Enhanced Investments - Financial Portal

Published: 2022-11-02

Consolidated Statements of Comprehensive (Loss) Income(unaudited)
	Three months ended		Nine months ended
		September 30	September 30
($ millions)	2022			2021	2022		2021
Revenues and Other Income
Operating revenues, net of royalties (note 3)						14 944	10 145					44 416	27 983
Other income (loss) (note 4)	113			68	196		(41)
						15 057	10 213					44 612	27 942
Expenses
Purchases of crude oil and products	6 089			3 891			16 125	9 721
Operating, selling and general	3 075			2 768	9 251		8 388
Transportation and distribution	467			368	1 228		1 099
Depreciation, depletion, amortization andimpairment (note 10)
	4 852			1 218	7 321		4 220
Exploration	6			11	51		31
Loss (gain) on disposal of assets (note 10)	65			(9)	53		(25)
Financing expenses (note 6)	982			652	1 805		992
						15 536	8 899			35 834	24 426
(Loss) Earnings before Income Taxes	(479)			1 314	8 778		3 516
Income Tax Expense (Recovery)
Current	952			386	3 380		898
Deferred	(822)			51	(938)		52
	130			437	2 442		950
Net (Loss) Earnings	(609)			877	6 336		2 566
Other Comprehensive Income
Items That May be Subsequently Reclassified to Earnings:
								Foreign currency translation adjustment	286			61	216	(35)
Items That Will Not be Reclassified to Earnings:
								Actuarial (loss) gain on employee retirementbenefit plans, net of income taxes (note 12)
	(63)			152	835		810
Other Comprehensive Income	223			213	1 051		775
Total Comprehensive (Loss) Income	(386)			1 090	7 387		3 341
Per Common Share (dollars) (note 7)
Net (loss) earnings – basic	(0.45)			0.59	4.52		1.71
Net (loss) earnings – diluted	(0.45)			0.59	4.51		1.71
Cash dividends	0.47			0.21	1.36		0.63
See accompanying notes to the condensed interim consolidated financial statements.
				2022 Third Quarter	Suncor Energy Inc.		51

Consolidated Balance Sheets(unaudited)
	September 30		December 31
($ millions)		2022		2021
Assets
Current assets
					Cash and cash equivalents	4 659		2 205
					Accounts receivable	7 673		4 534
					Inventories	5 157		4 110
					Income taxes receivable	205		128
					Assets held for sale (note 13)	1 083		—
Total current assets		18 777	10 977
Property, plant and equipment, net		58 825	65 546
Exploration and evaluation		2 253		2 226
Other assets		1 548		1 307
Goodwill and other intangible assets		3 519		3 523
Deferred income taxes		82		160
Total assets		85 004	83 739
Liabilities and Shareholders’ Equity
Current liabilities
					Short-term debt	2 837		1 284
					Current portion of long-term debt (note 6)	—		231
					Current portion of long-term lease liabilities	305		310
					Accounts payable and accrued liabilities	9 246		6 503
					Current portion of provisions	487		779
					Income taxes payable	1 267		1 292
					Liabilities associated with assets held for sale (note 13)	761		—
Total current liabilities		14 903	10 399
Long-term debt (note 6)		13 496	13 989
Long-term lease liabilities		2 605		2 540
Other long-term liabilities (note 12)		1 304		2 180
Provisions (note 11)		6 232		8 776
Deferred income taxes		8 297		9 241
Equity		38 167	36 614
Total liabilities and shareholders’ equity		85 004	83 739
See accompanying notes to the condensed interim consolidated financial statements.
52	2022 Third Quarter						Suncor Energy Inc.

