Q4 2023 Suncor Energy Inc Earnings Call

Operator: Where you see that we are Good day and welcome to the Suncor Energy fourth quarter 2023 results conference. At this time, all participants are in a listen-only mode.

What do you see that.

Yeah.

Good day and welcome to the Suncor Energy fourth quarter 2023 results conference call.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising you to raise your hand. To withdraw your question, press star 1 1 again.

After the speaker presentation, there will be a question and answer session.

Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message.

That's right.

Jay Your question Press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker, Mr. Choi Lyttle, Vice President of Investor Relations.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Troy Little, Vice President of Investor Relations. Mr. Little, the floor is yours.

Troy Little: Thank you, operator, and good morning. This is Suncor Energy's fourth quarter earnings call. Please note that today's comments contain forward-looking information. Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our fourth-quarter earnings release as well as in our annual information form, both of which are available on CDAR, EDGAR, and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian Generally Accepted Accounting Principles.

Choi Lyttle: Mr. <unk> the floor is yours.

Choi Lyttle: Thank you operator, and good morning, welcome to Suncor Energy's fourth quarter earnings call. Please.

Choi Lyttle: Please note that today's comments contain forward looking information.

Choi Lyttle: Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our fourth quarter earnings release as well as in our annual information form both of which are available on SEDAR, Edgar and our website Suncor Dot com.

Certain financial measures referred to in these comments are not prescribed by Canadian generally accepted accounting principles for a description of these financial measures. Please see our fourth quarter earnings release, we.

Troy Little: For a description of these financial measures, please see our fourth quarter earnings report. We will start with comments from Rich Krueger, President and Chief Executive Officer, followed by Chris Smith, Suncor's Chief Financial Officer. Also on the call are three of our senior operating leaders: Peter Zebedee, Executive Vice President, Oil Sands; Dave Oldrieve, Executive Vice President, Downstream; and Shelley Powell, Senior Vice President, Operational Improvement and Support Services. Following the formal remarks, we'll open up the call to questions. Now, I'll hand it over to Rich to share his comments. Thanks, Troy. Good morning.

Choi Lyttle: We will start with comments from rich Kruger, President and Chief Executive Officer, followed by Chris Smith, <unk> Chief Financial Officer.

Rich Kruger: Also on the call are three of our senior operating leaders, Peter Zebedee Executive Vice President oil Sands, Dave <unk> Executive Vice President downstream and Shelly Powell Senior Vice President of operational improvements and support services.

Rich Kruger: Following the formal remarks, we'll open up the call to questions now I'll hand, it over to rich to share his comments. Thanks, correct a good.

Rich Krueger: The fourth quarter, I would characterize it as strong results across the board, safety, upstream production, downstream reliability, cost management. We finalized the Fort Hills purchase. It was about delivering on commitments for our company. Chris will detail the fourth quarter.

Good morning: Good morning, the fourth quarter I would characterize it as strong results across the board safety upstream production downstream reliability cost management, we finalized our Fort Hills purchase it was about delivering on commitments for our company, Chris will detail the fourth quarter, but first I'd like to provide a little bit of a lift.

Rich Krueger: But first, I'd like to provide a little bit of a look back on 2023 overall. For context, on my first earnings call 10 months ago, I outlined four things you could expect to see from Suncor. One, an intense focus on the fundamentals.

Good morning: Back at 2023 overall for context on my first earnings call at 10 months ago I outlined four things you could expect to see from Suncorp.

Good morning: One an intense focus on the fundamentals to a simpler more focused organization three a shareholder oriented executive leadership team and for an overall urgency to improve performance. So how are we doing let me start with a focus on the fundamentals and first and most importantly, the fundamental of safety.

Rich Krueger: Two, a simpler, more focused organization. Three, a shareholder-oriented executive leadership team. And four, an overall urgency to improve performance. So how are we doing? Let me start with a focus on the fundamentals.

Rich Krueger: And first and most importantly, the fundamental of safety. The fourth quarter of the year was our safest quarter in 2023, and 2023 was the safest year in the company's history. We had no life-altering or life-threatening injuries for the first time since 2015.

Good morning: The fourth quarter of the year was our safest quarter in 2023, and 2023 was the safest year in the company's history, we had no life altering or life threatening injuries for the first time since 2015, we had a nearly 50% reduction in lost time incidents year on year.

Rich Krueger: We had a nearly 50% reduction in lost time incidents year on year. We had our best ever recordable incident rate in the downstream and our second best ever in the upstream. How?

Good morning: We had our best ever recordable incident rate in the downstream and our second best ever in the upstream how leadership.

Rich Krueger: Leadership, workforce engagement, risk management, procedures, and technology. I'll continue with a second fundamental, asset reliability, starting with the upstream. Our bitumen upgraders, or our moneymakers, had full year utilization of 92 percent, our best ever. We had 91 percent at the base plant, and 93 percent at Syncrude. This was the first time in our history that both assets were at or above 90 percent, and combined they were three percent higher than our previous best ever. How?

Good morning: Force engagement risk management procedures and technology.

Rich Kruger: Continue with a second fundamental asset reliability, starting with the upstream our bitumen upgrader moneymakers full year utilization of 92% our best ever we had 91% at the base plant 93% at Syncrude. This is the first time in our history that both assets were at or above 90%.

Rich Kruger: <unk> and combined they were 3% higher than our previous best ever how operational excellence by our site teams and our unique Interstate physical integration.

Rich Krueger: Operational excellence by our site teams and our unique inter-site physical integration. I'll continue with the downstream liability. Crude unit utilization, 90% for the full year, nothing to brag about. But it's a tale of two halves, 82% utilization in the first half and 99% utilization in the second half. For the full year, Sarnia Refinery had its best ever utilization, Edmonton had its second best ever, and Montreal its third best

Rich Kruger: The downstream liability crude unit utilization, 90% for the full year nothing to brag about but it's a tale of two past, 82% utilization in the first half and 99% utilization in the second half for the full year Sarnia refinery had its best ever.

Rich Kruger: <unk> Edmonton had its second best ever in Montreal, its third best ever.

Rich Krueger: How, again, leadership, workforce, and commitment to perform. I'll continue with delivering on commitments, and I'll highlight upstream production. We finished the year at 746,000 barrels a day, the second highest in our company history, including 808 KBD in the fourth quarter.

Rich Kruger: How again leadership workforce commitment to perform.

Rich Kruger: I'll continue with delivering on commitments and I'll highlight upstream production. We finished the year at 746000 barrels a day second highest in our company history, including eight O 8-K, B D. In the fourth quarter, we achieved external guidance for the first time in six years.

Rich Krueger: We achieved external guidance for the first time in six years, the highest ever annual production at Syncrude in its 45-year history and at Firebag in its 20-year history. Fort Hills delivered on year one of a three-year plan. The full year was at 147,000 barrels a day and the fourth quarter at a very strong 186,000 barrels a day. How? I'll begin to sound like a broken record.

Rich Kruger: Highest ever annual production at Syncrude, and it's 45 year history and at fire Bagging hits 20 year history.

Rich Kruger: Fort Hills delivered on year, one of a three year plan full year was at 147000 barrels a day in the fourth quarter at a very strong 186000 barrels a day how are you.

Rich Kruger: I'll begin to sound like a broken record leadership clear priorities workforce focus we understand that trust and credibility are based on delivering on commitments.

Rich Krueger: Leadership, clear priorities, workforce focus. We understand that trust and credibility are based on delivering on commitments. The second area I highlighted you could expect from Suncor was a simpler, more focused organization. Well, we have a new executive leadership team, smaller at eight versus previous nine. Four of us were new in 2023, a fifth in 2022.

Rich Kruger: The second area I highlighted you could expect Suncor was a simpler more focused organization.

Rich Kruger: Well, we have a new executive leadership team has smaller at eight versus previous nine four of US were new in 2023, a fifth in 2022.

Rich Krueger: Individually, the functional expertise on this team is outstanding, but we're even better collectively or in terms of team competencies. Our newest member of the team, Kent Ferguson, joined us here a month or so ago as our Senior VP of Strategy, Sustainability, Commercial, and Development, and Kent's in the room with us this morning as well. We reorganized and refocused our above-field or non-operating workforce, a 20% reduction in headcount completed in five months last year between June and November. And we did this through the elimination of work that was judged to be low priority or simply unaffordable. We spent $275 million in severance costs to achieve a $450 million annual savings starting this year.

Rich Kruger: Individually the.

Rich Kruger: Punctual expertise on this team is outstanding.

Rich Kruger: But we're even better collectively or in terms of the team competency our newest member of the team kept Ferguson joined US here, a month or so ago as our senior VP of strategy sustainability commercial and development in Camden in the room with US this morning as well.

Rich Kruger: <unk> reorganized and refocused our field or are not operating workforce, a 20% reduction in head count completed in five months last year between June and November.

Rich Kruger: We did this through the elimination of work work that was judged to be low priority or simply unaffordable.

Rich Kruger: We spent $275 million in severance cost to achieve a 450 million dollar annual savings starting this year $50 million above our target.

Rich Krueger: $50 million above our target. You do the math on that; that's about an eight-month payout. Our central above field teams have clear priorities, and they are very intensely focused on operational support and improvement. Another change we made above field is that we consolidated corporate-wide strategy, commercial sustainability, and development work, not only to increase efficiency, but even more importantly, to ensure we focus on the highest value work. Simultaneously, in the second half, an area we haven't talked about, we restructured and reorganized our upstream and downstream operational site teams. So we now have a common site design across the company, operations, maintenance, engineering, et cetera, with crystal clear site accountabilities.

Rich Kruger: You do the math on that that's about an eight month payout.

Rich Kruger: Our central above field teams have clear priorities and they are very intensely focused on operational support and improvement.

Rich Kruger: Another change we made about field as we consolidated corporate wide strategy commercial sustainability and development work not only to increase efficiency, but even more importantly to ensure we focus on the highest value work.

Rich Kruger: Simultaneously in the second half an area, we haven't talked about we restructured and reorganized our upstream and downstream operational site teams. So we now have a common site design across the company operations maintenance engineering et cetera, with Crystal clear.

Rich Krueger: The benefits of this are our common operating standards, applications of best practices, and natural improvement networks across the company. I would say the early results of this are positive, greater clarity, and accountability. We're seeing it in the improvements in the execution of our work. For example, although in early 2023, our cost per barrel was at or below guidance across all upstream oil sands sites. And for the first time in company history, we executed our turnaround scope, upstream, and downstream, $1.3 billion in aggregate on budget and on schedule.

Rich Kruger: Accountabilities the benefits of this week is our common operating standards applications with best practices and natural improvement networks across the company I would say the early results from this are positive greater clarity accountability, we're seeing it in the improvements in the execution of our work.

Rich Kruger: An example, although early 2023, our cost per barrel was at or below guidance across all upstream oil sands sites.

Rich Kruger: And for the first time in company.

Rich Kruger: History, we executed our turnaround scope upstream downstream $1 $3 billion in aggregate on budget and on schedule.

Rich Krueger: A third area I promised you could see was a shareholder-oriented executive leadership team. Well, during the year, we upgraded our asset portfolio to strengthen our competitive advantage and add shareholder value. We did that, in part, by acquiring the remaining 46 percent interest in Fort Hills in two separate transactions that totaled $2.2 billion.

Rich Kruger: The third area I promised you could see was a shareholder oriented executive leadership team well in the in the year, we high graded our asset portfolio to strengthen our competitive advantage and add shareholder value. We did that in part by acquiring the remaining 40% 46% interest in Fort Hills in two separate.

Transactions that totaled $2 $2 billion, both transactions, we consider to be at attractive prices. The second one touch all Canada also provides large and immediate tax benefits as articulated in our release.

Rich Krueger: Both transactions were considered to be at attractive prices. The second one, Total Canada, also provides large and immediate tax benefits as articulated in our release. These acquisitions address our long-term bitumen supply uncertainty, but in addition, they enable material regional synergies with the large footprint of our operation. In the year, we also sold non-core UK North Sea upstream assets for $1.1 billion and the solar and wind business for about $700 million, or a combined $1.8 billion. In the year profitability and shareholder returns, we had AFFO of 13.3 billion, the second highest in our history, despite oil prices being the seventh highest over the same period of time. We generated free funds flow of 7.5 billion, the second highest, and we executed a $5.7 billion capital program again within our guidance. We distributed $5 billion to shareholders, 2.8 in dividends, and 2.2 in buybacks, and when combined, this is a 9.1 percent cash return for the year.

These acquisitions address our long term Benjamin supply uncertainty, but in addition, they enabled material regional synergies with the large footprint of our operations.

In the year, we also sold non core UK North sea upstream assets for $1 1 billion and the solar and wind business for about $700 million are a combined one eight.

In the year profitability and shareholder returns, we had <unk> 13, 3 billion the second highest in our history. Despite oil prices being the seventh highest over the same period of time, we generated free funds flow of $7 5 billion second highest.

We executed a $5 $7 billion capital program again within our guidance, we distributed $5 billion to shareholders to 0.8 in dividends 2.2 in buybacks.

When combined this is a nine 1% cash return in the year.

Rich Krueger: Where we are today and going forward, continued priorities are to lower our overall corporate WTI breakeven and increase free cash flow, and free funds flow per share. In terms of continuing to improve and the urgency to do that, I'll talk a bit more about that when Chris is done, but I would say that, despite overall strong financial and operating performance in 2023, I look at it as if we have left some on the table. We missed our refining utilization guidance by a couple percent, really attributed to a slow recovery in the first half of the year at Commerce City, and we had disappointing project execution at Terra Nova and the subsequent delayed startup with the ramp up of that asset now going on.

Where we are today and going forward continued priorities are to lower our overall corporate WT I breakeven and increased free cash flow free funds flow per share in terms of continuing to improve and the urgency to do that I'll I'll talk a bit more about that one Chris has done, but I would say that despite.

Overall strong financial and operating performance in 2023 I look at it is we also left some on the table.

Missed a refining utilization guidance by a couple percent.

Really attributed to a slow recovery in the first half of the year at Commerce City, and we had disappointing project execution at Terra Nova and the subsequent delayed startup with the ramp up of that asset now going on so in summary, 2023, I would say it was a good year in many areas.

Rich Krueger: So in summary, 2023 was a good year in many areas, very good in other areas, but I believe we can do better, and that's exactly our plan. So I'll come back to 2024 in a few minutes, but first I'll turn it over to Chris, who will talk about our fourth quarter summary. Okay.

