Unaudited Consolidated Financial Statements for the third quarter ended September 30, 2013


	Three months ended September 30				Nine months ended September 30
($ millions)	2013		2012		2013		2012

			(restated – note 3)				(restated – note 3)
Revenues and Other Income
Operating revenues, net of royalties (note 4)	10 288		9 488		29 779		28 711
Other income (note 5)	85		88		324		327

	10 373		9 576		30 103		29 038

Expenses
Purchases of crude oil and products	4 603		4 124		13 101		12 612
Operating, selling and general	2 318		2 265		6 924		6 723
Transportation	205		171		573		491
Depreciation, depletion, amortization and impairment	1 089		895		3 117		3 432
Exploration	38		97		247		238
Gain on disposal of assets (note 16)	(133	)	(3	)	(134	)	(39	)
Project start-up costs	3		17		13		40
Voyageur upgrader project charges (note 15)	—		—		176		—
Financing (income) expenses (note 9)	(65	)	(241	)	709		(73	)

	8 058		7 325		24 726		23 424

Earnings before Income Taxes	2 315		2 251		5 377		5 614

Income Taxes
Current	627		319		1 519		1 245
Deferred	(6	)	388		390		1 055

	621		707		1 909		2 300

Net Earnings	1 694		1 544		3 468		3 314

Other Comprehensive (Loss) Income
Foreign currency translation adjustment	(55	)	(135	)	136		(116	)
Cash flow hedges reclassified to net earnings	—		(1	)	—		(1	)
Actuarial (loss) gain on employee retirement benefit plans, net of income taxes (note 13)	(33	)	(54	)	353		(178	)

Other Comprehensive (Loss) Income	(88	)	(190	)	489		(295	)

Total Comprehensive Income	1 606		1 354		3 957		3 019

Per Common Share (dollars) (notes 3 and 11)
Net earnings – basic	1.13		1.01		2.30		2.14
Net earnings – diluted	1.13		1.00		2.30		2.13
Cash dividends	0.20		0.13		0.53		0.37

Suncor Energy Inc.
056 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com


($ millions)	Sept 30 2013	Dec 31 2012

		(restated – note 3)
Assets
Current assets
Cash and cash equivalents	5 340	4 385
Accounts receivable	4 826	5 201
Inventories	4 249	3 697
Income taxes receivable	621	799

Total current assets	15 036	14 082
Property, plant and equipment, net (notes 15 and 16)	55 755	55 434
Exploration and evaluation	3 363	3 284
Other assets	427	419
Goodwill and other intangible assets	3 094	3 104
Deferred income taxes	86	78

Total assets	77 761	76 401

Liabilities and Shareholders' Equity
Current liabilities
Short-term debt	771	775
Current portion of long-term debt	31	311
Accounts payable and accrued liabilities	6 952	6 446
Current portion of provisions (note 12)	1 311	856
Income taxes payable	1 300	1 165

Total current liabilities	10 365	9 553
Long-term debt	10 331	9 938
Other long-term liabilities (note 13)	1 820	2 319
Provisions (note 12)	3 516	4 932
Deferred income taxes	10 597	10 444
Shareholders' equity	41 132	39 215

Total liabilities and shareholders' equity	77 761	76 401


	Three months ended September 30				Nine months ended September 30
($ millions)	2013		2012		2013		2012

	(restated – note 3)				(restated – note 3)
Operating Activities
Net earnings	1 694		1 544		3 468		3 314
Adjustments for:
Depreciation, depletion, amortization and impairment	1 089		895		3 117		3 432
Deferred income taxes	(6	)	388		390		1 055
Accretion	50		45		148		137
Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt	(157	)	(289	)	301		(272	)
Change in fair value of derivative contracts	(151	)	17		(63	)	30
Gain on disposal of assets	(133	)	(3	)	(134	)	(39	)
Share-based compensation	195		190		133		171
Exploration	8		65		59		124
Settlement of decommissioning and restoration liabilities	(84	)	(89	)	(342	)	(345	)
Other	23		(20	)	(15	)	(102	)
(Increase) decrease in non-cash working capital	(8	)	(360	)	702		178