Consolidated Statements of Cash Flows(unaudited)
	Three months ended		Nine months ended
		September 30	September 30
($ millions)	2022			2021	2022	2021
Operating Activities
Net (Loss) Earnings	(609)			877	6 336	2 566
Adjustments for:
Depreciation, depletion, amortization and impairment	4 852			1 218	7 321	4 220
Deferred income tax (recovery) expense	(822)			51	(938)	52
Accretion (note 6)	81			76	235	227
Unrealized foreign exchange loss (gain) on U.S. dollardenominated debt (note 6)
	723			282	929	(88)
Change in fair value of financial instruments and trading inventory	196			52	(11)	(63)
Loss (gain) on disposal of assets (note 10)	65			(9)	53	(25)
Loss on extinguishment of long-term debt (note 6)	—			80	—	80
Share-based compensation	(29)			1	161	80
Settlement of decommissioning and restoration liabilities	(64)			(74)	(235)	(187)
Other	80			87	61	251
(Increase) decrease in non-cash working capital	(24)			2 077	(2 156)	2 036
Cash flow provided by operating activities	4 449			4 718	11 756	9 149
Investing Activities
Capital and exploration expenditures	(1 379)			(1 221)	(3 685)	(3 371)
Capital expenditures on assets held for sale	(38)			—	(93)	—
Proceeds from disposal of assets (note 10)	297			8	315	18
Other investments and acquisitions (note 10)	(17)			27	7	11
Decrease (increase) in non-cash working capital	151			(2)	217	185
Cash flow used in investing activities	(986)			(1 188)	(3 239)	(3 157)
Financing Activities
Net increase (decrease) in short-term debt	1 167			(1 155)	1 436	(2 061)
Repayment of long-term debt (note 6)	—			(1 030)	(1 539)	(2 080)
Issuance of long-term debt	—			—	—	1 423
Lease liability payments	(79)			(69)	(246)	(237)
Issuance of common shares under share option plans	12			—	462	3
Repurchase of common shares (note 8)	(1 030)			(704)	(4 410)	(1 665)
Distributions relating to non-controlling interest	(3)			(2)	(7)	(7)
Dividends paid on common shares	(638)			(309)	(1 896)	(943)
Cash flow used in financing activities	(571)			(3 269)	(6 200)	(5 567)
Increase in Cash and Cash Equivalents	2 892			261	2 317	425
Effect of foreign exchange on cash and cash equivalents	97			13	137	(1)
Cash and cash equivalents at beginning of period	1 670			2 035	2 205	1 885
Cash and Cash Equivalents at End of Period	4 659			2 309	4 659	2 309
Supplementary Cash Flow Information
Interest paid	155			143	625	635
Income taxes paid (received)	1 450			(523)	3 212	(605)
See accompanying notes to the condensed interim consolidated financial statements.
		2022 Third Quarter	Suncor Energy Inc.		53

Consolidated Statements of Changes in Equity(unaudited)
			Accumulated				Number of
				Other			Common
	Share	Contributed	Comprehensive		Retained		Shares
($ millions)	Capital	Surplus	Income		Earnings	Total	(thousands)
At December 31, 2020	25 144							591	877	9 145	35 757	1 525 151
Net earnings	—							—	—	2 566	2 566		—
Foreign currency translation adjustment	—							—	(35)					—	(35)		—
Actuarial gain on employee retirement benefitplans, net of income taxes of $255
	—							—	—	810	810		—
Total comprehensive (loss) income	—							—	(35)	3 376	3 341		—
Issued under share option plans	3							—	—					—	3		100
Repurchase of common shares for cancellation(note 8)
	(1 039)							—	—	(626)	(1 665)	(63 101)
Change in liability for share repurchasecommitment
	(132)							—	—	(78)	(210)		—
Share-based compensation	—							17	—					—	17		—
Dividends paid on common shares	—							—	—	(943)	(943)		—
At September 30, 2021	23 976							608	842	10 874	36 300	1 462 150
At December 31, 2021	23 650							612	814	11 538	36 614	1 441 251
Net earnings	—							—	—	6 336	6 336		—
Foreign currency translation adjustment	—							—	216					—	216		—
Actuarial gain on employee retirement benefitplans, net of income taxes of $263 (note 12)
	—							—	—	835	835		—
Total comprehensive income	—							—	216	7 171	7 387		—
Issued under share option plans	530							(62)	—					—	468	12 200
Common shares forfeited	—							—	—					—	—		(30)
Repurchase of common shares for cancellation(note 8)
	(1 668)							—	—	(2 742)	(4 410)	(100 215)
Change in liability for share repurchasecommitment (note 8)
	15							—	—	(25)	(10)		—
Share-based compensation	—							14	—					—	14		—
Dividends paid on common shares	—							—	—	(1 896)	(1 896)		—
At September 30, 2022	22 527							564	1 030	14 046	38 167	1 353 206
See accompanying notes to the condensed interim consolidated financial statements.
54	2022 Third Quarter											Suncor Energy Inc.

