EX-99.3 4 a2219882zex-99_3.htm EX-99.3
QuickLinks -- Click here to rapidly navigate through this document


EXHIBIT 99.3

Unaudited Consolidated Financial Statements for the first quarter ended March 31, 2014

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

Three months ended March 31 ($ millions)   2014   2013  
Revenues and Other Income          
  Operating revenues, net of royalties (note 3)   10 342   9 843  
  Other income (note 4)   135   173  
    10 477   10 016  

Expenses
 
 
 
 
 
  Purchases of crude oil and products   3 701   4 059  
  Operating, selling and general   2 514   2 271  
  Transportation   227   160  
  Depreciation, depletion, amortization and impairment   1 140   999  
  Exploration   126   130  
  Project start-up costs   —   1  
  Voyageur upgrader project charges (note 10)   —   176  
  Financing expenses (note 7)   471   329  
    8 179   8 125  
Earnings before Income Taxes   2 298   1 891  

Income Taxes
 
 
 
 
 
  Current   811   540  
  Deferred   2   257  
    813   797  
Net Earnings   1 485   1 094  

Other Comprehensive Income
 
 
 
 
 
Items that may be subsequently reclassified to earnings          
  Foreign currency translation adjustment   192   19  
Items that will not be reclassified to earnings          
  Actuarial (loss) gain on employee retirement benefit plans, net of income taxes   (60 ) 57  
Other Comprehensive Income   132   76  

Total Comprehensive Income
 
1 617
 
1 170
 

Per Common Share (dollars) (note 8)
 
 
 
 
 
  Net earnings – basic   1.01   0.72  
  Net earnings – diluted   1.01   0.71  
  Cash dividends   0.23   0.13  

See accompanying notes to the interim consolidated financial statements.

SUNCOR ENERGY INC. 2014 FIRST QUARTER    37

CONSOLIDATED BALANCE SHEETS
(unaudited)

($ millions)   Mar 31
2014		   Dec 31
2013		  
Assets          
  Current assets          
    Cash and cash equivalents   4 846   5 202  
    Accounts receivable   5 508   5 254  
    Inventories   4 784   3 944  
    Income taxes receivable   522   294  
  Total current assets   15 660   14 694  
  Property, plant and equipment, net   58 095   57 270  
  Exploration and evaluation   2 884   2 772  
  Other assets   441   422  
  Goodwill and other intangible assets   3 095   3 092  
  Deferred income taxes   46   65  
Total assets   80 221   78 315  

Liabilities and Shareholders' Equity
 
 
 
 
 
  Current liabilities          
    Short-term debt   829   798  
    Current portion of long-term debt   475   457  
    Accounts payable and accrued liabilities   7 408   7 090  
    Current portion of provisions   872   998  
    Income taxes payable   1 180   1 263  
  Total current liabilities   10 764   10 606  
  Long-term debt   10 504   10 203  
  Other long-term liabilities   1 517   1 464  
  Provisions   4 342   4 078  
  Deferred income taxes   10 836   10 784  
  Shareholders' equity   42 258   41 180  
Total liabilities and shareholders' equity   80 221   78 315  

See accompanying notes to the interim consolidated financial statements.

38   SUNCOR ENERGY INC. 2014 FIRST QUARTER

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended March 31 ($ millions)   2014   2013    
Operating Activities            
Net earnings   1 485   1 094    
Adjustments for:            
  Depreciation, depletion, amortization and impairment   1 140   999    
  Deferred income taxes   2   257    
  Accretion   51   48    
  Unrealized foreign exchange loss on U.S. dollar denominated debt   357   168    
  Change in fair value of derivative contracts   11   60    
  Share-based compensation   (54 ) (117 )  
  Exploration   22   37    
  Settlement of decommissioning and restoration liabilities   (110 ) (187 )  
  Other   (24 ) (75 )  
(Increase) decrease in non-cash working capital   (1 147 ) 290    
Cash flow provided by operating activities   1 733   2 574    
Investing Activities            
Capital and exploration expenditures   (1 490 ) (1 485 )  
Acquisitions (note 10)   —   (515 )  
Proceeds from disposal of assets   16   4    
Other investments   (9 ) (4 )  
Decrease (increase) in non-cash working capital   15   (2 )  
Cash flow used in investing activities   (1 468 ) (2 002 )  
Financing Activities            
Net change in short-term debt   —   190    
Net change in long-term debt   (5 ) (4 )  
Issuance of common shares under share option plans   53   41    
Purchase of common shares for cancellation (note 6)   (384 ) (405 )  
Dividends paid on common shares   (338 ) (197 )  
Cash flow used in financing activities   (674 ) (375 )  

