Q4 2023 Imperial Oil Limited Earnings Call
Operator: Good day, and welcome to the Imperial Oil fourth quarter 23 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Peter Shaw, VP of Investor Relations. Please go ahead.
Good day and welcome to the Imperial oil fourth quarter 23 earnings call Today's conference is being recorded.
At this time I would like to turn the conference over to Peter Shah VP Investor Relations. Please go ahead.
Peter Shaw: Good morning, everybody. Welcome to our fourth quarter earnings conference call. I'm joined this morning by Imperial's senior management team, including Brad Corson, Chairman, President, and CEO, Dan Lyons, Senior Vice President, Finance and Administration, Sherry Evers, Senior Vice President of Sustainability, Commercial Development, and Product Solutions, and Simon Younger, Senior Vice President of the Upstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to this conference call.
Peter Shah: Good morning, everybody welcome to our fourth quarter earnings Conference call I'm joined this morning by Imperial Senior management team, including Brad Corson, Chairman President and CEO.
Peter Shah: Dan Lyons Senior Vice President Finance and administration, Sherry <unk> Senior Vice President of sustainability commercial development and product solutions and Simon younger senior Vice President of the upstream to.
Peter Shah: Todays comments include reference to non-GAAP financial measures definitions and reconciliations of these measures can be found in the attachment six of our most recent press release and are available on our website with a link to this conference call.
Peter Shaw: Today's comments may also contain forward-looking information. However, any forward-looking information is not a guarantee of future performance or actual future performance. An operating result can vary materially depending on a number of factors and assumptions.
Peter Shah: Todays comments may also contain forward looking information.
Peter Shah: Any forward looking information is not a guarantee of future performance and actual future performance and operating results can vary materially materially depending on a number of factors and assumptions.
Peter Shaw: Forward-looking information and the risk factors and assumptions are described in further detail in our fourth quarter earnings release that we issued this morning, as well as in our most recent foreign 10-K. All these documents are available on CDAR Plus, EDGAR, and our website, so I'd ask you to refer to them. Brad is going to start this morning with some opening remarks and then hand it over to Dan, who's going to provide a financial update, and then Brad will provide an operations update. Once that is done, we will proceed with the Q&A session. So with that, I will turn it over to Brad for his opening remarks. Thank you, Peter. Good morning, everybody.
Peter Shah: We're looking information and the risk factors and assumptions are described in further detail on our fourth quarter earnings release that we issued this morning as well as our most recent Form 10-K.
Peter Shah: All of these documents are available on SEDAR, Edgar and our website. So I'd ask you to refer to those.
Peter Shah: Brad is going to start this morning, with some opening remarks, and then hand it over to Dan who is going to provide a financial update and then Brad will provide an operations update once that is done we will follow with a Q&A session. So with that I will turn it over to Brad for his opening remarks.
Bradley W. Corson: Thank you Peter Good morning, everybody and welcome to our fourth quarter earnings call I Hope everyone's doing well in your new year is off to a good start.
Bradley W. Corson: And welcome to our fourth quarter earnings call. I hope everyone's doing well and your new year is off to a good start. Today, I'm pleased to report that Imperial delivered another very strong quarter, capping off a very strong year for the company. Curl continued to deliver excellent production results and set many new records, and its performance drove higher upstream volume. At the same time, our downstream business, with our structurally advantaged Canadian position, continues to capture significant value from wider crude discounts. It was a very solid quarter.
Bradley W. Corson: Today I am pleased to report that Imperial delivered another very strong quarter capping off a very strong year for the company.
Bradley W. Corson: <unk> continued to deliver excellent production results and set many new records and this performance drove higher upstream volumes.
At the same time, our downstream business with are structurally advantaged Canadian position.
Bradley W. Corson: <unk> to capture significant value from wider crude discounts.
Bradley W. Corson: Was a very solid quarter and as we look to 2024, we feel very confident about the strategic plans, we've laid out as well as our operational capabilities to execute those plans and our ongoing ability to generate value for our shareholders. I hope you see a reflection of our confidence in the dividend increase.
Bradley W. Corson: And as we look ahead to 2024, we feel very confident about the strategic plans we've laid out, as well as our operational capabilities to execute those plans, and our ongoing ability to generate value for our shareholders. I hope you see a reflection of that confidence in the dividend increase we've just announced today. Reflecting on the entire year, I'm very pleased with Imperial's performance across 2023. Specifically, we continue to have safe and reliable operations across all our assets, with strong execution of all our planned turnaround activities and continued focus on reducing operating costs. We took action to implement measures to address the environmental incidents at CURL, including expanding our monitoring and enhancing our engagements with local communities.
Bradley W. Corson: We've just announced today.
Bradley W. Corson: Ah, reflecting on the entire year I am very pleased with imperial's performance across 2023.
Specifically, we continue to have safe and reliable operations across all our assets.
Bradley W. Corson: We had strong execution of all our planned turnaround activity and continued focus on reducing operating costs.
Bradley W. Corson: We took action to implement measures to address the environmental incidents at <unk> <unk>.
Including expanding our monitoring and enhancing our engagements with local communities.
Bradley W. Corson: And throughout the year, we maintained our capital discipline as we advanced high-return growth projects, such as the Strathcona Renewable Diesel Project and the Grand Rapids Phase One Project, both of which remain on track. And for shareholders, we delivered another outstanding year of return. So over the next few minutes, Dan and I will detail the results of this very strong order. Now, let's review the fourth quarter results. Earnings for the quarter were $1,365 million, with cash from operating activities of $1,799 million when excluding working capital impact.
Bradley W. Corson: And throughout the year, we maintained our capital discipline as we advanced high return growth projects, such as the stress Kona renewable diesel project and the Grand Rapids Phase one project, both of which remain on track.
Bradley W. Corson: And for shareholders, we delivered another outstanding year of returns.
Speaker Change: So over the next few minutes, Dan and I will detail the results of this very strong quarter.
So now let's review the fourth quarter results earnings for the quarter were 1360 $5 million with cash from operating activities of 1790 $9 million when excluding working capital impacts.
Bradley W. Corson: These results reflect continued strong operational performance and record production from Curl, offset by weaker commodity prices. Full year 2023 saw strong operating performance and successful execution of our planned maintenance activity, which contributed to full year earnings of nearly $4.9 billion. Following 2022's record earnings performance, this is the second highest earnings in Imperial's history.
Speaker Change: These results reflect continued strong operational performance and record production from Pearl offset by weaker commodity prices.
Speaker Change: Full year 2023 saw strong operating performance and successful execution of our planned maintenance activities, which contributed to full year earnings of nearly $4 9 billion.
Speaker Change: Following 2020 two's record earnings performance. This is the second highest earnings in Imperial's history.
Bradley W. Corson: We achieved total upstream production of 452,000 gross oil equivalent barrels per day in the 4th quarter, the highest quarterly production in over 30 years when adjusting for the divestment of XTO cannabis. Our results in the upstream this quarter were underpinned by record performance at Curl, which delivered 308,000 total gross barrels per day of production, the highest quarterly production in the asset's history. This is just one of many records we set at PERL. I'll talk about each asset in more detail in a few minutes.
Speaker Change: We achieved total upstream production of 452000 gross oil equivalent barrels per day in the fourth quarter, the highest quarterly production and over 30 years when adjusting for the divestment of <unk>, Canada.
Speaker Change: Our results in the upstream this quarter were underpinned by record performance at Kearl, which delivered 308000 total gross barrels per day of production.
Speaker Change: The highest quarterly production in the assets history.
Speaker Change: This is just one of many records we set at curve.
Speaker Change: I'll talk about each asset in more detail in a few minutes.
Bradley W. Corson: In the downstream, we continue to see strong operating performance. Refining throughput averaged 407,000 barrels per day, which equates to a refinery utilization rate in the quarter of 94%, inclusive of the planned turnaround in Sarnia, which began in mid-September and was safely completed ahead of schedule and below budget by the end of October. This is especially notable because the joint refinery and chemical plant turnaround was the largest turnaround ever undertaken by our Sarnia site in terms of scope, workforce size, and total spend. I'd like to recognize the hard work of all of our teams in Sarnia for not only delivering this exceptional outcome but doing so in a way that ensured nobody got hurt.
Speaker Change: In the downstream we continue to see strong operating performance refining throughput averaged 407000 barrels per day, which equates to a refinery utilization in the quarter of 94% inclusive of the planned turnaround at Sarnia, which began in mid September and was safely completed.
Ahead of schedule and below budget by the end of October.
Speaker Change: This is especially notable because the joint refinery and chemical plant turnaround was the largest turnaround ever undertaken by our Sarnia site in terms of scope workforce size and total spend.
Speaker Change: I'd like to recognize the hard work of all of our teams in Sarnia for not only delivering this exceptional outcome.
Speaker Change: But doing so in a way that ensured nobody got hurt.
Bradley W. Corson: Our continued focus on financial discipline across the company resulted in lower overall cash operating costs, even beyond the reductions we saw from lower energy costs. I've been very pleased to see the progress our teams have made on reducing costs, which is especially notable because our company was able to deliver record production while at the same time successfully executing significantly higher planned turnaround activity compared to recent years. Our strong balance sheet allowed us to continue to maximize shareholder returns. We completed our annual NCIB, or normal course issuer bid, on an accelerated basis by mid-October, and then successfully executed our third SIB, or substantial issuer bid, in two years, returning another $1.5 billion of cash to our shareholders in December. In addition, we paid $288 million in dividends in the quarter for a total of $1.1 billion for the year.
Speaker Change: Our continued focus on financial discipline across the company resulted in lower overall cash operating costs, even beyond the reductions we saw from lower energy costs.
Speaker Change: I've been very pleased to see the progress our teams have made on reducing costs, which is especially notable because our company was able to deliver record production while.
Speaker Change: While at the same time successfully executing significantly higher planned turnaround at.
Activity compared to recent years.
Speaker Change: Our strong balance sheet allowed us to.
Speaker Change: To continue to maximize shareholder returns.
Speaker Change: We completed our annual and CIB, our normal course issuer bid on an accelerated basis by mid October and then successfully executed our third our substantial issuer bid in two years.
Returning another $1 $5 billion of cash to our shareholders in December.
Speaker Change: In addition, we paid $288 million in dividends in the quarter for a total of $1 $1 billion for the year.
Bradley W. Corson: In total, we returned $4.9 billion of cash to shareholders in 2023, our second highest year for shareholder returns following our record $7 billion in 2022. I'm also pleased to highlight that this morning we announced a dividend increase of 10 cents per share, or 20%, payable on April 1st, which positions us for our 30th consecutive year of dividend increases. A reliable and growing dividend is the cornerstone of our commitment to deliver industry-leading returns to shareholders, and since the beginning of 2021, we have nearly tripled our quarterly dividend. With that, I'll pass things over to Dan.
Speaker Change: In total we returned $4 $9 billion of cash to shareholders in 2023, our second highest year for shareholder returns following a record $7 billion in 2022.
Speaker Change: I'm also pleased to highlight that this morning, we announced a dividend increase of <unk> 10 per share or 20% payable on April one which positions us for our 30th consecutive year of dividend increases.
Speaker Change: A reliable and growing dividend is the cornerstone of our commitment to deliver industry, leading returns to shareholders and since the beginning of 2021, we have nearly tripled our quarterly dividend.
Speaker Change: With that I'll pass things over to Dan.
Daniel E. Lyons: Thanks, Brad. Starting with financial results for the full year, we recorded net income of $4,889,000,000, a decrease of $2,451,000,000 from 2022, reflecting lower realizations in the upstream, lower margins in the downstream, higher turnaround activity, and the absence of the gain realized on the sale of XTO in 2022. Looking at the fourth quarter, we recorded net income of $1,365,000,000, down about $360,000,000 from the fourth quarter of 2022. The decrease is primarily driven by lower refining margins in our downstream business. Moving to a sequential quarter comparison, our fourth quarter net income of $1,365,000,000 is down about $240,000,000 from the third quarter, reflecting weaker bitumen realizations in the upstream and lower downstream margins. Looking at each business line, upstream earnings of $770,000,000 are down about $258,000,000 from the third quarter, primarily driven by lower bitumen realizations, partly offset by higher volume.
