N"ewf~~dland. Your request for access to information under Part II of the Access to Information and Protection of Privacy Act {File I# NR )

Transcription

1 N"ewf~~dland Labrador Government of Newfoundland and Labrador Department of Natural Resources September 7, 2017 Re: Your request for access to information under Part II of the Access to Information and Protection of Privacy Act {File I# NR ) On August 9, 2017, the Department of Natural Resources received your request for access to the following records/information: Please provide any briefing notes regarding the Terra Nova Royalty Regime and/or Suncor Energy which have been provided to the Minister, Deputy Minister, ADMS, or Communications Director from Jan 1, 2017 to current. Please also provide any correspondence from any of these officials {Minister, Deputy Minister, ADMS, or Communications Director) which discusses the royalty regime of the Terra Nova oil field or Suncor Energy. Please also include any communications to/from Suncor Energy regarding the Terra Nova Oil Field. 1 Further to this, on August 22, 2017 you provided several points of clarification which assisted the department in identifying the responsive records. Those points have been appended to this letter for reference purposes. I am pleased to inform you that a decision has been made by the Department of Natural Resources, confirmed by the Deputy Minister, to provide access to the requested information. The records are attached. In accordance with our discussion on August 31, 2017 sections of the records that are unrelated to the Terra Nova Royalty Regime have been redacted as "non-responsive". This approach was agreed to in the interest of providing a quicker response to you. The particulars of our exchange on this point are also appended. P.O. Box 8700, St. John's, NL, Canada A1B 4J6 t

2 For the remaining information, I note that we have applied redactions to the least amount of information as possible and are relying upon sections 27(1)(i), 27(2)(a), 29(1)(a), 3S(l)(d), 3S(l)(f), 3S(l)(g), 39(1)(a)(ii), 39(1)(b), 39(1)(c)(i), 39(1)(c)(lii), and 39(2) for these redactions. Please see below for a description of these sections: S.27(1)(i} In this section, "cabinet record" means that portion of a record which contains information about the contents of a record within a class of information referred to in paragraphs (a) to (h); 5.27(2}(a) The head of a public body shall refuse to disclose to an applicant a cabinet record; S.29(1)(a) The head of a public body may refuse to disclose to an applicant information that would reveal advice, proposals, recommendations, analyses or policy options developed by or for a public body or minister; S.3S(l)(d) The head of a public body may refuse to disclose to an applicant information which could reasonably be expected to disclose information, the disclosure of which could reasonably be expected to result in the premature disclosure of a proposal or project or in significant loss or gain to a third party; 5.35(1}(f) The head of a public body may refuse to disclose to an applicant information which could reasonably be expected to disclose positions, plans, procedures, criteria or instructions developed for the purpose of contractual or other negotiations by or on behalf of the government of the province or a public body, or considerations which relate to those negotiations; 2 5.3S(l)(g) The head of a public body may refuse to disclose to an applicant information which could reasonably be expected to disclose information, the disclosure of which could reasonably be expected to prejudice the financial or economic interest of the government of the province or a public body; S.39(1)(a)(ii) The head of a public body shall refuse to disclose to an applicant information that would reveal commercial, financial, labour relations, scientific or technical information of a third party; S.39(1)(b) The head of a public body shall refuse to disclose to an applicant information that is supplied, implicitly or explicitly, in confidence; and 5.39{1){c)(i) The head of a public body shall refuse to disclose to an applicant information the disclosure of which could reasonably be expected to harm significantly the competitive position or interfere significantly with the negotiating position of the third party,

3 S.39(1)(c)(iii) The head of a public body shall refuse to disclose to an applicant information the disclosure of which could reasonably be expected to result in undue financial loss or gain to any person; 5.39(2) The head of a public body shall refuse to disclose to an applicant information that was obtained on a tax return, gathered for the purpose of determining tax liability or collecting a tax, or royalty information submitted on royalty returns, except where that information is non-identifying aggregate royalty information. I note that the following pages have been redacted in their entirety as all content on these pages is non-responsive to the request: 3-5, 8-10, 16-18, 21-23, 26-30, 36-38, 41-43, 46-50, 56-58, 61-63, 66-70, Additionally, by authority of section 22(1)(a), the attachment found on page 80 has not been reproduced in this response as it is a public document that can be obtained through the provincial courts. Please be advised that you may ask the Information and Privacy Commissioner to review the processing of your access request, as set out in section 42 of the Access to Information and Protection of Privacy Act (the Act). A request to the Commissioner must be made in writing within 15 business days of the date of this letter or within a longer period that may be allowed by the Commissioner. The address and contact information of the Information and Privacy Commissioner is as follows: 3 Office of the Information and Privacy Commissioner 2 Canada Drive P. 0. Box 13004, Stn. A St. John's, NL. AlB 3V8 Telephone: (709) Toll-Free: Facsimile: (709) You may also appeal directly to the Supreme Court Trial Division within 15 business days after you receive the decision of the public body, pursuant to section 52 of the Act. Please be advised that this letter will be published following a 72 hour period after it is sent electronically to you or five business days in the case where records are mailed to you. It is the goal to have the letter posted to the Office of Public Engagement's website within one business day following the applicable period of time. If you have any questions about the processing of your request, please feel free to contact me by telephone at or by at andreamarshall@gov.nl.ca.

4 Alternatively, you may contact Rod Hynes, the department's primary ATIPP Coordinator, at or by at Sincerely, Andrea Marshall ATIPP Coordinator 4

5 Marshall, Andrea From: Sent: To: Cc: Subject: Tuesday, August 29, :32 AM Marshall, Andrea Hynes, Rodney (NR) RE: Clarification Points: NR I would like the drafts. Thanks, -From: Marshall, Andrea Sent: Tuesda 29, :23 AM Cc: Hynes, Rodney (NR) Subject: RE: Clarification Points: NR Importance: High Hi- Me again- just wondering now if you want draft documents or just final versions? There is one responsive briefing note in particular that went through a few updates via . I would provide the s regardless but the drafts could be eliminated if they're not of interest. Up to you... let me know when you can. 5 Thanks, Andrea From: Sent: y, August 22, :07 PM To: Marshall, Andrea Cc: Hynes, Rodney (NR) Subject: RE: Clarification Points: NR Thanks Andrea, Here are some comments: Points of Clarification 1. We are assuming that the timeframe indicated for part 1 of request also applies to parts 2 and 3. Is this correct? Yes 2. For part 2, "correspondence which discusses... Suncor Energy", could capture numerous topics related to multiple projects. In line with the rest of the request, should any discussions about Suncor Energy also be focused on the Terra Nova royalty regime? If not, any clarification you can provide would be appreci ated. Yes please. Terra Nova Royalty Regime would be appropriate. 3. For part 3:

