Q1 2024 Imperial Oil Ltd Earnings Call

Operator: Good day, and welcome to the Imperial Oil first quarter 24 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Peter Shaw, Vice President, Investor Relations. Please go ahead, sir.

Good day and welcome to the Imperial Oil's first quarter 'twenty four earnings call Today's conference is being recorded.

At this time I would like to turn the conference over to Peter Shah Vice President Investor Relations. Please go ahead Sir.

Peter Shaw: Morning, everybody. Welcome to our first quarter earnings conference call. I'm joined this morning by Imperial's senior management team, including Brad Corson, Chairman, President, and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Sherri Evers, Senior Vice President of Sustainability, Commercial Development, and Product Solutions; and Simon Younger, Senior Vice President of the Upstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to this conference call.

Peter Shaw: Good morning, everybody welcome to our first quarter earnings Conference call I'm joined this morning by Imperial Senior management team, including Brad Corson, Chairman, President and CEO, Dan Lyons Senior Vice President Finance and administration, Sharon <unk> Senior Vice President of sustainability commercial development and product solutions.

And Simon younger senior Vice President of the upstream.

Peter Shaw: Ray's comments include reference to non-GAAP financial measures definitions and reconciliations of these measures can be found in the attachment six of our most recent press release and are available on our website with a link to this conference call.

Peter Shaw: Today's comments may also contain forward-looking information. However, any forward-looking information is not a guarantee of future performance, and actual future performance, and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information on the risk factors and assumptions is described in further detail in our first quarter earnings release that we issued this morning, as well as in our most recent Form 10-K. All these documents are available on CDAR Plus, EDGAR, and our website, so I'd ask you to refer to them.

Peter Shaw: Todays comments may also contain forward looking information any forward looking information is not a guarantee of future performance and actual future performance and operating results can vary materially depending on a number of factors and assumptions.

Peter Shaw: Forward looking information and the risk factors and assumptions are described in further detail on our.

Peter Shaw: On our first quarter earnings release that we issued this morning as well as our most recent Form 10-K.

Peter Shaw: All of these documents are available on SEDAR, Edgar and our website. So I'd ask you to refer to those.

Peter Shaw: Brad is going to start this morning with some opening remarks and then hand it over to Dan, who is going to provide a financial update. And then Brad will provide an operations update once that is done, and we will follow up with a Q&A session. So with that, I will turn it over to Brad for his opening remarks.

Speaker Change: Im just going to start this morning, with some opening remarks, and then hand it over to Dan who is going to provide a financial update and then that Brad will provide an operations update once that is done we will follow with the Q&A session. So with that I will turn it over to Brad for his opening remarks.

Bradley William Corson: Thank you, Peter. Good morning, everybody, and welcome to our first quarter earnings call. I hope everyone is doing well and the year is off to a good start for you. Today, I'm very pleased to report that we've sustained the strong operating momentum from the past several quarters, and the organization has delivered another very strong quarter to start 2024. Curl had a fantastic quarter and delivered more records with the highest first-quarter production in the asset's history. And Cold Lake is getting very close to first production from Grand Rapids Phase 1, which, as you may recall, is the first deployment of solvent-assisted SAG-D technology in the industry, and we're very excited about that.

Speaker Change: Peter Good morning, everybody and welcome to our first quarter earnings call I Hope everyone is doing well in the year is off to a good start for you.

Peter: Today I am very pleased to report that we sustained the strong operating momentum from the past several quarters and the organization has delivered another very strong quarter to start 2024.

Peter: <unk> had a fantastic quarter and delivered more records with our highest first quarter production and the assets history.

And Cold Lake is getting very close to first production from Grand Rapids Phase, one, which as you may recall is the first deployment of solvent assisted.

Peter: <unk> <unk> technology in the industry and we're very excited about that.

Bradley William Corson: Our downstream and chemicals businesses also ran well over the quarter and contributed very solid earnings. Overall, we feel really good about the strong start to the year. We are well positioned to meet our guidance for the year and continue delivering significant value to our shareholders by returning surplus cash through our reliable and growing dividend and industry-leading share repurchase program. In the next few minutes, Dan and I will detail the results of this very strong quarter.

Peter: Our downstream and chemicals businesses also ran well over the quarter and contributed very solid earnings.

