• Generated adjusted funds from operations of $3.0 billion and adjusted operating earnings of $1.8 billion, and returned nearly $1.6 billion to shareholders. 
• Delivered total upstream production of 742,100 barrels of oil equivalent per day (boe/d) and refinery throughput of 367,700 barrels per day (bbls/d), with Commerce City refinery back in service at the end of March.
• Portfolio rationalization continued with completion of sale of wind and solar business and acquisition of an additional 14.65% working interest in Fort Hills. Additionally, reached an agreement for the sale of the U.K. Exploration and Production (E&P) portfolio.
• Announced agreement to acquire TotalEnergies' Canadian operations, including the remaining working interest in Fort Hills and a 50% working interest in the Surmont in situ asset.

"I am excited to be working with the dedicated Suncor team, and to be leading a company with a long and successful history combined with a unique, physically integrated and high-quality asset base," said Rich Kruger, Suncor's President and Chief Executive Officer. "My goal is to return Suncor to its industry leadership position by focusing on the fundamentals of safety, operational excellence, reliability and profitability to ensure the company delivers superior, long-term shareholder value."

• Suncor delivered adjusted funds from operations of $3.002 billion ($2.26 per common share) in the first quarter of 2023, compared to $4.094 billion ($2.86 per common share) in the prior year quarter, and returned approximately $1.6 billion of value to shareholders through $874 million in share repurchases and the payment of $690 million of dividends. Cash flow provided by operating activities, which includes changes in non-cash working capital, was $1.039 billion ($0.78 per common share) in the first quarter of 2023, compared to $3.072 billion ($2.14 per common share) in the prior year quarter. 
• Adjusted operating earnings were $1.809 billion ($1.36 per common share) in the first quarter of 2023, compared to $2.755 billion ($1.92 per common share) in the prior year quarter. Net earnings were $2.052 billion ($1.54 per common share) in the first quarter of 2023, compared to $2.949 billion ($2.06 per common share) in the prior year quarter.
• Total Oil Sands production was 675,100 bbls/d in the first quarter of 2023, which included record quarterly In Situ volumes, compared to 685,700 bbls/d in the prior year quarter, with the decrease due to lower synthetic crude oil (SCO) production, partially offset by increased non-upgraded bitumen production.
• During the first quarter of 2023, the company completed the sale of its wind and solar assets for gross proceeds of $730 million, and the acquisition of an additional 14.65% working interest in Fort Hills for $712 million. Also during the first quarter of 2023, the company reached an agreement for the sale of its U.K. E&P portfolio for gross proceeds of approximately $1.2 billion, including a contingent consideration of approximately $338 million, before closing adjustments and other closing costs. The sale is pending regulatory approval and is expected to close in the second quarter of 2023.
• Subsequent to the first quarter of 2023, Suncor entered into an agreement to purchase TotalEnergies' Canadian operations through the acquisition of TotalEnergies EP Canada Ltd. (TotalEnergies Canada), which holds a 31.23% working interest in Fort Hills, a 50% working interest in the Surmont in situ asset (Surmont), as well as certain other associated assets. The acquisition is for cash consideration of $5.5 billion, before closing adjustments and other closing costs, with the potential for additional payments of up to an aggregate maximum of $600 million. The transaction will have an effective date of April 1, 2023, and is anticipated to close in the third quarter of 2023, subject to pre-emptive rights, regulatory approval and other closing conditions.
• Effective April 3, 2023, Suncor's Board of Directors selected Rich Kruger as the company's new President and Chief Executive Officer. Mr. Kruger also joined the Suncor Board of Directors. 

Adjusted Operating Earnings

Suncor's adjusted operating earnings were $1.809 billion ($1.36 per common share) in the first quarter of 2023, compared to $2.755 billion ($1.92 per common share) in the prior year quarter, primarily due to decreased crude oil realizations, increased operating expenses and lower upstream production and refinery throughput, partially offset by increased refined product realizations, decreased royalties and income taxes. Adjusted operating earnings were also impacted by a weakening in crude oil benchmark pricing during the current quarter, compared to a strengthening in benchmark pricing in the prior year quarter, resulting in a first-in, first-out (FIFO) inventory valuation loss in the first quarter of 2023, compared to a significant gain in the prior year quarter.