Very good and other areas, but I believe we can do better and that's exactly our plan. So I'll come back to 2024 in a few minutes, but first I will turn it over to Chris who will talk about our fourth quarter summary.

Chris Smith: Thanks, Rich, and good morning, everyone. Well, while we thought crude prices and refining margins weakened versus the prior quarter, the fourth quarter still saw a robust price and margin environment. WTI averaged U.S. $78 a barrel in the quarter, while the Light Heavy Differential widened versus Q3, averaging about $22 a barrel U.S. We also saw synthetic crude oil premiums retreat in Q4 on the back of strong regional upgrading production and egress constraints across the basin, averaging about $0.30 a barrel US above TI. On the refining side, while we saw weakening Finally, natural gas, which is a key input cost to our operations, remained low, with ACO averaging $2.15 Canadian at GJ in the quarter.

Great. Thanks, Rich and good morning, everyone.

Well, we saw crude prices and refining margins weakened versus the prior quarter, the fourth quarter still saw robust price and margin environment.

<unk> averaged <unk> $78, a barrel in the quarter, while the light heavy differential widened versus Q3, averaging about $22 a barrel U S. We also saw synthetic crude oil premiums retreat in Q4 on the back of strong regional upgrading production and egress constraints across the basin averaging about.

30, a barrel U S about ti.

On the refining side, while we saw weakening gasoline cracks in the quarter distillate cracks continued to be strong and our 5221 refinery index was U S $33 45 per barrel, which was about $2 55, a barrel below Q3.

Finally, natural gas, which is a key input cost of our operations remained low with eco averaging $2.15 Canadian at GJ in the quarter.

Chris Smith: With this business environment and very strong operations, Suncor delivered strong financial results in the fourth quarter, generating $4 billion in adjusted funds from operations for $3.12 a share and adjusted operating earnings of $1.6 billion, or $1.26 per share. During the quarter, we also returned nearly $1.1 billion to shareholders. This was comprised of $704 million in dividends, which represented a 5% increase over the previous quarterly dividend, as well as $375 million in share repurchase. In 2023, we bought back $2.2 billion of shares, which was almost 4% of our float. Our net debt ended at $13.7 billion, reflecting the closing of the acquisition of Total Energies Canada in the quarter for $1.5 billion Canadian, plus closing adjustments and closing costs.

With this business environment, and very strong operations Suncor delivered strong financial results in the fourth quarter generating 4 billion and adjusted funds from operations were $3 12 per share and.

And adjusted operating earnings of $1 6 billion or $1 26 per share.

During the quarter. We also returned nearly $1 1 billion to shareholders.

This was comprised of $704 million in dividends, which represented a 5% increase over the previous quarterly dividend as well as $375 million in share repurchases.

In 2023, we bought back $2 2 billion of shares which was almost 40% of our float.

Our net debt ended at $13 7 billion, reflecting the closing of the acquisition of the hotel <unk>, Canada in the quarter for $1 5 billion Canadian plus closing adjustments and closing costs.

Chris Smith: And we continue to remain focused on our capital allocation framework of allocating free cash flow to continue debt reduction and cash returns to shareholders through share buybacks. Turning now to operational performance in the corridor, we saw very strong operational performance in both the upstream and downstream, as outlined by Rhett. Our upstream delivered total production of 808,000 barrels per day in the quarter, the second highest in our history. This included 875,000 barrels per day in November and 904,000 in December, which were the highest months of production in company history.

And we continue to remain focused on our capital allocation framework of allocating free cash flow to continued debt reduction and cash returns to shareholders through share buybacks.

Turning now to operational performance in the quarter.

We saw a very strong operational performance in both the upstream and downstream as outlined by rich.

Our upstream delivered total production of 808000 barrels per day.

In the quarter the second highest in our history. This included 875000 barrels per day in November and 904000 in December which were the highest months of production in company history.

Chris Smith: The fourth quarter also saw record quarterly production in our oil sands segment. The base plant upgrade or two turnaround was successfully completed on time and on budget early in the quarter, while we also completed our fire bag turnaround successfully. As well, Syncrude had a very strong upgrading quarter, achieving over 100% utilization, another record. With the successful completion of the Fort Hills full plant turnaround in Q3 and the mine plan being set up to maximize ore delivery in the quarter, we saw very strong production at Fort Hills, with total production averaging 186,000 barrels per day, or about 96% utilization, a quarterly record. In addition to high reliability across our oil sands assets, we also optimize inter-asset volume transfers to maximize value across those assets. This included internal bitumen transfers of about 45,000 barrels per day in Q4, demonstrating an increased level of integration within oil sands.

The fourth quarter also saw a record quarterly production at our oil Sands segment.

The base plant upgrade or two turnaround was successfully completed on time and on budget early in the quarter. While we also completed our fire bag turnaround successfully.

As well Syncrude had a very strong upgrading quarters, achieving over 100% utilization.

Another record.

With the successful completion of the Fort Hills full plant turnaround in Q3, and the mine plan being set up to maximize our delivery in the quarter. We saw very strong production at Fort Hills with total production, averaging 100, <unk> hundred 86000 barrels per day or about 96% utilization a quarterly record.

In addition to high reliability across our oil sands assets, we also optimized inter asset volume transfers to maximize value across those assets.

Included internal bitumen transfers of about 45000 barrels per day in Q4, demonstrating an increased level of integration with an oil sands. This increase was primarily driven by bitumen transferred from Fort Hills to the base plant upgrader.

Chris Smith: This increase was primarily driven by bitumen transferred from Fort Hills to the base plant upgrade, taking advantage of the SCO yield uplift from the paraffinic froth treated Fort Hills barrels. Also, in the quarter, we saw the return to operation of the Terranova asset in our East Coast E&P segment, and that asset continues its ramp-up of production into this quarter. With respect to the downstream, refining utilization was an impressive 98% in the quarter, which included two smaller turnarounds at Edmonton and Montreal that were successfully completed. Downstream margin capture was strong in the quarter at 103% on a LIFO basis when compared to Suncor's 5-2-2-1 refining index, primarily driven by higher realizations from seasonal diesel differentials over the previous quarter. And with diesel cracks continuing to outperform gasoline, Suncor is structurally advantaged as our network produces a higher distillate cut when compared to the average North American refinery. As mentioned, we closed the purchase of Total Energies Canada on November 20th for $1.5 billion Canadian before closing adjustments and other closing costs, making Suncor the sole owner of Fort Hill.

Taking advantage of the SCO yield uplift from the Paraffinic froth treated Fort Hills barrels.

Also in the quarter, we saw a return to operation of the Terra Nova asset in our East Coast E&P segment and that asset continues its ramp up of production into this quarter.

With respect to the downstream refining utilization was an impressive 98% in the quarter, which included two smaller turnarounds in Edmonton and Montreal that were successfully completed.

Downstream margin capture was strong in the quarter at 103% on a LIFO basis, when compared to Suncor is 5% to one refine index.

Primarily driven by higher realizations from seasonal diesel differentials over the previous quarter.

And with diesel cracks continuing to outperform gasoline suncor is structurally advantaged as our network produces a higher distillate cut when compared to the average North American refining.

As mentioned, we closed the purchase of total energy Canada in November 20th for $1 5 billion Canadian dollars before closing adjustments and other closing costs, making suncor the sole owner of Fort Hills.

Chris Smith: In the quarter, we recognized an initial tax benefit of $880 million associated with the transaction, which supports the strong acquisition economics. With the asset now in 100% Suncor ownership, we're focused on continuing to drive the mine improvement plan and maximizing value through integration with our other regional operations. Now for a brief update on the Oil Sands Pathways Alliance to Net Zero carbon capture and storage project. As we continue to work closely with federal and provincial governments on the necessary fiscal and regulatory framework, major regulatory applications for the CO2 transportation network and storage hub are being prepared and are expected to be filed in the first half of this year, while front-end engineering and design of the proposed CO2 transportation line is now more than half complete. As well, more than 2,000 hours of environmental fieldwork have been completed so far, and formal consultation with indigenous groups along the proposed transportation corridor and storage hub began in 2023 and continues.

In the quarter, we recognized an initial tax benefit of $880 million associated with the transaction, which supports the strong acquisition economics.

With the asset.

Percent Suncor ownership.

Focused on continuing to drive the main improvement plan and maximizing value through integration with our other regional operations.

Now for a brief update on the oil sands pathways alliance to net zero carbon capture and storage project.

We continue to work closely with federal and provincial governments unnecessary fiscal and regulatory framework.

Major regulatory applications for the <unk> transportation network and storage hub are being prepared and are expected to be filed in the first half of this year.

While front end engineering and design of the proposed <unk> transportation line now more than half complete as.

As well more than 2000 hours of environmental field work have been completed so far and formal consultation with indigenous groups along the proposed transportation corridor and storage hub began in 'twenty three and continue.

Chris Smith: Now, finally, before handing it back to Rich, I just wanted to make a few comments on our 2024 guidance released this past December. As set out in the guidance, we expect production to grow by about 6%, or 44,000 barrels per day versus 23. The key drivers for that are the ramp-up in Fort Hills production as we move into the second year of our improvement plan, our increased ownership in Fort Hills as we move from effectively 70% of gross production in 2023 to 100% in 2024, and increased SCO production at Bays Plant as it has a shorter maintenance schedule this year. As well, while we sold our UK E&P business in 2023, we now have Terranova ramping up, which has us guiding That guidance includes a number of large planned maintenance activities during the year.

Now finally before handing it back to rich I just wanted to make a few comments on our 2024 guidance released this past December.

As set out in our guidance, we expect production to grow by about 6% or 44000 barrels per day versus 'twenty three.

The key drivers to that are the ramp up in Fort Hills production as we move into the second year of our improvement plan our increased ownership in Fort Hills, as we move from effectively 70% of gross production in 23% to 100% in 'twenty four and in ink and increased SCO production at base plant is it has a sort of maintenance schedule. This year.

As well, while we sold our UK E&P business in 'twenty three we now have turnover ramping up which has us guiding fairly flat with 2023 E&P volumes.

That guidance includes a number of large plants maintenance activities in the year.

Chris Smith: At Base Plant, we have a large turnaround in Upgrader 1 in the second quarter and Upgrader 2 annual COCR turnaround in Q3-Q4. And at Syncrude, we have an annual COCR turnaround starting in late Q1. And in the downstream, in the second quarter, we have large turnarounds at the Sarnia and Montreal refineries this year. With regard to our cash operating costs for 2024, we are essentially holding our costs flat with 2023 while bringing on additional Fort Hill working interest and growing production. That's an example of moving costs in the right direction.

At base plant, we have a large turnaround in upgrade or one in the second quarter and upgrade or two annual coker turnaround in Q3 Q4 and at Syncrude, We have an annual coker turnaround starting in late Q1.

And in the downstream in the second quarter, we have large turnaround at the Sarnia in Montreal refineries this year.

With regards to our cash operating costs were 24, we're essentially holding our costs flat with 23, while bringing on additional Fort Hills, working interest and growing production.

That's an example of moving cost in the right direction and we continue to be laser focused on driving cost down across the company.

Chris Smith: And we continue to be laser focused on driving costs down across the company. And finally, our capital guidance for 2024 is between $6.3 and $6.5 billion. This includes asset sustainment and maintenance capital largely consistent with what we saw in 2023 and higher economic investment capital versus the prior year, which reflects a number of key investments that will drive value for our shareholders. These include the Fort Hills Mine Improvement Plan, the Upgrader One Coke Drum Replacement Project, Mildred Lake Mine Extension at Syncrude, finishing up the Base Plant Co-Generation Project this year, the West White Rose Project and Sea Rose Asset Life I'm confident that the team is 100% focused on delivering against these commitments and is building on the strong momentum we had when we finished up in 2023. And with that, Rich, I'll hand it back to you. Thanks, Chris. Okay, 2023 in the books. It's all about 24 and beyond.

And finally, our capital guidance for 2024 to six 3% to $6 5 billion.

This includes asset Sustainment and maintenance capital largely consistent with what we saw in 2023 and higher economic investment capital versus prior year, which reflects a number of key investments that will drive value for our shareholders. These include the Fort Hills mine improvement plan, you have greater one coke drum replacement project mill.

Lake mine extension at Syncrude, finishing up the base plant Cogeneration project. This year, the West White Rose project and see Roes asset life extension, our sales and marketing growth plan and investment in new mining trucks at Fort Hills, and base plan, including the continued rollout of autonomous trucks at base plant.

I'm confident that the team is 100% focused on delivering against these commitments and is building on the strong momentum. We had finished up in 2023 and with that rich I'll hand, it back to you. Thanks, Chris Okay 2023 in the books, it's all about 'twenty four and beyond let me talk about what we're doing right.

Rich Krueger: Let me talk about what we're doing right now to continue to add shareholder value. As we look at the year, I think first and foremost, it is to achieve our volume growth commitments. I won't go through those in detail, as Chris just did.

Right now to continue to add shareholder value as we look at the year I think first and foremost it is achieve our volume growth commitments I won't go through those in detail, Chris just did it's a 6% year on year versus the midpoint of our guidance that will require continued strong upgrader utilization continued strong.

Rich Krueger: It's 6% year-on-year versus the midpoint of our guidance. That will require continued strong upgrader utilization, continued strong in situ, and then, of course, the growth that comes along with Fort Hills. In the downstream, we're about 4% year-on-year growth versus the midpoint of guidance. This will require continued strong performance at each of the Edmonton, Sarnia, and Montreal refineries and a full year of successful operations at Commerce City.

In <unk> and then of course the growth that comes along with Fort Hills in the downstream where about a 4% year on year growth versus the midpoint of guidance. This will require continued strong performance at each of the Edmonton Sarnia in Montreal refineries and a full year of successful operations at <unk>.

Rich Krueger: And then, of course, last but not least on volume, it's about executing the turnarounds across all of our major sites. A second area that I've talked about before, and I want to give you a bit of an update on is mining. You know, fundamentally, we, as a company, will improve our cost performance as our mining business improves its performance. And, you know, for context, again, I've said it before, the cost of moving ore from a mine to a crusher is the single highest cost component in bitumen production. And where we sit today, we know exactly what our unit cost competitive gap is relative to best in class. And there are really two components, a structural gap that's due to the relative age and configurations of our mines and deals with things like haul distances and strip ratios.

