $2.2 billion in oil sands royalties. Suncor paid an additional $2 billion in property and excise taxes to all three levels of government. Capital spending in 2007 and 2008 totaled more than $13 billion. Suncor spent a combined $16.5 billion on goods and services in 2007 and 2008. A look at our supply chain spending for 2008 shows we had 6,300 Canadian vendors spanning all 10 provinces as well as the Northwest Territories. The United States was our next biggest supplier (1,719 vendors), although we also purchased goods and services from 19 other countries. Whenever possible, Suncor prefers to use local vendors. In 2007 and 2008, we spent a combined $367 million on direct purchases from Aboriginal businesses in the Wood Buffalo region—helping us surpass a $1 billion spending milestone since we began keeping this data in 1992. looking ahead Suncor’s renewed focus on operational excellence is aimed at improving safety, reliability, productivity and environmental performance. We are starting to realize some of the benefits. Oil sands production averaged 278,000 bpd in the first quarter of 2009, compared to 248,000 bpd in the first quarter of 2008. We are targeting average production of 300,000 bpd for the full year (+5%/ -10%). The efficiencies we build into our operations today will serve us well tomorrow as we assess when, and how, to resume our growth projects. We intend to examine each growth project on its merits and proceed only when the economics are right. Pending regulatory approval, the proposed merger of Suncor and Petro-Canada creates a new company better positioned to responsibly pursue major projects and growth opportunities. On The web: More details on Suncor’s economic performance, including efforts to reduce operating costs, improved support systems for suppliers, and the construction of the Highway 63 interchange north of Fort McMurray, Alberta can be found in the “Creating Prosperity” section. economic performance 15 2009 summary report on sustainability

2008 Corporate Sustainability Report - SocialFunds.com