EX-99.1 2 a2218559zex-99_1.htm EX-99.1
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EXHIBIT 99-1

Audited Consolidated Financial Statements of Suncor Energy Inc. for the fiscal
year ended December 31, 2013

MANAGEMENT'S STATEMENT
OF RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Suncor Energy Inc. is responsible for the presentation and preparation of the accompanying consolidated financial statements of Suncor Energy Inc. and all related financial information contained in the Annual Report, including Management's Discussion and Analysis.

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to publically accountable enterprises, which is within the framework of International Financial Reporting Standards as issued by the International Accounting Standards Board incorporated into the CICA Handbook Part 1. They include certain amounts that are based on estimates and judgments.

In management's opinion, the consolidated financial statements have been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies adopted by management. If alternate accounting methods exist, management has chosen those policies it deems the most appropriate in the circumstances. In discharging its responsibilities for the integrity and reliability of the financial statements, management maintains and relies upon a system of internal controls designed to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized. These controls include quality standards in hiring and training of employees, formalized policies and procedures, a corporate code of conduct and associated compliance program designed to establish and monitor conflicts of interest, the integrity of accounting records and financial information among others, and employee and management accountability for performance within appropriate and well-defined areas of responsibility.

The system of internal controls is further supported by the professional staff of an internal audit function who conduct periodic audits of the company's financial reporting.

The Audit Committee of the Board of Directors, currently composed of five independent directors, reviews the effectiveness of the company's financial reporting systems, management information systems, internal control systems and internal auditors. It recommends to the Board of Directors the external auditor to be appointed by the shareholders at each annual meeting and reviews the independence and effectiveness of their work. In addition, it reviews with management and the external auditor any significant financial reporting issues, the presentation and impact of significant risks and uncertainties, and key estimates and judgments of management that may be material for financial reporting purposes. The Audit Committee appoints the independent reserve consultants. The Audit Committee meets at least quarterly to review and approve interim financial statements prior to their release, as well as annually to review Suncor's annual financial statements and Management's Discussion and Analysis, Annual Information Form/Form 40-F, and annual reserves and resource estimates, and recommend their approval to the Board of Directors. The internal auditors and the external auditor, PricewaterhouseCoopers LLP, have unrestricted access to the company, the Audit Committee and the Board of Directors.

Steve W. Williams	Stephen D.L. Reynish
President and Chief Executive Officer	Interim Chief Financial Officer

February 28, 2014

SUNCOR ENERGY INC. ANNUAL REPORT 2013    83

The following report is provided by management in respect of the company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934):

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

1.

Management is responsible for establishing and maintaining adequate internal control over the company's financial reporting.

2.

Management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework (1992) in Internal Control – Integrated Framework to evaluate the effectiveness of the company's internal control over financial reporting.

3.

Management has assessed the effectiveness of the company's internal control over financial reporting as at December 31, 2013, and has concluded that such internal control over financial reporting was effective as of that date. Additionally, based on this assessment, management determined that there were no material weaknesses in internal control over financial reporting as at December 31, 2013. Because of inherent limitations, systems of internal control over financial reporting may not prevent or detect misstatements and even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

4.

The effectiveness of the company's internal control over financial reporting as at December 31, 2013 has been audited by PricewaterhouseCoopers LLP, independent auditor, as stated in their report which appears herein.

Steve W. Williams	Stephen D.L. Reynish
President and Chief Executive Officer	Interim Chief Financial Officer

February 28, 2014

84   SUNCOR ENERGY INC. ANNUAL REPORT 2013

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of
Suncor Energy Inc.

We have completed integrated audits of Suncor Energy Inc.'s 2013 and 2012 consolidated financial statements and its internal control over financial reporting as at December 31, 2013. Our opinions, based on our audits are presented below.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Suncor Energy Inc., which comprise the consolidated balance sheets as at December 31, 2013, December 31, 2012 and January 1, 2012 and the consolidated statements of comprehensive income, changes in shareholders' equity and cash flows for each of the two years in the period ended December 31, 2013, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management's responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.

An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Suncor Energy Inc. as at December 31, 2013, December 31, 2012 and January 1, 2012 and its financial performance and its cash flows for each of the two years in the period ended December 31, 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    85

Report on internal control over financial reporting

We have also audited Suncor Energy Inc.'s internal control over financial reporting as at December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management's responsibility for internal control over financial reporting

Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting.

Auditor's responsibility

Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our audit opinion on the company's internal control over financial reporting.

Definition of internal control over financial reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent limitations

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, Suncor Energy Inc. maintained, in all material respects, effective internal control over financial reporting as at December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by COSO.

Chartered Accountants

Calgary, Alberta

February 28, 2014

86   SUNCOR ENERGY INC. ANNUAL REPORT 2013

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31 ($ millions)				2013		2012
						(restated – note 6)
Revenues and Other Income
	Operating revenues, net of royalties (note 7)			39 593		38 107
	Other income (note 8)			704		419
				40 297		38 526
Expenses
	Purchases of crude oil and products			17 293		17 047
	Operating, selling and general (notes 9 and 26)			9 447		8 897
	Transportation			845		685
	Depreciation, depletion, amortization and impairment (notes 10 and 17)			4 892		6 446
	Exploration			322		309
	Gain on disposal of assets (note 34)			(137	)	(44	)
	Project start-up costs			15		60
	Voyageur upgrader project charges (note 33)			82		—
	Financing expenses (note 11)			1 162		142
				33 921		33 542
Earnings before Income Taxes				6 376		4 984
Income Taxes (note 12)
	Current			2 083		1 515
	Deferred			382		729
				2 465		2 244
Net Earnings				3 911		2 740
Other Comprehensive Income (Loss)
	Items That May be Subsequently Reclassified to Profit or Loss:
		Foreign currency translation adjustment		325		(16	)
		Cash flow hedges reclassified to net earnings		—		(1	)
	Items That Will Not be Reclassified to Profit or Loss:
		Actuarial gain (loss) on employee retirement benefit plans, net of income taxes		579		(134	)
Other Comprehensive Income (Loss)				904		(151	)
Total Comprehensive Income				4 815		2 589
Per Common Share (dollars) (notes 6 and 13)
	Net earnings – basic			2.61		1.77
	Net earnings – diluted			2.60		1.76
	Cash dividends			0.73		0.50

The accompanying notes are an integral part of the consolidated financial statements.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    87

CONSOLIDATED BALANCE SHEETS

($ millions)				December 31 2013		December 31 2012		January 1 2012
						(restated – note 6)		(restated – note 6)
Assets
	Current assets
		Cash and cash equivalents (note 14)		5 202		4 385		3 781
		Accounts receivable		5 254		5 201		5 383
		Inventories (note 16)		3 944		3 697		4 169
		Income taxes receivable		294		799		704
	Total current assets			14 694		14 082		14 037
	Property, plant and equipment, net (notes 17, 33 and 34)			57 270		55 434		52 563
	Exploration and evaluation (note 18)			2 772		3 284		4 554
	Other assets (note 19)			422		419		413
	Goodwill and other intangible assets (note 20)			3 092		3 104		3 114
	Deferred income taxes (note 12)			65		78		60
	Total assets			78 315		76 401		74 741
Liabilities and Shareholders' Equity
	Current liabilities
		Short-term debt (note 21)		798		775		761
		Current portion of long-term debt (note 21)		457		311		12
		Accounts payable and accrued liabilities		7 090		6 446		7 742
		Current portion of provisions (note 24)		998		856		811
		Income taxes payable		1 263		1 165		964
	Total current liabilities			10 606		9 553		10 290
	Long-term debt (note 21)			10 203		9 938		10 004
	Other long-term liabilities (note 22)			1 464		2 319		2 402
	Provisions (note 24)			4 078		4 932		3 751
	Deferred income taxes (note 12)			10 784		10 444		9 702
	Shareholders' equity			41 180		39 215		38 592
	Total liabilities and shareholders' equity			78 315		76 401		74 741

The accompanying notes are an integral part of the consolidated financial statements.

Approved on behalf of the Board of Directors:

Steve W. Williams		Michael W. O'Brien
Director		Director

February 28, 2014

88   SUNCOR ENERGY INC. ANNUAL REPORT 2013

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31 ($ millions)			2013		2012
					(restated – note 6)
Operating Activities
Net earnings			3 911		2 740
Adjustments for:
	Depreciation, depletion, amortization and impairment		4 892		6 446
	Deferred income taxes		382		729
	Accretion		192		182
	Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt		605		(181	)
	Change in fair value of derivative contracts		95		10
	Gain on disposal of assets		(137	)	(44	)
	Share-based compensation		214		214
	Exploration		82		145
	Settlement of decommissioning and restoration liabilities		(423	)	(433	)
	Recognition of risk mitigation proceeds		(300	)	—
	Other		(101	)	(75	)
Decrease (increase) in non-cash working capital (note 15)			688		(874	)
Cash flow provided by operating activities			10 100		8 859
Investing Activities
Capital and exploration expenditures			(6 777	)	(6 957	)
Acquisitions (note 33)			(515	)	—
Proceeds from disposal of assets			943		67
Proceeds from risk mitigation instruments			—		300
Divestiture of pipeline contract (note 24)			(76	)	—
Other investments			(18	)	(3	)
Increase in non-cash working capital (note 15)			(90	)	(51	)
Cash flow used in investing activities			(6 533	)	(6 644	)
Financing Activities
Net change in short-term debt			(32	)	13
Net change in long-term debt			170		414
Repayment of long-term debt			(312	)	—
Issuance of common shares under share option plans			112		188
Purchase of common shares for cancellation, net of option premiums (note 25)			(1 675	)	(1 451	)
Dividends paid on common shares			(1 095	)	(756	)
Cash flow used in financing activities			(2 832	)	(1 592	)
Increase in Cash and Cash Equivalents			735		623
Effect of foreign exchange on cash and cash equivalents			82		(19	)
Cash and cash equivalents at beginning of year			4 385		3 781
Cash and Cash Equivalents at End of Year			5 202		4 385
Supplementary Cash Flow Information
Interest paid			711		642
Income taxes paid			1 339		1 510

The accompanying notes are an integral part of the consolidated financial statements.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    89

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

($ millions)		Share Capital		Contributed Surplus		Foreign Currency Translation		Cash Flow Hedge		Retained Earnings		Total (restated – note 6)		Number of Common Shares (thousands)
At January 1, 2012		20 303		545		(207	)	14		17 937		38 592		1 558 636
Net earnings		—		—		—		—		2 740		2 740		—
Foreign currency translation adjustment		—		—		(16	)	—		—		(16	)	—
Net changes in cash flow hedges		—		—		—		(1	)	—		(1	)	—
Actuarial loss on employee retirement benefit plans, net of income taxes of $49		—		—		—		—		(134	)	(134	)	—
Total comprehensive income (loss)		—		—		(16	)	(1	)	2 606		2 589		—
Issued under share option plans		255		(49	)	—		—		—		206		10 804
Issued under dividend reinvestment plan		15		—		—		—		(15	)	—		479
Purchase of common shares for cancellation, net of option premiums		(609	)	—		—		—		(842	)	(1 451	)	(46 862	)
Liability for share purchase commitment		(19	)	—		—		—		(29	)	(48	)	—
Share-based compensation		—		83		—		—		—		83		—
Dividends paid on common shares		—		—		—		—		(756	)	(756	)	—
At December 31, 2012		19 945		579		(223	)	13		18 901		39 215		1 523 057
Net earnings		—		—		—		—		3 911		3 911		—
Foreign currency translation adjustment		—		—		325		—		—		325		—
Actuarial gain on employee retirement benefit plans, net of income taxes of $201		—		—		—		—		579		579		—
Total comprehensive income		—		—		325		—		4 490		4 815		—
Issued under share option plans		159		(32	)	—		—		—		127		4 750
Issued under dividend reinvestment plan		28		—		—		—		(28	)	—		—
Purchase of common shares for cancellation (note 25)		(648	)	—		—		—		(1 027	)	(1 675	)	(49 492	)
Change in liability for share purchase commitment (note 25)		(89	)	—		—		—		(169	)	(258	)	—
Share-based compensation		—		51		—		—		—		51		—
Dividends paid on common shares		—		—		—		—		(1 095	)	(1 095	)	—
At December 31, 2013		19 395		598		102		13		21 072		41 180		1 478 315

The accompanying notes are an integral part of the consolidated financial statements.

90   SUNCOR ENERGY INC. ANNUAL REPORT 2013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 joint arrangement 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 consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Canadian generally accepted accounting principles (GAAP) as contained within Part 1 of the Canadian Institute of Chartered Accountants Handbook.

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as at February 28, 2014, the date the Board of Directors approved the consolidated financial statements.

(b) Basis of Measurement

The consolidated financial statements are prepared on a historical cost basis except as detailed in the accounting policies disclosed in note 3. The accounting policies described in note 3 have been applied consistently to all periods presented in these 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 consolidated financial statements are described in note 4.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Consolidation

The company consolidates its interest in entities it controls. Control comprises the power to govern an entity's financial and operating policies to obtain benefits from its activities, and is a matter of judgment. Suncor recognizes its share of assets, liabilities, income and expenses, on a line-by-line basis, of its joint operations. Joint ventures are investments in entities over which the company has significant influence and are accounted for using the equity method. All intercompany balances and transactions are eliminated.

(b) Foreign Currency Translation

Functional currencies of the company's individual entities are the currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are translated to the appropriate functional currency at foreign exchange rates that approximate those on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the appropriate functional currency at foreign exchange rates at the balance sheet date. Foreign exchange differences arising on translation are recognized in earnings. Non-monetary assets that are measured in a foreign currency at historical cost are translated using the exchange rate at the date of the transaction.

