EX-99.10 11 a2227389zex-99_10.htm EX-99.10
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EXHIBIT 99-10

SUPPLEMENTARY OIL AND GAS DISCLOSURE (unaudited)

        The following disclosures are presented in accordance with United States Financial Accounting Standards Board ("FASB") Topic 932 — "Extractive Activities — Oil and Gas" and Subpart 1200 of Regulation S-K ("Subpart 1200") of the United States Securities and Exchange Commission. Disclosures pertaining to the audited consolidated financial statements as at and for the year ended December 31, 2015 (the "2015 Financial Statements") of Suncor Energy Inc. ("Suncor" or the "Company") were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and Canadian generally accepted accounting principles contained within Part 1 of the Chartered Professional Accountants Canada Handbook, which differ in material respects from financial statements prepared in accordance with United States generally accepted accounting principles. The 2015 Financial Statements are attached as Exhibit 99.1 to Suncor's annual report on Form 40-F for the year ended December 31, 2015 (the "Form 40-F").

Reserves Data

        Reserves data included herein are estimates only and can be significantly impacted by a variety of internal and external factors. For more information to the risks involved when estimating reserves, see the discussion in the "Statement of Reserves Data and Other Oil and Gas Information — Significant Risk Factors or Uncertainties Affecting Reserves Data" section in Suncor's 2015 Annual Information Form (the "2015 AIF"), which is contained in the Form 40-F. Readers should also see Suncor's Management's Discussion and Analysis for the year ended December 31, 2015, which is attached as Exhibit 99.2 to the Form 40-F (the "2015 Management's Discussion and Analysis").

        The reserves data presented herein may differ in relation to the format and the basis from which volumes are economically determined under Subpart 1200 and National Instrument 51-101 — "Standards of Disclosure of Oil and Gas Activities" ("NI 51-101"), as disclosed in the 2015 AIF. Subpart 1200 requires disclosure of net proved reserves, after royalties, using the average of the first-day-of-the-month prices for the twelve month period prior to the end of the reporting period, whereas NI 51-101 requires disclosure of gross and net reserves, estimated using forecast prices and costs.

Net Proved Oil and Gas Reserves(1)(2)

        The majority of Suncor's oil and gas reserves are in Canada. In order to align with the Company's segmented information in the 2015 Financial Statements, the 2015 Management's Discussion and Analysis and the 2015 AIF, the Company presents the following supplementary oil and gas disclosures by showing amounts associated with its Oil Sands segment, which are exclusively in Canada and produce synthetic crude oil ("SCO") and bitumen, separate from other Canadian operations, which are aggregated with Suncor's international operations (collectively, "Exploration and Production") and produce crude oil, natural gas and natural gas liquids ("NGLs"). Exploration and Production reserves are in onshore and offshore Canada, offshore UK and onshore Libya.

 
  SCO
(mmbbls)
  Bitumen
(mmbbls)
  Crude Oil
and NGLs(3)
(mmbbls)
  Natural Gas
(bcf)
  Total
(mmboe)
 
At December 31, (net reserves, constant
prices and costs)
  2015   2014   2015   2014   2015   2014   2015   2014   2015   2014  

Proved Developed

                                                             

Oil Sands

    1 823     1 700     99     143                     1 922     1 843  

Exploration and Production

                    120     170     21     36     124     176  
                                           

    1 823     1 700     99     143     120     170     21     36     2 046     2 019  
                                           

Proved Undeveloped

                                                             

Oil Sands

    567     452     454     1 444                     1 022     1 897  

Exploration and Production

                    32     64     1     1     32     64  
                                           

    567     452     454     1 444     32     64     1     1     1 054     1 961  
                                           

Proved

                                                             

Oil Sands

    2 390     2 152     554     1 588                     2 944     3 740  

Exploration and Production

                    153     234     21     37     156     241  
                                           

    2 390     2 152     554     1 588     153     234     21     37     3 100     3 981  
                                           

Reconciliation of Net Proved Oil and Gas Reserves

(net reserves,
constant prices and costs)
  Balance
December 31
2013
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions   Balance
December 31
2014
 

Oil Sands

                                                 

SCO (mmbbls)

    2 320     (62 )               (106 )       2 152  

Bitumen (mmbbls)

    1 719     (92 )               (39 )       1 588  

Exploration and Production

                                                 

Crude oil and NGLs(3) (mmbbls)