Peter: Overall, we feel really good about the strong start to the year.

Peter: We are well positioned to meet our guidance for the year and continue delivering significant value to our shareholders by returning surplus cash through our reliable and growing dividend and industry leading share repurchase programs.

Peter: Over the next few minutes, Dan and I will detail the results of this very strong quarter.

Bradley William Corson: Earnings for the quarter were $1,195,000,000, with cash from operating activities of $1,521,000,000 when excluding the impact of working capital. From an earnings perspective, this represents the second best first quarter in company history. Throughout the quarter, the commodity price environment remained strong, and our financial results continued to reflect exceptional operating performance, which included a number of records across both our upstream and downstream business lines. In the upstream, we achieved total production of 421,000 gross oil equivalent barrels per day in the first quarter, underpinned by record performance at Curl, which delivered 277,000 total gross barrels per day of production, which, as I mentioned, was the highest first quarter production in the asset's history.

Peter: Earnings for the quarter were $1 billion $195 million with cash from operating activities of $1 billion $521 million when excluding the impact of working capital.

Peter: From an earnings perspective. This represents the second best first quarter in company history.

Peter: Throughout the quarter, the commodity price environment remains strong and our financial results continued to reflect exceptional operating performance, which included a number of records across both our upstream and downstream business lines.

Peter: In the upstream we achieved total production of 421000 gross oil equivalent barrels per day in the first quarter underpinned by record performance at Kearl, which still delivered 277000 total gross barrels per day of production, which as I mentioned.

Peter: Was the highest first quarter production in the assets history.

Bradley William Corson: I'll talk about each asset in more detail in a few minutes. In the downstream, we continue to see strong operating performance as well. Refining throughput averaged 407,000 barrels per day, which equated to a refinery utilization rate of 94 percent and included record first quarter throughput at our Nanocoat refinery. CREXPRED strengthened over the quarter with improving gasoline fundamentals, and we continue to capture additional margin from advantaged Canadian crews. With that, I'll pass things over to Dan.

Peter: I'll talk about each asset in more detail in a few minutes.

Peter: In the downstream, we continue to see strong operating performance as well refining throughput averaged 407000 barrels per day, which equates to a refinery utilization in the quarter of 94% and included record first quarter throughput at our nanticoke refineries.

Peter: Crack spreads strengthened over the quarter with improving gasoline fundamentals and we continue to capture additional margin from advantaged Canadian crudes.

Peter: With that I'll pass things over to Dan.

Daniel E. Lyons: Starting with financial results for the first quarter, we recorded net income of $1,195,000,000, a decrease of $53,000,000 from the first quarter of 2023, primarily reflecting lower margins in the downstream, partly offset by higher realizations in the upstream. Looking sequentially, our first quarter net income is down $170,000,000 from the fourth quarter of 2023, reflecting an expected seasonal decrease in upstream production volumes. Now looking at each business line, upstream earnings of $558,000,000 are down $212,000,000 from fourth-quarter earnings of $770,000,000, driven primarily by lower production volumes.

Daniel E. Lyons: Thanks, Brad.

Starting with financial results for the first quarter, we recorded net income of $1 billion $195 million.

Daniel E. Lyons: Decrease of $53 million from the first quarter of 2023, primarily reflecting lower margins in the downstream, partly offset by higher realizations in the upstream looking sequentially. Our first quarter net income is down $170 million from the fourth quarter of 2023, reflecting an expected.

Daniel E. Lyons: Seasonal decrease in upstream production volumes now looking at each business line.

Daniel E. Lyons: Upstream earnings of $558 million are down three sorry, $212 million from fourth quarter earnings of $770 million, driven primarily by lower production volumes.

Daniel E. Lyons: Downstream earnings of $631 million are up $36 million from fourth-quarter earnings of $595 million, mainly reflecting higher refining margins partly offset by lower product sales volume. Finally, our chemicals business generated earnings of $57 million, up $40 million from the fourth quarter, reflecting the absence of the Sarnia gas cracker turnaround that was completed in the fourth quarter.

Daniel E. Lyons: Onstream earnings of $631 million are up $36 million from fourth quarter earnings of $595 million, mainly reflecting higher refining margins, partly offset by lower product sales volumes finally, our chemicals business generated earnings of $57 million up.

