EX-99.3 4 a2242570zex-99_3.htm EXHIBIT 99.3
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EXHIBIT 99.3

Unaudited Consolidated Financial Statements for the third quarter ended September 30, 2020

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited)

  Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Revenues and Other Income

                    
​

Operating revenues, net of royalties (note 3)

   6 427   9 803   18 047   28 857    
​

Other income (note 4)

   30   93   411   534    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  6 457   9 896   18 458   29 391    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses

                    
​

Purchases of crude oil and products

   2 356   3 402   6 955   9 309    
​

Operating, selling and general (note 10)

   2 275   2 793   7 398   8 424    
​

Transportation

   281   378   946   1 075    
​

Depreciation, depletion, amortization and impairment (note 11)

   1 738   1 484   7 406   4 459    
​

Exploration

   12   15   176   204    
​

Gain on disposal of assets

   (3 ) (81 ) (8 ) (244 )  
​

Financing expenses (note 6)

   35   433   1 241   562    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  6 694   8 424   24 114   23 789    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(Loss) Earnings before Income Taxes

   (237 ) 1 472   (5 656 ) 5 602    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income Tax (Recovery) Expense

  
 		  
 		  
 		  
 		  
 
​

Current

   (41 ) 356   (710 ) 1 284    
​

Deferred

   (184 ) 81   (795 ) (916 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  (225 ) 437   (1 505 ) 368    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (Loss) Earnings

   (12 ) 1 035   (4 151 ) 5 234    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other Comprehensive Income (Loss)

  
 		  
 		  
 		  
 		  
 
​

Items That May be Subsequently Reclassified to Earnings:

                    
​

Foreign currency translation adjustment

   (52 ) 4   80   (144 )  
​

Items That Will Not be Reclassified to Earnings:

                    
​

Actuarial gain (loss) on employee retirement benefit plans, net of income taxes

   204   55   (195 ) (258 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other Comprehensive Income (Loss)

   152   59   (115 ) (402 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Comprehensive Income (Loss)

  
140		  
1 094		  
(4 266
)
4 832		  
 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Per Common Share (dollars) (note 7)

  
 		  
 		  
 		  
 		  
 
​

Net (loss) earnings – basic and diluted

   (0.01 ) 0.67   (2.72 ) 3.34    
​

Cash dividends

   0.21   0.42   0.89   1.26    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

See accompanying notes to the condensed interim consolidated financial statements.

  
 		  
 
​ 48  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

CONSOLIDATED BALANCE SHEETS
(unaudited)

($ millions)

   September 30
2020		   December 31
2019		    

​

​ ​ ​ ​ ​ ​

Assets

            
​

Current assets

            
​

Cash and cash equivalents

   1 489   1 960    
​

Accounts receivable

   2 742   4 052    
​

Inventories (note 10)

   3 325   3 761    
​

Income taxes receivable

   791   133    
​ ​ ​ ​ ​ ​ ​

Total current assets

   8 347   9 906    
​

Property, plant and equipment, net (note 11)

   67 976   72 640    
​

Exploration and evaluation

   2 442   2 428    
​

Other assets

   1 271   1 194    
​

Goodwill and other intangible assets

   3 266   3 058    
​

Deferred income taxes

   200   209    
​ ​ ​ ​ ​ ​ ​

Total assets

   83 502   89 435    
​ ​ ​ ​ ​ ​ ​

Liabilities and Shareholders' Equity

  
 		  
 		  
 
​

Current liabilities

            
​

Short-term debt

   2 586   2 155    
​

Current portion of long-term debt

   293   —    
​

Current portion of long-term lease liabilities

   273   310    
​

Accounts payable and accrued liabilities

   4 642   6 555    
​

Current portion of provisions

   642   631    
​

Income taxes payable

   69   886    
​ ​ ​ ​ ​ ​ ​

Total current liabilities

   8 505   10 537    
​

Long-term debt

   15 424   12 884    
​

Long-term lease liabilities

   2 623   2 621    
​

Other long-term liabilities

   2 753   2 499    
​

Provisions (note 12)

   8 552   8 676    
​

Deferred income taxes

   9 301   10 176    
​

Equity

   36 344   42 042    
​ ​ ​ ​ ​ ​ ​

Total liabilities and shareholders' equity

   83 502   89 435    

​

​ ​ ​ ​ ​ ​

See accompanying notes to the condensed interim consolidated financial statements.