    216     53             1     (32 )   (4 )   234  

Natural gas (bcf)

    44     8             6     (7 )   (14 )   37  
                                   

Total (mmboe)

    4 263     (100 )           2     (178 )   (6 )   3 981  
                                   

 

(net reserves,
constant prices and costs)
  Balance
December 31
2014
  Revisions of
Previous
Estimates(4)
  Improved
Recovery
  Acquisitions   Extensions
and
Discoveries(5)
  Production   Dispositions   Balance
December 31
2015
 

Oil Sands

                                                 

SCO (mmbbls)

    2 152     361                 (124 )       2 390  

Bitumen (mmbbls)

    1 588     (993 )               (41 )       554  

Exploration and Production

                                                 

Crude oil and NGLs(3) (mmbbls)

    234     (45 )               (37 )       152  

Natural gas (bcf)

    37     (7 )               (9 )       21  
                                   

Total (mmboe)

    3 981     (678 )               (203 )       3 100  
                                   

Notes to Reserve Data:

(1)
Definitions

a.
Net reserves, in relation to Suncor's production and reserves, represents the Company's working interest share after deduction of royalty obligations, plus the Company's royalty interests in production and reserves.

b.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations.

c.
Proved developed oil and gas reserves are those quantities that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and can be expected to be recovered through extraction equipment and infrastructure installed and operational at the time of the reserves estimate for projects that extract oil and gas by means not involving a well.

d.
Proved undeveloped oil and gas reserves are those quantities that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(2)
Reserve data tables may not add due to rounding.

(3)
Natural gas liquids reserves are not significant and have been presented in combination with Crude Oil reserves.

(4)
Revisions of previous estimates include changes to proved reserves, resulting from new information (except for an increase in proved acreage) normally obtained from development drilling and production history or resulting from a change in economic factors, such as changes in constant prices used for the reserve evaluation.

(5)
Extensions and discoveries are additions to proved reserves from proved acreage of previously discovered reservoirs through additional drilling in periods subsequent to discovery or discovery of new fields with proved reserves or of new reservoirs of proved reserves in old fields.

Capitalized Costs

 
  At December 31, 2015   At December 31, 2014  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Exploration and evaluation assets(1)

    1 198     483     1 681     1 581     667     2 248  

Oil and gas properties(2)

    13 387     19 248     32 635     12 584     16 651     29 235  

Plant and equipment(2)

    45 571     1 221     46 792     41 427     1 016     42 443  

— accumulated provision(2)

    (15 991 )   (11 810 )   (27 801 )   (13 032 )   (8 021 )   (21 053 )
                           

Total

    44 165     9 142     53 307     42 560     10 313     52 873  
                           

(1)
Exploration and evaluation assets largely represent amounts associated with unproved properties, but may include properties with proved reserves for which Suncor's Board of Directors have not sanctioned development. See note 17 of the 2015 Financial Statements.

(2)
Oil and Gas Properties, Plant and Equipment and the accumulated provision largely represent amounts associated with proved properties. See note 16 of the 2015 Financial Statements.

Costs Incurred for Property Acquisition, Exploration and Development Activities

 
  Year ended December 31, 2015   Year ended December 31, 2014  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Unproved property acquisition

    18     1     19         1     1  

Proved property acquisition

    360         360              

Exploration(1)

    157     400     557     161     296     457  

Development(2)

    3 553     1 028     4 581     4 237     1 819     6 056  
                           

Total

    4 088     1 429     5 517     4 398     2 116     6 514  
                           

(1)
Includes amounts capitalized to Exploration and Evaluation as well as those charged to Exploration Expense on the Consolidated Balance Sheets and the Consolidated Statements of Comprehensive Income, respectively, of the 2015 Financial Statements.

(2)
Includes amounts capitalized to Property, Plant and Equipment on the Consolidated Balance Sheets of the 2015 Financial Statements that relate to the Company's decommissioning and restoration activities.

