Suncor Energy reports 2010 second quarter results- strategy on track

CALGARY, ALBERTA, Jul 29 (MARKET WIRE) --
All financial figures are unaudited and in Canadian dollars unless noted
otherwise. 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 pages 37 to 42 of our report to shareholders for the period
ended June 30, 2010. Certain crude oil and natural gas liquid volumes
have been converted to millions of cubic feet equivalent of natural gas
(mmcfe) on the basis of one barrel to six thousand cubic feet (mcf).
Also, certain natural gas volumes have been converted to barrels of oil
equivalent (boe) on the same basis. Mmcfe and boe may be misleading,
particularly if used in isolation. A conversion ratio of one barrel of
crude oil or natural gas liquids to six thousand cubic feet of natural
gas is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent value
equivalency at the well head.

On August 1, 2009, Suncor Energy Inc. completed its merger with
Petro-Canada. As such, the results for the three months ended June 30,
2010 reflect the results of the post-merger Suncor and the comparative
figures for the three months ended June 30, 2009 reflect solely the
results of legacy Suncor prior to the merger.

Suncor Energy Inc. today reported second quarter 2010 net earnings of
$480 million ($0.31 per common share), compared to a net loss of $51
million ($0.06 per common share) for the second quarter of 2009.
Operating earnings in the second quarter of 2010 were $781 million ($0.50
per common share), compared to $38 million ($0.04 per common share) in
the second quarter of 2009.

The increase in operating earnings was primarily due to additional
upstream production as a result of the August 2009 merger with
Petro-Canada, as well as higher benchmark prices in the second quarter of
2010, compared to the second quarter of 2009. This was partially offset
by the stronger Canadian dollar, relative to the U.S. dollar.

Cash flow from operations was $1.758 billion ($1.13 per common share) in
the second quarter of 2010, compared to $295 million ($0.31 per common
share) in the second quarter of 2009. The increase in cash flow from
operations was primarily due to production volumes added as a result of
the merger as well as higher realized prices.

Suncor's total upstream production during the second quarter of 2010
averaged 633,900 boe per day, compared to 336,100 boe per day in the
second quarter of 2009, primarily reflecting additional upstream
production resulting from the merger.

Oil Sands production (excluding proportionate production share from the
Syncrude joint venture) contributed an average 295,500 barrels per day
(bpd) in the second quarter of 2010, compared to second quarter 2009
production of 301,000 bpd. Second quarter 2010 production was impacted by
planned maintenance at one of two oil sands upgraders in May and June.

"Prior to heading into planned maintenance this quarter, we achieved
record monthly oil sands average production of 333,000 barrels per day in
April," said Rick George, president and chief executive officer. "Even
with the impacts of maintenance, we had one of our best quarters for oil
sands production on record. Although we have some planned maintenance
remaining, we're targeting a strong second half to the year."

Cash operating costs for Suncor's oil sands operations (excluding
Syncrude) increased to $35.90 per barrel in the second quarter of 2010,
compared to $31.30 per barrel during the second quarter of 2009. The
increase in cash operating costs per barrel was primarily due to the
inclusion of MacKay River costs as a result of the merger, higher product
purchase costs and additional maintenance in the second quarter of 2010
compared to the second quarter of 2009.

Suncor's proportionate production share from the Syncrude joint venture
contributed an average of 38,900 bpd of production during the second
quarter of 2010.

Production from the Natural Gas business averaged 586 mmcfe per day in
the second quarter of 2010, compared to 211 mmcfe per day during the
second quarter of 2009, primarily due to the addition of Petro-Canada
natural gas assets.

Suncor's International and Offshore business contributed an average of
201,900 boe per day of production in the second quarter of 2010.
Production rates were impacted by planned maintenance at the company's
North Sea operations and by production quotas in Libya. These impacts
were partially offset by strong production in East Coast Canada
operations and new production from the Ebla gas project in Syria, which
was commissioned in April.

Total sales of refined petroleum products from the Refining and Marketing
business averaged 89,000 cubic metres per day during the second quarter
of 2010 compared to 33,900 cubic metres per day in the second quarter of
2009, reflecting additional sales volumes from the merger with
Petro-Canada.

