EX-99.3 4 a2228429zex-99_3.htm EX-99.3
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EXHIBIT 99.3

Unaudited Consolidated Financial Statements for the first quarter ended March 31, 2016

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited)

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Revenues and Other Income |  |  |  |  |  |
​
Operating revenues, net of royalties (note 3) |  | 5 644 |  | 7 129 |  |
​
Other (loss) income (note 5) |  | (67 | ) | 257 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | 5 577 |  | 7 386 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Expenses |  |  |  |  |  |
​
Purchases of crude oil and products |  | 2 069 |  | 2 772 |  |
​
Operating, selling and general |  | 2 349 |  | 2 295 |  |
​
Transportation |  | 289 |  | 267 |  |
​
Depreciation, depletion, amortization and impairment |  | 1 472 |  | 1 333 |  |
​
Exploration |  | 41 |  | 183 |  |
​
(Gain) loss on disposal of assets |  | (1 | ) | 2 |  |
​
Financing (income) expenses (note 7) |  | (718 | ) | 1 138 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | 5 501 |  | 7 990 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings (Loss) before Income Taxes |  | 76 |  | (604 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Income Taxes (note 8) |  |  |  |  |  |
​
Current |  | (116 | ) | 184 |  |
​
Deferred |  | (65 | ) | (447 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | (181 | ) | (263 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Net Earnings (Loss) |  | 257 |  | (341 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Net Earnings (Loss) Attributable to: |  |  |  |  |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Common shareholders |  | 246 |  | (341 | ) |
​
Non-controlling interest (note 4) |  | 11 |  | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | 257 |  | (341 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Other Comprehensive Income |  |  |  |  |  |
​
Items that may be subsequently reclassified to earnings |  |  |  |  |  |
​
Foreign currency translation adjustment |  | (262 | ) | 386 |  |
​
Items that will not be reclassified to earnings |  |  |  |  |  |
​
Actuarial loss on employee retirement benefit plans, net of income taxes |  | — |  | (30 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Other Comprehensive Income |  | (262 | ) | 356 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Total Comprehensive (Loss) Income |  | (5 | ) | 15 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Per Common Share (dollars) (note 9) |  |  |  |  |  |
​
Net earnings (loss) – basic and diluted |  | 0.17 |  | (0.24 | ) |
​
Net earnings (loss) attributable to common shareholders – basic and diluted |  | 0.16 |  | (0.24 | ) |
​
Cash dividends |  | 0.29 |  | 0.28 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
See accompanying notes to the interim consolidated financial statements. |  |  |  |  |  |

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 39

CONSOLIDATED BALANCE SHEETS
(unaudited)

($ millions) |  | March 31 2016 (see note 4) |  | December 31 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Assets |  |  |  |  |  |
​
Current assets |  |  |  |  |  |
​
Cash and cash equivalents |  | 3 134 |  | 4 049 |  |
​
Accounts receivable |  | 3 061 |  | 2 751 |  |
​
Inventories |  | 3 108 |  | 3 090 |  |
​
Income taxes receivable |  | 817 |  | 538 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Total current assets |  | 10 120 |  | 10 428 |  |
​
Property, plant and equipment, net |  | 70 050 |  | 61 151 |  |
​
Exploration and evaluation |  | 2 081 |  | 1 681 |  |
​
Other assets |  | 1 209 |  | 1 153 |  |
​
Goodwill and other intangible assets |  | 3 077 |  | 3 079 |  |
​
Deferred income taxes |  | 35 |  | 35 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Total assets |  | 86 572 |  | 77 527 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities and Shareholders' Equity |  |  |  |  |  |
​
Current liabilities |  |  |  |  |  |
​
Short-term debt |  | 1 639 |  | 747 |  |
​
Current portion of long-term debt |  | 71 |  | 70 |  |
​
Accounts payable and accrued liabilities |  | 5 075 |  | 5 306 |  |
​
Current portion of provisions |  | 805 |  | 769 |  |
​
Income taxes payable |  | 194 |  | 244 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Total current liabilities |  | 7 784 |  | 7 136 |  |
​
Long-term debt |  | 16 304 |  | 14 486 |  |
​
Other long-term liabilities |  | 1 900 |  | 1 573 |  |
​
Provisions (note 13) |  | 6 040 |  | 5 339 |  |
​
Deferred income taxes |  | 11 609 |  | 9 954 |  |
​
Shareholders' equity |  | 42 935 |  | 39 039 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Total liabilities and shareholders' equity |  | 86 572 |  | 77 527 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
See accompanying notes to the interim consolidated financial statements. |  |  |  |  |  |