In preparing the company's consolidated financial statements, the financial statements of each entity are translated into Canadian dollars. The assets and liabilities of foreign operations are translated into Canadian dollars at exchange rates at the balance sheet date. Revenues and expenses of foreign operations are translated into Canadian dollars using foreign exchange rates that approximate those on the date of the underlying transaction. Foreign exchange differences are recognized in Other Comprehensive Income.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    91

If the company or any of its entities dispose of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the accumulated foreign currency translation gains or losses related to the foreign operation are recognized in net earnings.

(c) Revenues

Revenue from the sale of crude oil, natural gas, natural gas liquids, purchased products and refined petroleum products is recorded when title passes to the customer and collection is reasonably assured. Revenue from properties in which the company has an interest with other producers is recognized on the basis of the company's net working interest. For operations not pursuant to production sharing contracts (PSCs), crude oil and natural gas sold below or above the company's working interest share of production results in production underlifts or overlifts, respectively. Underlifts are recorded as a receivable at market value with a corresponding increase to revenues, while overlifts are recorded as a payable at market value with a corresponding decrease to revenues. Revenue from oil and natural gas production is recorded net of royalty expense.

International operations conducted pursuant to PSCs are reflected in the consolidated financial statements based on the company's working interest. Each PSC establishes the exploration, development and operating costs the company is required to fund and establishes specific terms for the company to recover these costs (Cost Recovery Oil) and to share in the production profits (Profit Oil). Cost Recovery Oil is determined in accordance with a formula that is generally limited to a specified percentage of production during each fiscal year. Profit Oil is that portion of production remaining after deducting Cost Recovery Oil and is shared between the company and the respective government. Cost Recovery Oil and Profit Oil are reported as revenue when the sale of product to a third party occurs. Revenue also includes income taxes paid on our behalf by our government joint venture partners.

(d) Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash in banks, term deposits, certificates of deposit and all other highly liquid investments at the time of purchase.

(e) Inventories

Inventories of crude oil and refined products, other than inventories held for trading purposes, are valued at the lower of cost, using the first-in, first-out method, and net realizable value. Costs include direct and indirect expenditures incurred in bringing an item or product to its existing condition and location. Materials and supplies are valued at the lower of average cost and net realizable value.

Inventories held for trading purposes in the company's energy trading operations are carried at fair value less costs of disposal, and any changes in fair value are recognized within Other Income.

(f) Exploration and Evaluation Assets

The costs to acquire non-producing oil and gas properties or licences to explore, drill exploratory wells and the costs to evaluate the commercial potential of underlying resources, including related borrowing costs, are initially capitalized as Exploration and Evaluation assets. Certain exploration costs, including geological, geophysical, seismic, and delineation on oil sands properties, are charged to Exploration expense as incurred.

Exploration and evaluation assets are subject to technical, commercial and management review to confirm the continued intent to develop and extract the underlying resources. If an area or exploration well is no longer considered commercially viable, the related capitalized costs are charged to Exploration expense.

When management determines with reasonable certainty that an exploration and evaluation asset will be developed, as evidenced by the classification of proved or probable reserves and the appropriate internal and external approvals, the asset is transferred to Property, Plant and Equipment.

(g) Property, Plant and Equipment

Property, Plant and Equipment are recorded at cost.

The costs to acquire developed or producing oil and gas properties, and to develop oil and gas properties, including completing geological and geophysical surveys and drilling development wells, and the costs to construct and install development infrastructure, such as wellhead equipment, well platforms, well pairs, offshore platforms and subsea structures, are capitalized as oil and gas properties within Property, Plant and Equipment.

92   SUNCOR ENERGY INC. ANNUAL REPORT 2013

The costs to construct, install and commission, or acquire, oil and gas production equipment, including oil sands upgraders, extraction plants, mine equipment, processing and power generation facilities, utility plants, and all renewable energy, refining, and marketing assets, are capitalized as plant and equipment within Property, Plant and Equipment.

Stripping activity required to access oil sands mining resources incurred in the initial development phase is capitalized as part of the construction cost of the mine. Stripping costs incurred in the production phase are charged to expense as they normally relate to production for the current period.

The costs of planned major inspection, overhaul and turnaround activities that maintain Property, Plant and Equipment and benefit future years of operations are capitalized. Recurring planned maintenance activities performed on shorter intervals are expensed as operating costs. Replacements outside of a major inspection, overhaul or turnaround are capitalized when it is probable that future economic benefits will flow to the company and the associated carrying amount of the replaced asset (or part of a replaced asset) is derecognized.

Leases that transfer substantially all the benefits and risks of ownership to the company are recorded as finance lease assets within Property, Plant and Equipment. Costs for all other leases are recorded as operating expense as incurred.

Borrowing costs relating to assets that take a substantial period of time to construct are capitalized as part of the asset. Capitalization of borrowing costs ceases when the asset is in the location and condition necessary for its intended use, and is suspended when construction of an asset is ceased for extended periods.

(h) Depreciation, Depletion and Amortization

Exploration and Evaluation assets are not subject to depreciation, depletion and amortization. Once transferred to oil and gas properties within Property, Plant and Equipment and commercial production commences, these costs are depleted on a unit-of-production basis over proved developed reserves, with the exception of exploration and evaluation costs associated with oil sand mines which are depreciated on a straight-line basis over the life of the mine and property acquisition costs which are depleted over proved reserves.

Capital expenditures are not depleted until assets are substantially complete and ready for their intended use.

Costs to develop oil and gas properties other than oil sands properties, including costs of dedicated infrastructure, such as well pads and wellhead equipment, are depleted on a unit-of-production basis over proved developed reserves. A portion of these costs may not be depleted if they relate to undeveloped reserves. Costs to develop and construct oil sands mines are depreciated on a straight-line basis over the life of the mine.

Major components of Property, Plant and Equipment are depreciated on a straight-line basis over their expected useful lives.

Natural gas processing plants		15 years
Oil sands upgraders, extraction plants and mine facilities		20 to 40 years
Oil sands mine equipment		5 to 15 years
Oil sands in situ processing facilities		30 years
Power generation and utility plants		30 to 40 years
Refineries, ethanol and lubricants plants		20 to 40 years
Marketing and other distribution assets		20 to 40 years

The costs of major inspection, overhaul and turnaround activities that are capitalized are depreciated on a straight-line basis over the period to the next scheduled activity, which varies from two to five years.

Depreciation, depletion and amortization rates are reviewed annually, or when events or conditions occur that impact capitalized costs, reserves or estimated service lives.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    93

(i) Goodwill and Other Intangible Assets

The company accounts for business combinations using the acquisition method. The excess of the purchase price over the fair value of the identifiable net assets represents goodwill, and is allocated to the cash-generating units (CGUs) or groups of CGUs expected to benefit from the business combination.

Other intangible assets include acquired customer lists and brand value.

Goodwill and brand value have indefinite useful lives and are not subject to amortization. Customer lists are amortized over their expected useful lives, which range from five to ten years. Expected useful lives of goodwill and other intangible assets are reviewed on an annual basis.

(j) Impairment of Assets

Non-Financial Assets

Property, Plant and Equipment and Exploration and Evaluation assets are reviewed quarterly to assess whether there is any indication of impairment. Goodwill and intangible assets that have an indefinite useful life are tested for impairment annually. Exploration and Evaluation assets are also tested for impairment immediately prior to being transferred to Property, Plant and Equipment.

If any indication of impairment exists, an estimate of the asset's recoverable amount is calculated as the higher of the fair value less costs of disposal and value-in-use. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. In the absence of such transactions, an appropriate valuation model is used. Value-in-use is assessed using the present value of the expected future cash flows of the relevant asset. If the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, the asset is tested as part of a CGU, which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. An impairment loss is the amount by which the carrying amount of the individual asset or CGU exceeds its recoverable amount.

Impairments are reversed for all CGUs and individual assets, other than goodwill, if there has been a change in the estimates and judgments used to determine the asset's recoverable amount. If such indication exists, the carrying amount of the CGU or asset is increased to its revised recoverable amount which cannot exceed the carrying amount that would have been determined, net of depletion, depreciation and amortization, had no impairment been recognized.

Impairments and impairment reversals are recognized within Depreciation, Depletion, Amortization and Impairment.

Financial Assets

At each reporting date, the company assesses whether there is evidence that financial assets that are carried at amortized cost are impaired. If a financial asset carried at amortized cost is impaired, the impairment is recognized in Operating, Selling and General expense.

(k) Assets Held For Sale

Assets and liabilities are classified as held for sale if their carrying amounts are expected to be recovered through a disposition rather than through continuing use. The assets or disposal groups are measured at the lower of their carrying amount and fair value less costs of disposal. Impairment losses on initial classification as well as subsequent gains or losses on remeasurement are recognized in Depreciation, Depletion, Amortization and Impairment. However, when the assets or disposal groups are sold, the gains or losses on sale are recognized in (Gain) Loss on Disposal of Assets. Assets classified as held for sale are not depreciated, depleted or amortized.

(l) Provisions

Provisions are recognized by the company when it has a legal or constructive obligation as a result of past events, it is probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are recognized for decommissioning and restoration obligations associated with the company's Exploration and Evaluation assets and Property, Plant and Equipment. Provisions for decommissioning and restoration obligations are measured at the present value of management's best estimate of the future cash flows required to settle the present obligation, using the credit-adjusted risk-free interest rate. The value of the obligation is added to the carrying amount of the associated asset and amortized over the useful life of the asset. The provision is accreted over time through Financing Expenses with actual expenditures charged against the accumulated obligation. Changes in the future cash flow estimates

94   SUNCOR ENERGY INC. ANNUAL REPORT 2013

resulting from revisions to the estimated timing or amount of undiscounted cash flows are recognized as a change in the decommissioning and restoration provision and related asset.

(m) Income Taxes

The company follows the liability method of accounting for income taxes whereby deferred income taxes are recorded for the effect of differences between the accounting and income tax basis of an asset or liability. Deferred income tax assets and liabilities are measured using enacted or substantively enacted income tax rates at the balance sheet date that are anticipated to apply to taxable income in the years in which temporary differences are anticipated to be recovered or settled. Changes to these balances are recognized in earnings or in Other Comprehensive Income in the period they occur. Investment tax credits are recorded as an offset to the related expenditures.

The company recognizes the financial statement impact of a tax filing position when it is probable, based on the technical merits, that the position will be sustained upon audit. The company assesses possible outcomes and their associated probabilities. If the company determines payment is probable, it measures the tax position at the best estimate of the amount of tax payable.

(n) Pensions and Other Post-Retirement Benefits

The company sponsors defined benefit pension plans, defined contribution pension plans and other post-retirement benefits.

The cost of pension benefits earned by employees in the defined contribution pension plan are expensed as incurred. The cost of defined benefit pension plans and other post-retirement benefits are actuarially determined using the projected unit credit method based on present pay levels and management's best estimates of demographic and financial assumptions. Pension benefits earned during the current year are recorded in Operating, Selling and General expense. Interest costs on the net unfunded obligation are recorded in Financing Expenses. Any actuarial gains or losses are recognized immediately through Other Comprehensive Income and transferred directly to Retained Earnings.

The liability recognized on the balance sheet is the present value of the defined benefit obligations less the fair value of plan assets.

(o) Share-Based Compensation Plans

Under the company's share-based compensation plans, share-based awards are granted to executives, employees and non-employee directors. Compensation expense is recorded in Operating, Selling and General expense.

Share-based compensation awards that settle in cash or have the option to settle in cash or shares are accounted for as cash-settled plans. These are measured at fair value each reporting period using the Black-Scholes options pricing model, with the exception of performance share units, which are measured at fair value using the Monte-Carlo simulation approach. The expense is recognized over the vesting period, with a corresponding adjustment to liabilities. When awards are surrendered for cash, the cash settlement paid reduces the outstanding liability. When awards are exercised for common shares, consideration paid by the holder and the previously recognized liability associated with the options are recorded to Share Capital.

Stock options that give the holder the right to purchase common shares are accounted for as equity-settled plans. The expense is based on the fair value of the options at the time of grant using the Black-Scholes options pricing model and is recognized over the vesting periods of the respective options. A corresponding increase is recorded to Contributed Surplus. Consideration paid to the company on exercise of options is credited to Share Capital and the associated amount in Contributed Surplus is reclassified to Share Capital.

(p) Financial Instruments

The company classifies its financial instruments into one of the following categories: fair value through profit or loss; assets available for sale; held-to-maturity investments; loan and receivables and financial liabilities measured at amortized cost. All financial instruments are initially recognized at fair value on the balance sheet, net of any transaction costs except for financial instruments classified as fair value through profit and loss, where transaction costs are expensed as incurred. Subsequent measurement of financial instruments is based on their classification. The company classifies derivative financial instruments as fair value through profit and loss, cash and cash equivalents and accounts receivable as loans and receivables, financial instruments included in other assets as available for sale, and accounts payable and accrued liabilities, debt, and other long-term liabilities as other financial liabilities.

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The company uses derivative financial instruments, such as physical and financial contracts, either to manage certain exposures to fluctuations in interest rates, commodity prices and foreign exchange rates, as part of its overall risk management program, or to earn trading revenues. Earnings impacts from derivatives used to manage a particular risk are reported as part of Other Income in the related operating segment. Gains or losses from trading activities are reported in Other Income as part of Corporate, Energy Trading and Eliminations.

Certain physical commodity contracts are deemed to be derivative financial instruments for accounting purposes. Physical commodity contracts entered into for the purpose of receipt or delivery in accordance with the company's expected purchase, sale or usage requirements are not considered to be derivative financial instruments.

Derivatives embedded in other financial instruments or other host contracts are recorded as separate derivatives when their risks and characteristics are not closely related to those of the host contract.

(q) Hedging Activities

The company may apply hedge accounting to arrangements that qualify for designated hedge accounting treatment. Documentation is prepared at the inception of a hedge relationship in order to qualify for hedge accounting. Designated hedges are assessed at each reporting date to determine if the relationship between the derivative and the underlying hedged exposure is still effective and to quantify any ineffectiveness in the relationship.

