Suncor Energy reports financial results for 2007 and operational goals for 2008



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

    Certain financial measures referred to in this document are not
    prescribed by Canadian generally accepted accounting principles (GAAP).
    For a description of these measures, see "Non-GAAP Financial Measures" on
    page 5. This document makes reference to barrels of oil equivalent (boe).
    A boe conversion ratio of six thousand cubic feet of natural gas: one
    barrel of crude oil is based on an energy equivalency conversion method
    primarily applicable at the burner tip and does not represent a value
    equivalency at the wellhead. Accordingly, boe measures may be misleading,
    particularly if used in isolation.

    CALGARY, Jan. 22 /CNW/ - Suncor Energy Inc. today reported 2007 net
earnings of $2.832 billion ($6.14 per common share), compared to
$2.971 billion ($6.47 per common share) in 2006. Excluding the effects of the
reduction of federal and Alberta income tax rates, net insurance proceeds
(relating to a January 2005 fire), unrealized foreign exchange gains on the
company's U.S. dollar denominated long-term debt and project start-up costs,
2007 net earnings were $2.239 billion ($4.86 per common share), compared to
$2.350 billion ($5.12 per common share) in 2006. Cash flow from operations in
2007 was $3.805 billion, compared to $4.533 billion in 2006.
    The decrease in net earnings primarily reflects the impact of scheduled
and unscheduled maintenance that reduced crude oil production and increased
operating expenses. The largest impacts on financial results were a scheduled
50-day maintenance shutdown to portions of Suncor's oil sands operation to tie
in new facilities related to a planned expansion and a scheduled 120-day
shutdown to portions of the Sarnia refinery to tie in new sour crude
processing facilities. These impacts were partly offset by higher benchmark
crude oil prices. The decrease in cash flow from operations was due to the
same factors that impacted net earnings as well as an increase in cash income
taxes during 2007.
    "Suncor's goal in 2007 was to continue to build the financial and
physical foundation for future growth and profitability," said Rick George,
president and chief executive officer. "And we're on track to increase
production capacity by 35% in 2008."

    
    2007 Overview

    -   Combined oil sands and natural gas production in 2007 was
        271,400 barrels of oil equivalent (boe) per day, compared to
        294,800 boe per day in 2006. Oil sands production averaged
        235,600 barrels per day (bpd) in 2007, compared to 260,000 bpd in
        2006. Natural gas production averaged 215 million cubic feet
        equivalent (mmcfe) per day, compared to an average 209 mmcfe per day
        in 2006.

    -   Oil sands cash operating costs averaged $27.80 per barrel during
        2007, compared to $21.70 per barrel in 2006. The increase in 2007 was
        primarily due to fixed costs being spread over lower production, as
        well as higher maintenance costs related to planned and unplanned
        shutdowns.

    -   Suncor continued to make progress on plans to expand Upgrader 2 and
        increase production capacity to 350,000 bpd, with completion targeted
        in 2008. As of December 31, the project was 95% complete.

    -   In July, Suncor filed a regulatory application for the Voyageur South
        mine extension. Bitumen produced at the proposed project is expected
        to provide additional feedstock flexibility.

    -   In Suncor's downstream operations, investments were made to enable
        the company's Sarnia refinery to integrate up to 40,000 bpd of oil
        sands sour crude into the facility.

    -   In September, Suncor commissioned its fourth wind power project. The
        76 megawatt facility located near Ripley, Ontario is the company's
        largest wind power project.

    -   Capital spending in 2007 totalled $5.4 billion. Net debt at year-end
        2007 was $3.2 billion, compared to $1.8 billion at the end of 2006.

    -   Suncor achieved a company-wide return on capital employed of 28.3% in
        2007 (excluding capitalized costs for major projects in progress),
        compared to 40.7% in 2006.
    

