Exhibit 99.1​

Annual Report 2021

Our purpose To provide trusted energy that enhances people’s lives, while caring for each other and the earth Contents 12021 Highlights2Message to Shareholders92022 Corporate Guidance10Advisories14 Management’s Discussion and Analysis82Management’s Statement of Responsibility for Financial Reporting83Management’s Report on Internal Control over Financial Reporting84Independent Auditor’s Report87 Audited Consolidated Financial Statements and Notes136 Supplemental Financial and Operating Information160Share Trading Information161Leadership and Board Members

021 HighlightsAdjusted funds from operations($ millions)1718191201,2 21■Adjusted funds from operations 3,49,139 10,172 10,818 3,876 10,2572Production(mboe/d)■Exploration and Production17121.618103.4191106.8201,2 21101.787.5■Capital expenditures5,8225,2505,4363,806 4,411■Oil Sands – Bitumen111.7204.1184.8127.2 175.6 Adjusted funds from operations per share3,45.506.276.942.546.89■Oil Sands – Synthetic crude oil452.0424.5485.6466.2 468.6 Earnings (loss)($ millions) Shareholder returns($ millions) 1718191201,2 212 1718191201,2 212 ■Share repurchases1,413 3,053 2,274307 2,3041Includes the impacts of the Government of Alberta’s mandatory production curtailments.2Includes the impacts of the COVID-19 pandemic.3Non-GAAP financial measures or contains non-GAAP financial measures. Refer to the Advisories section of this Annual Report and Suncor’s Management’s Discussion and Analysis (MD&A) dated February 23, 2022.4Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted operating earnings (loss) and adjusted funds from (used in) operations, respectively, to better distinguish the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore no prior periods were restated.5Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.6Dividends and share repurchases per share divided by average share price.Annual Report 2021 Suncor Energy Inc. 1

Message to Shareholders Mark LittlePresident andChief Executive Officer 2021 was a pivotal year for Suncor, which saw us clearly articulating our strategy, strengthening our balance sheet and re-focusing on operational excellence. Reliable performance and strong execution across all assets during the year was, however, impacted by late December operational incidents at Syncrude and Firebag. We continue to enhance our integrated business model, optimizing the value captured from every barrel produced as demonstrated by increased realizations and margins during the year.When combined with higher crude oil and refined product realizations from the improved business environment,we generated adjusted operating earnings of  $3.8 billion and $10.3 billion in adjusted funds from operations – the second-highest adjusted funds from operations in the company’s history. On a per share basis, fourth quarter adjusted funds from operations were the highest ever in the company’s history – 11% higher than the previous record achieved in the first quarter of 2014. We’re focused on growing the business through investments in high- return initiatives that enhance margins, improve business processes and optimize performance.Confidence in our ability to generate sustainable and increasing cash flow led us to accelerate debt reduction and our share repurchase program while doubling our dividend. In doing so, we delivered competitive returns to our investors, and returned 38% of our adjusted funds from operations or 10% cash yield to shareholders based on our2021 average market capitalization, in the form of dividends and share buybacks. The benefits of our integrated model Long-life, low-decline assets Integrated value chain facilitates production of higher-value products Midstream and logistics network captures global-based pricing Maximize refinery output through strong sales channels 2 Annual Report 2021 Suncor Energy Inc

Focus on improving operations and increasing cash flow generation We increased annual production by approximately5.3% to 731,700 barrels of oil equivalent per day (boe/d). The completed debottlenecking project at Firebag and increased production from MacKay River, led to Oil Sands production of 644,200 boe/d, 9% higher than 2020 and the second-highest Oil Sands production on record – even as we completed the largest annual maintenance program in the company’s history. At the end of the year, we resumed two-train operations at Fort Hills and we’re on track to operate the Fort Hills asset at average utilization rates of 90% throughout 2022. We upgraded 73% of productionto higher-value synthetic crude oil, and leveraged the integration of Suncor’s upstream and downstream businesses to maximize value.Our Exploration and Production (E&P) assets averaged 87,500 boe/d production, reflecting natural reservoir declines and the sale of our interest in Golden Eagle. The E&P business delivered $1.5 billion in adjusted funds from operations and continues to provide us with geographic diversification across high-margin, low-risk basins and consistent cash flow. In 2021, we restructured the Terra Nova project ownership and moved forward with the Asset Life Extension (ALE) Project. We anticipate a safe return to operations before the end of 2022.We also reached a conditional agreement to increase our interest in White Rose (by 12.5% to approximately 40%), subject to a number of conditions including an economic restart decision for the West White Rose project by mid- 2022. Our investment decisions in these projects are based on their capacity for accretive free funds flow generation and high returns. 25+ yearsproved + probable reserves life index ~600 mboe/dheavy upgrading nameplate capacity ~465 mboe/drefinery nameplate capacity ~1,900Petro-Canada™ retail and wholesale sites Annual Report 2021 Suncor Energy Inc. 3

Our downstream business continues to be industry- leading in both performance and cash flow generation. As consumer demand recovered during the year, our refinery crude throughput of 415,500 barrels per day (bbls/d) helped realize $3.3 billion in adjusted funds fromoperations. Refinery utilization of 89% was over 12% higher than the Canadian average and approximately 4% higher than the North American average1. Strong downstream performance contributes to our ability to deliver reliable energy and be there for our customers – like we were during the floods in British Columbia – as we fulfil our purpose: to provide trusted energy that enhances people’s lives, while caring for each other and the earth.Our operational excellence journey was advanced through a benchmarking exercise – led by our operations leaders over a year ago – in which we evaluated ourselves against leading global supermajors. The resulting insights prompted us to make key changes to strengthen our processes and talent moving forward. These included re- structuring the senior leadership talent on the executive team to include more people with deep operational experience at the table. We also created a stronger and centralized Operational Risk Management organization, led by experienced operators to centralize control and leadership for analyzing process hazards and driving improvements and standardization. Even though it is still early days in our journey, these are fundamental changes to increase competitiveness and drive excellence. A fatality at our Oil Sands Base plant in early 2022 underscores the critical importance of this work. 4 Annual Report 2021 Suncor Energy Inc. 1 Sources: Canada Energy Regulator and U.S. Energy Administration.

Competitive returns for shareholders The operational and financial achievements of 2021 translated into a significant improvement in the strength of Suncor’s balance sheet. We were able to reduce our net debt to 2019 levels, a reduction of 18% or $3.7 billion. Andwe delivered competitive shareholder returns, sending back$3.9 billion through share repurchases and dividends. We increased the dividend by 100% in the fourth quarter of 2021, to an annualized rate of  $1.68 per common share – and increased our share repurchase program, repurchasing$2.3 billion of our common shares (5.5% of the company’s common shares or 84 million common shares) during 2021. The progress made during the year and management’s confidence in the company’s ability to generate sustainable and increasing cash flow and deliver on our strategy were behind these decisions. Maximized shareholder returns and fortified balance sheet ~70% of Dividends and share repurchasesShare buybacks Cash yield adjusted funds fromoperations Shares repurchased Net debt reduction Fortified balance sheet Annual Report 2021 Suncor Energy Inc. 5