Daniel E. Lyons: $40 million from the fourth quarter, reflecting the absence of the Sarnia gas cracker turnaround that was completed in the fourth quarter.

Daniel E. Lyons: Moving on to cash flow, we ended the quarter with about $1.2 billion of cash on hand. In the first quarter, we generated about $1.1 billion in cash flows from operating activities, excluding working capital effects of about $450 million. Cash flows from operating activities in the quarter were about $1.5 billion, down about $30 million from the first quarter of 2023. Cash flows from operating activities were also impacted by unfavorable LIFO WAC deferred tax impacts driven by higher commodity prices in the first quarter of 2024 as compared to the fourth quarter of 2023. As a US GAAP LIFO reporter, we tend to see negative inventory-driven deferred tax impacts when prices rise and positive impacts when prices fall.

Daniel E. Lyons: Moving on to cash flow, we ended the quarter with about $1 $2 billion of cash on hand in the first quarter, we generated about $1 $1 billion in cash flows from operating activities, excluding working capital effects of about $450 million cash flows from opera.

Daniel E. Lyons: <unk> activities in the quarter were about one $5 billion down about $30 million from the first quarter of 2023.

Daniel E. Lyons: Cash flows from operating activities were also impacted by unfavorable LIFO whack deferred tax impacts driven by higher commodity prices in the first quarter of 2024 as compared to the fourth quarter of 2023 as a U S. GAAP LIFO reporter, we tend to see neg.

Daniel E. Lyons: <unk> inventory driven deferred tax impacts when prices rise and positive impacts when prices fall.

Daniel E. Lyons: Now we'll discuss CapEx. Capital expenditures totaled $496 million in the first quarter, up $67 million from the first quarter of 2023 and remain in line with our plans and full year guidance of $1.7 billion. In the upstream, first quarter spending focused on smaller projects to sustain and grow production at Curl, Syncrude, and Cold Lake, as well as progressing the In-Pit Tailings Project at Curl and the S.A. SAG-D Grand Rapids Project at Cold Lake.

Daniel E. Lyons: Now I will discuss Capex capital expenditures totaled $496 million in the first quarter up $67 million from the first quarter of 2023 and remain in line with our plans and full year guidance of $1 $7 billion.

Daniel E. Lyons: In the upstream first quarter spending focused on smaller projects to sustain and grow production at curl Syncrude in cold Lake as well as progressing the in pit tailings project at <unk> and the <unk> Grand Rapids project at Cold Lake.

Daniel E. Lyons: In the downstream, first quarter spending mainly included progressing our renewable diesel projects at Strathcona. Shifting to shareholder distributions in the first quarter of 2024, we paid $278 million in dividends. A reliable and growing dividend is the cornerstone of our cash distribution strategy, and this morning we declared a second quarter dividend of 60 cents per share, payable in July, consistent with our first quarter dividend. We continue to demonstrate our long-standing commitment to delivering industry-leading returns to our shareholders, and we are positioned to deliver 30 consecutive years of dividend growth this year.

Daniel E. Lyons: In the downstream first quarter spending mainly included progressing our renewable diesel projects abstract Helena.

Daniel E. Lyons: Shifting to shareholder distributions in the first quarter of 2024, we paid $278 million of dividends.

Daniel E. Lyons: Reliable and growing dividend is the cornerstone of our cash distribution strategy and this morning, we declared a second quarter dividend of <unk> 60 per share payable in July consistent with our first quarter dividend. We continue to demonstrate our long standing commitment to delivering industry, leading returns to our shareholders and we are.

<unk> to deliver 30 consecutive years of dividend growth this year.

Daniel E. Lyons: Additionally in line with our long standing philosophy of returning surplus cash to shareholders. We intend to file for a renewal of our normal course issuer bid in late June 2024, consistent with prior years under the terms of the NCI imperial oil would be permitted to repurchase.

Daniel E. Lyons: Additionally, in line with our long-standing philosophy of returning surplus cash to shareholders, we intend to file for renewal of our normal course issuer bid in late June 2024, consistent with prior years. Under the terms of the NCIB, Imperial Oil would be permitted to repurchase up to 5% of its outstanding common shares during the ensuing 12 months. Now I'll turn it back to Brad to discuss our operational performance.