(Decrease) increase in Cash and Cash Equivalents
 
(409
)
197
 
 
Effect of foreign exchange on cash and cash equivalents   53   9    
Cash and cash equivalents at beginning of period   5 202   4 385    
Cash and Cash Equivalents at End of Period   4 846   4 591    

Supplementary Cash Flow Information
 
 
 
 
 
 
Interest paid   72   73    
Income taxes paid   1 125   557    

See accompanying notes to the interim consolidated financial statements.

SUNCOR ENERGY INC. 2014 FIRST QUARTER    39

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)

($ millions)   Share
Capital		   Contributed
Surplus		   Foreign
Currency
Translation		   Cash Flow
Hedges		   Retained
Earnings		   Total   Number of
Common
Shares
(thousands)		    
 
At December 31, 2012   19 945   579   (223 ) 13   18 901   39 215   1 523 057    
 
Net earnings   —   —   —   —   1 094   1 094   —    
 
Foreign currency translation adjustment   —   —   19   —   —   19   —    
 
Actuarial gain on employee retirement benefit plans,
net of income taxes of $20		   —   —   —   —   57   57   —    
 
Total comprehensive income   —   —   19   —   1 151   1 170   —    
 
Issued under share option plans   67   (28 ) —   —   —   39   2 126    
 
Issued under dividend reinvestment plan   7   —   —   —   (7 ) —   —    
 
Purchase of common shares for cancellation   (168 ) —   —   —   (237 ) (405 ) (12 840 )  
 
Change in liability for share purchase commitment   (22 ) —   —   —   (25 ) (47 ) —    
 
Share-based compensation   —   21   —   —   —   21   —    
 
Dividends paid on common shares   —   —   —   —   (197 ) (197 ) —    
 
At March 31, 2013   19 829   572   (204 ) 13   19 586   39 796   1 512 343    
 
                                 
 
At December 31, 2013   19 395   598   102   13   21 072   41 180   1 478 315    
 
Net earnings   —   —   —   —   1 485   1 485   —    
 
Foreign currency translation adjustment   —   —   192   —   —   192   —    
 
Actuarial loss on employee
retirement benefit plans,
net of income taxes of $20		   —   —   —   —   (60 ) (60 ) —    
 
Total comprehensive income   —   —   192   —   1 425   1 617   —    
 
Issued under share option plans   61   (3 ) —   —   —   58   1 740    
 
Issued under dividend reinvestment plan   6   —   —   —   (6 ) —   —    
 
Purchase of common shares for cancellation (note 6)   (137 ) —   —   —   (247 ) (384 ) (10 454 )  
 
Change in liability for share purchase commitment   40   —   —   —   67   107   —    
 
Share-based compensation   —   18   —   —   —   18   —    
 
Dividends paid on common shares   —   —   —   —   (338 ) (338 ) —    
 
At March 31, 2014   19 365   613   294   13   21 973   42 258   1 469 601    
 

See accompanying notes to the interim consolidated financial statements.

40   SUNCOR ENERGY INC. 2014 FIRST QUARTER

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. REPORTING ENTITY AND DESCRIPTION OF THE BUSINESS

Suncor Energy Inc. (Suncor or the company) is an integrated energy company headquartered in 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.


2. BASIS OF PREPARATION

(a) Statement of Compliance

These condensed interim consolidated 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, 2013.

The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and outstanding as at April 28, 2014, the date the Audit Committee approved these statements on behalf of the Board of Directors.

(b) Basis of Measurement

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, 2013, except for the retrospective adoption of the following interpretation effective January 1, 2014:

International Financial Reporting Interpretation Committee 21 Levies clarified that an entity recognizes a liability for a levy when the activity that triggers payment occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarified that no liability should be anticipated before the minimum threshold is reached. The adoption of this interpretation did not have an impact to the company's condensed interim consolidated financial statements.