6 Are you seeking communications between Suncor and the Minister, DM, ADMs or Communications Director (i.e., same department officials cited in parts 1 and 2)? Yes- the same. 4. In line with the rest of the request, should these communications be specific to the royalty regime for the Terra Nova project? If not, any clarification you can provide would be appreciated. Yes please. Terra Nova Royalty Regime would be appropriate. From: Marshall, Andrea Se~ust 22,2017 1:55PM To:-- Cc: Hynes, Rodney (NR) Subject: Clarification Points: NR Importance: High I've got a few questions on request NR regarding the Terra Nova royalty regime- hoping you can provide some direction. Request Wording You asked for: 1. Any briefing notes regarding the Terra Nova Royalty Regime and/or Suncor Energy which have been provided to the Minister, Deputy Minister, ADMS, or Communications Director from Jan 1, 2017 to current. 2. Please also provide any correspondence from any of these officials (Minister, Deputy Minister, ADMS, or Communications Director) which discusses the royalty regime of the Terra Nova oil field or Suncor Energy. 3. Please also include any communications to/from Suncor Energy regarding the Terra Nova Oil Field. 6 Points of Clarification 1. We are assuming that the timeframe indicated for part 1 of request also applies to parts 2 and 3. Is this correct? 2. For part 2, "correspondence which discusses... Suncor Energy", could capture numerous topics related to multiple projects. In line with the rest of the request, should any discussions about Suncor Energy also be focused on the Terra Nova royalty regime? If not, any clarification you can provide would be appreciated. 3. For part 3: Are you seeking communications between Suncor and the Minister, DM, ADMs or Communications Director (i.e., same department officials cited in parts 1 and 2)? In line with the rest of the request, should these communications be specific to the royalty regime for the Terra Nova project? If not, any clarification you can provide would be appreciated. By all means, give me a call if you'd like to chat about this. Thanks, 2

7 Andrea Andrea Marshall Corporate Services Division Department of Natural Resources St. John's, NL (709)

8 Marshall, Andrea From: Sent: To: Cc: Subject: Thursday, September 07, :11 AM Marshall, Andrea Hynes, Rodney RE: NR I' m not sure if I've replied to this or not, but you are correct. From: Marshall, Andrea Sent: Thursda ust 31, :17 AM Cc: Hynes, Rodney (N Subject: NR Importance: High Hi Andrea- Hi- Thanks for chatting with me this morning about these requests. I just wanted to follow up with an to confirm what we talked about and give you an opportunity to correct me if I got anything wrong. NR As discussed with you previously we have several versions of a briefing note among the responsive records. The note covers a number of topics, only one of which relates to the Terra Nova Royalty Regime. To properly process the notes in their entirety, I would have to consult with other public bodies (e.g., C-NLOPB, NRCan, etc.) and, as a result, would need to request a time extension from the OIPC. I suggested that, if you were agreeable, I could treat the sections of the note that are unrelated to the TN Royalty Regime as ~~non-responsive " in order to expedite the request, and you agreed to that approach. Drop me a line when you get a chance to verify that we're on the same page. Thanks!

9 Andrea Andrea Marshall Corporate Services Division Department of Natural Resources St. John's, NL (709)

10 Marshall, Andrea From: Sent: To: Subject: Attachments: Parsons, Paul 0 Wednesday, February 08, :10PM Sullivan, Lynn HP TRIM BRIEFING NOTES: BN-8801: Minister Meeting with Suncor Energy_Sept Minister Meeting with Suncor Energy_Sept DOCX; Minister Meeting with Suncor Energy_Sept tr5 Lynn, Attached is the last Suncor meeting note from Sept Just want to confirm whether you want all issues in the note updated for next week's meeting or is the agenda for next week different. Are there any additional issues/agenda items? You indicated it is intended as an introductory meeting so just wondering how much to carry forward before I engage with Royalties and Regulatory Affairs for updates. Thanks, Paul < HP TRIM Record Information> Record Number: BN-8801 Title Minister Meeting with Suncor Energy_Sept

11 Meeting Note Department of Natural Resources Suncor Energy September 26, :00 to 4:00 pm Minister's Boardroom Attendees: Suncor Energy: Brent Janke Vice President, East Coast (Biography included in Attachment 1) NL: Minister Siobhan Coady Charles Bown On April 15, 2016, Brent Janke met with the Minister of Natural Resources to discuss issues identified above. This meeting is aimed at furthering this ongoing discussion. Background: Suncor Energy is a Canadian-based energy company established in 1967 and 2 headquartered in Calgary. On August 1, 2009, Suncor Energy and Petro-Canada merged under the Suncor Energy name. The Petro-Canada brand was retained for downstream product distribution and marketing. Suncor Energy's business interests include: oil sands extraction and upgrading in western Canada; North American onshore oil and gas; international & offshore petroleum (North Sea, East Coast Canada, Libya and Syria); downstream operations in Canada & U.S., and, renewable energy and ethanol. Suncor Energy has a significant presence in the NL offshore. o Interest in all currently producing projects/fields: Hibernia (20%); HSE ( %); Terra Nova (37.675%); White Rose (27.5%); White Rose Expansion (26.125%). o A partner in the Hebron project (21.034%). j s. 39(2)1 o o Interest in 3 Exploration Licences and 51 Significant Discov~ To the end of June 2016, Suncor has paid approximately --in total royalties to NL. See Attachment 2 for an overview of Suncor's project/licence interests and royalties. Suncor's latest financial/operational results and 2016 capital guidance is in Attachment 3.

12 Potential Agenda Item #4 - Terra Nova Duplicative Royalties Issue (Originating Application) NL has an ongoing Originating Application proceeding with Terra Nova project owners as well as other arbitrations with Hibernia and White Rose pro ect owners ncludin Sun The Terra Nova inati ication is discussed below. Analysis: Terra Nova Duplicative Royalties Issue (Terra Nova Originating Application) o o Under the Terra Nova Royalty regime, Basic Royalty can be deducted from Tier I Royalty to the extent that it is equal to or less than Tier I Royalty. Due to how the Royalty Regulations were written, the ability to deduct Basic Royalty for the last month in a period is lost. 6 A solution to this circumstance was agreed between the Province and project owners in 2011 in resolution to Terra Nova royalty dispute matters that were ongoing at that time. The fix was based on the same language for the White Rose, White Rose Expansion and Hebron Projects. s. 35(1, S. 35 1), S. 39(2 o When implemented, the calcu still result in a loss of this Basic Royalty Deduction if the basic roya ctible exceeds Tier I royalty payable to the province, as there is no carry provision and the credit expires at the end of a year. This set of circum n occur during a year with extended shut downs. The royalty impact to the end of s. 27 o On December 7, 2015 Suncor filed an "Originating Application" with of NL with respect to this issue. NL filed a reply with the court and were set for October 17-21, However it is anti th ned until at least Febru o On March 1, 2016 the matter was cal in Court and was set over until March 23, The Province has filed its reply and is rrently engaging an expert witness regarding the matter. We anticipate that the Court hear arguments beginning on April 3, 2017.