If the derivative is designated as a fair value hedge, changes in the fair value of the derivative and in the fair value of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of the changes in fair value of the derivative are initially recorded in Other Comprehensive Income and are recognized in earnings when the hedged item is realized. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings immediately. Changes in the fair value of a derivative designated in a fair value or cash flow hedge are recognized in the same line item as the underlying hedged item.

(r) Share Capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects. When the company repurchases its own common shares, share capital is reduced by the average carrying value of the shares purchased. The excess of the purchase price over the average carrying value is recognized as a deduction from Retained Earnings. Shares are cancelled upon purchase.

(s) Dividend Distributions

Dividends on common shares are recognized in the period in which the dividends are declared by the company's Board of Directors.

(t) Earnings per Share

Basic earnings per share is calculated by dividing the net earnings for the period by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive common shares related to the company's share-based compensation plans. The number of shares included is computed using the treasury stock method. Options with tandem stock appreciation rights or 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.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements in accordance with IFRS requires management to make estimates and judgments that affect reported assets, liabilities, revenues, expenses, gains, losses, and disclosures of contingencies. These estimates

96   SUNCOR ENERGY INC. ANNUAL REPORT 2013

and judgments are subject to change based on experience and new information. The financial statement areas that require significant estimates and judgments are as follows:

Oil and Gas Reserves and Resources

Measurements of depletion, depreciation, impairment and decommissioning and restoration obligations are determined in part based on the company's estimate of oil and gas reserves and resources. The estimation of reserves and resources is an inherently complex process and involves the exercise of professional judgment. All reserves and certain resources have been evaluated at December 31, 2013 by independent qualified reserves evaluators. Oil and gas reserves and resources estimates are based on a range of geological, technical and economic factors, including projected future rates of production, projected future commodity prices, engineering data, and the timing and amount of future expenditures, all of which are subject to uncertainty. Estimates reflect market and regulatory conditions existing at December 31, 2013, which could differ significantly from other points in time throughout the year, or future periods. Changes in market and regulatory conditions and assumptions can materially impact the estimation of net reserves.

Oil and Gas Activities

The company is required to apply judgment when designating the nature of oil and gas activities as exploration, evaluation, development or production, and when determining whether the initial costs of these activities are capitalized.

Exploration and Evaluation Costs

Certain exploration and evaluation costs are initially capitalized with the intent to establish commercially viable reserves. The company is required to make judgments about future events and circumstances and applies estimates to assess the economic viability of extracting the underlying resources. The costs are subject to technical, commercial and management review to confirm the continued intent to develop the project. Level of drilling success, or changes to project economics, resource quantities, expected production techniques, production costs and required capital expenditures are important judgments when making this determination.

Development Costs

Management uses judgment to determine when exploration and evaluation assets are reclassified to Property, Plant and Equipment. This decision considers several factors, including the existence of reserves, appropriate approvals from regulatory bodies and the company's internal project approval processes.

Determination of Cash Generating Units

A CGU is defined as the lowest grouping of integrated assets that generate identifiable cash inflows that are largely independent of the cash inflows of other assets or groups of assets. The allocation of assets into CGUs requires significant judgment and interpretations with respect to the integration between assets, the existence of active markets, similar exposure to market risks, shared infrastructures, and the way in which management monitors the operations.

Asset Impairment and Reversals

Management applies judgment in assessing the existence of impairment and impairment reversal indicators based on various internal and external factors.

The recoverable amount of CGUs and individual assets is determined based on the higher of fair value less costs of disposal or value-in-use calculations. The key estimates the company applies in determining the recoverable amount normally include estimated future commodity prices, expected production volumes, future operating and development costs, discount rates, tax rates, and refining margins. In determining the recoverable amount, management may also be required to make judgments regarding the likelihood of occurrence of a future event. Changes to these estimates and judgments will affect the recoverable amounts of CGUs and individual assets and may then require a material adjustment to their related carrying value.

Decommissioning and Restoration Costs

The company recognizes liabilities for the future decommissioning and restoration of Exploration and Evaluation assets and Property, Plant and Equipment. Management applies judgment in assessing the existence and extent as well as the expected method of reclamation of the company's decommissioning and restoration obligations at the end of each reporting period. Management also uses judgment to determine whether the nature of the activities performed are related to decommissioning and restoration activities or normal operating activities.

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In addition, these provisions are based on estimated costs, which take into account the anticipated method and extent of restoration, technological advances and the possible future use of the site. Actual costs are uncertain and estimates can vary as a result of changes to relevant laws and regulations, the emergence of new technology, operating experience, prices and closure plans. The estimated timing of future decommissioning and restoration may change due to certain factors, including reserve life. Changes to estimates related to future expected costs, discount rates and timing may have a material impact on the amounts presented.

Employee Future Benefits

The company provides benefits to employees, including pensions and other post-retirement benefits. The cost of defined benefit pension plans and other post-retirement benefits received by employees is estimated based on actuarial valuation methods that require professional judgment. Estimates typically used in determining these amounts include, as applicable, rates of employee turnover, future claim costs, discount rates, future salary and benefit levels, the return on plan assets, mortality rates and future medical costs. Changes to these estimates may have a material impact on the amounts presented.

Other Provisions

The determination of other provisions, including, but not limited to, provisions for royalty disputes, onerous contracts, litigation and constructive obligations, is a complex process that involves judgments about the outcomes of future events, the interpretation of laws and regulations, and estimates on timing and amount of expected future cash flows and discount rates.

Income Taxes

Management evaluates tax positions, annually or when circumstances require, which involves judgment and could be subject to differing interpretations of applicable tax legislation. The company recognizes a tax provision when a payment to tax authorities is considered probable. However, the results of audits and reassessments and changes in the interpretations of standards may result in changes to those positions and potentially a material increase or decrease in the company's assets, liabilities and net earnings.

Deferred Income Taxes

Deferred tax assets are recognized when it is considered probable that deductible temporary differences will be recovered in the foreseeable future. To the extent that future taxable income and the application of existing tax laws in each jurisdiction differ significantly from the company's estimate, the ability of the company to realize the deferred tax assets could be impacted.

Deferred tax liabilities are recognized when there are taxable temporary differences that will reverse and result in a future outflow of funds to a taxation authority. The company records a provision for the amount that is expected to be settled, which requires judgment as to the ultimate outcome. Deferred tax liabilities could be impacted by changes in the company's judgment of the likelihood of a future outflow and estimates of the expected settlement amount, timing of reversals, and the tax laws in the jurisdictions in which the company operates.

Control and Significant Influence

Control is defined as the power to govern the financial and operating decisions of an entity so as to obtain benefits from its activities, and significant influence is defined as the power to participate in the financial and operating decisions of the investee. The assessment of whether the company has control, joint control, or significant influence over another entity requires judgment of the impact it has over the financial and operating decisions of the entity and the extent of the benefits it obtains.

Joint Arrangements

The classification of joint arrangements structured through separate vehicles as either joint ventures or joint operations requires significant judgment and depends on the legal form and contractual terms of the arrangement as well as other facts and circumstances. These include whether there is exclusive dependence on the parties to the joint arrangement for cash flows through the sale of product and funding of operations, and to assess the rights of the economic benefits of the assets and obligation for funding the liabilities of the arrangements.

98   SUNCOR ENERGY INC. ANNUAL REPORT 2013

A joint arrangement whereby the parties take their share of substantially all of the output of the joint arrangement would be an indicator for classification as a joint operation, regardless of structure of the arrangement, and accounted for by recognizing the company's share of assets and liabilities jointly owned and incurred, and the recognition of its share of revenue and expenses of the joint operation.

Fair Value of Financial Instruments

The fair value of financial instruments is determined whenever possible based on observable market data. If not available, the company uses third-party models and valuation methodologies that utilize observable market data including forward commodity prices, foreign exchange rates and interest rates to estimate the fair value of financial instruments, including derivatives. In addition to market information, the company incorporates transaction specific details that market participants would utilize in a fair value measurement, including the impact of non-performance risk.

5. RECENTLY ANNOUNCED ACCOUNTING PRONOUNCEMENTS

The standards and interpretations that are issued but not yet effective up to the date of issuance of the company's financial statements, and that may have an impact on the disclosures and financial position of the company, are disclosed below. The company intends to adopt these standards and interpretations, if applicable, when they become effective.

Offsetting Financial Assets and Financial Liabilities

In December 2011, the IASB issued amendments to IAS 32 Financial Instruments: Presentation to clarify the requirements for offsetting financial assets and liabilities. The amendments clarify that the right to offset must be available on the current date and cannot be contingent on a future event. Retrospective application of amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014, with earlier application permitted. The adoption of this amended standard is not expected to have a material impact on the company's financial statements.

Levies

In May 2013, the IASB issued International Financial Reporting Interpretation Committee (IFRIC) 21 Levies. This clarifies 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 clarifies that no liability should be anticipated before the minimum threshold is reached. Retrospective application of this interpretation is effective for annual periods beginning on or after January 1, 2014, with earlier application permitted. The company is assessing the impact of this interpretation on royalties and property taxes.

Financial Instruments: Recognition and Measurement

In November 2009, as part of the IASB project to replace International Accounting Standard (IAS) 39 Financial Instruments: Recognition and Measurement, the IASB issued the first phase of IFRS 9 Financial Instruments. It contained requirements for the classification and measurement of financial assets, and was updated in October 2010 to incorporate financial liabilities. In November 2013, the IASB issued amendments to include the new general hedge accounting model and to postpone the mandatory effective date of this standard indefinitely. The full impact of this standard will not be known until the amendments addressing impairments, classification and measurement have been completed. When these projects are completed, an effective date will be added by the IASB.

6. ADOPTION OF NEW AND AMENDED IFRS STANDARDS

Effective January 1, 2013, the company adopted the following new and amended IFRS standards and interpretations.

New and/or amended IFRS standards that resulted in restatements to comparative figures

Impact of the application of 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

SUNCOR ENERGY INC. ANNUAL REPORT 2013    99

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.

Impact of the application of IAS 19 Employee Benefits amendments

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.

Adjustments to Consolidated Statements of Comprehensive Income⁽¹⁾:

			For the year ended December 31, 2012
($ millions, increase/(decrease))			IFRS 11		IAS 19		Total
Revenues and Other Income
	Operating revenues, net of royalties		(101	)	—		(101	)
	Other income		11		—		11
Expenses
	Purchases of crude oil and products		(54	)	—		(54	)
	Operating, selling and general		(29	)	(22	)	(51	)
	Depreciation, depletion, amortization and impairment		(4	)	—		(4	)
	Financing expenses		(3	)	79		76
Income Taxes
	Deferred		—		(14	)	(14	)
Net Loss			—		(43	)	(43	)
	Actuarial gain on employee retirement benefit plans		—		43		43
Total Comprehensive Income			—		—		—
Per Common Share (dollars)
	Basic		—		(0.03	)	(0.03	)
	Diluted		—		(0.03	)	(0.03	)

(1)

The impact of the IAS 19 adjustments for the year ended December 31, 2013 was an increase to Financing Expenses of $49 million with a corresponding actuarial gain of $36 million, net of income taxes of $13 million, resulting in a $nil impact to the Consolidated Statements of Comprehensive Income.

100   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Adjustments to Consolidated Balance Sheets:

($ millions, increase/(decrease))		Dec 31 2012		Jan 1 2012
Cash and cash equivalents		(8	)	(22	)
Accounts receivable		(43	)	(29	)
Inventories		(46	)	(36	)
Property, plant and equipment, net		(24	)	(26	)
Other assets		99		102
Goodwill and other intangible assets		(24	)	(25	)
Deferred income taxes		(2	)	—
Total assets		(48	)	(36	)
Short-term debt		(1	)	(2	)
Accounts payable and accrued liabilities		(23	)	(13	)
Income taxes payable		(5	)	(5	)
Other long-term liabilities(2)		9		10
Provisions		(1	)	(1	)
Deferred income taxes(2)		(19	)	(17	)
Shareholders' equity(2)		(8	)	(8	)
Total liabilities and shareholders' equity		(48	)	(36	)

(2)

At December 31, 2012, the adjustment related to IAS 19 resulted in an increase of $11 million to Other long-term liabilities, offset by a decrease of $3 million and $8 million, respectively, to Deferred income taxes and Shareholders' equity. The remaining adjustments relate to IFRS 11.

Adjustments to Consolidated Statements of Cash Flow:

($ millions, increase/(decrease))			For the year ended December 31, 2012
Operating activities
	Cash flow from operating activities before change in non-cash working capital		(12	)
	Decrease in non-cash working capital		25
Cash flow from operating activities			13
Cash flow from investing activities			1
Cash flow from financing activities			—
Increase in cash and cash equivalents			14

Other new IFRS standards

Joint Arrangements

IFRS 12 Disclosures of Interests in Other Entities is a comprehensive disclosure standard for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The adoption of this standard had no material impact on the company's consolidated financial statements, but did result in increased disclosures on the company's material subsidiaries and interest in associates and joint arrangements. Refer to note 29 and 30.

Offsetting Financial Assets and Financial Liabilities Disclosures

IFRS 7 Financial Instruments: Disclosures amendments added disclosure requirements to enhance the understanding of the potential effects of offsetting arrangements. Refer to note 27.

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Fair Value Measurements

IFRS 13 Fair Value Measurement establishes a single source of guidance for most fair value measurements, clarifies the definition of fair value, and enhances the disclosures on fair value measurement. The adoption of this standard had no material impact on the company's consolidated financial statements, but did result in increased disclosures on the fair value measurement of the company's financial instruments. Refer to note 27.

Recoverable Amount Disclosures for Non-Financial Assets

The company early adopted amendments to IAS 36 Impairment of Assets. The amendments clarified the recoverable amount is disclosed only when an asset or CGU is impaired. The amended standard also requires expanded disclosure, including the fair value measurement input level, for CGUs with goodwill and assets that are impaired based on fair value less costs of disposal methodology. Refer to notes 10 and 20.

