Operating Earnings Reconciliation ⁽¹⁾

Corporate Guidance

Suncor has updated its full year business environment outlook assumptions to reflect average actual year-to-date realized prices plus forward curve pricing. Brent Sullom Voe has been updated to US$67.00 from US$58.00, WTI at Cushing to US$63.00 from US$55.00, WCS at Hardisty to US$41.00 from US$40.00, New York Harbor 3-2-1 crack to US$18.00 from US$16.00, AECO-C Spot to $1.50 from $2.50 and the Cdn$/US$ exchange rate to 0.78 from 0.80. These updates have resulted in a corresponding increase to full year current income tax to $1,050 million – $1,350 million from $450 million – $750 million. For further details and advisories regarding Suncor's 2018 corporate guidance, see www.suncor.com/guidance.

Normal Course Issuer Bid

The Toronto Stock Exchange (TSX) accepted a notice filed by Suncor of its intention to renew its normal course issuer bid (the NCIB) to continue to purchase shares under its previously announced buyback program through the facilities of the TSX, New York Stock Exchange and/or alternative trading platforms. The notice provides that Suncor may purchase for cancellation up to approximately $2.15 billion worth of its common shares beginning May 4, 2018 and ending May 3, 2019.

The actual number of common shares that may be purchased and the timing of any such purchases will be determined by Suncor. Suncor believes that, depending on the trading price of its common shares and other relevant factors, purchasing its own shares represents an attractive investment opportunity and is in the best interests of the company and its shareholders. The company does not expect the decision to allocate cash to repurchase shares will affect its long-term growth strategy. Between May 1, 2017 and April 30, 2018 and pursuant to Suncor's previous normal course issuer bid, Suncor repurchased 43,213,523 shares on the open market for approximately $1.85 billion, at a weighted average price of $42.83 per share.

Pursuant to the NCIB, Suncor has agreed that it will not purchase more than 52,285,330 common shares, which is equal to approximately 3% of Suncor's issued and outstanding common shares.

Subject to the block purchase exemption that is available to Suncor for regular open market purchases under the NCIB, Suncor will limit daily purchases of Suncor common shares on the TSX in connection with the NCIB to no more than 25% (725,092) of the average daily trading volume of Suncor's common shares on the TSX during any trading day. Purchases under the NCIB will be made through open market purchases at market price, as well as by other means as may be permitted by the TSX and securities regulatory authorities, including by private agreements. Purchases made by private agreement under an issuer bid exemption order issued by a securities regulatory authority will be at a discount to the prevailing market price as provided in the exemption order. In the future, Suncor may enter into an automatic share purchase plan in relation to purchases made in connection with the NCIB.

Measurement Conversions

Certain natural gas volumes in this report to shareholders have been converted to boe on the basis of one bbl to six mcf. See the Advisories section of the MD&A.

MANAGEMENT'S DISCUSSION AND ANALYSIS
May 1, 2018

Suncor is an integrated energy company headquartered in Calgary, Alberta, Canada. We are strategically focused on developing one of the world's largest petroleum resource basins – Canada's Athabasca oil sands. In addition, we explore for, acquire, develop, produce and market crude oil and natural gas in Canada and internationally; we transport and refine crude oil, and we market petroleum and petrochemical products primarily in Canada. We also conduct energy trading activities focused principally on the marketing and trading of crude oil, natural gas and byproducts. We also operate a renewable energy business as part of our overall portfolio of assets.

For a description of Suncor's segments, refer to Suncor's Management's Discussion and Analysis for the year ended December 31, 2017, dated March 1, 2018 (the 2017 annual MD&A).

This Management's Discussion and Analysis (MD&A) should be read in conjunction with Suncor's unaudited interim Consolidated Financial Statements for the three months ended March 31, 2018, Suncor's audited Consolidated Financial Statements for the year ended December 31, 2017 and the 2017 annual MD&A.

Additional information about Suncor filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC), including quarterly and annual reports and Suncor's Annual Information Form dated March 1, 2018 (the 2017 AIF), which is also filed with the SEC under cover of Form 40-F, is available online at www.sedar.com, www.sec.gov and our website www.suncor.com. Information contained in or otherwise accessible through our website does not form part of this MD&A, and is not incorporated into this MD&A by reference.