he road to $2.15B free funds flow growth – 9 strategic initiatives 1Supply, marketing and trading optimization2Suncor/Syncrude interconnecting pipelines3Tailings management – Permanent Aquatic Storage Structure (PASS) 4Mine optimization – Digital mine & autonomous haulage systems (AHS)5Supply chain management6Business process transformation 7Co-generation atBase Plant & Forty Mile Wind Power Project8Asset debottlenecking9Digital technology adoption – leveraging big data to create value Structural, long-term improvements drive value Despite the volatility of recent times, we remain committed to the structural long-term improvements and strategic investments we are making to our business to increase productivity and lower our overall cost structure – investments central to both our 2021 performance and our long-term resiliency. Becoming the operator of Syncrude on September 30, was a critical step in this journey – driving improved performance, greater integration, efficiencies and competitiveness across our Oil Sands assets. In total, we expect to capture $300 million of annual gross synergies and we’re on track to realize $100 million of these annual gross synergies in 2022. Physically connecting these assets– via the interconnecting pipelines between the Syncrude site and Oil Sands Base – also adds to the company’s operational flexibility and will support stronger reliability.As part of our evolution, we continue to harness digital technology capabilities to improve the safety, reliability, productivity and environmental performance of our operations. Growing our digital capability means we can use real-time data analytics to improve reliability, create consistent processes enterprise-wide to drive savings and make better and faster decisions. An example of this work is our business process transformation initiative, as we leverage technology to standardize our data and processes into one overarching system. Standard systems and processes may appear mundane, but the savings from this initiative are significant. Annual free funds flow generation is expected to increase by $250 million by 2023, largely resulting from efficiencies realized as automated systems replace complex and time-consuming manual processes and eliminate organizational silos.The interconnecting pipelines and digital transformation represent components of our long-term strategy to grow the business by focusing not on mega-projects, but onlow-capital intensity investment that helps reduce costs and improve margin capture. Exiting 2021, we have realized approximately $465 million in annual incremental value from these initiatives and expect to build on this value with an additional $400 million in 2022.

Energy pathways, partnerships support long-term resilience 2021 also saw us formalize our strategic objective to be a net-zero GHG emissions company by 2050. A company- wide team, with support and input from Suncor’s Board of Directors, did a ground-up refresh and review of the company’s entire business to develop a concrete – and economic – path forward. The goal is to advance pragmaticand highly economic investments in line with – or synergistic with – our core capabilities. We identified areas wherewe have existing lines of business and expertise that we can leverage – for example in hydrogen, electricity and low-carbon fuels – alongside ways to lower emissions and costs in our base business. We also had to meet two key criteria: to drive investor returns by improving the costperformance and margin capture of our base business whilestrengthening our overall environmental performance.Our strategy outlines three complementary approaches to get to net-zero: reducing emissions from our base business through energy efficiency, fuel switching and carbon capture and storage; expanding lines of businessin the low emissions power, renewable fuels and hydrogen sectors; and working with our customers, suppliers and other stakeholders on reducing emissions. Our competitive advantage is our ability to leverage our existing experience and expertise across all three avenues. In addition, we’re partnering with others to help as we look to develop our reliable and abundant sources of energy responsibly and expand into other promising opportunities to increase shareholder returns. This past year saw us announce a new proposed partnership with ATCO to advance a world-scale clean hydrogen project, and we increased our investment in carbon capture and storage technology with an equity investment in Svante Inc. and the Varennes Carbon Recycling biofuels facility. We also were a founding member of the new Oil Sands Pathways to Net Zero alliance, a consortium of Canadian oil sands companies with a common interest to find realistic and workable solutions to the challenge of climate change.A partnership of which I am particularly proud is Astisiy, our historic collaboration between Suncor and eight Indigenous communities in the Regional Municipality of Wood Buffalo that acquired a 15% stake in the Northern Courier Pipeline. The pipeline, which connects the Fort Hills asset to Suncor’s East Tank Farm asset, is now operated by Suncor. This investment and agreement, unprecedented in this industry, is the result of years of collaboration and negotiations among all partners, and is expected to provide long-term, stable revenues that will benefit the communities for decades to come. Historic partnership between First Nations, Métis communities and Suncor •Athabasca Chipewyan First Nation•Chipewyan Prairie First Nation•Conklin Métis Local 193•Fort Chipewyan Métis Local #125 •Fort McKay Métis Nation•McMurray Métis•Fort McMurray #468 First Nation•Willow Lake Métis Nation Annual Report 2021 Suncor Energy Inc. 7

Looking ahead We enter 2022 with clear objectives and remain steadfast in our focus on safety, operational excellence, capital and cost discipline, increasing shareholder returns and delivering a more resilient future for Suncor.We anticipate continued strong markets driven by rising consumer demand and are targeting upstream production of 750,000 to 790,000 boe/d, approximately 5% higher than2021 levels.We’ll continue to invest in the business to grow cash flow with a planned capital spend of  $4.7 billion – 6% lower than our previously announced $5 billion capital program ceiling. Spending will be directed towards sustaining projects, such as planned maintenance and tailings optimizations, and economic investments in the Base Plant Cogeneration, Forty Mile Wind Power and Terra Nova Asset Life Extension projects and In Situ well pads that are expected to generate high returns. We remain committed to creating shareholder value. We plan to do this by strengthening our balance sheet through sustainable dividend increases, ongoing debt reduction and continued share buybacks from excess free funds flow.As I close, I would like to express my gratitude to Suncor’s Board of Directors who challenge the executive leadership team to improve our operations, financial performance and responsibly grow, and who are outstanding stewards of stakeholders’ interests. In so doing, I remember and pay tribute to Mel Benson, a member of the Beaver Lake Cree Nation and a former Suncor Board member for 21 years, who we lost this past October. To the Suncor team, thank you for your hard work, innovation and for continuing to evolve and learn as we work with our diverse stakeholders. When I look at our people – and what we have already achieved – I know we can create and deliver strong value for you, our shareholders. On behalf of all of us at Suncor, thank you for your continued support.Mark LittlePresident and Chief Executive Officer Suncor Energy 8 Annual Report 2021 Suncor Energy Inc.

The following table highlights forecasts from Suncor’s 2022 Full Year Outlook and actual results for the year ended December 31, 2021. For further details regarding Suncor’s 2022 Full Year Outlook, including certain assumptions, see www.suncor.com/ guidance. See also the Advisories section of this Annual Report.2021 Full Year OutlookActual Year Ended2022 Full Year OutlookOctober 27, 2021December 31, 2021February 2, 2022Oil Sands operations (bbls/d)1410,000 – 445,000426,500395,000 – 435,000Fort Hills (bbls/d) Suncor working interest of 54.11%45,000 – 55,00050,70085,000 – 100,000Syncrude (bbls/d) Suncor working interest of 58.74%170,000 – 185,000167,000175,000 – 190,000Exploration and Production (boe/d)80,000 – 95,00087,50075,000 – 85,000Oil Sands operations cash operating costs ($/bbl)$26.00 – $28.50$25.90$25.00 – $28.00Fort Hills cash operating costs ($/bbl)$37.00 – $42.00$41.35$23.00 – $27.00Syncrude cash operating costs ($/bbl)$32.00 – $35.00$35.20$31.00 – $34.00Refinery utilization290% – 96%89%92% – 96%1Oil Sands operations production includes synthetic crude oil, diesel and bitumen and excludes Fort Hills PFT bitumen and Syncrude synthetic crude oil production. These ranges reflect the integrated upgrading and bitumen production performance risk.2Refinery utilization is based on the following crude processing capacities: Montreal – 137,000 bbls/d; Sarnia – 85,000 bbls/d; Edmonton – 146,000 bbls/d; and Commerce City – 98,000 bbls/d. Capital Expenditures1 2022 Full Year Outlook % Economic ($ millions)February 2, 2022Investment2Upstream Oil Sands3,200 – 3,35025%Upstream Exploration and Production400 – 45095%Total Upstream3,600 – 3,80030%Downstream700 – 85010%Corporate200 – 25075%Total4,70030%1Capital expenditures exclude capitalized interest of approximately $180 million.2Economic Investment capital expenditures include capital investments that result in an increase in value through adding reserves, improving processing capacity, utilization, cost or margin, including associated infrastructure. Balance of capital expenditures represents Asset Sustainment and Maintenance capital expenditures, which include capital investments that deliver on existing value by: ensuring compliance or maintaining relations with regulators and other stakeholders; maintaining current processing capacity; and delivering existing developed reserves.Annual Report 2021 Suncor Energy Inc. 9

