EX-99.2 3 a2217200zex-99_2.htm EXHIBIT 99.2
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EXHIBIT 99.2

Management's Discussion and Analysis for the third quarter ended September 30, 2013

MANAGEMENT'S DISCUSSION AND ANALYSIS
October 30, 2013

This Management's Discussion and Analysis (MD&A) should be read in conjunction with Suncor's unaudited interim Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2013, Suncor's audited Consolidated Financial Statements for the year ended December 31, 2012 and Suncor's MD&A for the year ended December 31, 2012 (the 2012 annual MD&A).

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 March 1, 2013 (the 2012 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 our website www.suncor.com. Information contained in or otherwise accessible through our website does not form part of this MD&A, and is not incorporated into this MD&A by reference.

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 otherwise requires.

Table of Contents

1. |  | Advisories |  | 9 |  |
2. |  | Third Quarter Highlights |  | 11 |  |
3. |  | Suncor Overview |  | 13 |  |
4. |  | Consolidated Financial Information |  | 15 |  |
5. |  | Segment Results and Analysis |  | 20 |  |
6. |  | Capital Investment Update |  | 35 |  |
7. |  | Financial Condition and Liquidity |  | 38 |  |
8. |  | Quarterly Financial Data |  | 42 |  |
9. |  | Other Items |  | 44 |  |
10. |  | Non-GAAP Financial Measures Advisory |  | 47 |  |
11. |  | Forward-Looking Information |  | 51 |  |

1. ADVISORIES

Basis of Presentation

Unless otherwise noted, all financial information has been prepared in accordance with Canadian generally accepted accounting principles (GAAP), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board, which is within the framework of International Financial Reporting Standards (IFRS).

Effective January 1, 2013, Suncor adopted new and amended accounting standards, described in the Other Items section of this MD&A. Comparative figures presented in this MD&A pertaining to Suncor's 2012 results have been restated while comparative figures pertaining to Suncor's 2011 results have not been restated in accordance with the respective transitional provisions of the new and amended standards.

All financial information is reported in Canadian dollars, unless otherwise noted. Production volumes are presented on a working-interest basis, before royalties, unless otherwise noted. Certain prior year amounts in the Consolidated Statements of Comprehensive Income have been reclassified to conform to the current year's presentation.

Suncor Energy Inc.
2013 Third Quarter 009

Non-GAAP Financial Measures

Certain financial measures in this MD&A – namely operating earnings, cash flow from operations, return on capital employed (ROCE) and Oil Sands cash operating costs – are not prescribed by GAAP. Operating earnings and Oil Sands cash operating costs are defined in the Non-GAAP Financial Measures Advisory section of this MD&A and reconciled to GAAP measures in the Segment Results and Analysis section of this MD&A. Cash flow from operations and ROCE are defined and reconciled to GAAP measures in the Non-GAAP Financial Measures Advisory section of this MD&A.

These non-GAAP financial measures are included because management uses this information to analyze operating performance, leverage and liquidity. 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.

Common Abbreviations

The following is a list of abbreviations that may be used in this MD&A:

Measurement
bbl |  | barrel
bbls/d |  | barrels per day
mbbls/d |  | thousands of barrels per day
boe |  | barrels of oil equivalent
boe/d |  | barrels of oil equivalent per day
mboe |  | thousands of barrels of oil equivalent
mboe/d |  | thousands of barrels of oil equivalent per day
mcf |  | thousands of cubic feet of natural gas
mcfe |  | thousands of cubic feet of natural gas equivalent
mmcf |  | millions of cubic feet of natural gas
mmcf/d |  | millions of cubic feet of natural gas per day
mmcfe |  | millions of cubic feet of natural gas equivalent
mmcfe/d |  | millions of cubic feet of natural gas equivalent per day
m3 |  | cubic metres
m3/d |  | cubic metres per day
MW |  | megawatts
Places and Currencies
U.S. |  | United States
U.K. |  | United Kingdom
B.C. |  | British Columbia
$ or Cdn$ |  | Canadian dollars
US$ |  | United States dollars
£ |  | Pounds sterling
€ |  | Euros
Financial and Business Environment
Q3 |  | Three months ended September 30
DD&A |  | Depreciation, depletion and amortization
WTI |  | West Texas Intermediate
WCS |  | Western Canadian Select
SCO |  | Synthetic crude oil
NYMEX |  | New York Mercantile Exchange

Risk Factors and Forward-Looking Information

The company's financial and operational performance is potentially affected by a number of factors, including, but not limited to: the volatility of commodity prices and exchange rate fluctuations; government regulation, including changes to royalty and income tax legislation; environmental regulation, including changes to climate change and reclamation legislation; risks associated with operating in foreign countries, including geopolitical and other political risks; operating hazards and other uncertainties, including extreme weather conditions, fires, explosions and oil spills; risks associated with the execution of major projects; reputational risk; permit approval; labour and materials supply; and other factors described within the Forward-Looking Information section of this MD&A. A more detailed discussion of the risk factors affecting the company is presented in the Risk Factors section of the 2012 annual MD&A.

Suncor Energy Inc.
010 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

This MD&A contains forward-looking information based on Suncor's current expectations, estimates, projections and assumptions. This information is subject to a number of risks and uncertainties, including those discussed in this MD&A and Suncor's other disclosure documents, many of which are beyond the company's control. Users of this information are cautioned that actual results may differ materially. Refer to the Forward-Looking Information section of this MD&A for information on the material risk factors and assumptions underlying our forward-looking information.

Measurement Conversions

Certain crude oil and natural gas liquids volumes have been converted to mcfe or mmcfe 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. Any figure presented in mcfe, mmcfe, boe or mboe may be misleading, particularly if used in isolation. A conversion ratio of one bbl of crude oil or natural gas liquids to six mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, conversion on a 6:1 basis may be misleading as an indication of value.

2. THIRD QUARTER HIGHLIGHTS

•
  Third quarter financial results.
  •
    Consolidated net earnings for the third quarter of 2013 were $1.694 billion, compared to $1.544 billion for the third quarter of 2012. Net earnings for the quarter included an after-tax gain of $130 million related to the sale of a significant portion of the company's natural gas business in Western Canada and an after-tax foreign exchange gain on the revaluation of U.S. denominated debt of $138 million, compared to $252 million in the prior year quarter, in addition to the factors that affected operating earnings.
  •
    Operating earnings (1) for the third quarter of 2013 were $1.426 billion, compared to $1.292 billion for the third quarter of 2012. Operating earnings included a record for the Oil Sands segment driven by favourable pricing and record production, in addition to higher production volumes in Exploration and Production, partially offset by lower refining margins and higher overall expenses.
  •
    Cash flow from operations (1) was $2.528 billion for the third quarter of 2013, compared to $2.743 billion for the third quarter of 2012, and included incremental current income tax expense related to the company's Canadian operations in addition to the factors that impacted operating earnings.
  •
    ROCE (1) (excluding major projects in progress) for the twelve months ended September 30, 2013 was 8.6%, compared to 12.4% for the twelve months ended September 30, 2012. ROCE for the twelve months ended September 30, 2013 was reduced by 4.3% due to the after-tax impairment charge of $1.487 billion relating to the Voyageur upgrader project recorded in the fourth quarter of 2012, in addition to an after-tax charge of $127 million recorded in the first quarter of 2013 as a result of not proceeding with the project.
•
  Record Oil Sands results driven by successful debottlenecking activities and the ongoing ramp up at Firebag. Production volumes for Oil Sands operations reached a record quarterly average of 396,400 bbls/d in the third quarter of 2013, compared to 341,300 bbls/d in the third quarter of 2012. Bitumen production at Firebag continued to ramp up and increased 35% over the prior year quarter to 152,700 bbls/d from 113,000 bbls/d in the third quarter of 2012. The

(1)
  Operating earnings, cash flow from operations and ROCE are non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Suncor Energy Inc.
2013 Third Quarter 011

commissioning of the hot bitumen infrastructure and diluent import strategy in mid-July also contributed to the step change in production by increasing the takeaway capacity of bitumen and unlocking production in mining.

•
  The Fort Hills oil sands mining project receives sanction. On October 30, 2013, Suncor announced that the project co-owners voted unanimously to proceed with the Fort Hills oil sands mining project. Suncor has a 40.8% interest and is the developer and operator of the project. The project is scheduled to produce first oil as early as the fourth quarter of 2017 and achieve 90% of its planned production capacity of 180,000 bbls/d within twelve months. With best estimate contingent resources of approximately 3.3 billion barrels, the mine life is expected to be in excess of 50 years at the current planned production rate.
•
  The integrated model provides the foundation for solid third quarter results. The integrated model enabled the company to capture the recent strength in inland crude oil pricing through its Oil Sands operations while continuing to realize incremental profit by obtaining global-based pricing through its refining operations and the company's vast logistics network.
•
  Completion of major planned maintenance activities in Oil Sands operations sets the stage for a strong fourth quarter. The increase in bitumen production was complemented by strong upgrading reliability following the seven-week planned turnaround of Upgrader 1 in the second quarter of 2013, which contributed to a monthly production record of 433,000 bbls/d in the month of August. Late in the quarter, Suncor executed the last major planned maintenance event of the year at its Upgrader 2 vacuum tower and related units, which was successfully completed in October.
•
  Suncor continues to expand its logistics network, increasing market access and takeaway capacity. Suncor continues activities to secure market access into Canadian and U.S. coastal markets, positioning the company to capture global prices on both its current production and future growth. By early 2014, the company expects to increase its heavy crude shipping capacity to the U.S. Gulf Coast through the Keystone South pipeline, resulting in added logistics and marketing flexibility. Suncor expects to meet linefill requirements on the pipeline in the fourth quarter of 2013. During the quarter, the company also entered into firm commitments for rail cars and terminalling services in support of its market access strategy to transport inland crudes to its Montreal refinery and to coastal markets. This strategy includes a rail offloading facility in Montreal, expected to take delivery of crude starting in the fourth quarter of 2013.
•
  Suncor completes the sale of a significant portion of its natural gas business in Western Canada. The transaction closed on September 26, 2013 for proceeds of $1 billion, before closing adjustments and other closing costs, resulting in an after-tax gain on sale of $130 million.
•
  Suncor continues to return cash to shareholders. During the quarter, Suncor returned $299 million to shareholders through dividends, reflecting the 54% increase announced in the first quarter of 2013 and $426 million through share repurchases.

Suncor Energy Inc.
012 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

3. SUNCOR OVERVIEW

Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. We are strategically focused on developing one of the world's largest petroleum resource basins – Canada's Athabasca oil sands. In addition, we explore for, acquire, develop, produce and market crude oil and natural gas in Canada and internationally, and we transport and refine crude oil and market, both proprietary and periodically, third-party petroleum and petrochemical products primarily in Canada. We also conduct energy trading activities focused principally on the marketing and trading of crude oil, natural gas and byproducts.

OIL SANDS

Suncor's Oil Sands segment, with assets located in the Wood Buffalo region of northeast Alberta, recovers bitumen from mining and in situ operations and upgrades the majority of this production into SCO for refinery feedstock and diesel fuel. The Oil Sands segment includes:

•
  Oil Sands operations refer to Suncor's wholly owned and operated mining, extraction, upgrading and in situ assets in the Athabasca oil sands. Oil Sands operations consist of:
  •
    Oil Sands Base operations include the Millennium and North Steepbank mining and extraction operations, integrated upgrading facilities known as Upgrader 1 and Upgrader 2, and the associated infrastructure for these assets – including utilities, energy and reclamation facilities, such as Suncor's tailings management (TROTM) assets.
  •
    In Situ operations include oil sands bitumen production from Firebag and MacKay River and supporting infrastructure, such as central processing facilities and cogeneration units. In Situ production is either upgraded by Oil Sands Base or blended with diluent and marketed directly to customers.
•
  Oil Sands Ventures assets include the company's interests in significant growth projects, including its 40.8% interest in the Fort Hills mining project where Suncor is the operator, its 36.75% interest in the Joslyn North mining project, and its 12.0% interest in the Syncrude oil sands mining and upgrading operation. Oil Sands Ventures also includes certain midstream assets, including a hot bitumen blending facility and tankage that are intended to support growth in Oil Sands operations.

EXPLORATION AND PRODUCTION

Suncor's Exploration and Production segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore operations in North America, Libya and Syria.

•
  East Coast Canada operations include Suncor's 37.675% working interest in Terra Nova, which Suncor operates. Suncor also holds a 20.0% interest in the Hibernia base project and a 19.5% interest in the Hibernia Southern Extension Unit (HSEU), a 27.5% interest in the White Rose base project and a 26.125% interest in the White Rose Extensions, and a 22.729% interest in Hebron, all of which are operated by other companies.
•
  International operations include Suncor's 29.89% working interest in Buzzard and its 26.69% interest in the Golden Eagle Area Development (Golden Eagle), both in the U.K. sector of the North Sea and are not operated by Suncor. Suncor also holds interests in several exploration licences offshore the U.K. and Norway. Pursuant to Exploration and Production Sharing Agreements (EPSAs), Suncor owns working interests in the exploration and development of oilfields in the Sirte Basin in Libya. Suncor also owns, pursuant to a Production Sharing Contract (PSC), an interest in the Ebla gas project in the Ash Shaer and Cherrife areas in Syria. Due to unrest in Syria, the company has declared force majeure under its contractual obligations, and Suncor's operations in Syria have been suspended indefinitely.

Suncor Energy Inc.
2013 Third Quarter 013

•
  North America Onshore operations include Suncor's interests in unconventional natural gas and crude oil assets, primarily in Western Canada, including natural gas properties in the Kobes region of B.C. and crude oil properties in the Wilson Creek area of central Alberta.

REFINING AND MARKETING

Suncor's Refining and Marketing segment consists of two primary operations:

•
  Refining and Product Supply operations refine crude oil into a broad range of petroleum and petrochemical products. Eastern North America operations include refineries located in Montreal, Québec, and Sarnia, Ontario, and a lubricants business located in Mississauga, Ontario, that manufactures, blends and markets products worldwide. Western North America operations include refineries located in Edmonton, Alberta, and Commerce City, Colorado. Other Refining and Product Supply assets include interests in a petrochemical plant, pipelines and product terminals in Canada and the U.S.
•
  Downstream Marketing operations sell refined petroleum products and lubricants to retail, commercial and industrial customers through a combination of company-owned, branded-dealer and other retail stations in Canada and Colorado, a nationwide commercial road transport network in Canada, and a bulk sales channel in Canada.

CORPORATE, ENERGY TRADING AND ELIMINATIONS

The grouping Corporate, Energy Trading and Eliminations includes the company's investments in renewable energy projects, results related to energy supply and trading activities, and other activities not directly attributable to any other operating segment.

•
  Renewable Energy interests include six operating wind power projects across Canada, two wind power projects under development in Ontario, and the St. Clair ethanol plant in Ontario.
•
  Energy Trading activities primarily involve the marketing, supply and trading of crude oil, natural gas and byproducts, and the use of midstream infrastructure and financial derivatives to optimize related trading strategies.
•
  Corporate activities include stewardship of Suncor's debt and borrowing costs, expenses not allocated to the company's businesses, and the company's captive insurance activities that self-insure a portion of the company's asset base.
•
  Intersegment revenues and expenses are removed from consolidated results in Group Eliminations. Intersegment activity includes the sale of diesel and crude oil feedstock by the Oil Sands segment and the sale of crude oil feedstock by the Exploration and Production segment to the Refining and Marketing segment, the sale of fuels and lubricants by the Refining and Marketing segment to the Oil Sands segment, the sale of ethanol by the Renewable Energy business to the Refining and Marketing segment, and the provision of insurance for a portion of the company's operations by the Corporate captive insurance entity.