Strategy and Operational Update

Construction continued on the Firebag Stage 3 in situ oil sands project.
The planned $3.6 billion expansion is expected to achieve first
production during the second quarter of 2011, with volumes ramping up
over an estimated 18 to 24 month period toward a planned production
capacity of approximately 62,500 bpd of bitumen.

Spending on engineering for Firebag Stage 4 is expected to continue in
2010 with a target of first bitumen production in the fourth quarter of
2012. Construction of the project, which also has a planned production
capacity of 62,500 bpd of bitumen, remains subject to Board of Directors
approval.

To support current and future mine reclamation, Suncor applied for and
received regulatory approval for a new tailings management plan using the
company's proprietary TRO(TM) tailings management process. Capital
spending for large scale implementation of TRO(TM) remains subject to
Board of Directors approval.

In Suncor's renewable energy business, construction continued on
expansion of the company's St. Clair Ethanol Plant. Work currently
underway is expected to double the plant's production capacity, with
completion targeted toward the end of 2010. The renewable energy business
also received regulatory approval for construction of a new wind power
project, Suncor's fifth, in southern Alberta.

As part of its strategic business alignment, Suncor continued with plans
to divest of a number of non-core assets. In the second quarter, Suncor
closed the sale of assets known as Rosevear and Pine Creek for net
proceeds of $229 million and signed another agreement to sell non-core
natural gas properties in Alberta for gross proceeds of $285 million,
before closing adjustments. Suncor also reached an agreement to sell all
of its shares in Petro-Canada Netherlands B.V. for gross proceeds of
EUR445 million, before closing adjustments. It is anticipated that this
sale will close in the third quarter of 2010. The sales that have not
closed are subject to the satisfaction of customary closing conditions.

To date, Suncor has disposed of, or reached agreements to dispose of,
assets for aggregate consideration of approximately $2.4 billion prior to
closing adjustments. Additional assets planned for divestiture include
certain natural gas assets in Western Canada as well as North Sea assets
in the Scott/Telford and Triton areas.

"One year out from our historic merger with Petro-Canada, we're very
pleased with the progress we've seen," said George. "Sales of non-core
assets have proceeded well and our growth plans are on track. Every part
of this business, from our core oil sands operations and conventional and
offshore oil and gas production to our downstream refining and marketing
division is delivering on strategy."

Outlook

Suncor's outlook provides management's targets for 2010 in certain key
areas of the company's business. Users of this forward-looking
information are cautioned that actual results may vary materially from
the targets disclosed. Readers are cautioned against placing undue
reliance on this outlook.

The following operational outlook for 2010 has been revised from the
operational outlook previously issued by management on May 4, 2010. The
revisions are principally as follows:

-- the Syncrude production outlook has been adjusted to 36,000 bpd (+/-5%)
from 38,000 bpd (+/-5%) primarily due to operational issues at the
Syncrude facilities in the second quarter of 2010;
-- the Natural Gas production outlook related to remaining targeted
divestitures has been adjusted to 140 mmcfe per day from 180 mmcfe per
day as a result of completed dispositions of our Rosevear and Pine Creek
properties during the second quarter of 2010 and the change in the
assets targeted for potential sale; and
-- the East Coast Canada production outlook has been adjusted to 65,000 bpd
(+/-5%) from 60,000 bpd (+/-5%) primarily as a result of improved
performance to date.

These changes to the operational outlook have a corresponding impact
on the total production outlook which has been adjusted to 610,000 boe
per day (+/-5%) from 608,000 boe per day (+/-5%) and total production
related to remaining targeted divestitures, which has been adjusted to
63,000 boe per day from 70,000 boe per day.

