“In the first quarter of 2022, Suncor generated the highest quarterly adjusted funds from operations in the company’s history of $4.1 billion, or $2.86 per share, including record adjusted funds from operations from our Oil Sands assets, as commodity prices increased,” said Mark Little, president and chief executive officer. “Our increased cash flows enabled us to reduce net debt by $728 million and return over $1.4 billion of value to shareholders through $827 million in share repurchases and payment of $601 million in dividends.”

• Adjusted funds from operations increased to $4.094 billion ($2.86 per common share) in the first quarter of 2022, compared to $2.110 billion ($1.39 per common share) in the prior year quarter, with adjusted funds from operations in the first quarter of 2022 more than doubling the prior year quarter on a per share basis. Cash flow provided by operating activities, which includes changes in noncash working capital, was $3.072 billion ($2.14 per common share) in the first quarter of 2022, compared to $2.345 billion ($1.54 per common share) in the prior year quarter.
• Adjusted operating earnings increased to $2.755 billion ($1.92 per common share) in the first quarter of 2022, compared to $746 million ($0.49 per common share) in the prior year quarter. The company had net earnings of $2.949 billion ($2.06 per common share) in the first quarter of 2022, compared to $821 million ($0.54 per common share) in the prior year quarter.
• In the first quarter of 2022, Oil Sands delivered its highest quarterly adjusted funds from operations(1) on record of $3.414 billion, compared to $1.527 billion in the prior year quarter, supported by strong production from the company’s In Situ assets, including Firebag, which produced its 750 millionth barrel of oil during the quarter, and the ramp-up of production at Fort Hills, allowing the company to capture strong upstream pricing. Combined Oil Sands upgrader utilization was 96% compared to 97% in the prior year quarter.
• Refining and Marketing (R&M) generated $1.597 billion in adjusted funds from operations(1) in the first quarter of 2022, compared to $1.172 billion in the prior year quarter. The first quarter of 2022 included a first-in, first-out (FIFO) inventory valuation gain, including the impact of commodity risk management activities, of $729 million before-tax, compared to $432 million before-tax in the prior year quarter. On a LIFO basis Suncor’s refining and marketing gross margin improved nearly 20% compared to the prior year quarter. Refinery utilization in the first quarter of 2022 was 94%, compared to refinery utilization of 92% in the prior year quarter, as the company’s Canadian refineries continued to outperform the national refining industry average.(2)
• In the first quarter of 2022, the company returned over $1.4 billion of value to its shareholders through $827 million in share repurchases and payment of $601 million of dividends. As at May 6, 2022, since the start of the year, the company has repurchased $1.3 billion of Suncor’s common shares, representing approximately 33 million common shares at an average share price of $39.70 per share, or the equivalent of 2.3% of its common shares as at December 31, 2021.
• In the first quarter of 2022, the company reduced net debt by $728 million, primarily due to an early redemption of its outstanding US$182 million 4.50% notes and increased cash and cash equivalents, after making a significant income tax payment of approximately $1.0 billion during the quarter related to the company’s 2021 income tax expense.
• During the first quarter of 2022, in alignment with Suncor’s strategy to maximize value through its core business, the company announced that it is taking steps to optimize its asset portfolio through the planned divestment of its Exploration & Production (E&P) assets in Norway. Subsequent to the quarter, based on interest received in the company’s E&P assets in the U.K., the company is exploring the sale of its entire U.K. portfolio, and has also announced plans to divest its wind and solar assets to focus on areas of energy expansion that are more complementary to its base business, with an emphasis on hydrogen and renewable fuels.
• Subsequent to the quarter, Suncor’s Board of Directors (the Board) approved a quarterly dividend of $0.47 per share, which represents an increase of 12% over the prior quarter dividend and the highest quarterly dividend per share in the company’s history. Also, the Board and the Toronto Stock Exchange (TSX) approved an increase to the company’s normal course issuer bid program (NCIB), to increase the maximum number of common shares the company may repurchase to up to approximately 10% of Suncor’s public float as at January 31, 2022. 

Adjusted Operating Earnings

Suncor’s adjusted operating earnings increased to $2.755 billion ($1.92 per common share) in the first quarter of 2022, compared to $746 million ($0.49 per common share) in the prior year quarter, primarily due to significantly higher crude oil and refined product realizations reflecting the improved business environment in the current quarter. The increase in adjusted operating earnings was partially offset by an increase in royalties and income taxes associated with the improved business environment and increased operating expenses primarily related to a significant increase in commodity costs and sharebased compensation expense in the current quarter compared to the prior year quarter. 