  
 		  
 		  
 
​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  49

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

  Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Operating Activities

                    
​

Net (Loss) Earnings

   (12 ) 1 035   (4 151 ) 5 234    
​

Adjustments for:

                    
​

Depreciation, depletion, amortization and impairment (note 11)

   1 738   1 484   7 406   4 459    
​

Deferred income tax (recovery) expense

   (184 ) 81   (795 ) (916 )  
​

Accretion (note 6)

   71   66   209   205    
​

Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt (note 6)

   (307 ) 133   290   (378 )  
​

Change in fair value of financial instruments and inventory

   (89 ) (28 ) 63   120    
​

Gain on disposal of assets

   (3 ) (81 ) (8 ) (244 )  
​

Share-based compensation

   (44 ) 66   (333 ) (19 )  
​

Exploration

   —   —   80   39    
​

Settlement of decommissioning and restoration liabilities

   (39 ) (123 ) (183 ) (313 )  
​

Other

   35   42   77   78    
​

Decrease (increase) in non-cash working capital

   79   461   (794 ) (148 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash flow provided by operating activities

   1 245   3 136   1 861   8 117    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investing Activities

                    
​

Capital and exploration expenditures

   (941 ) (1 516 ) (2 959 ) (3 783 )  
​

Proceeds from disposal of assets

   5   96   12   262    
​

Other investments

   (3 ) (35 ) (90 ) (134 )  
​

Decrease (increase) in non-cash working capital

   130   389   (414 ) 383    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash flow used in investing activities

   (809 ) (1 066 ) (3 451 ) (3 272 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Financing Activities

                    
​

Net (decrease) increase in short-term debt

   (370 ) (572 ) 354   (1 527 )  
​

Net increase in long-term debt

   —   —   2 634   557    
​

Lease liability payments

   (83 ) (88 ) (254 ) (230 )  
​

Issuance of common shares under share option plans

   —   18   29   59    
​

Repurchase of common shares (note 8)

   —   (756 ) (307 ) (1 822 )  
​

Distributions relating to non-controlling interest

   (3 ) (2 ) (8 ) (6 )  
​

Dividends paid on common shares

   (321 ) (650 ) (1 350 ) (1 970 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash flow (used in) provided by financing activities

   (777 ) (2 050 ) 1 098   (4 939 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(Decrease) Increase in Cash and Cash Equivalents

   (341 ) 20   (492 ) (94 )  
​

Effect of foreign exchange on cash and cash equivalents

   (16 ) 8   21   (38 )  
​

Cash and cash equivalents at beginning of period

   1 846   2 061   1 960   2 221    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash and Cash Equivalents at End of Period

   1 489   2 089   1 489   2 089    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Supplementary Cash Flow Information

                    
​

Interest paid

   140   133   648   639    
​

Income taxes paid

   118   482   696   880    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

See accompanying notes to the condensed interim consolidated financial statements.

  
 		  
 		  
 		  
 		  
 
​ 50  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)

($ millions)

   Share
Capital		   Contributed
Surplus		   Accumulated
Other
Comprehensive
Income		   Retained
Earnings		   Total   Number of
Common
Shares
(thousands)		    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

At December 31, 2018

   25 910   540   1 076   16 479   44 005   1 584 484    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adoption of IFRS 16 impact

   —   —   —   14   14   —    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

At January 1, 2019, adjusted

   25 910   540   1 076   16 493   44 019   1 584 484    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net earnings

   —   —   —   5 234   5 234   —    
​ ​ ​

Foreign currency translation adjustment

   —   —   (144 ) —   (144 ) —    
​ ​ ​

Actuarial loss on employee retirement benefit plans, net of income taxes of $89

   —   —   —   (258 ) (258 ) —    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total comprehensive (loss) income

   —   —   (144 ) 4 976   4 832   —    
​ ​ ​

Issued under share option plans

   76   (16 ) —   —   60   1 737    
​ ​ ​

Repurchase of common shares for cancellation (note 8)

