Q1 2023 Cenovus Energy Inc Earnings Call
Please standby we're about to begin.
Good day, ladies and gentlemen, and thank you for standing by welcome to Synovus Energy's first quarter results.
As a reminder, today's call is being recorded at this time all participants are in a listen only mode.
During the presentation, we will conduct a question and answer session.
<unk> joined the queue at any time by pressing star one members that the investment community will have the opportunity to ask questions first.
The conclusion of that session members of the media May then ask questions.
Please be advised that this conference call may not be recorded or rebroadcast without the express consent of Synovus energy.
I would now like to turn the conference over to Mr. Jason about tastes senior Vice President Investor Relations. Please go ahead Mr. <unk>.
Thank you operator, and welcome everyone to Synopsys Twin 23 first quarter results conference call. Please refer to the advisories located at the end of today's news release. These describe the forward looking information non-GAAP measures and oil and gas terms referred to today. They also outline the risk factors and assumptions relevant to this discussion additional information.
It is available on synovus as annual MD&A and our most recent Aif and form 40 F.
All figures are presented in Canadian dollars before royalties unless otherwise stated.
Alex per Bay, our President and Chief Executive Officer will provide brief comments then we'll take your questions. We ask that you hold off on any detailed modeling questions. You can follow up with them with on on those directly with our Investor Relations team after the call.
And please also keep to one question with a maximum of one follow up you're welcome to rejoin the queue for any follow up questions. You may have Alex. Please go ahead.
Thanks, Jason and good morning, everyone as I do every quarter I'm going to start this morning's call with our top priority health and safety the safe restart of the superior and Toledo refineries is of the utmost importance to us and over the last few weeks, we've resumed operations at both refineries, but our Q4 conference call we can.
<unk> to start running crude at superior in mid March and we did that safely.
Refinery is currently running between 24 and 30000 barrels a day and you can expect it to ramp up to full rates through the second quarter in Toledo, We successfully closed the transaction on February 28.
We've restarted the smaller 30000 barrel a day east side of the refinery and expect the larger west side to be online in May also ramping up to full rates through Q2.
Both of these refineries are currently making on spec product.
With the construction of superior now complete and the restoration work of the impacted zone at Toledo complete we expect these assets to generate significantly improved operating margins through the quarter approaching breakeven in June and achieving free cash flow by July .
Like to acknowledge and thank all the teams involved in achieving these significant milestones.
<unk> were done safely and methodically and we appreciate the focus by everyone involved we apply the same attention to safety that we did with these startups to everything we do our safety journey is never complete and we look to continue elevating our performance.
Turning to our operating results this was a challenging quarter and to be blunt not up to the standard we've set for ourselves at Synovus I wanted to address this upfront in the U S downstream the ongoing costs of getting Toledo and superior restart it impacted our margins because of our vertically integrated strategy.
Having these refineries running at full rates, while differentials widened as much as they did was especially impactful on our corporate cash flows are non operated refineries Wood River and Borger ran below expectations during the quarter, which further impacted cash flow and earnings. This was mainly due to one.
Unplanned downtime at Wood River related to the December incident, which led to significant cost associated with fulfilling the obligations for finished product as well as the remediation work itself Wood River is now back up and operational with the exception of some planned maintenance scheduled to be complete.
The middle of May.
Given the operational performance in U S manufacturing so far this year, we've adjusted the throughput in our annual guidance down by 40000 barrels per day at the midpoint, resulting in full year throughput guidance for the downstream to deliver between 580000 to 610000 bear.
<unk> per day.
However, with the many significant milestones now achieved we are paving a path to successfully deliver on our integrated strategy. We've also updated our annual production guidance for the Atlantic region, reducing it by 10000 barrels a day, we are taking a conservative view and have removed Terra Nova volumes from our.
2023 guidance, our full year guidance for upstream production is there for 790000 to 810000 barrels equivalent per day week.
We continue to progress our strategy with conviction our management team is confident the plan will deliver in all areas of our business with the performance that you've come to expect of us and more importantly, the performance. We expect of ourselves. We believe you will clearly see the strength of our operations and integrated.
<unk> in the back half of this year.
Let me further speak to the actions, we're taking as a company to improve our asset and financial performance.
And the oil Sands production from Foster Creek, and Christina Lake will benefit from three new pads, starting up at each asset and contributing to higher production volumes in the third and fourth quarters at our Lloyd Mr. Thermals in Sunrise product projects, we will continue to optimize our development and operating strategy too.
