Suncor Energy reaches royalty agreement with Province of Alberta

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

    CALGARY, Jan. 29 /CNW/ - Suncor Energy reports today it has reached an
agreement with the Province of Alberta to transition to the rates announced by
the government in its New Royalty Framework for the generic oil sands royalty
regime. The transition agreement could result in Suncor paying up to 20% more
in oil sands royalties than it would have paid under the previous terms.
    Beginning January 1, 2010 through to January 1, 2016, the agreement
provides that Suncor will pay between 25% and 30% of net profits (depending on
oil prices) on the bitumen derived from its oil sands mining operations. In
2016, the company's royalty rates for oil sands mining will reflect the new
generic royalty regime. (This agreement is applicable to Suncor's oil sands
mining operations only. Suncor's in-situ operation is already subject to the
new generic royalty regime, including previously announced royalty rate
    In return, the government has provided Suncor certainty until January 1,
2016, for various matters, including bitumen valuation methodology, allowed
costs, royalty in-kind and certain taxes.
    "We have reached a deal that provides a fair return to Albertans as
owners of the resource, while also giving Suncor the certainty we need to plan
for the future growth of our business," said Rick George, president and chief
executive officer.

    Anticipated Royalty Expense Based on Certain Assumptions
    The table below shows the potential royalty payment at various WTI crude
prices, for both mining and in-situ operations, as a percentage of gross

    Oil Sands Mining and In-situ Royalties

    WTI Price/bbl US$                                 70         80       90
    Natural gas price per mcf at Henry Hub US$      6.73       8.26     8.89
    Light/heavy oil differential of WTI
     at Cushing less Maya at the U.S.
     Gulf Coast US$                                15.89      18.72    20.86
    CDN$/US$ exchange rate                          0.95       1.00     1.05

    Crown Royalty Expense 2010 to 2012
     (based on percentage of
     total Oil Sands Revenue) %                  8.0-9.5   8.5-10.5   9.5-11

    The foregoing table contains forward-looking information and users of
this information are cautioned that actual royalty rates may vary from the
rates and ranges disclosed in the table. The royalty rates and ranges
disclosed in the table were developed using the following assumptions: current
forecasts of production, capital and operating costs, and the commodity prices
and exchange rates described in the table. If WTI prices rise beyond $90,
Suncor anticipates in-situ royalties may be higher than disclosed in the
    The following material risk factors could cause actual royalty rates to
differ materially from the rates contained in the foregoing table: changes in
crude oil and natural gas pricing, production volumes, foreign exchange rates,
and capital and operating costs for each oil sands project; changes to the
royalty regime by the Government of Alberta; changes in other legislation and
the occurrence of unexpected events. The forward-looking information in the
preceding paragraphs and table should not be taken as an estimate, forecast or
prediction of future events or circumstances.

    This news release also contains other 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 current budgets and plans for capital expenditures.
Some of the forward-looking statements may be identified by the words "could",
"potential", "anticipated" 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. 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.

For further information:

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

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