AGM 2020

May 6, 2020

I'm calling the meeting to order. My name is Michael Wilson. I'm the chair of the board of Suncor Energy Inc. In light of COVID nineteen and Suncor's purpose to care for each other, we're hosting this year's AGM through this virtual meeting platform, accessible to our shareholders regardless of physical location, which allows them to participate, submit questions, and vote. I'd now like to introduce Suncor's senior leadership team and in attendance. We have Mark Little, our president and chief executive officer Alistair Cowan, chief financial officer and Arlene Strom, chief legal officer and corporate secretary. On behalf of Suncor's directors and management, it's my pleasure to welcome you to the twenty twenty Annual General Meeting of Shareholders of Suncor Energy. I'd now like to turn it over to Arlene Strong for a traditional territory acknowledgment. Thanks, Mike. As you may know, many of Suncor's operations are located on the traditional lands of indigenous peoples, and we are committed to meaningful relationships with them. Together, we hope to be on a journey of discovery and reconciliation, guided by treaty rights, the constitution, the recommendations from the Truth and Reconciliation Commission, and our own purpose and values. We're looking to find ways to build meaningful, long term, and mutually beneficial relationships. We're pleased to acknowledge that while today's AGM is virtual, Suncor's corporate office is located on the traditional territories of the Blackfoot and the people of the Treaty 7 region in Southern Alberta. They are the Stoney Nakoda, Tsutina, Hixika, the Kainai, and the Kani Nations. The city of Calgary is also home to Metis Nation of Alberta region three. This protocol has been in place for many generations in indigenous communities, and we believe that observing and acknowledging a traditional territory in meetings like our AGM is a small but important way to show our respect for indigenous peoples. In Alberta, where treaties six, seven and eight cover the province, we are all treaty people. At Suncor, we seek to walk side by side with indigenous peoples and to remember that we are united in seeking a better world for our children, our our grandchildren, and the generations beyond. Thank you, Arlene. Before we begin the formal business, I'd like to explain how the voting and questions will work for this meeting. We'll conduct the votes on matters before us by virtual poll. Every eligible shareholder has one vote per share that can be voted on each matter. All will be open to all resolutions at the same time. This will allow you to choose to vote on each resolution, excuse me, immediately or wait until the conclusion of any discussion on each resolution prior to casting your vote. There'll be an opportunity to ask questions on each resolution in turn. Once the items of business have been presented, I'll give you an additional time to enter your votes and then declare the voting closed on all resolutions. We'll run through each of the items on the agenda in turn, responding to questions on that item of business while it is before the meeting. Thank you for your attention, and we'll now proceed with the business of the annual general meeting. There are several matters on the agenda this morning. To help move things efficiently and in order to limit the number of people participating in person here in accordance with health official guidance, two of our shareholders agreed to make and second all the formal motions. This online meeting is accessible to guests. However, only registered shareholders and proxy holders participate in the business meeting through our virtual platform, including asking questions. If you have any general questions, you may submit them online, and they'll be addressed at the question and answer period at the end of the meeting. Let's proceed with the business of the meeting, starting with the appointment of scrutineers. Computershare Trust Company of Canada is the transfer agent and registrar of the company and is represented today by Marilyn Painter and Chris Parsons. If there's no objection, I will point them to act as scrutineers for this meeting to report on the number and percentage of shares presented at this meeting and to record and report on the votes cast at any poll that may be taken. You've all received the notice calling the meeting. I'll now ask Arlene Strong to report on the mailing of the notice. The notice calling this meeting was mailed on 03/20/2020 to all shareholders of record as of the close of business on 03/09/2020, and has been provided to each director and to the auditors of the company. Suncor issued a news release on 04/14/2020, announcing the change in the meeting from a physical location to a virtual only format. A copy of the notice, proof of the mailing, and news release will be filed with the minutes of this meeting. I'm advised the scrutineer's report has been completed, and a quorum is present. Arlene, can you please read the scrutineer's report? I have received the scrutineers report, and there are 817 shareholders by proxy representing 1,159,932,338 shares present today. Very precise. Thank you. The scrutineer's report will be filed with the minutes of the meeting. I declare the meeting regularly called and properly constituted for the transaction of business. The 2019 annual report, which includes the financial statements for the year ending December 3139, and the auditor's report, have been tabled. The annual report was mailed to shareholders requesting the report. We'd be happy to answer any questions concerning the annual report during the q and a session following the formal part of the meeting. We're now moving to matters to be voted upon. I now declare the polls open on all resolutions. First item of business to be voted upon is the election of directors. Suncor's bylaws state that the number of directors to be elected at any meeting of shareholders shall be the