Suncor Energy Inc.
014 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

4. CONSOLIDATED FINANCIAL INFORMATION

Financial Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands |  |  | 951 |  |  | 537 |  |  | 1 571 |  |  | 1 505 |  |
Exploration and Production |  |  | 446 |  |  | 88 |  |  | 1 101 |  |  | (10 | ) |
Refining and Marketing |  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 687 |  |
Corporate, Energy Trading and Eliminations |  |  | (53 | ) |  | 209 |  |  | (768 | ) |  | 132 |  |
Total |  |  | 1 694 |  |  | 1 544 |  |  | 3 468 |  |  | 3 314 |  |
Operating earnings (loss) (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands |  |  | 951 |  |  | 537 |  |  | 1 698 |  |  | 1 575 |  |
Exploration and Production |  |  | 316 |  |  | 88 |  |  | 971 |  |  | 707 |  |
Refining and Marketing |  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 702 |  |
Corporate, Energy Trading and Eliminations |  |  | (191 | ) |  | (43 | ) |  | (506 | ) |  | (125 | ) |
Total |  |  | 1 426 |  |  | 1 292 |  |  | 3 727 |  |  | 3 859 |  |
Cash flow from (used in) operations (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands |  |  | 1 702 |  |  | 1 256 |  |  | 3 446 |  |  | 3 317 |  |
Exploration and Production |  |  | 406 |  |  | 365 |  |  | 1 764 |  |  | 1 698 |  |
Refining and Marketing |  |  | 371 |  |  | 1 063 |  |  | 2 084 |  |  | 2 504 |  |
Corporate, Energy Trading and Eliminations |  |  | 49 |  |  | 59 |  |  | (232 | ) |  | (14 | ) |
Total |  |  | 2 528 |  |  | 2 743 |  |  | 7 062 |  |  | 7 505 |  |

(1)
  Non-GAAP financial measures. Operating earnings are reconciled to net earnings below. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Operating Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Production volumes by segment |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands (mbbls/d) |  |  | 423.6 |  |  | 378.9 |  |  | 374.3 |  |  | 352.7 |  |
Exploration and Production (mboe/d) |  |  | 171.4 |  |  | 156.4 |  |  | 189.8 |  |  | 193.8 |  |
Total |  |  | 595.0 |  |  | 535.3 |  |  | 564.1 |  |  | 546.5 |  |
Production mix |  |  |  |  |  |  |  |  |  |  |  |  |  |
Crude oil and liquids / natural gas (%) |  |  | 93/7 |  |  | 91/9 |  |  | 92/8 |  |  | 91/9 |  |
Refinery utilization (%) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eastern North America |  |  | 93 |  |  | 92 |  |  | 94 |  |  | 88 |  |
Western North America |  |  | 102 |  |  | 101 |  |  | 95 |  |  | 100 |  |
Total |  |  | 98 |  |  | 97 |  |  | 95 |  |  | 94 |  |
Average price realizations by segment |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands ($/bbl) |  |  | 99.39 |  |  | 81.72 |  |  | 88.68 |  |  | 84.50 |  |
Exploration and Production ($/mboe) |  |  | 88.74 |  |  | 77.33 |  |  | 87.81 |  |  | 84.15 |  |

Suncor Energy Inc.
2013 Third Quarter 015

Net Earnings

Suncor's consolidated net earnings for the third quarter of 2013 were $1.694 billion, compared to $1.544 billion for the third quarter of 2012. Net earnings for the first nine months of 2013 were $3.468 billion, compared to $3.314 billion for the first nine months of 2012. Net earnings were primarily affected by the same factors that influenced operating earnings described subsequently in this section of the MD&A. Other items affecting net earnings over these periods include:

•
  The after-tax unrealized foreign exchange gain on the revaluation of U.S. dollar denominated debt was $138 million for the third quarter of 2013 and an after-tax unrealized foreign exchange loss of $262 million for the first nine months of 2013. The after-tax unrealized foreign exchange gain on the revaluation of U.S. dollar denominated debt was $252 million in the third quarter of 2012 and $237 million for the first nine months of 2012.
•
  In the third quarter of 2013, the company recorded an after-tax gain of $130 million relating to the sale of a significant portion of its natural gas business in Western Canada.
•
  In the first quarter of 2013, the company recorded an after-tax charge of $127 million as a result of not proceeding with the Voyageur upgrader project, which included costs related to decommissioning and restoration of the Voyageur site, and contract cancellations.
•
  In the second quarter of 2012, the company recorded after-tax impairment charges and write-offs of $694 million against the company's Syrian assets.
•
  In the second quarter of 2012, the company recorded a deferred tax charge of $88 million relating to an income tax rate change.

Operating Earnings

Operating Earnings Reconciliation (1)

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings as reported |  |  | 1 694 |  |  | 1 544 |  |  | 3 468 |  |  | 3 314 |  |
Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt |  |  | (138 | ) |  | (252 | ) |  | 262 |  |  | (237 | ) |
Gain on significant disposals |  |  | (130 | ) |  | — |  |  | (130 | ) |  | — |  |
Net impact of not proceeding with the Voyageur upgrader project |  |  | — |  |  | — |  |  | 127 |  |  | — |  |
Impairments and write-offs |  |  | — |  |  | — |  |  | — |  |  | 694 |  |
Impact of income tax rate adjustments on deferred income taxes |  |  | — |  |  | — |  |  | — |  |  | 88 |  |
Operating earnings |  |  | 1 426 |  |  | 1 292 |  |  | 3 727 |  |  | 3 859 |  |

(1)
  Operating earnings is a non-GAAP financial measure. All reconciling items are presented on an after-tax basis. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Suncor Energy Inc.
016 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

(1)
  Factors represent after-tax variances and include the impacts of operating earnings adjustments. These factors are analyzed in the narrative following this bridge analysis. This bridge analysis is provided because management uses this presentation to analyze performance.
(2)
  Calculated based on production volumes.
(3)
  Includes upstream price realizations before royalties, refining and marketing margins, other operating revenues, and the net impacts of sales and purchases of third-party crude.
(4)
  The Inventory variance factor reflects the opportunity cost of building production volumes in inventory or the additional margin earned by drawing down inventory produced in previous periods. The calculation of the Inventory variance factor in this bridge analysis permits the company to present the Volumes variance factor based on production volumes, rather than based on sales volumes.
(5)
  The Operating Expense factor includes transportation expense, project start-up costs, and operating, selling and general expense (adjusted for impacts of changes in inventory).
(6)
  This factor also includes operational foreign exchange gains and losses, changes in gains and losses on disposal of assets that are not operating earnings adjustments, impacts of changes in effective income tax rates, and other income tax adjustments.

Suncor's consolidated operating earnings for the third quarter of 2013 were $1.426 billion, compared to $1.292 billion in the third quarter of 2012. Factors contributing to the increase in operating earnings in the third quarter of 2013, compared to the third quarter of 2012, included:

•
  Average price realizations for crude oil increased in the company's upstream operations, primarily reflecting strength in the WTI benchmark and narrowing light/heavy differentials.
•
  Record average production for the Oil Sands segment of 423,600 bbls/d in the third quarter of 2013, compared to 378,900 bbls/d in the prior year quarter, primarily due to the ongoing ramp up of production at Firebag and commissioning of hot bitumen infrastructure that unlocked production in mining.
•
  Production volumes for the Exploration and Production segment increased to 171,400 boe/d from 156,400 boe/d, primarily due to higher production in East Coast Canada relative to the prior year quarter, which included planned maintenance programs at all East Coast Canada assets, partially offset by lower volumes in Libya due to the shut in of production.

The positive factors noted above were affected by the following:

•
  Refining margins decreased due to lower benchmark crack spreads resulting from the narrowing of the WTI to Brent differential and inland crude differentials, slightly offset by record throughput volumes and an after-tax increase to earnings of approximately $104 million as a result of an increasing crude price environment over the third quarter of 2013, compared to approximately $78 million in the prior year quarter.

Suncor Energy Inc.
2013 Third Quarter 017

•
  DD&A and exploration expenses were higher in the third quarter of 2013, due mainly to higher production volumes and a higher asset base, partially offset by the cessation of DD&A for properties that were classified as assets held for sale in North America Onshore and an exploration write-off in International in the prior year quarter.
•
  Operating expenses were higher in the third quarter of 2013, due to higher incremental costs associated with larger Oil Sands operations, higher natural gas consumption and prices, and higher maintenance costs.
•
  Inventory had a negative impact on earnings in the third quarter of 2013 due to larger builds in both Oil Sands and Exploration and Production, compared to the third quarter of 2012.
•
  Royalties were higher in the third quarter of 2013, due mainly to higher overall upstream production and higher crude oil prices.
•
  Financing Expense and Other Income had a negative impact on earnings in the third quarter of 2013, due primarily to lower capitalized interest and the elimination of intersegment profit, compared to the recognition of profit in the prior year quarter, partially offset by higher earnings from Energy Trading activities and a gain on the revaluation of provisions related to pipeline contracts in North America Onshore.

Suncor's consolidated operating earnings were $3.727 billion for the first nine months of 2013, compared to $3.859 billion for the first nine months of 2012, and decreased primarily due to higher DD&A, higher operating costs and higher financing expenses, partially offset by higher production volumes and higher upstream price realizations.

After-tax share-based compensation expense by segment

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Oil Sands |  |  | 32 |  |  | 71 |  |  | 23 |  |  | 91 |  |
Exploration and Production |  |  | 15 |  |  | 11 |  |  | 25 |  |  | 14 |  |
Refining and Marketing |  |  | 18 |  |  | 37 |  |  | 27 |  |  | 46 |  |
Corporate, Energy Trading and Eliminations |  |  | 91 |  |  | 48 |  |  | 162 |  |  | 99 |  |
Total share-based compensation expense |  |  | 156 |  |  | 167 |  |  | 237 |  |  | 250 |  |

Cash Flow from Operations

Consolidated cash flow from operations was $2.528 billion for the third quarter of 2013 and $7.062 billion for the first nine months of 2013, compared to $2.743 billion for the third quarter of 2012 and $7.505 billion for the first nine months of 2012. Cash flow from operations was impacted by the majority of the factors that affected operating earnings, in addition to incremental current income tax expense related to the company's Canadian operations.

Suncor Energy Inc.
018 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Business Environment

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

|  |  |  |  | Average for three months ended September 30 |  |  | Average for nine months ended September 30 |  |
|  |  |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
WTI crude oil at Cushing |  | US$/bbl |  |  | 105.85 |  |  | 92.20 |  |  | 98.15 |  |  | 96.20 |  |
Dated Brent crude oil at Sullom Voe |  | US$/bbl |  |  | 109.70 |  |  | 109.50 |  |  | 108.55 |  |  | 112.25 |  |
Dated Brent/Maya crude oil FOB price differential |  | US$/bbl |  |  | 10.35 |  |  | 11.90 |  |  | 8.85 |  |  | 10.40 |  |
Canadian 0.3% par crude oil at Edmonton |  | Cdn$/bbl |  |  | 105.25 |  |  | 84.70 |  |  | 95.55 |  |  | 87.30 |  |
WCS at Hardisty |  | US$/bbl |  |  | 88.35 |  |  | 70.45 |  |  | 75.25 |  |  | 74.15 |  |
Light/heavy crude oil differential for WTI at Cushing less WCS at Hardisty |  | US$/bbl |  |  | 17.50 |  |  | 21.75 |  |  | 22.90 |  |  | 22.05 |  |
Condensate at Edmonton |  | US$/bbl |  |  | 103.80 |  |  | 96.00 |  |  | 104.15 |  |  | 101.80 |  |
Natural gas (Alberta spot) at AECO |  | Cdn$/mcf |  |  | 2.80 |  |  | 2.20 |  |  | 3.15 |  |  | 2.20 |  |
New York Harbor 3-2-1 crack (1) |  | US$/bbl |  |  | 19.25 |  |  | 37.80 |  |  | 25.35 |  |  | 31.85 |  |
Chicago 3-2-1 crack (1) |  | US$/bbl |  |  | 15.80 |  |  | 35.15 |  |  | 24.50 |  |  | 27.30 |  |
Portland 3-2-1 crack (1) |  | US$/bbl |  |  | 19.60 |  |  | 38.15 |  |  | 26.90 |  |  | 34.60 |  |
Gulf Coast 3-2-1 crack (1) |  | US$/bbl |  |  | 15.95 |  |  | 33.95 |  |  | 22.90 |  |  | 29.55 |  |
Exchange rate |  | US$/Cdn$ |  |  | 0.96 |  |  | 1.00 |  |  | 0.98 |  |  | 1.00 |  |
Exchange rate (end of period) |  | US$/Cdn$ |  |  | 0.97 |  |  | 1.02 |  |  | 0.97 |  |  | 1.02 |  |

(1)
  3-2-1 crack spreads are indicators of the refining margin generated by converting three barrels of WTI into two barrels 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.

The benchmark price for WTI increased in the third quarter of 2013 while the benchmark price for Brent held relatively constant from the prior year quarter. Although the narrowing of the WTI to Brent differential had a detrimental impact on refining crack spreads, the benefit was realized in the Oil Sands segment with higher pricing for western Canadian crudes.

Suncor's sweet SCO price realizations are influenced primarily by the price of WTI at Cushing and by the supply and demand of sweet SCO from Western Canada. Price realizations for sweet SCO were positively impacted by an increase in the price for WTI to US$105.85/bbl, compared to US$92.20/bbl for the third quarter of 2012. Stronger price realizations for sweet SCO also reflected lower industry supplies of SCO volumes due to planned maintenance by large producers in the third quarter of 2013.

Suncor produces a specific grade of sour SCO, the price realizations for which are influenced by changes to various crude benchmarks including, but not limited to: Canadian par crude at Edmonton and WCS at Hardisty, and which can also be affected by prices negotiated for spot sales. Prices for Canadian par crude at Edmonton and WCS Hardisty increased in the third quarter of 2013 compared to the prior year quarter, resulting in higher price realizations for sour SCO.

Bitumen production that Suncor does not upgrade is blended with diluent (or SCO) to facilitate delivery on pipeline systems to customers. Net bitumen price realizations are, therefore, influenced by both prices for Canadian heavy crude oil (WCS at Hardisty is a common reference) and prices for diluent (Condensate at Edmonton and SCO). Diluent is sourced from the company's own upgrading and refining facilities and from third parties. Bitumen price realizations can also be affected by bitumen quality and spot sales. Prices for WCS at Hardisty increased in the third quarter of 2013 compared to the prior year quarter, resulting in higher price realizations for bitumen.

Suncor Energy Inc.
2013 Third Quarter 019

Suncor's price realizations for production from East Coast Canada and International assets are influenced primarily by the price for Brent crude. Brent crude pricing was relatively consistent with the prior year quarter and averaged US$109.70/bbl compared to US$109.50/bbl in the third quarter of 2012.

Suncor's price realizations for North America Onshore natural gas production are primarily referenced to Alberta spot at AECO. The average AECO benchmark increased to $2.80/mcf in the third quarter of 2013, from $2.20/mcf in the third quarter of 2012.

Suncor's refining margins are influenced primarily by 3-2-1 crack spreads, which are industry indicators approximating the gross margin on a barrel of crude oil that is refined to produce gasoline and distillates and by light/heavy and light/sour crude differentials, which indicate when more complex refineries can earn greater margins by processing less expensive, heavier crudes. Crack spreads do not necessarily reflect the margins of a specific refinery. Specific refinery margins are further impacted by actual crude purchase costs, refinery configuration and refined product sales markets unique to that refinery. In the third quarter of 2013, crack spreads declined significantly, which were reflected in lower refining margins over the prior year quarter.

The majority of Suncor's revenues from the sale of oil and natural gas commodities are based on prices that are determined by, or referenced to, U.S. dollar benchmark prices. The majority of Suncor's expenditures are realized in Canadian dollars. An increase in the value of the Canadian dollar relative to the U.S. dollar will decrease revenue received from the sale of commodities. A decrease in the value of the Canadian dollar relative to the U.S. dollar will increase the revenues received from the sale of commodities.

Conversely, many of Suncor's assets and liabilities, notably most of the company's debt, are denominated in U.S. dollars and translated to Suncor's reporting currency (Canadian dollars) at each balance sheet date. A decrease in the value of the Canadian dollar relative to the U.S. dollar from the previous balance sheet date increases the amount of Canadian dollars required to settle U.S. dollar denominated obligations.

5. SEGMENT RESULTS AND ANALYSIS

OIL SANDS

Financial Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Gross revenues |  |  | 3 904 |  |  | 3 052 |  |  | 9 652 |  |  | 8 777 |  |
Less: Royalties |  |  | (392 | ) |  | (262 | ) |  | (658 | ) |  | (619 | ) |
Operating revenues, net of royalties |  |  | 3 512 |  |  | 2 790 |  |  | 8 994 |  |  | 8 158 |  |
Net earnings |  |  | 951 |  |  | 537 |  |  | 1 571 |  |  | 1 505 |  |
Operating earnings (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands operations |  |  | 883 |  |  | 478 |  |  | 1 519 |  |  | 1 421 |  |
Oil Sands Ventures |  |  | 68 |  |  | 59 |  |  | 179 |  |  | 154 |  |
|  |  | 951 |  |  | 537 |  |  | 1 698 |  |  | 1 575 |  |
Cash flow from operations (1) |  |  | 1 702 |  |  | 1 256 |  |  | 3 446 |  |  | 3 317 |  |

(1)
  Non-GAAP financial measures. Operating earnings are reconciled to net earnings below. See the Non-GAAP Financial Measures Advisory section of this MD&A.