13 6 Potential Speaking Points: The Premier may wish to: Proposed Actions: Officials continue to advance arbitration and legal proceedings. 7

14 10 Attachment 1 - Biographies Brent Janke Vice President - East Coast Suncor Energy Mr. Janke is based in St. Johns, NL. He is responsible for all of Suncor's production, development and exploration on Canada's East Coast. He has over 20 years of experience in the oil and gas industry, both in Canada and internationally, in a number of leadership positions. Prior to Mr. Janke's current role, he worked at Imperial Oil in Calgary as the Technical and Development Manager for Mining at the Kearl Oil Sands Operation. He also worked for over 3 years in Nigeria with ExxonMobil as the country's Maintenance Manager where he was responsible for maintenance operations for over 110 offshore and onshore assets and approximately 1,000 team members. Prior to relocating to Nigeria, Mr. Janke had assignments in Houston, Texas, and was also located in Halifax, NS, where he was the Asset Manager for the Sable Operations, and throughout Mobil Oil's operations in Western Canada (including Olds, Whitecourt, Drayton Valley, Swift Current and Calgary). Mr. Janke has extensive experience in Facilities Engineering, Project Management, and Operations and Maintenance management both in onshore and offshore operations. He holds both a Bachelors and Master's degree in Industrial Systems Engineering from the University of Regina. In addition, Mr. Janke holds industry certifications from the Project Management Institute and American Society for Quality as a Project Management Professional (PMP) and a Certified Manager of Quality I Organizational Excellence (CMQ/OE). 11

15 11 Attachment 2- Suncor Energy Land Holdings in NL and Project Royalties s uncor E nergy L an d H 0 ld" mgs an dw or k" mg It n eres t s 1n. NL Off s h ore: Project/Prospect Interest Location Comments Hibernia Grand Banks Region PL % (Jeanne d'arc Basin) Hibernia Southern Extension (HSE) % PL % Grand Banks Region PL % (Jeanne d'arc Basin) PL % Terra Nova Grand Banks Region PL 1002, PL 1003, PL % (Jeanne d'arc Basin) Operator White Rose Grand Banks Region 27.5% PL1006, PL1007 & PL1010 (Jeanne d'arc Basin) White Rose Expansion Grand Banks Region % Various Licences (Jeanne d'arc Basin) Hebron Grand Banks Region Various SOLs % (Jeanne d'arc Basin) Grand Banks Region (Jeanne Various interests in other ELs (see d'arc, Flemish Pass, Carson); table below) and SOLs Labrador Offshore ReQion 1. PL- production licence; SDL- s1gmficant discovery licence; EL- exploration licence. Suncor Energy Exploration Licence Parcels from 2012 and 2013 Call for Bids: Call for Licence/ Effective Expiry Date Bid Interest Holders Bids Location Date [Period 1] (Million$) Year ExxonMobil Canada Ltd. (40%) 12 ConocoPhillips Canada NL EL 1135/ 01/15/2024 Partnership (30%) /15/2015 $559.0 Flemish Pass [01/15/2021] Suncor Energy Offshore Exploration Partnership (30%) EL 1136/ ExxonMobil Canada Ltd. (50%) 01/15/2024 Carson Basin Suncor Energy Offshore /15/2015 $21.0 [01 /15/2021] (SE NL Offshore) Exploration Partnership (50%) EL 1134/ Husky Oil Operations Ltd (65%) 01/15/ /15/2013 Flemish Pass Suncor Energy (35%) [01/15/2019] $19.9 NL Cumulative Royalties 1 Paid from Projects with Suncor Energy Interest (Million$): NFIDENTIAL NOT FOR REDISTRIBUTION HSE (from June 2011) White Rose (from Dec 2005) North Amethyst (from May 201 0) Total 1. Cumulative royalties include preliminary data that is subject to revision.

16 Potential copyright material If you wish to obtain a copy please contact the ATIPP Office at (709) or atippoffice@gov.nl.ca.

17 13 Attachment 3- Latest Suncor Energy Financial & Operational Indicators Q Q YTD 2016 YTD 2015 Financial: Revenue 1 Million C$ $5,914 $8,095 $11,558 $15,224 Net Earnings/Income Million C$ ($735) $729 ($478) $388 Net Earnings per Share (basic) C$ ($0.46) $0.50 ($0.31) $0.26 Cash Flow from Operations Million C$ $916 $2,155 $1,598 $3,630 Return on Ca[?ital Em[?loyed Percent (4.9%) 7.2% n/a n/a TotaTAssets Million C$ $88,786 $80,658 Same as Same as Total Liabilities:> Million C$ $44,333 $39,043 Q Q Total Shareholders' Equity:> _M_iJJJQ_Il gl $44,453 $41, Capital and Exploration 4 Million C$ $1,761 $1,575 $3,317 $2,901 Expenditures Netbacks-Continuing Operations East Coast Canada Average price realized C$/bbl $62.39 $78.23 $53.19 $71.10 Royalties C$/bbl $11.06 $16.38 $7.91 $17.10 Transportation costs C$/bbl $2.05 $1.73 $1.84 $1.74 Operating costs C$/bbl $ $14.14 $12.39 Operating netback C$/bbl $34.52 $43.49 $29.30 $39.87 Operations: Upstream Production 1000 boe/day East Coast Canada Terra Nova 1000 boe/day Hibernia 1000 boe/day White Rose _1_9_QQ I?_Q~{q~y Refinery Throughput 1000 boe/day Operating revenues (net of royalt1es) including other 1ncome. 2. Excludes major projects in progress- for 12 month period ending. 3. As at end of the quarter. 4. Includes capitalized interest on debt of $140 million for Q and $281 million for YTD 2016 and $1 10 million for Q and 11$203 million for YTD YTD reporting period includes the six months from January 1 to June 30 inclusive. 6. Numbers may not sum to totals due to rounding. Recent NL Related Discussion: Construction of the Hebron project continued in Q2 2016, with the utility process module being shipped from its construction site in South Korea on schedule. First oil from the project is expected in late Hebron is one Suncor's largest growth projects. Effective January 1, 2016, working interests in the Hebron were reset with Suncor's interest decreased from % to %. Suncor indicated that the combined capital expenditures for the Hebron and Fort Hills projects is $2.8 billion in 2016 and are both currently at peak capital expenditure spending. In 2017, capital expenditures are expected to drop to $0.8 to $1 billion and progressively less over the life of the projects. The capital expenditures from the reduced spend will significantly lower Suncor's capital budget over the coming years, as the company does not plan on any new major projects currently. Suncor's price realizations for production from East Coast Canada and International assets are influenced primarily by the price for Brent crude. Brent crude pricing decreased to an average of US$45.60/bbl in , compared to US$61.95/bbl in The planned maintenance turnaround event at Terra Nova was completed within Q In its previous reporting, Suncor indicated that, in part to achieve cost reductions, it has deferred some capital projects that have not yet been sanctioned, including the White Rose Extension. 14