number of directors then in office or such other number as has been determined by the board. There are currently 10 directors in office. The board is determined that 10 directors will be elected at the meeting. The 10 directors nominated, nine are independent, and one, Mark Little, is a member of management. Their backgrounds and experience, including principal occupations, are described in Suncor's circular for this meeting. May I have a motion to nominate for election to the board of directors those candidates named Suncor's circular for this meeting? Good morning. My name is Sean Poirier, and I'm a Suncor shareholder. I move to nominate the following candidates for election as directors. Patricia M. Bediant, Mel E. Benson, John D. Gas, Dennis M. Houston, Mark S. Little, Brian P. McDonald, Maureen McCaw, Lorraine Mitchell Moore, Ira M. Thomas, Michael M. Wilson. Thank you. Can I have a seconder to the motion? My name is Joel Thompson, and I am a Suncor shareholder. I second the motion. Thank you. I declare the nominations closed. 10 directors are to be elected at this meeting, and 10 persons have been nominated. I'll pause now to see if there are any questions from the virtual platform. If there are no questions, Arlene will give additional instructions on the voting procedure. On this vote, all shares for which proxies in favor of management have been received will be voted in accordance with those instructions. The 10 nominees named in the management proxy circular are listed on our virtual platform. To vote or withhold from voting for each director, please complete the ballot by clicking either for or withhold in the appropriate spot beside the name of each nominee. Please cast your votes on the appointment of directors. Again, you may submit your vote on this item now or wait until the end of all motions before submitting them at the same time. We'll proceed to the next item on the agenda. The next item on business is the appointment of auditors. Management has proposed that KPMG LLP be appointed as the company's auditors. Since auditors are appointed by shareholders, I ask for a motion appointing KPMG LLP as auditors. My name is Sean Poirier, and I'm a Suncor shareholder. I'm hoping that KPMG LLP be appointed auditors of Suncor Energy Inc. To hold office until the next annual meeting of shareholders or until a successor is appointed. Thank you. Can I have a seconder to the motion? My name is Joel Thompson, and I am a Suncor shareholder. I second the motion. Thank you. Any questions? If there are no questions, please cast your votes on the appointment of auditors. We'll now proceed to the next item on the agenda. The next item of business is the advisory vote on our approach to executive compensation. These types of advisory votes are often called say on pay resolutions. The results are considered nonbinding, but are a vehicle to allow shareholders to ensure their views are made known to the board. As noted in the circular, considering the company's approach to compensation in the future, the Board will take into account the results of the vote, together with any feedback it receives from shareholders in the course of Board's engagement activities. Form of motion set out in the circular allows the recommended best practice of the Canadian Coalition of Good Governance. I now ask that a motion be made. My name is Sean Poirier, and I'm a Suncor shareholder. I move on an advisory basis and not to diminish the role and responsibilities of the board of directors that the shareholders accept the approach to executive compensation disclosed in the management proxy circular of Suncor Energy Inc, delivered in advance of its twenty twenty annual meeting of shareholders. Thank you. Can I have a seconder to the motion? My name is Joel Thompson, and I am a Suncor shareholder. I second the motion. Thank you. We have received proxies representing a total of over 94% of the votes cast on this motion, which direct that they be voted in favor of the approach executive compensation. We've heard the motion. Are there any questions or comments? If there are no further questions, please cast your votes on the approached executive compensation. For those of you who have not voted on all of the resolutions, please do so now as we'll shortly be closing the poll. It is now 10:41, and the polls will close on all resolutions in one minute to allow time for votes to be cast. The polls are now closed. We'll move on to other business while the results are being calculated. I'd now like to turn the meeting over to Mark Little, Suncor's President and Chief Executive Officer and Officer Cohen, Suncor's Chief Financial Officer. Great. Thanks, Mike, and good morning, everyone. Thank you for joining us today. The fact that we're gathered online for today's AGM is certainly an indication that these are unprecedented times. And to everyone listening, our hope is that you, your families, and your colleagues are keeping safe and healthy. I'd also like to extend a special thank you to all of the essential workers from multiple industries who are working to keep us healthy, safe, and supplied. These individuals are a strong reminder that we are all part of a global community and effort to combat this pandemic. We, like many, have been part of that effort, and I'm grateful to work with many capable and dedicated people across Suncor. This morning, I'd like to take a few moments to speak to what we have been doing during this time to keep people safe and healthy. And then Alistair will outline the financial health of the company, and then I will provide our perspective on the path forward. But before I get into my remarks, I would like to take a quick moment to recognize Eric Axford, our Chief Sustainability Officer. In fact, our first Chief Sustainability Officer, who is retiring after today's Annual General Meeting. Eric has played a significant part in helping Suncor bring executive level focus and commitment to our