Notes to the Consolidated Financial Statements(unaudited)
1. Reporting Entity and Description of the Business
Suncor Energy Inc. (Suncor or the company) is an integrated energy company headquartered in Calgary, Alberta. Suncor’soperations include oil sands development, production and upgrading; offshore oil and gas; petroleum refining in Canada andthe U.S.; and the company’s Petro-Canada retail and wholesale distribution networks (including Canada’s Electric Highway
	TM, a
coast-to-coast network of fast-charging electric vehicle stations). Suncor is developing petroleum resources while advancing thetransition to a low-emissions future through investment in power, renewable fuels and hydrogen. Suncor also conducts energytrading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products andpower. Suncor has been recognized for its performance and transparent reporting on the Dow Jones Sustainability index,FTSE4Good and CDP. Suncor is also listed on the UN Global Compact 100 stock index. Suncor’s common shares (symbol: SU) arelisted on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE).
The address of the company’s registered office is 150 – 6th Avenue S.W., Calgary, Alberta, Canada, T2P 3E3.
2. Basis of Preparation
(a) Statement of ComplianceThese condensed interim consolidated financial statements have been prepared in accordance with International FinancialReporting Standards, specifically International Accounting Standard 34 Interim Financial Reporting as issued by the InternationalAccounting Standards Board. They are condensed as they do not include all of the information required for full annual financialstatements, and they should be read in conjunction with the audited consolidated financial statements of the company for theyear ended December 31, 2021.
(b) Basis of MeasurementThe consolidated financial statements are prepared on a historical cost basis except as detailed in the accounting policiesdisclosed in the company’s audited consolidated financial statements for the year ended December 31, 2021.
(c) Functional Currency and Presentation CurrencyThese consolidated financial statements are presented in Canadian dollars, which is the company’s functional currency.
(d) Use of Estimates, Assumptions and JudgmentsThe timely preparation of financial statements requires that management make estimates and assumptions and use judgment.Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates andjudgment used in the preparation of the financial statements are described in the company’s audited consolidated financialstatements for the year ended December 31, 2021.
(e) Income TaxesThe company recognizes the impacts of income tax rate changes in earnings in the period that the applicable rate change isenacted or substantively enacted.
		2022 Third Quarter	Suncor Energy Inc.	55

Notes to the Consolidated Financial Statements
3. Segmented Information
The company’s operating segments are reported based on the nature of their products and services and managementresponsibility.
Intersegment sales of crude oil and natural gas are accounted for at market values and are included, for segmented reporting,in revenues of the segment making the transfer and expenses of the segment receiving the transfer. Intersegment amounts areeliminated on consolidation. Beginning in the first quarter of 2022, to align with how management evaluates segmentperformance, the company revised its segment presentation to reflect segment results before income tax expense and presenttax at a consolidated level. This presentation change has no effect on consolidated net earnings and comparative periods havebeen restated to reflect this change.
		Exploration and	Refining and	Corporate and
Three months ended September 30	Oil Sands	Production	Marketing	Eliminations	Total
($ millions)	2022					2021	2022			2021	2022			2021	2022			2021	2022			2021
Revenues and Other Income
Gross revenues	5 251					3 705	1 012			744	9 597			6 304	9			5		15 869	10 758
Intersegment revenues	2 284					1 272	—			—	18			37	(2 302) (1 309)	—			—
Less: Royalties	(829)					(504)	(96)			(109)	—			—	—			—	(925)			(613)
Operating revenues, net ofroyalties
	6 706					4 473	916			635	9 615			6 341	(2 293) (1 304) 14 944	10 145
Other income (loss)	70	76	88					4	(46)			(9)	1			(3)	113			68
	6 776					4 549	1 004			639	9 569			6 332	(2 292) (1 307) 15 057	10 213
Expenses
Purchases of crude oil andproducts
	778					442	—			—	7 879			4 710	(2 568) (1 261)	6 089	3 891
Operating, selling and general	2 278					2 004	118			101	596			502	83			161	3 075	2 768
Transportation and distribution	338					277	19			23	120			79	(10)			(11)	467			368
Depreciation, depletion,amortization and impairment
	4 463					1 098	141			(98)	207			193	41			25	4 852	1 218
Exploration	2	2	4					9	—			—	—			—	6			11
Loss (gain) on disposal of assets	(1)	—	65					—	1			(10)	—			1	65			(9)
Financing expenses	111	97	20					14	13			10	838			531	982			652
	7 969					3 920	367			49	8 816			5 484	(1 616)			(554)		15 536	8 899
(Loss) Earnings before IncomeTaxes
	(1 193)					629	637			590	753			848	(676)			(753)	(479)	1 314
Income Tax Expense (Recovery)
Current————————	952					386
Deferred————————	(822)					51
	—	—	—					—	—			—	—			—	130			437
Net (Loss) Earnings	—	—	—					—	—			—	—			—	(609)			877
Capital and ExplorationExpenditures
										(1)	1 048			935	132			64	165			142	34	80	1 379	1 221
(1)	Excludes capital expenditures related to assets held for sale of $38 million for the three months ended September 30, 2022.
56	2022 Third Quarter											Suncor Energy Inc.