Daniel E. Lyons: Thanks, Brad starting with financial results for the full year, we recorded net income of $4.889 billion, a decrease of $2 billion $451 million from 2022, reflecting lower realizations in the upstream lower margins in the downstream higher turnaround.
Daniel E. Lyons: And the activity and the absence of the gain realized on the sale of <unk> in 2022.
Daniel E. Lyons: Looking at the fourth quarter, we recorded net income of $1 $365 million down about $360 million from the fourth quarter of 2022. The decrease is primarily driven by lower refining margins in our downstream business.
Daniel E. Lyons: Moving to a sequential quarter comparison, our fourth quarter net income of $1 $365 million is down about $240 million from the third quarter, reflecting weaker bitumen realizations in the upstream and lower downstream margins looking at each business line upstream earnings of <unk>.
Daniel E. Lyons: $770 million are down about $258 million from the third quarter, primarily driven by lower bitumen realizations, partly offset by higher volumes downstream earnings of $595 million are up $9 million from the third quarter, mainly reflecting higher volumes post.
Daniel E. Lyons: Downstream's earnings of $595 million are up $9 million from the third quarter, mainly reflecting higher volumes post-planned turnaround activities at Sarnia Refinery, partly offset by weaker refining margins. Finally, our chemical business generated earnings of $17 million, down $6 million from the third quarter, reflecting lower volumes from the Sarnia gas cracker turnaround that was completed in October. Moving on to cash flow in the fourth quarter, we generated about $1.3 billion in cash flows from operating activities, excluding work and capital effects of about $500 million. Cash flow from operating activities for the fourth quarter was about $1.8 billion, down about $150 million from the third quarter.
Daniel E. Lyons: Planned turnaround activities at Sarnia refinery.
Daniel E. Lyons: Italy offset by weaker refining margins finally, our chemical business generated earnings of $17 million down <unk>.
Daniel E. Lyons: $6 million from the third quarter, reflecting lower volumes from the Sarnia gas cracker turnaround that was completed in October.
Daniel E. Lyons: Moving on to cash flow in the fourth quarter.
We generated about $1 $3 billion in cash flows from operating activities, excluding working capital effects of about $500 million cash flow from operating activities for the fourth quarter was about $1 $8 billion down about $150 million from the third quarter.
Daniel E. Lyons: Full year cash flows from operating activities were $3.7 billion. As you will recall, we made a $2.1 billion income tax catch-up payment in the first quarter of 2023, driving an unfavorable working capital impact. Full year cash flows from operating activities excluding working capital were about $6.4 billion, down about $2.6 billion from 2022 in line with our expectations. We ended the quarter with about $900 million of cash on hand. Now discussing CapEx. Capital expenditures totaled $469 million in the fourth quarter and $1,778,000,000 for the year, just over our full-year guidance of $1.7 billion. The additional spend was primarily attributable to increased capitalized interest as interest rates increased significantly over the course of the year.
Daniel E. Lyons: Full year cash flows from operating activities were $3 $7 billion. As you will recall, we made a $2 1 billion income tax catch up payment in the first quarter of 2023, driving an unfavorable working capital impact.
Daniel E. Lyons: Full year cash flows from operating activities, excluding working capital were about $6 4 billion down about two 6 billion from 2022 in line with earnings we ended the quarter with about $900 million of cash on hand.
Daniel E. Lyons: Now discussing capex.
Daniel E. Lyons: Capital expenditures totaled $469 million in the fourth quarter and $1 billion $778 million for the year just over our full year guidance of $1 $7 billion. The additional spend was primarily attributable to increased capitalized interest as interest rates increase.
Daniel E. Lyons: Significantly over the course of the year.
Daniel E. Lyons: In the upstream fourth quarter spending focused on smaller projects to sustain and grow production at curl Cold Lake and Syncrude as well as progressing the in pit tailings project at Kearl and the SA Sag D. Grand Rapids project at Cold Lake and the downstream fourth quarter spending mainly <unk>.
Daniel E. Lyons: In the upstream, fourth quarter spending focused on smaller projects to sustain and grow production at Curl, Cold Lake, and Syncrude, as well as progressing the In-Pit Tailings Project at Curl and the SA-SAG-D Grand Rapids Project at Cold Lake. In the downstream, fourth quarter spending mainly included progressing a renewable diesel project at Strathcona. Shifting to shareholder distributions, we continue to demonstrate our longstanding commitment to deliver industry-leading returns to shareholders. A reliable and growing dividend is the foundation of our cash distribution strategy. And as Brad already noted, this morning we declared a first quarter dividend of $0.60 per share, payable in April, an increase of 20% or $0.10 per share compared to our fourth quarter dividend.
Daniel E. Lyons: <unk> progressing our renewable diesel project add stress Kona.
Daniel E. Lyons: Shifting to shareholder distributions, we continue to demonstrate our long standing commitment to deliver industry, leading returns to shareholders, our reliable and growing given US is the foundation of our cash distribution strategy and as Brad already noted. This morning, we declared a first quarter dividend of <unk> 60 per.
Daniel E. Lyons: Share payable in April an increase of 20% were <unk> 10 per share compared to our fourth quarter dividend.
Daniel E. Lyons: In addition to our dividend in the fourth quarter, we completed our most recent accelerated NCI program with purchases of about $950 million in October and we completed our substantial issuer bid in December repurchasing about $1 $5 billion in outstanding shares in total throughout the course.
Daniel E. Lyons: In addition to our dividend in the fourth quarter, we completed our most recent accelerated NCIB program with purchases of about $950 million in October, and we completed a substantial issuer bid in December, repurchasing about $1.5 billion in outstanding shares. In total, throughout the course of the year, we completed shareholder returns of $4.9 billion, the second highest in our company history, including $1.1 billion in dividends and total share repurchases of $3.8 billion Our total share repurchases over the year represent over 48 million shares and about 8.3% of our outstanding shares.
Daniel E. Lyons: Of the year, we completed shareholder returns of $4 $9 billion. The second highest in our company history, including $1 1 billion in dividends and total share repurchases.
Daniel E. Lyons: Repurchases of $3 8 billion.
Our total share repurchases over the year represent over 48 million shares and about eight 3%.
Daniel E. Lyons: Of our outstanding shares now I'll turn it back to Brad to discuss our operational performance. Thanks, Dan.
Daniel E. Lyons: Yes.
Bradley W. Corson: Upstream production for the quarter averaged 452000 oil equivalent barrels per day, which is up 29000 barrels per day versus the third quarter and up 11000 barrels per day versus the fourth quarter of 2022.
Bradley W. Corson: As I mentioned earlier this is the highest quarterly production in over 30 years, when adjusting for the divestment of <unk> Steel Canada.
Bradley W. Corson: Now I'll turn it back to Brad to discuss our operational performance. Thanks, Dan. Upstream production for the quarter averaged 452,000 oil-equivalent barrels per day, which is up 29,000 barrels per day versus the third quarter and up 11,000 barrels per day versus the fourth quarter of 2022. As I mentioned earlier, this is the highest quarterly production in over 30 years when adjusting for the divestment of XTO Canada. This higher production for the quarter was driven by stronger performance across all three major assets.
Bradley W. Corson: This higher production for the quarter was driven by stronger performance across all three major assets.
Bradley W. Corson: And in the quarter, we saw wty prices soften and the WP <unk> to WCS differential widened.
As we start the new year.
We have seen some tightening of the differentials and we would expect to see further tightening was the completion of <unk> in the coming months.
Bradley W. Corson: So now let's move on and talk specifically about Pearl.
Bradley W. Corson: <unk> production in the fourth quarter averaged 308000 barrels per day, gross which was up 13000 barrels per day versus the third quarter and up 24000 barrels per day from the fourth quarter of 2022.
Bradley W. Corson: And in the quarter, we saw WTI prices soften and the WTI to WCS differential widen. As we start the new year, we have seen some tightening of the differentials, and we would expect to see further tightening with the completion of PMX in the coming months. So now, let's move on and talk specifically about PERL.
Bradley W. Corson: This represents the best ever quarterly performance at Pearl, surpassing the previous record, which we set just last quarter.
Bradley W. Corson: Kurls production in the fourth quarter averaged 308,000 barrels per day gross, which was up 13,000 barrels per day versus the third quarter and up 24,000 barrels per day from the fourth quarter of 2022. This represents the best-ever quarterly performance at Curl, surpassing the previous record, which we set just last quarter. And the records at KERL don't stop there. Curl also achieved record full year production of 270,000 barrels per day, record second half production of 301,000 barrels per day, record December production of 321,000 barrels per day, and record single day production of 363,000 barrels per day on December 25th. How about that for a Christmas present and a string of records?
Bradley W. Corson: And the records that curl don't stop there.
Bradley W. Corson: <unk> also achieved record full year production of 270000 barrels per day.
And record second half production of 301000 barrels per day.
And record December production of 321000 barrels per day.
Bradley W. Corson: And record single day production of 363000 barrels per day on December 25th.
How about that for a Christmas present.
And a string of records.
Bradley W. Corson: I am so proud of the <unk> team and what they have been able to achieve.
Bradley W. Corson: It's really been an outstanding year.
Bradley W. Corson: For curl, which provides a solid foundation to continue driving low cost production growth and achieving our target of 280000 barrels per day in 2024.
Bradley W. Corson: I'm so proud of the CURL team and what they have been able to achieve. It's really been an outstanding year for Curl, which provides a solid foundation to continue driving low-cost production growth and achieving our target of 280,000 barrels per day in 2024. Now turning to Curl cash operating costs, which is also another great story. Unit cash operating costs in the quarter were $17.94 U.S. per barrel, which represents a decrease of over $2 per barrel versus the third quarter due primarily to strong production and ongoing We also saw a decrease of about $9 US per barrel versus the fourth quarter of 2022. And for the full year, unit cash operating costs at Curl are just over $22 U.S. per barrel, which is $6.60 U.S. per barrel lower than 2022, or approximately $4.50 U.S. cents per barrel lower when normalizing for energy costs and forex.
Bradley W. Corson: And now turning to curl cash operating costs.
Bradley W. Corson: Is also another great story.
<unk> cash operating costs in the quarter.
Bradley W. Corson: Were $17.94 U S per barrel, which represents a decrease of over $2 U S per barrel versus the third quarter due primarily to the strong production and ongoing focus on operational efficiencies.
Bradley W. Corson: We also saw a decrease of about $9 U S per barrel versus the fourth quarter of 2022.
Bradley W. Corson: And for the full year.
Unit cash operating cost at Kearl or just over $22 U S per barrel, which is $6 60.
<unk> per barrel lower than 2022 or approximately $4 50.
Bradley W. Corson: Since U S per barrel lower when normalizing for energy costs and Forex.
Bradley W. Corson: Going forward, we are focused on further unit cost reductions as we grow volumes and achieve further operating efficiency. So, turning now to Cold Lake. Coal Lake production for the fourth quarter averaged 139,000 barrels per day, which is 11,000 barrels per day higher than the third quarter and 2,000 barrels per day lower than the fourth quarter of 2022. Higher fourth quarter production was primarily driven by the absence of the planned Navier turnaround completed in the third quarter, as well as steam cycle timing.
Going forward, we are focused on further unit cost reductions as we grow volumes and achieve further operating efficiencies.
Bradley W. Corson: So turning now to cold Lake.
Bradley W. Corson: Cold Lake production for the fourth quarter averaged 139000 barrels per day, which was 11000 barrels per day higher than the third quarter and 2000 barrels per day lower than the fourth quarter of 2022.