sustainability initiatives over the years. And in recent weeks, his strategic focus has been particularly helpful as we've navigated the challenges of the pandemic and the market downturn. Eric, thank you for your contributions and support. You've done an absolutely amazing job and we wish you and Diane all the best in retirement. I would also like to officially introduce Martha Hull Finley as the Chief Sustainability Officer for Suncor. Martha joined us in January and brings a tremendous knowledge and experience to the table and we very much look forward to working with Martha in this role. She's off to a great start. And as we think of the greater good and focus on working together, I'm reminded of the connection to Suncor's purpose, to provide trusted energy that enhances people's lives while caring for each other and the earth. Over the years, we have strived to bring focus and clarity to how we operate our business, minimize our environmental footprint and engage with communities. Our purpose is the standard we hold ourselves to every day and together with our values has become the lens through which we make decisions and drive action across the company. This holds true during the pandemic. For our employees, early on, we made the decision to have essential personnel only at work sites. As a result, the vast majority of our workforce have been working remotely. And for those workers who need to work at site, we have taken numerous steps to protect people by providing prescreening surveys, conducting temperature testing, following physical distancing guidelines, and adhering to strict protocols. At our lodges, we have enhanced cleaning. We have moved to full service cafeterias, closed all the gyms and common areas. We have also adjusted shift schedules to minimize the number and frequency of commuters to our sites. And we commit we continue to remind all of our workers, regardless of whether they are on-site or working remotely, to take care of their mental health, and we're providing resources to assist with this. The steps we've taken to protect employees ensures we're able to continue to provide critical energy for our customers. And for our customers, we also launched a $3,000,000 program through PetroCanada designed to help meet the needs of local communities. It's our way of saying thank you to essential workers across the country. This includes ensuring truck drivers who deliver essential products have a place to rest, refuel, and take a break as needed. For our communities, we're honoring all of our existing community investment commitments through the Suncor Energy Foundation and looking at how we can work with our community partners to help address the needs through this crisis. In addition, and together with our employees through the SUN Cares program, we have donated over $2,000,000 to organizations addressing COVID-nineteen related, causes in 2020. In some cases, we have found unique ways to support communities. One example was our donation of masks to the federal government, which we also delivered to remote, northern communities in Canada before they ran out of these critical supplies. All of these and other efforts come from an understanding that caring for each other will be critically important as we immediately respond to this crisis, as we help with the recovery effort, and ensure we remain resilient in the long term. Resilience continues to be top of mind for us as we navigate COVID-nineteen market challenges and even the recent flood that hit one of our critical communities of Fort McMurray. Remaining strong as a company is vital to long term shareholder value creation and it's also critically important as we provide an essential service, the energy that our society needs to heat homes, provide lighting and move critical goods and services like medical supplies. Watching our employees respond across the company has been incredibly inspiring and I am very proud and appreciative of their efforts. And as we navigate the downturn, we continue to prove our ability to weather the storm, building on a solid foundation of operational excellence, a strong balance sheet and capital discipline. And with that, I will turn it over to Alistair, who will speak about our financial health of the company. Alistair? Thanks, Mark. Our focus is to create shareholder value by maximizing the margin for each barrel produced through our integrated operations from the reservoir to the end customer. In 2019, our upstream production totaled 777,000 barrels of oil equivalent per day, an increase of 6% over 2018. The combined utilization of 88% and our refinery utilization was 95%, allowing us to maximize high value synthetic crude oil and minimize lower value bitumen sales. Turning to our financial performance, we again demonstrated our proven ability to generate cash. In 2019, funds from operations were a record $10,800,000,000 surpassing the $10,100,000,000 received in 2018. Our capital expenditures were $5,400,000,000 in 2019, which included $3,200,000,000 spent on asset sustainment and maintenance and $2,200,000,000 in economic investments. Our strength was also highlighted by the $4,900,000,000 in discretionary free funds flow we generated during the year, returning $4,900,000,000 in cash to shareholders, dollars 2,600,000,000.0 in dividends and $2,300,000,000 in stock buybacks. In total, we returned 45% of funds from operations to shareholders. Our financial discipline and focus on capital allocation also includes our As of December 3139, net debt to funds from operations stood at 1.5x, with total debt to capital at 30% and liquidity of $6,700,000,000 Our performance demonstrates the strength of our integrated model and the flexibility of our assets as well as our strong marketing expertise and midstream logistics assets and capabilities. This combination of attributes, together with our financial and capital allocation discipline, enables Suncor to be more agile than many others in