Suncor Energy : 2023 Annual Report

(mboe/d)

Earnings (loss)

($ millions)

• Net earnings (loss)
• Adjusted operating earnings (loss)2,3,5

• Returned $5.0 billion to shareholders through dividends of $2.8 billion and share buybacks of nearly 4% of outstanding shares
• Increased quarterly dividend per share by approximately 5%
• Adjusted funds from operations of $10.19 per share; second highest in company's history
• Allocated excess funds to share buybacks and debt repayment

• Best overall employee and contractor safety performance in company history
• Record Oil Sands production, including best ever at Syncrude and Firebag. Total upstream production of 745.7 mboe/d; second highest in Suncor's history
• Leveraged regional integration to maximize value with record regional upgrader utilization of 92%
• Solid refinery utilization of 90%, including 99% in second half of the year

• Acquired remaining 45.89% interest in Fort Hills for $2.2 billion
• Asset sale proceeds of $1.8 billion through sale of U.K. Exploration & Production portfolio and wind and solar assets
• Safely restarted production at Terra Nova
• Delivered Fort Hills production in line with its three-year mine improvement plan

Improved safety performance

Strong safety performance and strong business performance go hand-in-hand. It's not only good business to maintain

a strong safety culture, but it's one of our core values to ensure that everyone goes home safely at the end of each day. With this in mind, I am very pleased to report that 2023 was the safest year in the company's history. We had no life- threatening or life-altering injuries and our year-over-yearlost-time injuries were down nearly 50%. This improvement is the result of our intense focus on strengthened leadership, workforce engagement, procedural adherence and training. Adopting safety-enhancing technologies

in our mining operations has also been a key factor in improving performance and we now have installed fatigue management and collision awareness systems on over 1,000 pieces of mobile equipment in our mines. In addition,

100% of our leaders, more than 2,800 individuals, were trained during 2023 in Human and Organizational Performance, a principles-based safety standard that emphasizes learning from mistakes to enable improvement.

Delivering on commitments

Meeting our 2023 upstream production guidance commitment, set more than a year earlier, was a tangible example of how being laser-focused on achieving our goals can produce results. Upstream production was 746,000 bbls/d in 2023, the second highest in our history, supported by annual records at Syncrude and Firebag, and growth at Fort Hills. Further, November and December 2023 represented successive monthly company records for total upstream production, building momentum to meet our challenging 2024 targets.

Fort

Hills

Syncrude

MacKay

River

Base Plant

Fort McMurray

Mining and upgrading

In situ

Pipeline

Higher asset reliability

Strong upstream asset performance, particularly in the second half of 2023, drove record annual operated upgrader utilization of 92%, 3% higher than any prior year. This performance amplified the strength of our regional oil sands integration, providing operational flexibility through interconnected pipelines to keep the upgraders full while limiting the impact of planned and unplanned maintenance. Downstream operations also delivered solid performance with annual refining utilization of 90%, including 99% for the second half of 2023, marking a strong recovery from the outage at Commerce City that affected the utilization rates in the first half of the year. In our retail business, we announced an exciting new partnership with Canadian Tire, securing a long-term fuel supply arrangement for our refineries, an expected 15% ultimate increase to retail

fuel sales and expanding the presence of Petro-Canada™ branded stations across the country.

Maximizing profitability

Our increased focus on the fundamentals translated into improved financial results in 2023, with adjusted funds from operations of $13.3 billion, the second highest in the company's history. With our unparalleled integrated upstream and downstream business, we maximize value from every barrel produced, a competitive advantage we expect to grow in the years ahead.

Lowering costs

In 2023, we reduced "above-field" costs by $450 million per year through workforce reductions, two months ahead of schedule and 12% above our original savings target. This project was an internally led effort to simplify the organization and eliminate work that is not aligned with our priorities. Our overall efforts translated into cash operating costs per barrel below our annual guidance at Oil Sands operations and Syncrude and within annual guidance at Fort Hills. Our total capital expenditures of $5.7 billion also fell within our 2023 guidance range to the investment community.