Net Earnings

Suncor's net earnings were $2.052 billion ($1.54 per common share) in the first quarter of 2023, compared to $2.949 billion ($2.06 per common share) in the prior year quarter. In addition to the factors impacting adjusted operating earnings discussed above, net earnings for the first quarter of 2023 included a $302 million gain on the sale of the company's wind and solar assets, an $18 million unrealized loss on risk management activities recorded in other income (loss), a $3 million unrealized foreign exchange loss on the revaluation of U.S. dollar denominated debt recorded in financing expenses and a $38 million income tax expense related to the items noted. Net earnings in the prior year quarter included a $146 million unrealized foreign exchange gain on the revaluation of U.S. dollar denominated debt recorded in financing expenses, a $75 million unrealized gain on risk management activities recorded in other income (loss) and a $27 million income tax expense related to the items noted.

Operating Results

Suncor's total upstream production was 742,100 boe/d in the first quarter of 2023, compared to 766,100 boe/d in the prior year quarter.

The company's net SCO production was 497,800 bbls/d in the first quarter of 2023, compared to 515,300 bbls/d in the prior year quarter, driven by combined upgrader utilization of 93% in the first quarter of 2023, reflecting the impact of unplanned maintenance in the quarter, compared to 96% in the prior year quarter. During the first quarter of 2023, the company leveraged its regional integration and asset flexibility, through the use of internal transfers between assets, to mitigate the impacts of maintenance during the period. 

The company's non-upgraded bitumen production increased to 177,300 bbls/d in the first quarter of 2023, compared to 170,400 bbls/d in the prior year quarter, and included a new quarterly production record from the company's In Situ assets. The increase in non-upgraded bitumen production to market included the impacts of lower bitumen volumes processed at upgrading compared to the prior year quarter. At Fort Hills, production in the first quarter of 2023 was 69,200 bbls/d, compared to 87,500 bbls/d in prior year quarter, reflecting the execution of its mine improvement plan, which is currently on plan. This was partially offset by increased production associated with the company's acquisition of an additional working interest, which was effective February 2, 2023.

E&P production during the first quarter of 2023 was 67,000 boe/d, compared to 80,400 boe/d in the prior year quarter, with the decrease primarily due to natural declines, and asset sales at E&P International.

Refinery crude throughput was 367,700 bbls/d and refinery utilization was 79% in the first quarter of 2023, compared to 436,500 bbls/d and 94% in the prior year quarter, with the decrease primarily due to the completion of repairs and subsequent progressive restart activities at the company's Commerce City refinery, as the asset returned to operations by the end of the quarter. Refinery utilization for the company's Canadian refineries was 94% in the first quarter of 2023, compared to 98% in the prior year quarter. Refined product sales in the first quarter of 2023 were 514,800 bbls/d, compared to 551,900 bbls/d in the prior year quarter, primarily due to the decrease in refinery crude throughput at the company's Commerce City refinery in the current quarter.

"I have spent some time at our major operating sites over my first few weeks, getting familiar with our operations, our workforce, and understanding our full capabilities," said Kruger. "Our operational performance in the first quarter reinforces the importance of executing the fundamentals of our business and my focus going forward, in addition to safety and operational excellence, will be to maximize the reliability and financial performance of each asset."

The company's total operating, selling and general (OS&G) expenses were $3.424 billion in the first quarter of 2023, compared to $3.088 billion in the prior year quarter. The increase was primarily due to increased maintenance costs, including the impacts of repair activities at the company's Commerce City refinery, inflationary impacts, increased mining activity and the company's additional working interest in Fort Hills, partially offset by a decrease in share-based compensation expense. The company's exposure to commodity costs within OS&G are partially mitigated by revenue from power sales that are recorded in operating revenues.

Strategy Update

"My overriding objective for Suncor is to deliver industry-leading performance. I believe we can achieve this by driving clarity and simplification throughout the organization, and by instilling a laser-like focus on the fundamentals of safety, operational excellence, reliability and profitability," said Kruger. 