Support improved production volumes at our Lloyd Thermals, we have production solidly back over 100000 barrels per day, while Sunrise will benefit from the first new well pad since 2017, when we start up a pad around the end of 2023.
Conventional continues to impress with steady production rates and strong cash flows even with eco prices declining through the quarter. We have recently drilled some really prolific wells in the wapiti area, which are testing at record rates. These were among the top Alberta gas wells in both January and February given us.
Further confidence in our future development plans.
Asia Pac continues to generate free cash flow and our offshore segment as a whole contributed 300 million and operating margin this quarter.
Moving to our downstream operations I want to reiterate what I previously mentioned with superior Toledo, and Wood River, we expect to see improvement in our overall throughput and utilization rates in Q2, the normalized margins and crack capture rates will become further evident in Q3.
Hi.
So not as robust as previous quarters, we expect to see a strong market for refined products through the rest of the year and our U S. Refining network will be in a great position to take advantage of this.
Canadian manufacturing performed well with the Lloyd refinery operating at a 99% utilization rate and the overall segment contributing over 260 million and operating margin with a consistent high reliability of these assets, we expect to be able to take advantage of strong product pricing through.
The year and are well positioned should the heavy oil dips widen.
Turning to our financial performance, our net debt increased this quarter as expected. This was mainly due to the cash tax payment of about 1.2 billion for taxes accrued from last year now that weird cash taxable in all jurisdictions taxes will be paid on a quarterly basis going forward the increase in <unk>.
Net debt also reflects approximately $460 million to close the Toledo deal in the first variable payment related to the Sunrise transaction.
Given where we are today and assuming commodity prices remain around current levels. We expect net debt to fall below the $4 billion floor in the fourth quarter Lastly.
Lastly, consistent with our ongoing strategy and commitment to shareholders. Our board approved a 33% increase to the base dividend to <unk> 56 cents per share on an annual basis. This increase is a reflection of our commitment to assess the base dividend annually and provide our shareholders with a sustainable and.
Growing dividend over time, this dividend as well as our sustaining capital is well covered and a $45 U S per barrel W. Ti pricing environment.
Today's call is the last conference call I'll be leading for synovus as I move to my new role as executive Chair of our board you will be in John's steady hands for Q2 as he takes the helm. This company is positioned well for long term success and I know that John will lead synovus successfully.
<unk> and continue to execute the company's long term strategic plan.
The strategy, we set at the beginning of my tenure in 2017 was really simple optimize our cost structure strengthening the balance sheet and ensure market access far upstream production I can confidently say that we have delivered on all three and then some and I would like to thank everyone, who made it possible our staff and manage.
My team have been remarkable and I am truly excited to see John lead. This company forward with that we're happy to take any questions you may have.
Ladies and gentlemen, as a reminder, you can join the queue to ask a question by pressing star one.
We will now begin.
A question and answer session and go to our first caller.
Dennis Fong with CIBC World markets.
Hi, good morning, and thank you for taking my questions maybe.
Maybe just quickly just wanted to say I guess again, congratulations to John and Alex for moving enter into your new roles later today.
The first question I have maybe directed towards Jon.
Given your background and experience in the refining sector I was hoping to maybe get your take and even maybe some examples of how to know with plans to change or improve on the maintenance of the refining assets.
Versus maybe the previous.
Operator.
We know that there are kind of operate as our ore or ramping up kind of throughout.
Throughout the portfolio.
Yeah.
Yes sure.
Dennis for those kind words and your question.
When I kind of look at our portfolio, we're going to be running a portfolio of five operated refineries with two non operated refineries.
And Wood River Borger, and if you kind of look at the trajectory of the performance of the assets that we've had under our stewardship over.
Over the past couple of years since we purchased husky.
You know I think youll see that the Canadian assets are operated really quite well and then we get high levels of utilization and reliability out of them and similarly.
There's been a step change in Lima, and I think that that is really a credit to the work that Keith and the group of.
People that we put into our manufacturing business had been able to do in relatively short order. So my expectation is that when we bring up our superior in Lima, not only will work very quickly or sorry superior.
Toledo, not only will work very quickly to optimize them commercially.
But you'll see the same kind of operating performance with the people that we brought in from outside as well as the people that we inherited from the Husky acquisition.
To bring in the same kind of maintenance processes and reliability processes there.