Cash flow provided by operating activities	2 520		2 383		7 764		7 683

Investing Activities
Capital and exploration expenditures	(1 539	)	(1 670	)	(5 004	)	(4 754	)
Acquisitions (note 15)	—		—		(515	)	—
Proceeds from disposal of assets (note 16)	904		15		910		58
Other investments	(9	)	(2	)	(15	)	(6	)
(Increase) decrease in non-cash working capital	(12	)	92		(184	)	142

Cash flow used in investing activities	(656	)	(1 565	)	(4 808	)	(4 560	)

Financing Activities
Net change in short-term debt	(42	)	(24	)	(28	)	(22	)
Net change in long-term debt	—		(5	)	149		(12	)
Repayment of long-term debt	(312	)	—		(312	)	—
Issuance of common shares under share option plans	36		12		80		179
Purchase of common shares for cancellation, net of option premiums (note 8)	(426	)	(312	)	(1 125	)	(1 043	)
Dividends paid on common shares	(299	)	(196	)	(798	)	(561	)

Cash flow used in financing activities	(1 043	)	(525	)	(2 034	)	(1 459	)

Increase in Cash and Cash Equivalents	821		293		922		1 664
Effect of foreign exchange on cash and cash equivalents	(11	)	(16	)	33		(7	)
Cash and cash equivalents at beginning of period	4 530		5 161		4 385		3 781

Cash and Cash Equivalents at End of Period	5 340		5 438		5 340		5 438

Supplementary Cash Flow Information
Interest paid	70		65		421		382
Income taxes paid	399		474		1 083		1 095

Suncor Energy Inc.
058 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com


($ millions)	Share Capital		Contributed Surplus		Foreign Currency Translation		Cash Flow Hedges		Retained Earnings		Total (restated – note 3)		Number of Common Shares (thousands)

At December 31, 2011	20 303		545		(207	)	14		17 937		38 592		1 558 636

Net earnings	—		—		—		—		3 314		3 314		—
Foreign currency translation adjustment	—		—		(116	)	—		—		(116	)	—
Net changes in cash flow hedges	—		—		—		(1	)	—		(1	)	—
Actuarial loss on employee retirement benefit plans, net of income taxes of $88	—		—		—		—		(178	)	(178	)	—

Total comprehensive income	—		—		(116	)	(1	)	3 136		3 019		—
Issued under share option plans	240		(44	)	—		—		—		196		10 086
Issued under dividend reinvestment plan	12		—		—		—		(12	)	—		391
Purchase of common shares for cancellation, net of option premiums	(447	)	—		—		—		(596	)	(1 043	)	(34 385	)
Liability for share purchase commitment	(121	)	—		—		—		(179	)	(300	)	—
Share-based compensation	—		78		—		—		—		78		—
Dividends paid on common shares	—		—		—		—		(561	)	(561	)	—

At September 30, 2012	19 987		579		(323	)	13		19 725		39 981		1 534 728



At December 31, 2012	19 945		579		(223	)	13		18 901		39 215		1 523 057

Net earnings	—		—		—		—		3 468		3 468		—
Foreign currency translation adjustment	—		—		136		—		—		136		—
Actuarial gain on employee retirement benefit plans, net of income taxes of $121	—		—		—		—		353		353		—

Total comprehensive income	—		—		136		—		3 821		3 957		—
Issued under share option plans	124		(35	)	—		—		—		89		3 745
Issued under dividend reinvestment plan	22		—		—		—		(22	)	—		—
Purchase of common shares for cancellation, net of option premiums (note 8)	(453	)	—		—		—		(672	)	(1 125	)	(34 560	)
Change in liability for share purchase commitment	(86	)	—		—		—		(162	)	(248	)	—
Share-based compensation	—		42		—		—		—		42		—
Dividends paid on common shares	—		—		—		—		(798	)	(798	)	—

At September 30, 2013	19 552		586		(87	)	13		21 068		41 132		1 492 242

Suncor Energy Inc. (Suncor or the company) is an integrated energy company headquartered in Canada. Suncor's operations include oil sands development and upgrading, onshore and offshore oil and gas production, petroleum refining, and product marketing primarily under the Petro-Canada brand. The consolidated financial statements of the company comprise the company and its subsidiaries and the company's interests in associates and jointly controlled entities.