   (722 ) —   —   (1 100 ) (1 822 ) (44 158 )  
​ ​ ​

Change in liability for share repurchase commitment

   17   —   —   6   23   —    
​ ​ ​

Share-based compensation

   —   42   —   —   42   —    
​ ​ ​

Dividends paid on common shares

   —   —   —   (1 970 ) (1 970 ) —    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

At September 30, 2019

   25 281   566   932   18 405   45 184   1 542 063    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

At December 31, 2019

   25 167   566   899   15 410   42 042   1 531 874    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net loss

   —   —   —   (4 151 ) (4 151 ) —    
​ ​ ​

Foreign currency translation adjustment

   —   —   80   —   80   —    
​ ​ ​

Actuarial loss on employee retirement benefit plans, net of income taxes of $60

   —   —   —   (195 ) (195 ) —    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total comprehensive income (loss)

   —   —   80   (4 346 ) (4 266 ) —    
​ ​ ​

Issued under share option plans

   36   (5 ) —   —   31   804    
​ ​ ​

Repurchase of common shares for cancellation (note 8)

   (124 ) —   —   (183 ) (307 ) (7 527 )  
​ ​ ​

Change in liability for share repurchase commitment

   65   —   —   103   168   —    
​ ​ ​

Share-based compensation

   —   26   —   —   26   —    
​ ​ ​

Dividends paid on common shares

   —   —   —   (1 350 ) (1 350 ) —    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

At September 30, 2020

   25 144   587   979   9 634   36 344   1 525 151    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

See accompanying notes to the condensed interim consolidated financial statements.

  
 		  
 		  
 		  
 
​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  51

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 Calgary, Alberta. The company is focused on developing one of the world's largest petroleum resource basins – Canada's Athabasca oil sands. In addition, the company explores for, acquires, develops, produces and markets crude oil in Canada and internationally, transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. The company also operates a renewable energy business and conducts energy trading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products, and power.

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 (IASB). 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 of the company for the year ended December 31, 2019.

(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, 2019.

(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, Assumptions and Judgments

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, 2019.

On January 30, 2020, the World Health Organization declared the Coronavirus disease (COVID-19) outbreak a Public Health Emergency of International Concern and, on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. These measures have caused significant disruption to business operations and a significant increase in economic uncertainty, with reduced demand for commodities leading to volatile prices and currency exchange rates, and a decline in long-term interest rates. Our operations and business are particularly sensitive to a reduction in the demand for, and prices of, commodities that are closely linked to Suncor's financial performance, including crude oil, refined petroleum products (such as jet fuel and gasoline), natural gas and electricity. The potential direct and indirect impacts of the economic downturn have been considered in management's estimates, and assumptions at period end have been reflected in our results with any significant changes described in the relevant financial statement note.

The COVID-19 pandemic is an evolving situation that will continue to have widespread implications for our business environment, operations and financial condition. Management cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact our consolidated statements of comprehensive (loss) income, consolidated balance sheets and consolidated statements of cash flows in fiscal 2020.

(e) Income Taxes

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

​ 52  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​


(f) Government Grants

Government grants are recognized when the company has reasonable assurance that it has complied with the relevant conditions of the grant and that it will be received. The company recognizes the grant against the financial statement line item that it is intended to compensate, or to Other income if the grant is recognized in a different period than the underlying transaction.

(g) Adoption of New IFRS Standards

Definition of a Business

In October 2018, the IASB issued Definition of a Business (Amendments to IFRS 3). The amendments narrowed and clarified the definition of a business. The amendments include an election to use a concentration test. This is a simplified assessment that results in treatment of an acquisition as an asset acquisition if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or a group of similar identifiable assets. If an election to use a concentration test is not made, or the test failed, then the assessment focuses on the existence of a substantive process. One important distinction is that "goodwill" can only be recognized as a result of acquiring a business, but not as a result of an asset acquisition. The company adopted the amendments prospectively on the effective date of January 1, 2020, and there was no impact to the company's consolidated financial statements as a result of the initial application.

