Suncor Energy (SU) 6-K Report to Shareholders for the Second Quarter of 2017

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EXHIBIT 99.3

Unaudited Consolidated Financial Statements for the second quarter ended June 30, 2017

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)

	Three months ended June 30				Six months ended June 30
($ millions)	2017		2016		2017		2016
Revenues and Other Income
Operating revenues, net of royalties (note 3)	7 247		5 914		15 065		11 558
Other income (loss) (note 6)	16		(58	)	41		(125	)
	7 263		5 856		15 106		11 433
Expenses
Purchases of crude oil and products	2 995		2 672		5 473		4 741
Operating, selling and general	2 240		2 053		4 546		4 402
Transportation	248		242		534		531
Depreciation, depletion, amortization and impairment	1 410		1 605		2 832		3 077
Exploration	13		16		65		57
Gain on disposal of assets (notes 15 and 16)	(2	)	(33	)	(550	)	(34	)
Financing (income) expenses (note 9)	(184	)	343		(148	)	(375	)
	6 720		6 898		12 752		12 399
Earnings (Loss) before Income Taxes	543		(1 042	)	2 354		(966	)
Income Taxes – Expense (Recovery)(note 10)
Current	120		(67	)	591		(183	)
Deferred	(12	)	(240	)	(24	)	(305	)
	108		(307	)	567		(488	)
Net Earnings (Loss)	435		(735	)	1 787		(478	)
Net Earnings (Loss) Attributable to:
Common shareholders	435		(735	)	1 787		(489	)
Non-controlling interest (note 4)	—		—		—		11
	435		(735	)	1 787		(478	)
Other Comprehensive (Loss) Income
Items that may be subsequently reclassified to earnings
Foreign currency translation adjustment	(78	)	(68	)	(106	)	(330	)
Items that will not be reclassified to earnings
Actuarial (loss) gain on employee retirement benefit plans, net of income taxes	(28	)	(40	)	1		(40	)
Other Comprehensive Loss	(106	)	(108	)	(105	)	(370	)
Total Comprehensive Income (Loss)	329		(843	)	1 682		(848	)
Per Common Share(dollars) (note 11)
Net earnings (loss) – basic and diluted	0.26		(0.46	)	1.07		(0.31	)
Net earnings (loss) – attributable to common shareholders – basic and diluted	0.26		(0.46	)	1.07		(0.31	)
Cash dividends	0.32		0.29		0.64		0.58
See accompanying notes to the interim consolidated financial statements.

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   43

CONSOLIDATED BALANCE SHEETS
(unaudited)

($ millions)	June 30 2017	December 31 2016
Assets
Current assets
Cash and cash equivalents	2 352	3 016
Accounts receivable	3 103	3 182
Inventories	3 221	3 240
Income taxes receivable	160	376
Assets held for sale (notes 15 and 16)	—	1 205
Total current assets	8 836	11 019
Property, plant and equipment, net	72 096	71 259
Exploration and evaluation	2 038	2 038
Other assets	1 174	1 248
Goodwill and other intangible assets	3 063	3 075
Deferred income taxes	90	63
Total assets	87 297	88 702
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt	2 019	1 273
Current portion of long-term debt	1 533	54
Accounts payable and accrued liabilities	5 131	5 588
Current portion of provisions	758	781
Income taxes payable	356	224
Liabilities associated with assets held for sale (notes 15 and 16)	—	197
Total current liabilities	9 797	8 117
Long-term debt	12 580	16 103
Other long-term liabilities	1 907	2 067
Provisions (note 14)	6 887	6 542
Deferred income taxes	11 239	11 243
Equity	44 887	44 630
Total liabilities and equity	87 297	88 702
See accompanying notes to the interim consolidated financial statements.

