Suncor Energy (SU) 6-K Current report (foreign)

 Exhibit 99.2​

Consolidated Statements of Comprehensive Income

(unaudited)

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Revenues and Other Income	​	​	​	​	​	​	​	​
Operating revenues, net of royalties (note 3)	​	16 135	​	9 159	​	29 472	​	17 838
Other income (loss) (note 4)	​	69	​	(66)	​	83	​	(109)
​	​	16 204	​	9 093	​	29 555	​	17 729
Expenses	​	​	​	​	​	​	​	​
Purchases of crude oil and products	​	5 684	​	3 247	​	10 036	​	5 830
Operating, selling and general	​	3 088	​	2 720	​	6 176	​	5 620
Transportation and distribution	​	391	​	350	​	761	​	731
Depreciation, depletion, amortization and impairment	​	998	​	1 512	​	2 469	​	3 002
Exploration	​	6	​	12	​	45	​	20
Gain on disposal of assets	​	(10)	​	(8)	​	(12)	​	(16)
Financing expenses (note 6)	​	638	​	172	​	823	​	340
​	​	10 795	​	8 005	​	20 298	​	15 527
Earnings before Income Taxes	​	5 409	​	1 088	​	9 257	​	2 202
Income Tax Expense (Recovery)	​	​	​	​	​	​	​	​
Current	​	1 452	​	228	​	2 428	​	512
Deferred	​	(39)	​	(8)	​	(116)	​	1
​	​	1 413	​	220	​	2 312	​	513
Net Earnings	​	3 996	​	868	​	6 945	​	1 689
Other Comprehensive Income (Loss)	​	​	​	​	​	​	​	​
Items That May be Subsequently Reclassified to Earnings:					​	​	​	​
Foreign currency translation adjustment	​	(14)	​	(55)	​	(70)	​	(96)
Items That Will Not be Reclassified to Earnings:	​	​	​	​	​	​	​	​
Actuarial gain on employee retirement benefit plans, net of income taxes (note 12)	​	506	​	2	​	898	​	658
Other Comprehensive Income (Loss)	​	492	​	(53)	​	828	​	562
Total Comprehensive Income	​	4 488	​	815	​	7 773	​	2 251
Per Common Share (dollars) (note 7)	​	​	​	​	​	​	​	​
Net earnings – basic	​	2.84	​	0.58	​	4.89	​	1.12
Net earnings – diluted	​	2.83	​	0.58	​	4.88	​	1.12
Cash dividends	​	0.47	​	0.21	​	0.89	​	0.42

See accompanying notes to the condensed interim consolidated financial statements.

52   2022 Second Quarter   Suncor Energy Inc.

Consolidated Balance Sheets

(unaudited)

($ millions)	June 30 2022		December 31 2021
Assets	​	​	​	​
Current assets	​	​	​	​
Cash and cash equivalents	​	1 670	​	2 205
Accounts receivable	​	8 074	​	4 534
Inventories	​	5 774	​	4 110
Income taxes receivable	​	180	​	128
Assets held for sale (note 13)	​	860	​	—
Total current assets	​	16 558	​	10 977
Property, plant and equipment, net	​	62 338	​	65 546
Exploration and evaluation	​	2 240	​	2 226
Other assets	​	1 633	​	1 307
Goodwill and other intangible assets	​	3 527	​	3 523
Deferred income taxes	​	61	​	160
Total assets	​	86 357	​	83 739
Liabilities and Shareholders’ Equity	​	​	​	​
Current liabilities	​	​	​	​
Short-term debt	​	1 581	​	1 284
Current portion of long-term debt (note 6)	​	—	​	231
Current portion of long-term lease liabilities	​	302	​	310
Accounts payable and accrued liabilities	​	9 729	​	6 503
Current portion of provisions	​	767	​	779
Income taxes payable	​	1 949	​	1 292
Liabilities associated with assets held for sale (note 13)	​	220	​	—
Total current liabilities	​	14 548	​	10 399
Long-term debt (note 6)	​	12 880	​	13 989
Long-term lease liabilities	​	2 606	​	2 540
Other long-term liabilities (note 12)	​	1 184	​	2 180
Provisions (note 11)	​	6 075	​	8 776
Deferred income taxes	​	9 299	​	9 241
Equity	​	39 765	​	36 614
Total liabilities and shareholders’ equity	​	86 357	​	83 739

See accompanying notes to the condensed interim consolidated financial statements.