​ 40 SUNCOR ENERGY INC. 2016 FIRST QUARTER | ​ | ​

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Activities |  |  |  |  |  |
​
Net earnings (loss) |  | 257 |  | (341 | ) |
​
Adjustments for: |  |  |  |  |  |
​
Depreciation, depletion, amortization and impairment |  | 1 472 |  | 1 333 |  |
​
Deferred income taxes |  | (65 | ) | (447 | ) |
​
Accretion |  | 64 |  | 52 |  |
​
Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt |  | (921 | ) | 962 |  |
​
Change in fair value of derivative contracts |  | 169 |  | 148 |  |
​
(Gain) loss on disposal of assets |  | (1 | ) | 2 |  |
​
Share-based compensation |  | (163 | ) | (148 | ) |
​
Exploration |  | — |  | 49 |  |
​
Settlement of decommissioning and restoration liabilities |  | (122 | ) | (133 | ) |
​
Other |  | (8 | ) | (2 | ) |
​
Increase in non-cash working capital |  | (634 | ) | (599 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flow provided by operating activities |  | 48 |  | 876 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Investing Activities |  |  |  |  |  |
​
Capital and exploration expenditures |  | (1 556 | ) | (1 326 | ) |
​
Cash acquired from Canadian Oil Sands Ltd. (note 4) |  | 109 |  | — |  |
​
Proceeds from disposal of assets |  | 159 |  | 40 |  |
​
Other investments |  | (2 | ) | (4 | ) |
​
Increase in non-cash working capital |  | (126 | ) | (47 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flow used in investing activities |  | (1 416 | ) | (1 337 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Financing Activities |  |  |  |  |  |
​
Net change in short-term debt |  | 964 |  | 58 |  |
​
Net change in long-term debt |  | 36 |  | — |  |
​
Issuance of common shares under share option plans |  | 7 |  | 34 |  |
​
Dividends paid on common shares |  | (453 | ) | (405 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flow provided by (used in) financing activities |  | 554 |  | (313 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Decrease in Cash and Cash Equivalents |  | (814 | ) | (774 | ) |
​
Effect of foreign exchange on cash and cash equivalents |  | (101 | ) | 104 |  |
​
Cash and cash equivalents at beginning of period |  | 4 049 |  | 5 495 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and Cash Equivalents at End of Period |  | 3 134 |  | 4 825 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Supplementary Cash Flow Information |  |  |  |  |  |
​
Interest paid |  | 86 |  | 76 |  |
​
Income taxes paid |  | 131 |  | 792 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
See accompanying notes to the interim consolidated financial statements. |  |  |  |  |  |

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 41

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)