But we have a high expectation for what we're going to get out of those assets and high expectation on internally of how theyre going to run and I think that that comes out of a level of confidence that we have from the assets that we've been running for the last couple of years already.
Great Great I appreciate that color.
My second question here is.
Really around.
The I guess, the current balance of upstream versus downstream within the portfolio as we kind of look out over the next 12 to 18 months there is.
Cancel for additional egress, especially with the Trans mountain expansion pipeline eventually coming online how do you look at the balanced portfolio between the upstream volumes and your downstream refining capacity and do you view that to be we'll call. It I don't think necessary, but how how do you think about balancing.
Those two items as you can move forward, especially just given the.
The nature of the assets and the availability of accessing global markets.
Hey.
Hey, Dennis it's Alex I'll, maybe just give a couple of comments and then I'll pass it over to John but.
I would say right now we feel pretty comfortable with.
With the with the portfolio we have in the mix, we have between upstream and downstream you've heard us talk in.
In the past about our plans to.
Modestly grow our upstream, but we think we have a really good portfolio of downstream assets that are largely directly connected and have the ability to run our heavy oil molecules and we'll always be opportunistic and you know if if if something really compelling.
Going forward, we would obviously have to take a look at it but I think right now we feel pretty good and maybe I'll pass it over to John maybe I'll, just add a couple of points onto that dentists, because it really it really.
Cuts to the heart of everything we're trying to do here in terms of creating that heavy oil value chain.
But if you think about what we've created here we've built an upstream heavy oil portfolio that produces about 800000 barrels a day of heavy oil blend.
And once we get superior and Toledo up and running we're gonna have takeaway capacity for about 600000 barrels.
That heavy also will eliminate the location risk on that and then within the portfolio we can consume.
About 400000 barrels a day of heavy so we really like.
The way that we put this together and we've been able to kind of mitigate those.
A large portion of the location and heavy oil differentials that we see in the portfolio and then on top of that.
Have about 740000 barrels a day of refining capacity, which we know we get a crack.
Value on top of it so in terms of what we built getting these two refineries up really completes the asset portfolio that we envisioned when we bought husky and we think we built a pretty powerful heavy oil value chain.
With the assets that we've got so I don't think Theres anything thats really missing from that that we need to kind of look at above and beyond it today, but as Alex mentioned, we do have a desire to incrementally grow the upstream and we'll have to look at the downstream in concert with that but today, we feel like we've got a really nice most trial.
Great.
Appreciate you answering my questions I'll turn it back thank you.
Thanks Dennis.
Thank you and next we'll go to Menno <unk> with TD Securities.
Hi, good morning, everyone and congrats to the to the bulk of you on your on your new roles, maybe I'll just follow up on Genesis.
Downstream my questions are there any specific learnings that have come out of the last couple of quarters with U S. Refining that you can speak to today and that gives me more confidence going forward.
Came in all its Keith.
What I would say is you know maybe it will just take them build on what John said, you know, we're pretty happy with the improvements we've seen at Lima Lima performed in 2022, producing almost a $1 billion of op margin.
Through the year safety performance was was down at kind of World class performance around 0.1 on it on a trip. So you know really happy with kind of the improvements we're seeing there obviously, we're not overly happy with kind of the restart of both superior and Toledo and working very diligently on that.
Maybe I'll just hit on each of those separately on Toledo.
On March 1st we took over operator ship rift.
Coronary wasn't running at the time, we basically performed a couple of additional assessments prior to restarting the refinery we've.
We've completed the repairs associated with the fire impacted area back in September . We then restarted the east side of the refinery, which is about 30000 barrels a day, we have that lined out and producing products and now we're turning our focus to the larger part of the asset which is the additional 120000 barrels a day, which will work.
Bring on through May and ramp up to full rates by the end of the quarter. Obviously, you know through this period of time when you're not operating you have a pretty significant impact on on free funds flow youre consuming a lot of opex, but you are not generating any revenue. So we do look to kind of Q3 being a really transformation.
In a time for the Toledo refinery.
On superior.
We are demobilizing.
The construction project is essentially complete.
Our teams are ramping down and and we're actively working on on the commissioning of the FTC. We are able to commission and start up the crude unit. So we're currently processing in the 20 to 30000 barrels a day of crude on the crude unit and producing finished product out of that asset.