2022 Second Quarter   Suncor Energy Inc.   53

Consolidated Statements of Cash Flows

(unaudited)

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Operating Activities	​	​	​	​	​	​	​	​
Net Earnings	​	3 996	​	868	​	6 945	​	1 689
Adjustments for:	​	​	​	​	​	​	​	​
Depreciation, depletion, amortization and impairment	​	998	​	1 512	​	2 469	​	3 002
Deferred income tax (recovery) expense	​	(39)	​	(8)	​	(116)	​	1
Accretion (note 6)	​	76	​	77	​	154	​	151
Unrealized foreign exchange loss (gain) on U.S. dollar denominated debt (note 6)	​	352	​	(174)	​	206	​	(370)
Change in fair value of financial instruments and trading inventory	​	(133)	​	(12)	​	(207)	​	(115)
Gain on disposal of assets	​	(10)	​	(8)	​	(12)	​	(16)
Share-based compensation	​	134	​	81	​	190	​	79
Settlement of decommissioning and restoration liabilities	​	(80)	​	(43)	​	(171)	​	(113)
Other	​	51	​	69	​	(19)	​	164
Increase in non-cash working capital	​	(1 110)	​	(276)	​	(2 132)	​	(41)
Cash flow provided by operating activities	​	4 235	​	2 086	​	7 307	​	4 431
Investing Activities	​	​	​	​	​	​	​	​
Capital and exploration expenditures	​	(1 295)	​	(1 347)	​	(2 306)	​	(2 150)
Capital expenditures on assets held for sale	​	(36)	​	—	​	(55)	​	—
Proceeds from disposal of assets	​	16	​	2	​	18	​	10
Other investments and acquisitions (note 10)	​	38	​	(9)	​	24	​	(16)
Decrease in non-cash working capital	​	97	​	221	​	66	​	187
Cash flow used in investing activities	​	(1 180)	​	(1 133)	​	(2 253)	​	(1 969)
Financing Activities	​	​	​	​	​	​	​	​
Net increase (decrease) in short-term debt	​	198	​	365	​	269	​	(906)
Repayment of long-term debt (note 6)	​	(1 306)	​	—	​	(1 539)	​	(1 050)
Issuance of long-term debt	​	—	​	—	​	—	​	1 423
Lease liability payments	​	(83)	​	(80)	​	(167)	​	(168)
Issuance of common shares under share option plans	​	371	​	3	​	450	​	3
Repurchase of common shares (note 8)	​	(2 553)	​	(643)	​	(3 380)	​	(961)
Distributions relating to non-controlling interest	​	(2)	​	(3)	​	(4)	​	(5)
Dividends paid on common shares	​	(657)	​	(315)	​	(1 258)	​	(634)
Cash flow used in financing activities	​	(4 032)	​	(673)	​	(5 629)	​	(2 298)
(Decrease) Increase in Cash and Cash Equivalents	​	(977)	​	280	​	(575)	​	164
Effect of foreign exchange on cash and cash equivalents	​	48	​	(7)	​	40	​	(14)
Cash and cash equivalents at beginning of period	​	2 599	​	1 762	​	2 205	​	1 885
Cash and Cash Equivalents at End of Period	​	1 670	​	2 035	​	1 670	​	2 035
Supplementary Cash Flow Information	​	​	​	​	​	​	​	​
Interest paid	​	329	​	353	​	470	​	492
Income taxes paid (received)	​	670	​	(230)	​	1 762	​	(82)

See accompanying notes to the condensed interim consolidated financial statements.