The address of the company's registered office is 150 - 6th Avenue S.W., Calgary, Alberta, Canada, T2P 3E3.

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board. They are condensed as they do not include all of the information required for full annual financial statements, and they should be read in conjunction with the consolidated financial statements for the year ended December 31, 2012 and the interim consolidated financial statements for the period ended March 31, 2013.

The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and outstanding as at October 30, 2013, the date the Audit Committee approved these statements on behalf of the Board of Directors.

The consolidated financial statements are prepared on a historical cost basis except as detailed in the accounting policies disclosed in the company's consolidated financial statements for the year ended December 31, 2012. Those accounting policies are consistent with those of the previous financial year, except as described in note 3.

These consolidated financial statements are presented in Canadian dollars, which is the company's functional currency.

The timely preparation of financial statements requires that management make estimates and assumptions and use judgment. Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates and judgment used in the preparation of the financial statements are described in the company's consolidated financial statements for the year ended December 31, 2012.

Suncor Energy Inc.
060 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

Effective January 1, 2013, the company adopted IFRS 11 Joint arrangements. IFRS 11 establishes a principle-based approach to accounting for joint arrangements by assessing the rights and obligations of the arrangement and limits the application of proportionate consolidation accounting to arrangements where sufficient rights and obligations are passed to the partners. As a result, two existing joint arrangements in the Refining and Marketing segment were reclassified as joint ventures, and are now being accounted for using the equity method of accounting rather than the proportionate consolidation method. This change did not have a material impact to the consolidated financial statements, but did result in the netting of revenues and expenses for these entities into Other Income, the netting of equity pick-up and cash distribution within Other in the Consolidated Statements of Cash Flows, and the company's net investment in these entities is now presented in Other Assets.

Effective January 1, 2013, the company adopted the amendments to IAS 19 Employee Benefits. The revised standard resulted in changes to the calculation and presentation of pension interest cost, which is now calculated on the net unfunded obligation, applying the discount rate used to measure the employee benefit obligation at the beginning of the annual period. Previously, pension interest cost was net of interest income on plan assets (using the expected return on plan assets) and interest expense on the plan obligation (using the discount rate). The net pension interest expense was reclassified to Financing Expenses from Operating, Selling and General expense. The change to the pension interest cost calculation also resulted in the refundable tax accounts (RTA) being present valued, resulting in an immaterial adjustment to the Consolidated Balance Sheets noted below.

IFRS 11 and the amendments to IAS 19 have been applied retroactively, and the effects of the application of IFRS 11 and IAS 19 amendments on the comparative periods are shown in the tables below.


	Three months ended September 30, 2012						Nine months ended September 30, 2012
($ millions, increase/(decrease))	IFRS 11		IAS 19		Total		IFRS 11		IAS 19		Total

Revenues and Other Income
Operating revenues, net of royalties	(24	)	—		(24	)	(53	)	—		(53	)
Other income	(1	)	—		(1	)	10		—		10
Expenses
Purchases of crude oil and products	(17	)	—		(17	)	(18	)	—		(18	)
Operating, selling and general	(7	)	(5	)	(12	)	(22	)	(16	)	(38	)
Depreciation, depletion, amortization and impairment	(1	)	—		(1	)	(3	)	—		(3	)
Financing expenses	—		19		19		—		57		57
Income Taxes
Deferred	—		(3	)	(3	)	—		(10	)	(10	)