For the third quarter of 2013, Oil Sands segment net and operating earnings were $951 million, compared with net and operating earnings of $537 million for the third quarter of 2012.

Suncor Energy Inc.
020 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Oil Sands operations contributed $883 million of operating earnings, while Oil Sands Ventures contributed $68 million. Operating earnings for Oil Sands operations were the highest on record due to higher average price realizations, which included the impacts of a strengthening U.S. dollar relative to the Canadian dollar, and higher production volumes. Operating earnings for Oil Sands Ventures increased for the third quarter of 2013, primarily due to higher price realizations, lower royalty expense and a decrease in operating expenses, as the prior year quarter included operating expenses related to the Voyageur upgrader project, partially offset by lower production volumes.

Cash flow from operations for the Oil Sands segment in the third quarter of 2013 was $1.702 billion, compared to $1.256 billion in the third quarter of 2012, and increased due to the same factors that impacted operating earnings, partially offset by incremental current income tax expense recorded in the quarter.

Operating Earnings

Operating Earnings Reconciliation

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings as reported |  |  | 951 |  |  | 537 |  |  | 1 571 |  |  | 1 505 |  |
Net impact of not proceeding with the Voyageur upgrader project |  |  | — |  |  | — |  |  | 127 |  |  | — |  |
Impact of income tax rate adjustments on deferred income taxes |  |  | — |  |  | — |  |  | — |  |  | 70 |  |
Operating earnings (1) |  |  | 951 |  |  | 537 |  |  | 1 698 |  |  | 1 575 |  |

(1)
  Non-GAAP financial measure. See the Non-GAAP Financial Measures Advisory section of this MD&A.

(1)
  Factors represent after-tax variances and include the impacts of operating earnings adjustments. These factors are analyzed in the narrative following this bridge analysis. This bridge analysis is provided because management uses this presentation to analyze performance.
(2)
  Includes price realizations before royalties, other operating revenues and the net impacts of sales and purchases of third-party crude.
(3)
  The Inventory variance factor reflects the opportunity cost of building production volumes in inventory or the additional margin earned by drawing down inventory produced in previous periods. The calculation of the Inventory variance factor in this bridge analysis permits the company to present the Volume variance factor based on production volumes, rather than based on sales volumes.

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2013 Third Quarter 021

(4)
  The Operating Expense factor includes transportation expense, project start-up costs, and operating, selling and general expense (adjusted for impacts of changes in inventory).
(5)
  This factor also includes operational foreign exchange gains and losses, changes in gains and losses on disposal of assets that are not operating earnings adjustments, impacts of changes in effective income tax rates, and other income tax adjustments.

Production Volumes (1)

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
(mbbls/d) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Upgraded product (sweet SCO, sour SCO and diesel) |  |  | 299.0 |  |  | 298.3 |  |  | 275.9 |  |  | 275.2 |  |
Non-upgraded bitumen |  |  | 97.4 |  |  | 43.0 |  |  | 68.0 |  |  | 43.6 |  |
Oil Sands |  |  | 396.4 |  |  | 341.3 |  |  | 343.9 |  |  | 318.8 |  |
Oil Sands Ventures – Syncrude |  |  | 27.2 |  |  | 37.6 |  |  | 30.4 |  |  | 33.9 |  |
Total |  |  | 423.6 |  |  | 378.9 |  |  | 374.3 |  |  | 352.7 |  |

(1)
  Bitumen production from Oil Sands Base operations is upgraded, while bitumen production from In Situ operations is either upgraded or sold directly to customers, including Suncor's own refineries. Yields of SCO and diesel from Suncor's upgrading process average approximately 79% of bitumen feedstock input.

Bitumen Production

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Oil Sands Base |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bitumen production (mbbls/d) |  |  | 299.9 |  |  | 287.6 |  |  | 253.4 |  |  | 265.1 |  |
Bitumen ore mined (thousands of tonnes per day) |  |  | 463.4 |  |  | 443.7 |  |  | 392.7 |  |  | 414.6 |  |
Bitumen ore grade quality (bbls/tonne) |  |  | 0.65 |  |  | 0.65 |  |  | 0.65 |  |  | 0.64 |  |
In Situ |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bitumen production – Firebag (mbbls/d) |  |  | 152.7 |  |  | 113.0 |  |  | 139.7 |  |  | 97.5 |  |
Bitumen production – MacKay River (mbbls/d) |  |  | 29.2 |  |  | 17.0 |  |  | 28.6 |  |  | 26.6 |  |
Total In Situ bitumen production |  |  | 181.9 |  |  | 130.0 |  |  | 168.3 |  |  | 124.1 |  |
Steam-to-oil ratio – Firebag |  |  | 3.3 |  |  | 3.2 |  |  | 3.4 |  |  | 3.4 |  |
Steam-to-oil ratio – MacKay River |  |  | 2.5 |  |  | 2.2 |  |  | 2.5 |  |  | 2.3 |  |

Production volumes for Oil Sands operations reached a record average of 396,400 bbls/d in the third quarter of 2013, compared to 341,300 bbls/d in the prior year quarter, primarily due to the ongoing ramp up of production at Firebag and the commissioning of new infrastructure and logistics capability. Production levels were fully restored by mid-July following the restart of third-party pipelines that underwent precautionary shutdowns in the latter half of June in response to flooding in northern Alberta. Shortly thereafter, the company commissioned hot bitumen infrastructure that enabled the company to unlock constrained mining capacity, contributing to a monthly production record in July of 389,800 bbls/d and again in August of 433,000 bbls/d. This group of assets – comprised of an insulated pipeline from Firebag to Suncor's Athabasca terminal, bitumen cooling and blending facilities, and capacity to import third-party diluents – has increased the takeaway capacity of non-upgraded bitumen.

The increase in bitumen supply was complemented by strong upgrading reliability in the quarter. Production of upgraded product averaged 299,000 bbls/d in the third quarter of 2013, compared to 298,300 bbls/d in the prior year quarter, reflecting strong reliability following the Upgrader 1 turnaround in the second quarter of 2013, offset by planned

Suncor Energy Inc.
022 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

maintenance of the Upgrader 2 vacuum tower and related units that commenced in September and was completed in October. Production of non-upgraded bitumen increased to an average of 97,400 bbls/d in the third quarter of 2013, compared to 43,000 bbls/d in the third quarter of 2012 as a result of the ongoing ramp up of Firebag and the ability to sell more non-upgraded bitumen with the hot bitumen infrastructure.

Oil Sands Base bitumen production from mining and extraction activities increased to an average of 299,900 bbls/d in the third quarter of 2013 from 287,600 bbls/d in the third quarter of 2012, as a result of the hot bitumen infrastructure that enabled the company to unlock constrained mining capacity.

In Situ bitumen production averaged 181,900 bbls/d in the third quarter of 2013, compared to 130,000 bbls/d in the third quarter of 2012, due primarily to the ongoing ramp up of Firebag production. The company anticipates that bitumen production from Firebag is on schedule to reach a targeted production capacity of approximately 180,000 bbls/d in early 2014. MacKay River production volumes increased to 29,200 bbls/d in the third quarter of 2013, compared to 17,000 bbls/d in the third quarter of 2012, due to maintenance of the central processing facility and the third-party cogeneration unit in the prior year quarter.

Suncor's share of Syncrude production decreased to an average of 27,200 bbls/d in the third quarter of 2013 from 37,600 bbls/d in the third quarter of 2012, due primarily to planned maintenance for one of three cokers and the LC Finer. The maintenance was completed in the quarter, and the units returned to production in late August.

Sales Volumes and Mix

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Oil Sands sales volumes (mbbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sweet SCO |  |  | 99.0 |  |  | 104.4 |  |  | 87.5 |  |  | 97.6 |  |
Diesel |  |  | 28.6 |  |  | 28.7 |  |  | 22.2 |  |  | 29.5 |  |
Sour SCO |  |  | 159.9 |  |  | 175.9 |  |  | 166.0 |  |  | 156.7 |  |
Upgraded product |  |  | 287.5 |  |  | 309.0 |  |  | 275.7 |  |  | 283.8 |  |
Non-upgraded bitumen |  |  | 84.3 |  |  | 36.4 |  |  | 62.7 |  |  | 40.2 |  |
Total |  |  | 371.8 |  |  | 345.4 |  |  | 338.4 |  |  | 324.0 |  |

Sales volumes for Oil Sands operations increased to an average of 371,800 bbls/d in the third quarter of 2013 from 345,400 bbls/d in the third quarter of 2012, primarily due to increased production volumes and the increased takeaway capacity for non-upgraded bitumen. Sales volumes for both upgraded product and bitumen were lower relative to production volumes due to a large inventory build in the third quarter of 2013.

Inventory

A large inventory build had a negative impact on earnings in the third quarter of 2013, partially due to the replenishment of inventory following the Upgrader 1 turnaround completed in the second quarter of 2013. In addition, the company built inventories in the quarter as a result of new infrastructure added to the company's storage and logistics network to support the growth in production, which has resulted in an increase to the company's average inventory levels.

Suncor Energy Inc.
2013 Third Quarter 023

Price Realizations

Net of transportation costs, but before royalties |  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($/bbl) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Oil Sands |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sweet SCO and diesel |  |  | 114.70 |  |  | 94.29 |  |  | 106.77 |  |  | 97.81 |  |
Sour SCO and bitumen |  |  | 89.91 |  |  | 72.33 |  |  | 78.14 |  |  | 74.40 |  |
Crude sales basket (all products) |  |  | 98.42 |  |  | 80.79 |  |  | 87.42 |  |  | 83.58 |  |
Crude sales basket, relative to WTI |  |  | (11.45 | ) |  | (10.92 | ) |  | (13.03 | ) |  | (12.81 | ) |
Oil Sands Ventures |  |  |  |  |  |  |  |  |  |  |  |  |  |
Syncrude, sweet SCO |  |  | 113.57 |  |  | 90.24 |  |  | 102.91 |  |  | 93.32 |  |
Syncrude, relative to WTI |  |  | 3.67 |  |  | (1.47 | ) |  | 2.46 |  |  | (3.07 | ) |

Average price realizations for sales from Oil Sands operations increased to $98.42/bbl in the third quarter of 2013 from $80.79/bbl in the third quarter of 2012, due mainly to higher prices for WTI and narrowing light/heavy differentials, partially offset by a higher proportion of bitumen sales. In the third quarter of 2013, average price realizations for sweet SCO increased and sold at a premium relative to WTI, compared to a discount relative to WTI in the prior year quarter, reflecting lower industry supply of SCO volumes due to planned maintenance by large producers in the third quarter of 2013. Average price realizations for sour SCO and bitumen also increased in the third quarter of 2013 and sold at smaller discounts relative to WTI over the prior year quarter.

Royalties

Royalties for the Oil Sands segment were higher in the third quarter of 2013 than in the same period in 2012. The increase was mainly due to higher crude oil prices and higher production.

Expenses and Other Factors

Operating expenses for the third quarter of 2013 were higher than operating expenses for the third quarter of 2012 due to an increase in cash operating costs, partially offset by a decrease in non-production costs. Non-production costs decreased primarily due to lower share-based compensation expense in the third quarter of 2013 compared to the prior year quarter and higher expenses in the prior year quarter relating to safe mode costs associated with the deferral and subsequent remobilization of growth projects.

Operating expenses at Syncrude were higher in the third quarter of 2013 than in the third quarter of 2012, due primarily to higher maintenance costs in the third quarter of 2013.

DD&A expense for the third quarter of 2013 was higher than in the same period of 2012, due mainly to a larger asset base as a result of the recent Upgrader 1 turnaround and other assets commissioned subsequent to the third quarter of 2012, including Firebag Stage 4 and the Millennium Naptha Unit. The third quarter of 2013 also included the derecognition of certain assets relating to projects no longer being considered for advancement.

Suncor Energy Inc.
024 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Cash Operating Costs Reconciliation (1)

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Operating, selling and general expense |  |  | 1 344 |  |  | 1 370 |  |  | 4 196 |  |  | 4 056 |  |
Syncrude operating, selling and general expense |  |  | (133 | ) |  | (124 | ) |  | (394 | ) |  | (376 | ) |
Non-production costs (2) |  |  | (85 | ) |  | (150 | ) |  | (249 | ) |  | (278 | ) |
Other (3) |  |  | 64 |  |  | (51 | ) |  | (72 | ) |  | (205 | ) |
Cash operating costs |  |  | 1 190 |  |  | 1 045 |  |  | 3 481 |  |  | 3 197 |  |
Cash operating costs ($/bbl) |  |  | 32.60 |  |  | 33.35 |  |  | 37.10 |  |  | 36.70 |  |

(1)
  Cash operating costs and cash operating costs per barrel are non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(2)
  Significant non-production costs include, but are not limited to, share-based compensation adjustments, costs related to the remobilization or deferral of growth projects, research, the expense recorded as part of a non-monetary arrangement involving a third-party processor and feedstock costs for natural gas used to create hydrogen for secondary upgrading processes.
(3)
  Other includes the impacts of changes in inventory valuation and operating revenues associated with excess power from cogeneration units.

Cash operating costs per barrel for Oil Sands operations in the third quarter of 2013 averaged $32.60/bbl, compared to $33.35/bbl in the third quarter of 2012, reflecting higher production volumes, partially offset by marginally higher cash operating costs. Cash operating costs increased over the prior year quarter due to incremental costs associated with larger operations, including Firebag 4, higher maintenance activities in mining, and higher natural gas prices and consumption, partially offset by the net benefit of increased power sales.

Results for the First Nine Months of 2013

Oil Sands segment net earnings for the first nine months of 2013 were $1.571 billion, compared to $1.505 billion for the same period in 2012. Net earnings for the first nine months of 2013 included an after-tax charge of $127 million as a result of not proceeding with the Voyageur upgrader project. Net earnings for the first nine months of 2012 included a $70 million deferred tax adjustment related to an income tax rate change.

Oil Sands segment operating earnings for the first nine months of 2013 were $1.698 billion, compared to $1.575 billion for the same period in 2012, and were higher due primarily to higher production volumes and higher average price realizations, partially offset by higher DD&A and operating expenses.

Cash flow from operations for the first nine months of 2013 was $3.446 billion for the segment, compared to $3.317 billion for the same period in 2012. The increase in cash flow from operations was mainly due to higher production volumes and higher average price realizations, partially offset by incremental current income tax expense.

Cash operating costs per barrel for Oil Sands operations averaged $37.10/bbl for the first nine months of 2013, an increase from an average of $36.70/bbl for the first nine months of 2012, primarily due to higher cash operating costs driven by larger operations and higher natural gas costs, partially offset by higher production volumes.

Voyageur Upgrader Project

In the first quarter of 2013, Suncor announced that the company is not proceeding with the Voyageur upgrader project. The decision was a result of a joint strategic and economic review launched by Suncor and co-owner Total E&P Canada Ltd. (Total E&P) in response to a change in market conditions that challenged the economics of the project. Suncor acquired Total E&P's interest in Voyageur Upgrader Limited Partnership (VULP) for $515 million to gain full control over the partnership assets, including a hot bitumen blending facility and tankage used to provide added logistic flexibility and

Suncor Energy Inc.
2013 Third Quarter 025

storage capacity for the company's growing Oil Sands operations. The net book value of these assets on the effective date was approximately $800 million.

As a result, Suncor recorded an after-tax charge to net earnings of $127 million in the first quarter of 2013, which represents the expected cost of not proceeding with the project, including costs related to decommissioning and restoration of the Voyageur site, and contract cancellations.