18 14 Financial/Operations Discussion: Suncor recorded a net loss of $735 million in Q compared to net earnings of $729 million in Q Net earnings in Q were negatively impacted by a decrease in oil sands production due to Alberta forest fires, a lower crude oil price environment, a higher share of Syncrude operating costs as well as some other operational and financial impacts. This was partially offset by lower operating costs (excluding acquisitions impacts), positive downstream realized margins, and additional production from Syncrude (due to the increased working interest) and increased production from Exploration & Production (E&P). Total capital and exploration expenditures was $1.621 billion (excludes capitalized interest on debt of $140 million) in Q These Q expenditures increased compared to Q due to an increased ownership interest in both Fort Hills and Syncrude, partially offset by cost reductions and lower spending in E&P due to decreased development drilling. o Oil Sands: $1.15 billion ($632 million for growth capital; $518 million for sustaining capital) o E&P: $239 million ($236 million for growth capital; $3 million for sustaining capital) o Refining & Marketing: $231 million ($1 million for growth; $230 million for sustaining capital) o Corporate, Energy Trading and Elimination: $1 million (all for sustaining capital) Suncor's total upstream production was lower in Q compared with Q2 2015, due primarily to shutting in of production at oil sands operations and Syncrude as a result of the Alberta forest fires in the Fort McMurray region. This was partially offset by a higher working interest in Syncrude and increased E&P production. E&P Canada production was higher in Q compared to Q due to higher production at Hibernia with new wells being brought online subsequent to Q2 2015, partially offset by natural production declines at Terra Nova. Both quarters were impacted by planned maintenance Capital and Production Guidance Summary Suncor's capital guidance for 2016 is in a range of $6.0 to $6.5 billion revised from its previous range $6.7 to $7.3 billion. The reduction is mostly due to the deferral of Firebag planned maintenance to The capital spending reduction is not anticipated to impact near term production targets. 15 Approximately 55% of the 2016 capital program has been allocated towards growth projects with a majority in the Upstream segment. Approximately 45% of 2016 capital is expected to be sustaining capital investments that support safe, reliable and efficient operations Full Year Outlook % of Growth Capital 2 Capital Expenditures (Million C$f $6,000 - $6,500 55% Upstream $5,250- $5,600 65% Downstream $700- $800 5% Corporate $50-$100 5% 1. Capital expenditures exclude capitalized interest of $600 million to $700 million. 2. Growth capital expenditures include investments that increase production levels at existing Oil Sands operations, new facilities or operations that increase overall production, new infrastructure required to support higher production, new reserves or a positive change in the company's reserves profile in E&P operations or margin improvement (by increasing revenues or reducing costs). Suncor's 2016 upstream production guidance is expected to between 585,000 to 620,000 barrels of oil equivalent per day (boe/day). Refined product sales for 2016 are expected to be in a range of 510,000 to 550,000 barrels per day. Suncor's 2016 outlook assumptions include: Brent (Sullom) at US$40/barrel; WTI (Cushing) at US$39/barrel; WCS (Hardisty) at US$26/barrel; and Cdn/US exchange rate at $0.75.

19 Marshall, Andrea From: Sent: To: Subject: Attachments: Sullivan, Lynn Monday, February 13, :09 PM Foote, Wes FW: HP TRIM BRIEFING NOTES: BN-9012: Deputy Minister Meeting with Suncor Energy _Feb 2017 Deputy Minister Meeting with Suncor Energy_Feb 2017.DOCX; Deputy Minister Meeting with Suncor Energy_Feb 2017.tr5 Wes, do you want to take a look too? Lynn Lynn Sullivan I Assistant Deputy Minister- Royalties and Benefits Department of Natural Resources 50 Elizabeth Avenue, 7th Floor St. John's, NL Canada AlA lws (tel) (fax) Original Message---- From: Andrews, Wayne Sent: Monday, February 13, :09PM To: Sullivan, Lynn Subject: HP TRIM BRIEFING NOTES: BN-9012: Deputy Minister Meeting with Suncor Energy_Feb 2017 Lynn... Here is the meeting note for Gordon's meeting with Suncor on Thursday < HP TRIM Record Information> Record Number: BN-9012 Title Deputy Minister Meeting with Suncor Energy_Feb 2017

20 Meeting Note Department of Natural Resources Suncor Energy February 16, :00 am to 12:00 pm Minister's Boardroom Attendees: Suncor Energy: Brent Janke Vice President, East Coast (Biography included in Attachment 1) NR: Gordon Mcintosh, OM On April 15, 2016 and September 26, 2016, Brent Janke met with the Minister of Natural 20 Resources to discuss issues noted above. Background: Suncor Energy is a Canadian-based energy company established in 1967 and headquartered in Calgary. On August 1, 2009, Suncor Energy and Petro-Canada merged under the Suncor Energy name. The Petro-Canada brand was retained for downstream product distribution and marketing. Suncor Energy's business interests include: oil sands extraction and upgrading in western Canada; North American onshore oil and gas; international & offshore petroleum (North Sea, East Coast Canada, Libya and Syria); downstream operations in Canada & U.S., and, renewable energy and ethanol. In NL, Suncor Energy has a significant presence in the offsh including interest in all currently producing projects/fields: Hibernia, Hibernia South, T Nova, White Rose and White Rose Expansion. Suncor is also a partner in the Heb project. The company also has interest in 3 exploration licences and 51 significant licences. To the end of December , Suncor has paid approximately in total royalties to NL. See Attachment 2 for a further overview of Suncor's project/licence interests and royalties. Suncor's latest financial/operational results and 2017 capital guidance is in Attachment 3.

21 24 Potential Agenda Item #4- Terra Nova Duplicative Royalties (Originating Application) NL has an ongoing Originating Application proceeding with Terra Nova project owners as well as other arbitrations with Hibernia and White Rose pro ect owners ncludin Sun The Terra Nova inati ication is discussed below. Analysis: Under the Terra Nova Royalty regime, Basic Royalty can be deducted from Tier I Royalty to the extent that it is equal to or less than Tier I Royalty. Due to how the Royalty Regulations were written, the ability to deduct Basic Royalty for the last month in a period is lost. A solution to this circumstance was agreed between the Province and project owners in 2011 in resolution to Terra Nova royalty dispute matters that were ongoing at that time. The fix was based on the same language for the White Rose, White Rose Expansion and Hebron Projects. When implemented, the calculation may still result in a loss of this Basic Royalty Deduction if the basic royalty deductible exceeds Tier I royalty payable to the province, as there is no carry forward provision and the credit expires at the end of a year. This set of circumstances can occur during a year with extended shut downs. The royalty impact is

22 ~ ~. 35(1 )(b), S. 35(1 )(g), S. 39(2) 6 to the end of On December 7, 2015 Suncor filed an "Originating Application" with NL with respect to this issue. NL filed a reply with the court and d~+~ ""'+ ~~ set for October 17-21, However it is antici that until at least Febru On March 1, 2016 the matter was called in Court and was set over until March 23, The Province has engaged an expert witness regarding the matter. The Interest Holders and Province have file memorandums with the courts outlining their respective arguments. We anticipate that the Court will hear arguments beginning on April 3, Proposed Actions: Officials continue to advance arbitration and legal proceedings. 25

23 12 Attachment 1 - Biographies Brent Janke Vice President - East Coast Suncor Energy Mr. Janke is based in St. Johns, NL. He is responsible for all of Suncor's production, development and exploration on Canada's East Coast. He has over 20 years of experience in the oil and gas industry, both in Canada and internationally, in a number of leadership positions. Prior to Mr. Janke's current role, he worked at Imperial Oil in Calgary as the Technical and Development Manager for Mining at the Kearl Oil Sands Operation. He also worked for over 3 years in Nigeria with ExxonMobil as the country's Maintenance Manager where he was responsible for maintenance operations for over 110 offshore and onshore assets and approximately 1,000 team members. Prior to relocating to Nigeria, Mr. Janke had assignments in Houston, Texas, and was also located in Halifax, NS, where he was the Asset Manager for the Sable Operations, and throughout Mobil Oil's operations in Western Canada (including Olds, Whitecourt, Drayton Valley, Swift Current and Calgary). Mr. Janke has extensive experience in Facilities Engineering, Project Management, and Operations and Maintenance management both in onshore and offshore operations. He holds both a Bachelors and Master's degree in Industrial Systems Engineering from the University of 31 Regina. In addition, Mr. Janke holds industry certifications from the Project Management Institute and American Society for Quality as a Project Management Professional (PMP) and a Certified Manager of Quality I Organizational Excellence (CMQ/OE).

