Mr. Steve Williams reports

SUNCOR ENERGY REPORTS 2012 FIRST QUARTER RESULTS

Suncor Energy Inc. recorded first quarter 2012 net earnings of $1.457-billion (93 cents per common share), compared with net earnings of $1.028-billion (65 cents per common share) for the first quarter of 2011. Return on capital employed for the 12 months ended March 31, 2012, was 14.8 per cent, reaching its highest level since the merger with Petro-Canada, primarily as a result of strong, reliable production and higher average price realizations.

Operating earnings were $1.329-billion (85 cents per common share) in the first quarter of 2012, compared with $1.478-billion (94 cents per common share) in the first quarter of 2011. The decrease in operating earnings, compared with the first quarter of 2011, was due primarily to lower upstream production volumes, higher royalties and higher depreciation in the oil sands segment, partially offset by higher average upstream price realizations.

Cash flow from operations was $2.426-billion ($1.55 per common share) in the first quarter of 2012, compared with $2.393-billion ($1.52 per common share) in the first quarter of 2011. The increase in cash flow from operations was mainly a result of higher upstream price realizations, partially offset by lower production volumes and higher royalties.

Suncor's total upstream production during the first quarter of 2012 averaged 562,300 barrels of oil equivalent per day, compared with 601,300 barrels of oil equivalent per day during the first quarter of 2011.

Oil sands production (excluding Suncor's proportionate share of production from the Syncrude joint venture) contributed an average of 305,700 barrels per day in the first quarter of 2012, compared with first quarter 2011 production of 322,100 barrels per day. The decrease in oil sands production was primarily due to an unplanned outage at upgrader 2, partially offset by consecutive record production levels in January and February, and the steady ramp-up of production from the Firebag stage 3 expansion. Maintenance to upgrader 2 was completed and the upgrader returned to normal operations in mid-April.

"The mid-March through mid-April unplanned shutdown of upgrader 2 was a disappointing setback after so many consecutive quarters of steadily improved operational performance and record-setting production levels," said Steve Williams, president and chief operating officer. "Be assured that we will learn from this experience as we continue our journey towards operational excellence."

Cash operating costs for oil sands (excluding Syncrude) increased to $38.10 per barrel in the first quarter of 2012, compared with $35.45 per barrel in the first quarter of 2011. The increase in cash operating costs per barrel is primarily a reflection of lower bitumen production volumes from mining and extraction operations as a result of the upgrader 2 outage.

Suncor's proportionate share of production from the Syncrude joint venture contributed an average of 35,400 barrels per day of production during the first quarter of 2012, compared with 38,500 barrels per day in the same quarter of 2011. Syncrude operated at lower rates for the quarter due primarily to operational issues with a coker unit, which was taken off-line during the quarter and successfully restarted in April.

The exploration and production segment contributed 221,200 barrels of oil equivalent per day of production in the first quarter of 2012, compared with 240,700 barrels of oil equivalent per day in the same period of 2011. The production decrease primarily reflected the divestiture of non-core assets throughout 2011, and the suspension of the company's operations in Syria as a result of political unrest and international sanctions.

In the company's downstream refining and marketing segment, total refined product sales averaged 80,100 cubic metres per day during the first quarter of 2012, compared with 82,000 cubic metres per day in the first quarter of 2011. The decrease in total refined product sales reflected lower demand in Eastern North America. During the first quarter of 2012, feedstock costs at Suncor's inland refineries decreased, reflecting market discounts to West Texas Intermediate (WTI).

"Our integrated model helped us capitalize on all aspects of the value chain while softening the impact of volatile market pricing," said Mr. Williams. "Lower prices experienced in our oil sands segment have been largely recovered through lower input costs in our refining and marketing segment."

Strategy and operational update

Suncor continues to move forward on its growth strategy. Capital spending in the first quarter of 2012 was primarily focused on expansion of the company's in situ oil sands operations and implementation of new tailings reclamation technology across existing oil sands mining operations.

Construction of the Firebag stage 3 expansion is essentially complete. Ramp-up of production is proceeding in line with expectations. Bitumen production from the company's Firebag operations averaged 83,600 barrels per day and exited the first quarter of 2012 at approximately 96,000 barrels per day, a 20-per-cent increase over the exit rate at the end of 2011. Firebag bitumen production also increased due to infill wells completed in 2011, and optimization of steam generation from stage 3 facilities across the integrated Firebag complex.

Construction activities at the company's Firebag stage 4 expansion project are also proceeding on target. During the first quarter of 2012, the company continued to focus on construction of the two new well pads, central processing facilities and cogeneration units. Initial production is targeted for the first quarter of 2013.

The company expects that the Millennium Naphtha Unit (MNU) project will be fully operational by midyear. The hydrogen plant portion of the MNU was taken off-line to complete modifications in the first quarter of 2012. The company has started commissioning assets associated with the Tailings Reduction Operations (TRO) infrastructure project and expects to start using these assets in the second quarter of 2012.