Bradley W. Corson: Higher fourth quarter production was primarily driven by the absence of the planned <unk> turnaround completed in the third quarter as well as theme cycle timing.
Bradley W. Corson: And moving to the Grand Rapids Phase 1 project, I'm pleased to share that we successfully commenced steam injection on December 1st, delivering on our commitment to accelerate the project's startup by one year to year-end 2023. The steam circulation phase is expected to last until the end of the first quarter of this year, after which production will start to ramp up over a period of several months. Once fully up and running, phase one of the project is expected to deliver profitable production of approximately 15,000 barrels per day and support our emissions reduction strategy. By using SA-SAGD technology, Grand Rapids production is expected to achieve an emissions intensity that is up to 40% lower compared to existing cyclic steam technology in use today.
Bradley W. Corson: And moving to the Grand Rapids Phase one project I am pleased to share that we successfully commenced steam injection on December one.
Bradley W. Corson: Delivering on our commitment to accelerate the project startup by one year to year end 2023.
Bradley W. Corson: The steam circulation phase is expected to last until the end of the first quarter of this year.
Bradley W. Corson: After which production will start to ramp up over a period of several months.
Bradley W. Corson: Once fully up and running phase one of the project is expected to deliver profitable production of approximately 15000 barrels per day and support our emissions reduction strategy.
Bradley W. Corson: By using SA Sag D technology Grand Rapids production is expected to achieve an emissions intensity that is up to 40% lower compared to existing cyclic steam technology in use today.
Bradley W. Corson: This project is an important milestone for us on our journey to reduce emissions at Coal Lake by continuing to deploy next-generation solvent recovery technology. I'd also like to take the opportunity to provide a brief update on our Lemming redevelopment project. The drilling of all wells was completed in 2023, and our focus through 2024 is on well completions and facility construction. Startup is planned for 2025, with the project expected to average about 9,000 barrels of production per day at peak. Lemming will use SAG-D technology, and similar to Grand Rapids, we expect to be able to achieve an emissions intensity that is up to 35% lower than existing cyclic steam technology.
Bradley W. Corson: This project is an important milestone for us on our journey to reduce emissions at <unk>.
Bradley W. Corson: Cold Lake by continuing to deploy next generation solvent recovery technology.
Bradley W. Corson: I would also like to take the opportunity to provide a brief update on our lemme redevelopment project the <unk>.
Bradley W. Corson: Drilling of all wells was completed in 2023, and our focus through 2024 is on well completions and facility construction startup. This plan for 2025 with the project expected to average about 9000 barrels per day of production that peak.
Bradley W. Corson: Let me, we will use <unk> technology and similar to Grand Rapids, we expect to be able to achieve in emissions intensity that is up to 35% lower than existing cyclic steam technology.
Bradley W. Corson: And now a few comments on Syncrude. Imperial's share of Syncrude production for the quarter averaged 85,000 barrels per day, which is 10,000 barrels per day versus the third quarter and down 2,000 barrels per day versus the fourth quarter of 2022. Higher production in the fourth quarter was due to the early completion of the fall plan turnaround by about a week, as well as favorable mining conditions and strong upgrader utilization. Throughout 2023, the Internet.
Bradley W. Corson: And now a few comments on Syncrude and.
Bradley W. Corson: <unk> share of Syncrude production for the quarter averaged 85000 barrels per day, which is 10000 barrels per day versus the third quarter and down 2000 barrels per day versus the fourth quarter of 2022.
Higher production in the fourth quarter was due to early completion of the fall planned turnaround by about a week.
As well as favorable binding conditions and strong upgrader utilization.
Bradley W. Corson: Throughout 2023 the Internet.
Bradley W. Corson: Interconnect pipeline continued to add value by enabling incremental production of Syncrude sweet premium from imported bitumen, helping to maintain high upgrader utilization rates and resulting in the highest ever full year shipments of SSP and the joint ventures history.
Bradley W. Corson: The interconnect pipeline continued to add value by enabling incremental production of Stimkroot Sweet Premium from imported bitumen, helping to maintain high upgraded utilization rates and resulting in the highest ever four-year shipments of SSP in the joint venture's history. Now, let's move on and talk about the downstream. In the fourth quarter, we refined an average of 407,000 barrels per day, which was down 9,000 barrels a day versus the third quarter and down 26,000 barrels per day versus the fourth quarter of 2022, reflecting a utilization of 94 percent.
So now let's move on and talk about the downstream in the fourth quarter. We refined an average of 407000 barrels per day, which was down 9000 barrels a day versus the third quarter and down 26000 barrels per day versus the fourth quarter of 2022, reflecting.
Bradley W. Corson: <unk> a utilization of 94%.
Bradley W. Corson: As I noted in my opening remarks, we completed the largest turnaround in Sarnia site history at the end of October below budget and ahead of schedule and all three of our refineries delivered very high utilization in the final months of the year.
Bradley W. Corson: As I noted in my opening remarks, we completed the largest turnaround in Sarnia site history at the end of October, below budget and ahead of schedule, and all three of our refineries delivered very high utilization in the final months of the year. In addition to high utilization, the refining business benefited from advantaged crude pricing across heavies, lights, and synthetics, contributing to strong value capture in the quarter. For the full year, our refinery achieved 94% utilization, which was the high end of our annual guidance, and we saw all our refineries achieve various full-year production records, including record gasoline, jet, and distillate production at Sarnia, record diesel production at Nanticoke, and record paving asphalt production at Strathcona, among many other production and process records. At our Strathcona refinery, we continue to advance our renewable diesel project.
In addition to high utilization the refining business benefited from advantaged crude pricing across heavy lights, and synthetics contributing to strong value capture in the quarter.
For the full year our refineries.
Bradley W. Corson: <unk>, 94% utilization, which was the high end of our annual guidance and we saw all our refineries achieved various full year production records, including record gasoline jet and distillate production at Sarnia.
Bradley W. Corson: Record diesel production at Nanticoke and record pay being asphalt production that stress Kona among many other production and process Records.
Bradley W. Corson: And our stress Kona refinery, we continued to advance our renewable diesel project and as.
Bradley W. Corson: And as we finish the year.
Bradley W. Corson: Most of the underground infrastructure has been completed and the above ground tankage is also nearing completion at this point, we continue to progress towards a planned startup in 2025.
Bradley W. Corson: Petroleum product sales in the quarter were 476000 barrels per day, which is down 2000 barrels per day versus the third quarter and down 11000 barrels per day versus the fourth quarter of 2022.
Bradley W. Corson: And as we finish the year, most of the underground infrastructure has been completed, and the above-ground tankage is also nearing completion at this point. We continue to progress towards a planned startup in 2025. Petroleum product sales in the quarter were 476,000 barrels per day, which is down 2000 barrels per day versus the third quarter and down 11,000 barrels per day versus the fourth quarter of 2022.
Bradley W. Corson: We continue to see gasoline demand around 99% to 95% of historical levels and jet at about 110% of historical levels.
Bradley W. Corson: Specifically jet demand was supported by strong sales into Toronto Pearson Airport and on diesel demand in the quarter was between 85% to 90%.
Bradley W. Corson: Diesel crack spreads remained relatively strong in the fourth quarter supported by low inventories.
Bradley W. Corson: We continue to see gasoline demand around 99 to 95% of historical levels and jet demand at about 110% of historical levels. Specifically, jet demand was supported by strong sales into Toronto's Pearson Airport. And on diesel, demand in the quarter was between 85 to 90%. Diesel crack spreads remained relatively strong in the fourth quarter, supported by low inventories, whereas gasoline cracks were more subdued, while overall crack spreads were lower quarter over quarter.
Bradley W. Corson: Whereas gasoline cracks were more subdued.
Bradley W. Corson: While overall crack spreads were lower quarter over quarter.
Bradley W. Corson: As Dan mentioned, our Canadian based refinery network enhanced overall product margins through the capture of crude discounts with access to a wider differentials that affected all crude grades in western Canada.
Bradley W. Corson: Currently we continue to see steady demand for our refined products and overall refinery margins remain robust.
Bradley W. Corson: And that brings us to chemicals, the business delivered $17 million in earnings in the fourth quarter, which was down $6 million versus the third quarter and down $24 million versus the fourth quarter.
Bradley W. Corson: As Dan mentioned, our Canadian-based refinery network enhanced overall product margins through the capture of crude discounts with access to wider differentials that affected all crude grades in Western Canada. Currently, we continue to see steady demand for our refined products, and overall refinery margins remain robust. And that brings us to chemicals. The business delivered $17 million in earnings in the fourth quarter, which was down $6 million versus the third quarter and down $24 million versus the fourth quarter of 2023. The lower earnings were driven by the gas cracker turnaround that occurred between mid-September and the end of October, as well as a softer margin environment.
Bradley W. Corson: In 2023.
Speaker Change: I'm sorry.
Speaker Change: 2022.
The lower earnings were driven by the gas cracker turnaround that occurred between mid September and the end of October as well as the softer margin environment.
Speaker Change: Despite these pressures our chemical business still delivered solid full year earnings of $164 million.
Speaker Change: And finally I'd like to highlight the publication of our annual sustainability report.
Speaker Change: Be successful in today's world energy providers must find ways to balance energy security affordability and environmental protection, while capturing opportunities in the energy transition at.
Bradley W. Corson: Despite these pressures, our chemical business still delivered solid full-year earnings of $164 million. And finally, I'd like to highlight the publication of our annual sustainability report. To be successful in today's world, energy providers must find ways to balance energy security, affordability, and environmental protection while capturing opportunities in the energy transition and Imperial. This includes our commitment to advancing our sustainability priorities, including developing pathways in support of a net zero future, enabling economic reconciliation, and meaningful partnerships with Indigenous communities. Protecting water resources and promoting biodiversity and cultivating a workforce where everyone's perspectives are valued and people are prepared for tomorrow. The sustainability report provides an update on our progress towards meeting each of these priorities. So to quickly wrap up,
Speaker Change: At Imperial this includes our commitment to advancing our sustainability priorities.
Speaker Change: Including developing pathways and supportive of net zero future, enabling economic reconciliation and meaningful partnerships with indigenous communities.
Speaker Change: Protecting water resources, and promoting biodiversity and cultivating a workforce where everyone's perspectives our value.
Speaker Change: And people are prepared for tomorrow.
The sustainability report provides an update on our progress towards each of these priorities.
Speaker Change: So to quickly wrap up.
Speaker Change: This was another very strong quarter to finish another very strong year underpinned by reliable operations across our integrated business model.
Speaker Change: We continued to deliver on our commitments and achieved our guidance achieved our guidance for the full year.
Speaker Change: As we look ahead in 2024, I'm optimistic and excited about delivering another very strong year.
Speaker Change: As you can see from the completion of the accelerated and CIB.
Bradley W. Corson: This was another very strong quarter to finish another very strong year underpinned by reliable operations across our integrated business model. We continue to deliver on our commitments and achieved our guidance for the full year. As we look ahead in 2024, I'm optimistic and excited about delivering another very strong year. As you can see from the completion of the accelerated NCIB, as well as our successful SIB completed in December, and now the announcement today of another material dividend increase. Our commitment to shareholder shareholder returns remains a top priority for us.
As well as our successful <unk> completed in December.
And now the announcement today of another material dividend increase our commitment to shareholder <unk>.
Shareholder returns remains a top priority for us.
Speaker Change: We're also committed to delivering on our plans to reduce emissions and generate value.
Speaker Change: I am excited as we near first production from Grand Rapids, and with the progress we are making with our stress covenant of renewable diesel project.
Speaker Change: I look forward to continuing to bring you updates on these attractive opportunities as we continue to focus on maximizing the value of our existing businesses. While at the same time responding to the changing needs of our customers and communities. So as always I'd like to thank you once again for your continued interest and support.