​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  53

3. SEGMENTED INFORMATION

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

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

Three months ended September 30        Oil Sands
 		           Exploration
       and Production
 		       Refining and
       Marketing
 		           Corporate and
       Eliminations
 		           Total
 		   
($ millions)     2020     2019     2020     2019     2020     2019     2020     2019     2020     2019    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Revenues and Other Income

                                                          
​

Gross revenues

     1 949     3 472     512     746     4 027     5 912     5     5     6 493     10 135    
​

Intersegment revenues

     618     1 129     —     —     23     17     (641 )   (1 146 )   —     —    
​

Less: Royalties

     (36 )   (235 )   (30 )   (97 )   —     —     —     —     (66 )   (332 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Operating revenues, net of royalties

     2 531     4 366     482     649     4 050     5 929     (636 )   (1 141 )   6 427     9 803    
​

Other income (loss)

     40     63     (9 )   15     (2 )   13     1     2     30     93    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    2 571     4 429     473     664     4 048     5 942     (635 )   (1 139 )   6 457     9 896    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses

                                                                
​

Purchases of crude oil and products

     171     284     —     —     2 840     4 276     (655 )   (1 158 )   2 356     3 402    
​

Operating, selling and general

     1 650     2 009     118     129     457     531     50     124     2 275     2 793    
​

Transportation

     236     344     24     19     31     30     (10 )   (15 )   281     378    
​

Depreciation, depletion, amortization and impairment

     1 242     1 037     261     220     214     209     21     18     1 738     1 484    
​

Exploration

     2     2     10     13     —     —     —     —     12     15    
​

(Gain) Loss on disposal of assets

     (2 )   (3 )   —     (77 )   (2 )   (1 )   1     —     (3 )   (81 )  
​

Financing expenses (income)

     81     94     14     20     11     6     (71 )   313     35     433    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    3 380     3 767     427     324     3 551     5 051     (664 )   (718 )   6 694     8 424    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(Loss) Earnings before Income Taxes

     (809 )   662     46     340     497     891     29     (421 )   (237 )   1 472    
​

Income Tax (Recovery) Expense

                                                                
​

Current

     (137 )   95     30     102     101     204     (35 )   (45 )   (41 )   356    
​

Deferred

     (141 )   62     (9 )   19     12     19     (46 )   (19 )   (184 )   81    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    (278 )   157     21     121     113     223     (81 )   (64 )   (225 )   437    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (Loss) Earnings

     (531 )   505     25     219     384     668     110     (357 )   (12 )   1 035    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Capital and Exploration Expenditures

     661     1 000     99     293     156     202     25     21     941     1 516    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ 54  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

 

Nine months ended September 30        Oil Sands
 		           Exploration
       and Production
 		       Refining and
       Marketing
 		           Corporate and
       Eliminations
 		           Total
 		   
($ millions)     2020     2019     2020     2019     2020     2019     2020     2019     2020     2019    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Revenues and Other Income

                                                          
​

Gross revenues

     5 491     10 676     1 344     2 677     11 327     16 694     20     19     18 182     30 066    
​

Intersegment revenues

     2 045     3 246     —     —     69     65     (2 114 )   (3 311 )   —     —    
​

Less: Royalties

     (77 )   (774 )   (58 )   (435 )   —     —     —     —     (135 )   (1 209 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Operating revenues, net of royalties

     7 459     13 148     1 286     2 242     11 396     16 759     (2 094 )   (3 292 )   18 047     28 857    
​

Other income (loss)

     311     74     48     410     58     42     (6 )   8     411     534    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    7 770     13 222     1 334     2 652     11 454     16 801     (2 100 )   (3 284 )   18 458     29 391    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses

                                                                
​

Purchases of crude oil and products

     669     961     —     —     8 499     11 319     (2 213 )   (2 971 )   6 955     9 309    
​

Operating, selling and general

     5 430     6 042     362     391     1 385     1 597     221     394     7 398     8 424    
​

Transportation

     797     968     80     59     101     86     (32 )   (38 )   946     1 075    
​

Depreciation, depletion, amortization and impairment

     5 372     3 089     1 312     702     660     612     62     56     7 406     4 459    
​