EXPLORATION AND PRODUCTION

Financial Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Gross revenues |  |  | 1 502 |  |  | 1 144 |  |  | 4 956 |  |  | 4 911 |  |
Less: Royalties |  |  | (325 | ) |  | (297 | ) |  | (974 | ) |  | (1 167 | ) |
Operating revenues, net of royalties |  |  | 1 177 |  |  | 847 |  |  | 3 982 |  |  | 3 744 |  |
Net earnings (loss) |  |  | 446 |  |  | 88 |  |  | 1 101 |  |  | (10 | ) |
Operating earnings (loss) (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
East Coast Canada |  |  | 128 |  |  | 12 |  |  | 431 |  |  | 339 |  |
International |  |  | 132 |  |  | 107 |  |  | 444 |  |  | 488 |  |
North America Onshore |  |  | 56 |  |  | (31 | ) |  | 96 |  |  | (120 | ) |
|  |  | 316 |  |  | 88 |  |  | 971 |  |  | 707 |  |
Cash flow from operations (1) |  |  | 406 |  |  | 365 |  |  | 1 764 |  |  | 1 698 |  |

(1)
  Non-GAAP financial measures. Operating earnings are reconciled to net earnings below. See also the Non-GAAP Financial Measures Advisory section of this MD&A.

Exploration and Production net earnings were $446 million for the third quarter of 2013, compared with net earnings of $88 million in the third quarter of 2012. Net earnings in the third quarter of 2013 included an after-tax gain of $130 million related to the disposition of a significant portion of the company's natural gas business in Western Canada.

Exploration and Production operating earnings were $316 million in the third quarter of 2013, compared to $88 million in the third quarter of 2012. Operating earnings of $128 million for East Coast Canada increased primarily due to higher production volumes as a result of significantly less planned maintenance in the quarter, partially offset by higher royalty and DD&A expenses. Operating earnings of $132 million for International increased due to higher average price realizations, partially offset by lower production volumes due to the shut in of production in Libya. Operating earnings of $56 million for North America Onshore increased as compared to the loss in the third quarter of 2012, primarily due to lower DD&A expense as a result of properties that were classified as assets held for sale, higher average price realizations, and a gain recorded on the revaluation of a provision related to future commitments for pipeline capacity, partially offset by lower production volumes.

Cash flow from operations was $406 million for the third quarter of 2013, compared to $365 million for the third quarter of 2012, and increased due to higher production volumes and higher price realizations, partially offset by incremental current income tax expense relating to the company's Canadian operations.

Suncor Energy Inc.
026 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Operating Earnings

Operating Earnings Reconciliation

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings (loss) as reported |  |  | 446 |  |  | 88 |  |  | 1 101 |  |  | (10 | ) |
Gain on significant disposals |  |  | (130 | ) |  | — |  |  | (130 | ) |  | — |  |
Impairments and write-offs |  |  | — |  |  | — |  |  | — |  |  | 694 |  |
Impact of income tax rate adjustments on deferred income taxes |  |  | — |  |  | — |  |  | — |  |  | 23 |  |
Operating earnings (1) |  |  | 316 |  |  | 88 |  |  | 971 |  |  | 707 |  |

(1)
  Non-GAAP financial measure. See the Non-GAAP Financial Measures Advisory section of this MD&A.

(1)
  Factors represent after-tax variances and include the impacts of operating earnings adjustments. These factors are analyzed in the narrative following this bridge analysis. This bridge analysis is provided because management uses this presentation to analyze performance.
(2)
  Includes price realizations before royalties, other operating revenues, and the net impacts of sales and purchases of third-party crude.
(3)
  Royalties in Libya and Syria represent the difference between gross revenues, which is based on the company's working-interest share of production less the net revenue attributable to Suncor under the terms of the respective contracts.
(4)
  The Inventory variance factor reflects the opportunity cost of building production volumes in inventory or the additional margin earned by drawing down inventory produced in previous periods. The calculation of the Inventory variance factor in this bridge analysis permits the company to present the Volume variance factor based on production volumes, rather than based on sales volumes.
(5)
  The Operating Expense factor includes transportation expense, project start-up costs, and operating, selling and general expense (adjusted for impacts of changes in inventory).
(6)
  This factor may also include operational foreign exchange gains and losses, changes in gains and losses on disposal of assets that are not operating earnings adjustments, impacts of changes in effective income tax rates, and other income tax adjustments.

Suncor Energy Inc.
2013 Third Quarter 027

Production Volumes

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Production (mboe/d) |  |  | 171.4 |  |  | 156.4 |  |  | 189.8 |  |  | 193.8 |  |
East Coast Canada (mbbls/d) |  |  | 62.4 |  |  | 22.7 |  |  | 59.6 |  |  | 45.8 |  |
International (mboe/d) |  |  | 63.5 |  |  | 81.7 |  |  | 81.8 |  |  | 92.8 |  |
North America Onshore (mmcfe/d) |  |  | 273 |  |  | 312 |  |  | 291 |  |  | 331 |  |
Production mix (liquids/gas) (%) |  |  | 76/24 |  |  | 70/30 |  |  | 77/23 |  |  | 74/26 |  |
East Coast Canada |  |  | 100/0 |  |  | 100/0 |  |  | 100/0 |  |  | 100/0 |  |
International |  |  | 98/2 |  |  | 99/1 |  |  | 99/1 |  |  | 99/1 |  |
North America Onshore |  |  | 13/87 |  |  | 11/89 |  |  | 14/86 |  |  | 10/90 |  |

For East Coast Canada, production averaged 62,400 bbls/d in the third quarter of 2013, compared to 22,700 bbls/d in the third quarter of 2012.

•
  Production from Terra Nova averaged 20,500 bbls/d, compared to no production in the prior year quarter, primarily due to the dockside maintenance program in the third quarter of 2012. The company commenced off-station maintenance of the Terra Nova facility in late September of 2013. Following a routine inspection that indicated one of nine mooring chains was damaged, the company extended the previously planned four-week maintenance program to eleven weeks in order to repair the mooring chain and perform preventive maintenance on the remaining eight chains. There will be no production from Terra Nova during this maintenance period, which has been reflected in the company's 2013 corporate guidance.
•
  Production from White Rose averaged 13,100 bbls/d, and increased from 7,000 bbls/d in the prior year quarter due primarily to the planned off-station maintenance program in the third quarter of 2012. Production in the third quarter of 2013 was reduced by a one-week planned maintenance event.
•
  Production from Hibernia averaged 28,800 bbls/d, and increased from 15,700 bbls/d in the prior year quarter due to the completion of planned maintenance in the third quarter of 2012.

For International, production averaged 63,500 boe/d in the third quarter of 2013, compared to 81,700 boe/d in the third quarter of 2012.

•
  Production from Libya averaged 13,100 bbls/d, and decreased from 39,800 bbls/d in the prior year quarter due to the shut in of production in response to political unrest and related labour disputes that have resulted in the closure of export terminal operations at certain Libyan seaports. Suncor has not lifted production in Libya since May 2013, although field activities continued throughout the quarter, allowing Suncor to progress its exploration program. Suncor continues to monitor the situation as the country continues its difficult transition to a more stable environment.
•
  Production from Buzzard averaged 50,400 boe/d, and increased from 41,900 boe/d in the prior year quarter due primarily to larger scope planned maintenance in the prior year quarter relative to planned maintenance in the third quarter of 2013.

For North America Onshore, production averaged 273 mmcfe/d in the third quarter of 2013, compared to 312 mmcfe/d in the third quarter of 2012 and decreased primarily as a result of natural declines.

Suncor Energy Inc.
028 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Sale of Natural Gas Business

On April 15, 2013, Suncor announced it had reached an agreement to sell a significant portion of its natural gas business in Western Canada, with an effective date of January 1, 2013. The transaction closed on September 26, 2013 for proceeds of $1 billion, before closing adjustments and other closing costs, resulting in an after-tax gain on sale of $130 million. Production from these assets was approximately 41,000 boe/d in the third quarter of 2013, of which 90% was natural gas. Net earnings and cash flow from operations from these assets in the third quarter of 2013 were approximately $17 million and $28 million, respectively. Excluded from the sale was the majority of Suncor's unconventional natural gas properties in the Kobes region of British Columbia and unconventional oil properties in the Wilson Creek area of central Alberta.

Price Realizations

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
Net of transportation costs, but before royalties |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Exploration and Production |  |  | 88.74 |  |  | 77.33 |  |  | 87.81 |  |  | 84.15 |  |
East Coast Canada ($/bbl) |  |  | 116.94 |  |  | 108.49 |  |  | 111.23 |  |  | 113.50 |  |
International ($/boe) |  |  | 111.00 |  |  | 106.94 |  |  | 107.31 |  |  | 108.78 |  |
North America Onshore ($/mcfe) |  |  | 4.28 |  |  | 3.46 |  |  | 4.76 |  |  | 3.44 |  |

Although benchmark prices for Brent crude were consistent with the third quarter of 2012, the company's East Coast Canada and International price realizations increased due to the strengthening of the U.S. dollar relative to the Canadian dollar. Price realizations for North America Onshore were higher due to higher benchmark prices for natural gas and a higher proportion of natural gas liquids sales.

Royalties

Royalties for Exploration and Production were higher in the third quarter of 2013, compared with the prior year quarter, due primarily to higher production and price realizations in East Coast Canada, partially offset by lower production in Libya.

Inventory

During the third quarter of 2013, there was a larger build in East Coast inventories, primarily due to timing of shuttle tankers at Hibernia, compared to the prior year quarter when inventory levels were lower due to planned maintenance at all East Coast Canada assets.

Expenses and Other Factors

Operating expenses increased slightly in the third quarter of 2013 relative to the third quarter of 2012, primarily due to higher production volumes, partially offset by lower maintenance expense in East Coast Canada.

DD&A and exploration expenses were higher in the third quarter of 2013 than in the third quarter of 2012. DD&A expense increased primarily due to higher production volumes, partially offset by the cessation of DD&A for properties that were classified as assets held for sale in North America Onshore. Exploration expenses decreased primarily due to an exploration well write-off relating to the Cooper prospect in Norway in the prior year quarter.

Financing Expense and Other Income had a positive impact on earnings, primarily due to the gain recorded on the revaluation of the pipeline provision in North America Onshore and foreign exchange gains in the third quarter of 2013.

Suncor Energy Inc.
2013 Third Quarter 029

Results for the First Nine Months of 2013

Net earnings for Exploration and Production over the first nine months of 2013 were $1.101 billion, compared to a net loss of $10 million over the first nine months of 2012. Net earnings for the first nine months of 2013 included an after-tax gain of $130 million relating to the sale of a significant portion of the company's natural gas business in Western Canada. Net earnings for the first nine months of 2012 included an impairment and write-offs of $694 million for assets in Syria and a deferred tax adjustment of $23 million related to an income tax rate change.

Operating earnings for Exploration and Production for the first nine months of 2013 were $971 million, compared to $707 million for the first nine months of 2012. Operating earnings were higher primarily due to higher production volumes at East Coast Canada and Buzzard, and higher overall price realizations, partially offset by lower production in Libya and North America Onshore.

Cash flow from operations was $1.764 billion for the first nine months of 2013, compared to $1.698 billion for the first nine months of 2012. The increase was primarily due to the same factors that impacted operated earnings, partially offset by incremental current income tax expense related to the company's Canadian operations.

REFINING AND MARKETING

Financial Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Operating revenues |  |  | 7 083 |  |  | 6 755 |  |  | 20 113 |  |  | 19 713 |  |
Net earnings |  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 687 |  |
Operating earnings (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Refining and Product Supply |  |  | 273 |  |  | 655 |  |  | 1 340 |  |  | 1 491 |  |
Marketing |  |  | 77 |  |  | 55 |  |  | 224 |  |  | 211 |  |
|  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 702 |  |
Cash flow from operations (1) |  |  | 371 |  |  | 1 063 |  |  | 2 084 |  |  | 2 504 |  |

(1)
  Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

For the third quarter of 2013, Refining and Marketing net and operating earnings were $350 million, compared to net and operating earnings of $710 million for the third quarter of 2012.

Refining and Product Supply activities contributed $273 million to operating earnings in the third quarter of 2013, which was lower than the prior year quarter due to lower benchmark crack spreads resulting from the narrowing of the WTI to Brent differential and inland crude differentials, slightly offset by record throughput volumes. Marketing activities contributed $77 million to operating earnings in the third quarter of 2013, an increase over the prior year quarter due primarily to higher retail and lubricants margins and lower share-based payment expense.

Refining and Marketing cash flow from operations was $371 million in the third quarter of 2013, compared to $1.063 billion in the third quarter of 2012, and decreased primarily due to the same factors that affected operating earnings in addition to incremental current income tax expense related to the company's Canadian operations recorded in the quarter.

Suncor Energy Inc.
030 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Operating Earnings

Operating Earnings Reconciliation

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings as reported |  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 687 |  |
Impact of income tax rate adjustments on deferred income taxes |  |  | — |  |  | — |  |  | — |  |  | 15 |  |
Operating earnings (1) |  |  | 350 |  |  | 710 |  |  | 1 564 |  |  | 1 702 |  |

(1)
  Non-GAAP financial measure. See the Non-GAAP Financial Measures Advisory section of this MD&A.

(1)
  Factors represent after-tax variances and include the impacts of operating earnings adjustments. These factors are analyzed in the narrative following this bridge analysis. This bridge analysis is provided because management uses this presentation to analyze performance.
(2)
  This factor represents refining and product supply margin realizations, other operating revenues, the net impacts of sales and purchases of third-party crude, and the inventory valuation impact of a fluctuating crude price environment.
(3)
  The Inventory variance factor reflects the opportunity cost of building production volumes in inventory or the additional margin earned by drawing down inventory produced in previous periods. The calculation of the Inventory variance factor in this bridge analysis permits the company to present the Volume variance factor based on production volumes, rather than based on sales volumes.
(4)
  The Operating Expense factor includes transportation expense, and operating, selling and general expense.
(5)
  This factor also includes changes in gains and losses on disposal of assets that are not operating earnings adjustments, changes in effective income tax rates, and other income tax adjustments.

Suncor Energy Inc.
2013 Third Quarter 031

Volumes

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Crude oil processed (mbbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eastern North America |  |  | 206.9 |  |  | 205.0 |  |  | 208.2 |  |  | 196.1 |  |
Western North America |  |  | 241.9 |  |  | 236.4 |  |  | 227.2 |  |  | 233.4 |  |
Total |  |  | 448.8 |  |  | 441.4 |  |  | 435.4 |  |  | 429.5 |  |
Refinery utilization (1)(2) (%) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eastern North America |  |  | 93 |  |  | 92 |  |  | 94 |  |  | 88 |  |
Western North America |  |  | 102 |  |  | 101 |  |  | 95 |  |  | 100 |  |
Total |  |  | 98 |  |  | 97 |  |  | 95 |  |  | 94 |  |
Refined product sales (thousands of m3/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gasoline |  |  | 42.1 |  |  | 41.5 |  |  | 39.1 |  |  | 40.3 |  |
Distillate |  |  | 32.7 |  |  | 30.7 |  |  | 33.7 |  |  | 30.0 |  |
Other |  |  | 15.6 |  |  | 15.3 |  |  | 14.2 |  |  | 14.7 |  |
Total |  |  | 90.4 |  |  | 87.5 |  |  | 87.0 |  |  | 85.0 |  |

(1)
  Effective January 1, 2013, the company increased the nameplate capacity of the Edmonton refinery from 135,000 bbls/d to 140,000 bbls/d. Prior quarter utilization rates have not been recalculated and reflect the lower nameplate capacities.
(2)
  Refinery utilization is the amount of crude oil and natural gas plant liquids run through crude distillation units, expressed as a percentage of the capacity of these units.

Overall refinery utilization of 98% was the highest quarterly average on record and was due primarily to strong reliability at each refinery. In Eastern North America, average crude oil processed increased to 206,900 bbls/d in the third quarter of 2013 from 205,000 bbls/d in the prior year quarter due to strong reliability, partially offset by a third-party power outage at the Montreal refinery and minor maintenance activities. Average crude oil processed in Western North America increased to 241,900 bbls/d in the third quarter of 2013 from 236,400 bbls/d in the prior year quarter, primarily due to strong reliability, partially offset by a third-party power outage that impacted the Edmonton refinery and domestic flooding that impacted the Commerce City refinery.

Total sales increased to 90,400 m3/d in the third quarter of 2013, compared to 87,500 m3/d in the third quarter of 2012, consistent with higher production.

Prices and Margins

For Refining and Supply, refined product margins were lower in the third quarter of 2013 than in the prior year quarter due to the following factors:

•
  Increasing benchmark prices for crude oil and narrowing light/heavy crude differentials for inland crudes resulted in higher feedstock costs.
•
  The narrowing differential between Brent and WTI impacted refining margins, contributing to a decline in benchmark crack spreads for the third quarter of 2013. Benchmark crack spreads were significantly lower across all regions into which the company sells refined product compared to the prior year quarter.
•
  The factors above were partially offset by an after-tax increase to earnings of approximately $104 million in the third quarter of 2013 pertaining to an increasing crude price environment, compared to approximately $78 million in the third quarter of 2012.