54   2022 Second 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, 2020	​	25 144	​	591	​	877	​	9 145	​	35 757	​	1 525 151
Net earnings	​	—	​	—	​	—	​	1 689	​	1 689	​	—
Foreign currency translation adjustment	​	—	​	—	​	(96)	​	—	​	(96)	​	—
Actuarial gain on employee retirement benefit plans, net of income taxes of  $208	​	—	​	—	​	—	​	658	​	658	​	—
Total comprehensive (loss) income	​	—	​	—	​	(96)	​	2 347	​	2 251	​	—
Issued under share option plans	​	3	​	​	​	—	​	—	​	3	​	100
Repurchase of common shares for cancellation (note 8)	​	(576)	​	—	​	—	​	(385)	​	(961)	​	(34 989)
Change in liability for share repurchase commitment	​	(122)	​	—	​	—	​	(98)	​	(220)	​	—
Share-based compensation	​	—	​	13	​	—	​	—	​	13	​	—
Dividends paid on common shares	​	—	​	—	​	—	​	(634)	​	(634)	​	—
At June 30, 2021	​	24 449	​	604	​	781	​	10 375	​	36 209	​	1 490 262
At December 31, 2021	​	23 650	​	612	​	814	​	11 538	​	36 614	​	1 441 251
Net earnings	​	—	​	—	​	—	​	6 945	​	6 945	​	—
Foreign currency translation adjustment	​	—	​	—	​	(70)	​	—	​	(70)	​	—
Actuarial gain on employee retirement benefit plans, net of income taxes of  $283 (note 12)	​	—	​	—	​	—	​	898	​	898	​	—
Total comprehensive (loss) income	​	—	​	—	​	(70)	​	7 843	​	7 773	​	—
Issued under share option plans	​	518	​	(68)	​	—	​	—	​	450	​	11 919
Common shares forfeited	​	—	​	—	​	—	​	—	​	—	​	(30)
Repurchase of common shares for cancellation (note 8)	​	(1 249)	​	—	​	—	​	(2 131)	​	(3 380)	​	(75 212)
Change in liability for share repurchase commitment (note 8)	​	(131)	​	—	​	—	​	(314)	​	(445)	​	—
Share-based compensation	​	—	​	11	​	—	​	—	​	11	​	—
Dividends paid on common shares	​	—	​	—	​	—	​	(1 258)	​	(1 258)	​	—
At June 30, 2022	​	22 788	​	555	​	744	​	15 678	​	39 765	​	1 377 928

See accompanying notes to the condensed interim consolidated financial statements.

2022 Second Quarter   Suncor Energy Inc.   55

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. Suncor’s operations include oil sands development, production and upgrading; offshore oil and gas; petroleum refining in Canada and the U.S.; and the company’s Petro-Canada retail and wholesale distribution networks (including Canada’s Electric HighwayTM, a coast-to-coast network of fast-charging electric vehicle stations). Suncor is developing petroleum resources while advancing the transition to a low-emissions future through investment in power, renewable fuels and hydrogen. Suncor also conducts energy trading activities focused principally on the marketing and trading of crude oil, natural gas, byproducts, refined products and power. Suncor has been recognized for its performance and transparent reporting on the Dow Jones Sustainability index, FTSE4Good and CDP. Suncor is also listed on the UN Global Compact 100 stock index. Suncor’s common shares (symbol: SU) are listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE).

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, specifically International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board. They are condensed as they do not include all of the information required for full annual financial statements, and they should be read in conjunction with the audited consolidated financial statements of the company for the year ended December 31, 2021.

(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 audited consolidated financial statements for the year ended December 31, 2021.

(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 audited consolidated financial statements for the year ended December 31, 2021.

(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.

56   2022 Second Quarter   Suncor Energy Inc.

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. Beginning in the first quarter of 2022, to align with how management evaluates segment performance, the company revised its segment presentation to reflect segment results before income tax expense and present tax at a consolidated level. This presentation change has no effect on consolidated net earnings and comparative periods have been restated to reflect this change.