24 13 Attachment 2- Suncor Energy Land Holdings in NL and Project Royalties s uncor E nergy L an d H 0 ld" mgs an dw or k" mg It n eres t s. 1n NL Off s h ore: Project/Prospect Interest Location Comments Hibernia Grand Banks Region PL % (Jeanne d'arc Basin) Hibernia Southern Extension (HSE) Grand Banks Region PL 1001, PL 1005, PL % (Jeanne d'arc Basin) Terra Nova Grand Banks Region PL 1002, PL 1003, PL % (Jeanne d'arc Basin) Operator White Rose Grand Banks Region 27.5% PL1006, PL1007 & PL1010 (Jeanne d'arc Basin) White Rose Expansion Grand Banks Region % Various Licences (Jeanne d'arc Basin) Hebron Grand Banks Region Various SDLs % (Jeanne d'arc Basin) Grand Banks Region (Jeanne Various interests in other Els (see d'arc, Flemish Pass, Carson); table below) and SDLs Labrador Offshore Region 1. PL- production licence; SDL- s1gmficant discovery licence; EL- exploration licence. s uncor E nergy E xp1ora f 1on L" 1cence p arce I s f rom 2012 an d 2013 C a II f or B"d I S: Call for Licence/ Effective Expiry Date Interest Holders Bids Location Date [Period 1] Year EL 1134/ Husky Oil Operations Ltd (65%) 01/15/ /15/2013 Flemish Pass Suncor Energy (35%) [01/15/20191 ExxonMobil Canada Ltd. (40%) EL 1135/ Statoil Canada Ltd. (30%) 01/15/ /15/2015 Flemish Pass Suncor Energy Offshore [01 /15/20211 Exploration Partnership (30%) EL 1136/ Carson Basin (SE Offshore) ExxonMobil Canada Ltd. (33.34%) Suncor Energy Offshore 01/15/ /15/2015 Exploration Partnership (33.33%) [01 /15/20211 Total E&P Canada Ltd. (33.33%) Bid (Million$) $19.9 $559.0 $ NL Cumulative Royalties 1 Paid from Projects with Suncor Energy Interest (Million$): NFIDENTIA NOT FOR REDISTRIBUTION Total Proje Project Dec Terra Nova (from Feb 2002) Hibernia PL 1001 (from Nov 1997) HSE (from June 2011) White Rose (from Dec 2005) North Amethyst (from May 201 0) Total 1. Cumulative royalties include preliminary data that is subject to revision.

25 Potential copyright material If you wish to obtain a copy please contact the ATIPP Office at (709) or atippoffice@gov.nl.ca.

26 15 Attachment 3- Latest Suncor Energy Financial & Operational Indicators Q Q YTD 2016::. YTD 2015::. Financial: Revenue 1 Million C$ $8,141 $6,593 $26,968 $29,680 Net Earnings/Income Million C$ $531 ($2,007) $445 ($1,995) Net Earnings per Share (basic) C$ $0.32 ($1.38) $0.28 ($1.38) Cash Flow from Operations Million C$ $2,365 $1,294 $5,988 $6,806 Return on Ca[?ital Em[?loyed Percent 0.5% 0.6% n/a n/a TotaTAssets Million C$ $88,702 $77,527 Same as Same as Total Liabilities:> Million C$ $44,072 $38,488 Q Q Total Shareholders' Equity:> _M_iJJJQ_Il gl $44,630 $39, Capital and Exploration Million C$ $1,572 $2,030 $6,582 $6,667 Expenditures Netbacks-Continuing Operations East Coast Canada Average price realized C$/bbl $68.06 $52.51 $59.31 $65.12 Royalties C$/bbl $15.07 $5.79 $10.64 $12.49 Transportation costs C$/bbl $1.72 $2.81 $1.91 $2.18 Operating costs C$/bbl $ $12.67 $14.15 Operating netback C$/bbl $41.75 $27.05 $34.09 $36.30 Operations: Upstream Production 1000 boe/dal East Coast Canada Terra Nova 1000 boe/dal Hibernia 1000 boe/dal White Rose _1_9_QQ I?_Q~{q~y~ Refinery Throughput 1 OOObbls/da/ Operating revenues (net of royalt1es) including other 1ncome. 2. Excludes major projects in progress- for 12 month period ending. 3. As at end of the quarter. 4. Includes capitalized interest on debt of $162 million for Q and $596 million for YTD 2016 and $1 29 million for Q and $447 million for YTD YTD reporting period includes the twelve months from January 1 to December 31 inclusive. 6. Thousand barrels of oil equivalent per day. 7. Thousands barrels per day. 8. Numbers may not sum to totals due to rounding. Recent NL Related Discussion: Construction of the Hebron project continued in Q with successful integration of the offshore topside modules with the GBS. First oil from the project continues to be on track for late 2017 followed by a full year ramp up to 30,000 barrels/day to Suncor. Suncor's price realizations for production from East Coast Canada and International assets are influenced primarily by the price for Brent crude. Brent crude pricing increased to an average of US$49.50/bbl in , compared to US$43.70/bbl in Royalties were higher in Q4 2016, compared with the prior year 4 1 h quarter, primarily due to higher crude price realizations and higher production in East Coast Canada. Financial/Operations Discussion: Net earnings in Q were positively impacted by: o improved benchmark crude pricing; o higher Syncrude operating earnings due to acquisition of additional working interests and improved upgrader reliability; o a non-cash after-tax mark to market gain on interest rate derivatives for future debt issuance; o refining and marketing gain; and o lower operating costs at Oil Sands and Exploration and Production (E&P) operations. 34

27 16 Net earnings for the full year 2016 were positively impacted by: o a non-cash gain on forward interest rate derivatives; o a deferred tax recovery related to a tax rate reduction on oil and gas profits in the U.K.; o higher Syncrude operating earnings; o Refining and Marketing gain; o higher refined product location differentials; and o lower operating costs across the company's operated assets. This was partially offset by lower upstream price realizations in the first nine months of 2016, the impact of shut-in production associated with the forest fires in the Fort McMurray area in Q and weaker benchmark crack spreads. Total capital and exploration expenditures in Q were lower compared to Q due to cost reduction initiatives, fewer planned maintenance activities and decreased purchases of haul trucks at Oil Sands. This was partially offset by increased Fort Hills activity and expenditures associated with the increased ownership in Syncrude. Capital and exploration expenditures for full year 2016 were within guidance and lower than 2015 due to execution of the capital plan. Suncor's total upstream production was higher for full year 2016 compared to 2015, due primarily to increased production in the Oil Sands segment. Asset sales for 2016 were C$2.0 billion, exceeding the company's target of C$1.0 to C$1.5 billion Capital and Production Guidance: Suncor Energy's capital guidance for 2017 is expected to be between C$4.8 billion and C$5.2 billion. Suncor stated that the 2017 capital spending program includes capital required to bring two major growth projects, Fort Hills and Hebron, to completion while at the same time investing in its existing assets to ensure continued safe, reliable and efficient operations. In 2017, approximately 40% of the capital spending program is allocated towards upstream growth projects, including Fort Hills and Hebron with both expected to achieve first oil by the end of The remaining 60% is directed towards sustaining capital across all segments. In 2016, approximately 60% of the capital spending program was allocated towards growth projects and 40% towards sustaining capital investments Capital Expenditure Guidance %of (C$ millions) Outlook Growth Capital 2 Total $4,800 - $5,200 40% Upstream.j $4,135-$4,475 50% Downstream $625-$675 0% Corporate $40-$50 0% 1. Exclude capitalized interest of $750 million in Growth capital expenditures include investments that increase production levels at existing Oil Sands operations, new facilities or operations that increase overall production, new infrastructure required to support higher production, new reserves or a positive change in the company's reserves profile in E&P operations or margin improvement (by increasing revenues or reducing costs). Suncor Energy's production guidance for 2017 is expected to be between 680,000 to 720,000 barrels of oil equivalent per day. Suncor expects increased production from the Oil Sands and Syncrude segments. Refined product sales for 2017 are expected to be in a range of 515,000 to 545,000 barrels per day. East Coast Canada Royalties (reflected as a percentage of gross revenues) are expected to be in the range of 17% to 21% for Suncor's 2016 outlook assumptions include: Brent (Sullom) at US$53/barrel; \1\/TI (Cushing) at US$52/barrel; WCS (Hardisty) at US$38/barrel; and Cdn/US exchange rate at $