Suncor Energy Inc.
032 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Marketing margins from the third quarter of 2013 were higher than margins in the prior year quarter due primarily to higher retail and lubricants margins.

Expenses and Other Factors

Operating expenses were higher in the third quarter of 2013 than in the third quarter of 2012, due primarily to higher energy prices and consumption, higher transportation costs and higher maintenance costs. DD&A expense increased in the third quarter of 2013 due to asset additions since the prior year quarter, including costs associated with the planned maintenance event in the second quarter of 2013 at the Edmonton refinery.

Results for the First Nine Months of 2013

Net and operating earnings for the Refining and Marketing segment for the first nine months of 2013 were $1.564 billion, compared to net earnings of $1.687 billion and operating earnings of $1.702 billion for the first nine months of 2012. The decrease in earnings was due primarily to narrower inland crude differentials and weakening benchmark crack spreads, primarily in the second and third quarters of 2013. The impact on earnings pertaining to the increasing crude price environment increased after-tax earnings by approximately $222 million for the first nine months of 2013, whereas the impact on earnings pertaining to the decreasing crude price environment decreased after-tax earnings by approximately $50 million for the first nine months of 2012.

Cash flow from operations was $2.084 billion for the first nine months of 2013, compared to $2.504 billion for the first nine months of 2012, and decreased primarily due to the same factors that influenced operating earnings in addition to incremental current income tax expense related to the company's Canadian operations.

CORPORATE, ENERGY TRADING AND ELIMINATIONS

Financial Highlights

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net (loss) earnings |  |  | (53 | ) |  | 209 |  |  | (768 | ) |  | 132 |  |
Operating earnings (loss) (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Renewable Energy |  |  | 18 |  |  | 8 |  |  | 50 |  |  | 42 |  |
Energy Trading |  |  | 27 |  |  | 15 |  |  | 121 |  |  | 114 |  |
Corporate |  |  | (193 | ) |  | (98 | ) |  | (611 | ) |  | (322 | ) |
Group Eliminations |  |  | (43 | ) |  | 32 |  |  | (66 | ) |  | 41 |  |
|  |  | (191 | ) |  | (43 | ) |  | (506 | ) |  | (125 | ) |
Cash flow from (used in) operations (1) |  |  | 49 |  |  | 59 |  |  | (232 | ) |  | (14 | ) |

(1)
  Non-GAAP financial measures. Operating earnings are reconciled to net earnings below. See also the Non-GAAP Financial Measures Advisory section of this MD&A.

The net loss for Corporate, Energy Trading and Eliminations in the third quarter of 2013 was $53 million, compared to net earnings of $209 million in the third quarter of 2012. In the third quarter of 2013, the Canadian dollar strengthened in relation to the U.S. dollar, resulting in an after-tax unrealized foreign exchange gain on U.S. dollar denominated debt of $138 million, compared to $252 million in the prior year quarter.

Suncor Energy Inc.
2013 Third Quarter 033

Operating Earnings

Operating loss for Corporate, Energy Trading and Eliminations in the third quarter of 2013 was $191 million, compared to a $43 million loss in the third quarter of 2012.

Operating Earnings Reconciliation

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net (loss) earnings |  |  | (53 | ) |  | 209 |  |  | (768 | ) |  | 132 |  |
Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt |  |  | (138 | ) |  | (252 | ) |  | 262 |  |  | (237 | ) |
Impact of income tax rate adjustments on deferred income taxes |  |  | — |  |  | — |  |  | — |  |  | (20 | ) |
Operating loss (1) |  |  | (191 | ) |  | (43 | ) |  | (506 | ) |  | (125 | ) |

(1)
  Non-GAAP financial measure. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Renewable Energy

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
|  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Power generation marketed (gigawatt hours) |  |  | 73 |  |  | 76 |  |  | 302 |  |  | 319 |  |
Ethanol production (millions of litres) |  |  | 101.3 |  |  | 99.5 |  |  | 308.9 |  |  | 302.7 |  |

Renewable Energy operating earnings increased to $18 million in the third quarter of 2013 from $8 million in the third quarter of 2012, due primarily to stronger ethanol margins and higher ethanol production. Power prices were higher in the third quarter of 2013 compared to the prior year quarter, but were offset by lower power generation.

Energy Trading

Energy Trading operating earnings increased to $27 million from $15 million in the prior year quarter, due primarily to higher gains on Canadian heavy crude trading strategies.

Corporate

The Corporate operating loss was $193 million for the third quarter of 2013, compared with an operating loss of $98 million for the third quarter of 2012. The increase in operating loss was due primarily to higher share-based compensation expense in the quarter, lower capitalized interest, and incremental expenditures relating to a company-wide process improvement initiative. The company capitalized $99 million of its borrowing costs in the third quarter of 2013 as part of the cost of major development assets and construction projects, compared to $138 million in the prior year quarter, reflecting fewer major projects in the third quarter of 2012.

Suncor Energy Inc.
034 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Group Eliminations

Group Eliminations include the elimination of profit on crude oil sales from Oil Sands and East Coast Canada to Refining and Product Supply. Consolidated profits are only realized when the refined products produced from internal purchases of crude feedstock have been sold to third parties. During the third quarter of 2013, the company eliminated $43 million of after-tax intersegment profit, compared to $32 million of profit that was recognized in the prior year quarter.

Results for the First Nine Months of 2013

The net loss for Corporate, Energy Trading and Eliminations for the first nine months of 2013 was $768 million, compared to net earnings of $132 million for the first nine months of 2012. Over the first nine months of 2013, the Canadian dollar weakened in relation to the U.S. dollar, resulting in an after-tax unrealized foreign exchange loss of $262 million on U.S. dollar denominated debt, compared to an after-tax gain of $237 million in the prior year period. The net loss for the first nine months of 2012 also included a deferred tax reduction of $20 million.

The operating loss for Corporate, Energy Trading and Eliminations for the first nine months of 2013 was $506 million, compared to an operating loss of $125 million for the first nine months of 2012. The higher operating loss was due mainly to an increase in interest expense largely from additional capital leases, lower capitalized interest, incremental expenditures relating to a company-wide process improvement initiative and after-tax profit that was eliminated in the first nine months of 2013, compared to the recognition of previously eliminated profit in the prior year period. The company capitalized $299 million of its borrowing costs in the first nine months of 2013 as part of the cost of major development assets and construction projects, compared to $444 million in the first nine months of 2012, reflecting fewer major projects in the third quarter of 2012.

6. CAPITAL INVESTMENT UPDATE

Capital and Exploration Expenditures by Segment

|  |  | Three months ended September 30 |  |  | Nine months ended September 30 |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Oil Sands |  |  | 898 |  |  | 1 113 |  |  | 3 421 |  |  | 3 383 |  |
Exploration and Production |  |  | 418 |  |  | 387 |  |  | 1 093 |  |  | 908 |  |
Refining and Marketing |  |  | 202 |  |  | 147 |  |  | 445 |  |  | 394 |  |
Corporate, Energy Trading and Eliminations |  |  | 21 |  |  | 23 |  |  | 45 |  |  | 69 |  |
Total capital and exploration expenditures |  |  | 1 539 |  |  | 1 670 |  |  | 5 004 |  |  | 4 754 |  |
Less: capitalized interest on debt |  |  | (99 | ) |  | (138 | ) |  | (299 | ) |  | (444 | ) |
|  |  | 1 440 |  |  | 1 532 |  |  | 4 705 |  |  | 4 310 |  |

Suncor Energy Inc.
2013 Third Quarter 035

Capital and Exploration Expenditures by Type (1)(2)(3)

|  |  | Three months ended September 30, 2013 |  |  | Nine months ended September 30, 2013 |  |
($ millions) |  |  | Sustaining |  |  | Growth |  |  | Total |  |  | Sustaining |  |  | Growth |  |  | Total |  |
Oil Sands |  |  | 602 |  |  | 219 |  |  | 821 |  |  | 2 151 |  |  | 1 026 |  |  | 3 177 |  |
Oil Sands Base |  |  | 301 |  |  | 20 |  |  | 321 |  |  | 1 221 |  |  | 62 |  |  | 1 283 |  |
In Situ |  |  | 176 |  |  | 37 |  |  | 213 |  |  | 614 |  |  | 337 |  |  | 951 |  |
Oil Sands Ventures |  |  | 125 |  |  | 162 |  |  | 287 |  |  | 316 |  |  | 627 |  |  | 943 |  |
Exploration and Production |  |  | 29 |  |  | 363 |  |  | 392 |  |  | 121 |  |  | 915 |  |  | 1 036 |  |
Refining and Marketing |  |  | 188 |  |  | 16 |  |  | 204 |  |  | 413 |  |  | 34 |  |  | 447 |  |
Corporate, Energy Trading and Eliminations |  |  | 21 |  |  | 2 |  |  | 23 |  |  | 40 |  |  | 5 |  |  | 45 |  |
|  |  | 840 |  |  | 600 |  |  | 1 440 |  |  | 2 725 |  |  | 1 980 |  |  | 4 705 |  |

(1)
  Capital expenditures in this table exclude capitalized interest on debt.
(2)
  Growth capital expenditures include capital investments that result in i) an increase in production levels at existing Oil Sands operations and Refining and Marketing operations; ii) new facilities or operations that increase overall production; iii) new infrastructure that is required to support higher production levels; iv) new reserves or a positive change in the company's reserves profile in Exploration and Production operations; or v) margin improvement, by increasing revenues or reducing costs.
(3)
  Sustaining capital expenditures include capital investments that i) ensure compliance or maintain relations with regulators and other stakeholders; ii) improve efficiency and reliability of operations or maintain productive capacity by replacing component assets at the end of their useful lives; iii) deliver existing proved developed reserves for Exploration and Production operations; or iv) maintain current production capacities at existing Oil Sands operations and Refining and Marketing operations.

In the third quarter of 2013, property, plant and equipment and exploration expenditures were $1.440 billion (excluding capitalized interest). Activity in the third quarter of 2013 included the following:

Oil Sands Operations

Oil Sands Base

Oil Sands Base capital and exploration expenditures were $321 million in the third quarter of 2013, of which $301 million and $20 million were directed towards sustaining and growth activities, respectively. Capital expenditures in the quarter included costs to complete planned maintenance of the Upgrader 2 vacuum tower and related units. The company continued to progress reliability and sustainment projects, including the construction of assets to support the ongoing TROTM process and activities aimed at reducing freshwater use, including the construction of a water treatment plant. In addition, the company commissioned the final two of four storage tanks in Hardisty, Alberta.

In Situ

In Situ capital and exploration expenditures were $213 million, of which $37 million was directed towards growth projects. In the third quarter of 2013, the company commissioned the hot bitumen infrastructure, including an insulated pipeline to flow hot bitumen from the Firebag site to Suncor's Athabasca terminal for blending, cooling and transport to market. Growth capital also included expenditures to progress the debottlenecking project at the MacKay River facilities that is intended to increase production capacity by approximately 20% over the next two years for a total capacity of 38,000 bbls/d.

Sustaining capital expenditures of $176 million were directed towards ongoing design engineering, procurement and construction of well pads that are expected to maintain existing production levels at Firebag and MacKay River in future years. Capital expenditures were also directed towards the infill well program at Firebag.

Suncor Energy Inc.
036 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Oil Sands Ventures

Capital expenditures for the Fort Hills project in the third quarter of 2013 continued to focus on design engineering, site preparation and early activity related to long-lead items. The Fort Hills project is scheduled to produce first oil as early as the fourth quarter of 2017 and achieve 90% of its planned production capacity of 180,000 bbls/d (73,000 bbls/d net to Suncor) within twelve months. Suncor's portion of the post-sanction capital investment in Fort Hills is estimated at approximately $5.5 billion.

Suncor and the co-owners of the Joslyn mining project continue to focus on design engineering and regulatory work and plan to provide an update on the targeted timing for a sanction decision on the project when available.

Suncor's share of capital expenditures for the Syncrude joint venture was $125 million, which included expenditures for the mine train replacement at the Mildred Lake mining area and the mine train relocation at the Aurora mining area.

Exploration and Production

Growth and exploration spending of $363 million in the third quarter of 2013 related to the advancement of significant growth projects. Growth spending for the Golden Eagle project related to the installation of the second jacket and wellhead deck. With drilling activities expected to commence by early 2014, the project is expected to achieve first oil in late 2014 or early 2015. Growth spending for the Hebron project related to detailed engineering and early construction of the gravity-based structure and topsides; the project is expected to achieve first oil in 2017. Growth spending also included subsea installation activities for the Hibernia Southern Extension Unit, which commenced in the quarter and are expected to be completed in the fourth quarter of 2013. The project is expected to increase overall production from the Hibernia field starting in 2015. Installation activities, detailed engineering and procurement activities continued for the remainder of the South White Rose Extension project. Subsea equipment for this project is being installed in two phases over 2013 and 2014. First oil is expected in the fourth quarter of 2014.

In the third quarter of 2013, the company continued to develop the Cardium oil formation in Western Canada and further delineate its play in the Montney shale gas formation in B.C.

The company continues negotiations with the National Oil Company in Libya regarding Suncor's exploration commitments under its EPSAs. In the first quarter of 2013, the company received an extension to reflect the time that Suncor was in force majeure due to political unrest and unable to fulfil its exploration commitments. The company continues to make progress on its 2013 exploration drilling program.

Refining and Marketing

Capital expenditures of $204 million relate primarily to the ongoing sustainment of existing operations and reliability initiatives through planned maintenance activities. Growth spending in the Refining and Marketing segment continues to focus on integration with the company's Oil Sands, including early engineering and design work for facilities to prepare the Montreal refinery for the receipt and processing of inland crudes. Construction to enable rail receipt of inland crudes to the Montreal refinery continued in the third quarter of 2013 and is expected to be operating in the fourth quarter of 2013.

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2013 Third Quarter 037

7. FINANCIAL CONDITION AND LIQUIDITY

Indicators

Twelve months ended September 30 |  |  | 2013 |  |  | 2012 |  |
Return on capital employed (1) (%) |  |  |  |  |  |  |  |
Excluding major projects in progress |  |  | 8.6 |  |  | 12.4 |  |
Including major projects in progress |  |  | 7.3 |  |  | 9.7 |  |
Net debt to cash flow from operations (2) (times) |  |  | 0.6 |  |  | 0.5 |  |
Interest coverage on long-term debt (times) |  |  |  |  |  |  |  |
Earnings basis (3) |  |  | 7.3 |  |  | 11.6 |  |
Cash flow from operations basis (2)(4) |  |  | 16.6 |  |  | 17.7 |  |

(1)
  Non-GAAP financial measure. ROCE is reconciled in the Non-GAAP Financial Measures Advisory section of this MD&A.
(2)
  Cash flow from operations and metrics that use cash flow from operations are non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.
(3)
  Net earnings plus income taxes and interest expense, divided by the sum of interest expense and capitalized interest on debt.
(4)
  Cash flow from operations plus current income taxes and interest expense, divided by the sum of interest expense and capitalized interest on debt.

Capital Resources

Suncor's capital resources consist primarily of cash flow from operations, cash and cash equivalents, and available lines of credit. Suncor's management believes the company will have the capital resources to fund the remainder of its planned 2013 capital spending program of $6.7 billion and meet current and future working capital requirements through existing cash balances and short-term investments, cash flow from operations for the remainder of 2013, available committed credit facilities, issuing commercial paper, and/or long-term notes or debentures. The company's cash flow from operations depends on a number of factors, including commodity prices, production and sales volumes, refining and marketing margins, operating expenses, taxes, royalties and foreign exchange rates. If additional capital is required, Suncor's management believes adequate additional financing will be available in debt capital markets at commercial terms and rates.

Cash and cash equivalents increased to $5.340 billion during the first nine months of 2013 from $4.385 billion at December 31, 2012, due primarily to stable cash flow from operations that exceeded capital expenditures, proceeds of $1 billion before closing adjustments and other closing costs relating to the sale of a significant portion of the company's natural gas business in Western Canada, partially offset by the repurchase of $1.125 billion of the company's common shares, the acquisition of Total E&P's interest in the VULP for $515 million and the repayment of long-term debt. For the twelve months ended September 30, 2013, the company's net debt to cash flow from operations measure was 0.6 times, which met management's limit of less than 2.0 times. Unutilized lines of credit at September 30, 2013 were $4.623 billion, compared to $4.735 billion at December 31, 2012.