And then we will quickly move over to the the FCC and start commissioning that in similar to Toledo, it's been consuming both capital and Opex in the first quarter without generating any revenue and so looking forward to kind of the April may timeframe to get that asset up fully running and into the.
<unk> ended June time period, two to start realizing the full value of those two assets. So a lot of focus on safely getting these two assets back up and running they do complete the heavy oil value chain that John alluded to and are a big part of the ongoing strategy and we are happy with the teams we have in place and we're confident in their.
Lady to safely restart and run these reliably yes, mental I would just add I agree with all of Keith's comments and and I would just observe that.
Particularly with with respect to superior in Toledo, we have not been in a position to demonstrate the full capability of this machine. When we have all of our downstream assets running and our upstream assets and the incredible impact that having all of that together.
Gives to our operating margin then and you heard me say in my prepared comments I think everybody should really look forward to the second half of the year because I believe we will see the full value of that engine operating both downstream and upstream and I'm I think we're all very happy to be getting through this.
Construction phase and moving into that.
Bringing everything online and getting everything lined out.
Thank you that's that's very helpful, maybe I'll flip over to upstream.
Sunrise in particular, I guess eyeballing, the slide here it looks like.
Incremental 15 to 20000 barrels per day of new capacity is slated for give or take the middle of next year can you just remind us of the scope of work.
For that incremental capacity and maybe even the capital efficiency and if we if we take it to a higher level is there anything jumping out in terms of best practices from Foster Creek Christina Lake currently being applied at Sunrise.
Yes, Hi noted rumsey here.
Yes, I mean.
Notionally this year production at Sunrise is flat and there haven't been any new pods.
Since 2017, so what we have is three pads actually being developed at the moment and as you said we plan to have production that beamed up really early next year as we start to actually bring on those parts.
<unk> been doing is applying our foster Creek, Christina Lake subsurface strategies and what we've been doing.
Wells within the reservoir and actually being able to deploy steam more efficiently across the and the reservoir as we do that so.
Our SLR saw steam oil ratio, which is one of the measures of our operating costs, we see that continuously have been driven down the way and similarly, we're applying our low cost strategies from up operating viewpoint across the surface facilities and we see our opex coming down as we do this so.
<unk> forwards as we as we drill more wells into the reservoir, we actually plan to get to nameplate list in the next 18 months and from there we're actually looking at Debottlenecking going forward.
Thanks, Alright, I will turn it back.
Thanks Menno.
And moving on we'll go to Greg Pardy with RBC capital markets.
Thanks, Thanks, good morning, and indeed.
Congratulations on the move on the boost to both of you.
A lot of focus on the U S and I recognize why.
But then you've got this great asset called the Weideman Strep, greater and I wonder whether that one holds further promise for you either.
And reducing your condensate costs on a go forward basis or or what have you, but I'm just wondering what the perhaps the medium to longer term plans might be for Lloyd Minster.
Hey, Greg it's Keith.
Great question, we're obviously spending a fair amount of time looking at the opportunities to integrator are world class upstream assets with the Lloyd Mr area in complex, we actually are advancing at the refinery a debottleneck opportunity right now and that.
That will expand the capacity of the refinery. We're also looking at a second debottleneck that will essentially increase throughput by almost 60% over the next few years at the refinery.
The refinery is also a feed into our upgrader. So we're pretty excited about to your point being able to bring over some of our higher condensate.
Upstream deal.
<unk> and processing it at this asset because then we can recycle that condensate, but also looking at the upgrader and pulling out additional diesel production out of the out of the asset as we've as we process more dull but through the through the combined infrastructure that we have there so pretty exciting opportunities that we're seeing there.
Sure.
<unk>.
A robust list of opportunities that we're progressing and.
Ongoing.
Debottlenecking and improvement in that in those assets.
And Greg it's Alex.
I know this kind of goes without saying, but all of those projects that Keith is talking about as always with this company will return their cost of capital at.
At a $45 <unk> price environment.
Okay understood, thanks, and royalty on that one.
Sorry, I missed that.
Yes, I was just going to stay relatively low capital too to kind of get those debottleneck Stan too.
Okay. Okay got it no thanks for that.
If I look at your first quarter.
Your Bill 12, 5000 barrels a day in terms of inventory.
Coal prices were high but they dropped significantly and then the timing on your condensate purchases would have meant that you were blending costs for that much higher and so you drive it realizations were that much lower is it fair to say, though that as you go through the second as we go through the second quarter here that all of those headwinds are essentially turning into a tailwind whether it's operating costs or even from the standpoint of.