(c) Functional Currency and Presentation Currency

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

(d) Use of Estimates and Judgment

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, 2013.

SUNCOR ENERGY INC. 2014 FIRST QUARTER    41


 3. SEGMENTED INFORMATION

The company's operating segments are reported based on the nature of their products and services and management responsibility.

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

Three months ended March 31   Oil Sands   Exploration and
Production		   Refining and
Marketing		   Corporate,
Energy Trading
and Eliminations		   Total    
($ millions)   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013    
Revenues and Other Income                                        
Gross revenues   2 700   2 122   1 229   1 656   6 742   6 521   26   31   10 697   10 330    
Intersegment revenues   1 190   921   212   116   18   60   (1 420 ) (1 097 ) —   —    
Less: Royalties   (192 ) (173 ) (163 ) (314 ) —   —   —   —   (355 ) (487 )  
Operating revenues, net of royalties   3 698   2 870   1 278   1 458   6 760   6 581   (1 394 ) (1 066 ) 10 342   9 843    
Other income   9   —   2   33   7   12   117   128   135   173    
    3 707   2 870   1 280   1 491   6 767   6 593   (1 277 ) (938 ) 10 477   10 016    
Expenses                                            
Purchases of crude oil and products   54   120   152   128   4 823   4 796   (1 328 ) (985 ) 3 701   4 059    
Operating, selling and general   1 529   1 397   153   161   639   543   193   170   2 514   2 271    
Transportation   140   85   26   29   71   57   (10 ) (11 ) 227   160    
Depreciation, depletion, amortization and impairment   669   545   299   304   152   120   20   30   1 140   999    
Exploration   75   74   51   56   —   —   —   —   126   130    
Project start-up costs   —   1   —   —   —   —   —   —   —   1    
Voyageur upgrader project charges   —   176   —   —   —   —   —   —   —   176    
Financing expenses   28   32   9   7   2   1   432   289   471   329    
    2 495   2 430   690   685   5 687   5 517   (693 ) (507 ) 8 179   8 125    
Earnings (Loss) before Income Taxes   1 212   440   590   806   1 080   1 076   (584 ) (431 ) 2 298   1 891    
Income Taxes                                            
Current   298   1   328   420   285   104   (100 ) 15   811   540    
Deferred   15   113   (32 ) 32   8   190   11   (78 ) 2   257    
    313   114   296   452   293   294   (89 ) (63 ) 813   797    
Net Earnings (Loss)   899   326   294   354   787   782   (495 ) (368 ) 1 485   1 094    
Capital and Exploration Expenditures   911   1 036   444   360   105   78   30   11   1 490   1 485    

42   SUNCOR ENERGY INC. 2014 FIRST QUARTER


 4. OTHER INCOME

Other income consists of the following:

    Three months ended
March 31		    
($ millions)   2014   2013    
Energy trading activities            
  Change in fair value of contracts   112   31    
  Gains on inventory valuation   5   87    
Risk management activities   (6 ) (1 )  
Investment and interest income   27   25    
Renewable energy grants   6   7    
Change in value of pipeline commitments and other   (9 ) 24    
    135   173    


5. SHARE-BASED COMPENSATION

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

    Three months ended
March 31		  
($ millions)   2014   2013  
Equity-settled plans   18   21  
Cash-settled plans   101   20  
    119   41  


6. NORMAL COURSE ISSUER BID

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 total consideration of $1.2 billion. Under the 2012 NCIB, the company repurchased 25.1 million common shares during 2013 for total consideration of $781 million.

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. The 2013 NCIB was amended on February 21, 2014 to permit the company to purchase for cancellation additional shares. Pursuant to the 2013 NCIB, the company is permitted to purchase for cancellation up to approximately $2.8 billion worth of its common shares between August 5, 2013 and August 4, 2014, of which the company had repurchased a total of 34.9 million common shares for a total consideration of $1.28 billion as at March 31, 2014.