the industry. Now as Mark described, 2020 is a significantly more challenging year. I think it's important to note that as we move through this and the resulting economic downturn, we've been focused on mitigating the impacts of lower demand from the end customer need for refined products back up through the integrated change of upstream production. Our focus on cost reduction opportunities and lowering capital spend remain key levers for us to respond to the economic downturn and we will continue to keep a close eye on market conditions and make further adjustments as required. That's why we announced a $1,000,000,000 or 10% reduction in operating costs from twenty nineteen levels. We have also reduced our total capital expenditures by $1,900,000,000 or 33% from the midpoint of our initial guidance range. Our revised 2020 capital spend is concentrated on sustaining capital and continuing with a limited number of low capital intensity value creating projects, like the interconnecting pipeline between Suncor base plant and Syncrude, the deployment of autonomous haul trucks at Foothills and improving the underlying systems and processes of the company to drive further operating and sustaining capital reductions. We will also complete some high value offshore production wells that are currently underway. Our financial strength, which includes access to liquidity, is a key element in our strategy. In early twenty twenty, we took proactive steps to enhance our liquidity, securing an additional $2,800,000,000 of twenty four month term credit facilities from our key banking partners. At the April, we also completed a $1,250,000,000 ten year medium term note offering. It was the largest offering in Canadian oil and gas history during an unprecedented time in the markets, which we believe reflects well on Suncor. This additional liquidity will help ensure the financial health of our company through these volatile times. Based on recent events, the resulting economic downturn and its impact on crude oil demand and pricing, management and the Board believe it's necessary to lower our crude oil cash breakeven price required to cover operating costs, sustaining capital and the dividend to US35 dollars WTI. As a result, combined with the significant actions taken on the operating costs and capital expenditure, management and the Board believe it is also necessary to reduce the dividend. We will not compromise the long term financial health or value of the company by over levering. Therefore, effective for the June 25 payment, we will reduce the dividend by 55%. Taking this proactive measure will preserve balance sheet strength and the company's financial health and drive down the crude oil cash breakeven of the company in a time of lower oil prices. Management and the Board recognize the importance of cash returns to shareholders, including the dividend to our shareholders, but we also recognize that maintaining the financial strength and health of the company is an equally important objective. Our commitment to creating shareholder value and returning cash to shareholders via the dividends and stock buybacks remains unchanged. We will continue to balance both objectives as the economic downturn evolves. To conclude, our 2019 performance demonstrates the strength of Suncor's integrated business model and our ability to continue to deliver value for shareholders. We remain one of just a few Canadian producers in this position, which continues to affirm our competitive advantage even in these challenging times. Thank you and I will now turn the microphone back to Mark. Great. Thanks, Alistair. And Alistair spoke to the actions we have taken to maintain the financial strength of the company. We'll continue to strengthen the company as we progress Suncor four point zero, the next phase of the company in which we are leveraging digital technologies and transforming our culture to accelerate operational excellence and drive value. In 2019, we made further investments in technology development and deployment, including digital transformation, progressed a number of initiatives already underway. And in fact, during this period of COVID nineteen, we were able to accelerate some of these initiatives. I'm looking forward to the possibilities ahead. And as we've said before, technology alone won't get us to where we wanna be. It's the people and the culture that will help us drive our ambition. We know that continued success for Suncor requires us to take a long view and leadership role, and that means maintaining our deep commitment to sustainability. Our purpose holds us to that commitment. Energy is at the core of our business, and we know it helps create quality of life in terms of heating and cooling and mobility and overall economic prosperity. On its own, moving barrels of oil and electrons to consumers isn't enough. Society is looking for us to do more. They expect us to leverage technology and innovation to reduce our environmental footprint. They want us to collaborate, and they want us to find meaningful ways to engage with indigenous peoples and businesses as well as communities and stakeholders. The good news is that we're well down that path. That said, some might question whether the market downturn and pandemic have altered our plans. As you've heard, we've had to delay the timing of some of initiatives, like the replacement of our coke fired boilers and the 40 mile wind project to protect the financial health of the business. But let me be absolutely clear, our commitment to creating shareholder value, continuing with our strategy and our focus on sustainability has not changed and will continue to be at the heart of everything we do. One of the biggest challenges of our time, climate change, remains a focus for Suncor as we plan for our future. Canada has a strong, diversified and resource rich economy. We also have world leading financial sector and excellent capacity for innovation. By