City, and then of course last but not least on volume it's about executing the turnarounds across all of our major sites.

A second area that I've talked about before I wanted to give you a bit of an update on his mining fundamentally we as a company we will improve our cost performance as our mining business improved its performance.

Context, again, I've said it before the cost of moving or from a mine to a crusher. That's the single highest cost component in bitumen production and where we sit today, we know exactly what our unit cost competitive gap is relative to best in class and there's really two components.

Our structural gap, that's due to the relative age and configurations of our mines and deals with things like haul distances and strip ratios and then Theres a performance gap that's related to simply how well we plan and execute our work Peter.

Rich Krueger: And then there's a performance gap that's related to simply how well we plan and execute our work. Peter has a very definitive plan focused on closing our performance gap with a specific list of tangible actions to bring about improvement. And what we're doing is evaluating alternatives to address our structural gap via alternate mining scenarios or different technologies in our minds. More to come each quarter on the mining business. But I want to share two specific examples of closing the mining performance gap, how we plan and execute our work. We've mentioned the trucks, the addition of 55 new 400-ton ultra-class trucks through the rest of this year. New and bigger trucks, 55 will displace about twice as many less efficient, smaller third-party trucks. We've received and are operating 13 of those 55 trucks, or about 25%. They're Komatsu 980s.

Peter has a has a very definitive plan focused on closing our performance gap with a specific list of tangible actions to bring about improvement in what we're doing is we're also evaluating alternatives to address our structural gap via alternate mining scenario.

Our different technologies in our minds more to come by each quarter on the mining business, but I wanted to share two specific examples on closing the mining performance gap, how we plan and execute our work we've mentioned the trucks. The addition of 55, new 400 ton.

Ultra class trucks through the rest of this year.

New and bigger trucks, 55 will displace about twice as many less efficient smaller third party trucks. We've received in our operating 13 of those 55 trucks are about 25% Komatsu 900 eighty's.

Rich Krueger: And recall that I've said before, with all 55 in operation, that will lower our overall corporate breakeven by about a dollar per barrel US when they're all up and running by the end of the year. I've also commented on autonomous operations. We're continuing to ramp up autonomous operations, the haul trucks in our base mines. The last time we talked about three months ago, we had 31 trucks operating autonomously. Today it's 45, and we'll be at 91 by the end of the year, where, in essence, by the end of the year, 100% of the ore at the base plant will be moved autonomously. And recall that conversion delivers about $1 million per truck per year in sustainable annual cost savings. So it's a material improvement.

And recall that I've said before with all 55 in operation that will lower our overall.

Break corporate breakeven about $1 per barrel U S. When they're all up and running by the end of the year. I've also commented on autonomous operations, we're continuing to ramp up of autonomous operations haul trucks in our base mines. The last time, we talked about three months ago, We had 31 trucks.

Operating economists Lee today, it's 45, and we'll be at 91 by the end of the year. We're in essence by the end of the year of 100% of the or at the base plant will be moved economists sleep and recall that conversion delivers about $1 million per truck.

Per year and sustainable annual cost savings, so it's a material improvement.

Rich Krueger: We will also get with autonomy what we believe to be a productivity increase where we will effectively move the same ore tonnage but with fewer trucks. Specifically, our estimate is it will be the equivalent of three free 400-ton haul trucks through the conversion to autonomy. And you recall these trucks cost $10 million plus each.

We will also get with the economy, what we believe to be a productivity increase where we will effectively moving the same or tonnage, but with fewer trucks. Specifically our estimate is it will be the equivalent of three free 400 ton haul trucks through the convert.

To autonomy and you recall these trucks cost $10 million plus each what we will do in practice is move the surplus trucks to displace higher cost third party vehicles.

Rich Krueger: What we will do in practice is move these surplus trucks to displace higher-cost third-party vehicles, you know, elsewhere in our operation. So, you know, the winning formula in mining continues to be fewer trucks, bigger trucks, more efficient trucks, autonomous haul trucks, but coupled with an industrial engineering-like focus on all aspects of today's business. Existing fleet availability, utilization, maintenance, all the ancillary equipment reliability across the board.

Elsewhere in our operation so the winning formula in mining continues to be fewer trucks bigger trucks more efficient trucks, antonymous haul trucks, but coupled with an industrial engineering like focus on all aspects of today's business existing fleet availability utilization may.

<unk>, all the ancillary equipment reliability across the board.

Rich Krueger: And maybe in the Q&A, I can ask Peter to address some of the specific things we're working on to bring about further improvement. I'll comment a bit more on turnarounds, which I've shared, and give you a bit of an update on our efforts there. You will recall, I mentioned we formed a new central group under Shelly Powell in 2023, and they're singularly focused on turnaround performance. Dave and Shelly together, Dave Oldridge and Shelly are our executive co-leads across both upstream and downstream to elevate our overall accountability on turnarounds.

And then maybe in the Q&A, if I can ask Peter to address some of the specific things we're working on to bring about further improvement.

I'll comment a bit more on turnarounds, which ive shared give you a bit of an update on our efforts there.

You will recall I mentioned, we have formed a new central group under ship now Paul in 2023, and they are singularly focused on turnaround performance, Dave and Shelly combined diebold or even celli, our executive co leads across both upstream and downstream calibrate our overall accountability on turnaround.

Rich Krueger: We are completing extensive third-party benchmarking to identify our improvement opportunities and establish expectations. We are holding monthly reviews on scope, cost, duration, and readiness, where previously these reviews had been held at an asset level. And along with our theme and our unique competitive value proposition, we're capturing regional synergies or efficiencies because of the proximity of our operations, and the ability to coordinate turnarounds. Examples early on, but of some of the improvements we're seeing, I'll use refining as an example. Montreal, second quarter this year, we've got a material turnaround dealing with heavy crude processing. Through benchmarking and pre-planning, we've cut the duration from the original 62 days to 53 days and are very comfortable with it.

We are completing extensive third party benchmarking to identify our improvement opportunities and establish expectations. We are holding monthly reviews on scope cost duration and readiness, where previously these reviews had been held at an asset level and along with our.

Our theme and our unique competitive value proposition, we're capturing regional synergy.

<unk> because of the proximity of our operations the ability to coordinate turnarounds.

Examples of early onset of some of the improvements we're seeing I'll use refining as an example, Montreal second quarter. This year, we've got a material turnaround dealing with heavy crude processing through benchmarking pre planning we've cut the duration from the original 62 days to 53 days in a very comfort.

Rich Krueger: A second example I'll share is at our Sarnia refinery, where again, we have a second quarter turnaround looking at risk-based work selection, our scope challenge. We've cut 66,000 hours out of that turnaround, 15%. That would equate to about a $21 million cost avoidance, and because we'll be up and running earlier, another $12 million or so in value addition. It's early in our improvement process here, but I want to share some of those examples.

Well with it a second example of shares at our Sarnia refinery, where again, we have a second quarter turnaround looking at risk baked based work selection our scope challenge, we cut 66000 hours out of that turnaround, 15% that would equate to about a $21 million cost avoidance.

And because we will be will be up and running earlier, another $12 million or so in value addition that it's early in our improvement process here, but I wanted to share some of those examples we're already starting to see the benefits and as I've said our goal is to be best in class and turnaround performance.

Rich Krueger: We're already starting to see the benefits, and as I said, our goal is to be best in class in turnaround performance across our business. Bottom line, there are big prizes here, lower costs, shorter durations, higher margins, and to achieve those, it's about benchmarking, knowing who's the best and why, quality risk assessments, advanced quality pre-planning, very clear accountability, and then high-quality disciplined execution. Now, as I wrap up, I want to share with you two less visible but also, I believe, very, very fundamental changes we have and are making at the company that will contribute to continued improved performance. My objective from day one was to create a level of alignment between our strategies, our organizational structure, and our corporate culture, with the goal to achieve a team-based, results-oriented, high-performance culture.

Across our business Bottomline Theres big prizes here lower cost shorter durations higher margins and to achieve those its about benchmarking knowing.

Who is the best and why.

Quality risk assessments advanced quality pre planning very clear accountability, and then high quality disciplined execution now as I wrap up I want to share with you two less visible, but also I believe very very fundamental changes, we have and are making at the company.

It will contribute to continued improved performance.

And my objective from day, one was to create a level of alignment between our strategies, our organizational structure and our corporate culture with the goal being to achieve a team based results oriented high performance culture, So with that in mind in the second half of 2023, we.

Rich Krueger: So, with that in mind, in the second half of 2023, we implemented a new, redesigned employee performance evaluation system designed to evaluate an individual's performance based on their impact versus their effort or the activity behind their work. The goal is to better differentiate individual performance and recognize and reward individuals accordingly. The outcomes of the performance evaluation system are directly linked to an individual's compensation in terms of base salary increases and the individual component of their annual incentive.

We entered a new redesigned employee performance evaluation system designed to evaluate an individual's performance based on their impact versus their effort or the activity behind their work. The goal is to better differentiate individual performance and recognize and reward individuals accordingly.

The outcomes of the performance evaluation.

System are directly linked to individual's compensation in terms of base salary increases and the individual component of their annual incentive.

Rich Krueger: Also, effective going into 2024, we are implementing a new, redesigned employee annual incentive program. Our previous program had multiple scorecards, even at the level of those sitting around the table with me this morning, each with a separate series of measures. Our new program has one single Suncor scorecard.

Also effective going into 2024, we are implementing a new redesigned employee annual incentive program. Our previous program have multiple scorecards, even at the level of those sitting around the table with me. This morning, each with a separate series of measures are new program has.

One single Suncor scorecard, we win and lose as a team it will be applicable to all and it will have far fewer very priority measures what measures surprise, the fundamentals safety and environmental performance production and throughput costs and profitability we want.

Rich Krueger: We win and lose as a team. It will be applicable to all, and it will have far fewer very priority measures. What measures?

Rich Krueger: Surprise! The fundamentals. Safety and environmental performance, production and throughput, cost, and profitability. We want to ensure that we incentivize what's most important and that we have an entire workforce focused on delivering on commitments and that our performance parallels the experience of the shareholder. Our new annual incentive program is very much aligned with my philosophy to clarify, simplify, and focus, which I think is the key to consistently delivering superior results. So as I sit here today, I feel as an organization we've got the right people, the right leadership, we're focused on the right work, and we're committed top to bottom to perform. For my final comments, employees, I'd like to thank our employees for first and foremost working safely and for their commitment and dedication to making Suncor the best it can be. Our shareholders. I'd like to thank our shareholders for their trust and confidence. We don't take it for granted, and we know it must be continually earned. So with that, I'll pause, and I'll turn it to Troy.

To ensure that we incentivize what's most important and that we have an entire workforce focused on delivering on commitments and that our performance parallels the experience of the shareholder our new annual incentive program is very much aligned with my philosophy to clarify simplify focus which I think.

The key to delivering consistently delivering superior results. So as I sit here today I feel as an organization. We've got the right people. The right leadership, we're focused on the right work and we're committed top to bottom to perform.

My final comments employees I'd like to thank our employees for first and foremost working safely and their commitment and dedication to making suncor. The best it can be our shareholders I'd like to thank our shareholders for their trust and confidence we don't take it for granted and we know what must be continually earned so with that.

Now I'll pass alternative Detroit.

Operator: Thank you, Rich. I'll turn the call back to the operator now to take some questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Thank you rich I'll turn the call back to the operator now to take some questions.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

So with <unk>. Your question. Please press star one again.

Operator: One moment while we compile the Q&A roster, and our first question will come from the line of Greg Pardy with RBC Capital Markets. Your line is open.

While we compile the Q&A roster.

And our first question will come from the line of Greg Pardy with RBC capital markets. Your line is open.

Greg Pardy: Thanks. Thanks. Good morning.

Rich Krueger: And, Rich, there's a lot of content in there. I don't think I could write fast enough. I've got a couple of questions for you. But maybe, just before I start, you know, obviously a big welcome to Mr. Ferguson now in the Suncor business. There are really, really two things. I want to come back to the question I asked the last time.

Thanks, Good morning, and.

Rich there is a lot of content in there I don't think I could write fast enough.

Got a couple of questions for you, but maybe just before I start obviously, a big welcome to Mr. Ferguson now and.

And the Suncorp is.

There's really two things I wanted to come back to the question I asked to the last time and I think a lot of the things you've already said would reinforce this change that's going on in the company but.

Greg Pardy: And I think a lot of the things you've already said would reinforce this change that's going on in the company. But what inning do you think you're at now, maybe versus when you arrived? That was probably the first inning when you arrived, but I'm curious where you are now in terms of the turnaround, and then what are the steps you need to take maybe over the next year or two to maybe get back to the leadership position that Suncor used to be in? Thanks, Greg. You know, if I look at it, I would say 2023. There was just, you know, a large amount of change. And we've talked about that, but I would describe a lot of that change as disruptive and potentially distracting, you know, new leadership team, people coming and going, we had a workforce reduction, we, a lot of things that could distract people from performing.

What inning do you think youre at now maybe versus when you arrived that was probably the first inning. When he arrived but I'm curious where you're at now in terms of in terms of the turnaround and then what are the steps you need to take maybe over the next year or two to maybe get back to the leadership position that suncor used to be in.

Thanks, Greg.

<unk>.

If I look at it I would say 2023, there was just a large amount of change and we've talked about that but I would describe a lot of that change is disruptive and potentially distracting.

New leadership team people coming and going we had a workforce reduction.

A lot of things that could distract people from performing so given that I'm really proud of the organization. How we did perform despite that so as we get into the <unk>.

Rich Krueger: So given that, I'm really proud of the organization and how it did perform despite that. So as we get into the, you know, as we turn the page on 2024, I think we built a lot of momentum in the fourth quarter. I think our starting pitcher is throwing strikes. And we, you know, I think we're, we're well into the game, I think the momentum that we've created, and I can comment on how we're doing through the first half of the first quarter, if folks would like. I think we're in a really good position to focus on some of these other things that I mentioned. We've got a lot of very tangible operational things. But a lot of these things that I would refer to as culture, the performance evaluation system, the annual incentive program, things like this, I think those are part of the secret sauce to getting 16,338 people focused like a laser on performance. And I feel really good that we have put a lot of that in place now. And our best days are ahead of us. And I don't think it's so much of a, I don't think it's, you know, trust us, believe us, have faith.

As we turn the page on 2024, I think we built a lot of momentum in the fourth quarter, I think our starting pitchers throw and strikes and we.