Financing Activities

Management of debt levels continues to be a priority for Suncor given the company's long-term growth plans. Suncor's management believes a phased and flexible approach to existing and future growth projects should assist Suncor in maintaining its ability to manage project costs and debt levels.

Suncor Energy Inc.
038 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Total Debt to Total Debt Plus Shareholders' Equity

Suncor is subject to financial and operating covenants related to its bank debt and public market debt. Failure to meet the terms of one or more of these covenants may constitute an Event of Default as defined in the respective debt agreements, potentially resulting in accelerated repayment of one or more of the debt obligations. The company is in compliance with its financial covenant that requires total debt to not exceed 65% of its total debt plus shareholders' equity. At September 30, 2013, total debt to total debt plus shareholders' equity was 21% (December 31, 2012 – 22%). The company is also currently in compliance with all operating covenants.

($ millions, except as noted) |  |  | September 30 2013 |  |  | December 31 2012 |  |
Short-term debt |  |  | 771 |  |  | 775 |  |
Current portion of long-term debt |  |  | 31 |  |  | 311 |  |
Long-term debt |  |  | 10 331 |  |  | 9 938 |  |
Total debt |  |  | 11 133 |  |  | 11 024 |  |
Less: Cash and cash equivalents |  |  | 5 340 |  |  | 4 385 |  |
Net debt |  |  | 5 793 |  |  | 6 639 |  |
Shareholders' equity |  |  | 41 132 |  |  | 39 215 |  |
Total debt plus shareholders' equity |  |  | 52 265 |  |  | 50 239 |  |
Total debt to total debt plus shareholders' equity (%) |  |  | 21 |  |  | 22 |  |

Change in Net Debt

|  |  | Three and nine months ended September 30, 2013 |  |
($ millions) |  |  | Q3 |  |  | YTD |  |
Net debt – Start of period |  |  | 7 114 |  |  | 6 639 |  |
Decrease in net debt |  |  | (1 321 | ) |  | (846 | ) |
Net debt – September 30, 2013 |  |  | 5 793 |  |  | 5 793 |  |
Decrease in net debt |  |  |  |  |  |  |  |
Cash flow from operations |  |  | 2 528 |  |  | 7 062 |  |
Capital and exploration expenditures and other investments |  |  | (1 548 | ) |  | (5 019 | ) |
Acquisition |  |  | — |  |  | (515 | ) |
Proceeds from divestitures |  |  | 904 |  |  | 910 |  |
Dividends less proceeds from exercise of share options |  |  | (263 | ) |  | (718 | ) |
Repurchase of common shares |  |  | (426 | ) |  | (1 125 | ) |
Change in non-cash working capital |  |  | (20 | ) |  | 518 |  |
Foreign exchange on cash, debt and other balances |  |  | 146 |  |  | (267 | ) |
|  |  | 1 321 |  |  | 846 |  |

At September 30, 2013, Suncor's net debt was $5.793 billion, compared to $6.639 billion at December 31, 2012. Over the first nine months of 2013, net debt decreased by $846 million, largely due to cash flow from operations that exceeded capital and exploration expenditures, and net proceeds related to the disposition of a significant portion of the company's natural gas business in Western Canada, partially offset by the acquisition of Total E&P's interest in VULP, share repurchases, dividends and unrealized foreign exchange losses on U.S. dollar denominated debt.

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2013 Third Quarter 039

Short-Term Investments

The company has invested excess cash in short-term financial instruments that are presented as cash and cash equivalents. The objectives of the company's short-term investment portfolio are to ensure the preservation of capital, maintain adequate liquidity to meet Suncor's cash flow requirements and deliver competitive returns consistent with the quality and diversification of investments within acceptable risk parameters. The maximum weighted average term to maturity of the short-term investment portfolio is not expected to exceed six months, and all investments will be with counterparties with investment grade debt ratings. As at September 30, 2013, the weighted average term to maturity of the short-term investment portfolio was approximately 75 days.

Common Shares

Outstanding Shares

September 30, 2013 (thousands) |  |  |  |  |
Common shares |  |  | 1 492 242 |  |
Common share options – exercisable and non-exercisable |  |  | 36 398 |  |
Common share options – exercisable |  |  | 28 102 |  |

As at October 23, 2013, the total number of common shares outstanding was 1,488,562,131 and the total number of exercisable and non-exercisable common share options outstanding was 36,056,650. Once exercisable, each outstanding common share option is convertible into one common share.

Share Repurchases

Pursuant to Suncor's normal course issuer bid (the 2012 NCIB) that commenced in the third quarter of 2012, Suncor repurchased a total of 38.9 million common shares for total consideration of $1.2 billion, of which 2.6 million common shares were repurchased in the third quarter of 2013 for total consideration of $83 million.

On August 5, 2013, Suncor commenced a new normal course issuer bid (the 2013 NCIB) through the facilities of the Toronto Stock Exchange, New York Stock Exchange and/or alternative trading platforms. Pursuant to the 2013 NCIB, Suncor is permitted to purchase for cancellation up to approximately $1.8 billion worth of its common shares between August 5, 2013 and August 4, 2014, and has agreed that it will not purchase more than 66,414,828 common shares, which equals approximately 4% of the issued and outstanding common shares in the public float as at July 29, 2013. Suncor has repurchased a total of 9.5 million common shares for total consideration of $343 million.

Shareholders may obtain a copy of the company's Notice of Intention to make a Normal Course Issuer Bid in relation to both the 2012 NCIB and the 2013 NCIB, without charge, by contacting Investor Relations.

Suncor Energy Inc.
040 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

As at October 23, 2013, the company had repurchased an additional 3,968,961 shares at an average price of $36.89 per share, for a total repurchase cost of $146 million.

|  |  | Three and nine months ended September 30, 2013 |  |  | Twelve months ended December 31, 2012 |  |
|  |  | Q3 |  |  | YTD |  |  |  |  |
Share repurchase activities (thousands of common shares) |  |  |  |  |  |  |  |  |  |  |
Shares repurchased directly (1) |  |  | 12 054 |  |  | 34 560 |  |  | 46 862 |  |
Shares repurchased through exercise of put options |  |  | — |  |  | — |  |  | — |  |
|  |  | 12 054 |  |  | 34 560 |  |  | 46 862 |  |
Share repurchase cost ($ millions) |  |  |  |  |  |  |  |  |  |  |
Repurchase cost |  |  | 426 |  |  | 1 125 |  |  | 1 452 |  |
Option premiums received |  |  | — |  |  | — |  |  | (1 | ) |
|  |  | 426 |  |  | 1 125 |  |  | 1 451 |  |
Weighted average repurchase price per share (dollars per share) |  |  | 35.36 |  |  | 32.55 |  |  | 30.96 |  |

(1)
  During the first quarter of 2012, the company obtained regulatory approval to recommence its normal course issuer bid that authorized the purchase for cancellation of up to an additional $1 billion of Suncor's common shares between February 28, 2012 and September 5, 2012.

Contractual Obligations, Commitments, Guarantees, and Off-Balance Sheet Arrangements

In the normal course of business, the company is obligated to make future payments, including contractual obligations and non-cancellable commitments. Suncor has included these items in the Financial Condition and Liquidity section of its 2012 annual MD&A, which section is herein incorporated by reference. The company does not believe that it has any guarantees or off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the company's financial performance or financial condition, results of operations, liquidity or capital expenditures. During the first nine months of 2013, Suncor entered into various agreements in the normal course of business totalling approximately $1.3 billion in support of the company's diluent import strategy, market access strategy and activities to expand its storage and logistics network. For the majority of these commitments, the contract terms range between 10 and 25 years.

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2013 Third Quarter 041

8. QUARTERLY FINANCIAL DATA

Trends in Suncor's quarterly earnings results and cash flow from operations are driven primarily by production volumes, which can be significantly impacted by major maintenance events – such as the maintenance that occurred in Oil Sands and Refining and Marketing in the second and third quarter of 2013 and at many Exploration and Production assets in the third quarter of 2012 – and unplanned maintenance outages – such as the one that occurred at Upgrader 2 in the second quarter of 2013 and the first half of 2012. Trends in Suncor's quarterly earnings results and cash flow from operations are also affected by changes in commodity prices, refining crack spreads and foreign exchange rates.

Financial Summary

Three months ended ($ millions, unless otherwise noted) |  |  | Sept 30 2013 |  |  | June 30 2013 |  |  | Mar 31 2013 |  |  | Dec 31 2012 |  |  | Sept 30 2012 |  |  | June 30 2012 |  |  | Mar 31 2012 |  |  | Dec 31 2011 |  |
Total production (mboe/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil Sands |  |  | 423.6 |  |  | 309.4 |  |  | 389.0 |  |  | 378.7 |  |  | 378.9 |  |  | 337.8 |  |  | 341.1 |  |  | 356.8 |  |
Exploration and Production |  |  | 171.4 |  |  | 190.7 |  |  | 207.1 |  |  | 177.8 |  |  | 156.4 |  |  | 204.6 |  |  | 221.2 |  |  | 219.7 |  |
|  |  | 595.0 |  |  | 500.1 |  |  | 596.1 |  |  | 556.5 |  |  | 535.3 |  |  | 542.4 |  |  | 562.3 |  |  | 576.5 |  |
Revenues and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating revenues, net of royalties |  |  | 10 288 |  |  | 9 648 |  |  | 9 843 |  |  | 9 396 |  |  | 9 488 |  |  | 9 584 |  |  | 9 639 |  |  | 9 906 |  |
Other income |  |  | 85 |  |  | 66 |  |  | 173 |  |  | 92 |  |  | 88 |  |  | 123 |  |  | 116 |  |  | 60 |  |
|  |  | 10 373 |  |  | 9 714 |  |  | 10 016 |  |  | 9 488 |  |  | 9 576 |  |  | 9 707 |  |  | 9 755 |  |  | 9 966 |  |
Net earnings (loss) |  |  | 1 694 |  |  | 680 |  |  | 1 094 |  |  | (572 | ) |  | 1 544 |  |  | 324 |  |  | 1 446 |  |  | 1 427 |  |
per common share – basic (dollars) |  |  | 1.13 |  |  | 0.45 |  |  | 0.72 |  |  | (0.37 | ) |  | 1.01 |  |  | 0.21 |  |  | 0.93 |  |  | 0.91 |  |
per common share – diluted (dollars) |  |  | 1.13 |  |  | 0.45 |  |  | 0.71 |  |  | (0.37 | ) |  | 1.00 |  |  | 0.20 |  |  | 0.92 |  |  | 0.91 |  |
Operating earnings (1) |  |  | 1 426 |  |  | 934 |  |  | 1 367 |  |  | 990 |  |  | 1 292 |  |  | 1 249 |  |  | 1 318 |  |  | 1 427 |  |
per common share – basic (1) (dollars) |  |  | 0.95 |  |  | 0.62 |  |  | 0.90 |  |  | 0.65 |  |  | 0.84 |  |  | 0.80 |  |  | 0.84 |  |  | 0.91 |  |
Cash flow from operations (1) |  |  | 2 528 |  |  | 2 250 |  |  | 2 284 |  |  | 2 228 |  |  | 2 743 |  |  | 2 347 |  |  | 2 415 |  |  | 2 650 |  |
per common share – basic (1) (dollars) |  |  | 1.69 |  |  | 1.49 |  |  | 1.50 |  |  | 1.46 |  |  | 1.79 |  |  | 1.51 |  |  | 1.55 |  |  | 1.69 |  |
ROCE (1) (%) for the twelve months ended |  |  | 8.6 |  |  | 8.1 |  |  | 7.1 |  |  | 7.2 |  |  | 12.4 |  |  | 14.2 |  |  | 14.7 |  |  | 13.8 |  |
Common share information (dollars) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividend per common share |  |  | 0.20 |  |  | 0.20 |  |  | 0.13 |  |  | 0.13 |  |  | 0.13 |  |  | 0.13 |  |  | 0.11 |  |  | 0.11 |  |
Share price at the end of trading |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Toronto Stock Exchange (Cdn$) |  |  | 36.83 |  |  | 31.00 |  |  | 30.44 |  |  | 32.71 |  |  | 32.34 |  |  | 29.44 |  |  | 32.59 |  |  | 29.38 |  |
New York Stock Exchange (US$) |  |  | 35.78 |  |  | 29.49 |  |  | 30.01 |  |  | 32.98 |  |  | 32.85 |  |  | 28.95 |  |  | 32.70 |  |  | 28.83 |  |

(1)
  Non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A. ROCE excludes capitalized costs related to major projects in progress.

Suncor Energy Inc.
042 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Business Environment

Three months ended (average for the period ended, except as noted) |  |  | Sept 30 2013 |  |  | June 30 2013 |  |  | Mar 31 2013 |  |  | Dec 31 2012 |  |  | Sept 30 2012 |  |  | June 30 2012 |  |  | Mar 31 2012 |  |  | Dec 31 2011 |  |
WTI crude oil at Cushing |  | US$/bbl |  |  | 105.85 |  |  | 94.20 |  |  | 94.35 |  |  | 88.20 |  |  | 92.20 |  |  | 93.50 |  |  | 102.95 |  |  | 94.05 |  |
Dated Brent crude oil at Sullom Voe |  | US$/bbl |  |  | 109.70 |  |  | 103.35 |  |  | 112.65 |  |  | 110.10 |  |  | 109.50 |  |  | 108.90 |  |  | 118.35 |  |  | 109.00 |  |
Dated Brent/Maya FOB price differential |  | US$/bbl |  |  | 10.35 |  |  | 5.50 |  |  | 10.60 |  |  | 17.30 |  |  | 11.90 |  |  | 9.85 |  |  | 9.45 |  |  | 5.55 |  |
Canadian 0.3% par crude oil at Edmonton |  | Cdn$/bbl |  |  | 105.25 |  |  | 92.90 |  |  | 88.45 |  |  | 84.35 |  |  | 84.70 |  |  | 84.45 |  |  | 92.80 |  |  | 98.20 |  |
WCS at Hardisty |  | US$/bbl |  |  | 88.35 |  |  | 75.05 |  |  | 62.40 |  |  | 70.05 |  |  | 70.45 |  |  | 70.60 |  |  | 81.50 |  |  | 83.60 |  |
Light/heavy crude oil differential for WTI at Cushing less WCS at Hardisty |  | US$/bbl |  |  | 17.50 |  |  | 19.15 |  |  | 31.95 |  |  | 18.15 |  |  | 21.75 |  |  | 22.90 |  |  | 21.45 |  |  | 10.45 |  |
Condensate at Edmonton |  | US$/bbl |  |  | 103.80 |  |  | 103.30 |  |  | 107.20 |  |  | 98.10 |  |  | 96.00 |  |  | 99.40 |  |  | 110.00 |  |  | 108.70 |  |
Natural gas (Alberta spot) at AECO |  | Cdn$/mcf |  |  | 2.80 |  |  | 3.60 |  |  | 3.05 |  |  | 3.05 |  |  | 2.20 |  |  | 1.85 |  |  | 2.50 |  |  | 3.40 |  |
New York Harbor 3-2-1 crack (1) |  | US$/bbl |  |  | 19.25 |  |  | 25.60 |  |  | 31.20 |  |  | 35.95 |  |  | 37.80 |  |  | 31.95 |  |  | 25.80 |  |  | 22.80 |  |
Chicago 3-2-1 crack (1) |  | US$/bbl |  |  | 15.80 |  |  | 30.70 |  |  | 27.10 |  |  | 27.85 |  |  | 35.15 |  |  | 27.85 |  |  | 18.80 |  |  | 19.20 |  |
Portland 3-2-1 crack (1) |  | US$/bbl |  |  | 19.60 |  |  | 30.60 |  |  | 30.55 |  |  | 29.85 |  |  | 38.15 |  |  | 37.90 |  |  | 27.70 |  |  | 26.45 |  |
Gulf Coast 3-2-1 crack (1) |  | US$/bbl |  |  | 15.95 |  |  | 24.00 |  |  | 28.80 |  |  | 27.35 |  |  | 33.95 |  |  | 29.30 |  |  | 25.45 |  |  | 20.40 |  |
Exchange rate |  | US$/Cdn$ |  |  | 0.96 |  |  | 0.98 |  |  | 0.99 |  |  | 1.00 |  |  | 1.00 |  |  | 0.99 |  |  | 1.00 |  |  | 0.98 |  |
Exchange rate (end of period) |  | US$/Cdn$ |  |  | 0.97 |  |  | 0.95 |  |  | 0.98 |  |  | 1.01 |  |  | 1.02 |  |  | 0.98 |  |  | 1.00 |  |  | 0.98 |  |

(1)
  3-2-1 crack spreads are indicators of the refining margin generated by converting three barrels of WTI into two barrels 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.