		Exploration and	Refining and	Corporate and
Nine months ended September 30	Oil Sands	Production	Marketing	Eliminations	Total
($ millions)	2022					2021	2022					2021	2022					2021	2022					2021	2022				2021
Revenues and Other Income
Gross revenues											(1)	17 261	10 766	3 246					2 240	27 614					16 210	32				20			48 153	29 236
Intersegment revenues													(1)	6 506					3 198	—					—	95				82	(6 601) (3 280)	—					—
Less: Royalties	(3 301)					(882)	(436)					(371)	—					—	—					—			(3 737) (1 253)
Operating revenues, net ofroyalties
	20 466	13 082	2 810					1 869	27 709					16 292	(6 569) (3 260) 44 416	27 983
Other income (loss)	93	(5)	168					14	(121)					(48)	56					(2)	196					(41)
	20 559	13 077	2 978					1 883	27 588					16 244	(6 513) (3 262) 44 612	27 942
Expenses
Purchases of crude oil andproducts
														(1)	1 792					1 037	—					—	20 746				11 697	(6 413) (3 013) 16 125	9 721
Operating, selling and general	6 659					5 922	357					333	1 747					1 453	488					680	9 251	8 388
Transportation and distribution	918					833	67					95	270					202	(27)					(31)	1 228	1 099
Depreciation, depletion,amortization and impairment
	6 847					3 348	(235)					195	618					610	91					67	7 321	4 220
Exploration	35	7	16					24	—					—	—					—	51					31
(Gain) loss on disposal of assets	(2)	—	65					—	(10)					(18)	—					(7)	53					(25)
Financing expenses	302					274	65					48	40					32	1 398					638	1 805				992
	16 551	11 421	335					695	23 411					13 976	(4 463) (1 666) 35 834	24 426
Earnings (Loss) before IncomeTaxes
	4 008					1 656	2 643					1 188	4 177					2 268	(2 050) (1 596)	8 778	3 516
Income Tax Expense(Recovery)
Current————————	3 380					898
Deferred————————	(938)					52
	—	—	—					—	—					—	—					—	2 442					950
Net Earnings	—	—	—					—	—					—	—					—	6 336	2 566
Capital and ExplorationExpenditures
											(2)	2 621					2 308	330					197	558				637	176					229	3 685	3 371
(1)	The company revised certain gross revenues and purchases of crude oil and products to align with current period presentation. For the nine monthsended September 30, 2022, gross revenues and purchases of crude oil and products decreased by $150 million, with no effect on net earnings.
(2)	Excludes capital expenditures related to assets held for sale of $93 million for the nine months ended September 30, 2022.
				2022 Third Quarter					Suncor Energy Inc.	57