7. SEGMENTED INFORMATION

The company's operating segments are reported based on the nature of their products and services and management responsibility. The following summary describes the operations in each of the segments:

•

Oil Sands includes the company's operations in northeast Alberta to develop and produce synthetic crude oil and related products, through the recovery and upgrading of bitumen from mining and in situ operations. This segment also includes the company's joint interest in Fort Hills (40.8%) and Joslyn North (36.75%) mining projects as well as its 12% ownership interest in the Syncrude oil sands mining and upgrading joint venture, located near Fort McMurray, Alberta.

•

Exploration and Production includes exploration and production of natural gas, crude oil and natural gas liquids in Western Canada, offshore activity in East Coast Canada, with interests in the Hibernia, Terra Nova, White Rose and Hebron oilfields, and the exploration and production of crude oil and natural gas in the United Kingdom (U.K.), Norway, Libya and 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.

•

Refining and Marketing includes the refining of crude oil products, and the distribution and marketing of these and other purchased products through retail stations located in Canada and the United States (U.S.), as well as a lubricants plant located in Eastern Canada.

The company also reports activities not directly attributable to an operating segment under Corporate, Energy Trading and Eliminations. This includes investments in renewable energy projects.

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 balances are eliminated on consolidation. Intersegment profit will not be eliminated until the related product has been sold to third parties.

102   SUNCOR ENERGY INC. ANNUAL REPORT 2013

The company had no customer that individually represented 10% or more of the consolidated revenues for the year ended December 31, 2013 and 2012.

For the years ended December 31		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 6)								(restated – note 6)				(restated – note 6)				(restated – note 6)
Revenues and Other Income
Gross revenues		9 063		8 378		5 931		5 947		26 495		26 008		109		89		41 598		40 422
Intersegment revenues		4 026		3 124		432		529		163		212		(4 621	)	(3 865	)	—		—
Less: Royalties		(859	)	(684	)	(1 146	)	(1 631	)	—		—		—		—		(2 005	)	(2 315	)
Operating revenues, net of royalties		12 230		10 818		5 217		4 845		26 658		26 220		(4 512	)	(3 776	)	39 593		38 107
Other income		64		20		381		71		22		38		237		290		704		419
		12 294		10 838		5 598		4 916		26 680		26 258		(4 275	)	(3 486	)	40 297		38 526
Expenses
Purchases of crude oil and products		460		211		568		444		20 807		20 341		(4 542	)	(3 949	)	17 293		17 047
Operating, selling and general		5 837		5 365		676		795		2 307		2 249		627		488		9 447		8 897
Transportation		482		337		127		182		278		204		(42	)	(38	)	845		685
Depreciation, depletion, amortization and impairment		2 439		3 964		1 804		1 857		530		464		119		161		4 892		6 446
Exploration		115		71		207		238		—		—		—		—		322		309
Gain on disposal of assets		—		(29	)	(130	)	(1	)	(7	)	(13	)	—		(1	)	(137	)	(44	)
Project start-up costs		15		57		—		—		—		3		—		—		15		60
Voyageur upgrader project charges		82		—		—		—		—		—		—		—		82		—
Financing expenses (income)		135		127		33		81		5		2		989		(68	)	1 162		142
		9 565		10 103		3 285		3 596		23 920		23 250		(2 849	)	(3 407	)	33 921		33 542
Earnings (Loss) before Income Taxes		2 729		735		2 313		1 320		2 760		3 008		(1 426	)	(79	)	6 376		4 984
Income Taxes
Current		331		1		1 443		1 154		674		342		(365	)	18		2 083		1 515
Deferred		358		266		(130	)	28		64		529		90		(94	)	382		729
		689		267		1 313		1 182		738		871		(275	)	(76	)	2 465		2 244
Net Earnings (Loss)		2 040		468		1 000		138		2 022		2 137		(1 151	)	(3	)	3 911		2 740
Capital and Exploration Expenditures		4 311		4 957		1 483		1 261		890		644		93		95		6 777		6 957

Geographical Information

Operating Revenues, net of Royalties

($ millions)		2013		2012
				(restated – note 6)
Canada		31 407		30 074
Foreign		8 186		8 033
		39 593		38 107

SUNCOR ENERGY INC. ANNUAL REPORT 2013    103

Non-Current Assets⁽¹⁾

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Canada		57 235		55 817		53 845
Foreign		6 321		6 424		6 799
		63 556		62 241		60 644

(1)

Excludes deferred income tax assets.

8. OTHER INCOME

Other Income consists of the following:

($ millions)			2013		2012
					(restated – note 6)
Energy trading activities
	Change in fair value of contracts		176		246
	Gains (losses) on inventory valuation		15		(13	)
Risk management activities			(18	)	1
Risk mitigation and insurance proceeds			342		27
Investment and interest income			85		91
Renewable energy grants			47		59
Change in value of pipeline commitments and other			57		8
			704		419

9. OPERATING, SELLING AND GENERAL

Operating, Selling and General expense consists of the following:

($ millions)		2013		2012
				(restated – note 6)
Contract services		4 412		4 067
Employee costs(1)		2 654		2 664
Materials		932		720
Energy		915		608
Equipment rentals and leases		335		329
Travel, marketing and other		199		509
		9 447		8 897

(1)

The company incurred $3.3 billion of employee costs for the year ended December 31, 2013 (2012 – $3.2 billion), of which $2.7 billion (2012 – $2.7 billion) was recorded as employee benefits in Operating, Selling and General expense. Employee costs includes salaries, benefits and share-based compensation.

104   SUNCOR ENERGY INC. ANNUAL REPORT 2013

10. ASSET IMPAIRMENT

All impairments and impairment reversals were recorded as part of Depreciation, Depletion, Amortization and Impairment expense. Asset impairments during the period are as follows.

Exploration and Production

Libya

Political unrest in Libya resulted in the closure of export terminal operations at certain Libyan seaports in late July 2013 and production was essentially shut-in for the last five months of 2013. As a result, the company performed an impairment test on its Libyan assets using a value-in-use methodology to determine the recoverable amount, and an after-tax impairment charge of $101 million was recognized in the fourth quarter of 2013 and charged against Property, Plant and Equipment.

The impairment test used an expected cash flow approach based on 2013 year-end reserves data with a risk-adjusted discount rate of 17% to reflect uncertainty related to continued political unrest in the region, with three scenarios representing i) future cash flows based on the 2013 year-end reserves information, ii) future operations incorporating the company's strategic growth plan, and iii) suspension of all activity at the end of 2014. The first two scenarios were equally weighted at 45% each and the final scenario was assigned a weighting of 10% based on the company's best estimates. All scenarios incorporated the restart of production on April 1, 2014 and were based on an average price of US$104.00 per barrel through 2014 – 2019 escalated at an average of 2% per year thereafter.

The calculation of the recoverable amount is sensitive to the likelihood and timing of production restart, the discount rate, and prices. A three-month delay in the resumption of production restart would impact after-tax earnings by approximately $50 million. A 2% change in discount rate would impact after-tax earnings by approximately $80 million. A 5% change in price would impact after-tax earnings by approximately $75 million.

The remaining carrying value of the company's net assets in Libya as at December 31, 2013 was approximately $570 million.

Syria

Since December 2011, the company's operations and its contractual obligations in Syria have been suspended under a period of force majeure due to political unrest and international sanctions affecting that country. As there has been no resolution of the political situation and increasing uncertainty with respect to the company's return to operations in the country, during the fourth quarter of 2013, using a value-in-use methodology, the company impaired the remaining carrying value of its Syrian property, plant and equipment and working capital, resulting in an after-tax impairment charge of $422 million. The company also recognized $300 million ($223 million after-tax) of risk mitigation proceeds in Other Income that had been received in the fourth quarter of 2012 as the likelihood of return in the foreseeable future is remote. These proceeds are subject to a provisional repayment should the company recover any or all of its investment in Syria.

In the second quarter of 2012, the company recognized after-tax impairment charges and a bad debt provision of $694 million related to its Syrian assets. 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).

In the fourth quarter of 2012, a valuation assessment was performed. After receipt of the $300 million of risk mitigation proceeds, an impairment reversal of $177 million was recorded.

Other

In the fourth quarter of 2013, the company recognized an after-tax impairment charge of $40 million to reflect the recoverable amount of its unconventional oil properties in the Wilson Creek area of central Alberta. The recoverable amount was determined using a fair value less costs of disposal methodology, with the expected cash flow approach based on 2013 year-end reserves information and a risk-adjusted discount rate of 10% (Level 3 fair value inputs).

In the fourth quarter of 2012, the company recognized an after-tax impairment charge of $65 million related primarily to certain East Coast Canada exploration and evaluation assets as well as natural gas Arctic land leases as a result of future

SUNCOR ENERGY INC. ANNUAL REPORT 2013    105

development uncertainty. In addition, the company also recognized an after-tax impairment charge of $63 million related to certain natural gas properties due to a decline in price forecasts.

Oil Sands

Voyageur Upgrader Project

In the fourth quarter of 2012, the company recognized after-tax impairment charges of $1.487 billion related to its 51% interest in the Voyageur upgrader project. As a result of the challenging economic outlook for the Voyageur upgrader, an impairment test was performed at December 31, 2012, using a fair value less costs of disposal methodology. A risk-adjusted discount rate of 10% was used to perform the calculation.

11. FINANCING EXPENSES

($ millions)			2013		2012
					(restated – note 6)
Interest on debt and finance leases			703		640
Capitalized interest at 6.1% (2012 – 6.0%)			(397	)	(587	)
	Interest expense		306		53
	Interest on pension and other post-retirement benefits		68		79
	Accretion		192		182
	Foreign exchange loss (gain) on U.S. dollar denominated debt		605		(181	)
	Foreign exchange and other		(9	)	9
			1 162		142

12. INCOME TAXES

Income Tax Expense

($ millions)			2013		2012
					(restated – note 6)
Current:
	Current year		2 093		1 483
	Adjustments for prior years		(10	)	32
Deferred:
	Origination and reversal of temporary differences		410		687
	Adjustments for prior years		(28	)	(46	)
	Changes in tax rates and legislation		—		88
			2 465		2 244

There was no income tax recognized directly in equity during 2013 and 2012.

106   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Reconciliation of Effective Tax Rate

The provision for income taxes reflects an effective tax rate that differs from the statutory tax rate. A reconciliation of the difference is as follows:

($ millions)			2013		2012
					(restated – note 6)
Earnings before income tax			6 376		4 984
Canadian statutory tax rate			25.64%		25.67%
Statutory tax			1 635		1 279
Add (deduct) the tax effect of:
	Non-taxable component of capital gains and losses		71		(22	)
	Share-based compensation and other permanent items		5		15
	Assessments and adjustments		(38	)	—
	Impact of income tax rate and legislative changes(1)		—		88
	Canadian tax rate differential		4		1
	Foreign tax rate differential		691		763
	Non-taxable impairment charge		134		127
	Other		(37	)	(7	)
			2 465		2 244

(1)

In the second quarter of 2012, the Ontario government substantively enacted legislation to freeze the general corporate income tax rate at 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.

Deferred Income Tax Balances

Deferred income tax expense and net liabilities in the company's consolidated financial statements were comprised of the following:

		Consolidated Statements of Comprehensive Income				Consolidated Balance Sheets (2)
($ millions)		2013		2012		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)				(restated – note 6)		(restated – note 6)
Property, plant and equipment		758		1 266		12 134		11 991		10 725
Decommissioning and restoration provision		(54	)	(625	)	(1 017	)	(1 132	)	(507	)
Employee retirement benefit plans		(103	)	(69	)	(541	)	(636	)	(521	)
Tax loss carry-forwards		136		391		(31	)	(167	)	(558	)
Partnership deferral reserve		(213	)	(189	)	192		405		594
Other		(142	)	(45	)	(18	)	(95	)	(91	)
		382		729		10 719		10 366		9 642

(2)

The current and non-current portion of the deferred income tax liability and asset are as follows:

SUNCOR ENERGY INC. ANNUAL REPORT 2013    107

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Current deferred income tax liability		103		141		6
Current deferred income tax asset		(4	)	(9	)	(13	)
Non-current deferred income tax liability		10 681		10 303		9 696
Non-current deferred income tax asset		(61	)	(69	)	(47	)
Net deferred income tax liability		10 719		10 366		9 642

Change in Deferred Income Tax Balances

($ millions)		2013		2012
				(restated – note 6)
Beginning of year		10 366		9 642
Recognized in deferred income tax expense		382		729
Recognized in other comprehensive income		201		(49	)
Foreign exchange, disposition, and other		(230	)	44
End of year		10 719		10 366

No deferred tax liability has been recognized at December 31, 2013 on temporary differences of approximately $11.2 billion (2012 – $9.9 billion) associated with earnings retained in our investments in foreign subsidiaries, as the company is able to control the timing of the reversal of these differences. Based on current plans, repatriation of funds in excess of foreign reinvestment will not result in material additional income tax expense. Deferred distribution taxes associated with international business operations have not been recorded.

Canada Revenue Agency Proposal Letter

In January 2013, the company received a proposal letter from the Canada Revenue Agency (CRA) relating to the income tax treatment of the realized losses in 2007 on the settlement of certain derivative contracts. Following the company's response to the letter and subsequent information requests in 2013, CRA informed the company that it has not changed its original proposed position.

In the event that the CRA issues a formal Notice of Reassessment (NOR), the company plans to file a Notice of Objection to dispute this matter. However, notwithstanding the filing of an objection, the company would be required to make a minimum payment of 50% of the amount payable under the NOR, estimated to be $600 million, which would remain on account until the dispute is resolved.

The company strongly disagrees with the CRA's position and firmly believes it will be able to successfully defend its original filing position so that, ultimately, no increased income tax payable will result from the CRA's actions. If the company is unsuccessful in defending its tax filing position, it could be subject to an earnings impact of up to $1.2 billion.