ll financial information in the preceding sections of this Annual Report is reported in Canadian dollars, unless otherwise noted. Production volumes are presented on a working interest basis, before royalties, unless otherwise noted, except for Libya, which is presented on an economic basis. References to “we”, “our”, “Suncor”, or “the company” mean Suncor Energy Inc., and the company’s subsidiaries and interests in associates and jointly controlled entities, unless the context requires otherwise. The use of such terms in any statement herein does not mean that they apply to Suncor Energy Inc. or any particular affiliate, and does not waive the corporate separateness of any affiliate. For further clarity, Suncor Energy Inc. does not directly operate or own assets in the U.S.Forward-Looking InformationThe preceding sections of this Annual Report contain certain forward looking information and forward looking statements (collectively referred to herein as “forward looking statements”) within the meaning of applicable Canadian and U.S. securities laws. Forward looking statements are based on Suncor’s current expectations, estimates, projections and assumptions that were made by the company in light of information available at the time the statement was made and consider Suncor’s experience and its perception of historical trends, including expectations and assumptions concerning: the accuracy of reserves estimates; the current and potential adverse impacts of the COVID-19 pandemic, including the status of the pandemic and future waves; commodity prices and interest and foreign exchange rates; the performance of assets and equipment; capital efficiencies and cost savings; applicable laws and government policies; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour, services and infrastructure; the satisfaction by third parties of their obligations to Suncor; the development and execution of projects; and the receipt, in a timely manner, of regulatory and third party approvals. All statements and information that address expectations or projections about the future, and statements and information about Suncor’s strategy for growth, expected and future expenditures or investment decisions, commodity prices, costs, schedules, production volumes, operating and financial results, future financing and capital activities, and the expected impact of future commitments are forward looking statements. Some of the forward looking statements may be identified by words like “expects”, “anticipates”,“will”, “estimates”, “plans”, “scheduled”, “intends”, “believes”, “projects”, “indicates”, “could”, “focus”, “vision”, “goal”, “outlook”, “proposed”, “target”, “objective”, “continue”, “should”, “may”, “future”, “promise”, “forecast”, “potential”, “opportunity”, “would” and similar expressions. Forward looking statements in the preceding sections of this Annual Report include references to:•Suncor’s strategic objective to become a net-zero GHG emissions company by 2050 and the plans Suncor has to achieve this objective;•The company’s expectation that it will operate the Fort Hills asset at average utilization rates of 90% throughout 2022;•Expectations about Terra Nova and the ALE Project, including the expectation that Terra Nova will have a safe return to operations before the end of 2022;•Suncor’s strategies, including: its continued commitment to structural long-term improvements and strategic investments with the goal of increasing productivity and lowering its overall cost structure; that it will remain steadfast in its focus on safety, operational excellence, capital and cost discipline to increase shareholder returns and deliver a more resilient future for Suncor; and Suncor’s commitment to create shareholder value and the manner in which it intends to do so;•Expectations about Syncrude, including the expectation that Suncor will capture $300 million of annual gross synergies and that it is on track to realize $100 million of these gross annual synergies in 2022 and that the physically connection between the assets will add to the company’s operational flexibility and will support stronger reliability;•Statements regarding the Oil Sands Pathways to Net Zero alliance, including the goals, expectations regarding timing and the expected pathways the alliance will take to address GHG emissions;•Suncor’s expectation that the Northern Courier Pipeline will provide the eight Indigenous communities (which Suncor has partnered with) long-term, stable revenue for decades to come;•Suncor’s expectation that it will increase annual free funds flow generation by $250 million by 2023 as a result of efficiencies from standard systems and processes;•The expected benefits from Suncor’s digital transition and interconnecting pipelines, including the $400 million of annual incremental value expected to be realized from initiatives in 2022;•Statements about Suncor’s free funds flow growth and the 9 strategic initiatives that it expects to contribute to such free funds flow growth;10 Annual Report 2021 Suncor Energy Inc.

•Expectations regarding proposed pipelines;•Suncor’s reserves and reserves life estimates and nameplate capacities;•Suncor’s expectation regarding its technology investments, including the potential benefits therefrom, as well as expectations regarding Suncor’s proposed partnership with ATCO on a world-scale clean hydrogen project, its equity investment in Svante Inc., its investment in the Varennes Carbon Recycling biofuels facility and the economic investments in the Base Plant Cogeneration, Forty Mile Wind Power and Terra Nova Asset Life Extension projects and In Situ well pads that are expected to generate high returns; and•Suncor’s outlook for 2022 and beyond, Suncor’s 2022 Corporate Guidance, Suncor’s planned capital spend of  $4.7 billion and projects to which Suncor’s 2022 capital expenditures are anticipated to be directed.Forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Suncor. Suncor’s actual results may differ materially from those expressed or implied by its forward looking statements, so readers are cautioned not to place undue reliance on them. The financial and operating performance of the company’s reportable operating segments, specifically Oil Sands, Exploration and Production, and Refining and Marketing, may be affected by a number of factors.Factors that affect our Oil Sands segment include, but are not limited to, volatility in the prices for crude oil and other production, and the related impacts of fluctuating light/heavy and sweet/sour crude oil differentials; changes in the demand for refinery feedstock and diesel fuel, including the possibility that refiners that process our proprietary production will be closed, experience equipment failure or other accidents; our ability to operate our Oil Sands facilities reliably in order to meet production targets; the output of newly commissioned facilities, the performance of which may be difficult to predict during initial operations; our dependence on pipeline capacity and other logistical constraints, which may affect our ability to distribute our products to market and which may cause the company to delay or cancel planned growth projects in the event of insufficient takeaway capacity; our ability to finance Oil Sands economic investment and asset sustainment and maintenance capital expenditures; the availability of bitumen feedstock for upgrading operations, which can be negatively affected by poor ore grade quality, unplanned mine equipment and extraction plant maintenance, tailings storage, and in situ reservoir and equipment performance, or the unavailability of third party bitumen; changesin operating costs, including the cost of labour, natural gas and other energy sources used in oil sands processes; and our ability to complete projects, including planned maintenance events, both on time and on budget, which could be impacted by competition from other projects (including other oil sands projects) for goods and services and demands on infrastructure in Alberta’s Wood Buffalo region and the surrounding area (including housing, roads and schools).Factors that affect our Exploration and Production segment include, but are not limited to, volatility in crude oil and natural gas prices; operational risks and uncertainties associated with oil and gas activities, including unexpected formations or pressures, premature declines of reservoirs, fires, blow outs, equipment failures and other accidents, uncontrollable flows of crude oil, natural gas or well fluids, and pollution and other environmental risks; adverse weather conditions, which could disrupt output from producing assets or impact drilling programs, resulting in increased costs and/or delays in bringing on new production; political, economic and socio economic risks associated with Suncor’s foreign operations, including the unpredictability of operating in Libya due to ongoing political unrest; and market demand for mineral rights and producing properties, potentially leading to losses on disposition or increased property acquisition costs.Factors that affect our Refining and Marketing segment include, but are not limited to, fluctuations in demand and supply for refined products that impact the company’s margins; market competition, including potential new market entrants; our ability to reliably operate refining and marketing facilities in order to meet production or sales targets; and risks and uncertainties affecting construction or planned maintenance schedules, including the availability of labour and other impacts of competing projects drawing on the same resources during the same time period.Additional risks, uncertainties and other factors that could influence the financial and operating performance of all of Suncor’s operating segments and activities include, but are not limited to, changes in general economic, market and business conditions, such as commodity prices, interest rates and currency exchange rates (including as a result of demand and supply effects resulting from the COVID-19 pandemic and the actions of OPEC+); fluctuations in supply and demand for Suncor’s products; the successful and timely implementation of capital projects, including growth projects and regulatory projects; risks associated with the development and execution of Suncor’s projects and the commissioning and integration of new facilities; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; the risk that projects and initiatives intended to achieve cash flow growth and/or reductions in operating costs may not achieve the expected results in the time anticipated or at all; competitive actions of other companies, including increased competition from other oil and gas companies or from companiesthat provide alternative sources of energy; labour and material shortages; actions by government authorities, including the imposition or reassessment of, or changes to, taxes, fees, royalties, duties, tariffs, allotment and other government-

