Pramod JindalBeam Ukarapong

Stock Pitch Competition 2011

November 12 2011

Overview

Suncor Energy Inc. (NYSE:SU, TSX:SU)

• Integrated energy company• Over 40 years of Oil Sands experience• Canada & International: crude oil and natural gas• Canada: crude oil, petroleum, and petrochemical products • Business units:

• Oil Sands• Natural Gas• International and Offshore• Refining and Marketing

• Price $31.44• 52 week low $23.97• 52 week high $47.27• Average daily volume 6.07M• Shares outstanding 1.57B• Market cap $49.50B

Key Statistics

As of November 9, 2011

Long Thesis: Suncor Energy Inc.

• Undervalued; Price target: $43• Strong correlation with SPTSEN Index

– SPTSEN expected to reach 347.6355 by Q2’ 2012• Strategic acquisitions

– Production level expected to reach 1 mboe/d by 2020• Opportunities

– World population (~6 billion) expected to be ~7.6 billion by 2020– Libyan stability

• Management Team– Visionary: foresee hidden fortune (first to exploit Oil Sands)

• Continued expansion of renewable energy projects • Target Oil Sands cash costs ~$30 range

– Exceed production target despit5e maintenance/shut down

Industry Outlook

• Revenue determined by Brent Oil Price (expected to increase to $122)

Source: Bloomberg

SU Stock Performance

• Strongly correlated with SPTSEN Index

Source: Bloomberg

Investment Highlights

• Current: – Firebag Stage 3: operational and production continuing to ramp up– Firebag Stage 4: expansion in offing- to be operational by Q1’ 2013 – Terra Nova maintenance due completion– Technology and innovation

• Tailings Reduction Operations (TROTM) • Recent:

– Partnership with Total E&P • Fort Hills and Joslyn oil sands• Restart Voyageur Upgrader (200,000 bpd by 2016)

• Past(2009):– Petro Canada merger

• Imminent re-entry in Libya

Financial Highlights

• Focus on debt reduction• Declared 11cents dividend, Nov 7 2011

– Consistent with 10% increase announced in May 2011

• 2009: Positive ripples from Petro Canada acquisition

– Annual savings of CAD$1.8B • Stability of future cash flow

– “American consumption of oil and gas expected to increase almost 50% by 2025” (CEO Richard George)

– Canadian oil sands production expected to increase at 6% (CAGR) to 3.3m bbl/d by 2025 (Datamonitor)

Q3 2011 Q3 2010

Revenue $1.28 B (82₵/share)

$1.22 B (78₵/share)

CFO $2.72 B $1.63 B

Comparables

P/NAV2011 2011E 2012E 2013E 2011E 2012E 2013E

Cenovus Energy 119% 8.7 7.7 7.3 8.1 7.2 6.8Husky Energy 97% 4.4 4.6 4.5 4.2 4.5 4.6Imperial Oil 97% 9 8.4 7.2 8.8 7.8 6.7

Average 97% 7 6.3 6.3 6.6 6 5.6Suncor 75% 5.8 4.7 4.2 5.2 4.5 4.2

EV/DACF EV/CFPS

Risk Profile

• Unexpected downtime and maintenance• International

– Syrian sanctions & Libyan uncertainties – European debt crises and slowdown in China

• EU’s proposed regulation (The Globe and Mail Nov 3, 2011)

• Keystone XL • Environmental issue• Foreign exchange rate exposure

Source: Bank of America

Recommendation

• Long Suncor• Target price: $43

Q&A