Exploration

     60     114     116     90     —     —     —     —     176     204    
​

Gain on disposal of assets

     (2 )   (13 )   —     (228 )   (6 )   (3 )   —     —     (8 )   (244 )  
​

Financing expenses

     254     237     31     48     26     33     930     244     1 241     562    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    12 580     11 398     1 901     1 062     10 665     13 644     (1 032 )   (2 315 )   24 114     23 789    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(Loss) Earnings before Income Taxes

     (4 810 )   1 824     (567 )   1 590     789     3 157     (1 068 )   (969 )   (5 656 )   5 602    
​

Income Tax (Recovery) Expense

                                                                
​

Current

     (664 )   244     47     526     162     757     (255 )   (243 )   (710 )   1 284    
​

Deferred

     (643 )   (675 )   (161 )   (103 )   29     (42 )   (20 )   (96 )   (795 )   (916 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    (1 307 )   (431 )   (114 )   423     191     715     (275 )   (339 )   (1 505 )   368    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (Loss) Earnings

     (3 503 )   2 255     (453 )   1 167     598     2 442     (793 )   (630 )   (4 151 )   5 234    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Capital and Exploration Expenditures

     2 108     2 440     409     789     334     504     108     50     2 959     3 783    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  55

Disaggregation of Revenue from Contracts with Customers and Intersegment Revenue

The company derives revenue from the transfer of goods mainly at a point in time in the following major commodities, revenue streams and geographical regions:

Three months ended September 30

   2020
   2019
 		   

($ millions)

   North America   International   Total   North America   International   Total    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Oil Sands(1)

                            
​

SCO and diesel

   2 040   —   2 040   3 344   —   3 344    
​

Bitumen

   527   —   527   1 257   —   1 257    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  2 567   —   2 567   4 601   —   4 601    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Exploration and Production

                            
​

Crude oil and natural gas liquids

   311   200   511   393   352   745    
​

Natural gas

   —   1   1   —   1   1    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  311   201   512   393   353   746    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Refining and Marketing

                            
​

Gasoline

   1 953   —   1 953   2 704   —   2 704    
​

Distillate

   1 534   —   1 534   2 401   —   2 401    
​

Other

   563   —   563   824   —   824    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  4 050   —   4 050   5 929   —   5 929    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Corporate and Eliminations

                            
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  (636 ) —   (636 ) (1 141 ) —   (1 141 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Revenue from Contracts with Customers

   6 292   201   6 493   9 782   353   10 135    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Prior period amounts have been reclassified to conform with current period presentation.


Nine months ended September 30

   2020
   2019
 		   

($ millions)

   North America   International   Total   North America   International   Total    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Oil Sands(1)

                            
​

SCO and diesel

   6 131   —   6 131   10 384   —   10 384    
​

Bitumen

   1 405   —   1 405   3 538   —   3 538    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  7 536   —   7 536   13 922   —   13 922    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Exploration and Production

                            
​

Crude oil and natural gas liquids

   790   551   1 341   1 391   1 282   2 673    
​

Natural gas

   —   3   3   —   4   4    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  790   554   1 344   1 391   1 286   2 677    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Refining and Marketing

                            
​

Gasoline

   4 979   —   4 979   7 470   —   7 470    
​

Distillate

   4 798   —   4 798   7 039   —   7 039    
​

Other

   1 619   —   1 619   2 250   —   2 250    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  11 396   —   11 396   16 759   —   16 759    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Corporate and Eliminations

                            
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  (2 094 ) —   (2 094 ) (3 292 ) —   (3 292 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Revenue from Contracts with Customers

   17 628   554   18 182   28 780   1 286   30 066    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Prior period amounts have been reclassified to conform with current period presentation.
​ 56  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

4. OTHER INCOME

Other income consists of the following:

  Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Energy trading activities

                    
​

(Losses) gains recognized in earnings

   (15 ) 49   152   159    
​

Losses on inventory valuation

   (18 ) (11 ) (28 ) (46 )  
​

Short-term commodity risk management

   22   44   121   (2 )  
​

Investment and interest income

   29   36   78   86    
​

Insurance proceeds(1)

   —   —   49   397    
​

Other

   12   (25 ) 39   (60 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  30   93   411   534    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Nine months ended September 30, 2020 includes insurance proceeds for MacKay River within the Oil Sands segment, and nine months ended September 30, 2019 includes insurance proceeds for Syncrude and Libyan assets within the Oil Sands segment and Exploration and Production segment respectively.