imposed compliance costs, and mandatory production curtailment orders and changes thereto; changes to laws and government policies that could impact the company’s business, including environmental (including climate change), royalty and tax laws and policies; the ability and willingness of parties with whom we have material relationships to perform their obligations to us; the unavailability of, or outages to, third party infrastructure that could cause disruptions to production or prevent the company from being able to transport its products; the occurrence of a protracted operational outage, a major safety or environmental incident, or unexpected events such as fires (including forest fires), equipment failures and other similar events affecting Suncor or other parties whose operations or assets directly or indirectly affect Suncor; the potential for security breaches of Suncor’s information technology and infrastructure by malicious persons or entities, and the unavailability or failure of such systems to perform as anticipated as a result of such breaches; security threats and terrorist or activist activities; the risk that competing business objectives may exceed Suncor’s capacity to adopt and implement change; risks and uncertainties associated with obtaining regulatory, third party and stakeholder approvals outside of Suncor’s control for the company’s operations, projects, initiatives, and exploration and development activities and the satisfaction of any conditions to approvals; the potential for disruptions to operations and construction projects as a result of Suncor’s relationships with labour unions that represent employees at the company’s facilities; our ability to find new oil and gas reserves that can be developed economically; the accuracy of Suncor’s reserves and future production estimates; Suncor’s ability to access capital markets at acceptable rates or to issue securities at acceptable prices; maintaining an optimal debt to cash flow ratio; the success of the company’s risk management activities using derivatives and other financial instruments; the cost of compliance with current and future environmental laws, including climate change laws; risks relating to increased activism and public opposition to fossil fuels and oil sands; risks and uncertainties associated with closing a transaction for the purchase or sale of a business, asset or oil and gas property, including estimates of the final consideration to be paid or received; the ability and willingness of counterparties to comply with their obligations in a timely manner; risks associated with joint arrangements in which the company has an interest; risks associated with land claims and Indigenous consultation requirements; the risk that the company may be subject to litigation; the impact of technology and risks associated with developing and implementing new technologies; and the accuracy of cost estimates, some of which are provided at the conceptual or other preliminary stage of projects and prior to commencement or conception of the detailed engineering that is needed to reduce the margin of error and increase the level of accuracy. The foregoing list of important factors is not exhaustive.Many of these risk factors and other assumptions related to Suncor’s forward-looking statements are discussed in further detail throughout the MD&A, including under the heading Risk Factors, and the company’s most recent Annual Information Form dated February 23, 2022 available at www.sedar.com and Form 40 F dated February 24, 2022 available at www.sec.gov, which risk factors are incorporated by reference herein. Readers are also referred to the risk factors and assumptions described in other documents that Suncor files from time to time with securities regulatory authorities. Copies of these documents are available without charge from the company.The forward looking statements contained in this Annual Report are made as of the date of this Annual Report. Except as required by applicable securities laws, we assume no obligation to update publicly or otherwise revise any forward looking statements or the foregoing risks and assumptions affecting such forward looking statements, whether as a result of new information, future events or otherwise.Suncor’s corporate guidance is based on the following assumptions around oil prices: WTI, Cushing of US$80.00/bbl; Brent, Sullom Voe of US$84.00/bbl; and WCS, Hardisty of US$68.00/bbl. In addition, the guidance is based on the assumption of a natural gas price (AECO C Spot) of Cdn$3.75 per gigajoule, US$/Cdn$ exchange rate of  $0.80 and synthetic crude oil sales from Oil Sands operations of 310,000 to 330,000 bbls/d. Assumptions for the Oil Sands operations, Syncrude and Fort Hills 2022 production outlook include those relating to reliability and operational efficiency initiatives that the company expects will minimize unplanned maintenance in 2022. Assumptions for the Exploration and Production 2022 production outlook include those relating to reservoir performance, drilling results and facility reliability. Factors that could potentially impact Suncor’s 2022 corporate guidance include, but are not limited to: Bitumen supply – Bitumen supply may be dependent on unplanned maintenance of mine equipment and extraction plants, bitumen ore grade quality, tailings storage and in situ reservoir performance; Third party infrastructure – Production estimates could be negatively impacted by issues with third party infrastructure, including pipeline or power disruptions, that may result in the apportionment of capacity, pipeline or third party facility shutdowns, which would affect the company’s ability to produce or market its crude oil; Performanceof recently commissioned facilities or well pads – Production rates while new equipment is being brought into service are difficult to predict and can be impacted by unplanned maintenance; Unplanned maintenance – Production estimatescould be negatively impacted if unplanned work is required at any of our mining, extraction, upgrading, in situ processing, refining, natural gas processing, pipeline, or offshore assets; Planned maintenance events – Production estimates, including production mix, could be negatively impacted if planned maintenance events are affected by unexpected events or are not executed effectively. The successful execution of maintenance and start up of operations for offshore assets, in particular, may be impacted by harsh weather conditions, particularly in the winter season; Commodity prices – Decli