Bradley W. Corson: We're also committed to delivering on our plans to reduce emissions and generate value. I'm excited as we near first production from Grand Rapids and with the progress we are making with our Strathcona Renewable Diesel Project. I look forward to continuing to bring you updates on these attractive opportunities as we continue to focus on maximizing the value of our existing businesses while, at the same time, responding to the changing needs of our customers and community. So, as always, I'd like to thank you once again for your continued interest and support. And now we'll move to the Q&A session, so I'll pass this on to Peter.
Speaker Change: Now, we'll move to the Q&A session. So I'll pass it back to Peter Thank you.
Peter Shah: Thank you Brad as always we would appreciate if you could limit yourself to one question plus a follow up so that we can get to as many questions as possible. So with that operator could you. Please open up the phone line for questions.
Operator: Thank you if you have dialed in via the telephone and would like to ask a question. Please signal by pressing star one on your telephone keypad.
Operator: You are using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Peter Shaw: Thank you. Thank you, Brad. As always, we'd appreciate it if you could limit yourself to one question plus a follow-up so that we can get to as many questions as possible.
Operator: Ken Please press star one to ask a question.
Operator: Your first question comes from the line of Manav Gupta with UBS. Please go ahead.
Manav Gupta: Good morning, guys. Congrats on a very strong results.
Operator: So with that, operator, could you please open up the phone line for questions? Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Manav Gupta: Can you go into start with downstream when I look at your corporate guidance.
Manav Gupta: You will have in significant amount of downtime in the first quarter and a very small amount of downtime in the second quarter and when you look across the border.
Manav Gupta: Has significant amount of downtime in the U S refining system.
Operator: Again, please press star 1 to ask a question. Your first question comes from the line of Manav Gupta with UBS. Please go ahead. Good morning guys. Congratulations on a very strong result. I'm actually going to start with downstream. When I look at your corporate guidance, it appears you have an insignificant amount of downtime in the first quarter and a very small amount of downtime in the second quarter. And when you look across the border, we have a significant amount of downtime in the US refining system for the next three to four months. So I'm trying to understand if you're running hard, and cracks are good, and across the border people are not running hard, does that set you up extremely well for the first half of 2024 as it relates to refining? Yeah, thanks for the question, Banaz.
For the next three to four months, so im trying to understand if youre running hard in <unk> and across the border, but im not running hard does that set you up extremely well for the first half of 2024 as it relates to refining.
Speaker Change: Yes, thanks for the question Bob.
Speaker Change: Yes, certainly as we look.
Speaker Change: To the first quarter.
First half of the year, we're encouraged by.
Speaker Change: All of the key fundamentals, including the ones that you mentioned.
Speaker Change:
Speaker Change: Having completed.
Speaker Change: A fair amount of maintenance activities. This last year, we feel we're well positioned.
Speaker Change: As we move into this year.
Speaker Change: Our business as you know is is well integrated we're well connected to the market with with strong infrastructure and all of that positions us to take.
Bradley W. Corson: Yeah, certainly as we look, you know, to the first quarter, the first half of the year, we're encouraged by all of the key fundamentals, including the ones that you mentioned. Having completed a fair amount of maintenance activities this last year, we feel we're well positioned, you know, as we move into this year. Our business, as you know, is well integrated. We're well connected to the market with strong infrastructure.
Speaker Change: Forward full advantage of.
Speaker Change: Bob.
Of value feedstocks.
Speaker Change: Lower crude prices.
Speaker Change: We expect high reliability.
Speaker Change: We expect to capture.
Speaker Change: High value product margins in the market put all that together and it's a strong formula for success. So so thanks, thanks for that question.
Speaker Change: Perfect and my quick follow up on coal and congrats on getting that cost below 20, you promise people you will do it in the results are very impressive. My question here is your guidance for 2024 is $2 75 to <unk> 85 based on the kind of record you talked about earlier in the call.
Bradley W. Corson: And all that positions us to take full advantage of value feedstocks, lower crude prices. We expect high reliability. We expect to capture, You know, high value product margins in the market. Put all that together, and it's a strong formula for success. So, thanks. Thanks for that question. Perfect. My quick follow up on Curl, and congrats on getting that cost below 20.
Speaker Change: Should we not can be think of this as more of a $2 <unk> five versus the 275, so just trying to understand.
Speaker Change: The top end of guidance is making more sense given the record setting it Glenn.
Speaker Change: Well, thanks for your confidence in us and P&L like you I have great confidence in the current team in.
Bradley W. Corson: You promised people you'd do it, and the results are very impressive. My question here is your guidance for 2024 is 275 to 285. Based on the kind of records you talked about earlier in the call, should we naturally think of this as more of a 285 versus the 275? So just trying to understand if the top end of the guidance is making more sense given the records you're setting at Curl.
Speaker Change: As noted with so many records they continue to outperform and excel in.
Speaker Change: That positions us quite well.
Speaker Change: To deliver on whats been a long term objective and commitment around 280000 barrels a day so.
Speaker Change: I have high confidence that we will achieve 280000 barrels a day.
Speaker Change: Certainly there is the potential that we will achieve more.
Bradley W. Corson: Well, thanks for your confidence in us. And, you know, like you, I have great confidence in the CURL team. And, you know, as noted with so many records, they continue to outperform and excel. And, you know, that positions us quite well to deliver on what's been a long-term objective and commitment around 280,000 barrels a day. So I have high confidence that we'll achieve 280,000 barrels a day. Certainly, there is the potential that we will achieve more, you know, and that's reflected in the higher end of our guidance. And so we're working towards that every day. You know, we're early in the year, but I'll also tell you we're off to a good start in January.
Speaker Change: That's reflected in the higher end of our guidance.
Speaker Change: And so we're working towards that everyday.
Speaker Change: In our early in the year, but I'll also tell you we're off to a good start in January.
Speaker Change: So.
Speaker Change: Let's continue to.
Speaker Change: To continue to deliver strong results will continue to talk about the potential for even higher volumes not just in this year, but as we look to the future.
Speaker Change: Thank you.
Speaker Change: Thank you so much for taking my questions.
Speaker Change: Your next question comes from the line of Greg Pardy with RBC capital markets.
Greg Pardy: Please go ahead.
Thanks.
Greg Pardy: Great results again, and it's becoming.
Greg Pardy: Just consistently putting up big numbers across the board.
Greg Pardy: <unk>.
I wanted to dig in a little bit Brad to the to the record set in.
Bradley W. Corson: So, you know, let's continue to deliver strong results. We'll continue to talk about the potential for even higher volumes, not just this year but as we look to the future. Thank you. Thank you. Thank you so much for taking my question. Your next question... and the Lion of Greg Party with RBC Capital. Thanks. Hey, I mean, like, great results again, and it's becoming consistently putting up big numbers across the board. I wanted to dig in a little bit, Brad, to the record set in the fourth quarter and then in December, and I'm trying to better understand what the factors that supported that were. I mean, obviously, we know the weather conditions were extremely warm, at least from what I understand and so forth.
Greg Pardy: In the fourth quarter.
Bradley W. Corson: And then in December and Im trying to better understand what were the factors that supported that obviously, we know weather conditions were extremely warm.
Bradley W. Corson: From what I understand and so forth. So we've seen big numbers elsewhere.
Bradley W. Corson: What was sort of the special sauce, maybe of getting to the 363 or three.
Bradley W. Corson: $3 21 in December.
Speaker Change: Yeah, Greg. Thanks, Thanks for acknowledging our are Super strong results and the consistency of those results.
Greg Pardy: And thanks for your question on Pearl.
Speaker Change: In terms of secret sauce.
Speaker Change: I think it really comes more down to a lot of fundamentals.
Speaker Change: We have continued to improve.
Speaker Change: The reliability of that operation P&L for for several months and even years now we continue.
Speaker Change: Two.
Speaker Change: To focus on.
Bradley W. Corson: So we've seen big numbers elsewhere. What was sort of the special sauce, maybe, of getting to the 363 or the 325? Greg, thanks. Thanks for acknowledging our super strong results and the consistency of those results. And thanks for your question about Perl.
Speaker Change: All of the contributing factors to maximize production P&L, which go all the way back to mine performance.
Speaker Change: The productivity in the mine.
Speaker Change: Certainly weather was.
Speaker Change: A positive factor for us as it allows Vietnam.
<unk>.
Speaker Change: Full productivity in the mine.
Speaker Change: Certainly our autonomous haul fleet, that's contributing to that.
Bradley W. Corson: You know, in terms of the secret sauce, I think it really comes more down to a lot of fundamentals. You know, we have continued to improve the reliability of that operation for several months and even years now, and we continue to focus on all of the contributing factors to maximize production, which go all the way back to mine performance, the productivity in the mine, certainly whether it was a positive factor for us is that it allows, you know, kind of full productivity in the mine. Certainly, our autonomous haul fleet is contributing to that; we have the benefit of mining some, you know, high quality ore grade. And then all that, you know, ensures the front end is fully loaded.
Speaker Change: We have the benefit of mining so.
High quality ore grade.
Speaker Change: And then so all of that.
Speaker Change: <unk>. The front end is fully loaded and then we're managing that through the crushers and then when we get to the plant.
Speaker Change: We're seeing very high reliability there so.
Speaker Change: A combination of a lot of factors.
Speaker Change: And.
Speaker Change: Actually if there is a secret sauce I would say, it's our people at Kearl that are high.
Speaker Change: Hyper focused on delivering these sort of results in there they are very.
Speaker Change: Yes.
Speaker Change: Excited and motivated to continue to set these records are extremely proud of what theyre doing there and we're quite proud of them.
Speaker Change: Okay.
Speaker Change: Thanks for that Brad.
Bradley W. Corson: And then, you know, we're managing that through the crushers. And then when we get to the plant, you know, we're seeing very high reliability there. So, you know, it's a combination of a lot of factors. And, you know, actually, if there is a secret sauce, I'd say it's our people at Curl that are hyper-focused on delivering these sorts of results. And they're very, you know, excited and motivated to continue to set these records. They're extremely proud of what they're doing there.
Speaker Change: The second one is I've asked it before but I think it was considered proprietary but I'm. Just curious are you a shipper on trans mountain and maybe if the answer is we're not telling you.
Speaker Change: Can you, perhaps just kind of walk us through.
Speaker Change: How you see sort of <unk>.
Speaker Change: Packaging the business top to bottom.
Speaker Change: Yes, thanks for the question.
Speaker Change: I think we view it as proprietary whether we're ship or not I'm happy to tell you that we are a shipper on <unk>.
Bradley W. Corson: And we're quite proud of them. Thanks. Thanks for that, Brad. The second one is, I've asked it before, but I think it was considered proprietary, but I'm just curious, are you a shipper on Trans Mountain?
Speaker Change: What's normally viewed as proprietary is the volumes that we plan to ship.
Speaker Change: In terms of total volume split between crude and products. So I won't get into those details with you I will tell you though that.
Bradley W. Corson: And maybe if the answer is we're not telling you, can you perhaps just kind of walk us through how you see sort of TMX, you know, impacting the business top to bottom? Yeah, thanks for the question. I don't think we view it as proprietary, whether we ship or not.
Speaker Change: Relative to others shippers were relatively minor.
Speaker Change: In terms of the capacity.
Speaker Change: Reservations that we've made on the system.
Speaker Change: We are quite.
Bradley W. Corson: I'm happy to tell you that we are a shipper on PMX. What's normally viewed as proprietary are the volumes that we plan to ship, you know, in terms of total volume split between crude and product. So I won't get into those details with you.
Speaker Change: Excited about.
Speaker Change: The startup of <unk>, which we view as is imminent and targeting sometime in the second quarter of course, there was recent news the beginning of this week about.