Significant or Unusual Items Impacting Net Earnings

In addition to the impacts of changes in production volumes and business environment, net earnings over the last eight quarters were affected by the following events or one-time adjustments:

•
  The third quarter of 2013 included an after-tax gain of $130 million relating to the sale of a significant portion of the company's natural gas business in Western Canada.
•
  The first quarter of 2013 included an after-tax charge of $127 million as a result of not proceeding with the Voyageur upgrader project, which represents the expected cost of not proceeding with the project, including costs related to decommissioning and restoration of the Voyageur site, and contract cancellations.
•
  Given Suncor's view of the challenging economic outlook for the Voyageur upgrader project, the company performed an impairment test in the fourth quarter of 2012. Based on an assessment of expected future net cash flows, the company recorded an after-tax impairment charge of $1.487 billion.
•
  The fourth quarter of 2012 included an after-tax impairment reversal of $177 million of the impairment charges recorded against its assets in Syria in the second quarter of 2012, due to a revised assessment of the net recoverable value of the underlying assets following the receipt of risk mitigation proceeds.
•
  The fourth quarter of 2012 included total after-tax impairment charges of $128 million for certain exploration, development and production assets in the Exploration and Production segment.
•
  The second quarter of 2012 included after-tax impairment charges and write-offs of $694 million against assets in Syria, which reflected the shut in of production due to political unrest and international sanctions. The company ceased recording all production and revenue from its Syrian assets in the fourth quarter of 2011.

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9. OTHER ITEMS

Accounting Policies

Suncor's significant accounting policies and a summary of recently announced accounting standards are described in notes 3 and 5, respectively, to the audited Consolidated Financial Statements for the year ended December 31, 2012.

Adoption of New and Amended Accounting Standards

Effective January 1, 2013, the company adopted IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosures of Interests in Other Entities, IFRS 13 Fair Value Measurement, and amendments to IAS 19 Employee Benefits and IFRS 7 Financial Instruments: Disclosure.

Scope of a Reporting Entity

IFRS 10 creates a single consolidation model by revising the definition of control in order to apply the same control criteria to all types of entities, including joint arrangements, associates and structured entities. IFRS 11 establishes a principle-based approach to the accounting for joint arrangements by focusing on the rights and obligations of the arrangement and limits the application of proportionate consolidation accounting to arrangements that meet the definition of a joint operation. Arrangements that meet the definition of a joint venture are required to apply the equity method of accounting. IFRS 12 is a comprehensive disclosure standard for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities.

The company identified two existing joint arrangements in the Refining and Marketing segment that have been retrospectively reclassified as joint ventures as a result of IFRS 11, and are now being accounted for using the equity method of accounting rather than the proportionate consolidation method. This change does not have a material impact to the consolidated financial statements, but does result in the netting of revenues and expenses for these entities into Other Income. Cash flow from operations from these joint arrangements is now recognized based on cash distributions received in the period, where previously it was recognized based on the company's proportionate share of cash flow from operations. In addition, the company's net investment in these entities is now presented in Other Assets. The company determined that the adoption of IFRS 10 did not result in changes to the consolidation conclusions of any of its subsidiaries and investees.

Employee Benefits

The amendments to IAS 19 revise the recognition, presentation and disclosure requirements for defined benefit plans. The revised standard requires immediate recognition of actuarial gains and losses in other comprehensive income, thereby eliminating the previous options that were available, changes the calculation and presentation of the interest expense component of annual pension expense and enhances the disclosure requirements for defined benefit plans.

The adoption of the amendments did not have a material impact on the consolidated financial statements. The company has recognized an interest expense on the net unfunded obligation, and reclassified net interest expense to Financing Expenses from Operating, Selling and General Expense.

Fair Value Measurements

IFRS 13 establishes a single source of guidance for most fair value measurements, clarifies the definition of fair value, and enhances the disclosures on fair value measurements. The adoption of IFRS 13 did not require any adjustments to the

Suncor Energy Inc.
044 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

valuation techniques used by the company to measure fair value and did not result in any fair value measurement adjustments as at January 1, 2013. The adoption of this standard resulted in additional interim disclosures with respect to the fair value hierarchy level of each category of financial instrument that is measured at fair value. See note 14 to the unaudited interim Consolidated Financial Statements for the three and nine months ended September 30, 2013.

Offsetting Financial Assets and Liabilities

The amendments to IFRS 7 clarify the offsetting model and develop common disclosure requirements to enhance the understanding of the potential effects of offsetting arrangements. The adoption of this amendment resulted in additional disclosure for the company's offsetting financial assets and financial liabilities; see note 14 to the unaudited interim Consolidated Financial Statements for the three and nine months ended September 30, 2013.

The effects of the application of IFRS 11 and the IAS 19 amendment to consolidated net earnings, operating earnings and cash flow from operations for the three and nine months ended September 30, 2012 and the twelve months ended December 31, 2012 are shown in the table below and reflect the application of relevant transitional provisions.

($ millions) |  |  | Three months ended September 30, 2012 |  |  | Nine months ended September 30, 2012 |  |  | Year ended December 31, 2012 |  |
Net earnings before accounting changes |  |  | 1 555 |  |  | 3 345 |  |  | 2 783 |  |
Adjustments to net earnings: |  |  |  |  |  |  |  |  |  |  |
Recognition of interest costs on net unfunded obligation (IAS 19) |  |  | (11 | ) |  | (31 | ) |  | (41 | ) |
Net earnings after accounting changes |  |  | 1 544 |  |  | 3 314 |  |  | 2 742 |  |
Operating earnings before accounting changes |  |  | 1 303 |  |  | 3 890 |  |  | 4 890 |  |
Adjustments to operating earnings: |  |  |  |  |  |  |  |  |  |  |
Recognition of interest costs on net unfunded obligation (IAS 19) |  |  | (11 | ) |  | (31 | ) |  | (41 | ) |
Operating earnings after accounting changes |  |  | 1 292 |  |  | 3 859 |  |  | 4 849 |  |
Cash flow from operations before accounting changes |  |  | 2 740 |  |  | 7 510 |  |  | 9 745 |  |
Adjustments to cash flow from operations: |  |  |  |  |  |  |  |  |  |  |
Proportionate consolidation to equity accounting (IFRS 11) |  |  | 3 |  |  | (5 | ) |  | (5 | ) |
Recognition of interest costs on net unfunded obligation (IAS 19) |  |  | — |  |  | — |  |  | (7 | ) |
Cash flow from operations after accounting changes |  |  | 2 743 |  |  | 7 505 |  |  | 9 733 |  |

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect reported assets, liabilities, revenues and expenses, gains and losses, and disclosures of contingencies. These estimates and assumptions are subject to change based on experience and new information. Critical accounting estimates are those that require management to make assumptions about matters that are highly uncertain at the time the estimate is made. Critical accounting estimates are also those estimates which, where a different estimate could have been used or where changes in the estimate that are reasonably likely to occur would have a material impact on the company's financial condition, changes in financial condition or financial performance. Critical accounting estimates are reviewed annually by the Audit Committee of the Board of Directors. A detailed description of Suncor's critical accounting estimates is provided in the Accounting Policies and Critical Accounting Estimates section of Suncor's 2012 annual MD&A, which section is herein incorporated by reference.

Suncor Energy Inc.
2013 Third Quarter 045

Voyageur Upgrader Project

In the first quarter of 2013, Suncor announced that it had acquired Total E&P's interest in VULP. Management applied judgment in determining whether the acquisition met the definition of a business combination or an asset purchase and determined that the acquisition met the definition of a business combination due to the existence of activities and assets that are capable of being conducted and managed for the purpose of generating a return. As the transaction met the definition of a business combination, the acquired identifiable assets and assumed liabilities were recognized at their fair value on the date of the acquisition.

The fair value attributed to the property, plant and equipment acquired was determined using a combination of an expected future cash flow approach under the fair value less costs to sell methodology and management's best estimate of the amount recoverable from the sale of certain assets.

The fair value of the asset retirement obligation was determined based on management's best estimate of the estimated costs to complete the activities, the timing of cash outflows, the discount rate and management's anticipated use of the area in the future. Changes to these estimates may have a material impact on the amounts presented.

Financial Instruments

Suncor periodically enters into derivative contracts such as forwards, futures, swaps, options and costless collars to manage exposure to fluctuations in commodity prices and foreign exchange rates, and to optimize the company's position with respect to interest payments. The company also uses physical and financial energy derivatives to earn trading profits. For more information on Suncor's financial instruments and the related financial risk factors, see note 26 of the audited Consolidated Financial Statements for the year ended December 31, 2012, and note 14 to the unaudited interim Consolidated Financial Statements for the three and nine months ended September 30, 2013.

Canada Revenue Agency Proposal Letter

In July 2013, the company responded to the information request received in April 2013 from the Canada Revenue Agency (CRA) relating to the proposal letter regarding the income tax treatment of the realized losses in 2007 on the settlement of the Buzzard derivative contracts. After reviewing the company's response, the CRA issued another information request, which Suncor responded to at the end of September. The company strongly disagrees with the CRA's position and firmly believes it will be able to successfully defend its original filing position should it receive a Notice of Reassessment.

Union Negotiations

On June 4, 2013, Suncor and the Communications, Energy and Paperworkers Union (CEP) reached a national collective bargaining agreement. The national agreement forms the foundation for local agreements at Suncor's CEP-represented operational sites across Canada. As at September 30, 2013, the CEP represented approximately 30% (or 4,200) of Suncor's employees, which is the majority of the company's unionized employees. Details of the agreements are as follows:

•
  The agreements covering approximately 19% of Suncor's CEP-represented employees working in the company's refinery, lubricants, natural gas, and terminal operations were under negotiation in the third quarter of 2013 and expired on December 31, 2012 or January 31, 2013. Certain of these agreements were successfully renewed in the third quarter of 2013.
•
  The agreement covering approximately 79% of Suncor's CEP-represented employees working in the company's Oil Sands Base or Firebag operations was under negotiation in the third quarter of 2013 and expired on May 1, 2013. The agreement was successfully renewed in the third quarter of 2013.

Suncor Energy Inc.
046 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

•
  The agreement covering the remainder of Suncor's CEP-represented employees, who work in the company's Terra Nova operations, is currently under negotiation and expired on September 30, 2013.

Control Environment

Based on their evaluation as at September 30, 2013, Suncor's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1934, as amended (the Exchange Act)) are effective to ensure that information required to be disclosed by the company in reports that are filed or submitted to Canadian and U.S. securities authorities is recorded, processed, summarized and reported within the time periods specified in Canadian and U.S. securities laws. In addition, as at September 30, 2013, there were no changes in the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three-month period ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting. Management will continue to periodically evaluate the company's disclosure controls and procedures and internal control over financial reporting and will make any modifications from time to time as deemed necessary.

As a result of current events in Syria, Suncor is not able to monitor the status of all of its assets in the country, including whether certain facilities have suffered damages. Suncor has assessed and is continually monitoring the control environment in the country and does not consider the changes to have a material impact on the company's overall internal control over financial reporting.

Based on their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements, and even those controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Corporate Guidance

Suncor has updated its previously issued 2013 corporate guidance. Suncor's press release dated October 30, 2013, which is also available on www.sedar.com, provides updates to its corporate guidance.

10. NON-GAAP FINANCIAL MEASURES ADVISORY

Certain financial measures in the MD&A – namely operating earnings, ROCE, cash flow from operations and Oil Sands cash operating costs – are not prescribed by GAAP. These non-GAAP financial measures are included because management uses the information to analyze operating performance, leverage and liquidity. 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. Therefore, these non-GAAP financial measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Except as otherwise indicated, these non-GAAP measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.

Effective January 1, 2013, Suncor adopted new and amended accounting standards, described in the Other Items section of this MD&A. Certain comparative figures pertaining to Suncor's 2012 non-GAAP financial measures have been restated for the adoption of the new and amended standards, while comparative figures pertaining to Suncor's 2011 results have not been restated in accordance with the respective transitional provisions.

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2013 Third Quarter 047

Operating Earnings

Operating earnings is a non-GAAP financial measure that adjusts net earnings for significant items that are not indicative of operating performance. Management uses operating earnings to evaluate operating performance because management believes it provides better comparability between periods. Operating earnings are reconciled to net earnings in the Consolidated Financial Information segment of the MD&A.

Return on Capital Employed (ROCE)

ROCE is a non-GAAP financial measure that management uses to analyze operating performance and the efficiency of Suncor's capital allocation process. Average capital employed is calculated as a thirteen-month average of the capital employed balance at the beginning of the twelve-month period and the month-end capital employed balances throughout the remainder of the twelve-month period. Figures for capital employed at the beginning and end of the twelve-month period are presented to show the changes in the components of the calculation over the twelve-month period.

The company presents two ROCE calculations – one including and one excluding the impacts on capital employed of major projects in progress. Major projects in progress includes accumulated capital expenditures and capitalized interest for significant projects still under construction or in the process of being commissioned, and acquired assets that are still being evaluated. Management uses ROCE excluding the impacts of major projects in progress on capital employed to assess performance of operating assets.

For the twelve months ended September 30 |  |  |  |  |  |  |  |  |  |
($ millions, except as noted) |  |  |  |  | 2013 |  |  | 2012 |  |
Adjustments to net earnings |  |  |  |  |  |  |  |  |  |
Net earnings |  |  |  |  | 2 896 |  |  | 4 742 |  |
Add after-tax amounts for: |  |  |  |  |  |  |  |  |  |
Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt |  |  |  |  | 339 |  |  | (393 | ) |
Interest expense |  |  |  |  | 177 |  |  | 47 |  |
|  | A |  |  | 3 412 |  |  | 4 396 |  |
Capital employed – beginning of twelve-month period |  |  |  |  |  |  |  |  |  |
Net debt |  |  |  |  | 5 034 |  |  | 7 678 |  |
Shareholders' equity |  |  |  |  | 39 981 |  |  | 37 613 |  |
|  |  |  |  | 45 015 |  |  | 45 291 |  |
Capital employed – end of twelve-month period |  |  |  |  |  |  |  |  |  |
Net debt |  |  |  |  | 5 793 |  |  | 5 034 |  |
Shareholders' equity |  |  |  |  | 41 132 |  |  | 39 981 |  |
|  |  |  |  | 46 925 |  |  | 45 015 |  |
Average capital employed |  | B |  |  | 46 552 |  |  | 45 264 |  |
ROCE – including major projects in progress (%) |  | A/B |  |  | 7.3 |  |  | 9.7 |  |
Average capitalized costs related to major projects in progress |  | C |  |  | 7 074 |  |  | 9 799 |  |
ROCE – excluding major projects in progress (%) |  | A/(B-C) |  |  | 8.6 |  |  | 12.4 |  |

Suncor Energy Inc.
048 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Cash Flow from Operations

Cash flow from 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. Changes to non-cash working capital can include, among other factors, the timing of offshore feedstock purchases and payments for fuel and income taxes, which management believes reduces comparability between periods.