in commodity prices may alter our production outlook and/or reduce our capital expenditure plans; Foreign operations – Suncor’s foreign operations and related assets are subject to a number of political, economic and socio economic risks; Government Action –Further action by the Government of Alberta regarding production curtailment may impact Suncor’s Corporate Guidance and such impact may be material; and COVID-19 Pandemic – Suncor’s Corporate Guidance is subject to a number of external factors beyond our control that could significantly influence this outlook, including the status of the COVID-19 pandemic and future waves, and any associated policies around current business restrictions, shelter-in- place orders, or gatherings of individuals. As a result of the volatile business environment and the uncertain pace of an economic recovery it is challenging to determine the overall outlook for crude oil and refined product demand, which remains dependent on the status of the COVID-19 pandemic.Non-GAAP Financial MeasuresCertain financial measures used in the preceding sections of this Annual Report, namely adjusted operating earnings (loss), adjusted funds from operations, Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs, free funds flow and net debt, are not prescribed by GAAP. Adjusted operating earnings (loss) isa non GAAP financial measure that adjusts net earnings (loss) for significant items that are not indicative of operating performance. Management uses adjusted operating earnings (loss) to evaluate operating performance because management believes it provides better comparability between periods. Adjusted operating earnings (loss) is defined in the Advisories – Non GAAP Financial Measures section of the MD&A and is reconciled to GAAP measures in the Financial Information section of Suncor’s annual management’s discussion and analysis for each respective year, each of which are available on the company’s profile at www.sedar.com and such sections are incorporated by reference herein. Oil Sands operations cash operating costs, Fort Hills cash operating costs and Syncrude cash operating costs are defined in the Advisories – Non GAAP Financial Measures section of the MD&A and reconciled to GAAP measures in the SegmentResults and Analysis section of the MD&A, each of which are available on the company’s profile at www.sedar.com and such sections are incorporated by reference herein. Adjusted funds from (used in) operations is a non GAAP financial measure that adjusts a GAAP measure – cash flow provided by operating activities – for changes in non cash working capital, which management uses to analyze operating performance and liquidity. Adjusted funds from (used in) operations is definedand reconciled in the Advisories – Non GAAP Financial Measures section of Suncor’s annual management’s discussion and analysis for each respective year each of which are available on the company’s profile at www.sedar.com and suchsections are incorporated by reference herein.. Free funds flow is calculated by taking adjusted funds from operations and subtracting capital expenditures, including capitalized interest. Management uses free funds flow to measure the capacity of the company to increase returns to shareholders and to grow Suncor’s business. Net debt is a non-GAAP financial measures that management uses to analyze the financial condition of the company. Net debt is equal to total debt less cash and cash equivalents (a GAAP measure). Net debt is defined and reconciled in the Advisories – Non GAAP Financial Measures section of the MD&A, which section is available on the company’s profile at www.sedar.com and incorporated by reference herein. These non GAAP financial measures are included because management uses this information toanalyze business performance, leverage and liquidity and it may be useful to investors on the same basis. These non GAAP financial measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.Beginning in the fourth quarter of 2021, the company changed the label of operating earnings (loss) and funds from (used in) operations to adjusted operating earnings (loss) and adjusted funds from (used in) operations respectively, to better distinguish the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore no prior periods were restated.ReservesReserves information presented herein is presented as Suncor’s working interests (operating and non operating) before deduction of royalties, and without including any royalty interests of Suncor, and is at December 31, 2021. For more information on Suncor’s reserves, including definitions of proved and probable reserves, Suncor’s interest, the location of the reserves and the product types reasonably expected, please see Suncor’s most recent Annual Information Form dated February 23, 2022 available at www.sedar.com and www.sec.gov. Reserves data is based upon evaluations conducted by independent qualified reserves evaluators.Measurement ConversionsCertain crude oil and natural gas liquids volumes have been converted to mcfe on the basis of one bbl to six mcf. Also, certain natural gas volumes have been converted to boe or mboe on the same basis. Refer to the Advisories – Measurement Conversions section of the MD&A.Annual Report 2021 Suncor Energy Inc. 13

Management’s Discussion
and Analysis

February 23, 2022

This Management’s Discussion and Analysis (MD&A) should be read in conjunction with Suncor’s December 31, 2021 audited Consolidated Financial Statements and the accompanying notes. Additional information about Suncor filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC), including quarterly and annual reports and Suncor’s Annual Information Form dated February 23, 2022 (the 2021 AIF), which is also filed with the SEC under cover of Form 40-F, is available online at www.sedar.com, www.sec.gov and on our website at www.suncor.com. Information on or connected to our website, even if referred to in this MD&A, does not constitute part of this MD&A.

Suncor Energy Inc. has numerous direct and indirect subsidiaries, partnerships and joint arrangements (collectively, affiliates), which own and operate assets and conduct activities in different jurisdictions. The terms “we”, “our”, “Suncor”, or “the company” are used herein for simplicity of communication and only mean there is an affiliation with Suncor Energy Inc., without necessarily identifying the specific nature of the affiliation. The use of such terms in any statement herein does not mean they apply to Suncor Energy Inc. or any particular affiliate, and does not waive the corporate separateness of any affiliate. For further clarity, Suncor Energy Inc. does not directly operate or own assets in the U.S. For a list of abbreviations that may be used in this MD&A, refer to the Advisories – Common Abbreviations section of this MD&A.

14   Annual Report 2021   Suncor Energy Inc.

MD&A – Table of Contents

​

Annual Report 2021   Suncor Energy Inc.   15

1. Financial and Operating Summary

Financial Summary

​

(1)

Represented on a basic and diluted per share basis.

​

(2)

Non-GAAP financial measures or contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(3)

Beginning in the fourth quarter of 2021, the company revised the label of operating earnings (loss) and funds from (used in) operations to adjusted operating earnings (loss) and adjusted funds from (used in) operations, respectively, to better distinguish the non-GAAP financial measures from the comparable GAAP measures and better reflect the purpose of the measures. The composition of the measures remains unchanged and therefore no prior periods were restated.

​

(4)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

(5)

Represented on a basic per share basis.

​

(6)

ROCE excluding impairments and impairment reversals would have been 8.2% in 2019, excluding the impacts of the $1.116 billion deferred tax recovery for the Alberta corporate income tax rate change in the second quarter of 2019.

​

(7)

Excludes capitalized interest of  $144 million in 2021, $120 million in 2020 and $122 million in 2019.

​

(8)

Includes long-term debt, long-term lease liabilities, other long-term liabilities, provisions and deferred income taxes.

​

16   Annual Report 2021   Suncor Energy Inc.

Operating Summary

​

(1)

Beginning in 2020, the company revised the presentation of its production volumes to aggregate production from each asset into the categories of  “Upgraded production” and “Non-upgraded bitumen production” to better reflect the integration among the company’s assets with no impact to overall production volumes. Comparative periods have been updated to reflect this change.

​

(2)

Beginning in 2020, the company revised the presentation of its Oil Sands price realizations to aggregate price realizations from each asset into the categories of  “SCO and diesel” and “Non-upgraded bitumen” to better reflect the integration among the company’s assets with no impact to overall price realizations. Comparative periods have been updated to reflect this change. Beginning in 2020, the company revised its “Non-upgraded bitumen” price realization to include midstream activities employed to optimize its logistics capacity and more accurately reflect the performance of the product stream. Comparative periods have been restated to reflect this change.

​

(3)

Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(4)

Net of transportation costs, but before royalties.

​

(5)

Exploration and Production International price realizations include the company’s U.K. and Norway assets and exclude Libya for all periods presented.

​

(6)

Refinery utilization is the amount of crude oil run through crude distillation units, expressed as a percentage of the nameplate capacity of these units. The Edmonton refinery crude processing capacity has increased to 146,000 bbls/d in 2021 from 142,000 bbls/d in 2020.

​

(7)

Beginning in 2020, refining and marketing gross margins have been revised to better reflect the refining, product supply and rack forward businesses. Prior periods have been restated to reflect this change.

​

Annual Report 2021   Suncor Energy Inc.   17

Financial and Operating Summary

Segment Summary

​

(1)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

18   Annual Report 2021   Suncor Energy Inc.

2. SUNCOR OVERVIEW

Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. Suncor’s operations include oil sands development, production and upgrading; offshore oil and gas; petroleum refining in Canada and the U.S.; and the company’s Petro-Canada retail and wholesale distribution networks (including Canada’s Electric Highway™, a coast-to-coast network of fast-charging electric vehicle stations). Suncor is developing petroleum resources while advancing the transition to a low-emissions future through investment in power, renewable fuels and hydrogen. Suncor also conducts energy trading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products and power. 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) are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE).

For a description of Suncor’s business segments, refer to the Segment Results and Analysis section of this MD&A.