The following table summarizes the share repurchase activities during the period:

    Three months ended
March 31		  
($ millions, except as noted)   2014   2013  
Share repurchase activities (thousands of common shares)          
  Shares repurchased   10 454   12 840  
Amounts charged to          
  Share capital   137   168  
  Retained earnings   247   237  
Share repurchase cost   384   405  

SUNCOR ENERGY INC. 2014 FIRST QUARTER    43

Under an automatic repurchase plan agreement with an independent broker, the company has recorded the following amounts for share repurchases that may take place during its internal blackout period:

($ millions)   Mar 31
2014		   Dec 31
2013		  
Amounts charged to          
  Share capital   68   108  
  Retained earnings   131   198  
Liability for share purchase commitment   199   306  


7. FINANCING EXPENSES

    Three months ended
March 31		    
($ millions)   2014   2013    
Interest on debt   183   177    
Capitalized interest   (108 ) (96 )  
  Interest expense   75   81    
  Interest on pension and other post-retirement benefits   14   17    
  Accretion   51   48    
  Foreign exchange loss on U.S. dollar denominated debt   357   168    
  Foreign exchange and other   (26 ) 15    
    471   329    


8. EARNINGS PER COMMON SHARE

    Three months ended
March 31		    
($ millions)   2014   2013    
Net earnings   1 485   1 094    
Dilutive impact of accounting for awards as equity-settled(1)   —   (10 )  
Net earnings – diluted   1 485   1 084    

(millions of common shares)
 
 
 
 
 
 
Weighted average number of common shares   1 471   1 519    
Dilutive securities:            
  Effect of share options   2   2    
Weighted average number of diluted common shares   1 473   1 521    

(dollars per common share)
 
 
 
 
 
 
Basic earnings per share   1.01   0.72    
Diluted earnings per share   1.01   0.71    
(1)
Cash payment alternatives are accounted for as cash-settled plans. As these awards can be exchanged for common shares of the company, they are considered potentially dilutive and are included in the calculation of the company's diluted net earnings per share if they have a dilutive impact in the period. Accounting for these awards as equity-settled was determined to have a dilutive impact for the three months ended March 31, 2013.

44   SUNCOR ENERGY INC. 2014 FIRST QUARTER


 9. FINANCIAL INSTRUMENTS

Fair Value Hierarchy

The following table presents the company's financial instruments measured at fair value for each hierarchy level as at March 31, 2014.

($ millions)   Level 1   Level 2   Level 3   Total Fair
Value		    
Accounts receivable   311   62   —   373    
Accounts payable   (407 ) (116 ) —   (523 )  
    (96 ) (54 ) —   (150 )  

During the first quarter of 2014, 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 March 31, 2014, the carrying value of fixed-term debt accounted for under amortized cost was $9.9 billion (December 31, 2013 – $9.6 billion) and the fair value was $11.9 billion (December 31, 2013 – $11.2 billion). The estimated fair value of long-term debt is based on pricing sourced from market data.


10. VOYAGEUR UPGRADER PROJECT

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

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

($ millions)        
Total purchase price   515    
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    

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. As a result, a charge of $176 million was recorded to net earnings during the first quarter of 2013 related to not proceeding with the upgrading portion of the project. In the fourth quarter of 2013, an adjustment of $94 million was recorded to reduce the previously estimated costs, resulting in a net charge of $82 million.

SUNCOR ENERGY INC. 2014 FIRST QUARTER    45


 11. SALE OF NATURAL GAS BUSINESS

During the third quarter of 2013, the company sold a significant portion of its natural gas business for $1.0 billion before closing adjustments and other closing costs. An after-tax gain of $130 million was recorded in the Exploration and Production segment upon closing of the sale.


12. COMMITMENTS

During the first quarter of 2014, the company increased its commitments by approximately $0.9 billion in support of the company's market access strategy and activities to expand its storage and logistics network.

46   SUNCOR ENERGY INC. 2014 FIRST QUARTER



QuickLinks

EXHIBIT 99.3 Unaudited Consolidated Financial Statements for the first quarter ended March 31, 2014
1. REPORTING ENTITY AND DESCRIPTION OF THE BUSINESS
2. BASIS OF PREPARATION
3. SEGMENTED INFORMATION
4. OTHER INCOME
5. SHARE-BASED COMPENSATION
6. NORMAL COURSE ISSUER BID
7. FINANCING EXPENSES
8. EARNINGS PER COMMON SHARE
9. FINANCIAL INSTRUMENTS
10. VOYAGEUR UPGRADER PROJECT
11. SALE OF NATURAL GAS BUSINESS
12. COMMITMENTS