Net (Loss) Earnings	—		(11	)	(11	)	—		(31	)	(31	)
Actuarial gain on employee retirement benefit plans	—		11		11		—		31		31

Total Comprehensive Income	—		—		—		—		—		—

Per Common Share (dollars)
Basic	—		—		—		—		(0.02	)	(0.02	)
Diluted	—		(0.01	)	(0.01	)	—		(0.02	)	(0.02	)


($ millions, increase/(decrease))	Dec 31 2012

Cash and cash equivalents	(8	)
Accounts receivable	(43	)
Inventories	(46	)
Property, plant and equipment, net	(24	)
Other assets	99
Goodwill and other intangible assets	(24	)
Deferred income taxes	(2	)

Total assets	(48	)

Short-term debt	(1	)
Accounts payable and accrued liabilities	(23	)
Income taxes payable	(5	)
Other long-term liabilities ⁽²⁾	9
Provisions	(1	)
Deferred income taxes ⁽²⁾	(19	)
Shareholders' equity ⁽²⁾	(8	)

Total liabilities and shareholders' equity	(48	)


($ millions, increase/(decrease))	Three months ended September 30, 2012		Nine months ended September 30, 2012

Operating activities
Cash flow from operating activities before change in non-cash working capital	3		(5	)
Decrease in non-cash working capital	(8	)	17

Cash flow from operating activities	(5	)	12
Cash flow from investing activities	—		—
Cash flow from financing activities	—		—

(Decrease) increase in cash and cash equivalents	(5	)	12

Suncor Energy Inc.
062 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

The company's operating segments are determined based on differences in the nature of their operations, products and services.

Intersegment sales of crude oil and natural gas are accounted for at market values and included, for segmented reporting, in revenues of the segment making the transfer and expenses of the segment receiving the transfer. Intersegment amounts are eliminated on consolidation.


	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

	(restated – note 3)								(restated – note 3)				(restated – note 3)				(restated – note 3)
Revenues and Other Income
Gross revenues	2 588		2 229		1 336		1 093		7 057		6 696		24		29		11 005		10 047
Intersegment revenues	1 316		823		166		51		26		59		(1 508	)	(933	)	—		—
Less: Royalties	(392	)	(262	)	(325	)	(297	)	—		—		—		—		(717	)	(559	)

Operating revenues, net of royalties	3 512		2 790		1 177		847		7 083		6 755		(1 484	)	(904	)	10 288		9 488
Other income (expenses)	4		6		31		7		(5	)	6		55		69		85		88

	3 516		2 796		1 208		854		7 078		6 761		(1 429	)	(835	)	10 373		9 576

Expenses
Purchases of crude oil and products	87		46		158		5		5 803		4 999		(1 445	)	(926	)	4 603		4 124
Operating, selling and general	1 344		1 370		183		182		596		596		195		117		2 318		2 265
Transportation	111		99		29		29		75		51		(10	)	(8	)	205		171
Depreciation, depletion, amortization and impairment	652		503		274		231		136		116		27		45		1 089		895
Exploration	7		2		31		95		—		—		—		—		38		97
(Gain) loss on disposal of assets	—		3		(130	)	(1	)	(3	)	(4	)	—		(1	)	(133	)	(3	)
Project start-up costs	3		16		—		—		—		1		—		—		3		17
Voyageur upgrader project charges	—		—		—		—		—		—		—		—		—		—
Financing (income) expenses	32		33		(8	)	20		2		3		(91	)	(297	)	(65	)	(241	)

	2 236		2 072		537		561		6 609		5 762		(1 324	)	(1 070	)	8 058		7 325

Earnings (Loss) before Income Taxes	1 280		724		671		293		469		999		(105	)	235		2 315		2 251
Income Taxes
Current	209		—		418		227		245		90		(245	)	2		627		319
Deferred	120		187		(193	)	(22	)	(126	)	199		193		24		(6	)	388

	329		187		225		205		119		289		(52	)	26		621		707

Net Earnings (Loss)	951		537		446		88		350		710		(53	)	209		1 694		1 544

Capital and Exploration Expenditures	898		1 113		418		387		202		147		21		23		1 539		1 670