Suncor’s Strategy

Delivering competitive and sustainable returns to shareholders is a top priority of the company and we aim to maximize shareholder returns by focusing on operational excellence, underpinned by safety above all else, capital discipline through investments in high-value projects, and our commitment to environmental stewardship and sustainability. We believe that our commitment to capital discipline, our balance sheet strength and financial health provides the foundation for our capital allocation framework, supporting long-term value creation and increasing returns to shareholders. We believe that Suncor is well positioned to execute on these priorities due to the company’s competitive advantages: financial strength, an industry-leading long-life, low-decline oil sands reserves base, an offshore business that provides geographically diversified cash flow, a highly efficient, tightly integrated downstream business supported by competitive sales channels, and our investment in sustainability, technology and innovation.

Key components of Suncor’s strategy include:

•

Free funds flow growth through high-return investments – Suncor’s growth and development plan is focused on highly economic projects and initiatives that are synergistic with our core capabilities and are expected to create long-term value for the company through free funds flow growth. The company’s significant long-life, low-decline reserves base combined with our industry expertise allows the company to execute improvement strategies at existing assets, such as digital mine optimization, innovative tailings technology advancements and the replacement of the coke-fired boilers at Oil Sands Base with a cogeneration facility. Further structural cost savings are being realized through supply chain optimization initiatives and investments in technology for our marketing and trading business and core business systems, aimed at improving operational efficiencies, structurally lowering costs and improving margin capture.

​

•

Optimize value through integration and secured market access – From the ground to the gas station, Suncor optimizes profit along each step of the value chain, through the regional strength of the company’s Oil Sands assets and the integration with its midstream and refining assets. Our broad asset base and operational flexibility allows us to optimize the production of higher-value SCO in the upstream, while our extensive logistics assets and sales channels, enhanced by our trading and marketing expertise, drives additional value as equity barrels move down the value chain. Through this midstream and marketing network and our geographical diversity, the company is able to maximize crude production and refinery utilization by securing sales outlets while receiving global-based pricing for the majority of its production.

​

•

Maximize value and structurally lower costs through operational excellence and reliability – Suncor aims to get the most out of its assets through a focus on operational excellence, which means operating in a way that is safe, reliable, cost-efficient and environmentally responsible, while continuing to practice capital discipline. We believe that focusing on investments that generate structural reductions to our capital requirements, with a continued focus on improved productivity and reliability, will drive down overall cost structures and sustainment capital requirements and are expected to help us achieve maximum value from our operations. Suncor assuming operatorship of the Syncrude asset on September 30, 2021, was a critical step towards structural cost reductions by driving greater integration, efficiencies and competitiveness across the company’s Oil Sands assets. The interconnecting pipelines between Oil Sands Base and Syncrude add to the company’s regional oil sands advantage, providing operational flexibility and supporting stronger reliability.

​

Annual Report 2021   Suncor Energy Inc.   19

Suncor Overview

•

Be an industry leader in sustainable development and the global energy expansion – Suncor’s integrated approach to sustainability includes leadership and industry collaboration in environmental performance, enhanced social responsibility and safety, underpinned by strong governance and our commitment to creating value for our stakeholders. Our objective is to be a net-zero greenhouse gas (GHG) emissions company by 2050 and we have set ambitious near-term goals to reduce emissions across our value chain. We aim to substantially contribute to society’s net-zero goals by reducing emissions across our base business, growing our low-emissions energy business, and working with others to reduce emissions. We are expanding our low-emissions energy business by pursuing investments that are technologically mature, economically viable and synergistic with our existing integrated value chain. Our investments in the energy expansion will complement our existing core capabilities; increasing low carbon power generation, expanding into clean hydrogen production, and growing our existing renewable liquid fuels business.

​

•

Technology and people-enabled – Suncor is focused on shifting our culture and leveraging technology to improve performance and reliability, which are central to our operational excellence journey. Unleashing the full potential of our people and technology will be critical in achieving our environmental, operational and financial goals.

​

2021 Highlights

   

(1)

Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

20   Annual Report 2021   Suncor Energy Inc.

 

(1)

Source: Canada Energy Regulator – https://www.cer-rec.gc.ca/en/data-analysis/energy-commodities/crude-oil-petroleum-products/statistics/​
weekly-crude-run-summary-data/index.html.

​

Annual Report 2021   Suncor Energy Inc.   21

Suncor Overview

22   Annual Report 2021   Suncor Energy Inc.

3. Financial Information

Adjusted Operating Earnings (Loss)

Consolidated Adjusted Operating Earnings (Loss) Reconciliation(1)(2)

​

(1)

Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

(3)

During 2019, the company recorded non-cash impairment charges of  $3.716 billion ($2.803 billion after-tax) on its share of the Fort Hills assets, in the Oil Sands segment, due to a decline in forecasted heavy crude oil prices and $521 million ($393 million after-tax) against White Rose, in the E&P segment, due to increased capital cost estimates at the West White Rose Project.

​

(4)

In 2019, Suncor sold its 37% interest in Canbriam Energy Inc., in the E&P segment, for proceeds of  $151 million ($139 million after-tax). 2019 also included a gain of  $65 million ($48 million after-tax) in the E&P segment related to the sale of certain non-core assets.

​

(5)

In 2019, the company recorded a $1.116 billion deferred income tax recovery associated with the Government of Alberta’s enactment of legislation for a staged reduction of the corporate income tax rate from 12% to 8%.

​

Annual Report 2021   Suncor Energy Inc.   23

Financial Information

Bridge Analysis of Adjusted Operating (Loss) Earnings ($ millions)(1)(2)

(1)

For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

(3)

The bridge factor for Inventory Valuation is comprised of changes in the first-in, first-out (FIFO) inventory valuation and short-term commodity risk management activities reported in the R&M segment, and changes in the intersegment elimination of profit reported in the Corporate and Eliminations segment.

​

24   Annual Report 2021   Suncor Energy Inc.

Business Environment

Commodity prices, refining crack spreads and foreign exchange rates are important factors that affect the results of Suncor’s operations.

​

(1)

2-1-1 crack spreads are indicators of the refining margin generated by converting two barrels of WTI into one barrel of gasoline and one barrel of diesel. The crack spreads presented here generally approximate the regions into which the company sells refined products through retail and wholesale channels.

​

Annual Report 2021   Suncor Energy Inc.   25

Financial Information

​

(Estimated change, in $ millions)

​

​

Impact on 2021 Net Earnings

​

​

Impact on 2021 Adjusted Funds from Operations(3)

​

​

Crude oil +US$1.00/bbl

​

​

​

​

200

​

​

​

​

​

200

​

​

​

​

Natural gas +Cdn$0.10/mcf (4)

​

​

​

​

(25)

​

​

​

​

​

(25)

​

​

​

​

WTI – narrowing light/heavy differential +US$1.00/bbl

​

​

​

​

15

​

​

​

​

​

15

​

​

​

​

2-1-1 crack spreads +US$1.00/bbl

​

​

​

​

140

​

​

​

​

​

140

​

​

​

​

Foreign exchange +$0.01 US$/Cdn$ related to operating activities(5)

​

​

​

​

(180)

​

​

​

​

​

(180)

​

​

​

​

Foreign exchange on U.S. dollar denominated debt +$0.01 US$/Cdn$

​

​

​

​

150

​

​

​

​

​

—

​

​

26   Annual Report 2021   Suncor Energy Inc.

4. Segment Results and Analysis

Suncor has classified its operations into the following segments:

Annual Report 2021   Suncor Energy Inc.   27

Segment Results and Analysis

   

(1)

Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

28   Annual Report 2021   Suncor Energy Inc.

Annual Report 2021   Suncor Energy Inc.   29

Segment Results and Analysis

Financial Highlights

​

(1)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

(2)

In 2019, the company recorded impairment charges of  $3.716 billion ($2.803 billion after-tax) on its share of the Fort Hills assets due to continued volatility in the crude oil price environment, resulting in a decline in forecasted long-term heavy crude oil prices.