I think where we.

We're well into the game.

I think the momentum that we've created and I can comment on how we're doing through the first half of the first quarter of folks would like I think we're in a really good position to focus some of these other things that I mentioned, we've got a lot of very tangible operational things, but a lot of these things that I would refer to as cultural the performance of <unk>.

<unk> system, the annual incentive program things like this I think those are part of the secret sauce to getting 16338 people focused like a laser on performance and I feel really good that we've put a lot of that in place now and our best days are ahead of us and I don't think its so much of up.

I don't think it is.

Trust Us believe us have faith, I think youre going to start seeing that I think the fourth quarter gave you a pretty good glimpse about whats.

Rich Krueger: I think you're going to start seeing that. I think the fourth quarter gave you a pretty good glimpse of that. What's next? Just doubling down on things we're doing, keeping the pedal to the metal on improvement efforts, lowering that cost structure, maintaining the highest levels of operational excellence and safety, and just continuing to create value. And we've got examples, and maybe I'll let Dave and Peter comment on some of the things we're doing to create that clarity deep, deep into the organization about what we're trying to achieve. So I got to tell you, Greg, I wake up every day feeling pretty excited to come to work. 10 months in, and I feel more excited every day than I did 10 months ago.

What's next.

Just doubling down on things, we're doing keeping the keeping the pedal to the metal unimproved efforts lowering that cost structure, maintaining the highest levels of operational excellence and safety and and just continuing to create value and we are we've got I've got examples and favorable I'll, let Dave.

And Peter comment on some of the things we're doing to create that clarity deep deep into the organization about what we're trying to achieve so I got to tell you Greg I wake up every day feel pretty excited to come to work 10 months and I feel more excited everyday that I did 10 months ago.

Greg Pardy: Very good. And then maybe just to shift gears a little bit, because you touched on the first quarter. So I guess the simple question would be, how much of a weather impact did favorable weather have on fourth quarter production? Because, you know, it was warmer, and this quarter has been different.

Very good and then maybe just to shift gears, a little bit because you touched on the first quarter. So the.

The simple question would be how much of a weather how much did favorable weather.

Impact fourth quarter production because of it is warmer but and this quarter has been different and then within that context could you give us an update just on how ops are going thus far in <unk>.

Rich Krueger: And then within that context, could you give us an update on how operations are going thus far in 1Q? Yeah, absolutely. I mean, you know, we did have good weather in the fourth quarter, but, you know, typically, we don't have a lot of our, you know, more severe weather. The mining business likes it when it's minus 10, 15, you know; that's when everything operates the best. They don't like it when it's minus 43, which it was in January.

Yeah, absolutely I mean, we did have good weather in the fourth quarter, but typically we don't have a lot of our most severe time the mining business likes it when it's minus 10 15 that just everything operates the best they don't like it when it's minus 43, which it was in January so I'd say the fourth.

Rich Krueger: So I would say the fourth-quarter weather played a bit of a role, but not a big bit. But when we came into the new year, the first couple weeks, you know, we had a real, very unusual cold spell there. Seems like we would expect that. But what I'm really pleased about that is, although we had some issues with the mobile equipment, fuel filters, plug-in, things like that, the plants kept running really, really well. The upgraders have kept all the refineries up and running. So yeah, we had a bit of a slow spot in the mining in the first couple weeks of the year. But as I sit here, as we sit here at the midpoint of the first quarter, refining for the year is at 98% utilization for the first six, seven weeks of the year.

Quarter weather played a bit of a role, but not not a big bet that when we came into the new year. The first couple of weeks we had.

Very uniquely cold spell there seems like we would expect that but what I'm really pleased about and that is although we had some issues with the mobile equipment.

Fuel filters plugging in things like that the plants kept running really really well. The upgrader is Dave kept all the refineries up and running so yeah, we had a bit of a slow spot in the mining in the first couple of weeks of the year, but as I sit here as we sit here at the midpoint of the first quarter.

Refining for them is at 98% utilization for the first six seven weeks of the year I'll, let you do the math on throughput, but there. They are continuing the very strong performance. We saw in the second half of last year and on the upstream despite a little bit of slowdown in the mining the first week or two.

Rich Krueger: I'll let you do the math on throughput, but they are continuing the very strong performance we saw in the second half of last year. And on the upstream, despite a little bit of a slowdown in the mining during the first week or two of the year, we are now at or above in the first quarter to deliver a quarter that is higher than our fourth quarter. So we're kind of, we started out a bit slow the first couple of weeks, but we're gaining week by week. So I don't know exactly where we'll end the first quarter, but I think you're, you know, I think when we, you know, we put it in the books, you're going to see that that operational momentum has been, has continued quite frankly to the entire second half of last year and on into the Terrific. Thanks very much.

For the year, we are now at or above in the for the first quarter to deliver a quarter that is higher than our fourth quarter watts.

<unk>.

We started out a bit slow the first couple of weeks, but we're gaining week by week. So I don't know exactly where we'll end the first quarter, but I think.

When we put in the books youre going to see that that operational momentum has been has continued.

And frankly to the entire second half of last year and on into the first quarter.

Terrific, Thanks very much.

Operator: Thank you. One moment for our next question, and that will come from the line of Dennis Fong with CIBC. Your line is open.

Thank you one moment our next question.

And that will come from the line of Dennis Fong with CIBC. Your line is open.

Dennis Fong: Hi, good morning, and thanks for taking my questions. My first one here focuses on Fort Hills. Production in Q4 reached near nameplate capacity, and we understand that the focus in 2024 and maybe the early part of 2025 is opening up two phases in the North Pit to access sufficient ore more consistently into the facilities. My question here is, can you discuss how you see the opportunity set at Fort Hills once you've, we'll call it, fixed or remediated the feedstock bottleneck, in addition to applying to more trucks and smoothing out operations? Thanks.

Good morning, and thanks for taking my questions.

My first one here focuses on Fort Hills.

Production in Q4 reached near nameplate capacity and we understand that the focus in 2024.

And maybe the early part of 2025.

Opening up two faces in the north pit access sufficient or more consistently into the facilities.

My question here is can you discuss how you see the opportunities at Fort Hills. Once you will call it fixed or remediated. The feedstock bottleneck. In addition to applying a more trucks and smoothing out operations.

Rich Krueger: Yeah, thanks, Dennis. I'll turn it over to Peter in just a second. But you know, I think what the fourth quarter showed is when we can feed the plant, just how good that plant is that we averaged 186 or something for the quarter. You know, if you squeeze Peter hard, he would tell you he had days over 200.

Yes, Thanks, Dennis I'll turn it over to Peter just a second but I think I think what the fourth quarter showed is when we can feed the plant just how good that plant is that we average 186 or something for the quarter.

If you squeeze Peter hard he would tell you. He had days over 200. So that plan is quite strong. So you rightly said that the challenge is ensuring that we feed it and that's why the opening the two pits in the North mine is so important so we're able to do that but Peter you want to maybe comment a little bit on kind of the whole.

Rich Krueger: So that plant is quite strong, so you've rightly said that the challenge is ensuring that we feed it. And that's why opening the two pits in the North mine is so important. So we're able to do that. But Peter, you want to maybe comment a little bit on kind of the whole mining, you know, where you are in the mining and your confidence in continuing to feed this piece? Yeah, no, thanks, Rich.

The mining.

You are in the mining and competency continuing to feed the Beast.

Peter Zebedee: And thanks, Dennis. And I think it is a good point. Rich is absolutely correct. The fixed plant assets at Fort Hills are extremely robust, and we're confident that we can push high volumes through the back end of that facility. Our focus is indeed on the mine. As you said, it is opening up, ultimately delivering ore from the North Pit and reducing the mining bottleneck. And hence, our focus at Fort Hills is really on mining efficiency improvements. The purchase of the ultra-class haul trucks obviously helps that.

Thanks, Rich and thanks, Dennis I think it is a good point rich is absolutely correct fixed plant assets at Fort Hills are extremely robust and we're confident that we can push higher volumes through the back end of that facility. Our focus is indeed on the mine as you said it is opening up.

Ultimately to win.

Irina <unk> from from the North pit and reducing the mining bottleneck and hence our focus at Fort Hills is really on mining efficiency improvements the purchase of the altra products contracts, obviously helps that but beyond that we're really focused as Richard say, we're focused on the fundamentals are really focused on the little things that drive efficiency.

Peter Zebedee: But beyond that, we're really focused, as Rich would say, on the fundamentals. We're really focused on the little things that drive mining efficiency, that extra ton on the trucks, that extra kilometer per hour in the haul cycle, and leveraging that efficiency, not only to deliver ore into the production facility but to reduce our unit costs and remove higher-cost mining volumes from our fleet and deliver those with our own trucks. And the two pits in the North Mine will give us that opportunity to blend ore, so we won't have the natural up and down variation of a variable input.

<unk>.

That extra ton on the trucks that extra kilometer per hour and the whole cycle and leveraging that efficiency not only to deliver or enter the production facility, but to reduce our unit costs.

Yes.

Remove higher cost mining volumes out of out of our fleet and delivering that with her on trucks and the two pits in the North mine will give us that opportunity to blend ore. So we won't have the natural up and down variation of a variable inputs. So I think it's.

Peter Zebedee: So I think it's, you know, as we improve the capacity to deliver ore, we'll also have a bit of stability in it because of the approach Peter's taking in mining. One of the key factors is to re-establish a robust inventory of mineable oil sands in front of us. So we have lots of options for the shovels that we can bring into the fixed plants.

As we improve the <unk> the capacity to deliver or we'll also have a bit of a stability in it because of the approach Peter staking in mining.

One of the key factors is to reestablish a robust inventory of minable oilsands in front of us and we have lots of options for the shovels that we can bring into the fixed plants.

Peter Zebedee: And that has been key to the success that we've seen at Fort Hills. And that team has done a fantastic job at opening up those pits, re-establishing the inventory, managing the risk, and now driving productivity. Great, great. Really appreciate that, that, that color.

That has been key to the success that we've seen at Fort Hills, and our team has done a fantastic job of that.

Opening up those pads reestablishing the inventory managing our risks are now driving productivity improvements.

Great Great really appreciate that.

Dennis Fong: My second question, and shifting focus more to the base mine, and Rich, really appreciate the context around the oil sands mining fleet, as well as any adjustments you're making to operations to drive controllable costs lower. I know in a previous conference call, Peter discussed the kind of cadence of production through time, as well as the need to balance that with sourcing ore to build tailings ponds and other earth-based infrastructure. Can you talk a little bit about how, again, some of these tweaks and changes to improve control costs may impact or affect or even maintain or improve some of the flexibility and development, specifically with North Sea Bank and the other areas of the base mine? Sure, let me know. I'm going to give Peter the opportunity here in a second.

Color.

My second question and shifting focus more to the baseline and rich really appreciate the context around the oil sands mining fleet as well as any adjustments, we're making to operations to drive controllable costs lower I know in previous conference calls our previous conference call. Peter discussed the kind of cadence of production through time as well as the need to be.

Balance that with <unk>.

Sourcing or to build tailings ponds and other Earth based infrastructure can you talk a little bit about how again some of these tweaks and changes to improving controlling costs may impact or effect or even maintain or improve some of the flexibility and development, specifically with north sea back in the other areas of the baseline.

Sure, let me I'm going to give.

Peter the opportunity here in a second but one of the things I want to start a little broader Dennis with now with 100% ownership of Fort Hills, and our level of physical integration Fort Hills bitumen to the base plant fire bag too. We increasingly are looking at this basin as one large bitumen supply source.

Rich Krueger: But one of the things I want to start a little wider Dennis, with now 100% ownership of Fort Hills and our level of physical integration, Fort Hills bitumen to the base plant, fire bag to it, we increasingly are looking at this basin as one large bitumen supply source. And what's the optimum way, the lowest cost, the greatest value way to do it? And what that does is it gives us flexibility at each individual site, where we're optimizing the whole versus what would previously have been an optimization of the site. So that's where the options at the base plant come in. I've talked about how we're moving to more autonomy, we're looking at, you know, where we deploy new trucks and shovels, and we're looking at the rate at which we deplete the remaining ore at the base plant.

And what's the optimum way the lowest cost the greatest value way to do it and what that does is it gives us flexibility at each individual site, where we're optimizing the whole versus what would previously have been in optimizing of the site. So that's where the options at the base plant come.

And I've talked about we're moving to more autonomy, we're looking at where we deploy new trucks and shovels were looking at the rate at which we deplete the remaining.

Rich Krueger: And so it's that physical integration that allows us to do this, and everything we're going to be looking at is going to be ultimately have a long term value on it. But, but maybe that's so that's kind of a broad setup to your question. But Peter, if you want to maybe comment a little bit more specifically on some of the things at the base plant, yeah, no, absolutely rich.

Or at the base plant and so it's that physical integration that allows us to do this and everything we're going to be looking at is going to be ultimately value long term value on it, but but maybe that so thats kind of a broad set up to your question that Peter if you want to maybe comment a little bit more specifically on on some of the things at the base plant.

Yes, no absolutely rich and as you said really based plan is in excess of our Benjamin supply into the region. We are.

Peter Zebedee: And as you said, really, base plant is the nexus of our bitumen supply into the region; we are, you know, leveraging that integration with four hills and with fire bag to really be able to flex which bitumen is going to the upgraders when that obviously translates back into additional mining flexibility at base plant. And I think with the investment that we made in the trucks, as I mentioned before, and the productivity improvements the team is driving coupled with autonomous driving, that gives us more mining flexibility, and it will give us more choices in the future on the rate at which we want to mine bitumen at the base plant. And that's something that our teams are under counter-evaluating as we look to what we're going to do in the future with respect to the baseline line. Yeah, I've got it. Maybe just another comment. It's a little bit from the base plant away from the base plant.

Leveraging that integration with Fort Hills, and with fire bag, so really be able to flex with Richmond is going to the upgrader is when that obviously translates back into additional mining flexibility of base.

And I think with the investment that we made on the traction as I mentioned before and the productivity improvements. The team is driving coupled with autonomous I gives us more mining flexibility and it will give us more choices in the future on the rate in which we want to mine bitumen at base plant and that's something that our.

Teams under counter evaluating as we look to what we're going to do in the future with respect to the biggest timeline I've got it maybe just another comment it's a little bit from the base plant away from the base plant, but.