108   SUNCOR ENERGY INC. ANNUAL REPORT 2013

13. EARNINGS PER COMMON SHARE

($ millions)			2013		2012
					(restated – note 6)
Net earnings			3 911		2 740
Dilutive impact of accounting for awards as equity-settled(1)			—		(7	)
Net earnings – diluted			3 911		2 733
(millions of common shares)
Weighted average number of common shares			1 501		1 545
Dilutive securities:
	Effect of share options		1		4
Weighted average number of diluted common shares			1 502		1 549
(dollars per common share)
Basic earnings per share			2.61		1.77
Diluted earnings per share			2.60		1.76

(1)

Options with tandem stock appreciation rights or 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 calculation 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 year ended December 31, 2012.

14. CASH AND CASH EQUIVALENTS

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Cash		1 184		628		810
Cash equivalents		4 018		3 757		2 971
		5 202		4 385		3 781

SUNCOR ENERGY INC. ANNUAL REPORT 2013    109

15. SUPPLEMENTAL CASH FLOW INFORMATION

The (increase) decrease in non-cash working capital is comprised of:

($ millions)			2013		2012
					(restated – note 6)
Accounts receivable			(60	)	193
Inventories			(220	)	460
Accounts payable and accrued liabilities			69		(1 729	)
Current portion of provisions			206		45
Income taxes payable (net)			603		106
			598		(925	)
Relating to:
	Operating activities		688		(874	)
	Investing activities		(90	)	(51	)

16. INVENTORIES

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Crude oil		1 269		1 091		1 321
Refined products		1 695		1 523		1 705
Materials, supplies and merchandise		594		597		592
Energy trading commodity inventories		386		486		551
		3 944		3 697		4 169

During 2013, product inventories of $18.0 billion (2012 – $17.7 billion) were expensed. There was no inventory write-down during 2013 (2012 – $45 million).

110   SUNCOR ENERGY INC. ANNUAL REPORT 2013

17. PROPERTY, PLANT AND EQUIPMENT

($ millions)			Oil and Gas Properties		Plant and Equipment		Total
							(restated – note 6)
Cost
At January 1, 2012			20 289		45 107		65 396
	Additions		1 739		4 955		6 694
	Transfers from exploration and evaluation		1 598		—		1 598
	Changes in decommissioning and restoration		899		92		991
	Disposals		(49	)	(185	)	(234	)
	Foreign exchange adjustments		(22	)	(55	)	(77	)
At December 31, 2012			24 454		49 914		74 368
	Additions		2 094		4 475		6 569
	Transfers from exploration and evaluation		644		—		644
	Acquisitions (note 33)		—		374		374
	Changes in decommissioning and restoration		358		18		376
	Disposals		(2 578	)	(921	)	(3 499	)
	Foreign exchange adjustments		551		166		717
At December 31, 2013			25 523		54 026		79 549
Accumulated provision
At January 1, 2012			(4 706	)	(8 127	)	(12 833	)
	Depreciation and depletion		(1 634	)	(2 058	)	(3 692	)
	Impairment (note 10)		(204	)	(2 484	)	(2 688	)
	Impairment reversal (note 10)		34		143		177
	Disposals		42		57		99
	Foreign exchange adjustments		(25	)	28		3
At December 31, 2012			(6 493	)	(12 441	)	(18 934	)
	Depreciation and depletion		(2 056	)	(2 181	)	(4 237	)
	Impairment (note 10)		(155	)	(444	)	(599	)
	Disposals		997		744		1 741
	Foreign exchange adjustments		(189	)	(61	)	(250	)
At December 31, 2013			(7 896	)	(14 383	)	(22 279	)
Net property, plant and equipment
	December 31, 2012		17 961		37 473		55 434
	December 31, 2013		17 627		39 643		57 270

SUNCOR ENERGY INC. ANNUAL REPORT 2013    111

		Dec 31, 2013						Dec 31, 2012
($ millions)		Cost		Accumulated provision		Net book value		Cost		Accumulated provision		Net book value
												(restated – note 6)
Oil Sands		52 127		(12 125	)	40 002		47 337		(10 440	)	36 897
Exploration and Production		15 660		(6 704	)	8 956		16 335		(5 691	)	10 644
Refining and Marketing		10 449		(2 883	)	7 566		9 462		(2 355	)	7 107
Corporate, Energy Trading and Eliminations		1 313		(567	)	746		1 234		(448	)	786
		79 549		(22 279	)	57 270		74 368		(18 934	)	55 434

At December 31, 2013, the balance of assets under construction, and not subject to depreciation or depletion, was $11.1 billion (December 31, 2012 – $12.2 billion; January 1, 2012 – $16.2 billion).

At December 31, 2013, Property, Plant and Equipment included finance leases with a net book value of $997 million (December 31, 2012 – $831 million; January 1, 2012 – $425 million).

Fort Hills Project Sanction

On October 30, 2013, the co-owners of Fort Hills announced project sanction. As a result, the accumulated capital costs in exploration and evaluation assets were transferred to oil and gas properties in Property, Plant and Equipment and an impairment test was required in accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources. A fair value less costs of disposal methodology was used to determine the recoverable amount and, as it exceeded the carrying amount, no impairment was recorded. Key assumptions used in the calculation of the recoverable amount were bitumen price, future capital costs and discount rate. The assumptions used by management to calculate the recoverable amount may change. Changes in these assumptions will have an impact on the recoverable amount and may result in impairment.

For purposes of calculating the recoverable amount at the date of sanction, the company applied a risk-adjusted discount rate of 8%, assumed bitumen price of $64.00 per barrel at first oil in 2017, escalated at an average of 2% per year thereafter, for the remaining life of the mine, and go forward capital costs of $5.5 billion (Level 3 fair value inputs).

A 1% increase in discount rate would have resulted in a decrease to the recoverable amount of $1.0 billion. Bitumen prices were based on third party published price curves adjusted for the company's view on long-term pricing economics and marketing information. A 5% decrease in prices would have resulted in a decrease to the recoverable amount of $800 million. Future capital costs of the mine are derived from company experience and adjusted for specific attributes of the project and expected cost savings due to new technologies. A 15% increase to this estimate (over the construction period) would have resulted in a decrease to the recoverable amount of $700 million.

18. EXPLORATION AND EVALUATION ASSETS

($ millions)		2013		2012
Beginning of year		3 284		4 554
Additions		225		478
Transfers to oil and gas assets		(644	)	(1 598	)
Dry hole expenses		(82	)	(145	)
Disposals		(11	)	—
Impairment		—		(88	)
Amortization		(13	)	(24	)
Foreign exchange adjustments		13		107
End of year		2 772		3 284

112   SUNCOR ENERGY INC. ANNUAL REPORT 2013

19. OTHER ASSETS

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Investments		325		309		265
Prepaids and other		97		110		148
		422		419		413

20. GOODWILL AND OTHER INTANGIBLE ASSETS

		Oil Sands		Refining and Marketing
($ millions)		Goodwill		Goodwill		Brand name		Customer lists		Total
				(restated – note 6)						(restated – note 6)
At January 1, 2012		2 752		149		166		47		3 114
Derecognition of goodwill		—		(1	)	—		—		(1	)
Additions		—		—		—		5		5
Amortization		—		—		—		(14	)	(14	)
At December 31, 2012		2 752		148		166		38		3 104
Amortization		—		—		—		(12	)	(12	)
At December 31, 2013		2 752		148		166		26		3 092

The company performed its most recent goodwill impairment test at October 31, 2013. Recoverable amounts for the Oil Sands CGUs were based on fair value less costs of disposal calculated using the present value of the CGUs' expected future cash flows. The primary sources of cash flow information are derived from business plans approved by executives of the company, which were developed based on macroeconomic factors such as forward price curves for benchmark commodities, inflation rates and industry supply-demand fundamentals. When required, the projected cash flows in the business plan have been updated to reflect current market assessments of key assumptions, including long-term forecasts of commodity prices, inflation rates, foreign exchange rates and discount rates specific to the asset (Level 3 fair value inputs).

Cash flow forecasts are also based on past experience, historical trends and third-party evaluations of the company's reserves and resources to determine production profiles and volumes, operating costs, maintenance and capital expenditures. Production profiles, reserves volumes, operating costs, maintenance and capital expenditures are consistent with the estimates approved through the company's annual reserves evaluation process and determine the duration of the underlying cash flows used in the discounted cash flow test.

Future cash flow estimates are discounted using after-tax risk-adjusted discount rates. The discount rates are calculated based on the weighted average cost of capital that is implicit in current market transactions for similar assets. The after-tax discount rate applied to cash flow projections was 10% at October 31, 2013 (July 31, 2012 – 10%). The company based its cash flow projections on an average West Texas Intermediate (WTI) price of US$ 97.50 per barrel through 2014-2019 escalated at an average of 2% per year thereafter, adjusted for applicable quality and location differentials depending on the underlying CGU. The forecasted cash flow period ranged from 20 years to 55 years based on the reserve life of the respective CGU. As a result of this analysis, management did not identify impairment within the Oil Sands operating segment and the associated allocated goodwill.

The company also performed a goodwill impairment test at October 31, 2013 of its Refining and Marketing operating segment, and no impairment was identified within the operating segment or the associated allocated goodwill.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    113

21. DEBT AND CREDIT FACILITIES

Debt and credit facilities are comprised of the following:

Short-Term Debt

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Commercial paper (1)		798		775		761

(1)

The commercial paper is supported by a revolving credit facility with a separate lender. The company is authorized to issue commercial paper to a maximum of $2.5 billion having a term not to exceed 365 days. The weighted-average interest rate as at December 31, 2013 was 0.3% (December 31, 2012 – 0.4%; January 1, 2012 – 0.4%).

Long-Term Debt

($ millions)			Dec 31 2013		Dec 31 2012		Jan 1 2012
Fixed-term debt, redeemable at the option of the company
	6.85% Notes, due 2039 (US$750)		798		746		763
	6.80% Notes, due 2038 (US$900)		983		921		942
	6.50% Notes, due 2038 (US$1150)		1 223		1 144		1 170
	5.95% Notes, due 2035 (US$600)		596		556		566
	5.95% Notes, due 2034 (US$500)		532		498		509
	5.35% Notes, due 2033 (US$300)		279		259		263
	7.15% Notes, due 2032 (US$500)		532		498		509
	6.10% Notes, due 2018 (US$1250)		1 330		1 244		1 271
	6.05% Notes, due 2018 (US$600)		646		606		621
	5.00% Notes, due 2014 (US$400)		427		402		413
	4.00% Notes, due 2013 (US$300)		—		299		305
	7.00% Debentures, due 2028 (US$250)		274		256		263
	7.875% Debentures, due 2026 (US$275)		321		303		312
	9.25% Debentures, due 2021 (US$300)		378		361		376
	5.39% Series 4 Medium Term Notes, due 2037		600		600		600
	5.80% Series 4 Medium Term Notes, due 2018		700		700		700
Total unsecured long-term debt			9 619		9 393		9 583
Secured long-term debt			13		13		13
Finance leases (2)			1 071		894		476
Deferred financing costs			(43	)	(51	)	(56	)
			10 660		10 249		10 016
Current portion of long-term debt
	Finance leases		(17	)	(12	)	(12	)
	Secured long-term debt		(13	)	—		—
	4.00% Notes, due July 2013 (US$300)		—		(299	)	—
	5.00% Notes, due 2014 (US$400)		(427	)	—		—
			(457	)	(311	)	(12	)
Total long-term debt			10 203		9 938		10 004

(2)

Interest rates range from 4.6% to 13.4% and maturity dates range from 2017 to 2052.

114   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Scheduled Debt Repayments

Scheduled principal repayments for finance leases, short-term debt and long-term debt are as follows:

($ millions)		Repayment
2014		1 255
2015		22
2016		24
2017		23
2018		2 690
Thereafter		7 437
		11 451

Credit Facilities

A summary of available and unutilized credit facilities is as follows:

($ millions)		2013
Fully revolving for a period of one year after term-out date (Nov 2014)		2 000
Fully revolving and expires in 2015		900
Fully revolving for a period of three years and expires in 2016		3 000
Can be terminated at any time at the option of the lenders		288
Total credit facilities		6 188
Credit facilities supporting outstanding commercial paper		(798	)
Credit facilities supporting standby letters of credit(3)		(854	)
Total unutilized credit facilities		4 536

(3)

The company supported certain credit facilities with $585 million of cash collateral as at December 31, 2013 (December 31, 2012 – $150 million).

22. OTHER LONG-TERM LIABILITIES

($ millions)		Dec 31 2013		Dec 31 2012		Jan 1 2012
				(restated – note 6)		(restated – note 6)
Pensions and other post-retirement benefits (note 23)		926		1 645		1 694
Share-based compensation plans (note 26)		335		242		187
Deferred revenue		72		77		84
Fort Hills purchase obligation(1)		—		223		275
Libya EPSAs signature bonus(2)		64		72		73
Other		67		60		89
		1 464		2 319		2 402

(1)

As part of the 2009 acquisition of Petro-Canada, the company assumed an obligation relating to Petro-Canada's acquisition of an additional 5% interest in the Fort Hills project. To pay for this investment, the company will fund $375 million of expenditures in excess of its working interest. At December 31, 2013, the carrying amount of the Fort Hills obligation, based on the discounted estimated payout pattern for the funding, was $230 million (December 31, 2012 – $300 million), of which the entire portion is classified as current (December 31, 2012 – $77 million) and is recorded in Accounts Payable and Accrued Liabilities.