​

(3)

In 2019, the company recorded a $910 million deferred income tax recovery in the Oil Sands segment associated with the Government of Alberta’s substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.

​

(4)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Bridge Analysis of Adjusted Operating (Loss) Earnings ($ millions)(1)(2)

(1)

For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

Beginning in 2021, the company revised its calculation of adjusted operating earnings (loss), a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

30   Annual Report 2021   Suncor Energy Inc.

​

Year ended December 31 (mbbls/d)

​

​

2021

​

​

2020

​

​

2019

​

​

SCO and diesel production(3)

​

​

​

​

483.5

​

​

​

​

​

477.5

​

​

​

​

​

497.0

​

​

​

​

Internally consumed diesel and internal transfers(4)(5)

​

​

​

​

(14.9)

​

​

​

​

​

(11.3)

​

​

​

​

​

(11.4)

​

​

​

Upgraded production – net SCO and diesel

​

​

​

​

468.6

​

​

​

​

​

466.2

​

​

​

​

​

485.6

​

​

​

​

Bitumen production

​

​

​

​

178.8

​

​

​

​

​

127.2

​

​

​

​

​

184.8

​

​

​

​

Internal bitumen transfers(5)

​

​

​

​

(3.2)

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

Non-upgraded bitumen production

​

​

​

​

175.6

​

​

​

​

​

127.2

​

​

​

​

​

184.8

​

​

​

Total Oil Sands production

​

​

​

​

644.2

​

​

​

​

​

593.4

​

​

​

​

​

670.4

​

​

Annual Report 2021   Suncor Energy Inc.   31

Segment Results and Analysis

​

Year ended December 31 (mbbls/d)

​

​

2021

​

​

2020

​

​

2019

​

​

SCO and diesel

​

​

​

​

465.7

​

​

​

​

​

467.9

​

​

​

​

​

483.6

​

​

​

​

Non-upgraded bitumen

​

​

​

​

183.8

​

​

​

​

​

125.6

​

​

​

​

​

187.5

​

​

​

Total

​

​

​

​

649.5

​

​

​

​

​

593.5

​

​

​

​

​

671.1

​

​

​

Year ended December 31 Net of transportation costs, but before royalties ($/bbl)

​

​

2021

​

​

2020

​

​

2019

​

​

SCO and diesel

​

​

​

​

77.73

​

​

​

​

​

43.83

​

​

​

​

​

70.68

​

​

​

​

Non-upgraded bitumen

​

​

​

​

53.80

​

​

​

​

​

22.37

​

​

​

​

​

45.71

​

​

​

​

Crude sales basket (all products)

​

​

​

​

70.96

​

​

​

​

​

39.29

​

​

​

​

​

63.70

​

​

​

Crude sales basket, relative to WTI

​

​

​

​

(14.20)

​

​

​

​

​

(13.51)

​

​

​

​

​

(12.00)

​

​

32   Annual Report 2021   Suncor Energy Inc.

​

Year ended December 31

​

​

2021

​

​

2020

​

​

2019

​

​

Oil Sands operating, selling and general expense (OS&G)

​

​

​

​

8 056

​

​

​

​

​

7 169

​

​

​

​

​

8 027

​

​

​

Oil Sands operations cash operating costs(1) reconciliation

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil Sands operations OS&G

​

​

​

​

4 710

​

​

​

​

​

4 292

​

​

​

​

​

4 639

​

​

​

​

Non-production costs(2)

​

​

​

​

(199)

​

​

​

​

​

(107)

​

​

​

​

​

(179)

​

​

​

​

Excess power capacity and other(3)

​

​

​

​

(375)

​

​

​

​

​

(248)

​

​

​

​

​

(241)

​

​

​

​

Inventory changes

​

​

​

​

21

​

​

​

​

​

(3)

​

​

​

​

​

48

​

​

​

Oil Sands operations cash operating costs(1) ($ millions)

​

​

​

​

4 157

​

​

​

​

​

3 934

​

​

​

​

​

4 267

​

​

​

​

Oil Sands operations production volumes(4) (mbbls/d)

​

​

​

​

439.2

​

​

​

​

​

380.9

​

​

​

​

​

414.5

​

​

​

​

Oil Sands operations cash operating costs(1) ($/bbl)

​

​

​

​

25.90

​

​

​

​

​

28.20

​

​

​

​

​

28.20

​

​

​

Fort Hills cash operating costs(1) reconciliation

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fort Hills OS&G

​

​

​

​

897

​

​

​

​

​

761

​

​

​

​

​

921

​

​

​

​

Non-production costs(2)

​

​

​

​

(118)

​

​

​

​

​

(52)

​

​

​

​

​

(115)

​

​

​

​

Inventory changes

​

​

​

​

(15)

​

​

​

​

​

(11)

​

​

​

​

​

9

​

​

​

Fort Hills cash operating costs(1) ($ millions)

​

​

​

​

764

​

​

​

​

​

698

​

​

​

​

​

815

​

​

​

​

Fort Hills production volumes (mbbls/d)

​

​

​

​

50.7

​

​

​

​

​

58.1

​

​

​

​

​

85.3

​

​

​

​

Fort Hills cash operating costs(1) ($/bbl)

​

​

​

​

41.35

​

​

​

​

​

32.80

​

​

​

​

​

26.15

​

​

​

Syncrude cash operating costs(1) reconciliation

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Syncrude OS&G

​

​

​

​

2 449

​

​

​

​

​

2 116

​

​

​

​

​

2 467

​

​

​

​

Non-production costs(2)

​

​

​

​

(234)

​

​

​

​

​

(66)

​

​

​

​

​

(156)

​

​

​

Syncrude cash operating costs(1)(5) ($ millions)

​

​

​

​

2 215

​

​

​

​

​

2 050

​

​

​

​

​

2 311

​

​

​

​

Syncrude production volumes(4) (mbbls/d)

​

​

​

​

172.4

​

​

​

​

​

165.7

​

​

​

​

​

172.3

​

​

​

​

Syncrude cash operating costs(1) ($/bbl)

​

​

​

​

35.20

​

​

​

​

​

33.80

​

​

​

​

​

36.75

​

​

(1)

Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Annual Report 2021   Suncor Energy Inc.   33

Segment Results and Analysis

(1)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

34   Annual Report 2021   Suncor Energy Inc.

Financial Highlights

​

(1)

Production, revenues and royalties from the company’s Libya operations have been presented in the E&P section of this MD&A on an economic basis and exclude an equal and offsetting gross up of revenues and royalties of  $242 million in 2021, $48 million in 2020 and $303 million in 2019, which is required for presentation purposes in the company’s financial statements under the working-interest basis.

​

(2)

During 2019, the company recorded non-cash impairment charges of  $521 million ($393 million after-tax) against White Rose due to increased capital cost estimates at the West White Rose Project.

​

(3)

2019 included a gain of  $65 million ($48 million after-tax) related to the sale of certain non-core assets. Also in 2019, Suncor sold its 37% interest in Canbriam Energy Inc. for total proceeds and an equivalent gain of  $151 million ($139 million after-tax), which had previously been written down to nil in 2018 following the company’s assessment of forward natural gas prices and the impact on estimated future cash flows.

​

(4)

In 2019, the company recorded a $70 million deferred income tax recovery in the E&P segment associated with the Government of Alberta’s substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.