Daniel E. Lyons: <unk> up to 5% of its outstanding common shares during the ensuing 12 months now I'll turn it back to Brian to discuss our operational performance.

Brian: Thanks, Dan upstream production for the quarter averaged 421000 oil equivalent barrels per day, which is down 31000 barrels per day versus the record fourth quarter and up 8000 barrels per day versus the first quarter of 2023.

Bradley William Corson: And upstream production for the quarter averaged 421,000 oil equivalent barrels per day, which is down 31,000 barrels per day versus the record fourth quarter and up 8,000 barrels per day versus the first quarter of 2023. The first quarter reflects expected seasonal factors driven by winter weather conditions.

Brian: The first quarter reflects expected seasonal factors driven by winter weather conditions. Overall this is a very strong quarter and a great start to the year.

Brian: Over the quarter, we saw wty prices soften slightly but the <unk> WCS differential did tightened with the net result, being stronger realizations for our bitumen.

Bradley William Corson: Overall, this was a very strong quarter and a great start to the year. Over the quarter, we saw WTI prices soften slightly, but the WTI-WCS differential did tighten, with the net result being stronger realizations for our bitumen. A key factor is the approaching startup of TMX, which will provide significant additional capacity for egress from the Western Canadian Basin. And as we've seen this past quarter, the anticipated structural tightening of Canadian crude differentials is already being realized.

Brian: A key factor as the approaching startup of <unk>, which will provide significant additional capacity for egress out of the Western Canadian basin.

Brian: And as we've seen this past quarter, the anticipated structural tightening of Canadian crude differentials is already being realized.

Completion of infrastructure projects, such as <unk> are crucial to the competitiveness and growth of the country's energy industry and the strength of the Canadian economy.

Brian: Going forward, we do expect to see a narrower WCS differential that will further support strong value delivery from our upstream and a net benefit to imperial.

Bradley William Corson: Completion of infrastructure projects such as TMX is crucial to the competitiveness and growth of the country's energy industry and the strength of the Canadian economy. Going forward, we do expect to see a narrower WCS differential that will further support strong value delivery from our upstream and a net benefit to Imperial. So now, let's move on and talk specifically about curl.

Brian: So now let's move on and talk specifically about Carl.

<unk> production in the first quarter averaged 277000 barrels per day, gross which was down 31000 barrels per day versus the fourth quarter and up 18000 barrels per day from the first quarter of 2023.

Brian: This represents the best ever first quarter performance at Kearl.

Bradley William Corson: Curl's production in the first quarter averaged 277,000 barrels per day gross, which was down 31,000 barrels per day versus the fourth quarter and up 18,000 barrels per day from the first quarter of 2023. This represents the best ever first quarter performance at Curl, surpassing the previous record of 259,000 barrels per day in the first quarter of 2023 by a wide margin. Improving our winter operating performance has been a key focus for our CURL team over the past few years as we take learnings from the extreme cold weather challenges we experienced in early 2022.

Brian: Passing the previous record of 259000 barrels per day in the first quarter of 2023 by a wide margin.

Brian: Improving our winter operating performance has been a key focus for our <unk> team over the past few years as we take learnings from the extreme cold weather challenges we experienced in early 2022.

Brian: We have been diligent in applying these learnings to our processes and procedures, which has enabled the team to deliver January monthly production rates that were nearly 90000 barrels per day gross higher than January of 2022.

Brian: This is especially noteworthy because we had multiple weeks this January where the temperature was actually colder than in 2022.

Bradley William Corson: We have been diligent in applying these learnings to our processes and procedures, which has enabled the team to deliver January monthly production rates that were nearly 90,000 barrels per day gross higher than January of 2022. This is especially noteworthy because we had multiple weeks this January where the temperature was actually colder than in 2022.

Brian: And then we followed up January with record monthly production in both February and March.

Brian: And although this month of April is not over yet we are on track to set another record, which is positioning us very well to deliver on our full year guidance of 280000 barrels per day gross.

Bradley William Corson: And then we followed up January with record monthly production in both February and March. And although this month of April is not over yet, we are on track to set another record, which is positioning us very well to deliver on our full year guidance of 280,000 barrels per day growth. I would also like to remind everyone that CURL's annual plant turnaround is going to start late next week and run through the month of May.