	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

	(restated – note 3)								(restated – note 3)				(restated – note 3)				(restated – note 3)
Revenues and Other Income
Gross revenues	6 681		6 437		4 674		4 434		19 973		19 568		83		58		31 411		30 497
Intersegment revenues	2 971		2 340		282		477		140		145		(3 393	)	(2 962	)	—		—
Less: Royalties	(658	)	(619	)	(974	)	(1 167	)	—		—		—		—		(1 632	)	(1 786	)

Operating revenues, net of royalties	8 994		8 158		3 982		3 744		20 113		19 713		(3 310	)	(2 904	)	29 779		28 711
Other income	10		20		71		47		11		26		232		234		324		327

	9 004		8 178		4 053		3 791		20 124		19 739		(3 078	)	(2 670	)	30 103		29 038

Expenses
Purchases of crude oil and products	261		151		409		259		15 698		15 197		(3 267	)	(2 995	)	13 101		12 612
Operating, selling and general	4 196		4 056		540		653		1 699		1 668		489		346		6 924		6 723
Transportation	301		274		97		95		207		150		(32	)	(28	)	573		491
Depreciation, depletion, amortization and impairment	1 759		1 412		889		1 557		381		337		88		126		3 117		3 432
Exploration	96		53		151		185		—		—		—		—		247		238
Gain on disposal of assets	—		(29	)	(130	)	(1	)	(4	)	(8	)	—		(1	)	(134	)	(39	)
Project start-up costs	13		38		—		—		—		2		—		—		13		40
Voyageur upgrader project charges	176		—		—		—		—		—		—		—		176		—
Financing expenses (income)	98		94		26		54		2		1		583		(222	)	709		(73	)

	6 900		6 049		1 982		2 802		17 983		17 347		(2 139	)	(2 774	)	24 726		23 424

Earnings (Loss) before Income Taxes	2 104		2 129		2 071		989		2 141		2 392		(939	)	104		5 377		5 614
Income Taxes
Current	210		1		1 100		973		429		244		(220	)	27		1 519		1 245
Deferred	323		623		(130	)	26		148		461		49		(55	)	390		1 055

	533		624		970		999		577		705		(171	)	(28	)	1 909		2 300

Net Earnings (Loss)	1 571		1 505		1 101		(10	)	1 564		1 687		(768	)	132		3 468		3 314

Capital and Exploration Expenditures	3 421		3 383		1 093		908		445		394		45		69		5 004		4 754

Suncor Energy Inc.
064 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com


	Three months ended September 30				Nine months ended September 30
($ millions)	2013		2012		2013		2012

	(restated – note 3)				(restated – note 3)
Energy trading activities
Change in fair value of contracts	106		33		223		161
(Losses) gains on inventory valuation	(61	)	(4	)	(26	)	21
Risk management activities	(14	)	2		(17	)	1
Investment and interest income	17		18		57		65
Renewable energy grants	13		19		37		45
Change in value of pipeline commitments and other	24		20		50		34

	85		88		324		327

In the second quarter of 2012, the company recognized after-tax impairment charges and a bad debt provision of $694 million related to Syrian assets in its Exploration and Production business. An impairment test was performed since there was no resolution to the political situation and international sanctions continued to affect the country. The impairment losses were charged against Property, Plant and Equipment ($604 million) and other current assets ($23 million). The company also recognized a bad debt provision for the remainder of its Syrian receivables ($67 million) at June 30, 2012.

During the fourth quarter of 2012, the company received $300 million of risk mitigation proceeds related to its Syrian operations. The proceeds are subject to a provisional repayment should the company resume operations in Syria. After receipt of the risk mitigation proceeds, a valuation assessment was performed at December 31, 2012, and an impairment reversal of $177 million was recorded.

