DBRS Confirms Suncor Energy Ratings at R-1 (low) and A (low), Trends Stable

DBRS has today confirmed the ratings of Suncor Energy Inc.’s (Suncor or the Company) Commercial Paper, Debentures and Medium-Term Notes at R-1 (low) and A (low) respectively, as well as the PC Financial Partnership Senior Notes at A (low), all with a Stable trend. The Senior Notes of PC Financial Partnership are guaranteed by Suncor Energy Inc. and Suncor Energy Oil Sands Limited Partnership (SEOSLP). The rating confirmation is based on the Company’s strong operating and asset base, continued future growth prospects and the Company’s strong financial profile.

Suncor benefits from above-average production growth opportunities (estimated to increase to one million barrels of oil equivalent per day (boe/d) by 2020) underpinned by its increased capital expenditure plans. Suncor continues to focus on its oil sands operations through both in situ and mining operations in Western Canada. Large projects, such as Firebag Phase 3, continue to ramp up, with Phase 4 expected to begin production in 2013. As a result of the focus on oil sands operations, earnings should continue to benefit, assuming strong liquids pricing. However, as with many oil sands operations, maintaining reliability is a challenge, as seen in March 2012 with the unplanned maintenance at Upgrader U2.

Suncor’s financial profile and flexibility strengthened in 2011, underpinned by a continued favourable liquids pricing environment. The Company’s strong operating results improved credit metrics, which compared favourably with its peers. Going forward, credit metrics could be negatively pressured by increased capital spending ($7.5 billion for 2012). Should the pricing environment decline, DBRS would expect the company to manage its growth in a prudent manner.

The Company further benefits from its strategic agreement with Total E&P Canada Ltd. (Total), a subsidiary of Total S.A. (rated AA by DBRS). Through its joint venture (JV), Suncor will experience increased diversification and enhanced capital operational/management capability. As well, upon completion of the Fort Hills, Joslyn and Voyageur projects expected in 2016-2018, Suncor should benefit from increased production, along with upgrading capacity for bitumen, allowing for better capture of the full value chain.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Suncor Energy Inc.’s Commercial Paper and Debentures and Medium-Term Notes are guaranteed by Suncor Energy Oil Sands Limited Partnership (SEOSLP).

PC Financial Partnership’s Senior Notes are guaranteed by Suncor Energy Inc. and SEOSLP.

The applicable methodology is Rating Oil and Gas Companies, which can be found on our website under Methodologies.