($ millions) |  | Share Capital |  | Contributed Surplus |  | Accumulated Other Comprehensive Income |  | Non- controlling interest |  | Retained Earnings |  | Total |  | Number of Common Shares (thousands) |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At December 31, 2014 |  | 19 311 |  | 609 |  | 504 |  | — |  | 21 179 |  | 41 603 |  | 1 444 119 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net loss |  | — |  | — |  | — |  | — |  | (341 | ) | (341 | ) | — |  |
​ | ​ | ​
Foreign currency translation adjustment |  | — |  | — |  | 386 |  | — |  | — |  | 386 |  | — |  |
​ | ​ | ​
Actuarial loss on employee retirement benefit plans, net of income taxes of $10 |  | — |  | — |  | — |  | — |  | (30 | ) | (30 | ) | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total comprehensive income |  | — |  | — |  | 386 |  | — |  | (371 | ) | 15 |  | — |  |
​ | ​ | ​
Issued under share option plans |  | 44 |  | (5 | ) | — |  | — |  | — |  | 39 |  | 1 150 |  |
​ | ​ | ​
Issued under dividend reinvestment plan |  | 10 |  | — |  | — |  | — |  | (10 | ) | — |  | — |  |
​ | ​ | ​
Share-based compensation |  | — |  | 20 |  | — |  | — |  | — |  | 20 |  | — |  |
​ | ​ | ​
Dividends paid on common shares |  | — |  | — |  | — |  | — |  | (405 | ) | (405 | ) | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At March 31, 2015 |  | 19 365 |  | 624 |  | 890 |  | — |  | 20 393 |  | 41 272 |  | 1 445 269 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At December 31, 2015 |  | 19 466 |  | 633 |  | 1 265 |  | — |  | 17 675 |  | 39 039 |  | 1 446 013 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings |  | — |  | — |  | — |  | 11 |  | 246 |  | 257 |  | — |  |
​ | ​ | ​
Foreign currency translation adjustment |  | — |  | — |  | (262 | ) | — |  | — |  | (262 | ) | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total comprehensive income (loss) |  | — |  | — |  | (262 | ) | 11 |  | 246 |  | (5 | ) | — |  |
​ | ​ | ​
Issued under share option plans |  | 12 |  | (1 | ) | — |  | — |  | — |  | 11 |  | 305 |  |
​ | ​ | ​
Issued for the acquisition of Canadian Oil Sands Ltd. (note 4) |  | 3 154 |  | — |  | — |  | 1 172 |  | — |  | 4 326 |  | 98 814 |  |
​ | ​ | ​
Equity transactions to eliminate non-controlling interest in Canadian Oil Sands Ltd. (note 4) |  | 1 298 |  | — |  | — |  | (1 183 | ) | (115 | ) | — |  | 36 879 |  |
​ | ​ | ​
Share-based compensation |  | — |  | 17 |  | — |  | — |  | — |  | 17 |  | — |  |
​ | ​ | ​
Dividends paid on common shares |  | — |  | — |  | — |  | — |  | (453 | ) | (453 | ) | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At March 31, 2016 |  | 23 930 |  | 649 |  | 1 003 |  | — |  | 17 353 |  | 42 935 |  | 1 582 011 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
See accompanying notes to the interim consolidated financial statements. |  |  |  |  |  |  |  |  |  |

​ 42 SUNCOR ENERGY INC. 2016 FIRST QUARTER | ​ | ​

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. REPORTING ENTITY AND DESCRIPTION OF THE BUSINESS

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

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

2. BASIS OF PREPARATION

(a) Statement of Compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board. They are condensed as they do not include all of the information required for full annual financial statements, and they should be read in conjunction with the consolidated financial statements for the year ended December 31, 2015.

The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and outstanding as at December 31, 2015.

Comparative figures have been reclassified to conform to the current year financial statement presentation for the revenues and expenses for the company's ethanol business that is presented in the Refining and Marketing segment, and was previously presented in the Corporate, Energy Trading and Eliminations segment. The reclassification resulted in an increase in net earnings for the Refining and Marketing segment of $6 million for the three months ended March 31, 2015 and $40 million for the twelve months ended December 31, 2015. Net earnings for the Corporate, Energy Trading and Eliminations segment decreased by $6 million for the three months ended March 31, 2015 and $40 million for the twelve months ended December 31, 2015 as a result of the reclassification.

(b) Basis of Measurement

The consolidated financial statements are prepared on a historical cost basis except as detailed in the accounting policies disclosed in the company's consolidated financial statements for the year ended December 31, 2015.

(c) Functional Currency and Presentation Currency

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

(d) Use of Estimates and Judgment

The timely preparation of financial statements requires that management make estimates and assumptions and use judgment. Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates and judgment used in the preparation of the financial statements are described in the company's consolidated financial statements for the year ended December 31, 2015.

(e) Income taxes

The company recognizes the impacts of income tax rate changes in earnings in the period the rate change is substantively enacted.