References to "we", "our", "Suncor", or "the company" mean Suncor Energy Inc., and the company's subsidiaries and interests in associates and jointly controlled entities, unless the context otherwise requires.

Table of Contents

1. ADVISORIES

Basis of Presentation

Unless otherwise noted, all financial information has been prepared in accordance with Canadian generally accepted accounting principles (GAAP), specifically International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board, which is within the framework of International Financial Reporting Standards (IFRS).

Effective January 1, 2018, the company adopted IFRS 15 Revenue from Contracts with Customers (IFRS 15), which sets out new guidelines for the recognition of revenue. As a result, certain comparative figures presented in this MD&A pertaining to Suncor's 2017 results have been restated in accordance with the new standard with no impact to overall net earnings or operating earnings.

All financial information is reported in Canadian dollars, unless otherwise noted. Production volumes are presented on a working-interest basis, before royalties, except for Libya, which is on an entitlement basis. Certain prior year amounts in the Consolidated Statements of Comprehensive Income (Loss) have been reclassified to conform to the current year's presentation.

References to Oil Sands operations exclude Suncor's interest in Fort Hills and Syncrude's operations.

Non-GAAP Financial Measures

Certain financial measures in this MD&A – namely operating earnings (loss), funds from (used in) operations, return on capital employed (ROCE), Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs, In Situ cash operating costs, refining margin, refining operating expense, discretionary free funds flow, and last-in, first-out (LIFO) – are not prescribed by GAAP. Operating earnings (loss) is defined in the Non-GAAP Financial Measures Advisory section of this MD&A and reconciled to GAAP measures in the Consolidated Financial Information and Segment Results and Analysis sections of this MD&A. Oil Sands operations cash operating costs, Fort Hills cash operating costs, Syncrude cash operating costs and LIFO are defined in the Non-GAAP Financial Measures Advisory section of this MD&A and reconciled to GAAP measures in the Segment Results and Analysis section of this MD&A. Funds from (used in) operations, ROCE, discretionary free funds flow, In Situ cash operating costs, refining margin and refining operating expense are defined and reconciled to GAAP measures in the Non-GAAP Financial Measures Advisory section of this MD&A.

Risk Factors and Forward-Looking Information

The company's financial and operational performance is potentially affected by a number of factors, including, but not limited to, the factors described within the Forward-Looking Information section of this MD&A. This MD&A contains forward-looking information based on Suncor's current expectations, estimates, projections and assumptions. This information is provided to assist readers in understanding the company's future plans and expectations and may not be appropriate for other purposes. Refer to the Forward-Looking Information section of this MD&A for information on the material risk factors and assumptions underlying our forward-looking information.

Measurement Conversions

Certain crude oil and natural gas liquids volumes have been converted to mcfe on the basis of one bbl to six mcf. Also, certain natural gas volumes have been converted to boe or mboe on the same basis. Any figure presented in mcfe, boe or mboe may be misleading, particularly if used in isolation. A conversion ratio of one bbl of crude oil or natural gas liquids to six mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, conversion on a 6:1 basis may be misleading as an indication of value.

Common Abbreviations

For a list of abbreviations that may be used in this MD&A, refer to the Common Abbreviations section of this MD&A.

2. FIRST QUARTER HIGHLIGHTS

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First quarter financial results   

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Net earnings were $789 million in the first quarter of 2018, compared to $1.352 billion in the prior year quarter. Net earnings for the first quarter of 2018 included an unrealized after-tax foreign exchange loss of $329 million on the revaluation of U.S. dollar denominated debt and a non-cash after-tax gain of $133 million related to the asset exchange with Canbriam Energy Inc. (Canbriam) for the company's mineral landholdings in northeast British Columbia. Net earnings in the prior year quarter included an after-tax gain of $437 million related to the sale of the company's lubricants business and its interest in the Cedar Point wind facility, and an unrealized after-tax foreign exchange gain of $103 million on the revaluation of U.S. dollar denominated debt.