Notes to the Consolidated Financial Statements
Disaggregation of Revenue from Contracts with Customers and Intersegment Revenue
The company derives revenue from the transfer of goods mainly at a point in time in the following major commodities, revenuestreams and geographical regions:
Three months ended September 30	2022	2021
($ millions)			North America	International	Total	North America	International			Total
Oil Sands
Synthetic crude oil and diesel					4 993	—	4 993				3 354	—	3 354
Bitumen					2 542	—	2 542				1 623	—	1 623
					7 535	—	7 535				4 977	—	4 977
Exploration and Production
Crude oil and natural gas liquids					726	272	998				427	314	741
Natural gas					—	14	14				—	3	3
					726	286	1 012				427	317	744
Refining and Marketing
Gasoline					3 998	—	3 998				2 901	—	2 901
Distillate					4 677	—	4 677				2 559	—	2 559
Other					940	—	940				881	—	881
					9 615	—	9 615				6 341	—	6 341
Corporate and Eliminations
					(2 293)	—	(2 293)				(1 304)	—	(1 304)
Total Revenue from Contracts withCustomers
					15 583	286	15 869				10 441	317	10 758
Nine months ended September 30	2022	2021
($ millions)			North America	International	Total	North America	International			Total
Oil Sands
Synthetic crude oil and diesel								(1)	17 222	—	17 222					9 995	—	9 995
Bitumen					6 545	—	6 545				3 969	—	3 969
					23 767	—	23 767				13 964	—	13 964
Exploration and Production
Crude oil and natural gas liquids					2 065	1 151		3 216					1 331	903	2 234
Natural gas					—	30	30				—	6	6
					2 065	1 181		3 246					1 331	909	2 240
Refining and Marketing
Gasoline					11 173	—	11 173				7 212	—	7 212
Distillate					13 650	—	13 650				6 876	—	6 876
Other					2 886	—	2 886				2 204	—	2 204
					27 709	—	27 709				16 292	—	16 292
Corporate and Eliminations								(1)
					(6 569)	—	(6 569)				(3 260)	—	(3 260)
Total Revenue from Contracts withCustomers
					46 972	1 181		48 153					28 327	909	29 236
(1)	The company revised certain gross revenues and purchases of crude oil and products to align with current period presentation. For the nine monthsended September 30, 2022, gross revenues and purchases of crude oil and products decreased by $150 million, with no effect on net earnings.
58	2022 Third Quarter									Suncor Energy Inc.

4. Other Income (Loss)
Other income (loss) consists of the following:
	Three months ended		Nine months ended
		September 30	September 30
($ millions)	2022			2021	2022		2021
Energy trading and risk management	(40)			19	(95)		(143)
Investment and interest income	8			11	72		57
Insurance proceeds						(1)	157		38	157		38
Other							(2)	(12)		—	62		7
	113			68	196		(41)
(1)	The three and nine months ended September 30, 2022, includes $147 million of insurance proceeds related to the company’s assets in Libya,within the Exploration and Production segment, and $10 million of insurance proceeds for the secondary extraction facilities at Oil Sands Base Plant,within the Oil Sands Segment.
(2)	Nine months ended September 30, 2022, includes a US$50 million contingent consideration gain related to the sale of the company’s 26.69%working interest in the Golden Eagle Area Development in the fourth quarter of 2021, within the Exploration & Production segment, and anunrealized gain on an equity investment, within the Corporate segment.
5. Share-Based Compensation
The following table summarizes the share-based compensation expense for all plans recorded within operating, selling andgeneral expense:
	Three months ended		Nine months ended
		September 30	September 30
($ millions)	2022			2021	2022		2021
Equity-settled plans	3			4	14		17
Cash-settled plans	(31)			(2)	304		180
	(28)			2	318		197
6. Financing Expenses
	Three months ended		Nine months ended
	September 30		September 30
($ millions)	2022			2021	2022		2021
Interest on debt	212			213	628		639
Interest on lease liabilities	40			40	124		122
Capitalized interest	(43)			(38)	(124)		(106)
Interest expense	209			215	628		655
Interest on partnership liability	12			13	38		39
Interest on pension and other post-retirement benefits	11			15	31		44
Accretion	81			76	235		227
Foreign exchange loss (gain) on U.S. dollar denominated debt	723			282	929		(88)
Operational foreign exchange and other	(54)			(29)	(56)		35
Loss on extinguishment of long-term debt	—			80	—		80
	982			652	1 805		992
Subsequent to the third quarter of 2022, the company executed a debt tender offer and as a result repaid approximately$3.6 billion of its various notes on October 7, 2022.
In the second quarter of 2022, the company completed an early redemption, at par, of its outstanding US$450 million 2.80%notes and US$550 million 3.10% notes, originally due in 2023 and 2025, respectively. The company also completed a partialredemption, at par, for US$10.2 million of its outstanding US$152 million 6.00% notes, due in 2042.
		2022 Third Quarter	Suncor Energy Inc.		59