​ 44   SUNCOR ENERGY INC. 2017 SECOND QUARTER

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	Three months ended June 30				Six months ended June 30
($ millions)	2017		2016		2017		2016
Operating Activities
Net earnings (loss)	435		(735	)	1 787		(478	)
Adjustments for:
Depreciation, depletion, amortization and impairment	1 410		1 605		2 832		3 077
Deferred income taxes	(12	)	(240	)	(24	)	(305	)
Accretion	61		73		122		137
Unrealized foreign exchange (gain) loss on U.S. dollar denominated debt	(295	)	29		(404	)	(892	)
Change in fair value of financial instruments and trading inventory	57		130		67		270
Gain on disposal of assets (notes 15 and 16)	(2	)	(33	)	(422	)	(34	)
Loss on extinguishment of long-term debt (note 9)	25		99		25		99
Share-based compensation	26		37		(224	)	(126	)
Exploration	—		—		41		—
Settlement of decommissioning and restoration liabilities	(69	)	(36	)	(189	)	(158	)
Other	(9	)	(13	)	40		8
Decrease (increase) in non-cash working capital	44		(54	)	(352	)	(688	)
Cash flow provided by operating activities	1 671		862		3 299		910
Investing Activities
Capital and exploration expenditures	(1 855	)	(1 761	)	(3 235	)	(3 317	)
Cash acquired from Canadian Oil Sands Limited (note 4)	—		—		—		109
Acquisitions (note 5)	—		(946	)	—		(946	)
Proceeds from disposal of assets	81		33		1 477		192
Other investments	1		(5	)	1		(7	)
Decrease (increase) in non-cash working capital	98		(41	)	37		(167	)
Cash flow used in investing activities	(1 675	)	(2 720	)	(1 720	)	(4 136	)
Financing Activities
Net change in short-term debt	1 338		991		827		1 955
Net change in long-term debt	(1 740	)	(1 578	)	(1 754	)	(1 542	)
Issuance of common shares under share option plans	32		5		76		12
(Purchase) issuance of common shares (notes 8 and 12)	(296	)	2 782		(296	)	2 782
Dividends paid on common shares	(533	)	(458	)	(1 067	)	(911	)
Cash flow (used in) provided by financing activities	(1 199	)	1 742		(2 214	)	2 296
Decrease in Cash and Cash Equivalents	(1 203	)	(116	)	(635	)	(930	)
Effect of foreign exchange on cash and cash equivalents	(22	)	(10	)	(29	)	(111	)
Cash and cash equivalents at beginning of period	3 577		3 134		3 016		4 049
Cash and Cash Equivalents at End of Period	2 352		3 008		2 352		3 008
Supplementary Cash Flow Information
Interest paid	383		428		498		514
Income taxes (received) paid	(2	)	(141	)	119		(10	)
See accompanying notes to the interim consolidated financial statements.

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   45

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, 2015	19 466		633		1 265		—		17 675		39 039		1 446 013
Net earnings (loss)	—		—		—		11		(489	)	(478	)	—
Foreign currency translation adjustment	—		—		(330	)	—		—		(330	)	—
Actuarial loss on employee retirement benefit plans, net of income taxes of $13	—		—		—		—		(40	)	(40	)	—
Total comprehensive (loss) income	—		—		(330	)	11		(529	)	(848	)	—
Issued under share option plans	17		(2	)	—		—		—		15		450
Issued for cash, net of income taxes of $26 (note 12)	2 808		—		—		—		—		2 808		82 225
Issued for the acquisition of Canadian Oil Sands Limited (note 4)	3 154		—		—		1 172		—		4 326		98 814
Equity transactions to eliminate non-controlling interest in Canadian Oil Sands Limited (note 4)	1 298		—		—		(1 183	)	(115	)	—		36 879
Share-based compensation	—		24		—		—		—		24		—
Dividends paid on common shares	—		—		—		—		(911	)	(911	)	—
At June 30, 2016	26 743		655		935		—		16 120		44 453		1 664 381
At December 31, 2016	26 942		588		1 007		—		16 093		44 630		1 667 914
Net earnings	—		—		—		—		1 787		1 787		—
Foreign currency translation adjustment	—		—		(106	)	—		—		(106	)	—
Actuarial gain on employee retirement benefit plans, net of income taxes	—		—		—		—		1		1		—
Total comprehensive (loss) income	—		—		(106	)	—		1 788		1 682		—
Issued under share option plans	97		(21	)	—		—		—		76		2 183
Purchase of common shares for cancellation (note 8)	(117	)	—		—		—		(179	)	(296	)	(7 221	)
Change in liability for share purchase commitment (note 8)	(72	)	—		—		—		(99	)	(171	)	—
Share-based compensation	—		33		—		—		—		33		—
Dividends paid on common shares	—		—		—		—		(1 067	)	(1 067	)	—
At June 30, 2017	26 850		600		901		—		16 536		44 887		1 662 876
See accompanying notes to the interim consolidated financial statements.