Three months ended June 30	Oil Sands				Exploration and Production				Refining and Marketing				Corporate and Eliminations				Total
($ millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Revenues and Other Income	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Gross revenues	​	6 388	​	3 766	​	1 219	​	906	​	10 194	​	4 916	​	14	​	9	​	17 815	​	9 597
Intersegment revenues	​	2 374	​	870	​	—	​	—	​	45	​	22	​	(2 419)	​	(892)	​	—	​	—
Less: Royalties	​	(1 487)	​	(220)	​	(193)	​	(218)	​	—	​	—	​	—	​	—	​	(1 680)	​	(438)
Operating revenues, net of royalties	​	7 275	​	4 416	​	1 026	​	688	​	10 239	​	4 938	​	(2 405)	​	(883)	​	16 135	​	9 159
Other income (loss)	​	16	​	(79)	​	12	​	11	​	35	​	6	​	6	​	(4)	​	69	​	(66)
​	​	7 291	​	4 337	​	1 038	​	699	​	10 274	​	4 944	​	(2 399)	​	(887)	​	16 204	​	9 093
Expenses	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Purchases of crude oil and products	​	561	​	345	​	—	​	—	​	7 385	​	3 712	​	(2 262)	​	(810)	​	5 684	​	3 247
Operating, selling and general	​	2 169	​	1 945	​	131	​	122	​	592	​	472	​	196	​	181	​	3 088	​	2 720
Transportation and distribution	​	287	​	280	​	25	​	20	​	87	​	60	​	(8)	​	(10)	​	391	​	350
Depreciation, depletion, amortization and impairment	​	1 279	​	1 092	​	(505)	​	191	​	199	​	208	​	25	​	21	​	998	​	1 512
Exploration	​	2	​	3	​	4	​	9	​	—	​	—	​	—	​	—	​	6	​	12
Loss (gain) on disposal of assets	​	1	​	—	​	—	​	—	​	(11)	​	—	​	—	​	(8)	​	(10)	​	(8)
Financing expenses	​	100	​	90	​	22	​	17	​	15	​	6	​	501	​	59	​	638	​	172
​	​	4 399	​	3 755	​	(323)	​	359	​	8 267	​	4 458	​	(1 548)	​	(567)	​	10 795	​	8 005
Earnings (Loss) before Income Taxes	​	2 892	​	582	​	1 361	​	340	​	2 007	​	486	​	(851)	​	(320)	​	5 409	​	1 088
Income Tax Expense (Recovery)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	1 452	​	228
Deferred	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(39)	​	(8)
​	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	1 413	​	220
Net Earnings	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	3 996	​	868
Capital and Exploration Expenditures(1)	​	905	​	834	​	115	​	64	​	261	​	375	​	14	​	74	​	1 295	​	1 347

(1)

Excludes capital expenditures related to assets held for sale of  $36 million for the three months ended June 30, 2022.