Brian: I would also like to remind everyone that curls annual plant turnaround is going to start late next week and run through the month of May.

Brian: Our team has been working hard at optimizing the scope and execution of our annual turnarounds at Pearl and has been successful in reducing both the cost and the duration of our turnaround this year compared to prior years.

This work is anticipated to enable us to complete this year's turnaround and a lower cost and lower impact to annual production compared to prior years, which has been reflected in our turnaround guidance for 2024.

Bradley William Corson: Our team has been working hard at optimizing the scope and execution of our annual turnarounds at CURL and has been successful in reducing both the cost and the duration of our turnaround this year compared to prior years. This work is anticipated to enable us to complete this year's turnaround at a lower cost and with a lower impact on annual production compared to prior years, which has been reflected in our turnaround guidance for 2024. Lastly, turning to operating costs.

Brian: Lastly, turning to operating costs.

Brian: <unk> continues to make significant progress on its journey to achieving an annual unit cash cost target of below U S $20 per barrel.

Brian: Unit cash operating costs in the quarter.

Brian: $20 66 U S per barrel, which is a great achievement.

Brian: Compared to the first quarter of 2023.

Bradley William Corson: Curl continues to make significant progress on its journey to achieving an annual unit cash cost target of below U.S. $20 per barrel. Unit cash operating costs in the quarter were $20.66 per barrel, which is a great achievement. Compared to the first quarter of 2023, unit costs are down over $4 US per barrel, and compared to the first quarter of 2020, $22 is down nearly $14 US per barrel, which demonstrates just how much progress Pearl has made in reducing its cost structure and improving reliability. I would also note that we need to normalize for energy costs and foreign exchange back to 2020.

Brian: Costs are down over $4 U S per barrel and.

Brian: And compared to the first quarter.

Brian: 'twenty two.

Brian: 22 down nearly $14 U S per barrel.

Brian: Which demonstrates good.

Brian: Progress <unk> has made in reducing its cost structure and improving reliability.

Brian: I would also note that when you normalize for energy costs and Forex back to 2020.

Which is when we set the $20 per barrel target.

Brian: The first quarter unit cost would be around $19 50 per barrel.

Brian: Overall <unk> has delivered an incredibly strong quarter and is positioned to have a strong back half of the year once our planned turnaround completes.

Brian: In may.

Bradley William Corson: Which is when we set the $20 per barrel target; the first quarter unit cost would be around $19.50 US per barrel. Overall, CURL has delivered an incredibly strong quarter and is positioned to have a strong back half of the year once our planned turnaround completes in May. So now, turning to cold light.

Speaker Change: So now turning to Cold Lake.

Speaker Change: Production for the first quarter averaged 142000 barrels per day, which was 3000 barrels per day higher than the fourth quarter and 1000 barrels per day higher than the first quarter of 2023.

Speaker Change: You may recall that we went through an extended period of lower production in 2023 due to steam cycle timing. So I'm very pleased to see strong performance in the first quarter with production back above 140000 barrels per day.

Bradley William Corson: Coal Lake production for the first quarter averaged 142,000 barrels per day, which was 3,000 barrels per day higher than the fourth quarter and 1,000 barrels per day higher than the first quarter of 2023. You may recall that we went through an extended period of lower production in 2023 due to steam cycle timing. So I'm very pleased to see strong performance in the first quarter with production back above 140,000 barrels per day. I'm confident in Coal Lake's ability to meet our guidance for the year.

I'm confident in <unk> ability to meet our guidance for the year.

Speaker Change: Moving to the Grand Rapids Phase one project.

Speaker Change: Throughout the first quarter, we continued to progress the initial steam injection phase and I am pleased to share that we are now very close to the finish line and expect production to begin ramping up in the coming weeks. This has been a tremendous journey for us as we work hard to bring on production from industry's first ever SA.

Bradley William Corson: Moving to the Grand Rapids Phase 1 project, throughout the first quarter, we continued to progress the initial steam injection phase, and I'm pleased to share that we are now very close to the finish line and expect production to begin ramping up in the coming weeks. This has been a tremendous journey for us as we work hard to bring on production from the industry's first ever SA-SAG-D development, which, as many of you may recall, we actually accelerated by one year given the strategic value of this project.