3. SEGMENTED INFORMATION

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

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

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 43

Three months ended March 31 |  |  | Oil Sands |  |  | Exploration and Production |  |  | Refining and Marketing |  |  | Corporate, Energy Trading and Eliminations |  |  | Total |  |
($ millions) |  |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (Restated) |  |  |  |  |  | (Restated) |  |  |  |  |  |  |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Revenues and Other Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
​
Gross revenues |  |  | 1 585 |  |  | 1 777 |  |  | 531 |  |  | 732 |  |  | 3 579 |  |  | 4 808 |  |  | (3 | ) |  | (44 | ) |  | 5 692 |  |  | 7 273 |  |
​
Intersegment revenues |  |  | 454 |  |  | 507 |  |  | — |  |  | 37 |  |  | 12 |  |  | 22 |  |  | (466 | ) |  | (566 | ) |  | — |  |  | — |  |
​
Less: Royalties |  |  | (19 | ) |  | (18 | ) |  | (29 | ) |  | (126 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (48 | ) |  | (144 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating revenues, net of royalties |  |  | 2 020 |  |  | 2 266 |  |  | 502 |  |  | 643 |  |  | 3 591 |  |  | 4 830 |  |  | (469 | ) |  | (610 | ) |  | 5 644 |  |  | 7 129 |  |
​
Other income (loss) |  |  | 33 |  |  | 58 |  |  | 2 |  |  | 116 |  |  | 11 |  |  | 21 |  |  | (113 | ) |  | 62 |  |  | (67 | ) |  | 257 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 2 053 |  |  | 2 324 |  |  | 504 |  |  | 759 |  |  | 3 602 |  |  | 4 851 |  |  | (582 | ) |  | (548 | ) |  | 5 577 |  |  | 7 386 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
​
Purchases of crude oil and products |  |  | 140 |  |  | 70 |  |  | — |  |  | 1 |  |  | 2 456 |  |  | 3 347 |  |  | (527 | ) |  | (646 | ) |  | 2 069 |  |  | 2 772 |  |
​
Operating, selling and general |  |  | 1 435 |  |  | 1 372 |  |  | 145 |  |  | 131 |  |  | 542 |  |  | 570 |  |  | 227 |  |  | 222 |  |  | 2 349 |  |  | 2 295 |  |
​
Transportation |  |  | 184 |  |  | 152 |  |  | 23 |  |  | 27 |  |  | 92 |  |  | 99 |  |  | (10 | ) |  | (11 | ) |  | 289 |  |  | 267 |  |
​
Depreciation, depletion, amortization and impairment |  |  | 917 |  |  | 773 |  |  | 356 |  |  | 365 |  |  | 170 |  |  | 165 |  |  | 29 |  |  | 30 |  |  | 1 472 |  |  | 1 333 |  |
​
Exploration |  |  | 30 |  |  | 105 |  |  | 11 |  |  | 78 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 41 |  |  | 183 |  |
​
(Gain) loss on disposal of assets |  |  | (1 | ) |  | 8 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | (7 | ) |  | (1 | ) |  | 2 |  |
​
Financing (income) expenses |  |  | 55 |  |  | 39 |  |  | 15 |  |  | 38 |  |  | 11 |  |  | (7 | ) |  | (799 | ) |  | 1 068 |  |  | (718 | ) |  | 1 138 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 2 760 |  |  | 2 519 |  |  | 550 |  |  | 641 |  |  | 3 271 |  |  | 4 174 |  |  | (1 080 | ) |  | 656 |  |  | 5 501 |  |  | 7 990 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(Loss) earnings before Income Taxes |  |  | (707 | ) |  | (195 | ) |  | (46 | ) |  | 118 |  |  | 331 |  |  | 677 |  |  | 498 |  |  | (1 204 | ) |  | 76 |  |  | (604 | ) |
​
Income Taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
​
Current |  |  | (147 | ) |  | (4 | ) |  | 61 |  |  | 101 |  |  | 99 |  |  | 207 |  |  | (129 | ) |  | (120 | ) |  | (116 | ) |  | 184 |  |
​
Deferred |  |  | (36 | ) |  | (45 | ) |  | (73 | ) |  | (445 | ) |  | (9 | ) |  | (28 | ) |  | 53 |  |  | 71 |  |  | (65 | ) |  | (447 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | (183 | ) |  | (49 | ) |  | (12 | ) |  | (344 | ) |  | 90 |  |  | 179 |  |  | (76 | ) |  | (49 | ) |  | (181 | ) |  | (263 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net (Loss) Earnings |  |  | (524 | ) |  | (146 | ) |  | (34 | ) |  | 462 |  |  | 241 |  |  | 498 |  |  | 574 |  |  | (1 155 | ) |  | 257 |  |  | (341 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Capital and Exploration Expenditures |  |  | 1 107 |  |  | 793 |  |  | 271 |  |  | 356 |  |  | 172 |  |  | 83 |  |  | 6 |  |  | 94 |  |  | 1 556 |  |  | 1 326 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