5. SHARE-BASED COMPENSATION

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

  Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Equity-settled plans

   7   9   26   42    
​

Cash-settled plans

   (51 ) 58   (120 ) 211    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  (44 ) 67   (94 ) 253    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

6. FINANCING EXPENSES

   Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest on debt

   225   205   666   617    
​

Interest on lease liabilities

   42   42   126   130    
​

Capitalized interest

   (29 ) (29 ) (94 ) (85 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest expense

   238   218   698   662    
​

Interest on partnership liability

   13   13   39   41    
​

Interest on pension and other post-retirement benefits

   14   15   41   45    
​

Accretion

   71   66   209   205    
​

Foreign exchange (gain) loss on U.S. dollar denominated debt

   (307 ) 133   290   (378 )  
​

Operational foreign exchange and other

   6   (12 ) (36 ) (13 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  35   433   1 241   562    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  57

The company issued $1.25 billion of senior unsecured Series 7 Medium Term Notes maturing on April 9, 2030 during the second quarter of 2020. The Series 7 Medium Term Notes have a coupon of 5.00% and were priced at $99.697 per $100 principal amount for an effective yield of 5.039%. Interest on the Series 7 Medium Term Notes is paid semi-annually.

During the second quarter of 2020, the company issued US$450 million of senior unsecured notes maturing on May 15, 2023. The notes have a coupon of 2.80% and were priced at US$99.903 per US$100 principal amount for an effective yield of 2.834%. The company also issued US$550 million of senior unsecured notes maturing on May 15, 2025. The notes have a coupon of 3.10% and were priced at US$99.949 per US$100 principal amount for an effective yield of 3.111%. Interest on the 2.80% and 3.10% notes is paid semi-annually.

The company secured an additional $2.5 billion and $300 million of credit facilities in the first and second quarters of 2020, respectively, with its key banking partners under new credit agreements. These agreements have the same terms and covenants as our existing credit facilities.

7. (LOSS) EARNINGS PER COMMON SHARE

   Three months ended
September 30		   Nine months ended
September 30		    

($ millions)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (loss) earnings

   (12 ) 1 035   (4 151 ) 5 234    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(millions of common shares)

  
 		  
 		  
 		  
 		  
 

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Weighted average number of common shares

   1 525   1 552   1 526   1 566    
​

Dilutive securities:

                    
​

Effect of share options

   —   2   —   3    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Weighted average number of diluted common shares

   1 525   1 554   1 526   1 569    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(dollars per common share)

  
 		  
 		  
 		  
 		  
 

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Basic and diluted (loss) earnings per share

   (0.01 ) 0.67   (2.72 ) 3.34    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

8. NORMAL COURSE ISSUER BID

On May 1, 2019, the company announced its intention to renew its existing normal course issuer bid (the 2019 NCIB) to continue to repurchase shares under its previously announced buyback program through the facilities of the Toronto Stock Exchange, the New York Stock Exchange and/or alternative trading platforms. Pursuant to the 2019 NCIB, the company was permitted to purchase for cancellation up to 50,252,231 of its common shares between May 6, 2019 and May 5, 2020. On December 23, 2019, Suncor announced an amendment to the 2019 NCIB, effective as of December 30, 2019, which allowed the company to increase the maximum number of common shares that could have been repurchased between May 6, 2019 and May 5, 2020 to 78,549,178. The COVID-19 pandemic has created significant uncertainly in the business environment and, consistent with our disciplined capital allocation strategy, share purchases have been suspended and the company decided not to renew the 2019 NCIB at this time.