Notes to the Consolidated Financial Statements
In the first quarter of 2022, the company completed an early redemption of its outstanding US$182 million 4.50% notes,originally scheduled to mature in the second quarter of 2022.
During the third quarter of 2021, the company completed an early redemption of its US$750 million (book value of $951 million)senior unsecured notes with coupon interest of 3.60% originally scheduled to mature on December 1, 2024 for US$822 million($1 billion), including US$9 million ($11 million) of accrued interest, resulting in a debt extinguishment loss of $80 million($60 million after tax).
7. Earnings per Common Share
	Three months ended		Nine months ended
		September 30	September 30
($ millions)	2022			2021	2022		2021
Net (loss) earnings	(609)			877	6 336		2 566
(millions of common shares)
Weighted average number of common shares	1 364			1 477	1 401		1 501
Dilutive securities:
Effect of share options	2			—	3		—
Weighted average number of diluted common shares	1 366			1 477	1 404		1 501
(dollars per common share)
Basic (loss) earnings per share	(0.45)			0.59	4.52		1.71
Diluted (loss) earnings per share	(0.45)			0.59	4.51		1.71
8. Normal Course Issuer Bid
During the first quarter of 2022, the Toronto Stock Exchange (TSX) accepted a notice filed by Suncor to renew its normal courseissuer bid (NCIB) to purchase the company’s common shares through the facilities of the TSX, New York Stock Exchange and/oralternative trading systems. The notice provided that, beginning February 8, 2022, and ending February 7, 2023, Suncor maypurchase for cancellation up to 71,650,000 common shares, which is equal to approximately 5% of Suncor’s issued and outstandingcommon shares as at the date hereof.
During the second quarter of 2022, Suncor received approval from the TSX to amend its existing NCIB effective as of the close ofmarkets on May 11, 2022, to increase the maximum number of common shares that may be repurchased in the period beginningFebruary 8, 2022, and ending February 7, 2023, from 71,650,000 common shares, or approximately 5% of Suncor’s issued andoutstanding common shares as at January 31, 2022, to 143,500,000, or approximately 10% of Suncor’s public float as atJanuary 31, 2022. No other terms of the NCIB have been amended.
For the three months ended September 30, 2022, the company repurchased 25.0 million common shares under the 2022renewed NCIB at an average price of $41.20 per share, for a total repurchase cost of $1.0 billion. For the nine months endedSeptember 30, 2022, the company repurchased 7.1 million common shares under the previous 2021 NCIB and 93.1 million underthe 2022 renewed NCIB at an average price of $44.00 per share, for a total repurchase cost of $4.4 billion.
The following table summarizes the share repurchase activities during the period:
	Three months ended		Nine months ended
	September 30		September 30
($ millions, except as noted)						2022	2021	2022		2021
Share repurchase activities (thousands ofcommon shares)
Shares repurchased						25 003	28 112				100 215	63 101
Amounts charged to:
Share capital						419	463				1 668	1 039
Retained earnings						611	241				2 742	626
Share repurchase cost						1 030	704				4 410	1 665
60	2022 Third Quarter								Suncor Energy Inc.

Under an automatic repurchase plan agreement with an independent broker, the company has recorded the following liabilityfor share repurchases that may take place during its internal blackout period:
	September 30		December 31
($ millions)		2022		2021
Amounts charged to:
Share capital		105		120
Retained earnings		135		110
Liability for share purchase commitment		240		230
9. Financial Instruments
Derivative Financial Instruments(a) Non-Designated Derivative Financial InstrumentsThe company uses derivative financial instruments, such as physical and financial contracts, to manage certain exposures tofluctuations in interest rates, commodity prices and foreign currency exchange rates, as part of its overall risk managementprogram, as well as for trading purposes.
The changes in the fair value of non-designated derivatives are as follows:
($ millions)				Total
Fair value outstanding at December 31, 2021				(98)
Cash settlements – paid during the year				154
Changes in fair value recognized in earnings during the year				(101)
Fair value outstanding at September 30, 2022				(45)
(b) Fair Value HierarchyTo estimate the fair value of derivatives, the company uses quoted market prices when available, or third-party models andvaluation methodologies that utilize observable market data. In addition to market information, the company incorporatestransaction-specific details that market participants would utilize in a fair value measurement, including the impact of non-performance risk. However, these fair value estimates may not necessarily be indicative of the amounts that could be realized orsettled in a current market transaction. The company characterizes inputs used in determining fair value using a hierarchy thatprioritizes inputs depending on the degree to which they are observable. The three levels of the fair value hierarchy are as follows:
•	Level 1 consists of instruments with a fair value determined by an unadjusted quoted price in an active market for identicalassets or liabilities. An active market is characterized by readily and regularly available quoted prices where the prices arerepresentative of actual and regularly occurring market transactions to assure liquidity.
•	Level 2 consists of instruments with a fair value that is determined by quoted prices in an inactive market, prices withobservable inputs or prices with insignificant non-observable inputs. The fair value of these positions is determined usingobservable inputs from exchanges, pricing services, third-party independent broker quotes and published transportationtolls. The observable inputs may be adjusted using certain methods, which include extrapolation over the quoted price termand quotes for comparable assets and liabilities.
•	Level 3 consists of instruments with a fair value that is determined by prices with significant unobservable inputs. As atSeptember 30, 2022, the company does not have any derivative instruments measured at fair value Level 3.
In forming estimates, the company utilizes the most observable inputs available for valuation purposes. If a fair valuemeasurement reflects inputs of different levels within the hierarchy, the measurement is categorized based upon the lowestlevel of input that is significant to the fair value measurement.
The following table presents the company’s derivative financial instruments measured at fair value for each hierarchy level as atSeptember 30, 2022:
($ millions)					Level 1	Level 2	Level 3		Total Fair Value
Accounts receivable					68	119	—			187
Accounts payable					(169)	(63)	—			(232)
					(101)	56	—			(45)
							2022 Third Quarter	Suncor Energy Inc.		61