Realizations.
Yeah.
Yes, Greg I think a few things.
We will be building a little bit of inventory as we as we are and we're seeing it already as we start the refineries.
In that in that infrastructure.
We're able to send some additional barrels down to the Gulf coast to capture some additional margin that we saw kind of coming out of the December and January time periods, when when differentials were wider.
But to your point differentials have now really narrowed in and and the spread between condensate and WCS has also narrowed so all of those are now moving over into <unk> and we've seen the realizations significantly improve over the past couple of months.
And Greg just on the condensate side I mean, one of the things that we've seen through the first quarter and continuing as condensate on the Gulf Coast has been really discounted relative to Fort Saskatchewan.
So we've been taking full advantage of our assets to bring condensate up to the Gulf Coast.
Alberta to meet our condensate demand.
With our heavy oil assets as well so.
Those arbs are still wide open for us.
Okay understood. Thanks again.
Yes, no worries.
And as a reminder for analysts. Please press star one at this time to enter the question and answer queue.
And next we'll go to Neil Mehta with Goldman Sachs.
Yes, Congrats John and congrats Alex on your new role.
Lots of luck.
Mike My first question is around the net debt level in the quarter were $6 6 billion, but I think in your script you talked about how you you still have a lot of confidence in being able to get under $4 billion by the fourth quarter can you kind of walk through some of the assumptions I would imagine you'll have some working capital release that should help.
In addition to the organic free cash flow is refining ramps.
The market a little more confidence your ability to achieve that SAP bulgari dollars levels.
Yes, Neal it's Jeff here.
I'll give some color on that.
I wouldn't expect a significant working capital release that being said as you did see the build this quarter.
That was really driven as we talked about the cash tax payment of $1 2 billion, but that's really underpinned as Keith talked about is our organic cash flow, we do as <unk> talked about we have pads coming on here.
The end of the year back half of the year. We also have the ramp up in superior and Toledo, and it's really that organic cash flow will be driving it and the generation, we're not relying on significant working capital releases. So.
Is it is the operations Neal.
And remind us the commodity price assumptions that are embedded in getting to that sub $4 billion number around.
We're at around <unk>.
Yes, yes.
Yes go ahead.
Right.
Hey, Scott.
Yeah, no so the commodity.
Commodity price assumptions, you're talking about there a $75 <unk>.
And ex Chicago crack of $28 pre rens and Youre probably in around the 2021 dollar Mark for the crack go forward for the residual part of the year.
Okay. That's great and then the follow up is as you get to that sub 4 billion level and given the stock has underperformed to start the year, how do you think about it.
The return of capital dynamic and how do you how do you take advantage.
The volatility in.
In this time.
Hey, Neil it's it's Alex.
I've said this many times and I think this view is is shared by by the management team and the board, but all things being equal.
We do prefer share buybacks than variable dividends.
And right now at this kind of share price are.
We are we are well below our target level for a.
For share buybacks and I would.
We would be alive to the opportunity that would present as long as we're at this kind of share price level.
Yeah.
Okay.
Okay.
I think we might have lost Neal.
Mr. Mehta was there anything further.
Yeah very clear thank you.
Thank you.
We'll go to John Royall with Jpmorgan.
Okay.
Hi, good morning, Thanks for taking my question.
So my first question is just on the variable payments to BP on the Sunrise acquisition can you remind us how those work and what are the expectations going forward.
I know its potential for another $600 million on the variable piece of how much do you ultimately expect to pay in the current environment.
Hey, John it's Cam.
So.
The way that that transaction was structured is.
We pay every quarter based on where WCS pricing is.
Above $52.
For every quarter so.
And effectively take the price difference between $52, and where WCS and multiply it by $2 8 million.
That that payment is does not have a quarterly cap, but it does have an aggregate cap.
$500 million.
So you should expect there'll be payments.
Under those terms of those agreements until we hit that $500 million Theres also a term. So two years after two years the payments stop irrespective of whether we get to that cap or not.
Okay. Thank you and then.
Maybe you can speak to just.
Any sort of broad expectations for.
There are a lot of moving pieces that maybe where you think refinery utilizations will will end up into Q and then the other thing we noticed is that the wood river went into turnaround for <unk>.
There was previously no maintenance in the schedule for <unk> or was this just pushed out from <unk> or is it incremental to overall guidance.