Bradley W. Corson: I will tell you, though, that, relative to others, shippers were relatively minor in terms of the capacity reservations that we've made on the system. We are quite excited about the startup of PMX, which we view as imminent and targeting sometime in the second quarter. Of course, there was recent news at the beginning of this week about, you know, some delays, but we're still very optimistic that that system will start up in the second quarter. And when it starts up, certainly, it gives us as a company additional capacity for crude volumes, which again is not significant for us. It gives us additional capacity for products, which is more significant for us, maybe not in volume but just, you know, more potential to access, you know, some higher-valued markets with, you know, efficient transportation.
Some delays, but we're still very optimistic.
Speaker Change: That system will startup in the second quarter and when it starts up.
Speaker Change: Certainly it gives us as a company.
Speaker Change: Additionally, additional capacity for crude volumes, which again is not significant for us. It gives us additional capacity for products, which is more significant for us maybe not in volume, but just.
Speaker Change: More potential took to access.
Some higher value markets with.
Speaker Change: Efficient transportation.
Speaker Change: But more importantly is the broader impact.
Speaker Change: The startup of <unk> will have on the industry providing.
Speaker Change: Significantly additional capacity.
Bradley W. Corson: But more importantly, is the broader impact, you know, the startup of TMX will have on the industry, providing significantly additional capacity for egress out of, you know, the basin. And that will, we believe, as I commented, will result in a tightening of the WCS differential and will place a higher value on WCS crude, of which, of course, we're a major producer. So, you know, the biggest benefit for us is not the individual barrels we ship but our view of the impact it will have on our crude value. We continue to see, you know, maximum value, primarily shipping our crude into the mid-continent and the Gulf Coast. And so we'll continue to move most of our barrels in that direction, but always looking at where the highest-value markets are and making sure we're positioned to capture those over the long term. And that's where having the optionality to go west goes south, you know, puts us in a great position. Thanks for the question. Thanks very much.
Speaker Change: For egress out of.
Speaker Change: Out of the basin.
Speaker Change: Ill.
Speaker Change: And that will have we believe as I commented, we believe that will result in a tightening of the WCS differential.
And we will place higher value on WCS crudes, which of course were a major producers. So the biggest benefit for us is not the individual barrels we ship, but our view of the.
Speaker Change: The impact it will have on our true value.
Speaker Change: We continue to see.
Speaker Change: <unk>.
Speaker Change: Maximum value primarily shipping our crude into the mid continent into the Gulf Coast and so we will continue to move.
Speaker Change: <unk> of our barrels in that direction, but always looking at.
Speaker Change: Where are the highest value markets and making sure we're positioned to capture those over the long term and that's where having optionality to go West go South.
Speaker Change: <unk> puts us in a great position.
Speaker Change: Thanks, Robert Thanks, very much yes, thanks Brent.
Bradley W. Corson: Yeah. Thanks, Brad, www.imperialoil.com and our next. This is the line from Dennis Fong with CIBC World News. Go ahead.
Speaker Change: And our next question comes from the line of Dennis Fong with CIBC World markets. Please.
Dennis Fong: Please go ahead.
Dennis Fong: Hi, good morning, and thanks for taking my questions first off just wanted to reiterate what Greg said and congrats on a on a very strong quarter and continued strong operations from Carl.
Bradley W. Corson: Hi, good morning, and thanks for taking my questions. First off, I just wanted to reiterate what Greg said, and congratulations on a very strong quarter and continued strong operations from Curl. My first question here is about Autonomous Hall. You indicated last quarter that you had completed the installation and the startup of autonomous operations at Curl. I just wanted to pick your brain on any potential takeaways that you've seen now that you have over a quarter of runtime from the fleet and where you think you are in terms of further optimization. Yeah, thanks for the question.
Dennis Fong: My first question here is just around the autonomous haul.
Dennis Fong: As you indicated last quarter that you had completed sure.
Dennis Fong: Installation and startup of autonomous operations.
Dennis Fong: I just was hoping to pick your brain on any potential takeaways that you've seen now that you have over a quarter of run time from the fleet and where you think you are in terms of further optimization.
Speaker Change: Yes. Thanks for the question I mean, we're quite excited about.
Speaker Change: The value that this is bringing to our business.
Speaker Change: And as you noted we have now 100% autonomous in the bind with our heavy haul trucks total of.
Bradley W. Corson: I mean, we're quite excited about the value that this is bringing to our business. And, and as you noted, we are now 100% autonomous in the mine with our heavy haul trucks, a total of 81 trucks. And, you know, we are seeing, kind of, that transition, the use of autonomous or driverless trucks, as delivering all of the value that we expected in terms of lower unit operating costs by around $1 per barrel. We see increased safety and reduced safety risk because of, you know, fewer human machine interfaces, and we're seeing increased productivity as well.
Speaker Change: 81 trucks.
Speaker Change: <unk>.
Speaker Change: We are seeing.
Speaker Change: Kind of that transition that the use of autonomous or driverless trucks.
Speaker Change: As.
Speaker Change: Delivering all of the value that we expected in terms of.
Lower unit operating costs by around $1 per barrel, we see increased.
Speaker Change: Safety and reduce safety risk because of fewer.
Speaker Change: Human machine interfaces.
Speaker Change: And we're seeing increased productivity.
Bradley W. Corson: And so, you know, there is no doubt that having that autonomous full fleet has contributed materially to our ability to achieve these record volumes as well as a significant improvement in operating costs. And we're still, I think, kind of realizing the full potential of that because, you know, it's only been in the last quarter or so that we've completed that full conversion. And now, at the same time, we're also looking for, well, where can we expand this autonomous concept beyond just heavy haul trucks?
Speaker Change: Well and so.
Speaker Change: There is no doubt that having that autonomous haul fleet.
Speaker Change: Has contributed.
Speaker Change: Materially to our ability to achieve these record volumes as well as cigna.
Significant improvement in operating costs.
Speaker Change: And we're still I think kind of realizing the full potential of that because it's only been in the last quarter or so that we've completed that.
Speaker Change: Full conversion and now at the same time, we're also looking for where can we expand this autonomous concept beyond just the heavy haul trucks and so.
Bradley W. Corson: And so, you know, we have a lot of work underway as to where else we can leverage this to further improve productivity, reduce costs, and improve safety. And I think that'll be, you know, a key, key element of our discussion when we get to our investor day later this year to really talk about the kind of potential that this technology is bringing and how we can expand it further. Great, I appreciate the color there.
Speaker Change: We have a lot of work underway as to where else we can leverage this.
Speaker Change: Further <unk>.
Speaker Change: Improved productivity reduce costs improve safety.
Speaker Change: And I think that'll be.
Speaker Change: A key.
Speaker Change: <unk>.
Speaker Change: Key elements of our discussion when we get to our Investor Day. Later this year to really talk about kind of the potential that this technology is bringing and how we can expand that further.
Speaker Change: Great I appreciate the color there.
Bradley W. Corson: My second question, kind of continuing on with Curl there, is... Thank you. You have shown very strong production, and you've discussed opportunities to potentially continuously or at least average maybe 300,000 barrels a day sometime in the future. Can you talk about some of the secondary recovery initiatives as well as the mine optimization opportunities that help kind of drive you to that 300,000 barrels a day and where are you at with respect to the engineering and the development of those next steps? Yeah, thanks.
Speaker Change: My second question kind of continuing on with Karl there is.
Speaker Change: You've.
Speaker Change: Shown very strong production.
Speaker Change: You've discussed opportunities to potentially.
Speaker Change: Continuously or at least average maybe 300000 barrels a day.
Or in the future can you talk towards some of the secondary recovery initiatives as well as the mine optimization opportunities that help kind of drive you to that 300000 barrels a day and where are you at with respect to the engineering and the development of those next steps.
Speaker Change: Thanks.
Bradley W. Corson: Thanks for the question. We are very focused, you know, first on getting to 280,000 barrels per day. That's, that's job number one when it comes to volumes at Curl. We've just delivered our highest, our highest annual volumes at Curl with 270. Now, we have to get to 280.
Speaker Change: Yeah. Thanks, Thanks for the question.
We are very focused.
Speaker Change: First on getting to 280000 barrels per day.
Speaker Change: That's job number one when it comes to volumes at Turtle Beach.
Speaker Change: Just delivered.
Speaker Change: Our highest our highest annual volumes at Kearl with 270, now we got to get to $2 80.
Bradley W. Corson: And then we'll get to 300. So it's kind of one step at a time. But you know, this evolution takes several years of planning, engineering, and, in some cases, investment.
<unk>.
Speaker Change: And then we will get to 300, so it's kind of one step at a time.
Speaker Change: But.
Speaker Change: This evolution takes several years.
Speaker Change: Planning engineer.
Speaker Change: Engineering and some case investment so we are progressing steps to get us to.
Bradley W. Corson: So we are progressing steps to get us to, you know, 300,000 barrels a day. I plan for us to talk more specifically about what that roadmap looks like when we have our investor day. But certainly, you know, we're focused on, you know, what are the next steps in reliability? What are the next steps in optimizations around turnaround durations?
Speaker Change: Yes, 300000 barrels a day.
Speaker Change: <unk>.
Speaker Change: For for Us to talk more specifically about what that roadmap looks like when when we have our investor day, but certainly we're focused on what are the next steps and reliability what are the next steps and optimizations around turnaround durations.
Bradley W. Corson: We're looking at additional steps in the bottlenecking, you know, our processing facilities. We're looking at how we can extract even more bitumen out of all of the ore that we extract, you know, through further processing, of course, fans tailing. And so, you know, it is a whole suite of activities.
Speaker Change: We're looking at additional steps and Debottlenecking.
Speaker Change: Our processing facilities, we're looking at how can we extract.
Speaker Change: EBIT bore bitumen out of all of the ore that we extract GNL through further processing of core sands tailing.
Speaker Change: And so.
Speaker Change: It is.
Speaker Change: It is a whole suite of activities.
Bradley W. Corson: You know, we've talked about floating column cells, you know, that specific project; we have detailed engineering, well advanced, we're targeting a startup in 2026. It'll be a major contributor to the next step after 280 and moving us towards 300. So there is a lot going on there, and I'm really excited about it.
Speaker Change: We've talked about flotation columns cells.
Speaker Change: That that specific project, we have detailed engineering well advance we're targeting a startup in 2026 it will be a major contributor to the next step after two lady in moving us towards 300.
Speaker Change: So a lot going on there.
Speaker Change: Really excited about them because again I think when you look at.
Bradley W. Corson: Because again, I think when you look at what we've achieved in the second half of the year, what we've achieved in the fourth quarter, certainly monthly and daily records, it continues to demonstrate just the potential that we have with this asset. Now, again, the challenge is to link together all of those records over an entire year, right? And a significant driver still in our overall production for the year is the annual turnaround. And so, you know, we have to not only achieve those sort of records, but then we have to offset any plant maintenance, you know, a turnaround or other plant maintenance over the course of the year. But I have confidence we'll get there. So thanks for that question. No, I appreciate it. I'll turn it back.
And what we've achieved in the second half of the year, what we've achieved in the fourth quarter, certainly monthly and Daily Records.
<unk>.
Speaker Change: To demonstrate just the potential that we have with this asset.
Speaker Change: Now again, the challenges to link together all of those records over.
Speaker Change: An entire year right.
Speaker Change: And a significant driver still in our overall.
Speaker Change: Production for the year is that an annual turnaround and so.
Speaker Change: We have to not only achieve those sort of records, but then we have to offset kind of any planned maintenance turnaround and other plant maintenance over the course of the year.
Speaker Change: But I have confidence we'll get there.
Speaker Change: So thanks for that question.
Speaker Change: No I appreciate it I'll turn it back.
Bradley W. Corson: Your next question comes from the line of Doug Leggett with Bank of America. Go ahead. Thanks. Good morning, everyone.
Speaker Change: Your next question comes from the line of Doug Leggate with Bank of America. Please go ahead.
