Page 43 - Suncor AR English

EXPLORATION AND PRODUCTION Impairments and Adjustments to Related Provisions

CONTINUED
Syria
Since December 2011, Suncor’s operations in Syria and its

contractual obligations have been suspended under a
period of force majeure due to political unrest and

international sanctions. As there has been no resolution of
the political situation and rising uncertainty with respect to
the company’s return to operations in the country, Suncor

impaired the remaining carrying value of its Syrian’s assets
resulting in an after-tax impairment charge of $422 million

in the fourth quarter of 2013. The carrying value had
previously been impaired in the second quarter of 2012

and a portion subsequently reversed in the fourth quarter
of 2012, for after-tax impairments (net of reversals) of

$517 million in 2012.

The company received risk mitigation proceeds in the
fourth quarter of 2012, at which time the proceeds were Royalties

recorded as a non-current provision to reflect potential Royalties were lower in 2013, compared with 2012, due
repayment if operations in Syria were to resume. Suncor primarily to lower production from Libya and North
recognized the risk mitigation proceeds of $300 million America Onshore, and lower royalty rates at East Coast

($223 million after-tax) in net earnings in the fourth Canada due to higher deductible costs related to planned
quarter of 2013, as the likelihood of return in the maintenance activities in both 2013 and 2012, partially

foreseeable future is undeterminable.
offset by higher production in East Coast Canada.

Libya
Expenses and Other Factors
Recent political unrest resulted in the closure of export Operating expenses were lower in 2013 than in 2012 due

terminal operations at eastern Libyan seaports, requiring primarily to lower production volumes in North America
the shut-in of production for the latter half of 2013. As the Onshore, partially offset by an after-tax expense of
situation persisted at the end of 2013, an impairment test
$14 million at East Coast Canada associated with the
was performed based on an assessment of future net cash mooring chain repair at Terra Nova, and higher production
flows over a range of possible outcomes. Based on this
volumes. The prior year also included an after-tax impact of
assessment, the company recorded an after-tax impairment $14 million, net of insurance proceeds, associated with a
charge of $101 million in the fourth quarter of 2013.
fire at an exploratory natural gas well in B.C.
The carrying value of the company’s net assets in Libya as
DD&A and exploration expenses were lower in 2013 due
at December 31, 2013 was approximately $570 million.
to the cessation of DD&A on natural gas properties that

Other
were classified as held for sale since February 2013 and
subsequently sold in September 2013, partially offset by
During the fourth quarter of 2013, the company
recognized an after-tax impairment charge of $40 million higher production volumes at East Coast Canada.
Exploration expenses were lower in 2013, as the company
relating to its properties in North America Onshore based
on an assessment of future net cash flows incorporating expensed $82 million in exploration activities ($46 million
after-tax) primarily related to wells in the U.K. and Libya,
recent drilling activity, updated reserves data, cost
assumptions and price forecasts.
compared to $145 million in exploration expenditures
($42 million after-tax) in 2012, primarily associated with a
In 2012, the company recorded after-tax impairment
second appraisal well for the Beta discovery and an
charges of $172 million, including impairments against exploration well for the Cooper prospect.
assets in North America Onshore and East Coast Canada,
Financing expense and other income increased in 2013
and a provision in North America Onshore for estimated
future commitments relating to unutilized pipeline capacity.
relative to 2012, primarily due to foreign exchange gains in
International and lower accretion on the decommissioning

Planned Maintenance
and restoration provision in North America Onshore
Routine annual planned maintenance has been scheduled following the sale of the company’s conventional natural

for Terra Nova and White Rose in the third quarter of gas business.
2014, and for Buzzard in the second and third quarters of

2014. The impact of this maintenance has been reflected
in the company’s 2014 guidance.

SUNCOR ENERGY INC. ANNUAL REPORT 2013 39