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Suncor recorded first quarter 2018 operating earnings ⁽¹⁾ of $985 million, compared to $812 million in the prior year quarter as a result of improved crude oil pricing and increased refining margins, refinery utilization of 98% and strong In Situ production, partially offset by increased operating costs, which were primarily due to higher maintenance expenses and the addition of full operating costs at Fort Hills while production ramps up. The decrease in Oil Sands production was due to a weather-related outage at Oil Sands Base, as well as a constrained bitumen feed line at Syncrude. In response to the bitumen feed line constraint at Syncrude, planned maintenance originally scheduled to begin in the second quarter of 2018 was advanced to the first quarter of this year to mitigate the impact to annual production. Production rates at the company's Oil Sands Base plant returned to normal by the end of February, following resolution of the weather-related issue.

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Funds from operations ⁽¹⁾ were $2.164 billion in the first quarter of 2018, compared to $2.024 billion in the first quarter of 2017, and were primarily impacted by the same factors as operating earnings described above. Cash flow provided by operating activities, which includes changes in non-cash working capital, was $724 million for the first quarter of 2018, compared to $1.628 billion for the first quarter of 2017. The change in non-cash working capital in the first quarter of 2018 resulted from an increase in accounts receivable on an improving price environment, a substantial build of product inventory in advance of major turnarounds and the payment of deferred 2017 tax instalments.

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At Fort Hills, the first and second of three secondary extraction trains were successfully brought online. Production in the quarter averaged 29,800 bbls/d, including 5,200 bbls/d of bitumen froth further processed by Oil Sands Base.

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Accelerated ramp up of Hebron production. Production in the quarter averaged 8,200 bbls/d with the second well coming online during the first quarter of 2018, ahead of schedule. A third production well at Hebron came online early in the second quarter of 2018.

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Refining and Marketing (R&M) average refinery utilization of 98% and crude throughput of 453,500 bbls/d, which is the highest ever in a first quarter. Strong reliability at all of the company's refineries and improved cracking margins enabled the R&M business to contribute $965 million in funds from operations during the quarter.

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In Situ cash operating costs ⁽¹⁾ averaged $9.55/bbl for the quarter. This represents the third quarter in a row where In Situ cash operating costs have been below $10.00 per barrel.

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Acquired an additional 5% interest in Syncrude from Mocal Energy Limited (Mocal). The transaction adds approximately 17,500 bbls/d of sweet SCO capacity and increases the company's ownership position in Syncrude to 58.74%.

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Acquired an equity position in Canbriam. Suncor closed the previously announced transaction with Canbriam to exchange all of Suncor's northeast British Columbia mineral landholdings and consideration of $52 million for a 37% equity interest in Canbriam, a private natural gas company.

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Suncor continued to return value to shareholders. The company returned $590 million to shareholders through dividends and bought back $389 million of outstanding shares in the first quarter of 2018.

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Suncor approved a dividend increase and renewed the share repurchase plan. In the first quarter of 2018, Suncor's Board of Directors approved a 12.5% increase to the quarterly dividend and a further $2.0 billion in share repurchases.

(1)

Operating earnings, funds from operations, and In Situ cash operating costs are non-GAAP financial measures. See the Non-GAAP Financial Measures Advisory section of this MD&A.

Net Earnings

Suncor's consolidated net earnings for the first quarter of 2018 were $789 million, compared to net earnings of $1.352 billion for the prior year quarter. Net earnings were primarily affected by the same factors that influenced operating earnings described subsequently in this section of this MD&A.

Other items affecting net earnings over these periods included:

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The after-tax unrealized foreign exchange impact on the revaluation of U.S. dollar denominated debt was a loss of $329 million for the first quarter of 2018, compared to a gain of $103 million for the first quarter of 2017.

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The first quarter of 2018 included a non-cash after-tax gain of $133 million related to the asset exchange with Canbriam for Suncor's mineral landholdings in northeast British Columbia.

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The first quarter of 2017 included an after-tax gain of $437 million related to the sale of the company's lubricants business and its interest in the Cedar Point Wind facility.