4. ACQUISITION OF CANADIAN OIL SANDS

On February 5, 2016, Suncor obtained control of Canadian Oil Sands Limited (COS) by acquiring 73% of COS' outstanding common shares in exchange for 0.28 of a Suncor share per COS share tendered. The acquisition resulted in the issuance of 98.9 million Suncor common shares, which had a fair value of $31.88 per share based on the closing price on the Toronto Stock Exchange on the acquisition date.

Suncor acquired COS to benefit from operating synergies and economies of scale expected from combining the two companies' ownership interests in Syncrude.

​ 44 SUNCOR ENERGY INC. 2016 FIRST QUARTER | ​ | ​

Purchase price consideration

​ | ​ | ​ | ​ | ​
Number of COS common shares tendered (millions) |  | 353.3 |  |
​
Multiplied by share exchange ratio |  | 0.28 |  |
​ | ​ | ​ | ​ | ​
Number of Suncor common shares issued (millions) |  | 98.9 |  |
​ | ​ | ​ | ​ | ​
Share price on acquisition date |  | $31.88 |  |
​ | ​ | ​ | ​ | ​
Fair value of consideration ($ millions) |  | 3 154 |  |
​ | ​ | ​ | ​ | ​

On February 22, 2016, and March 21, 2016, Suncor acquired the remaining outstanding 131.3 million COS shares on the same terms as the initial acquisition resulting in the issuance of an additional 36.7 million Suncor common shares, which resulted in a total acquisition price of $4.452 billion. The estimated fair values of the net assets acquired were not adjusted to reflect the changes in Suncor's share price on the subsequent transaction dates.

Purchase price allocation

The acquisition has been accounted for as a business combination using the acquisition method whereby the net assets acquired and the liabilities assumed are recorded at fair value, except for the employee future benefit liability which is measured as the present value of the net obligation. The preliminary purchase price allocation is based on management's best estimates of fair values of COS' assets and liabilities as at February 5, 2016. Adjustments to estimates may be required.

($ millions) |  |  |  |
​ | ​ | ​ | ​ | ​
Cash |  | 109 |  |
​
Accounts receivable |  | 231 |  |
​
Inventory |  | 135 |  |
​
Other assets |  | 105 |  |
​
Property, plant and equipment |  | 9 476 |  |
​
Exploration and evaluation |  | 602 |  |
​ | ​ | ​ | ​ | ​
Total assets acquired |  | 10 658 |  |
​ | ​ | ​ | ​ | ​
Accounts payable and other liabilities |  | (375 | ) |
​
Long-term debt |  | (2 639 | ) |
​
Employee future benefits |  | (323 | ) |
​
Decommissioning provision |  | (1 169 | ) |
​
Deferred income taxes |  | (1 826 | ) |
​ | ​ | ​ | ​ | ​
Total liabilities assumed |  | (6 332 | ) |
​ | ​ | ​ | ​ | ​
Net assets of COS |  | 4 326 |  |
​ | ​ | ​ | ​ | ​
Non-controlling interest |  | (1 172 | ) |
​ | ​ | ​ | ​ | ​
Net assets acquired |  | 3 154 |  |
​ | ​ | ​ | ​ | ​

The fair values of cash, accounts receivable and other current assets, and accounts payable and other liabilities approximate their carrying values due to the short-term maturity of the instruments. The fair values of crude inventory and long-term debt were determined using quoted prices and rates from available pricing sources. The fair value of materials and supplies inventory approximates book value due to short-term turnover rates. The fair values of property, plant and equipment, and the decommissioning provision were determined using an expected future cash flow approach. Key assumptions used in the calculations were discount rates, future commodity prices and costs, timing of development activities, projections of oil reserves, and cost estimates to abandon and reclaim the mine and facilities.