2022 Second Quarter   Suncor Energy Inc.   57

Notes to the Consolidated Financial Statements

Six months ended June 30	Oil Sands				Exploration and Production				Refining and Marketing				Corporate and Eliminations				Total
($ millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Revenues and Other Income	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Gross revenues(1)	​	12 010	​	7 061	​	2 234	​	1 496	​	18 017	​	9 906	​	23	​	15	​	32 284	​	18 478
Intersegment revenues(1)	​	4 222	​	1 926	​	—	​	—	​	77	​	45	​	(4 299)	​	(1 971)	​	—	​	—
Less: Royalties	​	(2 472)	​	(378)	​	(340)	​	(262)	​	—	​	—	​	—	​	—	​	(2 812)	​	(640)
Operating revenues, net of royalties	​	13 760	​	8 609	​	1 894	​	1 234	​	18 094	​	9 951	​	(4 276)	​	(1 956)	​	29 472	​	17 838
Other income (loss)	​	23	​	(81)	​	80	​	10	​	(75)	​	(39)	​	55	​	1	​	83	​	(109)
​	​	13 783	​	8 528	​	1 974	​	1 244	​	18 019	​	9 912	​	(4 221)	​	(1 955)	​	29 555	​	17 729
Expenses	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Purchases of crude oil and products(1)	​	1 014	​	595	​	—	​	—	​	12 867	​	6 987	​	(3 845)	​	(1 752)	​	10 036	​	5 830
Operating, selling and general	​	4 381	​	3 918	​	239	​	232	​	1 151	​	951	​	405	​	519	​	6 176	​	5 620
Transportation and distribution	​	580	​	556	​	48	​	72	​	150	​	123	​	(17)	​	(20)	​	761	​	731
Depreciation, depletion, amortization and impairment	​	2 384	​	2 250	​	(376)	​	293	​	411	​	417	​	50	​	42	​	2 469	​	3 002
Exploration	​	33	​	5	​	12	​	15	​	—	​	—	​	—	​	—	​	45	​	20
(Gain) loss on disposal of assets	​	(1)	​	—	​	—	​	—	​	(11)	​	(8)	​	—	​	(8)	​	(12)	​	(16)
Financing expenses	​	191	​	177	​	45	​	34	​	27	​	22	​	560	​	107	​	823	​	340
​	​	8 582	​	7 501	​	(32)	​	646	​	14 595	​	8 492	​	(2 847)	​	(1 112)	​	20 298	​	15 527
Earnings (Loss) before Income Taxes	​	5 201	​	1 027	​	2 006	​	598	​	3 424	​	1 420	​	(1 374)	​	(843)	​	9 257	​	2 202
Income Tax Expense (Recovery)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	2 428	​	512
Deferred	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(116)	​	1
​	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	2 312	​	513
Net Earnings	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	6 945	​	1 689
Capital and Exploration Expenditures(2)	​	1 573	​	1 373	​	198	​	133	​	393	​	495	​	142	​	149	​	2 306	​	2 150

(1)

The company revised certain gross revenues and purchases of crude oil and products to align with current period presentation. For the six months ended June 30, 2022, gross revenues and purchases of crude oil and products was decreased by $150 million, with no effect on net earnings.

(2)

Excludes capital expenditures related to assets held for sale of  $55 million for the six months ended June 30, 2022.

58   2022 Second Quarter   Suncor Energy Inc.

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 June 30

2022

2021

($ millions)

North America

International

Total

North America

International

Total

Oil Sands

​

​

​

​

​

​

​

​

​

​

​

​

Synthetic crude oil and diesel

​

6 541

​

—

​

6 541

​

3 294

​

—

​

3 294

Bitumen

​

2 221

​

—

​

2 221

​

1 342

​

—

​

1 342

​

​

8 762

​

—

​

8 762

​

4 636

​

—

​

4 636

Exploration and Production

​

​

​

​

​

​

​

​

​

​

​

​

Crude oil and natural gas liquids

​

776

​

436

​

1 212

​

518

​

387

​

905

Natural gas

​

—

​

7

​

7

​

—

​

1

​

1

​

​

776

​

443

​

1 219

​

518

​

388

​

906

Refining and Marketing

​

​

​

​

​

​

​

​

​

​

​

​

Gasoline

​

4 142

​

—

​

4 142

​

2 260

​

—

​

2 260

Distillate

​

5 128

​

—

​

5 128

​

2 030

​

—

​

2 030

Other

​

969

​

—

​

969

​

648

​

—

​

648

​

​

10 239

​

—

​

10 239

​

4 938

​

—

​

4 938

Corporate and Eliminations

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(2 405)

​

—

​

(2 405)

​

(883)

​

—

​

(883)

Total Revenue from Contracts with Customers

​

17 372

​

443

​

17 815

​

9 209

​

388

​

9 597

Six months ended June 30

2022

2021

($ millions)

North America

International

Total

North America

International

Total

Oil Sands

​

​

​

​

​

​

​

​

​

​

​

​

Synthetic crude oil and diesel(1)