Three months ended September 30 |  |  | Oil Sands |  |  | Exploration and Production |  |  | Refining and Marketing |  |  | Corporate, Energy Trading and Eliminations |  |  | Total |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings (loss) |  |  | 951 |  |  | 537 |  |  | 446 |  |  | 88 |  |  | 350 |  |  | 710 |  |  | (53 | ) |  | 209 |  |  | 1 694 |  |  | 1 544 |  |
Adjustments for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation, depletion, amortization and impairment |  |  | 652 |  |  | 503 |  |  | 274 |  |  | 231 |  |  | 136 |  |  | 116 |  |  | 27 |  |  | 45 |  |  | 1 089 |  |  | 895 |  |
Deferred income taxes |  |  | 120 |  |  | 187 |  |  | (193 | ) |  | (22 | ) |  | (126 | ) |  | 199 |  |  | 193 |  |  | 24 |  |  | (6 | ) |  | 388 |  |
Accretion of liabilities |  |  | 28 |  |  | 25 |  |  | 16 |  |  | 15 |  |  | 2 |  |  | 1 |  |  | 4 |  |  | 4 |  |  | 50 |  |  | 45 |  |
Unrealized foreign exchange gain on U.S. dollar denominated debt |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (157 | ) |  | (289 | ) |  | (157 | ) |  | (289 | ) |
Change in fair value of derivative contracts |  |  | (1 | ) |  | (2 | ) |  | (2 | ) |  | (1 | ) |  | (3 | ) |  | (2 | ) |  | (145 | ) |  | 22 |  |  | (151 | ) |  | 17 |  |
Gain (loss) on disposal of assets |  |  | — |  |  | 3 |  |  | (130 | ) |  | (1 | ) |  | (3 | ) |  | (4 | ) |  | — |  |  | (1 | ) |  | (133 | ) |  | (3 | ) |
Share-based compensation |  |  | 39 |  |  | 85 |  |  | 18 |  |  | 13 |  |  | 25 |  |  | 44 |  |  | 113 |  |  | 48 |  |  | 195 |  |  | 190 |  |
Exploration expenses |  |  | — |  |  | — |  |  | 8 |  |  | 65 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | 65 |  |
Settlement of decommissioning and restoration liabilities |  |  | (74 | ) |  | (78 | ) |  | (3 | ) |  | (5 | ) |  | (7 | ) |  | (6 | ) |  | — |  |  | — |  |  | (84 | ) |  | (89 | ) |
Other |  |  | (13 | ) |  | (4 | ) |  | (28 | ) |  | (18 | ) |  | (3 | ) |  | 5 |  |  | 67 |  |  | (3 | ) |  | 23 |  |  | (20 | ) |
Cash flow from operations |  |  | 1 702 |  |  | 1 256 |  |  | 406 |  |  | 365 |  |  | 371 |  |  | 1 063 |  |  | 49 |  |  | 59 |  |  | 2 528 |  |  | 2 743 |  |
Decrease (increase) in non-cash working capital |  |  | 208 |  |  | 256 |  |  | 54 |  |  | (168 | ) |  | 77 |  |  | 44 |  |  | (347 | ) |  | (492 | ) |  | (8 | ) |  | (360 | ) |
Cash flow provided by (used in) operating activities |  |  | 1 910 |  |  | 1 512 |  |  | 460 |  |  | 197 |  |  | 448 |  |  | 1 107 |  |  | (298 | ) |  | (433 | ) |  | 2 520 |  |  | 2 383 |  |

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2013 Third Quarter 049

Nine months ended September 30 |  |  | Oil Sands |  |  | Exploration and Production |  |  | Refining and Marketing |  |  | Corporate, Energy Trading and Eliminations |  |  | Total |  |
($ millions) |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |  |
Net earnings (loss) |  |  | 1 571 |  |  | 1 505 |  |  | 1 101 |  |  | (10 | ) |  | 1 564 |  |  | 1 687 |  |  | (768 | ) |  | 132 |  |  | 3 468 |  |  | 3 314 |  |
Adjustments for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation, depletion, amortization and impairment |  |  | 1 759 |  |  | 1 412 |  |  | 889 |  |  | 1 557 |  |  | 381 |  |  | 337 |  |  | 88 |  |  | 126 |  |  | 3 117 |  |  | 3 432 |  |
Deferred income taxes |  |  | 323 |  |  | 623 |  |  | (130 | ) |  | 26 |  |  | 148 |  |  | 461 |  |  | 49 |  |  | (55 | ) |  | 390 |  |  | 1 055 |  |
Accretion of liabilities |  |  | 84 |  |  | 83 |  |  | 50 |  |  | 47 |  |  | 4 |  |  | 3 |  |  | 10 |  |  | 4 |  |  | 148 |  |  | 137 |  |
Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 301 |  |  | (272 | ) |  | 301 |  |  | (272 | ) |
Change in fair value of derivative contracts |  |  | (1 | ) |  | — |  |  | (1 | ) |  | (1 | ) |  | (1 | ) |  | — |  |  | (60 | ) |  | 31 |  |  | (63 | ) |  | 30 |  |
Gain on disposal of assets |  |  | — |  |  | (29 | ) |  | (130 | ) |  | (1 | ) |  | (4 | ) |  | (8 | ) |  | — |  |  | (1 | ) |  | (134 | ) |  | (39 | ) |
Share-based compensation |  |  | (10 | ) |  | 78 |  |  | 21 |  |  | 11 |  |  | 9 |  |  | 38 |  |  | 113 |  |  | 44 |  |  | 133 |  |  | 171 |  |
Exploration expenses |  |  | — |  |  | — |  |  | 59 |  |  | 124 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 59 |  |  | 124 |  |
Settlement of decommissioning and restoration liabilities |  |  | (313 | ) |  | (310 | ) |  | (16 | ) |  | (22 | ) |  | (13 | ) |  | (13 | ) |  | — |  |  | — |  |  | (342 | ) |  | (345 | ) |
Other |  |  | 33 |  |  | (45 | ) |  | (79 | ) |  | (33 | ) |  | (4 | ) |  | (1 | ) |  | 35 |  |  | (23 | ) |  | (15 | ) |  | (102 | ) |
Cash flow from (used in) operations |  |  | 3 446 |  |  | 3 317 |  |  | 1 764 |  |  | 1 698 |  |  | 2 084 |  |  | 2 504 |  |  | (232 | ) |  | (14 | ) |  | 7 062 |  |  | 7 505 |  |
(Increase) decrease in non-cash working capital |  |  | 2 188 |  |  | (816 | ) |  | 565 |  |  | (88 | ) |  | 226 |  |  | 29 |  |  | (2 277 | ) |  | 1 053 |  |  | 702 |  |  | 178 |  |
Cash flow provided by (used in) operating activities |  |  | 5 634 |  |  | 2 501 |  |  | 2 329 |  |  | 1 610 |  |  | 2 310 |  |  | 2 533 |  |  | (2 509 | ) |  | 1 039 |  |  | 7 764 |  |  | 7 683 |  |

Oil Sands Cash Operating Costs

Oil Sands cash operating costs and cash operating costs per barrel are non-GAAP financial measures, which are derived by adjusting Oil Sands segment operating, selling and general expense (a GAAP measure based on sales volumes) for i) costs pertaining to Syncrude operations; ii) non-production costs that management believes do not relate to the production performance of Oil Sands operations, including, but not limited to, share-based compensation adjustments, costs related to the remobilization or deferral of growth projects, research, the expense recorded as part of a non-monetary arrangement involving a third-party processor, and feedstock costs for natural gas used to create hydrogen for secondary upgrading processes; iii) excess power generated and sold that is recorded in operating revenue; and iv) the impacts of changes in inventory levels, such that the company is able to present cost information based on production volumes. Oil Sands cash operating costs are reconciled in the Segment Results and Analysis – Oil Sands section of the MD&A.

Impact of First-in, First-out Inventory Valuation on Refining and Marketing Net Earnings

In accordance with GAAP, Suncor applies the first-in, first-out inventory (FIFO) valuation methodology. This results in a disconnect between the sales prices for refined products, which reflect current market conditions, and the amount recorded as the cost of sale for the related refinery feedstock, which reflects market conditions at the time when the feedstock was purchased. This lag between purchase and sale can be anywhere from several weeks to several months, and is influenced by the time to receive crude after purchase (which can be several weeks for foreign offshore crude purchases), regional crude inventory levels, the completion of refining processes, transportation time to distribution channels, and regional refined product inventory levels.

Suncor Energy Inc.
050 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Suncor prepares and presents an estimate of the impact of using a FIFO inventory valuation methodology compared to a last-in, first-out (LIFO) methodology, because management uses the information to analyze operating performance and compare itself against refining peers that are permitted to use LIFO inventory valuation under United States GAAP (U.S. GAAP).

Generally, during times of increasing crude prices, a FIFO inventory valuation positively impacts net earnings, compared with LIFO inventory valuation, as inventories purchased during periods of lower relative feedstock costs are replaced by inventories purchased during periods of higher relative feedstock costs. Conversely, during times of decreasing crude prices, FIFO inventory valuation generally negatively impacts net earnings, compared with LIFO inventory valuation, as inventories purchased during periods of higher relative feedstock costs are replaced by inventories purchased during periods of lower relative feedstock costs.

The company's estimate of the impact of using a FIFO inventory valuation methodology compared to a LIFO methodology is a relatively simple calculation that replaces the FIFO-based costs of goods sold with an average purchase cost over the same period, and does not incorporate all of the elements of a more complex and precise LIFO inventory valuation methodology that an entity using U.S. GAAP might include. The company's estimate is not derived from a standardized calculation and, therefore, is 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 or U.S. GAAP.

The impact on earnings pertaining to the increasing crude price environment increased after-tax earnings by approximately $104 million and $222 million for the third quarter of 2013 and first nine months of 2013, respectively. The impact on earnings pertaining to the increasing crude price environment increased after-tax earnings by approximately $78 million for the third quarter of 2012, while the impact of the decreasing crude price environment decreased after-tax earnings by approximately $50 million for the first nine months of 2012.

11. FORWARD-LOOKING INFORMATION

The MD&A contains 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 and other information is 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 and resources estimates; commodity prices and interest and foreign exchange rates; capital efficiencies and cost-savings; applicable royalty rates and tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory and third-party approvals. In addition, all other statements and other information that address expectations or projections about the future, and other 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 and information 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" and similar expressions.

Forward-looking statements in the MD&A include references to:

Suncor's expectations about production volumes and the performance of its existing assets, including that:

•
  The company anticipates that bitumen production from Firebag will reach the targeted production capacity of approximately 180,000 bbls/d in early 2014.

Suncor Energy Inc.
2013 Third Quarter 051

The anticipated duration and impact of planned maintenance events, including:

•
  The company's expectation that all planned maintenance events for Oil Sands are complete for the year; and
•
  The company's plans to complete routine maintenance, repair a damaged mooring chain and perform preventive maintenance on the remaining eight chains at Terra Nova in eleven weeks.

Suncor's expectations about capital expenditures, and growth and other projects, including:

•
  The company's capital allocation plans;
•
  That the charge recorded in respect of the Voyageur upgrader project reflects all the costs of not proceeding with the project;
•
  The company's plans to increase its heavy crude shipping capacity to the U.S. Gulf Coast through its capacity on the Keystone South pipeline, resulting in additional logistics and marketing flexibility;
•
  The company's plans to meet linefill requirements on the Keystone South pipeline in the fourth quarter of 2013;
•
  The expectation that the rail offloading facility in Montreal will take delivery of crude starting in the fourth quarter of 2013;
•
  The debottlenecking project at the MacKay River facilities is expected to increase production capacity by approximately 20% over the next two years for a total capacity of 38,000 bbls/d;
•
  The expectation that the Fort Hills project will produce first oil as early as the fourth quarter of 2017, achieve 90% of its planned production capacity of 180,000 bbls/d (73,000 bbls/d net to Suncor) within twelve months, have an expected mine life in excess of 50 years at the current planned production rate (which assumes that all of the estimated contingent resources are developed), and that Suncor's portion of the post-sanction capital investment in Fort Hills is estimated at approximately $5.5 billion;
•
  The company's plans to continue to focus on design engineering and regulatory work and to provide an update on the targeted timing for a sanction decision for the Joslyn mining project when available;
•
  The design and construction of new well pads at Firebag and MacKay River are expected to maintain existing production levels in future years;
•
  Drilling activities on the Golden Eagle project are expected to commence by early 2014, and the project is expected to achieve first oil in late 2014 or early 2015;
•
  Subsea installation for the Hibernia Southern Extension Unit is expected to be completed in the fourth quarter of 2013. The project is expected to increase the overall production from the Hibernia field starting in 2015;
•
  Subsea equipment for the South White Rose Extension project is expected to be installed in two phases over 2013 and 2014. First oil is expected in the fourth quarter of 2014; and
•
  The Hebron project is expected to achieve first oil in 2017.

Also:

•
  The company's position in respect of the proposal letter received from the CRA relating to the income tax treatment of realized losses in 2007 on the settlement of certain derivative contracts relating to Buzzard and that it will be able to successfully defend its original filing position;
•
  Management's belief that Suncor will have the capital resources to fund the remainder of its planned 2013 capital spending program of $6.7 billion and to meet current and future working capital requirements through existing cash balances and short-term investments, cash flow from operations for the remainder of 2013, available committed credit facilities issuing commercial paper and long-term notes or debentures, and that, if additional capital is required, adequate additional financing will be available to Suncor in the debt capital markets at commercial terms and rates;
•
  Management's belief that a phased and flexible approach to existing and future growth projects should assist Suncor in maintaining its ability to manage project costs and debt levels;
•
  The company's expectations that the maximum weighted average term to maturity of its short-term investment portfolio will not exceed six months, and that all investments will be with counterparties with investment grade debt ratings; and

Suncor Energy Inc.
052 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

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  The company's belief that it does not have any guarantees or off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the company's financial condition or results of operations, liquidity or capital expenditures.

Forward-looking statements and information 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; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; our dependence on pipeline capacity and other logistical constraints, which may affect our ability to distribute our products to market; our ability to finance Oil Sands growth and sustaining 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; inflationary pressures on operating costs, including labour, natural gas and other energy sources used in oil sands processes; 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); risks and uncertainties associated with obtaining regulatory and stakeholder approval for exploration and development activities; changes to royalty and tax legislation and related agreements that could impact our business, such as our current dispute with the Alberta Department of Energy in respect of the Bitumen Valuation Methodology Regulation; the potential for disruptions to operations and construction projects as a result of our relationships with labour unions that represent employees at our facilities; and changes to environmental regulations or legislation.

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; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; 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 and that operations in Syria continue to be impacted by sanctions or political unrest; risks and uncertainties associated with obtaining regulatory and stakeholder approval for exploration and development activities; the potential for disruptions to operations and construction projects as a result of our relationships with labour unions that represent employees at our facilities; 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; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; risks and

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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; and the potential for disruptions to operations and construction projects as a result of our relationships with labour unions or employee associations that represent employees at our refineries and distribution facilities.

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; fluctuations in supply and demand for Suncor's products; the successful and timely implementation of capital projects, including growth projects and regulatory projects; competitive actions of other companies, including increased competition from other oil and gas companies or from companies that provide alternative sources of energy; labour and material shortages; actions by government authorities, including the imposition or reassessment of taxes or changes to fees and royalties, and changes in environmental and other regulations; the ability and willingness of parties with whom we have material relationships to perform their obligations to us; the occurrence of unexpected events such as 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 systems by computer hackers or cyberterrorists, and the unavailability or failure of such systems to perform as anticipated as a result of such breaches; our ability to find new oil and gas reserves that can be developed economically; the accuracy of Suncor's reserves, resources and future production estimates; market instability affecting Suncor's ability to borrow in the capital debt markets at acceptable rates; 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; risks and uncertainties associated with closing a transaction for the purchase or sale of an oil and gas property, including estimates of the final consideration to be paid or received, the ability of counterparties to comply with their obligations in a timely manner and the receipt of any required regulatory or other third-party approvals outside of Suncor's control that are customary to transactions of this nature; 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 important factors are not exhaustive.

Many of these risk factors and other assumptions related to Suncor's forward-looking statements and information are discussed in further detail throughout the MD&A, and under the heading Risk Factors in the 2012 annual MD&A, the company's 2012 AIF and Form 40-F on file with Canadian securities commissions at www.sedar.com and the United States Securities and Exchange Commission at www.sec.gov. 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.

Suncor's operating working interest before deduction of royalties, and without including any royalty interests of Suncor, in the approximately 3.3 billion barrels of contingent resources associated with the Fort Hills project in Alberta is approximately 1.35 billion barrels of bitumen. In its 2012 AIF and Form 40-F, Suncor disclosed that the reclassification of the contingent resources, which have an effective date of December 31, 2012, for the Fort Hills project was largely contingent upon an assessment that development would be sanctioned and commence within a reasonable time frame. Since the date of Suncor's 2012 AIF, the respective co-owners of the Fort Hills project have sanctioned the project. Given the foregoing, these resources, or a portion thereof, may in the future be re-classified as reserves.

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that it will be commercially viable to produce the contingent resources.

There is no certainty as to timing of the development of the resources. The contingent resource estimates are considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual

Suncor Energy Inc.
054 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

remaining quantities recovered will be greater or less than the best estimate. The best estimate of potentially recoverable volumes is prepared independent of the risks associated with achieving commercial production. There are numerous uncertainties inherent in estimating quantities and quality of these contingent resources, including many factors beyond our control. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or lack of infrastructure or markets.

For more information on contingent resources, please see Suncor's 2012 AIF and Form 40-F.

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EXHIBIT 99.2