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

  Three months ended
September 30		   Nine months ended
September 30		    

($ millions, except as noted)

   2020   2019   2020   2019    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Share repurchase activities (thousands of common shares)

                    
​

Shares repurchased

   —   19 206   7 527   44 158    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Amounts charged to

                    
​

Share capital

   —   316   124   722    
​

Retained earnings

   —   440   183   1 100    
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Share repurchase cost

   —   756   307   1 822    

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ 58  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

9. FINANCIAL INSTRUMENTS

Derivative Financial Instruments

(a) Non-Designated Derivative Financial Instruments

The company uses derivative financial instruments, such as physical and financial contracts, to manage certain exposures to fluctuations in interest rates, short-term commodity prices and foreign currency exchange rates, as part of its overall risk management program, as well as for trading purposes.

The changes in the fair value of non-designated derivatives are as follows:

($ millions)

   Total    

​

​ ​ ​ ​

Fair value outstanding at December 31, 2019

   (39 )  
​

Cash Settlements – received during the year

   (286 )  
​

Changes in fair value recognized in earnings during the year

   273    
​ ​ ​ ​ ​

Fair value outstanding at September 30, 2020

   (52 )  

​

​ ​ ​ ​

(b) Fair Value Hierarchy

To estimate the 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 consists 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 consists 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 is 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 consists of instruments with a fair value that is determined by prices with significant unobservable inputs. As at September 30, 2020, 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 non-designated derivative financial instruments measured at fair value for each hierarchy level as at September 30, 2020:

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

Accounts receivable

 ​ 56 ​ 56 ​ — ​ 112 ​  
​

Accounts payable

 ​ (128 ) (36 ) — ​ (164 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ (72 ) 20 ​ — ​ (52 )  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

During the third quarter of 2020, there were no transfers between Level 1 and Level 2 fair value measurements.

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. While the industry has experienced credit downgrades due to the COVID-19 pandemic, Suncor has not been significantly affected as the majority of Suncor's customers are large and established downstream companies with investment grade credit ratings.

​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  59


Non-Derivative Financial Instruments

At September 30, 2020, the carrying value of fixed-term debt accounted for under amortized cost was $15.7 billion (December 31, 2019 – $12.9 billion) and the fair value was $18.5 billion (December 31, 2019 – $16.1 billion). The increase in carrying value and fair value of debt is mainly due to issuance of new debt during the second quarter of this year. The estimated fair value of long-term debt is based on pricing sourced from market data.

10. INVENTORIES

($ millions)

   September 30
2020		   December 31
2019		    

​

​ ​ ​ ​ ​ ​

Crude Oil(1)

   1 422   1 689    
​

Refined products

   1 043   1 290    
​

Materials, supplies and merchandise

   860   782    
​ ​ ​ ​ ​ ​ ​

  3 325   3 761    

​

​ ​ ​ ​ ​ ​
(1)
Includes $246 million of inventories held for trading purposes (December 31, 2019 – $210 million) which are measured at fair value less costs of disposal based on Level 1 and Level 2 fair value inputs.

At June 30, 2020, the company recorded a hydrocarbon inventory write-down to net realizable value of $61 million ($45 million after-tax) which was subsequently sold in the third quarter.

At March 31, 2020, the company recorded a hydrocarbon inventory write-down to net realizable value of $536 million ($397 million after-tax) which was subsequently sold in the second quarter.

11. ASSET IMPAIRMENT

The COVID-19 pandemic has resulted in a significant decrease in global demand for crude oil and commodity prices. In response, the company announced plans to reduce capital and operating costs. As a result of these events, the company performed asset impairment tests on certain cash generating units (CGUs) in its Oil Sands and Exploration and Production segments as at March 31, 2020 and September 30, 2020 as the recoverable amounts of these CGUs were most sensitive to the combined reduction in crude oil prices and changes to their respective capital and operating plans. The impairment tests were performed using recoverable amounts based on the fair value less cost of disposal. An expected cash flow approach was used with the key assumptions discussed below (Level 3 fair value inputs):

Oil Sands

During the first quarter of 2020, the company recorded an impairment of $1.38 billion (net of taxes of $0.44 billion) on its share of the Fort Hills project in the Oil Sands segment using the following asset-specific assumptions:

•
WCS price forecast of US$9.00/bbl for the remainder of 2020, US$13.60/bbl in 2021, US$32.00/bbl in 2022, US$51.55/bbl in 2023 and US$52.90/bbl in 2024, escalating at 2% per year thereafter over the life of the project up to 2061, adjusted for asset-specific location and quality differentials;