(2)

The company also assumed the remaining US$500 million obligation for a signature bonus relating to Petro-Canada's ratification of six Exploration and Production Sharing Agreements (EPSAs) in Libya payable in several instalments through 2014. At December 31, 2013, the carrying amount of the Libya EPSAs signature bonus was $78 million (December 31, 2012 – $86 million). The current portion is $14 million (December 31, 2012 – $14 million) and is recorded in Accounts Payable and Accrued Liabilities.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    115

23. PENSIONS AND OTHER POST-RETIREMENT BENEFITS

The company's defined benefit pension plans provide pension benefits at retirement based on years of service and final average earnings (if applicable). These obligations are met through funded registered retirement plans and through unregistered supplementary pensions that are voluntarily funded through retirement compensation arrangements, and/or paid directly to recipients. The amount and timing of future funding for these supplementary plans is subject to the funding policy as approved by the Board of Directors. The company's contributions to the funded plans are deposited with independent trustees who act as custodians of the plans' assets, as well as the disbursing agents of the benefits to recipients. Plan assets are managed by a pension committee on behalf of beneficiaries. The committee retains independent managers and advisors.

Asset-Liability matching studies are performed by a third-party consultant to set the asset mix by quantifying the risk-and-return characteristics of possible asset mix strategies. Investment and contribution policies are integrated within this study, and areas of focus include asset mix as well as interest rate sensitivity.

Funding of the registered retirement plans complies with applicable regulations that require actuarial valuations of the pension funds at least once every three years in Canada, or more, depending on funding status, and every year in the United States. The most recent valuations were performed as at December 31, 2013. The company uses a measurement date of December 31 to value the plan assets and accrued benefit obligation for accounting purposes.

The company's other post-retirement benefits programs are unfunded and include certain health care and life insurance benefits provided to retired employees and eligible surviving dependants.

The company also provides a number of defined contribution plans, including a U.S. 401(k) savings plan, that provide for an annual contribution of 5% to 11.5% of each participating employee's pensionable earnings.

Effective January 1, 2014, Petro-Canada Retirement Plan and Suncor Energy Pension Plan were merged. There was no impact to the consolidated results as a result of this transaction.

116   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Defined Benefit Obligations and Funded Status

				Pension Benefits				Other Post-Retirement Benefits
($ millions)				2013		2012		2013		2012
						(restated – note 6)
Change in benefit obligation
	Benefit obligation at beginning of year			4 137		3 698		545		510
	Current service costs			160		143		13		11
	Past service costs			13		—		—		—
	Plan participants' contributions			14		14		—		—
	Benefits paid			(186	)	(172	)	(16	)	(18	)
	Interest costs			159		163		21		22
	Foreign exchange			17		2		2		—
	Settlements			2		2		—		—
	Actuarial remeasurement:
		Experience loss (gain) arising on plan liabilities		25		18		(5	)	(13	)
		Actuarial loss (gain) arising from changes in demographic assumptions		38		—		(1	)	—
		Actuarial (gain) loss arising from changes in financial assumptions		(488	)	269		(70	)	33
Benefit obligation at end of year				3 891		4 137		489		545
Change in plan assets
	Fair value of plan assets at beginning of year			2 832		2 488		—		—
	Employer contributions			220		267		—		—
	Plan participants' contributions			14		14		—		—
	Benefits paid			(178	)	(172	)	—		—
	Foreign exchange			14		3		—		—
	Settlements			2		2		—		—
	Administrative costs			(2	)	—		—		—
	Interest income on plan assets			112		106		—		—
	Actuarial remeasurement:
		Return on plan assets (excluding amounts included in net interest expense)		279		124		—		—
Fair value of plan assets at end of year				3 293		2 832		—		—
Net unfunded obligation				598		1 305		489		545

Of the total net unfunded obligation as at December 31, 2013, 86% relates to Canadian pension and other post-retirement benefits obligation (excluding Syncrude) (December 31, 2012 – 88%). The weighted average duration of the Canadian pension and other post-retirement plans (excluding Syncrude) is 14.0 years (2012 – 14.2 years).

SUNCOR ENERGY INC. ANNUAL REPORT 2013    117

The net unfunded obligation is recorded in Accounts Payable and Accrued Liabilities and Other Long-Term Liabilities (note 22) in the Consolidated Balance Sheets.

			Pension Benefits				Other Post-Retirement Benefits
($ millions)			2013		2012		2013		2012
					(restated – note 6)
Analysis of amount charged to earnings:
	Current service costs		160		143		13		11
	Past service costs		13		—		—		—
	Interest costs		47		57		21		22
Defined benefit plans expense			220		200		34		33
Defined contribution plans expense			62		53		—		—
Total benefit plans expense charged to earnings			282		253		34		33

Components of defined benefit costs recognized in Other Comprehensive Income:

		Pension Benefits				Other Post-Retirement Benefits
($ millions)		2013		2012		2013		2012
				(restated – note 6)
Return on plan assets (excluding amounts included in net interest expense)		(279	)	(124	)	—		—
Experience loss (gain) arising on plan liabilities		25		18		(5	)	(13	)
Actuarial loss (gain) arising from changes in demographic assumptions		38		—		(1	)	—
Actuarial (gain) loss arising from changes in financial assumptions		(488	)	269		(70	)	33
Actuarial (gain) loss recognized in other comprehensive income		(704	)	163		(76	)	20

Actuarial Assumptions

The cost of the defined benefit pension plans and other post-retirement benefits received by employees is actuarially determined using the projected unit credit method of valuation that includes employee service to date and present pay levels, as well as projection of salaries and service to retirement.

The significant weighted average actuarial assumptions were as follows:

		Pension Benefits				Other Post-Retirement Benefits
(%)		Dec 31 2013		Dec 31 2012		Dec 31 2013		Dec 31 2012
Discount rate		4.70		3.90		4.70		3.90
Rate of compensation increase		3.45		3.65		3.30		3.75

The discount rate assumption is based on the interest rate on high-quality bonds with maturity terms equivalent to the benefit obligations.

The defined benefit obligation reflects the best estimate of the mortality of plan participants both during and after their employment. The mortality assumption is based on a standard mortality table adjusted for actual experience over the past five years.

118   SUNCOR ENERGY INC. ANNUAL REPORT 2013

In order to measure the expected cost of other post-retirement benefits, it was assumed for 2013 that the health care costs would increase annually by 7% per person (2012 – 7%). This rate will remain constant in 2014 and will decrease 0.5% annually to 5% by 2018, and remain at that level thereafter.

Assumed discount rates, longevity rates and health care cost trend rates may have a significant effect on the amounts reported for pensions and other post-retirement benefit obligations for the company's Canadian plans (excluding Syncrude). A 1% change of these assumed assumptions would have the following effects:

			Pension Benefits
($ millions)			Increase		Decrease
Discount rate
	Effect on the aggregate service and interest costs		(13	)	16
	Effect on the benefit obligations		(411	)	514
Longevity rate
	Effect on the aggregate service and interest costs		6		(6	)
	Effect on the benefit obligations		79		(82	)

			Other Post-Retirement Benefits
($ millions)			Increase		Decrease
Discount rate
	Effect on the benefit obligations		(56	)	70
Health care cost
	Effect on the aggregate service and interest costs		2		(1	)
	Effect on the benefit obligations		32		(27	)

Plan Assets and Investment Objectives

The company's long-term investment objective is to secure the defined pension benefits while managing the variability and level of its contributions. The portfolio is rebalanced periodically, as required, while ensuring that the maximum equity content is 65% at any time. Plan assets are restricted to those permitted by legislation, where applicable. Investments are made through pooled, mutual, segregated or exchange traded funds.

The company's weighted average pension plan asset allocation, based on market values as at December 31, are as follows:

(%)			2013		2012
Equities, comprised of:
	– Canada		18		18
	– United States		22		20
	– Foreign		20		20
			60		58
Fixed income, comprised of:
	–  Canada		40		42
Total			100		100

Equity securities do not include any direct investments in Suncor shares.

The company expects to make cash contributions to its defined benefit pension plans in 2014 of $427 million.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    119

24. PROVISIONS

($ millions)		Decommissioning and Restoration(1)		Royalties(2)		Other(3)		Total
						(restated – note 6)		(restated – note 6)
At January 1, 2012		3 801		355		406		4 562
Liabilities incurred		378		317		408		1 103
Changes in estimates		783		51		(14	)	820
Liabilities settled		(433	)	(356	)	(73	)	(862	)
Accretion		163		—		6		169
Foreign exchange		(4	)	—		—		(4	)
At December 31, 2012		4 688		367		733		5 788
Less: current portion		(395	)	(367	)	(94	)	(856	)
		4 293		—		639		4 932
At December 31, 2012		4 688		367		733		5 788
Liabilities incurred		398		224		97		719
Changes in estimates		82		(15	)	(392	)	(325	)
Liabilities settled		(423	)	(52	)	(132	)	(607	)
Accretion		174		—		5		179
Asset divestitures		(714	)	—		—		(714	)
Foreign exchange		33		—		3		36
At December 31, 2013		4 238		524		314		5 076
Less: current portion		(362	)	(524	)	(112	)	(998	)
		3 876		—		202		4 078

(1)

Represents decommissioning and restoration provisions associated with the retirement of Property, Plant and Equipment and Exploration and Evaluation assets. The total undiscounted amount of estimated future cash flows required to settle the obligations at December 31, 2013 was approximately $8.0 billion (December 31, 2012 – $8.1 billion). A weighted average credit-adjusted risk-free interest rate of 4.51% was used to discount the provision recognized at December 31, 2013 (December 31, 2012 – 3.75%). The credit-adjusted risk-free rate used reflects the expected time frame of the provisions. Payments to settle the decommissioning and restoration provisions occur on an ongoing basis and will continue over the lives of the operating assets, which can exceed fifty years.

(2)

In December 2013, Suncor reached an agreement with the Government of Alberta concerning several outstanding issues under the Royalty Amending Agreements (RAA) entered into in 2008. Subsequent to December 31, 2013, the company settled $196 million related to these provisions.

(3)

For the year ended December 31, 2013, the company's provisions decreased by $300 million as a result of a recognition of risk mitigation proceeds to earnings. In addition, the company divested one of its pipeline commitments to a third party, resulting in a $76 million decrease to provisions.

120   SUNCOR ENERGY INC. ANNUAL REPORT 2013

25. SHARE CAPITAL

Authorized

Common Shares

The company is authorized to issue an unlimited number of common shares without nominal or par value.

Preferred Shares

The company is authorized to issue an unlimited number of preferred shares in series, without nominal or par value.

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 a 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 3, 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 24.4 million common shares for a total consideration of $894 million as at December 31, 2013.

During the year ended December 31, 2013, the company purchased 49.5 million (2012 – 46.9 million) common shares for total consideration of $1,675 million (2012 – $1,451 million). Of the amount recognized, $648 million (2012 – $609 million, net of $1.3 million options premiums) was charged to share capital and $1,027 million (2012 – $842 million) to retained earnings.

The company had also recorded a liability of $306 million at December 31, 2013 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, $108 million was charged to share capital and $198 million to retained earnings.

26. SHARE-BASED COMPENSATION

Equity-Settled Plans

Stock options that give the holder the right to purchase common shares at the grant date market price, subject to fulfilling vesting terms, are accounted for as equity-settled plans.

(i) Suncor Energy Inc. Stock Options

This plan replaced the pre-merger stock option plans of legacy Suncor and legacy Petro-Canada. Outstanding options that are cancelled, expire or otherwise result in no underlying common share being issued will be available for issuance as options under this plan. Options granted have a seven-year life and vest annually over a three-year period.

The weighted average fair values of the options granted during the period and the weighted average assumptions used in their determination are as noted below:

		2013		2012
Annual dividend per share		$0.73		$0.50
Risk-free interest rate		1.40%		1.26%
Expected life		5 years		5 years
Expected volatility		48%		50%
Weighted average fair value per option		$11.72		$13.30

The expected life is based on historical experience and current expectations. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    121

(ii) Discontinued Plans

The following plans were in place prior to August 1, 2009: SunShare 2012 Performance Stock Options, Executive Stock Options, and Key Contributor Stock Options. For options granted under these plans, they generally have a seven to ten-year life and vest over periods up to four years.

Cash-Settled Plans

(a) Cash-Settled Stock Option Plans

Stock options that the holder can settle for cash or common shares are accounted for as cash-settled plans.

(i) Suncor Energy Inc. Stock Options with TSARs

Options were granted under this plan between August 1, 2009 and July 31, 2010. Each option included a tandem stock appreciation right (TSAR). Options granted have a seven-year life and vest annually over a three-year period.

(ii) Legacy Petro-Canada Stock Options with CPAs

This plan was discontinued on August 1, 2009. Options were granted to executives and key employees, and can be settled in common shares or exchanged for a cash payment alternative (CPA). Options granted have a seven-year life and vest over periods of up to four years.

Changes in the total outstanding stock options were as follows:

		2013				2012
		Number (thousands)		Weighted Average Exercise Price ($)		Number (thousands)		Weighted Average Exercise Price ($)
Outstanding, beginning of year		47 324		38.33		59 178		35.25
Granted		4 209		32.50		5 101		34.50
Exercised		(4 750	)	23.31		(10 803	)	17.31
Forfeited/expired		(11 786	)	45.13		(6 152	)	42.08
Outstanding, end of year		34 997		37.47		47 324		38.33
Exercisable, end of year		27 104		38.31		29 834		36.23

Options are exercised regularly throughout the year. Therefore, the weighted average share price during the year of $33.66 (2012 – $31.94) is representative of the weighted average share price at the date of exercise.

For the options outstanding at December 31, 2013, the exercise price ranges and weighted average remaining contractual lives are shown below:

		Outstanding
Exercise Prices ($)		Number (thousands)		Weighted Average Remaining Contractual Life (years)
11.99-19.99		1 885		2
20.00-29.99		1 793		3
30.00-39.99		16 066		4
40.00-49.99		14 423		3
50.00-59.99		684		1
60.00-72.17		146		1
Total		34 997		3

122   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Common shares authorized for issuance by the Board of Directors that remain available for the granting of future options:

(thousands)		2013		2012
		29 817		7 020

(b) Share Unit Plans

The company's share unit plans are accounted for as cash-settled plans.