Rich Krueger: But, you know, I mentioned we produce 746,000 barrels a day. I know all of you on the line had complete confidence last fall that we were going to meet guidance. I know that.

I mentioned, we produced 746000 barrels a day I know all of you on the line at complete confidence with US last fall that were going to meet guidance I know that.

Rich Krueger: But Peter running his upgraders at record high utilization, he actually put more bitumen from fire bag and four hills into it that have a shrinkage component to it. So, you know, if because there's more value in it, but absent that, Peter, we've been over 750,000 barrels a day. But there again is an example of that physical integration. And it's all about value for us, not volume. And I think that was a surprise to me, as I saw, you know, through the fourth quarter, as they redirected barrels to capture what was in the market. That, again, is something that makes us, you know, different. I know that's not your question, Dennis, but I couldn't help but go there. I appreciate the color, as always.

But but Peter running his upgrader is at record high utilization he actually put more bitumen from fire bag in Fort Hills into it that have a shrinkage component to it so.

Because there's more value in it but absent that Peter we have been over 750000 barrels a day, but there again as an example of that physical integration and it's all about value for us not volume and I think that was a to me as I saw through the fourth quarter as they redirected bear.

Charles to capture what was in the market that again is something that makes us different.

I know that's not on your question Dennis.

I Couldnt help it go there.

Dennis Fong: Thanks Rich and Peter; I'll turn it back. Thank you. One moment for our next question, and that will come from the line of Doug Legate with Bank of America. Your line is open. Thank you, Rich. Terrific continued progress, so congratulations on everything you've done and the changes you've made.

Well I appreciate the color as always.

Thanks, Rich and Peter I'll turn it back.

Thank you one moment our next question.

And that will come from the line of Doug Leggate with Bank of America. Your line is open.

Thank you rich tremendous continued progress so congratulations to everything you've done them the changes you've made.

Doug Legate: I feel like I ask you this question every quarter, so forgive me for being predictable, but I guess I'm not sure I've seen the analyst's day-to-day yet, so maybe we'll get it there, but the $5 target you originally set out, where do you think you are? I guess it's a different way of asking the question about what inning you're in that was asked earlier, but how much of the $5 do you feel you've now achieved at this point? Yeah, you know, Doug, we've talked about things like the workforce reduction, which was more than a buck, about a buck and fifty. So that is what has happened. And I think with many of the other things, I think we've captured a couple bucks of that already. That's kind of where I where I'm at. And the, you know, we do have some headwinds; we've got inflation and things like this, but our $5 goal is a net goal, so we've got to offset whatever headwinds we're facing on it. And so, you know, I think we've captured a couple of those.

I feel like I ask you. This question every quarter, so forgive me for being predictable but.

I guess I'm not sure I've seen the analyst day date, yet so maybe it will get it there, but the $5 target you originally set up where do you think you are I guess, it's a different way of asking the question about what inning. You are in that was asked earlier, but how much of the $5 do you feel you have now.

<unk> achieved to this point.

Yes.

Doug we've.

We've talked about things like the.

The workforce reduction which was.

More than a buck about a buck 50, so that that has happened and I think with many of the other things I think we've captured a couple bucks of that already is kind of where I'm where I'm at.

And.

You do have some we do have some headwinds we've got inflation and things like this but our but our $5 goal is a net goal we've got to offset whatever headwinds we're facing on it and so I think we've captured a couple of that but we have an urgency over the rest of this year with the new trucks, we've talked about.

Rich Krueger: But we have an urgency over the rest of this year, with the new trucks. We've talked about improvements in turnaround performance. Dave Oldrief's got a list of things of value he's capturing on the downstream. So you know, I don't have an absolute timeline on the $5, but there's no better time than the present.

Improvements in turnaround performance.

<unk> got a list of things of value he's capturing on the downstream so.

Have a absolute timeline on the $5, but no better time than the present and so I think this will be a big year and continuing to see that accumulate in quite frankly, when we get to five well what number is better than five six is better than five sevens better. So it's going to be it's going to be a.

Doug Legate: And so I think this will be a big year in continuing to see that accumulate. Quite frankly, when we get to five, well, what number is better than five? Six is better than five, seven is better. So, you know, it's going to be a continued priority. But I think we're off to quite a good start on it. Am I right in thinking you haven't given us an analyst day date yet? Troy's going to kill me for that, but maybe we'll get clarification.

Continued priority, but I think we're off to a quite a good start on it.

Hi.

Am I right in thinking you haven't given us an analyst.

I was going to kill me for that but maybe it will get clarification Lisa.

Rich Krueger: Thank you very much. You're always right. I was going to say, so here's what we're thinking of doing, and Troy, Troy, looking at me, and I hope this is what you're thinking, we have some big, big decisions, some big analytics, the base mine, the rate at which we mine it toward depletion, we've got some big things that we're tackling right now. What's the priority in our continued development? I'm looking long and hard at in situ opportunities. I like what I see.

Yes.

Good morning.

I'm sorry.

Those are always right.

I was going to say so here's what we're thinking of doing it Troy Troy looking at me and I Hope. This what you were thinking and we have some big big decisions some big analytics the base mine the.

The rate at which we mined it toward depletion we've got some big things that we're tackling right now whats the priority on our continued development I'm looking long and hard at in situ opportunities I like what I see and so we could hold an analyst day sooner and tell you the things we're looking at or we could hold it later.

Rich Krueger: And so we could hold an analyst day sooner and tell you the things we're looking at, or we could hold it later and tell you where we land on them. So what we're inclined to do right now is have a pretty comprehensive update sometime in the second quarter. I don't know what we'll call it.

And tell you where we land on these so what we are inclined to do right. Now is have a sometime probably in the second quarter, a pretty comprehensive update I don't know what we'll call. It it wouldn't be a full blown analyst day, but we dig in and detail, particularly think about this $5 a barrel et cetera, and then later.

Rich Krueger: It wouldn't be a full-blown analyst day, but we'll dig in detail, particularly think about this $5 a barrel, et cetera. And then later this year, we will have a full-blown analyst day that looks at answering a lot of these longer-term key strategic questions. I don't think we can wait till late this year and do all that, so I feel we're going to need to give you something sooner. But that's where Troy and I's heads are right now, and we're trying to land on those dates.

This year have a a full blown analyst day that looks at answering a lot of these longer term key strategic questions don't think we can wait till late this year and do all of that so im feeling we're going to need to give you something sooner, but thats more Troy nice heads are right now and we're trying to land on those dates.

Doug Legate: But that's what we're thinking. Well, Rich, I didn't intend that to be my second question, but you did address some of the portfolio questions, which I guess you haven't resolved yet. So, yeah, I will, I will get another one done. Oh, I do. No, no, no, no. Go ahead. It was actually then.

That's what we're thinking.

Well rich I didn't intend that to be my second question, but you did address some of the portfolio, which I guess you haven't resolved yet so.

I will get another one.

Oh no no no.

Yes.

Go ahead.

It was actually than the freebies Kenneth.

Rich Krueger: It's kind of on that exact topic, actually, because when you and I talked about this before, you said, look, we don't necessarily have to replace bitumen because we could use that capital commitment to buy back an enormous amount of stock with the capital and grow, you know, and basically shrink the share account. And I guess my question is, were you any further forward in that thought process? And I guess you've kind of addressed it in your last question, but any updated thoughts on that would be appreciated. Well, I think you're spot on. For us, it's all going to be about value. And I think the one area that is just pretty intuitively obvious to us is to keep the upgraders full. Because in doing that, the value uplift from a barrel of bitumen to a barrel of synthetic crude, whether it's sweet or sour, is kind of obvious by inspection that that creates tremendous value.

As Ken of on that exact topic actually because when you and I have chatted about this before you've said look we don't necessarily have to replace bitumen.

Because we could use that capital commitment to buy back an enormous amount of stock with the capital and draw on basically shrink the share count and I guess my question is what are you any further forward in that thought process and I guess, you've kind of addressed it in your last question, but any updated thoughts so not really appreciate it.

Well I think youre spot on for us its all going to be about value and I think the one area that is just pretty intuitively obvious to us is keep the upgrader full because in doing that and the value uplift from a barrel of bitumen.

A barrel of synthetic crude whether it's sweet or sour is is kind of obvious by inspection that that creates tremendous value going beyond that it's just like anybody else, whether we were in west Texas or.

Rich Krueger: Going beyond that, it's just like anybody else, whether we were in West Texas or, you know, the South China Sea. Does adding new capacity make economic sense? So we don't have a bias toward maintaining production levels at a given level or not, but it will be about value. Now, I also do believe that as we have good, valuable development opportunities, they can create more long-term value. But we don't have a bias one way or another.

The South China Sea does adding new capacity make economic sense. So we don't have a bias towards maintaining production levels at a given level or not but it will be about value now I also do believe that as we have good valuable development opportunities.

They can create more long term value, but we don't have a it's not a bias one way or another the upgrader is full yes anything beyond that will have to stand on its own two feet in terms of the value it creates to shareholders and we're going to look at that at the end of the day on free cash flow per share.

Rich Krueger: The upgrader is full, yes. Anything beyond that will have to stand on its own two feet in terms of the value it creates for shareholders, and we're going to look at that at the end of the day on pre-cash flow per share. Terrific. We'll look forward to that when it comes. Thanks so much, guys.

Terrific well look forward to that when it comes thanks, so much guys.

Operator: Thank you. One moment for our next question, and that will come from the line of Menno Holshoff with TD Cowen. Your line is open. Thanks, and good morning, everyone.

Thank you one moment our next question.

And that will come from the line of Menno <unk> with TD Cowen Your line is open.

Thanks, and good morning, everyone I'll start with a question on upstream Opex given your comments rich on the <unk>.

Menno Holshoff: I'll start with a question on upstream OPEX. Given your comments Rich on the mine performance gap, has your thinking changed at all in recent quarters in terms of where longer-term per barrel OPEX could land over the next several years? And I'm thinking along the lines of oil sands ops, Syncrude, and Ford Hills, and if not, maybe you could just remind us of what the current goalposts are. Thank you.

<unk> performance gap.

Thinking changed at all in recent quarters in terms of where longer term per barrel opex could land over the next several years.

And along the lines of Oilsands ops, Syncrude and Fort Hills, and if not maybe you could just remind us of what the current.

Goalposts, Sir thank you.

Rich Krueger: You know, I don't know, Miro, that I would say our, um, our outlook has changed. We, obviously, I won't go back over the examples, but our, you know, our intent is to drive them down. I do think, you know, if I take Ford Hills specifically, we would have been driving it down, uh, if we went back a year or two ago, a little bit faster.

I don't know mineral that I would say are our outlook has changed it obviously I won't go back over the examples but our intent is to drive them down I do think if I take Fort Hills, specifically, we would have been driving it down if we go back a year or two ago.

Rich Krueger: We, the opening of the two pits in the North mine is kind of delayed by a year or so. Um, and you know, I'll, uh, we got specifics. I'm looking at Peter, if he's got anything to say about that, but we do believe in our existing business and that, by executing the day-to-day work we do, we can continue to bring about improvements, and that is, so I don't know if that, you know, translates. I think if you talk about this $5 a barrel, Peter himself is talking about $5 a ton, a dollar a ton, which would be the equivalent of $5 a barrel.

Faster with the opening of the two pits in the North mine is kind of delayed that a year or so.

Yes.

We have specifics I'm looking at Peter if he's got anything.

To say on it but we do believe in our existing business by by executing the day to day work. We do we can continue to bring about improvements and that is so I don't know if that translates I think if you can talk about this $5 a barrel Peter himself is talking about $5 a ton.

Dollar time, excuse me, a dollar a ton which would be equivalent of $5. A barrel. He is targeting that in the mining I've kind of hedge my bet. Samuel Peter is going to give me a big chunk of that day is going to give me some more of that so our corporate number is $5 a barrel, but Peter has an inventory list that.

Rich Krueger: He's targeting that in the mining business. I've kind of hedged my bet saying, well, Peter's going to give me a big chunk of that day is going to give me some more of that, so our corporate number is $5 a barrel, but Peter has an inventory list that would largely give him $5 a barrel or a dollar a ton, just with all the things he's pursuing. Peter, do you have any other comments on our outlook on OPEC? Yeah, thanks, Rich.

We've largely give him the $5 a barrel or a dollar a ton.

Just with all the things he is pursuing Peter do you have any other.

Any other comments on our outlook on Opex.

Peter Zebedee: And I think, you know, and we talked a lot about the mining efficiencies and the improvements, and really that is the big gearing to reducing our operating costs. But beyond just, you know, investment by whole tribes driving mine productivity, we're looking at lots of dimensions in our mining business. So whether that's our light civil strategy, whether that's our maintenance and reliability expenditures, the benefits that we're gonna get from the autonomous haul trucks that Rich spoke about earlier, fuel contractors, everything we can as it relates to the operating cost buildup for mining is where our focus area is. The team is challenged to go out and find a dollar a ton.

Yes, thanks, rich and I think.

We talked a lot about the mining efficiencies and improvements and really that is the big gearing to reducing our operating costs.

But beyond just investment of haul trucks driving mine productivity, we're looking at lots of dimensions in our mining business. So whether that's online civil strategy, whether that's our maintenance and reliability expenditures.

Benefits that we're going to get from the autonomous haul trucks that rich spoke about earlier fuel contractors everything we can as it relates to the operating cost buildup for mining is where our focus areas for team is challenged to go out and find $1 a ton.

Peter Zebedee: That's quite a substantial amount of cash if you project that over how many tons we move in the year, which is more than a billion tons a year. And that is the objective of not just at one site but across all mine operating sites across our upstream. So Peter, comment on what's different today about how we're going about this than, say, maybe, a few years back before your time here in your perception of how the company was going about it. I'm really thinking about the, you know, I'm looking at your little chart here, the tangible nature and the accountability by the component parts. So I'm giving you a clue on how to answer the question. You take it from there. I mean, there's a very high degree of specificity in the tactics that we are taking to drive efficiency in the mine. I mentioned it earlier.

A substantial amount of cash if you project out over how many tons, we move in the air which is north of 1 billion tons a year.

As you prefer.

Factors not just one site, but indeed, all online operating sites across across our upstream portfolio. So Peter comment on what's different today about how we're going about this than say maybe a few years back before your time here.

Your perception of how the company was going about it and really thinking about the.

Looking at your load chart here that tangible nature and the accountability by the component parts of it so I'm, giving you the Q on how to answer the question.

