Suncor Energy Inc.

Suncor Energy Inc.

October 23, 2008 00:00 ET

Suncor Energy Board approves 2009 capital spending plan

(All financial figures are approximate and in Canadian dollars unless otherwise noted.)

Calgary, Alberta (October 23, 2008) — Suncor Energy Inc. announced today that its Board of Directors has approved a $6 billion capital spending plan for 2009. Approximately $3.6 billion in spending, or about 60% of the total, is targeted to Suncor's Voyageur oil sands growth strategy.

"Following a thorough review in light of current financial market conditions, we've modified our capital plans for 2009, reducing targeted spending by more than a third" said Rick George, president and chief executive officer. "Our aim is to ensure we are living within our means during a time of market uncertainty, while also making the strategic spending decisions that will allow us to continue on our growth path."

Suncor's 2009 plan maintains spending and construction timelines for the third and fourth stages of the company's Firebag in-situ operations, part of the $20.6 billion Voyageur strategy. Completion of Firebag stages 3 and 4 (in 2009 and 2010, respectively) is expected to provide increases in bitumen production and future cash flow.

In the near-term, Suncor expects to scale down spending and the pace of construction on the company's planned Voyageur upgrader, delaying targeted completion by approximately one year. Stages five and six of Firebag in-situ operations are expected to proceed but, as they are at relatively early phases of development, spending and scheduling plans are flexible to respond to market conditions. 

"We remain committed to an integrated expansion strategy and targeted oil sands production of 550,000 barrels per day," said George. "However, we've always had options available to us in terms of how the expansion is rolled out — and we believe in the current economic environment it's prudent to exercise that flexibility."

In addition to Voyageur program investment, Suncor plans 2009 capital spending of $2.4 billion to support its base business.  Approximately $1.7 billion is targeted for the company's oil sands operations, including new extraction facilities and various projects intended to improve the reliability and productivity of oil sands assets. Continuing investments in emission control equipment are also slated for 2009.

In Suncor's natural gas operations, plans call for spending of approximately $300 million on exploration and production in 2009. In the company's refining and marketing operations, approximately $400 million in capital is slated for planned maintenance and environmental improvements.

Suncor expects similar levels of company-wide capital spending through 2012. However, some projects, including components of Suncor's planned in-situ expansion, are subject to regulatory approval and the outcome may impact project details and related budgets.

Suncor's 2009 capital spending plan is expected to be financed through undrawn credit facilities and cash flow from operations.


This news release contains forward-looking statements that address goals, expectations or projections about the future. These statements are not guarantees of future performance and are based on Suncor's current goals, expectations, estimates, projections and assumptions, as well as its current budgets and plans for capital expenditures. Estimating and budgeting for major capital projects is a process that involves uncertainties and that evolves in stages, each with progressively more refined data and a correspondingly narrower range of uncertainty. At very early stages, when broad engineering design specifications are developed, the level of uncertainty can result in price ranges with -30% / +50% (or similar levels) of uncertainty. As project engineering progresses, vendor bids are studied, goods and materials ordered and as the company moves closer to the build stage, the level of uncertainty narrows. Generally, when projects receive final Board of Directors approval, cost estimates have a range of uncertainty that has narrowed to the -10% / +10% or similar range. These ranges establish an expected high and low capital cost estimate for a project. When Suncor says that a project is "on budget", it means Suncor still expects the final project capital cost to fall within the current range of uncertainty for the project. Even at this stage, the uncertainties in the estimating process and the impact of future events, can and will cause actual results to differ, in some cases materially, from our estimates.

Some of the forward-looking statements in this document may be identified by words like "plan", "expected", "targeted", "continue,  "aim", "may", "impact" and similar expressions. These statements are not guarantees of future performance. Readers are cautioned that actual results could differ materially from those expressed or implied, as a result of factors, risks and uncertainties, known and unknown, to which Suncor's business is subject. These could include: changes in general economic, market and business conditions; fluctuations in supply and demand for Suncor's products; fluctuations in commodity prices and currency exchange rates; the impact of stakeholder consultation; the regulatory process; technical issues; environmental issues; technological capabilities; new legislation; actions by governmental authorities including the imposition of taxes or changes to fees and royalties, the occurrence of unexpected events; Suncor's capability to execute and implement its future plans; and changes in current plans. Further discussion of the risks, uncertainties and other factors that could affect these plans, and any actual results, is included in Suncor's annual report to shareholders and other documents filed with regulatory authorities.

Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta. Suncor's oil sands business, located near Fort McMurray, Alberta, extracts and upgrades oil sands and markets refinery feedstock and diesel fuel, while operations throughout western Canada produce natural gas. Suncor operates a refining and marketing business in Ontario with retail distribution under the Sunoco brand. U.S.A. downstream assets include pipeline and refining operations in Colorado and Wyoming and retail sales in the Denver area under the Phillips 66® brand. Suncor's common shares (symbol: SU) are listed on the Toronto and New York stock exchanges.

Suncor Energy (U.S.A.) Inc. is an authorized licensee of the Phillips 66® brand and marks in the state of Colorado. Sunoco in Canada is separate and unrelated to Sunoco in the United States, which is owned by Sunoco, Inc. of Philadelphia.


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