Six Months Actual Ended 2010 Full Year Outlook
June 30, 2010
----------------------------------------------------------------------------
Total production (boe 599,600 610,000 (+/-5%)
per day) - before
remaining targeted
divestitures(1)
Total production (boe N/A 63,000
per day) - related to
remaining targeted
divestitures(1)
----------------------------------------------------------------------------
Oil Sands(2)
Production (bpd) 249,300 280,000 (+/-5%)
Sales
Diesel 9% 9%
Sweet 31% 36%
Sour 44% 46%
Bitumen 16% 9%
Realization on crude WTI @ Cushing less WTI @ Cushing less
sales basket(3)
Cdn$9.37 per barrel Cdn$7.00 to Cdn$8.00 per
barrel
Cash operating costs(4) $43.50 per barrel $38 to $42 per barrel
----------------------------------------------------------------------------
Syncrude production 35,600 36,000 (+/-5%)
(bpd)
----------------------------------------------------------------------------
Natural Gas
Production (mmcfe per 659 580 (+/-5%)
day) - before
remaining targeted
divestitures(1)
Production (mmcfe per N/A 140
day) - related to
remaining targeted
divestitures(1)
Natural gas 90% 91%
Crude oil and liquids 10% 9%
----------------------------------------------------------------------------
East Coast Canada
Production (bpd) 72,600 65,000 (+/-5%)
----------------------------------------------------------------------------
International
Production (boe per 132,300 133,000 (+/-5%)
day) - before
targeted
divestitures(1)
Production (boe per N/A 40,000
day) - related to
remaining targeted
divestitures(1)
Crude oil and 82% 84%
liquids(5)
Natural gas(5) 18% 16%
----------------------------------------------------------------------------

(1) Actual production results will be impacted by the timing of
planned divestitures of assets.

(2) Excludes Suncor's proportionate production share from the Syncrude
joint venture.

(3) Excludes the impact of hedging activities.

(4) Cash operating cost estimates (excluding Syncrude) are based on the
following assumptions: (i) production volumes and sales mix as described
in the table above; and (ii) an average natural gas price of $5.28 per
mcf at AECO.

(5) Pre-divestment.

This outlook is based on Suncor's current estimates, projections and
assumptions for the 2010 fiscal year and is subject to change.
Assumptions are based on management's experience and perception of
historical trends, current conditions, anticipated future developments
and other factors believed to be relevant. Assumptions for the Oil Sands
2010 full year outlook include reliability and operational efficiency
initiatives which we expect to minimize further unplanned maintenance in
2010.

Assumptions for the Natural Gas, East Coast Canada and International 2010
full year outlook include reservoir performance, drilling results,
facility reliability, changes in production quotas and successful
execution of planned maintenance turnarounds.

Risk Factors Affecting Performance

Factors that could potentially impact Suncor's operational outlook for
2010 include, but are not limited to:

-- Bitumen supply. Ore grade quality, unplanned mine equipment and
extraction plant maintenance, tailings storage and in situ reservoir
performance could impact 2010 production targets.
-- Performance of recently commissioned facilities. Production rates while
new equipment is being lined out are difficult to predict and can be
negatively impacted by unplanned maintenance.
-- Unplanned maintenance. Production estimates could be negatively impacted
if unplanned work is required at any of our mining, production,
upgrading, refining, pipeline, or offshore assets.
-- Planned turnarounds. Production estimates could be negatively impacted
if planned turnarounds are not effectively executed.
-- Planned divestitures. Our inability to execute planned divestitures
could impact our debt management and capital expenditure plans.
-- Commodity prices. Significant declines in natural gas commodity prices
could result in the shut-in of some of our natural gas production.
-- Foreign operations. Suncor's foreign operations and related assets are
subject to a number of political, economic and socio-economic risks.
Suncor's operations in Libya may be constrained by production quotas.

Notice - Forward-Looking Information

This news release contains certain forward-looking statements and other
information that are based on Suncor's current expectations, estimates,
projections and assumptions that were made by the company in light of its
experience and its perception of historical trends.

All statements and other information that address expectations or
projections about the future, including statements and information about
Suncor's strategy for growth, expected and future expenditures, commodity
prices, costs, schedules, production volumes, operating and financial
results and expected impact of future commitments, are forward-looking
statements. Some of the forward-looking statements and information may be
identified by words like "expects," "anticipates," "estimates," "plans,"
"scheduled," "intends," "believes," "projects," "indicates," "could,"
"focus," "vision," "goal," "outlook," "proposed," "target," "objective,"
and similar expressions. These statements and information are not
guarantees of future performance and involve a number of risks and
uncertainties, some that are similar to other oil and gas companies and
some that are unique to Suncor. Suncor's actual results may differ
materially from those expressed or implied by its forward-looking
statements and information and readers are cautioned not to place undue
reliance on them.