Let me take it from there.

There is a very high degree of specificity and the tactics that were taken to drive efficiency in their mind I mentioned it earlier.

Rich Krueger: This isn't just something that we look at on a monthly basis in our performance stewardship. This is a day by day, shift by shift, dare I say, even hour by hour, driving efficiencies and improvements in our operation. And that's owned by the operating leaders at the sites.

This isn't just something that we look at it on a monthly basis and our performance stewardship.

Day by day shift by shift in Ontario, say, even by hour hour by hour.

Driving efficiencies and improvements in our operation that is owned by the operating leaders at the sites.

Peter Zebedee: They understand what the targets are. They have a strong commitment to delivering, and they understand what the big picture is and how that fits into, you know, driving the overall corporate performance. And going back to a comment I made earlier, with a common organizational structure at all of our sites now, upstream and downstream, whether that's a maintenance opportunity, an operational reliability, an engineering technical solution, we have natural networks now across the company who can collaborate on bringing ideas and bringing about in a faster way the execution of an idea company-wide. And you might say, well, why weren't you organized like that before?

I understand what the targets are.

A strong commitment to deliver on the I understand what the big picture is and how that fits into it.

Driving the overall corporate performance and going back to a comment I made earlier on is with a common organizational structure at all of our sites now upstream and downstream, whether thats a maintenance opportunity on operational reliability and engineering technical solution, we have natural network.

Works now across the company, who can collaborate on bringing sharing ideas and bringing about in a faster way the execution of an idea companywide.

And you might say well why werent you organize like that before alone. That's a different question, but we are now and I think that will help not only identify new opportunities that accelerate their implementation.

Peter Zebedee: Well, that's a different question, but we are now. And I think that will help not only identify new opportunities but accelerate their implementation. I think one of the clear things when we reorganized through the back half of 2023 and really crystallized the accountabilities for a site. So that has enabled us to implement very efficient work processes, not just within a given site but indeed across the breadth of Suncor's operating assets. So given my role and my assets are very similar to or exactly the same as what Dave has in the downstream and refining assets. Shelley's central team is focused on delivering value to the assets. It's a very asset-centric organizational design, and it's enabled by consistent work processes. So we are very clear on what's required, who's accountable for delivering it, and what a measure of success looks like. And that archetype is showing to deliver some really good results for us across our operation. Terrific. Thanks for that!

I think one of the clear things on when we reorganized through the back half of 2023 and really crystallize. The accountabilities for our site. So that has enabled us to implement very efficient work processes not just within a given site, but indeed across the breadth of the suncor operating asset so given role.

And my assets are very similar to exactly the same as what Dave has in the downstream in refining assets Shelley Central team is focus on delivering value to the asset. So it's a very asset centric.

Organizational design.

It's enabled by consistent work processes. So we are very clear on what's required who is accountable to deliver it and what our measure of success looks like and that Oncotype is showing to deliver some really good results for us across across our operations.

Menno Holshoff: That was a very thorough rundown. So, maybe the second question for Rich: you've been in the seat for almost a year, so I have a question on your take on strategic fit for the four refineries. I think the fit is really obvious for Edmonton and Sarnia, but maybe a little bit more nuanced for Commerce City and Montreal.

Terrific.

Eric Thanks for that that was a very thorough rundown. So maybe the second question for rich <unk>.

Been in the seat for almost a year. So I have a question on your take on strategic fit for the four refineries.

I think the fit is really obvious for Edmonton, and Sarnia, but maybe a little bit more nuanced for commerce city in Montreal. So the question is how core do you consider commerce city of Montreal, and if we look across the entire downstream portfolio. What are you seeing in terms of near term.

Rich Krueger: So the question is, how core do you consider Commerce City and Montreal? And if we look across the entire downstream portfolio, what are you seeing in terms of near-term opportunities to further enhance margin capture? Thanks.

Opportunities to further enhance our margin capture.

Rich Krueger: Well, you know, I think any of our assets, wherever they are, are about the value they can provide. And I would go a step further and say, is there something unique about our capabilities, our competencies? We've talked a lot about physical integration. Is there a unique level of value that we can bring to owning and operating an asset versus an alternative?

Well I think any of our assets wherever they are they are about the value. They can provide and I would go a step further and say is there something unique about our capabilities or competencies are we've talked a lot about the physical integration is there a unique level of value that we can bring to <unk>.

Owning and operating the asset versus an alternative I mean, I think commerce city is a bit more of an island compared to the rest of our operations, but it also is in a strong market and it's got some.

Rich Krueger: Now, I mean, I think, you know, Commerce City is a bit more of an island compared to the rest of our operations. But it also has a strong market, and it's got some, you know, logistical advantages there that we believe can add and create value. So the key for us over the last year and a half there has been keeping that thing up and running. And when it's up and running, it generates a lot of cash. I would say you look at the East Coast operations kind of in the same way. You've got it's a bit of a you've got the dichotomy of Hebron and Hibernia, non-operated, different kinds of operations. And then you've got the two floaters.

Logistical advantages there that we believe can add and create value. So the key for us over the last year and a half there is keeping that thing up and running and when it's up and running and it generates a lot of cash I would say you look at the east coast operations kind of in the same way you've got it's a bit of a you've got the dichotomy.

The Hebron Hibernia non operated different kind of operations and then you got the two floaters, but again its the idea of can we can we keep things in these assets up and running with high reliability high integrity and when we do they can add material value to the enterprise. So we look at our assets individually.

Rich Krueger: But again, it's the idea of can we keep things and these assets up and running with high reliability and high integrity? And when we do, they can add material value to the enterprise. So, you know, we look at our assets individually and collectively, and it all comes down to what kind of value we believe they can add, how well we can operate them, and what kind of value they can provide to us. Thanks, Rich. I'll turn it back.

Collectively and it all comes down to what kind of value do we believe they can how well can we operate them and what kind of value can they provide to us.

Thanks, Rich I'll turn it back.

Operator: Thank you. One moment for our next question, and that will come from the line of Neil Mehta with Goldman Sachs. Your line is open.

Thank you one moment for our next question.

And that will come from the line of Neil Mehta with Goldman Sachs. Your line is open.

Neil Mehta: Yeah, good morning, Rich and team. But my first question is just around your framework for capital allocation. So that's slide five, maybe Rich, you can step back and talk big picture about how as you're balancing the operational turnaround, you're also prioritizing return of capital. And we've anchored to this nine to $12 billion being the right net debt level at which you shift to a 75 percent payout. But how are you tracking towards that? Are those the right levels?

Yeah, good morning, rich and team.

My first question is just around.

Your framework for capital allocation. So that's slide five maybe rich you can step back and talk Big picture about how as you are balancing the operational turnaround Youre also prioritizing return of capital.

We've anchored to this 9% to $12 billion being the right net debt level.

At which you shift to a 75% to 20 versus 25 50 50 payout.

But how are you tracking towards that.

Rich Krueger: You know, Neil, I'm going to ask Chris to comment here in a second, but I want to step back again and frame it in the context of why we keep talking about this $5 a barrel. You know, our breakeven now is kind of 50-ish or low 50s, and we want to take $5 out of that so that we have a greater level of financial resiliency and, you know, the inevitable ups and downs of this business that, you know, we're in. And so in doing that, that allows us, from a capital allocation standpoint, to weather the storms when we get in weak market conditions and be more opportunistic when maybe others are in a bit more of a difficult position. So the $5 a barrel objective we have aligns with then having a, you know, ensuring we have a strong balance sheet, we have financial resiliency, we can, you know, pay all of our bills in good times and bad, and I put dividend in those bills, and then have the, you know, the added flexibility of continuing to return, you know, cash to shareholders. But, Chris, you maybe want to talk more specifically about the current, you know, structure we have and our thoughts? Yeah, sure. Hey, Neil.

Are those the right levels as you've spent more time thinking about it.

Rich Kruger: Neal I'm going to ask Chris to comment here in a second but I want to step back again and frame. It in the context of why we keep talking about this $5 a barrel or breakeven now is kind of 50 ish low fifties and we want to take $5 out of that so that we have a greater level of financial resilience.

Speaker Change: <unk> and <unk>.

Neal: Inevitable ups and downs of this the business that we're in and so in doing that that allows us from a capital allocation standpoint to weather the storms when we get in weak market conditions.

Speaker Change: And be more opportunistic when maybe others are in a bit more of a difficult position. So the the $5 a barrel objective, we have aligns with than having a ensuring we have a strong balance sheet. We have financial resiliency, we can pay all of our bills in good times or bad I put <unk>.

Speaker Change: Dividend in those bills and then have the.

Speaker Change: The added flexibility of continuing to return.

Speaker Change: Return.

Speaker Change: Cash to shareholders, but Chris you maybe want to talk more specifically about the current structure, we have in our thoughts, yes, Sir Hey, Neil.

Chris Smith: Yeah, I mean, as you pointed out, our capital allocation structure is pretty clear. You know, when we hit the $12 billion net debt, we go to $75, $25 buyback and reduction, and then once we get to $9 billion, that is on a net debt basis, including capitalized leases. We're focused on that framework. I think, to piggyback on Rich's comments, what we're trying to do is drive more free cash flow out of the business so we can get to those targets even more quickly. Now, obviously, you know, it's all going to be dependent on where the commodity price lands, and people will take varying views of when we're going to hit the $12 billion, but we're focused on driving that debt down while continuing to return cash to shareholders.

Chris Smith: I mean as you pointed out our capital allocation structure is pretty clear when we hit in the $12 billion net debt. We go to $75 25 buyback and reduction and then once we get to 9 billion and I think that is a net debt basis, including capitalized leases.

Chris Smith: We're focused on that framework I think to.

Speaker Change: Piggyback on Rich's comments, what we're trying to do is drive more free cash flow out of the business that we can drive to those targets even more quickly now obviously.

Speaker Change: It's all going to be dependent on where commodity price lands and people will take varying views of when we're going to hit the $12 billion, but we're focused on driving that debt down while continuing to return cash to shareholders. I mean, I think your other question about will the targets change I mean, we're always looking at the resiliency of the business and do these targets makes sense, but in a commodity.

Chris Smith: I mean, to your other question about whether the targets will change, I mean, we're always looking at the resiliency of the business and do these targets make sense, but in a commodity business like this, as you know, having a really strong balance sheet, and we want a balance sheet in a place that's going to weather not even mid-cycle, low, below mid-cycle pricing, and that's really what the $9 billion is But we're continually looking at our capital position. We're driving this, but the allocation framework isn't changing at this time. Thanks, Chris.

Speaker Change: Business like this as you know having.

Speaker Change: Really strong balance sheet, and we want our balance sheet in a place that's going to weather.

Speaker Change: Not even mid cycle low well below mid cycle pricing and that's really what the $9 billion driving towards but we're continually looking at our capital position, we're driving but the allocation framework isn't changing.

Speaker Change: At this time.

Speaker Change: Yes.

Neil Mehta: And then the follow-up is just on slide 13. It's been a pretty heavy year for economic investment capital between Westwater Road, the WellPads, Mildred Lake, and then Ford Hills and the truck. So maybe you could just talk about that set of projects, how they're tracking relative to expectations and updates. I think, you know, on West White Rose, I'll let the operator maybe comment a bit more on that.

Speaker Change: Thanks, Kristen and then the follow up is just on slide 13 is a pretty heavy year for economic investment capital between West White rose the well pads Mildred Lake the drum.

Speaker Change: And Fort Hills, and the trucks. So maybe you could just talk about that set of projects how they're tracking.

Relative to expectations and update on the investments that you're making here.

Speaker Change: I think on West White Rose and I'll, let the operator ready to comment a bit more on that but I think.

Rich Krueger: But I think, you know, we do have a lot of things going on. The co-foiler replacements we'll be wrapping up later this year as we approach startup. Well pads are quite an economic investment for us.

Speaker Change: We do have a lot of things going on.

Speaker Change: The portfolio of replacements will be wrapping up later this year as we approach startup well pads are.

Speaker Change: Quite economic investment for us and so we're we're wrapping some things up and now we're really looking at kind of what goes on from here forward in terms of what is the right level of Capex, but maybe if there's any.

Neil Mehta: And so, you know, we're wrapping some things up, and now we're really looking at kind of what goes on from here forward in terms of what is the right level of CapEx, but, you know, maybe if there's any.

Rich Krueger: In terms of the execution, Shelly, you want to comment a little bit on the capital projects and, or Peter, the bulk of the monies in your guys' areas? Any comments you'd offer there? Yeah, I think you've hit the high points. The execution for all of those major projects is on track, proceeding as we expect them to. Some of the, certainly the coal boiler replacements, we're into system turnover, starting to commission some of those key systems. So, we're expecting that spend to progress as we expected it to be. You know, one of the things I'd comment on projects; projects are just like operations or others. It's a specialized expertise that goes with planning and executing projects.

Speaker Change: In terms of the execution Shelly you want to comment a little bit on the capital projects <unk> Peter.

Shelly Powell: The bulk of the money is and you guys as areas any any comments you'd offer there I think you hit the high points the execution for all of those major projects is on track proceeding as we expect them to be.

Shelly Powell: The certainly the.

Shelly Powell: Replacement oriented system turnover is starting to commission some of those key system. So we're expecting that sense of progressive as we expected it to be one.

Shelly Powell: The things I would comment on projects projects is just like operations or others. Its a specialty expertise that goes with planning and executing projects and shame on us we learned a lot through terra Nova but as we've been learning it we've been strengthening our execution capability in other areas and although <unk>.

Shelley Powell: You know, shame on us; we learned a lot through Terranova, but as we've been learning it, we've been strengthening our execution capability in other areas. But although turnarounds are different, they also have a lot of similarities in the importance of pre-planning, ensuring you have the necessary resources, you know, scheduled out in time. So, this is a whole area of emphasis for us in planning and executing our work, and that applies really across the board, but you'll really see it tangibly in project execution. Thank you, sir.

Shelly Powell: Turnaround are different they also have a lot of similarities in the importance of preplanning, ensuring you have the necessary resources.

Shelly Powell: Scheduled out in time. So this is a whole area of emphasis for us on planning and executing our work and that applies really across the board.

Shelly Powell: Youll really see it tangibly in project execution.