Notes to the Consolidated Financial Statements
During the third quarter of 2022, there were no transfers between Level 1 and Level 2 fair value measurements.
Non-Derivative Financial InstrumentsAt September 30, 2022, the carrying value of fixed-term debt accounted for under amortized cost was $13.5 billion (December 31,2021 – $14.2 billion) and the fair value was $12.8 billion (December 31, 2021 – $17.4 billion). The estimated fair value of long-termdebt is based on pricing sourced from market data.
10. Asset Transactions and Valuations
Oil SandsFort Hills assets:During the third quarter of 2022, the company continued commercial discussions to acquire an additional 21.3% workinginterest in the Fort Hills Energy L.P. (Fort Hills) from Teck Resources Limited (Teck). The company was also in the process ofupdating its long-range plan for Fort Hills, which incorporates lower gross production and increased operating costs per barrelfor the next 36 months.
Subsequent to the third quarter of 2022, the company entered into an agreement, to acquire Teck’s interest in Fort Hills and itsassociated sales and logistics agreements for $1.0 billion, subject to working capital and other closing adjustments, bringing thecompany’s aggregate working interest to 75.4%. The transaction is expected to close in the first quarter of 2023, subject toregulatory approval and other closing conditions.
Management considered these indicators of impairment and performed an asset impairment test using recoverable amountsbased on fair value less costs of disposal. An impairment charge of $2.6 billion (net of taxes of $0.8 billion) was recognized on itsshare of Fort Hills in the Oil Sands segment in the third quarter of 2022. An expected cash flow approach with the followingasset specific assumptions (Level 3 fair value inputs – note 9) were applied:
•	The average annual after tax free cash flows for the 54.1% working interest are anticipated to be approximately $450 millionper year for the first three years, with the balance of the recoverable value to be realized during the balance of the minelife; and
•	A long term WTI average forecast of US$60 (expressed in real dollars).
The recoverable amount of the Fort Hills CGU is $2.8 billion (net of taxes) as at September 30, 2022.
Exploration and ProductionWhite Rose assets:In the second quarter of 2022, the company announced that concurrent with the decision to restart the West White Rose projectby the joint venture owners, Suncor increased its ownership in the White Rose asset by 12.5% to approximately 39% (previouslyapproximately 26%). The decision to restart was driven by a revised royalty structure and development plan. The company received$38 million (net of taxes of $12 million) in cash consideration to acquire the additional working interest, which was primarilyallocated to the asset retirement obligation and property, plant and equipment of the project. As a result of these events, duringthe second quarter of 2022, the company performed an impairment reversal test on the White Rose CGU as the recoverableamount of this CGU was sensitive to the restart decision. The impairment reversal test was performed using a recoverable amountbased on the fair value less cost of disposal. An expected cash flow approach was used with the key assumptions discussedbelow (Level 3 fair value inputs – note 9).
As a result of the impairment reversal test, the recoverable amounts were determined to be greater than the carrying values ofthe White Rose CGU and the company recorded an impairment reversal of $542 million (net of taxes of $173 million) on its previousshare of the White Rose assets in the Exploration and Production segment. The recoverable amount was determined based onthe following asset-specific assumptions:
•	Brent price forecast of US$85.00/bbl in 2023, US$68.00 in 2024 and US$69.00 in 2025, escalating at 2% per year thereafterover the life of the project to 2038 and adjusted for asset-specific location and quality differentials;
•	anticipated first oil for the West White Rose project in the first half of 2026 and the company’s share of production ofapproximately 9,800 bbls/d (based on its previous working interest of approximately 26%) over the life of the project;
•	the company’s share of future capital expenditures of $1.5 billion, including the West White Rose expansion; and
•	risk-adjusted discount rate of 9.0% (after-tax).
No other indicators of impairment or reversals of impairment were identified at September 30, 2022.
62	2022 Third Quarter	Suncor Energy Inc.