​ 46   SUNCOR ENERGY INC. 2017 SECOND 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) 34Interim 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, 2016.

The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and outstanding as at July 26, 2017.

(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, 2016.

(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, 2016.

(e) Income taxes

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

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   47

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 June 30	Oil Sands				Exploration and        Production				Refining and    Marketing				Corporate,        Energy Trading        and Eliminations				Total
($ millions)	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
Revenues and Other Income
Gross revenues	1 818		810		852		595		4 725		4 538		10		25		7 405		5 968
Intersegment revenues	680		350		—		29		19		52		(699	)	(431	)	—		��
Less: Royalties	(37	)	(9	)	(121	)	(45	)	—		—		—		—		(158	)	(54	)
Operating revenues, net of royalties	2 461		1 151		731		579		4 744		4 590		(689	)	(406	)	7 247		5 914
Other income (loss)	17		(18	)	10		36		19		2		(30	)	(78	)	16		(58	)
	2 478		1 133		741		615		4 763		4 592		(719	)	(484	)	7 263		5 856
Expenses
Purchases of crude oil and products	139		172		—		—		3 584		2 869		(728	)	(369	)	2 995		2 672
Operating, selling and general	1 575		1 288		111		116		464		526		90		123		2 240		2 053
Transportation	168		146		22		22		69		84		(11	)	(10	)	248		242
Depreciation, depletion, amortization and impairment	927		938		289		461		168		172		26		34		1 410		1 605
Exploration	4		—		9		16		—		—		—		—		13		16
Gain on disposal of assets	—		(32	)	—		—		(2	)	(1	)	—		—		(2	)	(33	)
Financing expenses (income)	52		64		5		35		1		1		(242	)	243		(184	)	343
	2 865		2 576		436		650		4 284		3 651		(865	)	21		6 720		6 898
(Loss) Earnings before Income Taxes	(387	)	(1 443	)	305		(35	)	479		941		146		(505	)	543		(1 042	)
Income Taxes – (Recovery) Expense
Current	(37	)	(290	)	161		130		137		220		(141	)	(127	)	120		(67	)
Deferred	(73	)	(90	)	(38	)	(191	)	(4	)	32		103		9		(12	)	(240	)
	(110	)	(380	)	123		(61	)	133		252		(38	)	(118	)	108		(307	)
Net (Loss) Earnings	(277	)	(1 063	)	182		26		346		689		184		(387	)	435		(735	)
Capital and Exploration Expenditures	1 500		1 254		215		275		134		229		6		3		1 855		1 761