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 45

The following table summarizes the fair value of COS debt acquired by Suncor.

($ millions) |  | February 5, 2016 |  |
​ | ​ | ​ | ​ | ​
Fixed-term debt, redeemable at the option of the company |  |  |  |
​
7.75% Notes, due 2019 (US$500) |  | 755 |  |
​
7.90% Notes, due 2021 (US$250) |  | 389 |  |
​
4.50% Notes, due 2022 (US$400) |  | 515 |  |
​
8.20% Notes, due 2027 (US$74) |  | 114 |  |
​
6.00% Notes, due 2042 (US$300) |  | 316 |  |
​ | ​ | ​ | ​ | ​
Total Notes |  | 2 089 |  |
​
Credit facility |  | 550 |  |
​ | ​ | ​ | ​ | ​
Total long-term debt |  | 2 639 |  |
​ | ​ | ​ | ​ | ​

The non-controlling interest (NCI) was initially measured at the NCI's proportionate share of the net identifiable assets acquired. The subsequent transactions on February 22, 2016, and March 21, 2016, were accounted for as equity transactions with shareholders and eliminated the NCI balance. Suncor recognized the difference between the fair value of the common shares issued and the NCI recorded at February 5, 2016 directly in equity. During the period from February 5, 2016 to March 21, 2016, when Suncor did not own 100% of the equity, net earnings of $11 million were earned that are attributable to the NCI owners.

As part of the acquisition the company also assumed various pipeline and storage commitments of $3.0 billion undiscounted. The contract terms of these commitments range between one and 24 years, with payments commencing in the first quarter of 2016.

Acquisition costs of $28.7 million have been charged to Operating, Selling and General expense in the consolidated statements of comprehensive income for the period ended March 31, 2016.

COS contributed $326.4 million to gross revenues and $77.0 million to consolidated net earnings from the acquisition date to March 31, 2016.

Had the acquisition occurred on January 1, 2016, COS would have contributed $508.0 million to gross revenues and $40.1 million to consolidated net earnings, which would have resulted in gross revenues of $6.2 billion and consolidated net earnings of $297 million for the period ended March 31, 2016.

5. OTHER (LOSS) INCOME

Other (loss) income consists of the following:

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Energy trading activities |  |  |  |  |  |
​
Change in fair value of contracts |  | (24 | ) | 7 |  |
​
Gains on inventory valuation |  | 30 |  | 75 |  |
​
Risk management activities(1) |  | (99 | ) | 8 |  |
​
Investment and interest income |  | 18 |  | 18 |  |
​
Renewable energy grants |  | — |  | 5 |  |
​
Risk mitigation and insurance proceeds(2) |  | — |  | 104 |  |
​
Change in value of transportation commitments and other |  | 8 |  | 40 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | (67 | ) | 257 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​

(1)
  Includes fair value changes related to short-term derivative contracts in the Oil Sands and Refining and Marketing segments and long-term forward starting interest rate swaps in the Corporate segment.
(2)
  Includes business interruption insurance proceeds recorded in the first quarter of 2015 for the Terra Nova assets in the Exploration and Production segment.