At September 30, 2013, the carrying value of the company's Property, Plant and Equipment in Syria, net of the risk mitigation provision, was approximately $130 million. There has been no change in the company's overall assessment of its Syrian assets; therefore, no further impairment or impairment reversal was recognized during the quarter.

The following table summarizes the share-based compensation expense recorded for all plans within Operating, Selling and General expense.

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

On August 5, 2013, the company 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, the company 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, of which the company has repurchased a total of 9.5 million common shares for a total consideration of $343 million.

During the nine months ended September 30, 2013, the company purchased 34.6 million (2012 – 34.4 million) common shares for total consideration of $1,125 million (2012 – $1,043 million). Of the amount recognized, $453 million (2012 – $447 million, net of $1.3 million options premiums) was charged to share capital and $672 million (2012 – $596 million) to retained earnings.

The company has also recorded a liability of $296 million for share purchases that may take place during its internal blackout period under an automatic repurchase plan agreement with an independent broker. Of the liability recognized, $105 million was charged to share capital and $191 million to retained earnings.


	Three months ended September 30				Nine months ended September 30
($ millions)	2013		2012		2013		2012

	(restated – note 3)				(restated – note 3)
Interest on debt	176		162		525		488
Capitalized interest	(99	)	(138	)	(299	)	(444	)

Interest expense	77		24		226		44
Interest on pension and other post-retirement benefits	17		19		51		57
Accretion	50		45		148		137
Foreign exchange (gain) loss on U.S. dollar denominated debt	(157	)	(289	)	301		(272	)
Foreign exchange and other	(52	)	(40	)	(17	)	(39	)

	(65	)	(241	)	709		(73	)

In the second quarter of 2012, the Ontario government substantively enacted legislation to freeze the general corporate income tax rate at the current 11.5% instead of the planned reduction to 10%. Accordingly, the company recognized an increase in deferred tax expense of $88 million related to the revaluation of deferred income tax balances.

Suncor Energy Inc.
066 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com


	Three months ended September 30		Nine months ended September 30
($ millions)	2013	2012	2013	2012

	(restated – note 3)		(restated – note 3)
Net earnings	1 694	1 544	3 468	3 314
Dilutive impact of accounting for awards as equity-settled ⁽¹⁾	—	—	—	(6	)

Net earnings – diluted	1 694	1 544	3 468	3 308

(millions of common shares)
Weighted average number of common shares	1 497	1 536	1 507	1 550
Dilutive securities:
Effect of share options	1	2	1	4

Weighted average number of diluted common shares	1 498	1 538	1 508	1 554

(dollars per common share)
Basic earnings per share	1.13	1.01	2.30	2.14
Diluted earnings per share	1.13	1.00	2.30	2.13

In the third quarter of 2013, there was a decrease to the decommissioning and restoration provision as a result of an increase to the credit-adjusted risk-free interest rate of 0.6% ($302 million) and sale of a significant portion of the company's natural gas business in Western Canada ($714 million) (note 16).

For the nine months ended September 30, 2013, there was a net decrease to the decommissioning and restoration provision as a result of an increase to the credit-adjusted risk-free interest rate of 0.8% ($415 million) and sale of a significant portion of the company's natural gas business in Western Canada ($714 million). This was partially offset by an increase of $132 million in the first quarter of 2013 as a result of acquiring a 49% interest in the Voyageur Upgrader Limited Partnership (VULP) and the timing of certain reclamation activities being accelerated due to the Voyageur upgrader project not proceeding (note 15).

In the third quarter of 2013, an after-tax actuarial loss of $33 million was recorded due to a remeasurement of the company's pension plan assets during the period. For the nine months ended September 30, 2013, an actuarial gain of $353 million was recognized as a result of a 0.7% increase to the actuarial discount rate assumption for employee retirement plans (December 31, 2012 – 3.9%). The corresponding offset was recorded in Other Long-term Liabilities.

The following table presents the company's financial instruments measured at fair value for each hierarchy level as at September 30, 2013.