​ 48   SUNCOR ENERGY INC. 2017 SECOND QUARTER

Six months ended June 30	Oil Sands				Exploration and        Production				Refining and    Marketing				Corporate,        Energy Trading        and Eliminations				Total
($ millions)	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
Revenues and Other Income
Gross revenues	4 240		2 395		1 772		1 126		9 372		8 117		23		22		15 407		11 660
Intersegment revenues	1 548		804		—		29		25		64		(1 573	)	(897	)	—		—
Less: Royalties	(98	)	(28	)	(244	)	(74	)	—		—		—		—		(342	)	(102	)
Operating revenues, net of royalties	5 690		3 171		1 528		1 081		9 397		8 181		(1 550	)	(875	)	15 065		11 558
Other income (loss)	31		15		(23	)	38		38		13		(5	)	(191	)	41		(125	)
	5 721		3 186		1 505		1 119		9 435		8 194		(1 555	)	(1 066	)	15 106		11 433
Expenses
Purchases of crude oil and products	255		312		—		—		6 836		5 325		(1 618	)	(896	)	5 473		4 741
Operating, selling and general	3 128		2 723		212		261		981		1 068		225		350		4 546		4 402
Transportation	357		330		45		45		156		176		(24	)	(20	)	534		531
Depreciation, depletion, amortization and impairment	1 868		1 855		573		817		328		342		63		63		2 832		3 077
Exploration	6		30		59		27		—		—		—		—		65		57
Gain on disposal of assets	(1	)	(33	)	—		—		(452	)	(1	)	(97	)	—		(550	)	(34	)
Financing expenses (income)	85		119		22		50		10		12		(265	)	(556	)	(148	)	(375	)
	5 698		5 336		911		1 200		7 859		6 922		(1 716	)	(1 059	)	12 752		12 399
Earnings (Loss) before Income Taxes	23		(2 150	)	594		(81	)	1 576		1 272		161		(7	)	2 354		(966	)
Income Taxes – Expense (Recovery)
Current	62		(437	)	337		191		414		319		(222	)	(256	)	591		(183	)
Deferred	(64	)	(126	)	(97	)	(264	)	(13	)	23		150		62		(24	)	(305	)
	(2	)	(563	)	240		(73	)	401		342		(72	)	(194	)	567		(488	)
Net Earnings (Loss)	25		(1 587	)	354		(8	)	1 175		930		233		187		1 787		(478	)
Capital and Exploration Expenditures	2 559		2 361		442		546		226		401		8		9		3 235		3 317

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   49

4. ACQUISITION OF CANADIAN OIL SANDS LIMITED (COS)

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 (TSX) on the acquisition date.

COS owned a 36.74% interest in the Syncrude joint arrangement. Suncor acquired COS to benefit from operating synergies and economies of scale expected from combining the two companies' ownership interests in Syncrude.

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 purchase price allocation is based on management's best estimates of fair values of COS' assets and liabilities as at February 5, 2016 and no changes are 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

​ 50   SUNCOR ENERGY INC. 2017 SECOND QUARTER

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.

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

During the second quarter of 2016, the company purchased US$688 million of subsidiary debt acquired through the acquisition of COS. The company also repaid approximately $600 million of the credit facility acquired in the COS transaction.

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 were 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 that commenced in the first quarter of 2016.

Acquisition costs of $29 million have been charged to Operating, Selling and General expense in the consolidated statements of comprehensive loss for the six-month period ended June 30, 2016.

The acquisition of COS contributed $489 million to gross revenues and $226 million to consolidated net loss from the acquisition date to June 30, 2016.

Had the acquisition occurred on January 1, 2016, COS would have contributed $671 million to gross revenues and $263 million to consolidated net loss, which would have resulted in gross revenues of $12.3 billion and consolidated net loss of $741 million for the six months ended June 30, 2016.

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   51

5. ACQUISITION OF ADDITIONAL OWNERSHIP INTEREST IN SYNCRUDE

On June 23, 2016, Suncor completed the purchase of an additional 5% working interest in the Syncrude project from Murphy Oil Corporation's Canadian subsidiary for $946 million after purchase price adjustments. The purchase increased Suncor's share in the Syncrude project to 53.74%.

The acquisition has been accounted for as a business combination using the acquisition method. The purchase price allocation is based on management's best estimates of fair values of Syncrude's assets and liabilities as at June 23, 2016.

($ millions)
Accounts receivable	8
Inventory	19
Property, plant and equipment	1 330
Exploration and evaluation	82
Total assets acquired	1 439
Accounts payable and other liabilities	(29	)
Employee future benefits	(49	)
Decommissioning provision	(187	)
Deferred income taxes	(228	)
Total liabilities assumed	(493	)
Net assets acquired	946

The fair values of accounts receivable and accounts payable approximate their carrying values due to the short-term maturity of the instruments. The fair value of crude inventory was 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. All of the key assumptions were applied on a consistent basis as the COS acquisition (note 4).

The additional interest in Syncrude contributed $3 million to gross revenues and nil to consolidated net loss from the acquisition date to June 30, 2016.

Had the acquisition occurred on January 1, 2016, the additional interest would have contributed $88 million to gross revenues and $38 million to consolidated net loss, which would have resulted in gross revenues of $11.7 billion and consolidated net loss of $516 million for the six months ended June 30, 2016.