harnessing these advantages, Canada can be among the leaders in global transition to a low emissions future. I have no doubt that we can be a trusted source of climate smart solutions, expertise and investment. Suncor will continue to evolve our climate ambition and we remain committed to our climate goals we've set to lead through this transition. We will also build on our long history of technology and innovation at our existing assets and invest in new sources of energy to drive down our environmental footprint. We'll lead the way with initiatives like our announcement of Canada's first electric highway. We'll continue to collaborate with others through organizations like Canada's Oil Sands Innovation Alliance and the Clean Resource Innovation Network. And will engage with all levels of government when it comes to meaningful public policy dialogue. We know that delivering economic and environmental benefit can't come without attention to the health and well-being of our communities. And with that in mind, we'll continue to work with others across society through the Suncor Energy Foundation in an effort to address complex social challenges. Through our social goal, which is focused on changing the way we think and act towards indigenous peoples, we'll continue to listen and to learn. A key part of that effort will be to explore innovative ways to engage with indigenous communities. We will also maintain our focus on finding new business opportunities with indigenous partners. One example that comes to mind is the Fort Mackay First Nations and Mikasu Cree First Nations investment in our East Tank farm. Another is the 39 Petro Canada stations that are now owned and operated by First Nations across the country, including two that are part of Canada's electric highway. As we continue our sustainability journey, we know you want to see how we are doing and where we are heading and we will report on those efforts through our report on sustainability and our climate risk report and through our financial reports and we will provide context and our perspective on the opportunities and challenges ahead. The progress that we've made over the years is certainly due to our commitment to sustainability, our integrated model and our focus on operational excellence. In closing, I have seen through the pandemic and economic downturn what an incredible team we have here at Suncor. It's been truly inspiring to see our team respond in such tremendous energy and enthusiasm and professionalism. They're living our purpose through their everyday actions. Seeing our employees in action makes me proud to lead this company. They have demonstrated remarkable innovation and resilience when faced with both adversity and opportunity. And given that, I remain optimistic about the days, months, years and decades ahead. We will emerge from these extraordinary circumstances stronger together. On behalf of our leadership team and all of us at Suncor, thank you for your support. And I'll now turn the floor back to Mike. Thank you, Mark and Alister. It's now time to complete the business of the meeting. We've received the scrutineers' report for the votes cast for this meeting. The secretary will now give the results of the voting. We have received proxies from shareholders representing 76.05% of the issued and outstanding shares. I will read the percentage of the votes cast for each of the motions. Patricia Embedient, 99.9%. Mel E. Benson, 98.3%. Dawn D. Gass, 99.4. Dennis M. Houston, 99.5%. Mark S. Little, 99%. Brian P. McDonald, 99.9%. Maureen McCaw, 97.1%. Lorraine Mitchell Moore, 99.9% Ira M. Thomas, 98.1% Michael M. Wilson, 99.6% And for the appointments of KPMG as auditors, 99.8%. And for the advisory resolution on executive compensation, 94.6%. Thank you, mister chairman. Thank you, Arlene. The scrutineers report will be incorporated in the minutes of the meeting. I accept the scrutineers report. I declare that the board of directors will consist of 10 nominees named in the circular. I declare that the shareholders have approved the appointment of KPMG as the auditors. I also declare that the shareholders have accepted the approach to executive compensation disclosed in Suncor's management proxy circular. If there are no other matters to be properly brought before this meeting, may I have a motion that the formal part of the meeting be terminated? My name is Sean Poirier, and I'm a Suncor shareholder. I move that the meeting be terminated. Thank you, Sean. Can we have a seconder to the motion? My name is Joel Thompson, and I am a Suncor shareholder. I second the motion. Thank you, Joel. Ladies and gentlemen, I now declare the meeting to be terminated. I'd now like to open the floor to view and respond to your questions. But before we get started, I'd like to take a moment to introduce Suncor's senior executive team. Here in the room, at a safe physical distance, are President and CEO, Mark Little chief financial officer, Alistair Cowan chief legal officer and corporate secretary, Arlene Strong. Listening in online are Eric Axford, our chief sustainability officer, who Mark has mentioned is retiring today. We will miss you, Eric. Martha Hall Findley, our new Chief Sustainability Officer, who we're happy to have join our team. Bruno Frankfort, Chief Transformation Officer Paul Gardner, Chief Financial or sorry, Chief People Officer Mike McSween, executive vice president upstream Steve Rainish, executive vice president strategy and operations services and Chris Smith, executive vice president downstream. We'll now take questions submitted from our virtual platform. A reminder that only registered shareholders are able to submit questions. To do so, simply enter the question in the platform tool. As I note that there are no questions, I'd like to thank everyone for joining us today. We appreciate your interest in Suncor, and we're looking forward to connecting with you again. Thank you. Stay safe, and have a great day.