•
the company's share of production of 47,000 bbls/d while the Fort Hills project operates on one primary extraction train for the remainder of 2020 through to 2021, and ramping up to two primary extraction trains during 2022 and then ranging from 96,000 to 106,000 bbls/d over the remaining life of the project;

•
cash operating costs averaging $32.00/bbl to $37.00/bbl while the Fort Hills project operates on one primary extraction train for the remainder of 2020 through to 2021, and ranging from $22.00/bbl to $24.00/bbl thereafter, as the project returns to two primary extraction trains over the remaining life of the project (expressed in real dollars). Cash operating costs reflect operating, selling and general expense adjusted for non-production costs, including share-based compensation, research costs, and excess power revenue; and

•
risk-adjusted discount rate of 7.5% (after-tax).

The recoverable amount of the Fort Hills CGU was $6.4 billion as at March 31, 2020. The recoverable amount estimate is most sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an increase to the impairment charge of approximately $1.1 billion (after-tax) on the company's share of the Fort Hills assets. A

​ 60  2020 THIRD QUARTER   Suncor Energy Inc. ​ ​

1% increase in the discount rate would have resulted in an increase to the impairment charge of approximately $1.1 billion (after-tax) on the company's share of the Fort Hills assets.

No indicators of impairment or reversals of impairment were identified as at September 30, 2020.

Exploration and Production

During the first quarter of 2020, the company recorded an impairment of $285 million (net of taxes of $93 million) on its share of the Terra Nova assets and $137 million (net of taxes of $45 million) on its share of the White Rose assets in the Exploration and Production segment using the following asset-specific assumptions:

Terra Nova assets:

•
Brent price forecast of US$30.00/bbl for the remainder of 2020, US$35.00/bbl in 2021, US$50.00/bbl in 2022 and US$69.00/bbl in 2023, escalating at 2% per year thereafter over the life of the project to 2031 and adjusted for asset-specific location and quality differentials;

•
the company's share of production of approximately 6,200 bbls/d over the life of the project, including the benefit of the asset life extension project; and

•
risk-adjusted discount rate of 9.0% (after-tax).

The recoverable amount of the Terra Nova CGU was $24 million as at March 31, 2020.

No indicators of impairment or reversals of impairment were identified as at September 30, 2020.

White Rose assets:

•
Brent price forecast of US$30.00/bbl for the remainder of 2020, US$35.00/bbl in 2021, US$50.00/bbl in 2022 and US$69.00/bbl in 2023, escalating at 2% per year thereafter over the life of the project to 2036 and adjusted for asset-specific location and quality differentials;

•
the company's share of production of approximately 9,800 bbls/d over the life of the project;

•
the company's share of future capital expenditures of $1.435 billion, including the West White Rose expansion; and

•
risk-adjusted discount rate of 9.0% (after-tax).

The recoverable amount of the White Rose CGU was $185 million as at March 31, 2020. The recoverable amount estimate is most sensitive to price and discount rate. A 5% average decrease in price over the life of the project would have resulted in an increase to the impairment charge of approximately $83 million (after-tax) on the company's share of the White Rose assets. A 1% increase in the discount rate would have resulted in an increase to the impairment charge of approximately $45 million (after-tax) on the company's share of the White Rose assets.

In the third quarter of 2020, the operator of the West White Rose expansion project announced plans to evaluate the project scope, schedule and cost. As at September 30, 2020, the company performed an impairment test for the White Rose CGU and the estimated recoverable amount approximated its carrying value, as the impact of deferring production and capital by one year had offsetting impacts on the recoverable amount, thus no impairment or reversal of impairment was required.

12. PROVISIONS

Suncor's decommissioning and restoration provision decreased by $145 million for the nine months ended September 30, 2020. The decrease was primarily due to an increase in the credit-adjusted risk-free interest rate to 3.40% (December 31, 2019 – 3.30%).

​ ​ ​ 2020 THIRD QUARTER   Suncor Energy Inc.  61



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EXHIBIT 99.3