​

12 229

​

—

​

12 229

​

6 641

​

—

​

6 641

Bitumen

​

4 003

​

—

​

4 003

​

2 346

​

—

​

2 346

​

​

16 232

​

—

​

16 232

​

8 987

​

—

​

8 987

Exploration and Production

​

​

​

​

​

​

​

​

​

​

​

​

Crude oil and natural gas liquids

​

1 339

​

879

​

2 218

​

904

​

589

​

1 493

Natural gas

​

—

​

16

​

16

​

—

​

3

​

3

​

​

1 339

​

895

​

2 234

​

904

​

592

​

1 496

Refining and Marketing

​

​

​

​

​

​

​

​

​

​

​

​

Gasoline

​

7 175

​

—

​

7 175

​

4 311

��

—

​

4 311

Distillate

​

8 973

​

—

​

8 973

​

4 317

​

—

​

4 317

Other

​

1 946

​

—

​

1 946

​

1 323

​

—

​

1 323

​

​

18 094

​

—

​

18 094

​

9 951

​

—

​

9 951

Corporate and Eliminations(1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(4 276)

​

—

​

(4 276)

​

(1 956)

​

—

​

(1 956)

Total Revenue from Contracts with Customers

​

31 389

​

895

​

32 284

​

17 886

​

592

​

18 478

(1)

The company revised certain gross revenues and purchases of crude oil and products to align with current period presentation. For the six months ended June 30, 2022, gross revenues and purchases of crude oil and products was decreased by $150 million, with no effect on net earnings.

2022 Second Quarter   Suncor Energy Inc.   59

Notes to the Consolidated Financial Statements

4. Other Income (Loss)

Other income (loss) consists of the following:

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Energy trading and risk management	​	38	​	(86)	​	(55)	​	(162)
Investment and interest income	​	31	​	23	​	64	​	46
Other(1)	​	—	​	(3)	​	74	​	7
​	​	69	​	(66)	​	83	​	(109)

(1)

Six months ended June 30, 2022, includes a US$50 million contingent consideration gain related to the sale of the company’s 26.69% working interest in the Golden Eagle Area Development in the fourth quarter of 2021, within the Exploration & Production segment, and an unrealized gain on an equity investment, within the Corporate segment.

5. Share-Based Compensation

The following table summarizes the share-based compensation expense for all plans recorded within operating, selling and general expense:

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Equity-settled plans	​	3	​	4	​	11	​	13
Cash-settled plans	​	137	​	80	​	335	​	182
​	​	140	​	84	​	346	​	195

6. Financing Expenses

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Interest on debt	​	221	​	216	​	416	​	426
Interest on lease liabilities	​	45	​	41	​	84	​	82
Capitalized interest	​	(44)	​	(37)	​	(81)	​	(68)
Interest expense	​	222	​	220	​	419	​	440
Interest on partnership liability	​	13	​	13	​	26	​	26
Interest on pension and other post-retirement benefits	​	10	​	14	​	20	​	29
Accretion	​	76	​	77	​	154	​	151
Foreign exchange loss (gain) on U.S. dollar denominated debt	​	352	​	(174)	​	206	​	(370)
Operational foreign exchange and other	​	(35)	​	22	​	(2)	​	64
​	​	638	​	172	​	823	​	340

During the second quarter of 2022, the company completed an early redemption, at par, of its outstanding US$450 million 2.80% notes and US $550 million 3.10% notes, originally due in 2023 and 2025, respectively. The company also completed a partial redemption, at par, for US$10.2 million of its outstanding US$152 million 6.00% notes, due in 2042.

During the first quarter of 2022, the company completed an early redemption of its outstanding US$182 million 4.50% notes, originally scheduled to mature in the second quarter of 2022.

60   2022 Second Quarter   Suncor Energy Inc.