Results of Operations for Oil- and Gas-Producing Activities

 
  At December 31, 2015   At December 31, 2014  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Operating revenues, net of royalties

    9 218     2 345     11 563     13 579     4 043     17 622  

Other Income

    146     150     296     115     217     332  
                           

    9 364     2 495     11 859     13 694     4 260     17 954  

Purchases of crude oil and products

    319     3     322     355     459     814  

Operating, selling and general

    5 220     502     5 722     6 042     558     6 600  

Transportation

    645     98     743     541     90     631  

Depreciation, depletion, amortization and impairment

    3 583     3 106     6 689     4 035     1 349     5 384  

Exploration

    120     358     478     96     271     367  

Loss (gain) on disposal of assets

    8     (5 )   3     3     (82 )   (79 )

Finance expenses

    150     82     232     153     72     225  
                           

Earnings (Loss) before Income Taxes

    (681 )   (1 649 )   (2 330 )   2 469     1 543     4 012  

Income taxes

    175     (891 )   (716 )   693     890     1 583  
                           

Net Earnings (Loss)

    (856 )   (758 )   (1 614 )   1 776     653     2 429  
                           

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

        The standardized measure of discounted future net cash flows relating to Suncor's proved oil and gas reserves are calculated in accordance with FASB Topic 932 — "Extractive Activities — Oil and Gas". Future cash inflows are estimated using the trailing twelve-month average price, which are also used in estimating the entity's proved oil and gas reserves. Future development and production costs, including the associated decommissioning and restoration activities, are calculated by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. The appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, were applied to the future pretax net cash flows, less the tax basis of the properties involved. A prescribed rate of 10% is applied to discount the future net cash flows.

        The calculation of the standardized measure of discounted future net cash flows is based upon information prepared by the Company's independent qualified reserves evaluators, and adjusted for decommissioning and restoration activities and future income taxes.

        It should not be assumed that the estimates of future net cash flows presented in the tables below represent the fair market value of the reserves. There is no assurance that the price and cost assumptions will be attained and variances could be material. Future changes to income tax, royalty and environmental regulations could also have a significant impact on the respective assumptions. There is no guarantee that the estimates for SCO, bitumen, crude oil and NGLs, and natural gas reserves provided herein will be recovered. Actual SCO, bitumen, crude oil and NGLs, and natural gas reserves may be greater than or less than the estimates provided herein.

        The following twelve-month average prices were used to calculate the standardized measure of discounted future net cash flows:

Year
  Brent
North Sea
  WTI
Cushing
Oklahoma
  WCS
Hardisty
Alberta
  Light
Sweet
Edmonton
Alberta
  Pentanes Plus
Edmonton
Alberta
  AECO
Gas
  B.C. Gas
Westcoast
Station 2
  National
Balancing
Point
North Sea
 
 
  US$/bbl
  US$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/bbl
  Cdn$/mmbtu
  Cdn$/mmbtu
  Cdn$/mmbtu
 

2015

    54.17     50.28     48.82     61.20     64.19     2.66     1.92     8.42  

2014

    101.70     94.99     82.80     95.98     103.40     4.65     4.32     9.52  
                                   


 
  At December 31, 2015   At December 31, 2014  
($ millions)
  Oil Sands   Exploration
and
Production
  Total   Oil Sands   Exploration
and
Production
  Total  

Future cash inflows

    170 803     10 330     181 133     309 703     25 774     335 477  

Future production costs

    (99 211 )   (4 050 )   (103 261 )   (154 238 )   (6 122 )   (160 360 )

Future development costs

    (54 936 )   (4 231 )   (59 167 )   (74 774 )   (4 394 )   (79 168 )

Future income tax expenses

    (4 423 )   (982 )   (5 405 )   (18 212 )   (8 103 )   (26 315 )
                           

Future net cash flows

    12 233     1 067     13 300     62 479     7 155     69 634  

10% Discount Factor

    (6 560 )   264     (6 296 )   (39 279 )   (2 337 )   (41 616 )
                           

Standardized measure of discounted future net cash flows

    5 673     1 331     7 004     23 200     4 818     28 018  
                           

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

($ millions)
  2015   2014  

Standardized measure of discounted future net cash flows — beginning of year

    28 018     24 383  

Sales and transfers of oil and gas produced

    (9 701 )   (8 679 )

Net change in sales prices and operating costs related to future production

    (32 402 )   5 310  

Net change due to extensions, discoveries and improved recovery

        47  

Net change due to acquisitions and dispositions

        (72 )

Net change due to revisions in quantity estimates

    1 287     52  

Previously estimated development costs incurred during the period

    2 533     5 209  

Changes in estimated future development costs

    3 283     (2 646 )

Accretion of discount

    2 564     2 213  

Net change in income taxes

    11 422     2 201  
           

Standardized measure of discounted future net cash flows — end of year

    7 004     28 018  
           



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