Thanks, Good morning, everyone. Good morning, Brad.
Daniel E. Lyons: Good morning, Brad. I don't know if you've looked at your share price this morning, but this dividend bump, we continue to believe that is a huge mechanism for market recognition of value. So congratulations on that decision. My question is, where do you think your dividend burden needs to be to have a competitive yield versus your peers? Yeah, thanks.
Doug Leggate: I don't know if you've looked at your share price. This morning, but this dividend bump. We continue to believe is a huge mechanism for market record Theres no volume. So congratulations on that decision. My question is is <unk>.
Doug Leggate: Where do you think your dividend burden needs to be.
Doug Leggate: To have a competitive yield versus your peers.
Bradley W. Corson: Thanks for your First, your recognition of our dividend strategy and the impact it's having, and yes, I can assure you, I've looked at my share price today. I look at it every day, as you might expect, and we're quite pleased with the market receptivity to the board's decision to raise our dividend. And, you know, maybe I'll give Dan a chance to make some comments about our dividend strategy. But, you know, first, I think you can see the consistency of our strategy by continuing to raise that dividend now for 30 years. And you can see the materiality of those increases for the last few years, obviously, underpinned by our strong performance and Dan talking about the future. Yeah, Doug, thanks for acknowledging the dividend. From our prior conversations, I know you're a dividend growth lover. So we always listen to you.
Speaker Change: Yes, thanks, Thanks for your.
Speaker Change: First your recognition of our dividend strategy of impact, that's having and yes I can assure you I looked at my share price today I look at it every day.
Speaker Change: While we expect and we're quite pleased with the market receptivity to the board's decision to.
Speaker Change: To raise our dividend.
Speaker Change: And maybe maybe I'll give dan a chance to make some comments about our dividend strategy, but first I think you can see the consistency of our strategy with continuing to raise that dividend now for 30 years and you can see that.
Speaker Change: Materiality of those increases for the last few years, obviously underpinned by a strong performance.
Speaker Change: Dan talk about the future.
Daniel E. Lyons: Yeah, Hey, Doug Thanks for acknowledging the dividend I know, you're a dividend growth lever from our prior conversations so we always listen to you but.
Daniel E. Lyons: But, you know, as we've said, the dividend, a reliable and growing dividend and competitive dividends, is sort of the foundation of our shareholder return strategy. And, you know, if you look over the last number of years, our compound annual growth rate is very competitive and, you know, above most of our peers. So we continue to be focused on growing our dividend, but, you know, for us, it's really critical that it's sustainable. And so, you know, as we look out into the future and look at, you know, relatively conservative assumptions, we look at that kind of analysis, look at what our competitors are doing, and that drives, you know, our recommendations to the board and ultimately the board's action. So it's certainly an area of focus for us. We're glad we're delivering. IMO, Imperial Oil Ltd. Thank you for the answers, guys. I hope the operator doesn't take this as my second question. It's more of a clarification point.
Speaker Change: Yes.
Daniel E. Lyons: As we've said the dividend a reliable and growing dividend and competitive dividend sort of the foundation of our shareholder return strategy.
Daniel E. Lyons: And if.
If you look over in the last number of years.
Daniel E. Lyons: Our compound annual growth rate is very competitive.
Daniel E. Lyons: And and above most most of our peers. So we continue to be focused on growing our dividend, but for us. It's really critical that it's sustainable and so as we look out into the future and look at relatively.
Daniel E. Lyons: And sort of assumptions you look at that kind of analysis looking at our competitors are doing and that drives our recommendations to the board and ultimately the board's actions. So it's certainly an area of focus for us.
Daniel E. Lyons: We're glad we're delivering.
Daniel E. Lyons: That kind of growth to the market but.
Daniel E. Lyons: I can't say there is a particular target or a payout ratio were burdened level that were exactly targeting oddly it's dynamic, but we look ahead and we and our focus is on reliable and growing and making sure. We're never in a situation, where we're where we'd have to cut it.
Daniel E. Lyons: Where do you think your dividend break-even is right now? I have a separate follow-up question. Yeah, well, we say with sustaining capital on their dividend, you know, we're about 35 bucks. That's, you know, WTI, a US dollar. So that's where we are. So you know, it's a pretty good spot, I would say. And, you know, it leaves open room for growth over time. Perfect. Thank you. My follow-up question is actually on Carol, but a slightly different question.
Speaker Change: Thank you for the answers guys I hope it will be all paid so it doesn't take this as my second question is more of a clarification point what do you think your dividend breakeven is right and that drove a separate follow up question.
Speaker Change: Yeah, well, we say with the sustaining capital and our dividend we're about 35 box.
Speaker Change: <unk> U S dollars, that's where we are so.
Speaker Change: A pretty good spot I would say.
Speaker Change: Leaves open room for growth over time.
Speaker Change: Perfect. Thank you my follow up is actually on Carol but slightly different question.
Daniel E. Lyons: You're the only, I think I'm correct in saying this, you're the only major mine project left that's still pre-oil. Given all the moving parts, you know potentially the fact you're outperforming obviously, and there's obviously some growth options down the road. To the extent you can give any visibility, how long do you expect to stay pre-royalty?
Speaker Change: Only.
Speaker Change: I think I'm correct in saying that you are the only major.
Speaker Change: <unk> main project left that still pre royalty.
Speaker Change: Given all the moving parts.
Speaker Change: Potentially the fact, performing obviously there was obviously some growth options down the road.
To the extent you can you can give us any visibility how long do you expect to see pre royalty you've got you through the end of the decade I'm curious if you can offer any color on that kind of leave it there. Thank you.
Daniel E. Lyons: We've got you through the end of the decade. I'm curious if you can offer any color on that. Yeah, thanks for the comment, Doug. I'll defer that one to Dan as well.
Speaker Change: Yes, thanks for the comment Doug I'll defer that one to Dan as well.
Daniel E. Lyons: Yeah, obviously, it depends on prices, Doug. But you know, our outlook is to be pre-royalty, and I think, you know, we would, you know, end of the decade is, or even more is probably very reasonable. But, you know, it's very sensitive to prices. If prices get really high, we'd get there sooner. But, you know, for the foreseeable future, in reasonable scenarios, I think we will continue to be pre-royalty, which is a significant benefit for us on a cash flow basis for sure. Absolutely. Thanks for taking my questions and congrats on nailing this dividend story. Thanks, Doug. Your next question comes from the line of Menno Hullschraf. Thanks everyone, and good morning.
Daniel E. Lyons: Yeah, obviously, it depends on prices Doug but.
Daniel E. Lyons: Our outlook is to be pre royalty I think.
Daniel E. Lyons: We would end the decade as or even more is probably very reasonable, but it is very sensitive to prices if prices get really high.
Daniel E. Lyons: We get there sooner but.
Daniel E. Lyons: For the foreseeable future.
Daniel E. Lyons: And reasonable scenarios I think we will continue to be pretty royalty, which is.
Daniel E. Lyons: A significant benefit for us on a cash flow basis for sure.
Speaker Change: Absolutely well guys. Thanks for taking my questions.
Speaker Change: So on nailing this dividend story.
Speaker Change: Okay. Thanks, Doug.
Your next question comes from the line of Menno <unk> with TD Securities.
Go ahead.
Menno: Thanks, everyone and good morning, maybe I'll just start with a question on Grand Rapids Phase, one which of course is solvent assisted you did broad touch on the emissions reduction in your prepared comments, but can you just elaborate on some of the some of the Kpis for this project, including.
Bradley W. Corson: Maybe I'll just start with a question on Grand Rapids Phase 1, which, of course, is solvent-assisted. You did, Brad, touch on emissions reduction in your prepared comments, but can you just elaborate on some of the KPIs for this project, including SORs, OPEX, and how much solvent is actually getting recycled through the system? And then as a follow-up to that, how much do you think you can scale up solvent-assisted over time? Yeah, thanks for the question. I don't necessarily have those details at my fingertips on those metrics for Grand Rapids. You know, I'll maybe defer to Simon, who's here beside me, to see if he has those.
Menno: <unk> Opex and how much solvent is actually getting recycled through the through the system and then as a follow up to that how much do you think you can scale up solvent assisted overtime.
Speaker Change: Yes, thanks for the question Menno.
Speaker Change: I don't necessarily have those details at my fingertips on those metrics for Grand Rapids.
May be deferred to Simon who's here beside me to see if he has those in.
Bradley W. Corson: And if he doesn't, we may have to follow up with you offline on those. But I will say, you know, that from a very macro standpoint, what is most important is that we do expect to deliver 15,000 barrels of oil a day from this asset. It's a very high return economically, you know, by its design, it relies on lower steam production, which is more economical for us and lowers emissions intensity. So, you know, those are the macros that are most important for the project and how it fits into our overall strategy to increase production, you know, reduce operating costs, and reduce greenhouse gas emissions intensity. But now I'll see if Simon has any more details he can share with you. Yeah, no worries, Brad. I can take a bit of a run at some of those.
Simon Younger: If he doesn't we may have to follow up with you offline.
Simon Younger: <unk>.
Speaker Change: But I will say that from a very macro standpoint.
Speaker Change: What is most important is.
Simon Younger: We do expect to deliver 15000 barrels a day from this asset it's very high return economically.
Simon Younger: <unk> by its design it for.
Simon Younger: Relies on lower steam production.
Simon Younger: Which is more economic for us and <unk> and lower emissions intensity. So those are the macros that are most important for the project and how it fits into our overall strategy to increase production.
Simon Younger: Reduced operating costs reduced greenhouse gas emission intensity.
Simon Younger: But now I'll see if Simon has any any of those more details you can share with you yeah, no worries, Brad I can take a bit of a run at some of those.
Simon Younger: I mean, as Brad shared, in terms of the greenhouse gas intensity for Grand Rapids Phase 1, when we started up, we expected it to be, you know, at least 40% lower than our heritage CSS process. If you compared it though to conventional SAG-B with the addition of SA, the solvent assisted, depending on how we evolve that and optimize that through time, think about that as anywhere from a 10% to a 20% improvement over conventional SAG-B by virtue of the solvent addition. So that would be a key KPI as you were asking about. Another one of course is solvent recovery, which will only be known over time and through experience, again as we optimize the operation, but certainly, we're looking at numbers north of 85 or even 90% on solvent recovery will be a key KPI.
Simon Younger: Red shed in terms of the greenhouse gas intensity.
Simon Younger: For Grand Rapids Phase one when we started up we expect it to be.
Simon Younger: At least 40% lower than.
Simon Younger: Our heritage.
Simon Younger: This process is.
Simon Younger: If you compare that bodes too.
Simon Younger: Set conventional Sag D.
Simon Younger: With the addition of ESI the solvent assisted.
Simon Younger: Depending on how we.
Simon Younger: Evolve that and optimize that through time.
Simon Younger: Think about that is anywhere from a sort of a 10% to 20% improvement over conventional sag D. By virtue of the Sullivan addition, so that would be a key sort of Kpis you were asking about another one of course is the solvent recovery, which will.
Simon Younger: Only be known over time and through experience again, as we optimize the operation, but certainly we're looking at numbers north of 95 or even 90%.
Simon Younger: The solvent recovery will be a peak ipi.
Speaker Change: You mentioned.
Simon Younger: You mentioned unit costs. I think if you look across the industry at the most competitive SAG-B operations, as low as $10 a barrel, I'd certainly expect us to be targeting that and even improving on that, again aided by the benefit of the solvent assisted, the solvent addition to the SAG-B process, which, by the way, we piloted for several years at Cold Lake, which gave us the confidence to proceed with a full-scale investment at Grand Rapid And then I think another part of your question was sort of about how much running room there is, and I would say it's substantial. I mean, we're starting with our first pad here. It's got 21 well pairs.
Speaker Change: <unk>.