7. Earnings per Common Share

​	Three months ended June 30				Six months ended June 30
($ millions)	2022		2021		2022		2021
Net earnings	​	3 996	​	868	​	6 945	​	1 689
(millions of common shares)	​	​	​	​	​	​	​	​
Weighted average number of common shares	​	1 406	​	1 502	​	1 420	​	1 512
Dilutive securities:	​	​	​	​	​	​	​	​
Effect of share options	​	4	​	1	​	3	​	1
Weighted average number of diluted common shares	​	1 410	​	1 503	​	1 423	​	1 513
(dollars per common share)	​	​	​	​	​	​	​	​
Basic earnings per share	​	2.84	​	0.58	​	4.89	​	1.12
Diluted earnings per share	​	2.83	​	0.58	​	4.88	​	1.12

8. Normal Course Issuer Bid

During the first quarter of 2022, the Toronto Stock Exchange (TSX) accepted a notice filed by Suncor to renew its normal course issuer bid (NCIB) to purchase the company’s common shares through the facilities of the TSX, New York Stock Exchange and/or alternative trading systems. The notice provided that, beginning February 8, 2022, and ending February 7, 2023, Suncor may purchase for cancellation up to 71,650,000 common shares, which is equal to approximately 5% of Suncor’s issued and outstanding common shares as at the date hereof.

During the second quarter of 2022, Suncor received approval from the TSX to amend its existing NCIB effective as of the close of markets on May 11, 2022, to increase the maximum number of common shares that may be repurchased in the period beginning February 8, 2022, and ending February 7, 2023, from 71,650,000 common shares, or approximately 5% of Suncor’s issued and outstanding common shares as at January 31, 2022, to 143,500,000, or approximately 10% of Suncor’s public float as at January 31, 2022. No other terms of the NCIB have been amended.

For the three months ended June 30, 2022, the company repurchased 53.5 million common shares under the 2022 renewed NCIB at an average price of  $47.70 per share, for a total repurchase cost of  $2.6 billion. For the six months ended June 30, 2022, the company repurchased 7.1 million common shares under the previous 2021 NCIB and 68.1 million under the 2022 renewed NCIB at an average price of  $44.94 per share, for a total repurchase cost of  $3.4 billion.

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)	2022		2021		2022		2021
Share repurchase activities (thousands of common shares)	​	​	​	​	​	​	​	​
Shares repurchased	​	53 513	​	22 934	​	75 212	​	34 989
Amounts charged to:	​	​	​	​	​	​	​	​
Share capital	​	892	​	377	​	1 249	​	576
Retained earnings	​	1 661	​	266	​	2 131	​	385
Share repurchase cost	​	2 553	​	643	​	3 380	​	961

2022 Second Quarter   Suncor Energy Inc.   61

Notes to the Consolidated Financial Statements

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 2022		December 31 2021
Amounts charged to:	​	​	​	​
Share capital	​	251	​	120
Retained earnings	​	424	​	110
Liability for share purchase commitment	​	675	​	230

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, 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, 2021	​	(98)
Cash settlements – paid during the year	​	117
Changes in fair value recognized in earnings during the year	​	71
Fair value outstanding at June 30, 2022	​	90

(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 June 30, 2022, the company does not have any derivative instruments measured at fair value Level 3.

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

The following table presents the company’s derivative financial instruments measured at fair value for each hierarchy level as at June 30, 2022:

($ millions)	Level 1		Level 2		Level 3		Total Fair Value
Accounts receivable	​	108	​	110	​	—	​	218
Accounts payable	​	(59)	​	(69)	​	—	​	(128)
​	​	49	​	41	​	—	​	90

62   2022 Second Quarter   Suncor Energy Inc.

During the second quarter of 2022, there were no transfers between Level 1 and Level 2 fair value measurements.

Non-Derivative Financial Instruments

At June 30, 2022, the carrying value of fixed-term debt accounted for under amortized cost was $12.9 billion (December 31, 2021 – $14.2 billion) and the fair value was $13.1 billion (December 31, 2021 – $17.4 billion). The estimated fair value of long-term debt is based on pricing sourced from market data.

10. Asset Impairment

Exploration and Production

White Rose assets:

During the second quarter of 2022, the company announced that concurrent with the decision to restart the West White Rose project by the joint venture owners, Suncor has increased its ownership in the White Rose asset by 12.5% to approximately 39% (previously approximately 26%). The decision to restart was driven by a revised royalty structure and development plan. The company received $38 million (net of taxes of  $12 million) in cash consideration to acquire the additional working interest, which was primarily allocated to the asset retirement obligation and property, plant and equipment of the project. As a result of these events, during the second quarter of 2022, the company performed an impairment reversal test on the White Rose cash generating unit (CGU) as the recoverable amount of this CGU was sensitive to the restart decision. The impairment reversal test was performed using a recoverable amount 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 – note 9).