Rich Krueger: Thank you. Please take a moment for our next question. And that will come from the line of Patrick O'Rourke with ATB Capital Marks. Hey guys, good morning, and congratulations on a strong quarter. Thanks for taking my question here. You spent a lot of time going over sort of mining operations, but you touched on in situ opportunities earlier in the call. I'm sure a lot out there, just like myself, have been watching very impressive results at, you know, Firebag and McKay.

Speaker Change: Thank you Sir.

Shelly Powell: Yes.

Speaker Change: Thank you one moment our next question.

Speaker Change: And that will come from the line of Patrick O'rourke with ATB capital market.

Patrick O'rourke: Hey, guys good morning, and congratulations on a strong quarter. Thanks for taking my question here.

Patrick O'rourke: You spent a lot of time going over sort of mining operations, but you touched on in <unk>.

Patrick O'rourke: Opportunities earlier in the call I'm sure a lot out there just like myself have been watching very impressive results at fire bag Mek.

Patrick O'rourke: And you're running from, what I can see, very close to nameplate capacity there. So I'm just wondering if you could kind of maybe unpack a little bit more what the opportunities are in the thermal units. Are they growth?

Speaker Change: And you're running from what I can see very close to nameplate capacity. There. So I'm just wondering if you could kind of maybe unpack a little bit more what the opportunities and the thermal units or are they growth are the capital efficiency are.

Rich Krueger: Are they capital efficient? Are they on the operating cost side, and what could that look like going forward? Yeah, sure. If you look back over our last 10 years, we had such an intense focus on mining with the initial investment at Fort Hills and things, and it's not, I'm going to use a word, and I don't mean it quite as strongly, but, you know, in a sense, our in situ kind of took a bit of a backseat in some respects because we had so many other capital needs. But as we look at the quality of that operation, Firebag, Firebag's a rock star, you know; I wish I wished we had a couple more of them. And we do have opportunities to continue to de-bottleneck at a lower relative cost per flowing barrel at Firebag.

Speaker Change: Are they on the operating cost side, and what that could look like going forward.

Speaker Change: Yes, sure. If you look back over our last 10 years, we had such intense focus on mining with the initial investment at Fort Hills and things.

It's not I'm going to use a word I don't mean, it quite as strong, but but in a sense are in seats, you kind of took a bit of a back seat in some regards because we had so many other capital needs, but as we look at the quality of that operation.

Speaker Change: Fireback fire bags of Rockstar I.

Speaker Change: I wish I wish we had a couple more of them and we do have opportunities to continue to debottleneck at lower relative cost per flowing barrel at fire bag, we've got opportunities for new developments Lewis or fire bag, South and what we're doing right now in this this gets in concept to the Investor day, we're doing a lot of.

Rich Krueger: We've got opportunities for new developments, you know, Lewis or Firebag South. And what we're doing right now, and this gets in kind of to Investor Day, we're doing a lot of work right now to answer some key questions about what's next, what's the most capitally efficient, and when. And I'd love to have those questions earlier rather than later, but it's going to take us, you know, the bulk of the spring and summer to get there on some of those.

Speaker Change: Work right now to answer some key questions. There about what's next what's the most capitally efficient and win.

Speaker Change: And.

Speaker Change: I'd love to have those questions earlier, rather than later, but it's going to take us the bulk of the spring and the summer to get there on some of those but I think in situ plays into our future in a in a bigger way. So that your question is a good set up youre going to hear more from us about in <unk>. Some of the opportunities are very much.

Rich Krueger: But I think in situ plays into our future in a bigger way. So that, you know, your question's a good setup. You're going to hear more from us about in situ. Some of the opportunities are very much low cost de-bottlenecking at the, at the Firebag plant in itself, water handling capability, whatnot, where you can spend a small amount of money and open up, you know, two, three, four, 5,000 barrels a day of additional capacity. We're also testing solvent technologies. You know, solvent, to me, is a winning formula.

Speaker Change: Low cost debottlenecking at the at the <unk> plant in itself water handling capability whatnot, where you can spend a small amount of money and open up 234 5000 barrels a day of additional capacity. We're also testing solvent technologies.

Speaker Change: Solvent to me is a winning formula if you can convince yourself, you get equal to or better recovery and lower carbon emissions with it lower steam use. So we've got some pilot work that some of it that's wrapping up this spring.

Rich Krueger: If you can convince yourself that you get equal to or better recovery, you lower carbon emissions with it, and you lower steam use. So we've got some pilot work that's, some of it that's wrapping up this spring. And so you can expect to hear more on that. But in the greenfield developments, like Lewis, for example, we're also looking at synergies given its proximity to the base plant with surplus steam utilization. So here again, it comes back to the concentrated, you know, geographic footprint of our assets, the physical integration of what we have, and the ability to do things or add value that are above and beyond what our competitors can, or can say. So, you know, you answered, or you asked a great question for me, because in situ is something you're going to be hearing more and more from us about in the months and the quarters ahead. Okay, great.

Speaker Change: So you can expect to hear more on that.

Speaker Change: But.

Speaker Change: Green field developments.

Speaker Change: Also like Louis for example, we're looking at synergies given its proximity to the base plant with surplus steam utilization. So here again it comes back to the concentrated geographic footprint of our assets the physical integration of what we have and the ability to do things or add value.

Speaker Change: That are above and beyond what our competitors can say so.

Speaker Change: You answered or you asked a great question for me because instituted something youre going to be hearing more and more from us about in the in the months and the quarters ahead.

Rich Krueger: And just to follow up here, just looking ahead at the year, I know, you know, a lot of these risks are completely unpredictable. We've had things like wildfires in the past, but one of the things we've been watching is, you know, drought conditions here.

Speaker Change: Okay, great. Thank you and just a follow up here.

Speaker Change: Just looking ahead at the year I know a lot of these risks are completely unpredictable, we had things like wildfires in the past, but one of the things that we've been watching as drought conditions here.

Patrick O'rourke: The Athabasca River water levels and flow rates look okay so far, but just wondering if you have any contingencies or any concerns on that end. Yeah, I'm going to ask Peter to comment on that specifically, because obviously, the importance of water to our resource and, of course, our operations are where the vast majority of the source of water is in Alberta. And we, we in industry, use a relatively small fraction of that resource. But Peter, would you like to comment a little bit about our overall approach to water use and management? Oh, yeah, absolutely, Rich.

Speaker Change: Vascular river water levels and flow rates look okay, so far but just wondering.

Speaker Change: If you have any contingencies or any concerns on that end.

Speaker Change: Yes, I'm going to ask Peter to comment on that specifically, because obviously the importance of water to a resource and of course, our operations are where the vast majority of the source of water is in Alberta, and we in industry use a relatively small fraction of that source. The Peter you want to comment a little bit about our kind of our overall.

Peter Zebedee: Approach in wound water use and management.

Peter Zebedee: I think I'd like to start by just saying, you know, in our operations today, we recycle 94% of the water we use in our operations. And we are very careful in the amount of water that we drain from the river. We have contingency plans in place. Yes, absolutely.

Peter Zebedee: You're absolutely right. So I think I'd like to start by just saying.

Peter Zebedee: And our operations today, we are recycling, 94% of the water we use in our operations and we are very.

Peter Zebedee: Careful in the amount of water that we're drawing on that.

Peter Zebedee: River.

Peter Zebedee: We are we have contingency plans in place.

Peter Zebedee: And we're also casting our eyes to the future to look at investments that will reduce our water intensity across our operations. First and foremost, at the base plant, we'll look to develop a potential water treatment plant and bring that on by the by the end of the decade here. So first, you know, in our operations, it is all about efficiency and scarcity of use, a heavy focus on recycling and building the contingency so that we can weather through these drug conditions that we are going to see across the province. Thank you. Thank you very much.

Speaker Change: Absolutely and were also.

Speaker Change: Casting our eyes to the future to look at investments that will reduce our water intensity across our operations.

Speaker Change: First and foremost.

Speaker Change: Based platform.

Speaker Change: To develop a potential water treatment plant.

Speaker Change: And bring that on.

Speaker Change: By the towards the end of the decade here.

Speaker Change: So first.

Speaker Change: Our operations it is all about.

Speaker Change: You can see and scarcity of use heavy focus on recycling and building the contingency and so that we can.

Whether through these drought conditions that we are going to see across the province. This summer.

Speaker Change: Thank you. Thank you very much.

Peter Zebedee: One moment for our next question, and that will come from the line of Manav Gupta with UBS. Your line is open.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: And that will come from the line of Manav Gupta with UBS. Your line is open.

Manav Gupta: My first question here is, it looks like you didn't have too much downtime in the refining segment in 1Q. Your fourth quarter capture number was 103%. Every time the capture goes over 100%, we view that very favorably. Looks like a lot of North America is in a turnaround, and you are running all out in 1Q. Does that set you up very well for at least the first half of the year as far as downstream earnings are concerned? Yeah, I think, you know, we like the 100% too. That's good, right, Dave? We like it more than 100%. You know, I'll ask Dave to comment.

Manav Gupta: My first question here is it looks like you don't have too much downtime in the refining segment in <unk>.

Manav Gupta: Your fourth quarter of capture number was 103% anytime the capture goes out 100%, we view that very favorably looks like a lot of North America is in a turnaround.

Manav Gupta: And you're running all out in <unk> does that set you up very well for the at least the first half of the year outside of downstream earnings are concerned.

Speaker Change: Yes, I think so we like the 100% to that that's good right, Dave we like more than 100%.

Dave Oldrieve: We do have turnarounds at Montreal and Sarnia that come on this year in the kind of second quarter-ish. You're right; for the rest of the bulk of the first quarter, we're going to be up and running. Dave, could you make a comment on that?

Speaker Change: I'll ask Dave to comment we do have turnarounds at Montreal in Sarnia had come on this year and in the kind of second quarter ish.

Speaker Change: Youre right for the rest of the bulk of the first quarter, we're going to be up and running but Dave will comment on that but I also want we've up.

Dave Oldrieve: But I also want you to we've, you know, I've asked you to give your quarter a pint of blood at $5 a barrel. So answer that question. But then also talk about what the downstream is doing to contribute to our $5 a barrel corporate break-even reduction. So, Manav, sorry, you still have another question. But I want Dave to comment on what his team is doing in that regard as well. Thanks, Rich, and thanks, Manav, for the question. Well, that's actually a lot of material to work with. I could probably spend a bit of time on this one.

Dave: I've asked you to give your corridor pint of blood on the $5 a barrel. So answer that question. But then also talk about what the downstream is doing to contribute to our $5 a barrel corporate breakeven reduction so manav sorry, you still get another question.

Dave: I want Dave to comment on what his team is doing in that regard as well so thanks rich and thanks for the question.

Speaker Change: That's actually a lot of material to go work, but I could probably spend a bit of time on this one but.

Dave Oldrieve: But you mentioned margin capture, and I think the story for the first quarter is going to be fairly similar to the story for the fourth quarter. You know, and for the fourth quarter, we delivered, you know, a strong margin capture. And when I think about it, we, you know, Chris mentioned some of the reasons why we were able to run our refineries full and why they're economical. And we've got some structural advantages in terms of our G to D, our location, our connectivity to our upstream, as well as our retail. But, you know, we ran full and saw strong margin capture. I'd also flip that around, you know. Running full allows you to capture strong margin capture.

You mentioned margin capture and I think the story for the first quarters can be fairly similar to the story for the fourth quarter.

Speaker Change: For the fourth quarter, we delivered.

Speaker Change: A strong a strong margin capture and when I think about it Chris mentioned some of the reasons why we were able to run our refineries fall weather economic and we've got some structural advantages.

Speaker Change: Terms of our <unk> location.

Speaker Change: Our.

Speaker Change: Connectivity to our to our upstream as well as our retail business.

Speaker Change: We ran full and saw strong margin capture I'd also flip that around.

Speaker Change: <unk>.

Running full allows you to capture strong margin margin capture strong margin capture it gives you the economics of unfolded, we had we saw both.

Dave Oldrieve: Strong margin capture gives you the economics to run full, and we saw both. You know, in the downstream, in the fourth quarter... We have optimization that our downstream teams do aggressively every day, and we saw some really good examples of that. First off, reliable operations allow us to optimize our molecules through our refineries and integrate a value chain to the customer. We were also able to give economic full signals to all of our refineries despite falling gasoline prices. You know, that was assisted by deeper West Can crude discounts, particularly on SCO, our lower G to D ratios relative to our competition, and our ability to export diesel across both coasts. And that will continue through the first quarter as well.

Speaker Change: In the downstream in the fourth quarter.

Speaker Change: We haven't we have optimization.

Our downstream teams do aggressively every day and we saw some really good examples of that.

Speaker Change: First off reliable operations allowed us to optimize our molecules through our refineries and integrate integrated value chain to the customer.

Speaker Change: We were also able to give economic full signals to all of our refineries. Despite falling gasoline prices now that was assisted by deeper west can crude discounts, particularly on SCO are lower <unk> ratios relative to our competition and our ability to export diesel across both coasts and that it will continue through the first quarter as well that ability to move.

Dave Oldrieve: That ability to move diesel across both coasts and the ability to move volume between the two regions, east to west, on rail is a real good advantage for us to allow us to do that. Our Edmonton refinery is highly integrated with our upstream assets, and we optimize that every day to make sure that we, you know, we fill out the refinery to all of its constraints as well as try to tailor it to meet our customer demands, and that's a unique Our trading organization did a great job in the fourth quarter and continues to move volumes off the coast at really good netbacks. We saw that in December; we saw that through January while gasoline cracks were low.

Speaker Change: Diesel across both coasts.

Speaker Change: And the ability to move volume between the two regions east to West on rail is a real good advantage for us to allow us to take advantage of that.

Speaker Change: Our Edmonton refinery is highly integrated with our upstream assets, we optimize that everyday.

Speaker Change: To make sure that we.

Speaker Change: We fill out the refinery to all of its constraints as well as trying to tailor the mix to meet our customer demands and that's a unique capability in the industry are trading organization has done a great job in the fourth quarter continues in the first quarter to move volumes.

Speaker Change: Off the coast.

Speaker Change: It really good net backs we saw that in December we see that through January while gasoline cracks were low gasoline cracks have picked up that should continue to help us and our rack forward business.

Dave Oldrieve: Gasoline cracks have picked up, and that should continue. And our RAC Forward business just continues to be strong and provides a nice cushion. It also provides a little bit of a cushion in a falling pricing market, which we saw through the fourth quarter in our wholesale price when our street price kind of lagged wholesale prices. So really, a really good fourth quarter in terms of margin capture. We'd expect that to continue through the first quarter.