A performance share unit (PSU) is a time-vested award entitling employees to receive varying degrees of cash (0% – 200% of the company's share price at time of vesting) contingent upon Suncor's total shareholder return (stock price appreciation and dividend income) relative to a peer group of companies. PSUs vest approximately three years after the grant date.

A restricted share unit (RSU) is a time-vested award entitling employees to receive cash equal to the company's share price at the time of vesting. Typically, RSUs vest approximately three years after the grant date.

A deferred share unit (DSU) is redeemable for cash or a common share for a period of time after a unitholder ceases employment or Board membership. The DSU plan is limited to executives and members of the Board of Directors. Members of the Board of Directors receive one-half or, at their option, all of their compensation in the form of DSUs. Executives may elect to receive one-half, or all, of their annual incentive payment in the form of DSUs.

Changes in the number of outstanding share units were as follows:

(thousands)			PSU		RSU		DSU
Outstanding, January 1, 2012			4 660		9 294		1 702
	Granted		1 021		6 803		198
	Redeemed for cash		(1 168	)	(2 666	)	(263	)
	Forfeited/expired		(135	)	(566	)	—
Outstanding, December 31, 2012			4 378		12 865		1 637
	Granted		1 082		7 365		165
	Redeemed for cash		(1 684	)	(2 526	)	(764	)
	Forfeited/expired		(135	)	(658	)	—
Outstanding, December 31, 2013			3 641		17 046		1 038

(c) Stock Appreciation Rights (SARs)

A SAR entitles the holder to receive a cash payment equal to the difference between the stated exercise price and the market price of the company's common shares on the date the SAR is exercised, and is accounted for as a cash-settled plan.

(i) Suncor Energy Inc. SARs

These SARs have a seven-year life and vest annually over a three-year period.

(ii) Legacy Petro-Canada SARs

This plan was discontinued on August 1, 2009. These SARs have a seven-year life and vest annually over a four-year period.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    123

Changes in the number of outstanding SARs were as follows:

		2013				2012
		Number (thousands)		Weighted Average Exercise Price ($)		Number (thousands)		Weighted Average Exercise Price ($)
Outstanding, beginning of year		7 776		29.65		8 752		29.32
Granted		88		32.60		101		34.51
Exercised		(1 567	)	27.57		(482	)	20.53
Forfeited/expired		(492	)	35.47		(595	)	32.86
Outstanding, end of year		5 805		29.75		7 776		29.65
Exercisable, end of year		5 665		29.61		6 568		30.80

Share-Based Compensation Expense

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

($ millions)		2013		2012
Equity-settled plans		51		83
Cash-settled plans		341		269
Total share-based compensation expense		392		352

Liability Recognized for Share-Based Compensation

The company has recorded a liability of $653 million as at December 31, 2013 (December 31, 2012 – $523 million), of which $318 million was classified as current (December 31, 2012 – $281 million), based on the fair value of awards accounted for as cash-settled. The intrinsic value of the vested awards at December 31, 2013 was $347 million (December 31, 2012 – $237 million).

27. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The company's financial instruments consist of cash and cash equivalents, accounts receivable, derivative contracts, substantially all accounts payable and accrued liabilities, debt, and certain portions of other assets and other long-term liabilities.

Non-Derivative Financial Instruments

The fair values of cash and cash equivalents, accounts receivable, short-term debt, and accounts payable and accrued liabilities approximate their carrying values due to the short-term maturities of those instruments.

The company's long-term debt and long-term financial liabilities are recorded at amortized cost using the effective interest method. At December 31, 2013, the carrying value of fixed-term debt accounted for under amortized cost was $9.6 billion (December 31, 2012 – $9.4 billion) and the fair value at December 31, 2013 was $11.2 billion (December 31, 2012 – $11.8 billion). The estimated fair value of long-term debt is based on pricing sourced from market data, which is considered Level 2 fair value inputs.

Derivative Financial Instruments

(a) Non-Designated Derivative Financial Instruments

•

Energy Trading Derivatives – The company's Energy Trading group uses physical and financial energy derivative contracts, including swaps, forwards and options to earn trading revenues.

124   SUNCOR ENERGY INC. ANNUAL REPORT 2013

•

Risk Management Derivatives – The company periodically enters into derivative contracts in order to manage exposure to commodity price and foreign exchange movements and are a component of the company's overall risk management program.

The Changes in the fair value of non-designated Energy Trading and Risk Management derivatives are as follows:

($ millions)			Energy Trading		Risk Management		Total
Fair value of contracts outstanding at January 1, 2012			(34	)	—		(34	)
	Fair value of contracts realized in earnings during the year		(255	)	(2	)	(257	)
	Changes in fair value during the year (note 8)		246		1		247
Fair value of contracts outstanding at December 31, 2012			(43	)	(1	)	(44	)
	Fair value of contracts realized in earnings during the year		(271	)	18		(253	)
	Changes in fair value during the year (note 8)		176		(18	)	158
Fair value of contracts outstanding at December 31, 2013			(138	)	(1	)	(139	)

(b) Fair Value Hierarchy

To estimate fair value of derivatives, the company uses quoted market prices when available, or third-party models and valuation methodologies that utilize observable market data. In addition to market information, the company incorporates transaction specific details that market participants would utilize in a fair value measurement, including the impact of non-performance risk. However, these fair value estimates may not necessarily be indicative of the amounts that could be realized or settled in a current market transaction. The company characterizes inputs used in determining fair value using a hierarchy that prioritizes inputs depending on the degree to which they are observable. The three levels of the fair value hierarchy are as follows:

•

Level 1 transactions consist of instruments with a fair value determined by an unadjusted quoted price in an active market for identical assets or liabilities. An active market is characterized by readily and regularly available quoted prices where the prices are representative of actual and regularly occurring market transactions to assure liquidity.



•

Level 2 transactions consist of instruments with a fair value that is determined by quoted prices in an inactive market, prices with observable inputs, or prices with insignificant non-observable inputs. The fair value of these positions are determined using observable inputs from exchanges, pricing services, third-party independent broker quotes, and published transportation tolls. The observable inputs may be adjusted using certain methods, which include extrapolation over the quoted price term and quotes for comparable assets and liabilities.



•

Level 3 transactions consist of instruments with a fair value that is determined by prices with significant unobservable inputs. As at December 31, 2013, the company does not have any derivative instruments measured at fair value Level 3.

In forming estimates, the company utilizes the most observable inputs available for valuation purposes. If a fair value measurement reflects inputs of different levels within the hierarchy, the measurement is categorized based upon the lowest level of input that is significant to the fair value measurement.

The following table presents the company's derivative financial instrument assets and liabilities measured at fair value for each hierarchy level as at December 31, 2013 and 2012.

($ millions)			Level 1		Level 2		Level 3		Total Fair Value
	Accounts receivable		5		47		1		53
	Accounts payable		(12	)	(85	)	—		(97	)
Balance at December 31, 2012			(7	)	(38	)	1		(44	)
	Accounts receivable		137		88		—		225
	Accounts payable		(165	)	(199	)	—		(364	)
Balance at December 31, 2013			(28	)	(111	)	—		(139	)

SUNCOR ENERGY INC. ANNUAL REPORT 2013    125

During the year ended December 31, 2013, there were no transfers between Level 1 and Level 2 fair value measurements.

The following table presents the company's recurring Level 3 derivative financial instrument assets and liabilities as at December 31, 2013 and 2012:

($ millions)			Level 3 Fair Value
Balance at December 31, 2012			1
	Realized gains		2
	Purchases		(7	)
	Transfers into Level 2		4
Balance at December 31, 2013			—

Offsetting Financial Assets and Liabilities

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 shown in the table below as at December 31, 2013 and 2012.

Financial Assets

($ millions)		Gross assets		Gross liabilities offset		Net amounts presented
Derivatives		440		(387	)	53
Accounts receivable		2 567		(732	)	1 835
Balance at December 31, 2012		3 007		(1 119	)	1 888
Derivatives		225		(185	)	40
Accounts receivable		3 092		(967	)	2 125
Balance at December 31, 2013		3 317		(1 152	)	2 165

Financial Liabilities

($ millions)		Gross liabilities		Gross assets offset		Net amounts presented
Derivatives		(484	)	387		(97	)
Accounts payable		(2 401	)	732		(1 669	)
Balance at December 31, 2012		(2 885	)	1 119		(1 766	)
Derivatives		(364	)	185		(179	)
Accounts payable		(2 956	)	967		(1 989	)
Balance at December 31, 2013		(3 320	)	1 152		(2 168	)

Risk Management

The company is exposed to a number of different risks arising from financial instruments. These risk factors include market risks, comprising commodity price risk, foreign currency risk and interest rate risk, as well as liquidity risk and credit risk.

The company maintains a formal governance process to manage its financial risks. The company's Commodity Risk Management Committee (CRMC) is charged with the oversight of the company's trading and credit risk management activities. Trading activities are defined as activities intended to enhance the company's operations and enhance profitability through informed market calls, market diversification, economies of scale, improved transportation access, and leverage of assets, both physical and contractual. The CRMC, acting under the authority of the company's Board of

126   SUNCOR ENERGY INC. ANNUAL REPORT 2013

Directors, meets regularly to monitor limits on risk exposures, review policy compliance and validate risk-related methodologies and procedures.

The nature of the risks faced by the company and its policies for managing such risks remains unchanged from December 31, 2012.

1) Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of the business. The market price movements that could adversely affect the value of the company's financial assets, liabilities and expected future cash flows include commodity price risk, foreign currency exchange risk and interest rate risk.

(a) Commodity Price Risk

Suncor's financial performance is closely linked to crude oil prices (including pricing differentials for various product types) and, to a lesser extent, natural gas and refined product prices. The company may reduce its exposure to commodity price risk through a number of strategies. These strategies include committing a portion of expected crude oil production to fixed price contracts and entering into option contracts to limit exposure to changes in crude oil prices.

An increase of US$1.00 per barrel of crude oil as at December 31, 2013 would decrease pre-tax earnings for the company's outstanding derivative financial instruments by approximately $2 million.

(b) Foreign Currency Exchange Risk

The company is exposed to foreign currency exchange risk on revenues, capital expenditures, or financial instruments that are denominated in a currency other than the company's functional currency (Canadian dollars). As crude oil is priced in U.S. dollars, fluctuations in US$/Cdn$ exchange rates may have a significant impact on revenues. This exposure is partially offset through the issuance of U.S. dollar denominated debt. A 1% strengthening in the Cdn$ relative to the US$ as at December 31, 2013 would decrease pre-tax earnings by approximately $90 million.

The company also has foreign operations whose functional currency is different than the company's functional currency. The main exposures relate to foreign operations whose functional currencies are in U.S. dollars, euros (€) or pound sterling (£). A 1% strengthening in the Cdn$ relative to the US$, € and £ as at December 31, 2013 would decrease Other Comprehensive Income by approximately $43 million, $26 million and $21 million, respectively.

(c) Interest Rate Risk

The company is exposed to interest rate risk as changes in interest rates may affect future cash flows and the fair values of its financial instruments. The primary exposure is related to its revolving-term debt of commercial papers.

To manage the company's exposure to interest rate volatility, the company may periodically enter into interest rate swap contracts. The objective of entering into these contracts is to reduce the company's cost of borrowing by managing the mix of fixed and floating interest rate debt. The proportion of floating interest rate exposure at December 31, 2013 was 7.6% of total debt outstanding. The weighted average interest rate on total debt for the year ended December 31, 2013 was 6.3%.

The company's net earnings are sensitive to changes in interest rates on the floating rate portion of the company's debt. To the extent interest expense is not capitalized, if interest rates applicable to floating rate instruments increased by 1%, it is estimated that the company's pre-tax earnings would decrease by approximately $8 million. This assumes that the amount and mix of fixed and floating rate debt remains unchanged from December 31, 2013, and that the change in interest rates is effective from the beginning of the year.

2) Liquidity Risk

Liquidity risk is the risk that Suncor will not be able to meet its financial obligations when due. The company mitigates this risk by forecasting spending requirements and maintaining sufficient cash and credit facilities to meet these requirements. Suncor's cash and cash equivalents and total credit facilities at December 31, 2013 were $5.2 billion and $6.2 billion, respectively.

Surplus cash is invested into a range of short-dated money market securities. Investments are only permitted in high credit quality government or corporate securities. Diversification of these investments is maintained through counterparty credit limits.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    127

The following table shows the timing of cash outflows related to trade and other payables and debt.

		December 31, 2013
($ millions)		Trade and other payables		Gross derivative liabilities(1)		Debt(2)
Within one year		6 911		353		1 959
1 to 3 years		64		11		1 402
3 to 5 years		—		—		4 064
Over 5 years		—		—		15 746
		6 975		364		23 171

(1)

Gross derivative liabilities of $364 million are offset by gross derivative assets of $185 million, resulting in a net amount of $179 million.

(2)

Debt includes short-term debt, long-term debt, finance leases and interest payments on fixed-term debt and commercial paper.

3) Credit Risk

Credit risk is the risk that a customer or counterparty will fail to perform an obligation or fail to pay amounts due causing a financial loss. The company's credit policy is designed to ensure there is a standard credit practice throughout the company to measure and monitor credit risk. The policy outlines delegation of authority, the due diligence process required to approve a new customer or counterparty and the maximum amount of credit exposure per single entity. Before transactions begin with a new customer or counterparty, its creditworthiness is assessed, a credit rating is assigned and a maximum credit limit is allocated. The assessment process is outlined in the credit policy and considers both quantitative and qualitative factors. The company constantly monitors the exposure to any single customer or counterparty along with the financial position of the customer or counterparty. If it is deemed that a customer or counterparty has become materially weaker, the company will work to reduce the credit exposure and lower the credit limit allocated. Regular reports are generated to monitor credit risk and the Credit Committee meets quarterly to ensure compliance with the credit policy and review the exposures.

A substantial portion of the company's accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risk. At December 31, 2013, substantially all of the company's trade receivables were current.