​ 52   SUNCOR ENERGY INC. 2017 SECOND QUARTER

6. OTHER INCOME (LOSS)

Other income consists of the following:

	Three months ended June 30				Six months ended June 30
($ millions)	2017		2016		2017		2016
Energy trading activities
Gains (losses) recognized in earnings during the period	1		6		20		(18	)
(Losses) gains on inventory valuation	(6	)	(13	)	(43	)	17
Risk management activities(1)	(22	)	(131	)	34		(230	)
Investment and interest income	33		30		54		48
Risk mitigation and insurance proceeds(2)	—		26		—		26
Change in value of pipeline commitments and other	10		24		(24	)	32
	16		(58	)	41		(125	)

(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 property damage insurance proceeds recorded in the second quarter of 2016 for the Terra Nova asset in the Exploration and Production segment.

7. 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 June 30		Six months ended June 30
($ millions)	2017	2016	2017	2016
Equity-settled plans	9	7	33	24
Cash-settled plans	18	31	92	146
	27	38	125	170

8. NORMAL COURSE ISSUER BID

On April 26, 2017, the company announced its intention to commence a new Normal Course Issuer Bid (the 2017 NCIB) to repurchase shares through the facilities of the Toronto Stock Exchange, New York Stock Exchange and/or alternative trading platforms. Pursuant to the 2017 NCIB, the company may purchase for cancellation up to approximately $2.0 billion worth of its common shares between May 2, 2017 and May 1, 2018. During the second quarter of 2017, the company repurchased 7.2 million common shares under the 2017 NCIB at an average price of $40.93 per share, for a total repurchase cost of $296 million.

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

	Three months ended June 30		Six months ended June 30
($ millions, except as noted)	2017	2016	2017	2016
Share repurchase activities(thousands of common shares)
Shares repurchased	7 221	—	7 221	—
Amounts charged to
Share capital	117	—	117	—
Retained earnings	179	—	179	—
Share repurchase cost	296	—	296	—

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   53

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

($ millions)	June 30 2017	December 31 2016
Amounts charged to
Share capital	72	—
Retained earnings	99	—
Liability for share purchase commitment	171	—

9. FINANCING (INCOME) EXPENSE

	Three months ended June 30				Six months ended June 30
($ millions)	2017		2016		2017		2016
Interest on debt	234		256		486		510
Capitalized interest	(196	)	(140	)	(370	)	(281	)
Interest expense	38		116		116		229
Interest on pension and other post-retirement benefits	15		15		30		27
Accretion	61		73		122		137
Foreign exchange (gain) loss on U.S. dollar denominated debt	(295	)	29		(404	)	(892	)
Foreign exchange and other	(28	)	11		(37	)	25
Loss on extinguishment of long-term debt	87		99		87		99
Realized gains on foreign currency hedges	(62	)	—		(62	)	—
	(184	)	343		(148	)	(375	)

During the second quarter of 2017, the company completed an early retirement of its US$1.250 billion (book value of $1.700 billion) long-term notes originally scheduled to mature on June 1, 2018 for US$1.344 billion ($1.830 billion), including US$31 million ($42 million) of accrued interest. In conjunction with the early retirement of the notes, the company also realized gains of $62 million on foreign currency hedges resulting in an overall debt extinguishment loss of $25 million ($10 million after-tax).

During the second quarter of 2016, the company purchased US$688 million ($891 million) principal value (book value of $864 million) of subsidiary debt acquired through the acquisition of COS (note 4) for US$751 million ($973 million) including US$8 million ($10 million) of accrued interest, resulting in a debt extinguishment loss of $99 million ($73 million after-tax). The company also repaid approximately $600 million of the credit facility acquired in the COS transaction.

10. INCOME TAXES

In the third quarter of 2016, the United Kingdom (U.K.) government enacted a decrease in the supplementary charge rate on oil and gas profits in the North Sea that reduced the statutory tax rate on Suncor's earnings in the U.K. from 50% to 40%. The company revalued its deferred income tax balances, resulting in a deferred income tax recovery of $180 million.