Speaker Change: Unit cost I think if you look across industry.
At the most competitive Sag D operations sort of.
Speaker Change: Low as $10 a barrel.
Speaker Change: Certainly expect us to be targeting that and even even improving on that again aided by the the the benefit of the solvent assisted.
Speaker Change: To solve in addition to the Sag D process, which which by the way we piloted for several years at Cold Lake, which gave US the confidence to proceed with a full scale investment at Grand Rapids.
Speaker Change: And then I think another part of your question was what's the running room and I would say, it's substantial I mean were starting with.
Speaker Change: Our first pad here, it's Scott.
Speaker Change: One well is currently stemming.
Bradley W. Corson: We're currently steaming, and that's across two wings. We're currently steaming one of those, but we have, you know, running room if the Grand Rapids resource development proves successful. We've got running room for several more pads, up to as many as 10 additional pads. So it's really exciting, and the whole organization is super excited to see how we bring that new asset online this first quarter of this year. Terrific. I appreciate the detail. And for my second question, I'm just going to follow up on Dennis's and your comments on Autonomous Haul, and I'm probably getting a bit ahead of things. But is conversion of the dozer fleet still in the cards?
Speaker Change: That's across two wings, but currently saving one of those but we are running room.
Speaker Change: The Grand Rapids resource development proves successful, we've got running room of.
Speaker Change: Several more to up to as many as 10 additional pads.
It's really exciting and the whole organization is super excited to see across this first quarter. This year, how we how we bring that new asset online.
Speaker Change: Terrific I appreciate the detail and for my second question I'm, just kind of follow up on <unk> and your comments on autonomous haul and im probably getting a bit ahead of things but.
Speaker Change: Conversion of the Dozer fleet still in the cards and to the extent that it is how would that compare in terms of scale with what you've done so far on the truck side of things and any initial high level thoughts on timing and upside would be would be helpful as well.
Bradley W. Corson: And to the extent that it is, how would that compare in terms of scale with what you've done so far on the truck side of things? And any initial high-level thoughts on timing and upside would be helpful as well. Yeah, thanks for that question. I mean, it is an example of the next evolution of autonomous or driverless that we are looking at.
Speaker Change: Yes, Thanks for that question I mean it is.
Speaker Change: An example of the next evolution of autonomous or driverless that we are looking at.
Bradley W. Corson: And we are actively piloting driverless dozers. So it's really exciting, you know; we see huge benefits to that across the whole range of considerations I mentioned earlier, starting first with safety, as well as cost. We're very early in that pilot test work, so I think it's, it's premature for me to quantify it. But, you know, our early experience with our pilot work is very encouraging. So, you know, we're, we're continuing to progress that work. And again, I think we'll be in a better position to talk about that at investor day. And I'll just remind you that, you know, the evolution of the autonomous haul trucks at Curl took several years, you know, and, and so I would anticipate that as we look at, you know, expanding that technology and approach to other pieces of equipment, it takes time because we obviously want to make sure that not only we get the full benefit, but that, So stay tuned; more to come. Thanks, Brad. I'll turn it back.
Speaker Change: And we are actively piloting drew.
Speaker Change: Driverless soldiers.
Speaker Change: So it's really exciting we see huge benefits to that.
<unk> the whole range of.
Speaker Change: Considerations I mentioned early starting first with safety as well as cost productivity, we're very early.
Speaker Change: In that pilot test work, so I think it's premature for me to.
Quantify it.
Speaker Change: Our early experience with our pilot work is very encouraging so.
Speaker Change: We're continuing to progress that work and again I think we'll be in a better position to talk about that in Investor day, and I'll just remind you that.
Speaker Change: The evolution of the autonomous haul trucks at Pearl took several years.
Speaker Change: Yes.
Speaker Change: So I would anticipate.
Speaker Change: As we look at it.
Speaker Change: Expanding that technology and approach to other pieces of equipment.
Speaker Change: Next time, because we obviously want to make sure that not only we get the full benefit, but but that we are a doorway compromising the safety of the operation.
So stay tuned more to come.
Speaker Change: Thanks, Brad I'll turn it back thanks.
Bradley W. Corson: Thanks. Thank you. Your next question comes from the line of Patrick O'Rourke with ATB Capital Markets. Please go ahead. Oh, hey, guys. Good morning.
Bradley W. Corson: Thank you.
Bradley W. Corson: Next question comes from the line of Patrick O'brien with ATB capital markets.
Patrick O'brien: Please go ahead.
Patrick O'brien: Yeah.
Patrick O'brien: Oh, Hey, guys. Good morning, congratulations on the dividend increase and a great quarter.
Bradley W. Corson: Congratulations on the dividend increase and a great quarter. You've obviously unpacked a lot between the prepared remarks and a lot of the very detailed questions we've had. So perhaps this first question is going a little bit off the board. But so we're seeing industrial, we're in drought conditions in Western Canada, and we're starting to see industrial water use restrictions that are coming about. Are there any commercial risks to your business?
Patrick O'brien: Obviously unpacked a lot between the prepared remarks, and a lot of very detailed questions. We've had so.
Patrick O'brien: Perhaps the first question is going a little bit off the board, but so we're seeing industrial we're in drought conditions in Western Canada, we're starting to see industrial water use restrictions that are coming about are there sort of any commercial risks to your business and how are you preparing for those going forward here in 2024.
Bradley W. Corson: And how are you preparing for those going forward here in 2024? Yeah, thanks for the question. And, I mean, you're right, it's not something we maybe normally talk about or get questions on, but it's not off the board for us because, you know, we take water consumption very seriously in all of our operations. We have a long history of continuing to reduce water consumption, and so that's a priority for us. You know, when you look at both Pearl and Cold Lake, our two primary water users, those teams have made exceptional progress toward reducing water usage in the range of 30% to 40% since 2020.
Speaker Change: Yes, thanks for the question and.
Speaker Change: I mean youre right its not something we may be normally talk about or get questions on.
Speaker Change: But it's not off the board for us because we take water consumption very seriously and all of our operations.
Speaker Change: We have a long history of continuing to reduce water consumption.
Speaker Change: And and so that's a priority for us in fact.
Speaker Change: When you look at.
Speaker Change: Both Pearl and Cold Lake P&L, our two primary water users.
Speaker Change: Those teams have made exceptional progress towards reducing water usage.
Speaker Change: And the range of 30% to 40% reductions since 2020.
Bradley W. Corson: And that comes through, you know, the result of increased recycling, as well as reduced consumption. And so, you know, I'm quite pleased with that. I think, you know, as we look to the risk of drought and the impacts that it has on water supply, we're going to continue to have to manage that carefully. For Pearl, you know, our primary source of water, of course, is the Athabasca River.
Speaker Change: And that comes through.
Speaker Change: The result of increased recycling.
Speaker Change: As well as reduced consumption and so.
Speaker Change: I'm quite pleased with that I. Thank you.
Speaker Change: As we look to risk of drought and impacts that has on water supply we're going to continue to.
Speaker Change: To have to manage that carefully.
Speaker Change: For parole.
Speaker Change: Our primary source of water of course is the Athabasca River, we have agreements in place for the implications of.
Bradley W. Corson: We have agreements in place for the implications of, you know, reduced water availability and how we manage that. And similarly, Coal Lake is the primary source of our water for our coal lake operations. We have agreements in place there for low water levels. I have no concerns with respect to our operations.
Speaker Change: P&L.
Speaker Change: Of.
Speaker Change: Produced water availability.
And how we manage that.
Speaker Change: And similarly with with.
Speaker Change: Cold Lake, which is a source primary source of our water for our cold Lake operations.
Speaker Change: We have agreements in place there for.
For low water levels.
Speaker Change: So.
Speaker Change: I have no concerns with respect to our operations.
Bradley W. Corson: But it is something, you know, we manage quite carefully and something we're very diligent about, you know, and obviously, more broadly, you know, we want to make sure we are contributing in a positive way to sustainability, but when it comes to water use, especially in drought conditions. Okay, great. And then my second question here, there's no sort of formal update on pathways in the release, although you did touch on it a little bit. Are you able to, you know, provide a bit of an update on the project where you stand here? Because I think from yourselves and some of the partners, there has been discussion about, especially with the long lead items being on a pretty short cycle in terms of timeframe, in terms of meeting decisions in order to get the project on and meet some of the 20-30 time frames that have been in place. Yeah, thanks.
Speaker Change: But it is something we manage quite carefully.
We're very diligent about.
Speaker Change: Obviously more broadly.
Speaker Change: We want to make sure we are contributing.
Speaker Change: A positive way to sustainability, but when it comes to water use, especially it dropped conditions.
Okay great.
Speaker Change: And then my second question here there is no sort of formal update on possibly then the release, although you did touch on it a little bit are you able to provide a bit of an update on the project, where you stand here, because I think from yourselves and some of the partners.
Speaker Change: Then discussion about especially with the long lead items being on.
Speaker Change: Pretty short cycle in terms of Timeframes.
Speaker Change: In terms of meeting decisions in order to get the project on and meet some of the 2030 timeframe. So it had been in place.
Speaker Change: Yes. Thanks, Thanks for the question.
Bradley W. Corson: Thanks for the question. And I'm glad I have an opportunity to comment on Pathways because, you know, there is a lot of activity underway. And, you know, it often doesn't get, you know, doesn't get publicized, doesn't get, maybe, external recognition, but, you know, maybe, maybe just summarize it a bit.
Speaker Change: Glad I have an opportunity to comment on pathways because.
Speaker Change: There is a lot of activity underway and it often doesn't get it.
Speaker Change: It doesn't get publicized doesn't get maybe external recognition but.
Speaker Change: Maybe maybe just summarize it a bit.
Bradley W. Corson: But, you know, I would characterize this as two main streams of work activity, you know, the first is the ongoing engagement with the government, both federal and provincial, regarding all of the fiscal support and regulatory certainty that is required to underpin these, you know, significant investments. And so those discussions continue. You're obviously aware of the 50% investment tax credit offered by the federal government. You know, more recently, the Alberta province has announced 12% support for projects like this.
I would characterize us as two vein kind of streams of work activity.
Speaker Change: The first is.
Speaker Change: Kind of the ongoing engagement with the government, both federal and provincial.
Speaker Change: Regarding all of the fiscal support and regulatory certainty that is required to underpin these significant investments and so those discussions continue.
You're obviously aware of the 50% invest investment tax credit offered by the federal government.
Speaker Change: More recently at the Alberta Province has announced a 12%.
Speaker Change: Support.
Speaker Change: For projects like this and there is the discussions are continuing around further support that's needed and all of the details that go around that but equally important is.
Bradley W. Corson: And there's, you know, discussions are continuing around further support that's needed and all the details that go around that. But equally important is another big work stream around progressing, the physical aspects of the project. So there's significant engineering and design work underway, both regarding the main pipeline, as well as individual companies working on their own capture projects, you know, which all will feed into that pipeline. We're also working on environmental field work and studies that are integral to the permitting of the pipeline. There is significant community engagement and indigenous consultation underway where. The front-end engineering and design, the feed work, as we refer to it, for the 400-kilometer CO2 pipeline is now more than 50% complete.
Speaker Change: Another big work stream around progressing.
Speaker Change: The physical aspects of the project.
So there's significant engineering and design work underway.
Speaker Change: Regarding the main pipeline.
Speaker Change: As well as individual companies or are working on their own capture projects, which all will feed into that pipeline.
Speaker Change: We're working on.
Speaker Change: Environmental field work.
Speaker Change: Studies that are integral to the permitting.
Speaker Change: The pipeline Theres significant community engagement and indigenous consultation underway.
Speaker Change: We are.
Speaker Change: The front end engineering and design the feed work as we referred to it for the 400 kilometers.
Speaker Change: <unk> pipeline is now more than 50% complete that that positions us to two ultimately order the line pipe.