During the first quarter of 2012, the company's oil sands ventures business continued its work on the development plans for the Voyageur upgrader and the Fort Hills mining projects, and its support of Total E&P Canada Ltd. on the plan for the Joslyn North mining project. Work on the Voyageur upgrader project focused on validating project scope, developing the project execution plan, engineering and progressing site preparation. Work on the Fort Hills mining project focused on progressing design basis memorandum engineering and site preparation, and procurement for long-lead items. Work on the Joslyn North mining project focused on further design work, drilling and site preparation. In 2013, the company expects to present the development plans for all three projects to Suncor's board of directors for sanctioning. The development of each of these projects remains subject to approval by the joint venture owners of the respective projects.

In the company's East Coast Canada operations, the extended dockside maintenance program for the Terra Nova floating production storage and offloading (FPSO) vessel for an estimated 21-week period is scheduled to begin in June, 2012. The planned work includes the replacement of the FPSO water injection swivel and the completion of the replacement of subsea infrastructure to remediate hydrogen sulphide issues. For White Rose, the estimated 18-week off-station maintenance program for the FPSO is scheduled to commence in May, 2012, primarily to address issues with the FPSO propulsion system.

In the company's offshore international operations, capital expenditures for the Golden Eagle project focused on detailed engineering, and the start of construction of topsides and platform jackets. In April, the company commenced drilling the second appraisal well for the Beta discovery.

In other international operations, Suncor's joint venture partner, Harouge Oil Operations BV, has successfully restarted production in all major fields in Libya. Production from Libya averaged 39,200 barrels per day during the first quarter of 2012. Suncor is currently engaged in discussions with the National Oil Corporation with respect to the impact of the force majeure period on the company's contractual obligations for its production and development activities in Libya. In December, 2011, the company declared force majeure under its contractual obligations in Syria due to political unrest and international sanctions affecting that country. As a result, the company recorded no production from Syria in the first quarter of 2012.

As Suncor invests in its growth strategy, managing debt and maintaining a strong balance sheet remain priorities. Net debt was reduced to just below $6-billion at March 31, 2012, compared with $7-billion at Dec. 31, 2011.

In February, Suncor announced a plan to repurchase up to $1-billion of its common shares, continuing the program to return value to shareholders that saw the company repurchase $500-million of its common shares in 2011. As at April 27, 2012, the company had repurchased an additional 9.8 million common shares and returned $317-million to shareholders in 2012. The company also announced today that its board of directors approved an 18-per-cent increase to Suncor's quarterly dividend to 13 cents per common share, from the previous level of 11 cents per share. The five-year compound annual growth rate of Suncor's dividends is 21 per cent.

As announced on Dec. 1, 2011, Rick George, the company's current chief executive officer, is retiring effective May 1, 2012. Suncor president and chief operating officer Steve Williams will succeed him as CEO. Mr. Williams joined Suncor in 2002, as executive vice-president, corporate development, and chief financial officer. He served as executive vice-president, oil sands, for four years, where he was responsible for leading Suncor's oil sands operations through a significant period of growth.

"While it's hard to leave all my friends and colleagues, I do so with a tremendous amount of pride in what we have built together over the past two decades and a sense of excitement about the future of this great company," said Mr. George. "Steve and his leadership team know this company and this industry from the inside out, and I can't think of a team better equipped to face both the challenges and tremendous opportunities that lie ahead. They also have the support of dedicated employees who continue to serve Suncor and its shareholders extremely well."

Corporate guidance

Suncor has revised the corporate guidance that it previously issued on Feb. 1, 2012. Total production guidance remains unchanged. The key changes in the company's guidance presented below include:

• The decrease for the realization on the oil sands crude sales basket reflects increased crude oil supply out of Western Canada and the Bakken region of the United States. Suncor's integration with inland refineries in the refining and marketing segment is expected to recover much of this decline in crude price realization through lower feedstock costs.
• The shift in sales mix from 38 per cent sweet synthetic crude oil (SCO) to 35 per cent sweet SCO, and the related increase in sales mix of sour SCO from 52 per cent to 55 per cent, reflect the impacts of the unplanned upgrader outage over the first and second quarters of 2012.
• Outlook assumptions for the WTI price were increased to $95 (U.S.) per barrel from $90 (U.S.) per barrel and, for the AECO-C spot price, were decreased to $2.43 (Canadian) per gigajoule, from $4.09 (Canadian) per gigajoule.

                   2012 full-year       2012 full-year         Actual three
                          outlook      outlook revised         months ended 
                     Feb. 1, 2012       April 30, 2012       March 31, 2012 
Suncor total                                                                
production                                                                 
(boe/d)        530,000 to 580,000   530,000 to 580,000              562,300
Oil sands (1)
(bbl/d)                                                                   
Sales                                                                      
Synthetic                                                                 
crude oil      299,000 to 327,000   299,000 to 327,000              305,300
Diesel                        10%                  10%                  11%
Sweet                         38%                  35%                  29%
Sour                          52%                  55%                  60%
Bitumen          26,000 to 28,000     26,000 to 28,000               27,500 
Realization   WTI at Cushing less  WTI at Cushing less  WTI at Cushing less
on crude            $4 (Canadian)    $10 (Canadian) to    $12.12 (Canadian)
sales            to $5 (Canadian)       $15 (Canadian)           per barrel
basket                 per barrel           per barrel           per barrel 

(1) Excludes Suncor's proportionate share of production and operating costs 
from the Syncrude joint venture

For further details regarding Suncor's 2012 corporate guidance, see the company's website.

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