Suncor's outlook includes a production range based on our current
expectations, estimates, projections and assumptions. Uncertainties in
the estimating process and the impact of future events may cause actual
results to differ, in some cases materially, from our estimates.
Assumptions are based on management's experience and perception of
historical trends, current conditions, anticipated future developments
and other factors believed to be relevant.

The risks, uncertainties and other factors that could influence actual
results include but are not limited to, market instability affecting
Suncor's ability to borrow in the capital debt markets at acceptable
rates; availability of third-party bitumen; success of hedging
strategies, maintaining a desirable debt to cash flow ratio; changes in
the general economic, market and business conditions; fluctuations in
supply and demand for Suncor's products; commodity prices, interest rates
and currency exchange rates; Suncor's ability to respond to changing
markets and to receive timely regulatory approvals; the successful and
timely implementation of capital projects including growth projects and
regulatory projects; effective execution of planned turnarounds; the
accuracy of cost estimates, some of which are provided at the conceptual
or other preliminary stage of projects and prior to commencement or
conception of the detailed engineering needed to reduce the margin of
error and increase the level of accuracy; the integrity and reliability
of Suncor's capital assets; the cumulative impact of other resource
development; the cost of compliance with current and future environmental
laws; the accuracy of Suncor's reserve, resource and future production
estimates and its success at exploration and development drilling and
related activities; the maintenance of satisfactory relationships with
unions, employee associations and joint venture partners; competitive
actions of other companies, including increased competition from other
oil and gas companies or from companies that provide alternative sources
of energy; labour and material shortages;

uncertainties resulting from potential delays or changes in plans with
respect to projects or capital expenditures; actions by governmental
authorities including the imposition of taxes or changes to fees and
royalties, changes in environmental and other regulations (for example,
the Government of Alberta's review of the unintended consequences of the
proposed Crown royalty regime, the Government of Canada's current review
of greenhouse gas emission regulations); the ability and willingness of
parties with whom we have material relationships to perform their
obligations to us (including in respect of any planned divestitures);
uncertainties relating to the ability of closing conditions to be met in
respect of any planned divestitures in a timely manner, or at all;
political, economic and socio-economic risk associated with foreign
operations (including OPEC production quotas); the occurrence of
unexpected events such as fires, blowouts, freeze-ups, equipment failures
and other similar events affecting Suncor or other parties whose
operations or assets directly or indirectly affect Suncor; failure to
realize anticipated synergies or cost savings; risks regarding the
integration of the two businesses after the merger; and incorrect
assessments of the values of the other entity. The foregoing important
factors are not exhaustive.

Many of these risk factors and other assumptions related to Suncor's
forward-looking statements and information are discussed in further
detail throughout our report to shareholders for the period ended June
30, 2010 and in Suncor's Annual Information Form/Form 40-F on file with
Canadian securities commissions at www.sedar.com and the United States
Securities and Exchange Commission (SEC) at www.sec.gov. Readers are also
referred to the risk factors and assumptions described in other documents
that Suncor files from time to time with securities regulatory
authorities. These risk factors and assumptions are incorporated herein
by reference. Copies of these documents are available without charge from
the company.

For more information about Suncor Energy Inc. please visit our web site
at www.suncor.com.

For more information on the TRO tailings management process, wind power
projects and other elements of Suncor's environmental, economic and
social performance, see our 2010 Report on Sustainability at
www.suncor.com/sustainability.

A full copy of Suncor's second quarter 2010 Report to Shareholders and
the financial statements and notes (unaudited) can be obtained at
www.suncor.com/financialreporting or by calling 1-800-558-9071 toll-free
in North America.

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

Contacts:
Investor inquiries
Helen Kelly
403-693-2048

Media inquiries
403-920-8332

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