Canada's most trusted gas station brand

~1,900 Petro-Canada™ retail and wholesale sites

Expanding the network across the country from coast to coast

Enhanced customer experience with site upgrades and partnerships

Canadian Tire partnership provides fuel supply, loyalty program and retail network benefits for customers

Looking ahead to 2024, we will continue to lower operating costs with the addition of 55 ultra-class400-tonne trucks to our mining fleet. These trucks are expected to replace nearly twice as many smaller third-party, less efficient, higher-cost vehicles, generating significant cost savings year after year. This is just one example of our ongoing initiatives to lower our cost structure, increase financial resiliency, improve competitiveness and deliver long-term value to our shareholders.

Highly aligned portfolio

Suncor's asset portfolio is increasingly aligned with the company's core competencies and competitive advantages, driving simplicity and focus. In 2023, we completed the sale of non-core assets including our U.K. North Sea upstream assets and our renewable power business for $1.8 billion, exceeding our internal sales price expectations. We acquired all remaining working interests in Fort Hills for $2.2 billion, adding 89,000 bbls/d of high-quality bitumen production capacity and building upon our best-in-class physical integration. Full ownership of Fort Hills allows for improved decision-making and greater regional synergies, delivering incremental long-term value to shareholders. When combined with our Firebag and MacKay River in

situ assets, Suncor now has enough physically integrated bitumen supply, at a competitive supply cost, to keep the Base Plant upgraders full for decades.

Targeted pathway to net-zero

Our work to reduce emissions is focused on taking tangible actions today that drive success in the future. In the near term, our investment in a new cogeneration facility to replace the coke-fired boilers at Oil Sands Base is on track for completion in 2024, contributing to our goal of a 10 megatonne reduction in annual emissions across our value chain by 2030. The facility will provide the reliable steam generation required for our extraction and upgrading activities while also generating 800 MW of baseload electricity capacity to supply Alberta's power grid, lowering the grid's carbon intensity.

Looking further out in time, our ongoing collaboration within the Pathways Alliance to pursue large-scale carbon capture and storage (CCS) will be a key enabler of our objective of net-zero greenhouse gas emissions from our operations by 2050. CCS represents enormous potential to decarbonize our base business, dependent on achieving a competitive fiscal framework for infrastructure investment in conjunction with the Federal and Provincial governments.

Rewarding shareholders for the trust and confidence they place in Suncor is one of our highest priorities. Specifically, this means growing free funds flow per share and delivering industry leading financial returns to shareholders. In 2023, we increased Suncor's quarterly dividend by 5% to $0.545 per share, the highest dividend per share in the company's history representing a 12% increase in per share payments compared to 2022. In total,

we returned $5.0 billion to shareholders in 2023, including $2.2 billion in share repurchases, representing 3.9% of the company's outstanding shares as of December 31, 2022. Our capital allocation framework can be summarized as providing competitive shareholder returns while prudently investing in the business and maintaining a strong balance sheet to ensure financial resiliency across a range of market conditions.

Our heightened focus on the fundamentals of safety, operational integrity, reliability, and profitability resulted in increasingly strong operational and financial performance throughout the year. This unwavering commitment, and the discipline it requires, is exactly what shareholders can expect from the Suncor team in 2024 and beyond.

In 2024, we are targeting increased upstream production of 770,000-810,000 barrels per day, approximately 6% higher than in 2023. We will also continue exploring ways to reduce our overall cost structure to further improve financial performance while exercising disciplined capital allocation to sustain and grow the business over the longer term.

I would like to wrap-up by thanking my colleagues at Suncor, employees and contractors alike. Thank you for your commitment and dedication to making our company the best it can be. The work you do benefits not only our shareholders but Canadians nationwide by providing

the energy that improves lives, bolstering the economy, supporting communities, developing relationships with Indigenous peoples and businesses, and working together to build a sustainable future. Well done! Lastly, on behalf of the Board and all Suncor employees, I want to thank you, our shareholders, for the trust and confidence you place in us to manage your investment. We don't take this lightly and we are committed to earning that trust, year after year.

Rich Kruger

President and Chief Executive Officer

Suncor Energy