Suncor Energy Inc. (SU) | Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Property, Plant and Equipment are recorded at cost.

The costs to acquire developed or producing oil and gas properties and to develop oil and gas properties, including completing geological and geophysical surveys and drilling development wells, and the costs to construct and install dedicated infrastructure, such as wellhead equipment and supporting assets, mine development, offshore platforms and subsea structures, are capitalized as oil and gas properties within Property, Plant and Equipment.

The costs to construct, install and commission, or acquire, oil and gas production equipment, including oil sands upgraders, extraction plants, mine equipment, in situ processing facilities, power generation, utility plants, and natural gas processing plants, and all renewable energy, refining, distribution, marketing assets and related decommissioning and restoration obligations, are capitalized as Property, Plant and Equipment. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will flow to Suncor, the expenditure is capitalized and the carrying amount of the replaced asset is derecognized.

Stripping activity required to access oil sands mining resources incurred in the initial development phase is capitalized as part of the investment in the construction cost of the mine. Stripping costs incurred in the production phase are charged to expense as they normally relate to production for the current period.

The costs of planned major inspection, overhaul and turnaround activities that maintain Property, Plant and Equipment and benefit future years of operations are capitalized. Recurring planned maintenance activities performed on shorter intervals are expensed as operating costs. Replacements outside of a major inspection, overhaul or turnaround are capitalized when it is probable that future economic benefits will flow to Suncor and the associated carrying amount of the replaced asset is derecognized.

Leases that transfer substantially all the benefits and risks of ownership to Suncor are recorded as finance lease assets within Property, Plant and Equipment. Costs for all other leases are recorded as operating expense as incurred.

Borrowing costs relating to assets that take a substantial period of time to construct are capitalized as part of the asset. Capitalization of borrowing costs ceases when the asset is in the location and condition necessary for its intended use, and is suspended when construction of an asset is ceased for extended periods.

Source: Suncor Energy Inc., Annual Report

Property, Plant and Equipment Disclosure

Suncor Energy Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions, translated from CAD C$

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Oil Sands	47,537	40,990	37,451	35,166	21,830
Exploration and Production	16,404	13,530	12,810	18,783	2,452
Refining and Marketing	9,538	8,688	8,483	8,427	3,190
Corporate and Energy Trading	1,239	1,143	899	401	269
Property, plant and equipment, cost	74,718	64,351	59,644	62,776	27,740
Accumulated provision	(19,026)	(12,631)	(9,731)	(7,824)	(4,606)
Net property, plant and equipment	55,692	51,720	49,913	54,952	23,134

Source: Based on data from Suncor Energy Inc. Annual Reports

Item	Description	The company
Property, plant and equipment, cost	Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation.	Suncor Energy Inc.'s property, plant and equipment, cost increased from 2010 to 2011 and from 2011 to 2012.
Net property, plant and equipment	Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment.	Suncor Energy Inc.'s net property, plant and equipment increased from 2010 to 2011 and from 2011 to 2012.

Property, Plant and Equipment Ratios (Summary)

Suncor Energy Inc., Property, Plant and Equipment Ratios

		Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
	Average age	25.46%	19.63%	16.32%	12.46%	16.60%

Ratio	Description	The company
Average age	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient.	Suncor Energy Inc.'s average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.

Average Age

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions, translated from CAD C$)
Accumulated provision	19,026	12,631	9,731	7,824	4,606
Property, plant and equipment, cost	74,718	64,351	59,644	62,776	27,740
Ratio
Average age¹	25.46%	19.63%	16.32%	12.46%	16.60%

2012 Calculations

¹ Average age = 100 × Accumulated provision ÷ Property, plant and equipment, cost
= 100 × 19,026 ÷ 74,718 = 25.46%

Ratio	Description	The company
Average age	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient.	Suncor Energy Inc.'s average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.