Norway assets:During the third quarter of 2022, the company completed the sale of its Norway assets, including its 30% working interest inOda and its 17.5% working interest in the Fenja Development Joint Operations, for net proceeds of $297 million (net of cashdisposed of $133 million), resulting in a $65 million loss related to closing adjustments and foreign exchange losses recognizedas a result of the disposal of foreign operations. The company completed the sale on September 30, 2022 with an effective date ofMarch 1, 2022. The Norway assets are reported in the Exploration and Production segment.
In the second quarter of 2022, the company reclassified the assets and liabilities related to its Norway operations as assets heldfor sale and performed an impairment test on the Norway assets held for sale as at June 30, 2022. The impairment test wasperformed using the lower of its carrying amount and fair value less costs to sell (Level 2 fair value inputs – note 9). As a result ofthe impairment test, the company recorded a $47 million charge related to the impairment on its share of the Norwayoperations, net of a $23 million deferred tax adjustment associated with the assets held for sale.
No other indicators of impairment or reversals of impairment were identified at September 30, 2022.
Terra Nova assets:During the third quarter of 2021, the company recorded an impairment reversal of $168 million (net of taxes of $53 million) onits share of the Terra Nova assets in the Exploration and Production segment.
No other indicators of impairment or reversals of impairment were identified at September 30, 2022.
11. Provisions
Suncor’s decommissioning and restoration provision decreased by $2.3 billion for the nine months ended September 30, 2022.The decrease was primarily due to an increase in the credit-adjusted risk-free interest rate to 5.40% (December 31, 2021 – 3.70%).
12. Pensions and Other Post-Retirement Benefits
For the nine months ended September 30, 2022, the actuarial gain on employee retirement benefit plans was $835 million (netof taxes of $263 million), mainly due to an increase in the discount rate to 5.00% (December 31, 2021 – 2.90%).
13. Assets Held for Sale
In the third quarter of 2022, the company reclassified the assets and liabilities related to its United Kingdom (U.K.) operations,including its interests in Buzzard and Rosebank located in the U.K. sector of the North Sea. The sales process is progressing, witha sale anticipated to close within the next twelve months. The U.K. operations are reported within the Exploration and Productionsegment.
The table below details the assets and liabilities held for sale as at September 30, 2022:
	September 30
($ millions)		2022
Assets
Currents assets		110
Property, plant and equipment, net		539
Total Assets		649
Liabilities
Current liabilities		(208)
Provisions		(205)
Deferred income taxes		(156)
Total Liabilities		(569)
Net Assets		80
In the second quarter of 2022, the company reclassified the assets and liabilities related to its wind and solar assets as assetsheld for sale, including its interests in wind farms located in Alberta and Ontario, with the Forty Mile Wind and Solar Power Projectcurrently under construction and expected to be completed and operational in 2022.
			2022 Third Quarter	Suncor Energy Inc.	63

Notes to the Consolidated Financial Statements
Subsequent to the third quarter of 2022, the company reached an agreement for the sale of its wind and solar assets in theCorporate segment, for gross proceeds of approximately $730 million before closing adjustments and other closing costs. Thesale is pending regulatory approval, and is expected to be completed in the first quarter of 2023.
The table below details the assets and liabilities held for sale as at September 30, 2022:
	September 30
($ millions)		2022
Assets
Current assets		21
Property, plant and equipment, net		413
Total Assets		434
Liabilities
Current liabilities		(111)
Other long-term liabilities and provisions		(34)
Deferred income taxes		(47)
Total Liabilities		(192)
Net Assets		242
64	2022 Third Quarter		Suncor Energy Inc.