The company may be exposed to certain losses in the event that counterparties to derivative financial instruments are unable to meet the terms of the contracts. The company's exposure is limited to those counterparties holding derivative contracts with positive fair values at the reporting date. At December 31, 2013, the company's exposure was $225 million (December 31, 2012 – $53 million).

28. CAPITAL STRUCTURE FINANCIAL POLICIES

The company's primary capital management strategy is to maintain a conservative balance sheet, which supports a solid investment-grade credit rating profile. This objective affords the company the financial flexibility and access to the capital it requires to execute on its growth objectives.

The company's capital is primarily monitored by reviewing the ratios of net debt to cash flow from operations⁽¹⁾ and total debt to total debt plus shareholders' equity.

Net debt to cash flow from operations is calculated as short-term debt plus total long-term debt less cash and cash equivalents divided by cash flow from operations for the year then ended.

Total debt to total debt plus shareholders' equity is calculated as short-term debt plus total long-term debt divided by short-term debt plus total long-term debt plus shareholders' equity. This financial covenant under the company's various banking and debt agreements shall not be greater than 65%.

The company's financial covenants are reviewed regularly and controls are in place to maintain compliance with these covenants. The company complied with financial covenants for the years ended December 31, 2013 and 2012.

128   SUNCOR ENERGY INC. ANNUAL REPORT 2013

The company's financial measures, as set out in the following schedule, were unchanged from 2012. The company believes that achieving its capital target helps to provide the company access to capital at a reasonable cost by maintaining solid investment-grade credit ratings. The company operates in a fluctuating business environment and ratios may periodically fall outside of management's targets.

($ millions)				Capital Measure Target		Dec 31, 2013		Dec 31, 2012
								(restated – note 6)
Components of ratios
	Short-term debt					798		775
	Current portion of long-term debt					457		311
	Long-term debt					10 203		9 938
		Total debt				11 458		11 024
	Less: Cash and cash equivalents					5 202		4 385
		Net debt				6 256		6 639
	Shareholders' equity					41 180		39 215
	Total capitalization (total debt plus shareholders' equity)					52 638		50 239
	Cash flow from operations(1)					9 412		9 733
Net debt to cash from operations				<2.0 times		0.7		0.7
Total debt to total debt plus shareholders' equity						22%		22%

(1)

Cash flow from operations is expressed before changes in non-cash working capital, and is a non-GAAP financial measure.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    129

29. JOINT ARRANGEMENTS

Joint Operations

The company's material joint operations as at December 31, 2013 are set out below:

Material Joint Operations			Principal activity		Country of incorporation and principal place of business		Ownership % 2013		Ownership % 2012
Oil Sands
Operated by Suncor:
	Fort Hills Energy Limited Partnership		Oil sands development		Canada		40.80		40.80
Non-operated:
	Syncrude		Oil sands development		Canada		12.00		12.00
	Joslyn		Oil sands development		Canada		36.75		36.75
Exploration and Production
Operated by Suncor:
	Terra Nova		Oil and gas production		Canada		37.68		37.68
Non-operated:
	White Rose and the White Rose Extensions		Oil and gas production		Canada		26.13-27.50		26.13-27.50
	Hibernia and the Hibernia South Extension Unit		Oil and gas production		Canada		19.51-20.00		19.51-20.00
	Hebron		Oil and gas production		Canada		22.73		22.73
	Harouge Oil Operations		Oil and gas production		Libya		49.00		49.00
	Buzzard		Oil and gas production		United Kingdom		29.89		29.89
	Golden Eagle Area Development		Oil and gas production		United Kingdom		26.69		26.69

Joint Ventures and Associates

The company does not have any joint ventures or associates that are considered individually material. Summarized aggregate financial information of the joint ventures and associates in the company's refining and marketing operations are shown below:

		Joint ventures				Associates
($ millions)		2013		2012		2013		2012
Net earnings		9		31		10		8
Other comprehensive (loss) income		(2	)	3		—		—
Total comprehensive income		7		34		10		8
Carrying amount as at December 31		120		121		46		37

130   SUNCOR ENERGY INC. ANNUAL REPORT 2013

30. SUBSIDIARIES

Material subsidiaries, each of which are wholly owned, either directly or indirectly, by the company as at December 31, 2013, are shown below:

Material Subsidiaries		Principal activity
Canadian Operations
Suncor Energy Oil Sands Limited Partnership		This partnerships holds most of the company's oil sands and in situ assets.
Suncor Energy Products Inc.		This subsidiary holds interests in the company's energy marketing and renewable energy businesses.
Suncor Energy Products Partnership		This partnership holds substantially all of the company's Canadian refining and marketing assets.
Suncor Energy Marketing Inc.		A subsidiary through which the company's upstream production is marketed, the company's energy trading activities is administered, and the company's refining operations feedstock is procured.
U.S. Operations
Suncor Energy (U.S.A.) Marketing Inc.		A subsidiary that procures and markets third-party crude oil, in addition to procuring crude oil feedstock for the company's refining operations.
Suncor Energy (U.S.A.) Inc.		A subsidiary through which the company's U.S. refining and marketing operations are conducted.
International Operations
Suncor Energy UK Limited		A subsidiary through which the majority of the company's North Sea operations are conducted.
Suncor Energy Oil (North Africa) GmbH		A subsidiary through which the majority of the company's Libya operations are conducted.

The table does not include wholly owned subsidiaries that are immediate holding companies of the operating subsidiaries. For certain foreign operations of the company, there are restrictions on the sale or transfer of production licences, which would require approval of the applicable foreign government.

31. RELATED PARTY DISCLOSURES

Related Party Transactions

The company enters into transactions with related parties in the normal course of business, which includes purchases of feedstock, distribution of refined products, and sale of refined products and by-products. These transactions are with joint ventures and associated entities in the company's refining and marketing operations, including pipeline, refined product and petrochemical companies. A summary of the significant related party transactions as at and for the year ended December 31, 2013 and 2012 are as follows:

($ millions)		2013		2012
Sales		1 593		1 281
Purchases		245		157
Accounts receivable		92		72
Accounts payable and accrued liabilities		15		9

SUNCOR ENERGY INC. ANNUAL REPORT 2013    131

Compensation of Key Management Personnel

Compensation of the company's Board of Directors and members of the Executive Leadership Team for the years ended December 31 is as follows:

($ millions)		2013		2012
Short-term benefits		14		18
Pension and other post-retirement benefits		4		4
Share-based compensation		35		32
		53		54

32. COMMITMENTS, CONTINGENCIES AND GUARANTEES

(a) Commitments

Future payments under the company's operating leases for pipeline transportation agreements and for various premises, service stations and other property and equipment are as follows:

			Payment due by period
($ millions)			2014		2015		2016		2017		2018		2019 and beyond		Total
Commitments
	Product transportation and storage		660		579		551		526		488		4 015		6 819
	Energy services		237		183		178		180		182		1 045		2 005
	Commitments from joint arrangements		3		2		2		1		1		1		10
	Exploration work commitments		165		363		42		—		—		2		572
	Other		276		41		9		4		4		25		359
Operating leases			545		465		401		341		292		1 903		3 947
			1 886		1 633		1 183		1 052		967		6 991		13 712

Significant operating leases expire at various dates through 2035. For the year ended December 31, 2013, operating lease expense was $0.6 billion (2012 – $0.5 billion).

In addition to the operating lease commitments in the above table, the company has other obligations for goods and services and raw materials entered into in the normal course of business, which may terminate on short notice. Such obligations include commodity purchase obligations which are transacted at market prices. The company has also entered into various pipeline commitments of $6.4 billion with contract terms up to 25 years, which are awaiting regulatory approval. In the event regulatory approval is not obtained, the company has committed to reimbursing certain costs to the service provider.

(b) Contingencies

Legal and environmental contingent liabilities

The company is defendant and plaintiff in a number of legal actions that arise in the normal course of business. The company believes that any liabilities that might arise pertaining to such matters would not have a material effect on its consolidated financial position, except as disclosed in note 12.

The company may also have environmental contingent liabilities, beyond decommissioning and restoration liabilities recognized in note 24, which are reviewed individually and are reflected in the company's consolidated financial statements if material and more likely than not to be incurred. These contingent environmental liabilities primarily relate to the mitigation of contamination at sites where the company has had operations. For any unrecognized environmental

132   SUNCOR ENERGY INC. ANNUAL REPORT 2013

contingencies, the company believes that any liabilities that might arise pertaining to such matters would not have a material effect on its consolidated financial position.

Costs attributable to these commitments and contingencies are expected to be incurred over an extended period of time and to be funded from the company's cash flow from operating activities. Although the ultimate impact of these matters on net earnings cannot be determined at this time, the impact may be material.

Operational risk

The company also has exposure to some operational risks, which is reduced by maintaining a comprehensive insurance program at limits and deductible amounts that management believes to be acceptable.

The company carries property damage and business interruption insurance with varying coverage limits and deductible amounts based on the asset. As of December 31, 2013, Suncor's insurance program includes coverage of up to US$1.2 billion for oil sands risks, up to US$1.3 billion for offshore risks and up to US$594 million for refining risks. These limits are all net of deductible amounts or waiting periods and subject to certain price and volume limits. The company also has primary property insurance for US$300 million that covers all of Suncor's assets. As part of its normal course of operations, Suncor also carries risk mitigation instruments in the aggregate amount of $300 million on certain foreign operations.

Suncor believes its liability, property and business interruption insurance is appropriate to its business, although such insurance will not provide coverage in all circumstances or fully protect against prolonged outages. In the future, the insurance program may change due to market conditions or other business considerations.

(c) Guarantees

At December 31, 2013, the company has various indemnification agreements with third parties as described below and provides loan guarantees to certain retail licensees, wholesale marketers, and the company's subsidiaries.

The company has agreed to indemnify holders of all notes and debentures and the company's credit facility lenders (see note 21) for added costs relating to withholding taxes. Similar indemnity terms apply to certain facility and equipment leases.

There is no limit to the maximum amount payable under the indemnification agreements described above. The company is unable to determine the maximum potential amount payable as government regulations and legislation are subject to change without notice. Under these agreements, the company has the option to redeem or terminate these contracts if additional costs are incurred.

The company also has guaranteed its working-interest share of certain joint venture undertakings related to transportation services agreements entered into with third parties. The guaranteed amount is limited to the company's share in the joint venture. As at December 31, 2013, the probability is remote that these guarantee commitments will impact the company.

33. VOYAGEUR UPGRADER PROJECT

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.

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 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. ANNUAL REPORT 2013    133

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 of not proceeding with the upgrading portion of the project, a charge of $82 million was recorded to net earnings during the year, including costs related to the acceleration of certain reclamation activities.

34. SALE OF NATURAL GAS BUSINESS

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.

35. SUSPENDED EXPLORATORY WELL COSTS

($ millions)		2013		2012
Beginning of year		318		387
Additions		24		4
Capitalized exploratory well costs charged to expense		—		(73	)
End of year		342		318

134   SUNCOR ENERGY INC. ANNUAL REPORT 2013

The following provides an aging of amounts capitalized as suspended exploratory wells at December 31 based on the completion date of the individual well.

($ millions)		2013		2012
Suspended exploratory well costs that have been capitalized for a period less than one year		9		4
Suspended exploratory well costs that have been capitalized for a period greater than one year		333		314
		342		318
Number of suspended exploratory wells that have been capitalized for a period greater than one year		8		8

Suspended capitalized costs for exploratory wells completed prior to the end of 2013 are associated with projects located in i) Norway (three wells), ii) Libya (five wells) and iii) East Coast Canada (one well). The projects are awaiting the completion of economic evaluations including, but not limited to, results of additional appraisal drilling, additional geological and geophysical data, and development plan approval.

36. SUBSEQUENT EVENT

On February 3, 2014, the company's Board of Directors approved a 15% increase to the company's quarterly dividend to $0.23 per common share beginning in the first quarter of 2014. The Board of Directors also approved up to an additional $1.0 billion worth of the company's common shares to be purchased, subject to regulatory approval.

SUNCOR ENERGY INC. ANNUAL REPORT 2013    135

QuickLinks

EXHIBIT 99-1

Audited Consolidated Financial Statements of Suncor Energy Inc. for the fiscal year ended December 31, 2013
1. REPORTING ENTITY AND DESCRIPTION OF THE BUSINESS
2. BASIS OF PREPARATION
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
5. RECENTLY ANNOUNCED ACCOUNTING PRONOUNCEMENTS
6. ADOPTION OF NEW AND AMENDED IFRS STANDARDS
7. SEGMENTED INFORMATION
8. OTHER INCOME
9. OPERATING, SELLING AND GENERAL
10. ASSET IMPAIRMENT
11. FINANCING EXPENSES
12. INCOME TAXES
13. EARNINGS PER COMMON SHARE
14. CASH AND CASH EQUIVALENTS
15. SUPPLEMENTAL CASH FLOW INFORMATION
16. INVENTORIES
17. PROPERTY, PLANT AND EQUIPMENT
18. EXPLORATION AND EVALUATION ASSETS
19. OTHER ASSETS
20. GOODWILL AND OTHER INTANGIBLE ASSETS
21. DEBT AND CREDIT FACILITIES
22. OTHER LONG-TERM LIABILITIES
23. PENSIONS AND OTHER POST-RETIREMENT BENEFITS
24. PROVISIONS
25. SHARE CAPITAL
26. SHARE-BASED COMPENSATION
27. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
28. CAPITAL STRUCTURE FINANCIAL POLICIES
29. JOINT ARRANGEMENTS
30. SUBSIDIARIES
31. RELATED PARTY DISCLOSURES
32. COMMITMENTS, CONTINGENCIES AND GUARANTEES
33. VOYAGEUR UPGRADER PROJECT
34. SALE OF NATURAL GAS BUSINESS
35. SUSPENDED EXPLORATORY WELL COSTS
36. SUBSEQUENT EVENT