​ 54   SUNCOR ENERGY INC. 2017 SECOND QUARTER

11. EARNINGS PER COMMON SHARE

	Three months ended June 30			Six months ended June 30
($ millions)	2017	2016		2017		2016
Net earnings (loss)	435	(735	)	1 787		(478	)
Dilutive impact of accounting for awards as equity-settled(1)	—	—		(1	)	—
Net earnings (loss) – diluted	435	(735	)	1 786		(478	)
​	​	​	​	​	​	���	​
Net earnings (loss) attributable to common shareholders	435	(735	)	1 787		(489	)
Dilutive impact of accounting for awards as equity-settled(1)	—	—		(1	)	—
Net earnings (loss) – diluted attributable to common shareholders	435	(735	)	1 786		(489	)
(millions of common shares)
Weighted average number of common shares	1 668	1 590		1 668		1 553
Dilutive securities:
Effect of share options	4	2		4		1
Weighted average number of diluted common shares	1 672	1 592		1 672		1 554
(dollars per common share)
Basic and diluted earnings (loss) per share	0.26	(0.46	)	1.07		(0.31	)
Basic and diluted earnings (loss) per share attributable to common shareholders	0.26	(0.46	)	1.07		(0.31	)

(1)

Cash payment alternatives are accounted for as cash-settled plans. As these awards can be exchanged for common shares of the company, they are considered potentially dilutive and are included in the calculation of the company's diluted net earnings (loss) per share if they have a dilutive impact in the period. Accounting for these awards as equity-settled was determined to have a dilutive impact for the three and six months ended June 30, 2017.

12. SHARE CAPITAL

On June 22, 2016, the company issued 82.2 million common shares for $35.00 per common share. Gross proceeds were approximately $2.878 billion ($2.782 billion net of fees).

13. 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 June 30, 2017.

($ millions)	Energy Trading		Risk Management		Total
Fair value outstanding at December 31, 2016	(36	)	(18	)	(54	)
Cash Settlements – (received) paid during the period	(20	)	(57	)	(77	)
Gains recognized in earnings during the period (note 6)	20		34		54
Fair value outstanding at June 30, 2017	(36	)	(41	)	(77	)

​ SUNCOR ENERGY INC. 2017 SECOND QUARTER   55

(b) Fair Value Hierarchy

The following table presents the company's financial instruments measured at fair value for each hierarchy level as at June 30, 2017.

($ millions)	Level 1		Level 2		Level 3	Total Fair Value
Accounts receivable	57		70		—	127
Accounts payable	(107	)	(97	)	—	(204	)
	(50	)	(27	)	—	(77	)

During the second quarter of 2017, 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 June 30, 2017, the company had $949 million in outstanding forward swaps. A decrease in interest rates of 0.06% during the quarter resulted in a decrease in value of $17 million associated with the remaining swaps. A decrease in interest rates of 0.03% during the six months ended June 30, 2017 resulted in a decrease in value of $10 million associated with the remaining swaps.

Non-Derivative Financial Instruments

At June 30, 2017, the carrying value of fixed-term debt accounted for under amortized cost was $13.0 billion (December 31, 2016 – $15.1 billion) and the fair value was $15.3 billion (December 31, 2016 – $17.5 billion). The estimated fair value of long-term debt is based on pricing sourced from market data.

14. PROVISIONS

A decrease in the credit-adjusted risk-free interest rate to 3.70% (December 31, 2016 – 3.90%) and recognition of additional disturbances resulted in an increase in the decommissioning and restoration provision of $385 million for the six months ended June 30, 2017.

15. SALE OF LUBRICANTS BUSINESS

On February 1, 2017, the company completed the previously announced sale of its lubricants business for proceeds of $1.1 billion before closing adjustments and other closing costs. The sale of this business resulted in an after-tax gain of $354 million, including a current tax expense of $101 million and a deferred tax recovery of $11 million, in the Refining and Marketing segment.

16. SALE OF CEDAR POINT

The company sold its interest in the Cedar Point wind facility in southwestern Ontario for proceeds of $291 million before closing adjustments and other closing costs, with an effective date of January 1, 2017. The disposition resulted in an after-tax gain of $83 million, including a current tax expense of $29 million and a deferred tax recovery of $15 million, in the Corporate, Energy Trading and Eliminations segment.

​ 56   SUNCOR ENERGY INC. 2017 SECOND QUARTER

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EXHIBIT 99.3