    Fourth Quarter 2007

    Suncor's net earnings for the fourth quarter of 2007 were $963 million
($2.08 per common share), compared to $358 million ($0.78 per common share) in
the fourth quarter of 2006. Excluding the reduction of federal income tax
rates, net insurance proceeds (relating to a January 2005 fire), the impacts
of unrealized foreign exchange gains/losses on the company's U.S. dollar
denominated long-term debt and project start-up costs, net earnings for the
fourth quarter of 2007 were $598 million ($1.29 per common share), compared to
$378 million ($0.82 per common share) during the fourth quarter of 2006. Cash
flow from operations for the fourth quarter of 2007 was $1.104 billion,
compared to $746 million in the fourth quarter of 2006.
    The increase in net earnings primarily reflects higher oil sands
operating revenues, as stronger price realizations more than offset lower
production in the quarter. Net earnings were also positively impacted by lower
oil sands royalty expense that primarily resulted from an increase in capital
expenditures incurred. These factors were partially offset by lower earnings
in refining and marketing due to the planned outage at the Sarnia refinery
that resulted in increased product purchases to meet customer commitments. The
increase in cash flow from operations in the fourth quarter of 2007, compared
to the fourth quarter of 2006, was due to the same factors that impacted net
earnings, partially offset by an increase in cash income taxes during the
quarter.
    Suncor's combined oil sands and natural gas production for the fourth
quarter was 290,700 boe per day, compared to 301,100 boe per day in the same
period of 2006. Natural gas production increased to an average of 229 mmcfe
per day in the fourth quarter of 2007, compared to the 208 mmcfe per day
recorded in the fourth quarter of 2006. Oil sands production in the fourth
quarter of 2007 averaged 252,500 bpd, compared to fourth quarter 2006
production of 266,400 bpd.
    Fourth quarter 2007 oil sands cash operating costs were $27.90 per
barrel, compared to $25.65 per barrel in the same period of 2006. Cash
operating costs per barrel were higher in the fourth quarter of 2007 primarily
due to the operating costs being allocated across reduced production volumes.
    In the downstream, a shutdown of the Sarnia refinery to tie in modified
facilities was completed in November. During commissioning of the new
facilities in December, operational difficulties were encountered resulting in
a lengthier than planned start-up period. As a result, full production from
the new facilities has not yet been achieved. Work is ongoing at the refinery
to address this issue. Planned maintenance work was also conducted at the
company's Commerce City refinery in the fourth quarter of 2007.

    Operational Outlook

    "We plan on establishing new milestones for our company in 2008 and
anticipate a record-setting year for production," said George. "Safe,
reliable, cost effective and environmentally responsible operations will be
the focus."
    Suncor's outlook provides management's targets for 2008 in certain key
areas of the company's business. Outlook forecasts are subject to change.

    
                                         2008 Full Year Outlook
    -------------------------------------------------------------------------
    Oil Sands

    Production (bpd)                     275,000 bpd to 300,000 bpd

      Diesel                             11%

      Sweet                              36%

      Sour                               49%

      Bitumen                            2%

      Third-party processing             2%

    Realization on crude sales basket    WTI @ Cushing less
                                         Cdn$4.25 to Cdn$5.25 per barrel

    Cash operating costs(1)              $25.00 to $27.00 per barrel
    -------------------------------------------------------------------------
    Natural Gas

    Production(2)
     (mmcf equivalent per day)           205 to 215

      Natural gas                        93%

      Liquids                            7%

    1.  Cash operating cost estimates are based on the following assumptions:
        i) production volumes and sales mix as described in the table above;
        and ii) a natural gas price of $6.70 per gigajoule at AECO. This goal
        also includes costs incurred for third-party bitumen processing. Cash
        operating costs per barrel are not prescribed by Canadian generally
        accepted accounting principles (GAAP). This non-GAAP financial
        measure does not have any standardized meaning and therefore is
        unlikely to be comparable to similar measures presented by other
        companies. Suncor includes this non-GAAP financial measure because
        investors may use this information to analyze operating performance.
        This information should not be considered in isolation or as a
        substitute for measures of performance prepared in accordance with
        GAAP. See "Non-GAAP Financial Measures".