Bradley W. Corson: That positions us to ultimately order the line pipe once we have all the fiscal support in place from the government. And we're also working on a major regulatory application related to the whole CO2 transportation network but also the storage hub. And that's an important part of this project as well. So a lot of activities are underway, you know; our Pathways team, including the CEOs, are meeting on a weekly basis to discuss several aspects of the project. They meet multiple times a week on it.
Once we have all the digital support in place from the government.
Speaker Change: And we're also working on on a major.
Speaker Change: Kind of a regulatory application related to kind of the whole <unk> transportation network, but also the storage hub and Thats an important part of this project as well so a lot of activities underway our pathways.
Speaker Change: Team, including the Ceos are beating on a weekly basis.
Speaker Change: Several aspects of the project.
Speaker Change: They are meeting multiple times, so we got it.
Bradley W. Corson: So we're making progress, you know, and all of this is consistent with, you know, a multi-year project of unprecedented scale. So, you know, these things take time, but we're, you know, intensely focused on delivering this project, which is a key enabler to achieving net zero by 2050. And all of our member companies have, you know, their own interim targets, and for Imperial, you know, in addition to net zero, we've also announced a target of 30% reduction in greenhouse gas intensity for our oil sands by 2030. So we're all focused on those interim targets as well. So thanks for that question, and really kind of a shout out to the Pathways team that is doing a lot of work in this space. Okay, great. Thanks very much.
Speaker Change: So we're making progress.
Speaker Change: And all of this is consistent with our multi year project of unprecedented scale. So.
Speaker Change: These statements take time, but.
Speaker Change: We are.
Intensely focused on.
Speaker Change: Delivering this project, which is a key enabler to achieving net zero by 2050 and all of our member companies have their own.
Speaker Change: Interim targets.
Speaker Change: Sure.
Speaker Change: For a period in addition to net zero, we've also announced the target of 30% reduction in greenhouse gas intensity for our oil sands by 2030. So we're all focused on those interim targets as well so thanks for that question.
Speaker Change: And really kind of a shout out to the pathways.
Speaker Change: <unk> that is doing a lot of work in this space.
Speaker Change: Okay, great. Thanks very much.
Bradley W. Corson: Your next question- Neil Mehta, go ahead. Yeah, Ad Mike, congrats on the dividend bump and the strong results as well. I guess, Brad, maybe I want to talk to you about the return of capital via the SIB. You've been pretty consistent about doing that over the last couple of years when you have excess cash. How are you thinking about the timing of that, and based on what we see in the forward curve, is it fair to say? More likely the back half of them.
Speaker Change: Your next question comes from the line of Neil Mehta with Goldman Sachs. Please go ahead.
Neil Singhvi Mehta: Yes, Mike Congrats on the dividend bump in la.
Neil Singhvi Mehta: Strong results as well I guess, Brad maybe I want to talk to you about the return of capital via the SIV.
Neil Singhvi Mehta: <unk> been pretty consistent about doing that over the last couple of years. When you have excess cash just how are you thinking about the timing of that and based on what we see in the forward curve is it fair to assume thats more likely a back half event than a front half event.
Bradley W. Corson: Yeah, thanks. Thanks for the question. You know, as we've talked about on many calls and other occasions, returning surplus cash to our shareholders is core to our strategy. It's a key priority for us, you know, and that return of cash starts with the dividend and ensuring that that is not just reliable but also growing. And obviously, you've seen the decision we took on that today. And then, you know, historically, we have turned next to the NCIB.
Speaker Change: Yeah. Thanks, Thanks for the question.
Speaker Change: As we've talked on many calls and other occasions, returning surplus cash to our shareholders is core to our strategy its a key priority for us.
Speaker Change: And that return of cash.
Speaker Change: Starts with the dividend.
Speaker Change: And ensuring that that is not just reliable, but also growing and obviously you've seen the decision we've taken on that today.
Speaker Change: And then historically, we have turn next to the CIB.
Bradley W. Corson: But of course, for that, we're limited to 5% per year share buybacks. But we do see that as a very efficient and advantageous way to return cash to shareholders. So, you know, that's why that has been kind of our next go-to, and we've done NCIBs consistently for many years now.
Speaker Change: But of course for that were limited to 5%.
Speaker Change: Per year share buybacks.
Speaker Change: But we do see that as a very.
Speaker Change: Efficient an advantaged way to return cash to shareholders. So.
Speaker Change: That that's why that has been kind of our next go to as we've done.
<unk> consistently for many years now and then of course in the last couple of years we've had.
Bradley W. Corson: And then, of course, in the last couple of years, we've had further surplus cash beyond, you know, what's needed to support the dividend program and the NCIB program. So we've turned to SIP, the decision on timing for the SIB and the magnitude of the SIB has in the past been very much driven by both of our actual and projected cash flows, as well as where we are with the NCIB, because again, we have to do, we want to do that preferentially, and we can't be doing them both at the same time. And on top of that, to execute an SIB, there are prescriptive blackout periods that we have to work around.
Speaker Change: Further surplus cash.
Speaker Change: Beyond.
Speaker Change: Whats needed to support.
Speaker Change: The dividend program.
Speaker Change: CIB program, so we've turned to <unk>.
Speaker Change: The decision on <unk>.
Speaker Change: Timing for the <unk> and magnitude of the site.
Speaker Change: In the past has been very much driven by both of our actual and projected cash flows.
As well as where we are with the NCI because again, we have to do we want to do that preferentially and we can't be doing that both at the same time.
Speaker Change: And then on top of that to execute in that side.
Speaker Change: There are prescriptive blackout periods that we have to work around so all of those things factor into.
Daniel E. Lyons: So all of those things factor into our decision as to when we will do, and when and if we will do an SIB. So, you know, I'm not going to forecast at this point the timing of a future SIB, but we'll be looking at all those factors. We'll be, you know, reviewing those with the board on a quarterly basis, and we'll certainly be, you know, continuing to discuss the status of those plans with the market. And maybe I'll just see if Dan has anything else to add to that. No, well said, Brad.
Speaker Change: Our decision as to when we will do.
Speaker Change: And if we will do with S. IP so.
Speaker Change: Im not going to.
Forecast at this point no.
Speaker Change: <unk>.
Our future at <unk>, but we'll be looking at all those factors will be.
Speaker Change: Ill.
Speaker Change: Reviewing those with the board on a quarterly basis and will certainly be continuing to discuss the status of those plans.
Speaker Change: With the market.
And maybe I'll just see if Dan has anything else to add no well.
Daniel E. Lyons: Well said, Brian and of course, it really depends on prices right commodity prices.
Daniel E. Lyons: And of course, Neil, it really depends on prices, right? Commodity prices, you know, we assume will continue strong operations. So whether we have surplus cash, you know, above and beyond the NCIB, it's going to be driven by commodity prices primarily. So to the extent we generate surplus cash, you know, our commitment is to return it to shareholders in a timely way. So we'll just have to see how things play out over the year. I think that's where we are. Yeah, that makes sense, Dan. Thanks, Brad.
Speaker Change: Or could we assume well continue strong operation so.
Whether we have surplus cash.
Daniel E. Lyons: Above and beyond the in CIB is going to be driven by by commodity prices, primarily so to the extent we generate surplus cash.
Our commitment is to return it to shareholders in a timely way. So we will just have to see how things play out over the year I think that's where.
Speaker Change: We're at yes.
Speaker Change: That makes sense Dan. Thanks, Brandon just a follow up is just your perspective on the differentials in the prepared remarks, you talked a little bit about when <unk> comes online you expect some of these differentials would tighten up but maybe you could talk about both the outlook for WCS, but also the outlook for Syncrude.
Bradley W. Corson: And just a follow-up, it's just your perspective on the differentials. We talked a little bit about when TMX comes online, you expect some of these differentials will tighten, but maybe you could talk about both the outlook for WCS and also the outlook for Syncrude. Those light crude diffs have, uh... Microsoft Office Word IMO Title Microsoft Office Word Document MSWordDoc Word Document.8, Yeah, thanks
Speaker Change: <unk>.
Speaker Change: And Edmonton Sweet because those light crude diff.
Speaker Change: Have been a little softer than many would have expected.
Brandon: Yeah. Thanks, Thanks for the comment.
Bradley W. Corson: Thanks for the comment. And, you know, I always want to avoid forecasting too much around differentials because there are just so many factors that come into play. I made the comment around PMX because there is kind of a major structural shift that's about to occur when you, you know, when you bring that much additional capacity onto the system, you know, that I think will have a structural impact on heavies. I think there will be, if you will, kind of a carryover impact on light differentials as well. And so, you know, we will likely see some, some tightening of those as well. Of course, in our case, we're, we're well integrated across the upstream and the downstream, and, you know, and so the financial implications of that, you know, are, are, are muted, if you will, in our company relative to others. We, when we see, you know, extremely high pricing in the upstream, certainly there And we would expect that to continue.
I always want to avoid forecasting too much around differentials because there are just so many factors that come into play.
Brandon: Yes.
I made the comment around <unk>, because there is kind of a major structural shift that's about to occur.
Brandon: When you bring that much additional capacity onto the system.
Brandon: That I think will have a structural impact.
Brandon: On Heavies I think there will be if you will kind of a carryover.
Brandon: The impact on light differentials as well and so.
Brandon: We will see likely.
Brandon: Some some tightening of those as well.
Brandon: Of course in our case.
Brandon: We are well integrated across the upstream and the downstream in P&L and so the financial implications of that P&L is.
Brandon: Is muted if you will.
Brandon: And our company relative to others.
Brandon: When we see extremely strong pricing in the upstream certainly there is a bit of a hit in the downstream but.
Brandon: The net net of that is positive for us and we would expect that to continue.
Bradley W. Corson: And I guess that, you know, the same with Syncrude and SSP. It's obviously a bit unusual that that's currently trading at a discount to WTI. You know, it normally trades more at a premium. And I think longer term, there's, there's a few short-term things in the market that I think are driving that longer term. I think we would expect it to, to, you know, settle in that at a premium over WTI, like it's been historically. So, you know, that's probably the most I could say, kind of, again, given the normal volatility uncertainty in the market. Yeah, that's great. Thanks, Brad, www.imperialoil.com. I would now like to turn the call back to Peter Shaw, VP of Investor Relations, for any additional or closing comments.
Brandon: And I guess the.
Brandon: The same with.
Brandon: Syncrude and SSP.
Brandon: Yes.
Brandon: Obviously.
Brandon: A bit unusual that thats currently trading at a discount.
W Ti.
Brandon: Normally trades P&L more at a premium.
Brandon: And I think longer term.
Brandon: As a few short term things that the market I think that are driving that longer term I think we would expect it.
Brandon: To.
Brandon: Settle land that at a premium over <unk> like it has been historically so.
Speaker Change: That is probably the most I could say kind of again.
Speaker Change: Given the the normal volatility.
Speaker Change: And the market.
Speaker Change: Thats great. Thanks, Brad.
Yeah.
Speaker Change: This concludes today's question and answer session I would now like to turn the call back to Peter Shah VP of Investor Relations for any additional or closing remarks.
Bradley W. Corson: Thank you. And so, on behalf of the management team, I would like to thank everyone for joining us this morning. If there are further questions, please don't hesitate to reach out to anybody on the Investor Relations team, and we'll be happy to answer your questions. And with that, thank you very much and have a great day. Please see review 65803 on PissedConsumer.com. Thank you for your participation, www.imperial
Peter Shah: Thank you and so on behalf of the management team I would like to thank everyone for joining us this morning.
Peter Shah: If there are further questions. Please don't hesitate to reach out to anybody on the Investor Relations team will be happy to answer your questions.
Speaker Change: With that thank you very much and have a great day.
Speaker Change: Yeah.
Speaker Change: This concludes today's call. Thank you for your participation and you may now disconnect.
Speaker Change: [music].