During the three and nine months ended September 30, 2013, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

At September 30, 2013, the carrying value of fixed-term debt accounted for under amortized cost was $9.3 billion and the fair value was $10.9 billion. The estimated fair value of long-term debt is based on pricing sourced from market data.

The company enters into arrangements that allow for offsetting of derivative financial instruments and accounts receivable (payable), which are presented on a net basis on the balance sheet. As at September 30, 2013, the net accounts receivable and derivative financial instrument was $49 million (December 31, 2012 – $122 million), comprised of gross asset of $2,834 million (December 31, 2012 – $3,007 million) and gross liability of $2,785 million (December 31, 2012 – $2,885 million).

Effective March 27, 2013, the company acquired Total E&P Canada Ltd.'s (Total E&P) interest in VULP for $515 million and gained full control over the partnership assets. The transaction was accounted for as a business combination.

Management applies judgment in determining whether an acquisition meets the definition of a business combination or an asset purchase. When a transaction meets the definition of a business combination, the acquired identifiable assets and assumed liabilities, including contingent liabilities, are measured and recognized at their fair value on the date of the acquisition, including tax assets and liabilities. Associated transaction costs are expensed when occurred.

As VULP was in the development stage and therefore had no revenues and the majority of costs were capitalized, no significant net earnings were generated.

The preliminary allocation of the purchase price was based on current best estimates by the company. The completion of the purchase price allocation may result in further adjustment to the carrying value of the recorded assets and liabilities acquired.

Suncor Energy Inc.
068 2013 Third Quarter For more information about Suncor Energy, visit our website www.suncor.com

The fair value of consideration transferred and the assets acquired and liabilities assumed at the date of acquisition are summarized below:

The fair value attributed to the property, plant and equipment acquired was based on an expected future cash flow approach for assets expected to be retained, with a risk adjusted discount rate of 10%. For assets expected to be sold, the fair value was determined based on management's best estimate of the recoverable amount.

The fair value of the decommissioning and restoration provisions was determined based on management's best estimate of the costs to complete the reclamation activities, the timing of cash outflows, method of reclamation, the discount rate and management's anticipated use of the area in the future.

Following the acquisition, the company announced that it was not proceeding with the Voyageur upgrader project. The decision was a result of a joint strategic and economic review launched by the company and its co-owner, Total E&P, in response to a change in market conditions that challenged the economics of the project. The total net book value of the assets retained was approximately $800 million, and included a hot bitumen blending facility, storage tanks and a camp which the company plans to utilize to support the continued growth in its Oil Sands operations.

As a result of not proceeding with the project, an after-tax charge to net earnings of $127 million was recorded during the three months ended March 31, 2013, which included provisions associated with the decommissioning and restoration of the Voyageur site and contract cancellation costs. There was also a net increase of $132 million to the decommissioning and restoration provision as a result of acquiring the 49% interest in VULP and the timing of certain reclamation activities being accelerated due to the project not proceeding.

On September 26, 2013, the company completed the previously announced sale of a significant portion of its natural gas business in Western Canada for proceeds of $1.0 billion before closing adjustments and other closing costs. The sale of these assets resulted in an after-tax gain on disposal of assets of $130 million in its Exploration and Production segment.

During the nine months ended September 30, 2013, the company entered into various agreements totalling approximately $1.3 billion over the next 25 years related to pipeline capacity agreements to support third-party diluent imports, and logistics and storage agreements to support the company's market access for transporting inland crudes to the Montreal refinery, coastal markets and the Gulf Coast.

On October 30, 2013, the company 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.


($ millions)	Level 1		Level 2		Level 3		Total Fair Value

Accounts receivable	59		129		1		189
Accounts payable	(11	)	(154	)	(5	)	(170	)

	48		(25	)	(4	)	19


($ millions)

Total purchase price	515

Preliminary allocation of purchase price:
Property, plant and equipment	374
Deferred income taxes	312
Decommissioning and restoration provisions	(81	)
Contracts and liabilities acquired	(90	)

Net assets acquired	515