Hey, John It's Keith Yes, so on Utilizations as we kind of alluded to the Canadian part of the business is running well and in the U S. We would expect utilization to continue to improve through the quarter and then be at full utilization in third quarter on Wood River.
You're spot on there was a planned turnaround early in Q1 that got deferred to Q2 as they repair them restarted from the incident back in December you know all of that is progressing well that should wrap up here.
Towards mid May and then.
All of our joint venture assets will be running running through.
Through the.
The remainder of the second quarter and into the third quarter as well.
Thank you.
Thanks, Sean.
And as a final reminder, for analysts star one at this time for questions, we'll pause for just a moment.
And we do have a follow up from Dennis Fong with CIBC World markets.
Hi, Thanks for taking my follow up.
I'd be curious now that you're operating obviously the.
Three our refining assets in the U S. Can you maybe make a comment on how you plan and I know <unk> costs.
Decreased a little bit through the start of this year, but any of that happen to be.
Kind of maybe a pinch point in years prior and how do you plan on managing.
RVO requirements as well as rent costs within your refining assets now that you operate.
Binaries.
Yeah.
Hey, Dennis Keith here.
We were reliant to the fact of our blending requirements in.
And we are a participant obviously in the market and kind of Ratably offset our requirements.
Orderly.
Obviously, we are continuing to look at are there any additional opportunities to further impact that but the way, our where our assets are structured and where they're located theres no evident easy opportunities to do that so we will continue to we.
We will continue to look at it but right now we're just ratably offsetting those through the quarters.
Yes, Dennis this is John I mean, thats the important piece of that Keith just highlighted as we randomly by and we don't really take a position on rins outside of just managing that RVO requirement.
Great. Thank you.
Okay.
And now for any members of the media. Please press star one at this time to join the queue.
Okay.
And we will next go to Chris <unk> with Calgary Herald.
Hi. This is a question for either John or Alex up we heard just a couple of weeks ago that the Trans mountain cost.
Complete that project have now gone up to about $39 billion I'm wondering what kind of impact that's going to have upon your told on that project and the economics of it and can you remind us how many barrels youll be moving on about the expansion is completed.
Hey, Chris It's it's it's Alex.
You know the.
All of the shippers, we obviously all have long term shipping agreements that provide for some level of sharing.
I'm not sure that number or that formula is.
<unk> public, but what I would tell you is that even at the price we're at now.
This still represents say aye.
Good egress asset for us and I think it's really going to help.
The situation in the province, so over the long term.
Just on a separate topic, we saw the federal budget come out a couple of weeks ago with some changes to respond to the U S. IRI I'm wondering whether you thought those changes were sufficient enough for pathway can partner company to move ahead on your carbon capture projects in some of your other de Carbonization project.
Yeah.
Chris This is something I've I've said, many times I mean.
Look we we appreciate.
The words that the government had in the budget for example, about the investment tax credit.
We are right now.
In an ongoing discussion with the federal government and the provincial government.
It is the it.
It was.
Was a welcome addition, we very much.
Appreciate that.
The government stepping out to.
To help us in that way, but I think at the end of the day.
We are going to need more support from.
From governments this is an incredibly.
Just an incredible undertaking that the industry is proposing to do too.
Two.
<unk> and ultimately move towards net zero by by 2050.
There's going to be we estimate just for the oil sands, that's going to be a 75 billion dollar cost.
But you have to put that against the value that this industry brings to Alberta brings to the country.
I think the last I saw we employee directly or indirectly about a half a million.
Workers in this country and just this year, we're going to pay somewhere in the range of $50 billion in taxes and royalties.
To all level of governments and we're going to we're going to do our part we are going to fund tens of billions of dollars of this transition but.
But we are we are going to need more help to do it, especially if we have any kind of hope to remain competitive with other oil producing jurisdictions around the world that I would point out are largely doing nothing to address their emissions.
Finally, I just wanted to ask you about we're talking about the federal response, but I'm wondering where the discussions are sitting right now with the province.
They've had some discussion about maybe expanding their EBIT grant to.
To include <unk>.
Or are you looking for something else as it relates to the provincial government's involvement.
As always the Devil is in the details Chris but.
Hi.
We are we are well and continuing in discussions with the Alberta government I think those discussions have been productive I think I think both.
The industry and government appreciates, what we're trying to achieve and I think they are going in the right direction then.