​ 46 SUNCOR ENERGY INC. 2016 FIRST QUARTER | ​ | ​

6. SHARE-BASED COMPENSATION

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

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Equity-settled plans |  | 17 |  | 20 |  |
​
Cash-settled plans |  | 115 |  | 97 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | 132 |  | 117 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​

7. FINANCING (INCOME) EXPENSES

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Interest on debt |  | 254 |  | 210 |  |
​
Capitalized interest |  | (141 | ) | (93 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
Interest expense |  | 113 |  | 117 |  |
​
Interest on pension and other post-retirement benefits |  | 12 |  | 15 |  |
​
Accretion |  | 64 |  | 52 |  |
​
Foreign exchange (gain) loss on U.S. dollar denominated debt |  | (921 | ) | 962 |  |
​
Foreign exchange and other |  | 14 |  | (8 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
|  | (718 | ) | 1 138 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​

8. INCOME TAXES

Pursuant to the previously disclosed 2013 proposal letter from the Canada Revenue Agency (CRA), the company received a Notice of Reassessment (NOR) from the CRA during the second quarter of 2014, regarding the income tax treatment of realized losses in 2007 on the settlement of certain derivative contracts. The total amount of the NOR, including tax, penalty and interest, was approximately $920 million. The company strongly disagrees with the CRA's position and continues to firmly believe it will be able to successfully defend its original filing position and will take the appropriate actions to resolve this matter. In addition to the above, the company has:

•
  Received NORs related to the derivative contracts from the Provinces of Alberta, Ontario and Quebec for approximately $124 million, $100 million and $42 million, respectively;
•
  Provided security to the CRA and the Provinces of Quebec and Ontario for approximately $642 million;
•
  Filed Notices of Objection with the CRA and the Provinces of Alberta, Ontario and Quebec; and
•
  Filed a Notice of Appeal with the Tax Court of Canada in November 2014 and is now pursuing its Appeal to that Court.

If the company is unsuccessful in defending its tax filing position, it could be subject to an earnings and cash impact of up to $1.3 billion.

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 47

9. EARNINGS (LOSS) PER COMMON SHARE

|  | Three months ended March 31 |  |
($ millions) |  | 2016 |  | 2015 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings (loss) |  | 257 |  | (341 | ) |
​
Net earnings (loss) attributable to common shareholders |  | 246 |  | (341 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​
(millions of common shares) |  |  |  |  |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average number of common shares |  | 1 516 |  | 1 445 |  |
​
Dilutive securities: |  |  |  |  |  |
​
Effect of share options |  | 1 |  | — |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average number of diluted common shares |  | 1 517 |  | 1 445 |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars per common share) |  |  |  |  |  |
​ | ​ | ​ | ​ | ​ | ​ | ​
Basic and diluted earnings (loss) per share |  | 0.17 |  | (0.24 | ) |
​
Basic and diluted earnings (loss) per share attributable to common shareholders |  | 0.16 |  | (0.24 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​

10. FINANCIAL INSTRUMENTS

Derivative Financial Instruments

(a) Non-Designated Derivative Financial Instruments

The following table presents the company's non-designated Energy Trading and Risk Management derivatives measured at fair value as at March 31, 2016.

($ millions) |  | Energy Trading |  | Risk Management |  | Total |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value outstanding at December 31, 2015 |  | (18 | ) | 20 |  | 2 |  |
​
Value of contracts settled during the quarter |  | 24 |  | (70 | ) | (46 | ) |
​
Changes in fair value during the quarter (note 5) |  | (24 | ) | (99 | ) | (123 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value outstanding at March 31, 2016 |  | (18 | ) | (149 | ) | (167 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

(b) Fair Value Hierarchy

The following table presents the company's financial instruments measured at fair value for each hierarchy level as at March 31, 2016.

($ millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts receivable |  | 2 |  | 29 |  | — |  | 31 |  |
​
Accounts payable |  | (45 | ) | (153 | ) | — |  | (198 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | (43 | ) | (124 | ) | — |  | (167 | ) |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

During the first quarter of 2016, there were no transfers between Level 1 and Level 2 fair value measurements and no transfers into and out of Level 3 fair value measurements.

The company uses forward starting interest rate swaps to mitigate its exposure to the effect of future interest rate movements on future debt issuances. As at March 31, 2016, the company had executed $1.3 billion in forward swaps. A decrease in interest rates of 0.53% during the quarter resulted in a decrease in value of $123 million associated with the swaps.