28 Marshall, Andrea From: Sent: To: Cc: Subject: Attachments: Foote, Wes Tuesday, February 14, :17PM Sullivan, Lynn Butland, Anne RE: HP TRIM BRIEFING NOTES : BN-9012 : Deputy Minister Meeting with Suncor Energy _Feb 2017 Deputy Minister Meeting with Suncor Energy_Feb 2017.docx Lynn Hope you haave lots of "storm chips", this appears to be a biggie.we had a "tornado warning" here this morning. I was unable to access TRIM but have made some edits in tracked changes in the attached. later wes From: Sullivan, Lynn Sent: Monday, February 13, :09PM To: Foote, Wes Subject: FW: HP TRIM BRIEFING NOTES: BN-9012: Deputy Minister Meeting with Suncor Energy_Feb 2017 Wes, do you want to take a look too? 39 Lynn Lynn Sullivan I Assistant Deputy Minister- Royalties and Benefits Department of Natural Resources 50 Elizabeth Avenue, 7th Floor St. John's, NL Canada AlA lws (tel) (fax) Original Message---- From: Andrews, Wayne Sent: Monday, February 13, :09PM To: Sullivan, Lynn Subject: HP TRIM BRIEFING NOTES: BN-9012: Deputy Minister Meeting with Suncor Energy_Feb 2017 Lynn... Here is the meeting note for Gordon's meeting with Suncor on Thursday < HP TRIM Record Information> Record Number : BN-9012 Title : Deputy Minister Meeting with Suncor Energy_Feb 2017

29 Meeting Note Department of Natural Resources Suncor Energy February 16, :00 am to 12:00 pm Minister's Boardroom Attendees: Suncor Energy: Brent Janke Vice President, East Coast (Biography included in Attachment 1) NR: Gordon Mcintosh, OM On April 15, 2016 and September 26, 2016, Brent Janke met with the Minister of Natural 40 Resources to discuss issues noted above. Background: Suncor Energy is a Canadian-based energy company established in 1967 and headquartered in Calgary. On August 1, 2009, Suncor Energy and Petro-Canada merged under the Suncor Energy name. The Petro-Canada brand was retained for downstream product distribution and marketing. Suncor Energy's business interests include: oil sands extraction and upgrading in western Canada; North American onshore oil and gas; international & offshore petroleum (North Sea, East Coast Canada, Libya and Syria); downstream operations in Canada & U.S., and, renewable energy and ethanol. In NL, Suncor Energy has a significant presence in the offsh including interest in all currently producing projects/fields: Hibernia, Hibernia South, T Nova, White Rose and White Rose Expansion. Suncor is also a partner in the Heb project. The company also has interest in 3 exploration licences and 51 sig licences. To the end of December , Suncor has paid approximately in total royalties to NL. See Attachment 2 for a further overview of Suncor's project/licence interests and royalties. Suncor's latest financial/operational results and 2017 capital guidance is in Attachment 3.

30 44 Potential Agenda Item #4- Terra Nova Duplicative Royalties (Originating Application) NL has an ongoing Originating Application proceeding with Terra Nova project owners as well as other arbitrations with Hibernia and White Rose pro ect owners ncludin Sun The Terra Nova inati ication is discussed below Analysis: Under the Terra Nova Royalty regime, Basic Royalty can be deducted from Tier I Royalty to the extent that it is equal to or less than Tier I Royalty. Due to how the Royalty Regulations were written, the ability to deduct Basic Royalty for the last month in a period is lost. A solution to this circumstance was agreed between the Province and project owners in 2011 in resolution to Terra Nova royalty dispute matters that were ongoing at that time. The fix was based on the same language for the White Rose, White Rose Expansion and Hebron Projects. When implemented, the calculation may still result in a loss of this Basic Royalty Deduction if the basic royalty deductible exceeds Tier I royalty payable to the province, as there is no carry forward provision and the credit expires at the end of a year. This set of circumstances can occur during a year with extended shut downs. The royalty impact is

31 6 to the end of On March 1, 2016 the matter was called in Court and was set over until March 23, The Province has engaged an expert witness regarding the matter. The Interest Holders and Province have file memorandums with the courts outlining their respective arguments. We anticipate that the Court will hear arguments beginning on April 3, ~------~----~ Proposed Actions: Officials continue to advance arbitration and legal proceedings. 45

32 12 Attachment 1 - Biographies Brent Janke Vice President - East Coast Suncor Energy Mr. Janke is based in St. Johns, NL. He is responsible for all of Suncor's production, development and exploration on Canada's East Coast. He has over 20 years of experience in the oil and gas industry, both in Canada and internationally, in a number of leadership positions. Prior to Mr. Janke's current role, he worked at Imperial Oil in Calgary as the Technical and Development Manager for Mining at the Kearl Oil Sands Operation. He also worked for over 3 years in Nigeria with ExxonMobil as the country's Maintenance Manager where he was responsible for maintenance operations for over 110 offshore and onshore assets and approximately 1,000 team members. Prior to relocating to Nigeria, Mr. Janke had assignments in Houston, Texas, and was also located in Halifax, NS, where he was the Asset Manager for the Sable Operations, and throughout Mobil Oil's operations in Western Canada (including Olds, Whitecourt, Drayton Valley, Swift Current and Calgary). Mr. Janke has extensive experience in Facilities Engineering, Project Management, and Operations and Maintenance management both in onshore and offshore operations. He holds both a Bachelors and Master's degree in Industrial Systems Engineering from the University of 51 Regina. In addition, Mr. Janke holds industry certifications from the Project Management Institute and American Society for Quality as a Project Management Professional (PMP) and a Certified Manager of Quality I Organizational Excellence (CMQ/OE).