As a result of the impairment reversal test, the recoverable amounts were determined to be greater than the carrying values of the White Rose CGU and the company recorded an impairment reversal of  $542 million (net of taxes of  $173 million) on its previous share of the White Rose assets in the Exploration and Production segment. The recoverable amount was determined based on the following asset-specific assumptions:

•

Brent price forecast of US$85.00/bbl in 2023, US$68.00 in 2024 and US$69.00 in 2025, escalating at 2% per year thereafter over the life of the project to 2038 and adjusted for asset-specific location and quality differentials;

•

anticipated first oil for the West White Rose project in the first half of 2026 and the company’s share of production of approximately 9,800 bbls/d (based on its previous working interest of approximately 26%) over the life of the project;

•

the company’s share of future capital expenditures of  $1.5 billion, including the West White Rose expansion; and

•

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

No other indicators of impairment or reversals of impairment were identified at June 30, 2022.

11. Provisions

Suncor’s decommissioning and restoration provision decreased by $2.6 billion for the six months ended June 30, 2022. The decrease was primarily due to an increase in the credit-adjusted risk-free interest rate to 5.70% (December 31, 2021 – 3.70%).

12. Pensions and Other Post-Retirement Benefits

For the six months ended June 30, 2022, the actuarial gain on employee retirement benefit plans was $898 million (net of taxes of  $283 million), mainly due to an increase in the discount rate to 5.00% (December 31, 2021 – 2.90%).

2022 Second Quarter   Suncor Energy Inc.   63

Notes to the Consolidated Financial Statements

13. Assets Held For Sale

During the second quarter of 2022, the company reclassified the assets and liabilities related to its wind and solar assets as assets held for sale, including its interests in wind farms located in Alberta and Ontario, with the Forty Mile Wind and Solar Power Project currently under construction and expected to be completed and operational in 2022. The sale process is progressing with the sale expected to close early in 2023. The renewable energy business are reported within the Corporate segment.

The table below details the assets and liabilities held for sale as at June 30, 2022:

​	June 30
($ millions)	2022
Assets	​	​
Current assets	​	22
Property, plant and equipment, net	​	381
Total Assets	​	403
Liabilities	​	​
Current liabilities	​	(85)
Other long-term liabilities and provisions	​	(29)
Deferred income taxes	​	(47)
Total Liabilities	​	(161)
Net Assets	​	242

Subsequent to the second quarter of 2022, the company reached an agreement for the sale of its Norway assets in the Exploration and Production segment, pending regulatory approval, including its 30% working interest in Oda and its 17.5% working interest in the Fenja Development Joint Operations, for gross proceeds of approximately $410 million (Canadian dollar equivalent), before closing adjustments and other closing costs. The sale is expected to be completed in the fourth quarter of 2022, with an effective date of March 1, 2022.

In the first quarter of 2022, the company reclassified the assets and liabilities related to its Norway operations as assets held for sale and performed an impairment test on the Norway assets held for sale as at June 30, 2022. The impairment tests were performed using the lower of its carrying amount and fair value less costs to sell (Level 2 fair value inputs – note 9). The company recorded a $47 million charge related to the impairment on its share of the Norway operations, net of a $23 million deferred tax adjustment associated with the assets held for sale.

The table below details the assets and liabilities held for sale as at June 30, 2022:

​	June 30
($ millions)	2022
Assets	​	​
Currents assets(1)	​	87
Property, plant and equipment, net	​	325
Deferred income taxes	​	45
Total Assets	​	457
Liabilities	​	​
Current liabilities	​	(29)
Provisions	​	(30)
Total Liabilities	​	(59)
Net Assets	​	398

(1)

Current assets include $71 million of cash and cash equivalents as at June 30, 2022.

64   2022 Second Quarter   Suncor Energy Inc.