    2.  Production target includes natural gas liquids (NGL) and crude oil
        converted into mmcf equivalent at a ratio of one barrel of NGL/crude
        oil: six thousand cubic feet of natural gas. This conversion ratio is
        based on an energy equivalency conversion method primarily applicable
        at the burner tip and does not represent a value equivalency at the
        wellhead. This mmcf equivalent may be misleading, particularly if
        used in isolation.

    Factors that could potentially impact Suncor's financial performance
include:

    -   Planned maintenance at oil sands. Upgrader 1 is expected to be shut
        down for approximately 30 days in the second quarter while scheduled
        maintenance is underway. Although this shutdown is reflected in
        operational targets for the year, production estimates could be
        impacted if unplanned work is identified, or the schedule is impacted
        by labour or material supply issues. During the outage, Upgrader 2 is
        expected to continue producing approximately 200,000 bpd.

    -   Completion and commissioning of an expansion to Upgrader 2 during the
        second quarter to enable production capacity of 350,000 bpd.
        Production rates during the ramp-up period are difficult to predict
        and can be impacted by bitumen supply, as well as planned and
        unplanned maintenance. However, Suncor expects to move towards the
        350,000 bpd capacity in the fourth quarter.

    -   Regulatory requirements at the company's oil sands base plant and in-
        situ operation. Suncor plans to incur maintenance and capital
        expenditures to construct and commission emission abatement
        equipment. The timing and scope of this work could impact 2008
        results.

    -   Bitumen supply. If Suncor encounters unexpected issues in meeting
        regulatory requirements aimed at controlling emissions at both base
        plant and the in-situ operation, there may be further bitumen supply
        restrictions that could impact 2008 production targets.

    -   Production volumes at the Sarnia refinery. Suncor is lining-out new
        facilities at the refinery and this work could impact future
        production. In addition, third-party hydrogen is in tight supply and
        this could also reduce production volumes resulting in increased
        purchases of products to meet customer requirements.

    -   Crude oil hedges. Suncor has hedging agreements for 10,000 bpd in
        2008. These costless collar hedges have an average floor of
        US$59.85 per barrel with an average ceiling of US$101.06 per barrel
        in 2008.

    Information on risks, uncertainties and other factors that could affect
these plans is included in Suncor's annual report to shareholders and other
documents filed with regulatory authorities.

    Net Earnings Components

    This table sets forth some of the factors impacting Suncor's net earnings.

                                                                 Years ended
    ($ millions after tax)              Fourth Quarter           December 31
    (unaudited)                        2007       2006       2007       2006
    -------------------------------------------------------------------------

    Net earnings before the
     following items:                   598        378      2 239      2 350
      Impact of income tax rate
       changes on opening future
       income tax liabilities(1)        360          -        427        419
      Oil sands fire accrued
       insurance proceeds(2)              -         27          -        232
      Unrealized foreign exchange
       gain (loss) on U.S. dollar
       denominated long-term debt        16        (43)       215          -
      Project start-up costs            (11)        (4)       (49)       (30)
    -------------------------------------------------------------------------
    Net earnings as reported            963        358      2 832      2 971
    -------------------------------------------------------------------------
    Net earnings per share
     attributable to common
     shareholders as reported         $2.08      $0.78      $6.14      $6.47
    -------------------------------------------------------------------------
    (1) Reflects Q4 2007 federal rate reduction of 3.5%, Q2 2007 federal rate
        reduction of 0.5%, Q2 2006 federal rate reduction of 3.1% and Q2 2006
        Alberta rate reduction of 1.5%.
    (2) Net accrued property loss and business interruption proceeds net of
        income taxes and Alberta Crown Royalties.
    