33 13 Attachment 2- Suncor Energy Land Holdings in NL and Project Royalties s uncor E nergy L an d H 0 ld" mgs an dw or k" mg It n eres t s. 1n NL Off s h ore: Project/Prospect Interest Location Comments Hibernia Grand Banks Region PL % (Jeanne d'arc Basin) Hibernia Southern Extension (HSE) Grand Banks Region PL 1001, PL 1005, PL % (Jeanne d'arc Basin) Terra Nova Grand Banks Region PL 1002, PL 1003, PL % (Jeanne d'arc Basin) Operator White Rose Grand Banks Region 27.5% PL1006, PL1007 & PL1010 (Jeanne d'arc Basin) White Rose Expansion Grand Banks Region % Various Licences (Jeanne d'arc Basin) Hebron Grand Banks Region Various SDLs % (Jeanne d'arc Basin) Grand Banks Region (Jeanne Various interests in other Els (see d'arc, Flemish Pass, Carson); table below) and SDLs Labrador Offshore Region 1. PL- production licence; SDL- s1gmficant discovery licence; EL- exploration licence. s uncor E nergy E xp1ora f 1on L" 1cence p arce I s f rom 2012 an d 2013 C a II f or B"d I S: Call for Licence/ Effective Expiry Date Interest Holders Bids Location Date [Period 1] Year EL 1134/ Husky Oil Operations Ltd (65%) 01/15/ /15/2013 Flemish Pass Suncor Energy (35%) [01/15/20191 ExxonMobil Canada Ltd. (40%) EL 1135/ Statoil Canada Ltd. (30%) 01/15/ /15/2015 Flemish Pass Suncor Energy Offshore [01 /15/20211 Exploration Partnership (30%) EL 1136/ Carson Basin (SE Offshore) ExxonMobil Canada Ltd. (33.34%) Suncor Energy Offshore 01/15/ /15/2015 Exploration Partnership (33.33%) [01 /15/20211 Total E&P Canada Ltd. (33.33%) Bid (Million$) $19.9 $559.0 $ NL Cumulative Royalties 1 Paid from Projects with Suncor Energy Interest (Million$): NFIDENTIA NOT FOR REDISTRIBUTION Total Proje Project Dec Terra Nova (from Feb 2002) Hibernia PL 1001 (from Nov 1997) HSE (from June 2011) White Rose (from Dec 2005) North Amethyst (from May 201 0) Total 1. Cumulative royalties include preliminary data that is subject to revision.

34 Potential copyright material If you wish to obtain a copy please contact the ATIPP Office at (709) or atippoffice@gov.nl.ca.

35 15 Attachment 3- Latest Suncor Energy Financial & Operational Indicators Q Q YTD 2016::. YTD 2015::. Financial: Revenue 1 Million C$ $8,141 $6,593 $26,968 $29,680 Net Earnings/Income Million C$ $531 ($2,007) $445 ($1,995) Net Earnings per Share (basic) C$ $0.32 ($1.38) $0.28 ($1.38) Cash Flow from Operations Million C$ $2,365 $1,294 $5,988 $6,806 Return on Ca[?ital Em[?loyed Percent 0.5% 0.6% n/a n/a TotaTAssets Million C$ $88,702 $77,527 Same as Same as Total Liabilities:> Million C$ $44,072 $38,488 Q Q Total Shareholders' Equity:> _M_iJJJQ_Il gl $44,630 $39, Capital and Exploration Million C$ $1,572 $2,030 $6,582 $6,667 Expenditures Netbacks-Continuing Operations East Coast Canada Average price realized C$/bbl $68.06 $52.51 $59.31 $65.12 Royalties C$/bbl $15.07 $5.79 $10.64 $12.49 Transportation costs C$/bbl $1.72 $2.81 $1.91 $2.18 Operating costs C$/bbl $ $12.67 $14.15 Operating netback C$/bbl $41.75 $27.05 $34.09 $36.30 Operations: Upstream Production 1000 boe/dal East Coast Canada Terra Nova 1000 boe/dal Hibernia 1000 boe/dal White Rose _1_9_QQ I?_Q~{q~y~ Refinery Throughput 1 OOObbls/da/ Operating revenues (net of royalt1es) including other 1ncome. 2. Excludes major projects in progress- for 12 month period ending. 3. As at end of the quarter. 4. Includes capitalized interest on debt of $162 million for Q and $596 million for YTD 2016 and $1 29 million for Q and $447 million for YTD YTD reporting period includes the twelve months from January 1 to December 31 inclusive. 6. Thousand barrels of oil equivalent per day. 7. Thousands barrels per day. 8. Numbers may not sum to totals due to rounding. Recent NL Related Discussion: Construction of the Hebron project continued in Q with successful integration of the offshore topside modules with the GBS. First oil from the project continues to be on track for late 2017 followed by a full year ramp up to 30,000 barrels/day to Suncor. Suncor's price realizations for production from East Coast Canada and International assets are influenced primarily by the price for Brent crude. Brent crude pricing increased to an average of US$49.50/bbl in , compared to US$43.70/bbl in Royalties were higher in Q4 2016, compared with the prior year 4 1 h quarter, primarily due to higher crude price realizations and higher production in East Coast Canada. Financial/Operations Discussion: Net earnings in Q were positively impacted by: o improved benchmark crude pricing; o higher Syncrude operating earnings due to acquisition of additional working interests and improved upgrader reliability; o a non-cash after-tax mark to market gain on interest rate derivatives for future debt issuance; o refining and marketing gain; and o lower operating costs at Oil Sands and Exploration and Production (E&P) operations. 54

36 16 Net earnings for the full year 2016 were positively impacted by: o a non-cash gain on forward interest rate derivatives; o a deferred tax recovery related to a tax rate reduction on oil and gas profits in the U.K.; o higher Syncrude operating earnings; o Refining and Marketing gain; o higher refined product location differentials; and o lower operating costs across the company's operated assets. This was partially offset by lower upstream price realizations in the first nine months of 2016, the impact of shut-in production associated with the forest fires in the Fort McMurray area in Q and weaker benchmark crack spreads. Total capital and exploration expenditures in Q were lower compared to Q due to cost reduction initiatives, fewer planned maintenance activities and decreased purchases of haul trucks at Oil Sands. This was partially offset by increased Fort Hills activity and expenditures associated with the increased ownership in Syncrude. Capital and exploration expenditures for full year 2016 were within guidance and lower than 2015 due to execution of the capital plan. Suncor's total upstream production was higher for full year 2016 compared to 2015, due primarily to increased production in the Oil Sands segment. Asset sales for 2016 were C$2.0 billion, exceeding the company's target of C$1.0 to C$1.5 billion Capital and Production Guidance: Suncor Energy's capital guidance for 2017 is expected to be between C$4.8 billion and C$5.2 billion. Suncor stated that the 2017 capital spending program includes capital required to bring two major growth projects, Fort Hills and Hebron, to completion while at the same time investing in its existing assets to ensure continued safe, reliable and efficient operations. In 2017, approximately 40% of the capital spending program is allocated towards upstream growth projects, including Fort Hills and Hebron with both expected to achieve first oil by the end of The remaining 60% is directed towards sustaining capital across all segments. In 2016, approximately 60% of the capital spending program was allocated towards growth projects and 40% towards sustaining capital investments Capital Expenditure Guidance %of (C$ millions) Outlook Growth Capital 2 Total $4,800 - $5,200 40% Upstream.j $4,135-$4,475 50% Downstream $625-$675 0% Corporate $40-$50 0% 1. Exclude capitalized interest of $750 million in Growth capital expenditures include investments that increase production levels at existing Oil Sands operations, new facilities or operations that increase overall production, new infrastructure required to support higher production, new reserves or a positive change in the company's reserves profile in E&P operations or margin improvement (by increasing revenues or reducing costs). Suncor Energy's production guidance for 2017 is expected to be between 680,000 to 720,000 barrels of oil equivalent per day. Suncor expects increased production from the Oil Sands and Syncrude segments. Refined product sales for 2017 are expected to be in a range of 515,000 to 545,000 barrels per day. East Coast Canada Royalties (reflected as a percentage of gross revenues) are expected to be in the range of 17% to 21% for Suncor's 2016 outlook assumptions include: Brent (Sullom) at US$53/barrel; \1\/TI (Cushing) at US$52/barrel; WCS (Hardisty) at US$38/barrel; and Cdn/US exchange rate at $