Net Earnings

Suncor’s net earnings were $2.949 billion ($2.06 per common share) in the first quarter of 2022, compared to $821 million ($0.54 per common share) in the prior year quarter.

Operating Results

Suncor’s total upstream production was 766,100 barrels of oil equivalent per day (boe/d) in the first quarter of 2022, compared to 785,900 boe/d in the prior year quarter.

Total Oil Sands production was 685,700 barrels per day (bbls/d) in the first quarter of 2022, compared to 690,600 bbls/d in the prior year quarter, with the first quarter of 2022 reflecting lower production early in the quarter due to the previously disclosed weather-related mining challenges experienced in the region. The company’s net SCO production in the first quarter of 2022 was 515,300 bbls/d, compared to 519,900 bbls/d in the first quarter of 2021, reflecting a combined upgrader utilization rate of 96% compared to 97% in the prior year quarter.

The company’s non-upgraded bitumen production was 170,400 bbls/d in the first quarter of 2022, comparable to 170,700 bbls/d in the prior year quarter, primarily due to increased production at Fort Hills, which was largely offset by decreased saleable bitumen production from the company’s In Situ assets. Production from Fort Hills in the first quarter of 2022 increased to 87,500 bbls/d, compared to 51,200 bbls/d in the prior year quarter, as production ramped up in the quarter. Overall production from the company’s In Situ assets was comparable to the prior year quarter, reflecting strong production in both periods, with the decrease in saleable bitumen production in the current period due to increased Firebag volumes being diverted to upgrading to maximize higher-value SCO production. 

The company will commence significant planned turnaround activities at Firebag in the second quarter of 2022, the largest turnaround in Firebag history. Additionally, in the second quarter of 2022, the company will commence planned annual coker maintenance at Oil Sands Base Upgrader 2 and planned maintenance at Fort Hills, and is expected to complete planned maintenance at Syncrude that commenced in the first quarter. Planned maintenance at Syncrude in the first quarter of 2022 included hydrotreating maintenance that was accelerated from later in the year to stagger coker and hydrotreating maintenance, which is expected to optimize full-year production at Syncrude.

“Following the weather-related impacts early in the quarter, our Oil Sands assets delivered solid production in the first quarter, and we accelerated Syncrude hydrotreating maintenance in order to optimize full-year production, positioning us well for the remainder of the year,” said Little. “In the downstream business, refinery utilization was 94% in the first quarter as our Canadian refineries continue to outperform the national refining industry average.”

E&P produced 80,400 boe/d during the first quarter of 2022, compared to 95,300 boe/d in the prior year quarter. The decrease in production was primarily due to the absence of production from the Golden Eagle Area Development, as the sale of the company’s working interest in the asset was completed in the fourth quarter of 2021, and natural declines, partially offset by liftings in Libya in the first quarter of 2022 compared to no liftings in Libya in the prior year quarter.

Refinery crude throughput increased to 436,500 bbls/d and refinery utilization was 94% in the first quarter of 2022, compared to 428,400 bbls/d and 92% in the prior year quarter, reflecting improved refined product demand and a strategic build in product inventory in advance of upcoming turnaround activities, partially offset by maintenance that occurred late in the current period, including maintenance that was accelerated into the first quarter from the second quarter. Refined product sales in the first quarter of 2022 increased to 551,900 bbls/d, compared to 548,100 bbls/d in the prior year quarter. Domestic demand for diesel has improved compared to 2019 levels, however, gasoline demand continues to lag behind the comparable 2019 levels. The company will undergo planned turnaround maintenance at its refineries in the second quarter of 2022.

The company’s total operating, selling and general expenses were $3.088 billion in the first quarter of 2022, compared to $2.900 billion in the prior year quarter. The increase was primarily due to a significant increase in commodity costs, primarily driven by increased natural gas prices, and increased share-based compensation expenses in the first quarter of 2022 compared to the first quarter of 2021. The increase was also due to costs associated with increased production at Fort Hills and increased maintenance costs in the current period relative to the prior year quarter, partially offset by increased costs in the prior year quarter relating to a restructuring charge associated with the company’s workforce reduction plans. The company’s exposure to higher natural gas costs is partially mitigated by revenue from power sales that is recorded in operating revenues. 

KeyFacts Energy: Suncor Energy Canada country profile