Speaker Change: <unk> continues to be strong and provides a nice push it also provides a little bit of cushion in our falling.

Speaker Change: <unk> market, which we saw through the fourth quarter and our wholesale pricing.

Speaker Change: When our street price kind of lagged wholesale prices. So so really good fourth quarter in terms of margin capture we would expect that to continue.

Speaker Change: Through the through the first quarter in terms of value capture that's a really really exciting thing for us in the downstream.

Dave Oldrieve: You know, in terms of value capture, that's a really exciting thing for us in the downstream. You know, if we think about, where are the opportunities? You know, we, you know, Peter talks a lot about how we reduce the costs of mining. That's the big opportunity in the upstream. In the downstream, our volumes are a little bit smaller, and the cost of production is, you know, it's a smaller piece to work with to begin with. So there are some opportunities on the dollar per barrel OPEX side of things, but our bigger opportunity is our ability to capture value, and that's really where we're focused. Our team is really excited about it.

Speaker Change: We think about.

Speaker Change: There are opportunities.

Peter talks a lot about how we reduce costs of mining that's a big opportunity in the upstream and the downstream our volumes are a little bit smaller and the cost of production.

Speaker Change: It's a smaller it's a smaller piece to work with to begin with so there is some opportunities in the dollar per barrel opex side of things, but our bigger opportunity is our ability to capture value.

Speaker Change: And that's really where we're focused and our team is really excited about it we're building plans to capture value in a number of key areas.

Dave Oldrieve: We're building plans to capture value in a number of key areas, and that value will turn into cash, and it's all about cash, which helps the bottom line of the enterprise, which overall helps our break even for the enterprise. We're looking at structural reliability improvement at all of our assets in the refining business. We're looking at supply and logistics opportunities. We're taking a look, on the supply side, at a lot of our contracts that maybe we haven't looked at in a number of years and checking whether they still, you know, still serve us well.

Speaker Change: That value will turn into cash and at Alba cash, which to the bottom line of the enterprise, which overall helps our breakeven for the enterprise.

Speaker Change: We're looking at a structural reliability improvement at all of our assets and our refining business.

Speaker Change: We're looking at supply and logistics opportunities, we're taking a look and the supply side that a lot of our contracts that maybe we haven't looked at a number of years and checking whether they still.

Speaker Change: Still have.

Dave Oldrieve: And we're seeing some opportunities in that space. We spend a lot of money on logistics, moving large volumes of product all across North America and even for export. There are vessel leases, there are rail car leases, there are pipeline contracts, all of that stuff.

Speaker Change: Serve as well.

Speaker Change: And we're seeing some opportunities in that space, we spend a lot of money and logistics moving large volumes of product all across North America and even in export.

Speaker Change: There is theres vessel leases theres railcar leases as pipeline contracts all of that stuff. There's a lot of money being spent there. We think there is some opportunity to squeeze some of that and.

Dave Oldrieve: There's a lot of money being spent there, and we think there's some opportunity to squeeze some of that and find some really good value there. Our trading organization is world class, and we've been growing that over the last few years, and we continue to see opportunities to capture more value through that organization. On the refining side, we have a number of really small investment opportunities, low capex, high return, that we're going to look at at each of our assets to continue to grow that. And of course, folks are aware of our retail growth strategy. We began implementing that in 2023, and that's going to – that is actually delivering very well for us. We're seeing some really promising signals on some of the early sites that we've developed, and we're going to continue that through the next few years. So we see a lot of opportunity to contribute, you know, upwards of a couple dollars a barrel to that $5 a barrel challenge over the next number of years through downstream value capture. I just wrote that down, Dave. Thank you. The best of the Bank Ridge.

Speaker Change: And find some some really good value there our trading organization is world class and we've been growing that over the last few years and we continue to see opportunity to capture more value through that organization.

Speaker Change: On the refining side, we have a number of kind of really small investment opportunities low capex high return that we're going to look at it each of our assets to continue to grow that and of course folks are aware of our retail growth strategy. We began implementing that in 2023, and that's going to that is actually delivering very well for us we're seeing some really.

Speaker Change: Promising signals on some of the early sites that we've developed and.

Speaker Change: And we're going to continue that through the next few years. So we see a lot of opportunity to contribute.

Speaker Change: Upwards of a couple of dollars a barrel to that $5 a barrel challenge over the next number of years to downstream value capture I just wrote that down day. Thank you.

Speaker Change: That's what our bankers.

Manav Gupta: My quick follow-up, and thank you for the detailed response. It looks like the net depth just went up a little because of the FOTL. I think you took on some more depth for that transaction, and maybe there were some lease liability things. I'm just trying to understand now that FOTL is in there, you're crossing higher volumes, like what would be an optimal depth level after which you would say, you know, we are very comfortable holding to this amount of depth, and then most of the other proceeds can just go to buyback. Hey Manav, it's Chris here.

Speaker Change: My quick follow up and thank you for the detailed response my quick follow up is it looks like the net debt went up a little because of the photo that I think you took on some more debt for the transaction and maybe there was some lease liability things I'm just trying to understand now that photos within there.

Speaker Change: Crossing higher volumes I think what would be an optimal depth level. After that you would say and I'll give you a very comfortable holding to this amount of debt and then most of the proceeds can just go to buybacks.

Speaker Change: Yes.

Chris Smith: Similar to the question we had earlier from Neil Mehta, our capital allocation framework is quite clear, so we're driving to $12 billion in net debt as our next target, and then we'll change the capital allocation framework from 50-50 to 75-25. And our goal is to get down to $9 billion in net debt, including capitalized leases. So that's the framework we have in place, and as I said earlier in the call, this is all about, as you've listened for the last period of time, we're looking to release as much free cash flow as we can so that we can actually drive to that net debt target and return more cash to shareholders. And the net debt only went up because of the Fortis transaction, right?

Chris Smith: It's Chris here.

Chris Smith: Similar to the question you had earlier from Neil Mehta.

Speaker Change: Our capital allocation frameworks quite clear so we're driving to $12 billion net debt as our next target and then we will change the capital allocation framework from 50 50 to $75 25, and we're honored and our goal is to get down to 9 billion net debt, including capitalized leases. So that's the framework we have in place.

Speaker Change: As I said earlier in the call. This is all about as you look as you've listened for the last period of time or we're looking to release as much free cash flow as we can so that we can actually drive to that net debt target and returned more cash to shareholders.

Speaker Change: And the net debt only went up because of the photos transaction right and just wanted to clarify that in.

Manav Gupta: I just want to clarify that in the quarter. Yeah, that's right. I mean, our net debt at the end of the day was flat year-over-year, and we had the acquisition, which was $1.5 billion Canadian, plus closing adjustments and closing costs, and, as you pointed out, there were some capitalized leases that came with that.

Speaker Change: In the quarter, Yeah, that's right I mean, our net our net debt at the end of the day was.

Speaker Change: Flat year over year, and we had the acquisition, which was $1 5 billion Canadian plus closing adjustments adjustments and closing costs and as you pointed out there was some capitalized leases that came with that so when you look at that.

Chris Smith: So when you look at it on that basis, we did the transaction, and we kept the net debt level. Our debt-excluding capitalized leases actually went down. Thank you so much. Thank you. One moment for our next question. Thank you. Thank you. And that will come from the line of Roger Reed with Wells Fargo. Yeah, good morning. I'd like to just follow up on one thing, as you mentioned, being able to supply Ford Hills and Firebag, you know, kind of give faceplant and others. Does it really matter?

Speaker Change: On that basis, we did the transaction, we kept the net debt level or our debt excluding capitalized leases actually went down.

Speaker Change: Thank you so much.

Speaker Change: Thanks.

Speaker Change: Thank you one moment our next question.

Okay.

Roger Read: And that will come from the line of Roger read with Wells Fargo.

Roger Read: Yes, good morning.

Roger Read: Sure.

Roger Read: I'd like to just follow up on one thing as you mentioned being able to supply Fort Hills from fire bag kind of.

Roger Read: If it gets placed plan and others.

Roger Reed: What you're putting through the upgraders in terms of bitumen and bitumen quality. What's the flexibility there as we think about the long-term question of replacing base plant production? You know, I know it's a, you know, next decade kind of question, but it's out there.

Speaker Change: Does it matter.

Speaker Change: What you are putting through the upgrader is in terms of bitumen and bitumen quality, what's the flexibility there as we think about the long term question of replacing.

Speaker Change: <unk> plant production.

Speaker Change: Sure.

Speaker Change: No.

Speaker Change: Next decade kind of question, but it's out there and so I'm. Just curious are you learning something about the ability to be more flexible with the feedstock.

Rich Krueger: And so I'm just curious, are you learning something about the ability to be more flexible with the feedstock? Roger, thank you. The upgraders have the capability of handling whatever the feed is, but the cocktail that comes from Firebag is not exactly the same as the cocktail that comes from Fort Hills.

Speaker Change: Roger Thank you.

Speaker Change: The upgrade or has have the capability of handling whatever the feed is but the the cocktail that comes from fire bag is not exactly the same as the cocktail that comes from Fort Hills, and what we've learned with the paraffinic froth treatment that Fort Hills that basically is taken the heavier.

Rich Krueger: And what we've learned with the paraffinic froth treatment at Fort Hills that basically is taking the heavier asphaltenes out of it before it comes. What Peter is getting at the base plant when he runs that through, we've talked in the past about getting an uplift in volume when it goes through there, but literally, we've been testing that long and hard and with more Fort Hills barrels going through. Peter, keep me honest; we've talked about the volumetric uplift of bringing a Fort Hills barrel in at about the 4% range. Increasingly, we're thinking it's more than 6%.

Speaker Change: Asphalt teams out of it before it comes what Peter is getting at base plant. When he runs that through we've talked in the past about getting the uplift in volume that when it goes through there, but literally we've been testing that long and hard and with more court Hillsboro.

Speaker Change: Barrels going through Peter keep me honest, we've talked about the volumetric uplift of bringing a fort hills barrel in on the kind of the 4% range.

Speaker Change: Increasingly we're thinking it's more than 6%.

Rich Krueger: And what we think is we're getting that four. But as you stir those Fort Hills barrels in with all the other barrels, they have a synergistic effect that gets an uplift from a larger volume. And so there again lies the value proposition; when you can look at where a paraffinic froth treatment bitumen gets in the market versus a fire bag, we have the ability to move barrels literally day to day, week to week to get the highest value. So all barrels are not created equal.

Speaker Change: And what we think as we get in that for but as you stir those fort hills barrels in with all the other barrels they have a synergistic effect that get an uplift from a larger volume and so there again like what's the value proposition. When you can look at where the paraffinic froth treatment bitumen gets in the market.

Speaker Change: Versus a fire bag, we have the ability to move barrels literally day to day week to week to get the highest value. So all barrels are not created equal Peter you have anything you'd add to that or I love. This topic.

Rich Krueger: Peter, do you have anything you'd add to that, or do you love this topic? This is awesome. And actually, that is what the results are showing a north 6% yield uplift on those parapentic frost treatment barrels from Fort Hills.

Peter Zebedee: This is awesome and actually that is what the results are showing north of 6% yield uplift on those.

Peter Zebedee: Paraffinic froth treatment barrels from Fort Hills again, we can bring those into the upgrader at a maximum of 60000, a day right now and that's one of the things. The teams do is look every day on where we're going to generate the most value.

Rich Krueger: Again, we can bring those into the upgrading at a maximum of $60,000 a day right now. And that's one of the things the teams do every day, look at where we're going to generate the most value for the company and what the mixture is, what the cocktail is that we're bringing. So I guess just as a follow-up on that, I mean, does that imply as you're looking, you know, out? For 10 plus years, that there's actually a lot more flexibility in the way to think about bitumen, be laser focused.

Peter Zebedee: For the company and what what the mix is what the cocktail and so we're bringing into those on graders.

Speaker Change: So I guess just as a follow up on that I mean does that imply as youre looking out.

Speaker Change: 10, plus years that there's actually a lot more flexibility in the way to think about bitumen.

Speaker Change: Being laser.

Roger Reed: Absolutely. Absolutely. Yeah, no, no doubt about it.

Speaker Change: Absolutely minor so absolutely.

Rich Krueger: We will look at it in the most, most holistic way, so that we can accurately, you know, see what value can be captured. And here again, I think this is part of what makes us a bit different than others, the way we can look at a barrel of bitumen. And what we can do with it, we have options. And that will be part of, you know, what are the best long-term sources of bitumen, that will be very much a consideration as we look at, you know, where value can be created.

Speaker Change: Yes, no no doubt about it we will look at the most most holistic way so that we ensure we can accurately see what value can be captured and here again I think I think this is part of what makes us a bit different than others is the way we can look at a barrel of bitumen.

Speaker Change: What we can do with it we have options and that will be part of as we look forward on what are the best long term sources of bitumen that will be very much a consideration as we look at where value can be created.

Roger Reed: All right, I will appreciate it. Thank you. Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call over to Mr. Rich Krueger for any closing remarks. Yeah, you know, I'll just wrap up very quickly before giving it back to Troy, you know, thank you for the time, the questions today; we had a lot to cover. I'll just reiterate where Greg started us, you know, where we are right now as we get into 2024. I believe we've got the right leadership, the right people, we're focused on the right work, and we have an inventory of things that can make a good operation great. And that's exactly what we intend to do. So with that, I'll just turn it back to Troy.

Speaker Change: Alright I appreciate it thank you.

Speaker Change: Thank you I'm showing no further questions in the queue. At this time I would now like to turn the call over to Mr. Rich Kruger for any closing remarks.

Rich Kruger: Yes, I'll, just wrap up pretty quickly before giving it back to Troy. Thank you for the time.

Rich Kruger: Questions today, we had a lot to cover I'll, just reiterate really what Greg started us where we are right now as we get into 2024 I believe we've got the right leadership. The right people were focused on the right work, we have an inventory of things that can make a good operation great and thats it.

Rich Kruger: Exactly what we intend to do so with that I'll, just turn it back to Troy.

Rich Krueger: Thank you everyone for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can end the call. Thank you. This concludes today's program. Thank you all for participating. You may now disconnect.

Troy: Okay. Thank you everyone for joining our call. This morning, if you have any follow up questions. Please don't hesitate to reach out to our team operator, you can end the call.

Speaker Change: Thank you. This concludes today's program. Thank you all for participating you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].