There's many ways that the province could could support this work we're trying to do the APAC.
Idea is is one of them, but I'd, probably just hold off.
You know on an on being specific about it until we have we have more discussions with the province and the feds.
Thank you.
No worries thanks, Chris.
And moving on we'll go to Peter.
Kathy with Duluth News Tribune.
Well, congratulations gentlemen, on finishing work on the refinery and superior.
I'm curious you said I think that you are running about 20% to 30000 gallon crude to the facility right now and can you talk a little bit about what the throughput will look like when you add capacity and when you expect to reach that that's likely to be second or third quarter.
Hey, Peter it's Alex <unk>.
That was those were barrels not not gallons, but I think what I'll do is I'll I'll turn.
No worries I'll turn you over to Keith Chase on.
Who is our EVP downstream and he can give you the detail.
Hey, Peter it's it's.
It's pretty exciting to talk about this asset we've been.
Since we've taken over the asset in January 2021, we've been in the in the middle of a construction project and rebuilding and it's and it's nice to be coming out of the back end of that.
I would tell you that our staff that have been through this whole period of time are really excited.
To restart the refinery so through through this.
Month, we've been able to bring on crude to.
To the tune of 24, 25000 barrels a day and ramping to 30000 barrels a day and then we will start commissioning.
The FCC imminently here to bring on the remainder which will take it up to its nameplate capacity of 49000 barrels a day. The teams have spent a lot of time on training community involvement.
Making sure everybody is ready for this restart so so pretty exciting times and synovus may not be that well known in the area yet but.
Working on building our reputation.
In Canada, we have a.
Our reputation as a world class operators and we are definitely planning to replicate that south of the border at our U S assets, including superior.
Can you tell me how that capacity the 49000 barrels a day compared to the facility you inherited.
The fire.
Yes, it's roughly similar Peter the only difference is prior to the incident. They were in batch operations, so you'd you'd run a batch and then and then slowdown in changeover your crude slate.
Made a lot of improvements in the in the control systems and the equipment to be able to now run continuously. So you should see us having higher utilization rates because of that at a similar nameplate capacity.
I understand the workforce is also growing.
It had been about 200 people I think you were looking at roughly 350.
New facility can.
Can you talk a little bit about why that is.
Is that more labor intensive or is it about safety alert.
A number of factors.
Yes, I think Peter when you're when you're quoting that type of number Youre also including some of the contract workforce that we have in and we're also planning on growing our asphalt business in the region and because we're running continuously we will we will be producing more products. So it just requires a little bit larger of a workforce and.
I would tell you as we onboard the people they've been really excited to join the company and get ready for safe reliable operations.
Thank you.
Thanks Peter.
And next we'll go to Patrick Butler with radio Canada.
Hi.
And you are taking a conservative view on the Terra Nova and removing carrying over from your corporate guidance.
Why is that and could you provide that.
Our timeline for returning to production at Terra Nova has that changed.
Yeah.
I just noted arms here.
Okay.
I mean, a lot of these questions you probably have to delight to deal to the operator.
The operator has informed us that <unk>.
<unk> delayed.
Taking the facility back offshore we're continuing some maintenance work at <unk>.
The alarm which is in Newfoundland.
I'd just refer you to the operator in this case they know.
And they have information on when they plan to restart.
And could you also provide an update on Westwood West White rose.
There's been a major poor started recently can you talk about the operations of our attention right now.
Yeah, we're actually very excited about it there's two big pieces of work on Westlake Rose at the moment.
We have on each shift we have literally a thousand people.
On three shifts working and Egencia.
We're actually doing a tour, which will which will complete the bulk of the gravity based structure.
That'll take 60 days and Notionally in the next 40.
For two days or so that part will be finished the other thing is we've.
Completed.
And putting together the top sites facilities, which are down in Texas.
So the projects coming together well, but there is obviously a long way to go before we finally see safe production.
Alright. Thank you and then can I just ask you were speaking just now.
As already noted around <unk> I run the upstream part of our business.
Thank you.
Thanks, Patrick.
I will now turn it over to Mr. <unk> for final comments.
Okay.
Well, thanks, very much operator, and I would encourage everyone who is interested to tune into our annual meeting of shareholders. At 11. This morning Calgary time.
You can find the link to access the call on our website.
With that our call is now complete and thanks for joining us and have a great day.
Thank you and that does conclude today's call we'd like to thank everyone for their participation you may now disconnect.
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