The company continues to progress disciplined decisions to streamline its portfolio, enabling greater fit and focus and allowing the company to allocate resources to its highest value core assets to maximize shareholder returns. On February 2, 2023, Suncor completed the acquisition of an additional 14.65% working interest in Fort Hills for $712 million, bringing the company's and its affiliate's total aggregate working interest in Fort Hills to 68.76%. Subsequent to the first quarter of 2023, Suncor entered into an agreement to purchase TotalEnergies' Canadian operations through the acquisition of TotalEnergies Canada, which holds a 31.23% working interest in Fort Hills, a 50% working interest in Surmont, located in the Fort McMurray region, as well as certain other associated assets. The acquisition is for cash consideration of $5.5 billion, before closing adjustments and other closing costs, with the potential for additional payments of up to an aggregate maximum of $600 million, expiring after five years and conditional upon WCS benchmark pricing and certain production targets. Subject to closing, the transaction will have an effective date of April 1, 2023. The Surmont in situ project is operated by ConocoPhillips Canada, which holds the remaining 50% working interest. Under the terms of the Surmont joint venture arrangements, ConocoPhillips Canada has certain pre-emptive rights including a right of first refusal on the 50% Surmont working interest. Closing of the transaction is anticipated to occur in the third quarter of 2023 and is subject to waiver of the right of first refusal on the Surmont working interest and other customary closing conditions, including regulatory approvals.

Upon closing, Suncor will be the sole owner and operator of Fort Hills. This transaction, in addition with the previous acquisition of 14.65% interest in Fort Hills from Teck Resources Limited in the first quarter of 2023, adds approximately 163,000 bbls/d of bitumen production capacity to Suncor's portfolio. The additional bitumen production capacity advances the company's long-term bitumen supply strategy for when the company's Base Mine reaches its end of life. With 100% ownership of Fort Hills, Firebag and MacKay River, there is sufficient bitumen supply from the company's regional Oil Sands assets to continue to feed the Base Plant upgraders at full rates post the end of the Base Mine life, which is expected in the mid-2030's. Additionally, the increased production volumes will provide immediate and accretive cash flow for the company.

The company intends to fund the acquisition primarily through debt issuances. As a result, the company plans to maintain its current capital allocation levels, allocating excess funds equally towards debt repayment and share buybacks. Should the acquisition close as contemplated, Suncor's Board of Directors currently intends to increase the quarterly dividend by approximately 10% following transaction close.

In E&P, during the first quarter of 2023, the company reached an agreement for the sale of its U.K. portfolio for gross proceeds of approximately $1.2 billion, including a contingent consideration of approximately $338 million, before closing adjustments and other closing costs. The sale is pending regulatory approval and is expected to close in the second quarter of 2023. Also during the first quarter of 2023, the company completed the sale of its wind and solar assets for gross proceeds of $730 million, before closing adjustments and other closing costs, resulting in an after-tax gain on sale of approximately $260 million.

The Terra Nova Floating, Production, Storage and Offloading facility returned to Canada in the first quarter of 2023. The timing of Terra Nova return to production has been delayed as the company has identified additional maintenance and commissioning activities, that are currently ongoing quayside, in order to ensure full confidence in the safety and reliability of the asset before returning to production. 

In the downstream, in the first quarter of 2023 the company entered into a co-ownership agreement with North Atlantic, a leading gas station and convenience store operator in Atlantic Canada, to combine retail fuel networks. The combined network has 110 sites in three Atlantic Canadian provinces, and will include the rebranding of a number of North Atlantic's sites to the Petro-Canada™ brand. Additionally, subsequent to the first quarter of 2023, Petro-Canada™ and Canadian Tire Corporation announced a new partnership. The partnership will result in the rebranding of over 200 of Canadian Tire Corporation's retail fuel network sites to the Petro-Canada™ brand, increasing the presence of Petro-Canada's brand across the country. This will include partnering of the two iconic brand's loyalty programs, driving additional value for millions of loyalty members. Suncor will also become the primary fuel provider for Canadian Tire Corporation's retail fuel network over time.

Reducing greenhouse gas (GHG) emissions is a key component of the company's business strategy and long-term vision, and Suncor continues to work collaboratively with industry peers through the Pathways Alliance and with federal and provincial governments. In the first quarter of 2023, the Pathways Alliance was awarded exploratory rights from the Government of Alberta for the proposed carbon capture and storage hub to safely and permanently store CO2 captured from over twenty oil sands facilities in northern Alberta. Also during the first quarter of 2023, an engineering contract was awarded to Wood, a global engineering and consulting company, to develop detailed plans for a 400-kilometre CO2 transportation line that would eventually link the oil sands facilities with the carbon capture and storage hub. This engineering and field work is expected to support a regulatory application later this year.

KeyFacts Energy: Suncor Energy Canada country profile