37 Marshall, Andrea From: Sent: To: Subject: Attachments: Sullivan, Lynn Monday, February 27, :14PM Coady, Siobhan HP TRIM BRIEFING NOTES: BN-9012: Deputy Minister Meeting with Suncor Energy _Feb 2017 Deputy Minister Meeting with Suncor Energy_Feb 2017.DOCX; Deputy Minister Meeting with Suncor Energy_Feb 2017.tr < HP TRIM Record Information> Record Number: BN-9012 Title Deputy Minister Meeting with Suncor Energy_Feb

38 Meeting Note Department of Natural Resources Suncor Energy February 22, :30pm to 2:30pm Minister's Boardroom Attendees: Suncor Energy: Brent Janke, Vice President, East Coast (Biography included in Attachment 1) NR: Gordon Mcintosh, OM On April 15, 2016 and September 26, 2016, Brent Janke met with the Minister of NR to discuss issues noted above. 60 Background: Suncor Energy is a Canadian-based energy company established in 1967 and headquartered in Calgary. On August 1, 2009, Suncor Energy and Petro-Canada merged under the Suncor Energy name. The Petro-Canada brand was retained for downstream product distribution and marketing. Suncor Energy's business interests include: oil sands extraction and upgrading in western Canada; North American onshore oil and gas; international and offshore petroleum (North Sea, East Coast Canada, Libya and Syria); downstream operations in Canada and the United States, and, renewable energy and ethanol. In Newfoundland and Labrador, Suncor Energy has a significant presence in the offshore including interest in all currently producing projects/fields: Hibernia, Hibernia South, Terra Nova, White Rose and White Rose Expansion. Suncor is also a partner in the Hebron project. The company also has interest in three exploration licences and 51 significant discovery licences. To the end of December Suncor has paid approximate - in total royalties to Newfoundland and Labrador. See Attachment 2 for a overview of Suncor's project/licence interests and royalties..----'------, Suncor's latest financial/operational results and 2017 capital guidance is in Attachment 3.

39 64 Potential Agenda Item #4- Terra Nova Duplicative Royalties (Originating Application) Newfoundland and Labrador has an ongoing Originating Application (court) proceeding with Terra Nova project owners as well as other arbitrations with Hibernia and White Rose project owners includ Sunco. The Terra Nova Ori natin ication is discussed below. Analysis: Under the Terra Nova Royalty regime, Basic Royalty can be deducted from Tier I Royalty to the extent that it is equal to or less than Tier I Royalty. Due to how the Royalty Regulations were written, the ability to deduct Basic Royalty for the last month in a period is lost. A solution to this circumstance was agreed between the Province and project owners in 2011 in resolution to Terra Nova royalty dispute matters that were ongoing at that time. The fix was based on the same language for the White Rose, White Rose Expansion and Hebron Projects.

40 S. 35(1)(b), S. 35(1)(g), S. 39(2) 6 When implement, the calculation may still result in a loss of this Basic Royalty Deduction if the basic ro ty deductible exceeds Tier I royalty payable to the Province, as there is no carry forw Cl provision and the credit expires at the end of a year. This set of ~s can occur during a year with extended shut downs. The royalty impact is --to the end of On December 7, 2015 Suncor filed an "Originating Application" with the Supreme Court of Newfoundland and Labrador with respect to this issue. Newfoundland and Labrador filed a reply with the Court and dates for the hearing were set. On March 1, 2016 the matter was called in Court and was set over until March 23, The Province has engaged an expert witness regarding the matter. The Interest Holders and the Province have filed memorandums with the Court outlining their respective that the , Court will hear uments ril 3,

41 12 Attachment 1 - Biographies Brent Janke Vice President - East Coast Suncor Energy Mr. Janke is based in St. Johns, NL. He is responsible for all of Suncor's production, development and exploration on Canada's East Coast. He has over 20 years of experience in the oil and gas industry, both in Canada and internationally, in a number of leadership positions. Prior to Mr. Janke's current role, he worked at Imperial Oil in Calgary as the Technical and Development Manager for Mining at the Kearl Oil Sands Operation. He also worked for over 3 years in Nigeria with ExxonMobil as the country's Maintenance Manager where he was responsible for maintenance operations for over 110 offshore and onshore assets and approximately 1,000 team members. Prior to relocating to Nigeria, Mr. Janke had assignments in Houston, Texas, and was also located in Halifax, NS, where he was the Asset Manager for the Sable Operations, and throughout Mobil Oil's operations in Western Canada (including Olds, Whitecourt, Drayton Valley, Swift Current and Calgary). Mr. Janke has extensive experience in Facilities Engineering, Project Management, and Operations and Maintenance management both in onshore and offshore operations. He holds both a Bachelors and Master's degree in Industrial Systems Engineering from the University of 71 Regina. In addition, Mr. Janke holds industry certifications from the Project Management Institute and American Society for Quality as a Project Management Professional (PMP) and a Certified Manager of Quality I Organizational Excellence (CMQ/OE).

42 13 Attachment 2- Suncor Energy Land Holdings in Newfoundland and Labrador and Project Royalties Suncor Energy Land Holdings and Working Interests in Newfoundland and Labrador Offshore: Project/Prospect Interest Location Comments Hibernia Grand Banks Region PL % (Jeanne d'arc Basin) Hibernia Southern Extension (HSE) Grand Banks Region PL 1001, PL 1005, PL % (Jeanne d'arc Basin) Terra Nova Grand Banks Region PL 1002, PL 1003, PL % (Jeanne d'arc Basin) Operator White Rose Grand Banks Region 27.5% PL 1006, PL 1007 & PL 1010 (Jeanne d'arc Basin) White Rose Expansion Grand Banks Region % Various Licences (Jeanne d'arc Basin) Hebron Grand Banks Region Various SOLs % (Jeanne d'arc Basin) Grand Banks Region (Jeanne Various interests in other ELs (see d'arc, Flemish Pass, Carson); table below) and SOLs Labrador Offshore Region 1. PL- product1on licence; SDL- s1gmficant discovery licence; EL- exploration licence. Suncor Energy Exploration Licence Parcels from 2012 and 2013 Call for Bids: Call for Licence/ Effective Expiry Date Bid Interest Holders Bids Location Date [Period 1] (Million$) Year EL 1134/ Husky Oil Operations Ltd (65%) 01/15/ /15/2013 Flemish Pass Suncor Energy (35%) [01/15/2019] ExxonMobil Canada Ltd. (40%) EL 1135/ Statoil Canada Ltd. (30%) 01/15/ /15/2015 Flemish Pass Suncor Energy Offshore [01 /15/2021] Exploration Partnership (30%) EL 1136/ Carson Basin (SE Offshore) ExxonMobil Canada Ltd. (33.34%) Suncor Energy Offshore 01/15/ /15/2015 Exploration Partnership (33.33%) [01 /15/2021] Total E&P Canada Ltd. (33.33%) $19.9 $559.0 $ Newfoundland and Labrador's Cumulative Royalties 1 Paid from Projects with Suncor Energy Interest (Million $): NFIDENTIAL NOT FOR REDISTRIBUTION Project Terra Nova (from Feb 2002) Hibernia PL 1001 (from Nov 1997) HSE (from June 2011) White Rose (from Dec 2005) North Amethyst (from May 201 0) Total