    Non-GAAP Financial Measures

    Certain financial measures referred to in this news release, namely cash
flow from operations, return on capital employed (ROCE) and oil sands cash and
total operating costs per barrel, are not prescribed by GAAP. These non-GAAP
financial measures do not have any standardized meaning and therefore are
unlikely to be comparable to similar measures presented by other companies.
Suncor includes these non-GAAP financial measures because investors may use
this information to analyze operating performance, leverage and liquidity. The
additional information should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.
    Cash flow from operations is expressed before changes in non-cash working
capital. A reconciliation of net earnings to cash flow from operations is
provided in the schedules of segmented data, which are an integral part of the
company's fourth quarter financial statements.
    A reconciliation of cash flow from operations on a per common share basis
is presented in the following table:

    
    Reconciliation of cash flow from operations on a per share basis
    (unaudited)

                                                                 Years ended
                                        Fourth Quarter           December 31
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Cash flow from operations
     ($ millions)                  A  1 104        746      3 805      4 533

    Weighted average number of
     common shares outstanding
     - basic (millions of shares)  B    462        460        461        459

    Cash flow from operations
     - basic (per share)         A/B   2.39       1.62       8.25       9.87
    -------------------------------------------------------------------------


    The following tables outline the reconciliation of oil sands cash and
total operating costs to expenses included in the schedules of segmented data
in Suncor's fourth quarter financial statements.

    Oil Sands Operating Costs -
    Total Operations
                                                 Fourth Quarter
    (unaudited)                            2007                  2006
                                  $ millions  $/barrel  $ millions  $/barrel
    Operating, selling and
     general expenses                   652                   696
      Less: natural gas costs,
       inventory changes and
       stock-based compensation         (96)                 (134)
      Less: non-monetary
       transactions                     (21)                  (22)
    Accretion of asset
     retirement obligations              10                     7
    Taxes other than income
     taxes                               16                     8
    -------------------------------------------------------------------------
    Cash costs                          561      24.10        555      22.65
    Natural gas                          84       3.60         74       3.00
    Imported bitumen (net of
     other reported product
     purchases)                           5       0.20          -          -
    -------------------------------------------------------------------------
    Cash operating costs           A    650      27.90        629      25.65
    Project start-up costs         B     13       0.55          6       0.25
    -------------------------------------------------------------------------
    Total cash operating costs   A+B    663      28.45        635      25.90
    Depreciation, depletion
     and amortization                   129       5.60        104       4.25
    -------------------------------------------------------------------------
    Total operating costs               792      34.05        739      30.15
    -------------------------------------------------------------------------
    Production
     (thousands of barrels
     per day)                              252.5                 266.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Oil Sands Operating Costs
    Total Operations
                                             Years ended December 31
    (unaudited)                            2007                  2006
                                  $ millions  $/barrel  $ millions  $/barrel

    Operating, selling and
     general expenses                 2 435                 2 198
      Less: natural gas costs,
       inventory changes and
       stock-based compensation        (353)                 (361)
      Less: non-monetary
       transactions                    (102)                 (126)
    Accretion of asset
     retirement obligations              41                    28
    Taxes other than income
     taxes                               55                    36
    -------------------------------------------------------------------------
    Cash costs                        2 076      24.15      1 775      18.70
    Natural gas                         307       3.55        276       2.90
    Imported bitumen (net of
     other reported product
     purchases)                           8       0.10          6       0.10
    -------------------------------------------------------------------------
    Cash operating costs           A  2 391      27.80      2 057      21.70
    Project start-up costs         B     60       0.95         38       0.40
    -------------------------------------------------------------------------
    Total cash operating costs   A+B  2 451      28.75      2 095      22.10
    Depreciation, depletion
     and amortization                   462       5.40        385       4.05
    -------------------------------------------------------------------------
    Total operating costs             2 913      34.15      2 480      26.15
    -------------------------------------------------------------------------
    Production
     (thousands of barrels
     per day)                              235.6                 260.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Oil Sands Operating Costs - In-situ
    Bitumen Production Only                      Fourth Quarter
                                           2007                  2006
    (unaudited)                   $ millions  $/barrel  $ millions  $/barrel