Non-Derivative Financial Instruments

At March 31, 2016, the carrying value of fixed-term debt accounted for under amortized cost was $15.2 billion (December 31, 2015 – $13.3 billion) and the fair value was $16.0 billion (December 31, 2015 – $14.5 billion). The estimated fair value of long-term debt is based on pricing sourced from market data.

​ 48 SUNCOR ENERGY INC. 2016 FIRST QUARTER | ​ | ​

11. ASSET SWAP WITH TRANSALTA CORPORATION

On August 31, 2015, Suncor completed an exchange of assets with TransAlta Corporation. Suncor exchanged Kent Breeze and its share of the Wintering Hills wind power facilities for TransAlta's Poplar Creek cogeneration facilities, which provide steam and power for Suncor's Oil Sands operations. The acquisition of the Poplar Creek cogeneration facilities is expected to enhance the reliability and efficiency of Suncor's base operations.

As part of the agreement, Suncor entered into a 15-year lease with TransAlta to finance the difference between the fair value of the cogeneration facilities and the fair value of the wind farms. The leased assets consist of two gas turbine generators and heat recovery steam generators. Ownership of these assets will automatically transfer to Suncor at the end of the term for a nominal amount. Although the legal form of this arrangement is a lease, in substance it is a deferred financing arrangement because it was entered into to finance the remaining balance of this acquisition and ownership of the assets will automatically transfer to Suncor at the end of the term. The lease is accounted for as a deferred financing arrangement that is part of the business combination because it is a component of the consideration provided to TransAlta.

The transaction was determined to have commercial substance since Suncor acquired operational control of Poplar Creek and will be entitled to all of the electrical output. The acquisition of the Poplar Creek assets was treated as a business combination, whereby the assets and liabilities acquired were recorded at their fair value. The fair values were calculated using an expected future cash flow approach with risk-adjusted discount rates between 6% and 8%. Key assumptions used in the calculation were discount rate, power price and natural gas price.

Purchase consideration

($ millions) |  |  |  |
​ | ​ | ​ | ​ | ​
Fair value of Kent Breeze wind farm |  | 47 |  |
​
Fair value of Suncor's share of Wintering Hills wind farm |  | 77 |  |
​
Fair value of deferred financing arrangement |  | 303 |  |
​ | ​ | ​ | ​ | ​
Total purchase consideration |  | 427 |  |
​ | ​ | ​ | ​ | ​

Purchase price allocation

The preliminary purchase price allocation is based on management's best estimates of the fair value of the acquired assets and assumed liabilities. Upon finalization, adjustments to the initial estimates may be required.

($ millions) |  |  |  |
​ | ​ | ​ | ​ | ​
Working capital |  | 36 |  |
​
Property, plant and equipment |  | 393 |  |
​
Decommissioning provision |  | (2 | ) |
​ | ​ | ​ | ​ | ​
Net assets acquired |  | 427 |  |
​ | ​ | ​ | ​ | ​

12. ACQUISITION OF ADDITIONAL OWNERSHIP IN FORT HILLS

On November 6, 2015, Suncor completed the purchase of an additional 10% working interest in the Fort Hills oil sands project from Total E&P Canada Ltd. for total aggregate consideration of $360 million. Suncor's share in the project has increased to 50.8%.

13. PROVISIONS

An increase in the credit-adjusted risk-free interest rate to 4.73% (December 31, 2015 – 4.37%) resulted in a decrease in provisions of $440 million for the three months ended March 31, 2016.

14. SUBSEQUENT EVENT

On April 27, 2016 Suncor announced that it had entered into a purchase and sale agreement with Murphy Oil Company Ltd. (Murphy Oil) to acquire Murphy Oil's 5% interest in the Syncrude oil sands mining and upgrading joint arrangement for $937 million, subject to closing adjustments. The transaction is subject to regulatory approval and has an effective date of April 1, 2016. Upon completion of the transaction, which is expected to close by the end of the second quarter of 2016, Suncor's working interest in Syncrude will increase to 53.74%.

​ | ​ | ​ SUNCOR ENERGY INC. 2016 FIRST QUARTER 49

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EXHIBIT 99.3