​

(5)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Bridge Analysis of Adjusted Operating Earnings ($ millions)(1)

(1)

For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Annual Report 2021   Suncor Energy Inc.   35

Segment Results and Analysis

​

Year ended December 31

​

​

2021

​

​

2020

​

​

2019

​

​

E&P Canada (mbbls/d)

​

​

​

​

54.4

​

​

​

​

​

59.7

​

​

​

​

​

59.9

​

​

​

​

E&P International (mboe/d)

​

​

​

​

33.1

​

​

​

​

​

42.0

​

​

​

​

​

46.9

​

​

​

Total production (mboe/d)

​

​

​

​

87.5

​

​

​

​

​

101.7

​

​

​

​

​

106.8

​

​

​

Total sales volumes (mboe/d)

​

​

​

​

82.8

​

​

​

​

​

102.6

​

​

​

​

​

106.0

​

​

​

Year ended December 31 Net of transportation costs, but before royalties

​

​

2021

​

​

2020

​

​

2019

​

​

E&P Canada – Crude oil and natural gas liquids ($/bbl)

​

​

​

​

84.70

​

​

​

​

​

49.69

​

​

​

​

​

84.86

​

​

​

​

E&P International(2) ($/boe)

​

​

​

​

82.16

​

​

​

​

​

50.28

​

​

​

​

​

81.22

​

​

(1)

Source: Canada Energy Regulator – https://www.cer-rec.gc.ca/en/data-analysis/energy-commodities/crude-oil-petroleum-products/statistics/ weekly-crude-run-summary-data/index.html.

​

36   Annual Report 2021   Suncor Energy Inc.

(1)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

The estimated impact of the LIFO method is a non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(3)

Based on Kent (a Kalibrate company) survey data for year-end 2020.

​

Annual Report 2021   Suncor Energy Inc.   37

Segment Results and Analysis

Financial Highlights

​

(1)

Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

(2)

In 2019, the company recorded an $88 million deferred income tax recovery in the R&M segment associated with the Government of Alberta’s substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.

​

(3)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Bridge Analysis of Adjusted Operating Earnings ($ millions)(1)(2)

(1)

For an explanation of the construction of this bridge analysis, see the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

Beginning in 2021, the company revised its calculation of adjusted operating earnings, a non-GAAP financial measure, to exclude unrealized (gains) losses on derivative financial instruments that are recorded at fair value in other income (loss) to better align the earnings impact of the activity with the underlying items being risk-managed. Prior period comparatives have been restated to reflect this change.

​

38   Annual Report 2021   Suncor Energy Inc.

​

Year ended December 31

​

​

2021

​

​

2020

​

​

2019

​

​

Crude oil processed (mbbls/d)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Eastern North America

​

​

​

​

202.8

​

​

​

​

​

201.0

​

​

​

​

​

203.3

​

​

​

​

Western North America

​

​

​

​

212.7

​

​

​

​

​

206.0

​

​

​

​

​

235.6

​

​

​

Total

​

​

​

​

415.5

​

​

​

​

​

407.0

​

​

​

​

​

438.9

​

​

​

Refinery utilization(1)(2) (%)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Eastern North America

​

​

​

​

91

​

​

​

​

​

91

​

​

​

​

​

92

​

​

​

​

Western North America

​

​

​

​

87

​

​

​

​

​

86

​

​

​

​

​

98

​

​

​

Total

​

​

​

​

89

​

​

​

​

​

88

​

​

​

​

​

95

​

​

​

Refined product sales (mbbls/d)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gasoline

​

​

​

​

225.8

​

​

​

​

​

214.1

​

​

​

​

​

246.6

​

​

​

​

Distillate(3)

​

​

​

​

228.5

​

​

​

​

​

215.7

​

​

​

​

​

218.1

​

​

​

​

Other

​

​

​

​

74.1

​

​

​

​

​

73.6

​

​

​

​

​

74.7

​

​

​

Total

​

​

​

​

528.4

​

​

​

​

​

503.4

​

​

​

​

​

539.4

​

​

​

Refining and marketing gross margin – FIFO(4)(5) ($/bbl)

​

​

​

​

36.85

​

​

​

​

​

25.30

​

​

​

​

​

40.45

​

​

​

​

Refining and marketing gross margin – LIFO(4)(5) ($/bbl)

​

​

​

​

30.90

​

​

​

​

​

28.65

​

​

​

​

​

36.80

​

​

​

​

Refining operating expense(5) ($/bbl)

​

​

​

​

5.95

​

​

​

​

​

5.50

​

​

​

​

​

5.35

​

​

(1)

Contains non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

(2)

The estimated impact of the LIFO method is a non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

Annual Report 2021   Suncor Energy Inc.   39

Segment Results and Analysis

   

(1)

Non-GAAP financial measure. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

40   Annual Report 2021   Suncor Energy Inc.

Financial Highlights

​

(1)

In 2019, the company recorded a $48 million deferred income tax recovery associated with the Government of Alberta’s substantive enactment of legislation for the staged reduction of the corporate income tax rate from 12% to 8%.

​

(2)

Non-GAAP financial measures. See the Advisories – Non-GAAP Financial Measures section of this MD&A.

​

​

Year ended December 31

​

​

2021

​

​

2020

​

​

2019

​

​

Renewable Energy power generation marketed (gigawatt hours)(1)

​

​

​

​

183

​

​

​

​

​

200

​

​

​

​

​

184

​

​

Annual Report 2021   Suncor Energy Inc.   41

5. Fourth Quarter 2021 Analysis

​

Three months ended December 31 ($ millions, except as noted)

​

​

2021

​

​

2020

​

​

Net earnings (loss)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil Sands

​

​

​

​

896

​

​

​

​

​

(293)

​

​

​

​

Exploration and Production

​

​

​

​

465

​

​

​

​

​

(379)

​

​

​

​

Refining and Marketing

​

​

​

​

450

​

​

​

​

​

268

​

​

​

​

Corporate and Eliminations

​

​

​

​

(258)

​

​

​

​

​

236

​

​

​

Total

​

​

​

​

1 553

​

​

​

​

​

(168)

​

​

​

Adjusted operating earnings (loss)(1)(2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil Sands

​

​

​

​

898

​

​

​

​

​

(130)

​

​

​

​

Exploration and Production

​

​

​

​

238

​

​

​

​

​

44

​

​

​

​

Refining and Marketing

​

​

​

​

437

​

​

​

​

​

280

​

​

​

​

Corporate and Eliminations

​

​

​

​

(279)

​

​

​

​

​

(303)

​

​

​

Total

​

​

​

​

1 294

​

​

​

​

​

(109)

​

​

​

Adjusted funds from (used in) operations(1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil Sands

​

​

​

​

2 175

​

​

​

​

​

729

​

​

​

​

Exploration and Production

​

​

​

​

425

​

​

​

​

​

312

​

​

​

​

Refining and Marketing

​

​

​

​

765

​

​

​

​

​

415

​

​

​

​

Corporate and Eliminations

​

​

​

​

(221)

​

​

​

​

​

(235)

​

​

​

Total adjusted funds from operations

​

​

​

​

3 144

​

​

​

​

​

1 221

​

​

​

​

Changes in non-cash working capital

​

​

​

​

(529)

​

​

​

​

​

(407)

​

​

​

Cash flow provided by operating activities

​

​

​

​

2 615

​

​

​

​

​

814

​

​

​

Production volumes (mboe/d)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil Sands – Upgraded – net SCO and diesel

​

​

​

​

515.0

​

​

​

​

​

514.3

​

​

​

​

Oil Sands – Non-upgraded bitumen

​

​

​

​

150.9

​

​

​

​

​

157.2

​

​

​

​

Exploration and Production

​

​

​

​

77.4

​

​

​

​

​

97.7

​

​

​

Total

​

​

​

​

743.3

​

​

​

​

​

769.2

​

​