    Operating, selling and
     general expenses                    69                    57
      Less: natural gas costs
       and inventory changes            (34)                  (32)
    Taxes other than income
     taxes                                2                     1
    -------------------------------------------------------------------------
    Cash costs                           37       9.95         26       8.05
    Natural gas                          34       9.15         32       9.90
    -------------------------------------------------------------------------
    Cash operating costs           A     71      19.10         58      17.95
    In-situ (Firebag) start-up
     costs                         B      -          -          -          -
    -------------------------------------------------------------------------
    Total cash operating costs   A+B     71      19.10         58      17.95
    Depreciation, depletion
     and amortization                    25       6.80         20       6.20
    -------------------------------------------------------------------------
    Total operating costs                96      25.90         78      24.15
    -------------------------------------------------------------------------
    Production (thousands of
     barrels per day)                       40.4                  35.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Oil Sands Operating Costs - In-situ
    Bitumen Production Only                   Years ended December 31
                                           2007                  2006
    (unaudited)                   $ millions  $/barrel  $ millions  $/barrel

    Operating, selling and
     general expenses                   273                   209
      Less: natural gas costs
       and inventory changes           (134)                 (103)
    Taxes other than income
     taxes                                7                     4
    -------------------------------------------------------------------------
    Cash costs                          146      10.85        110       8.95
    Natural gas                         134       9.90        103       8.35
    -------------------------------------------------------------------------
    Cash operating costs           A    280      20.75        213      17.30
    In-situ (Firebag) start-up
     costs                         B      -          -         21       1.70
    -------------------------------------------------------------------------
    Total cash operating costs   A+B    280      20.75        234      19.00
    Depreciation, depletion
     and amortization                    83       6.20         68       5.55
    -------------------------------------------------------------------------
    Total operating costs               363      26.95        302      24.55
    -------------------------------------------------------------------------
    Production (thousands of
     barrels per day)                       36.9                  33.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    ROCE is calculated as net earnings (2007 - $2,653 million; 2006 -
$2,997 million) adjusted for after-tax financing expense (2007 - income of
$179 million; 2006 - loss of $26 million) for the twelve month period ended;
divided by average capital employed (2007 - $9,376 million; 2006 -
$7,357 million). Average capital employed is the sum of shareholders' equity
and short-term debt plus long-term debt less cash and cash equivalents, at the
beginning and end of the year, divided by two, less average annual capitalized
costs related to major projects in progress (as applicable). For more detail
on how ROCE is calculated, see page 58 of Suncor's 2006 Annual Report.

    This news release contains forward-looking statements that address goals,
expectations or projections about the future. These statements are based on
Suncor's current goals, expectations, estimates, projections and assumptions,
as well as its current budgets and plans for capital expenditures. Some of the
forward-looking statements may be identified by words like "goal", "targeted",
"expected", "plans", "forecasts", "should", "estimates", "may", "could",
"proposed", "outlook", "continues" and similar expressions. These statements
are not guarantees of future performance. Actual results could differ
materially, 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; the occurrence of unexpected events; Suncor's
capability to execute and implement its future plans; actions by governmental
authorities including the imposition of taxes or increases to fees and
royalties, changes in environmental and other regulations (for example, the
Government of Alberta's current negotiation with Suncor in connection with the
Crown Royalty regime, the Government of Canada's current review of greenhouse
gas emission regulations and the issuance of government and regulatory control
and protection orders); 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(R) 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(R) 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.

    To listen to the conference call discussing Suncor's fourth quarter
results, visit www.suncor.com/webcasts.





For further information:

For further information: Investor inquiries: John Rogers, (403)
269-8670; Media inquiries: Brad Bellows, (403) 269-8717

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