Sag D development, which as many of you may recall, we actually accelerated by one year given the strategic value of this project.

Speaker Change: Grand Rapids Phase one is an important step in our strategy to transform cold Lake by progressing capital efficient projects that deliver lower cost and lower emission production.

Speaker Change: Using the <unk> technology Grand Rapids is expected to deliver 15000 barrels per day of production at an emissions intensity that is 40% lower than the technology in use today, while also reducing coal lakes overall unit costs by about one.

Bradley William Corson: Grand Rapids phase one is an important step in our strategy to transform Cold Lake by progressing capital efficient projects that deliver lower cost and lower emission production. By using SA-SAG-D technology, Grand Rapids is expected to deliver 15,000 barrels per day of production at an emissions intensity that is 40% lower than the technology in use today, while also reducing Coal Lake's overall unit cost by about $1 US per barrel.

Speaker Change: U S per barrel.

Speaker Change: So right now our cold Lake team is laser focused on getting brand Rapids phase one over the finish line and I look forward to celebrating the first production milestone in the very near future.

Speaker Change: Before I move on to Syncrude I, just wanted to take the opportunity to provide a brief update on our lemming redevelopment project, which is another important growth project for us at Cold Lake.

Bradley William Corson: So right now, our Coal Lake team is laser focused on getting Grand Rapids phase one over the finish line, and I look forward to celebrating the first production milestone in the very near future. Before I move on to Syncrude, I just want to take the opportunity to provide a brief update on our Lemming redevelopment project, which is another important growth project for us at Coal Lake. The focus for this year continues to be on facility construction and well completions, which are progressing on plan for startup in 2025 with projected average production of about 9,000 barrels per day at peak. Now, a few comments on Syncrude.

Speaker Change: The focus for this year continues to be on facility construction and well completions, which are progressing on plan for startup in 2025 with projected.

Speaker Change: On average.

Speaker Change: Production of about 9000 barrels per day at peak.

Speaker Change: Now a few comments on Syncrude.

Speaker Change: Imperial share of Syncrude production for the quarter averaged $70 dropped 73000 barrels per day, which was down 12000 barrels per day versus the fourth quarter and down 3000 barrels per day versus the first quarter of 2023, primarily due to unplanned maintenance and.

Bradley William Corson: Imperial's share of Syncrude production for the quarter averaged 73,000 barrels per day, which was down 12,000 barrels per day versus the fourth quarter and down 3,000 barrels per day versus the first quarter of 2023, primarily due to unplanned maintenance and lower bitumen recovery levels. In order to continue to maintain high upgrader utilization rates throughout the quarter, Syncrude leveraged the InterConnect Pipeline system to import bitumen and produce about 10,000 barrels per day, our share of incremental Syncrude Suite Premium.

Speaker Change: Lower bitumen recovery levels.

Speaker Change: In order to continue to maintain that high upgrader utilization rates throughout the quarter Syncrude leverage the interconnect pipeline system to import bitumen and produce about 10000 barrels per day, our share of incremental Syncrude sweet premium.

Speaker Change: I would also like to highlight that the annual Coker turnaround began during the final days of the quarter and is expected to run through the end of May at this time, we expect the annualized volume impact of the turnaround to be consistent with our annual guidance for the year, which is around 6000 barrels per day.

Speaker Change: Our share impact on a full year basis.

Bradley William Corson: I would also like to highlight that the annual Coker turnaround began during the final days of the quarter and is expected to run through the end of May. At this time, we expect the annualized volume impact of the turnaround to be consistent with our annual guidance for the year, which is around 6,000 barrels per day, our share impact on a full year basis. Now, let's move on and talk about the downstream, which is another positive story for us. In the first quarter, we refined an average 407,000 barrels per day, which was flat with the fourth quarter and down 10,000 barrels per day versus the first quarter of 2023, reflecting a utilization of 94%.

Speaker Change: Now, let's move on and talk about the downstream, which is another positive story for us in the first quarter, we refined and averaged 407000 barrels per day, which was flat with the fourth quarter and down 10000 barrels per day versus the first quarter of 2023, reflecting a utilization.

Speaker Change: <unk> of 94%.

Speaker Change: As I mentioned earlier, our nanticoke refineries achieved its highest ever first quarter throughput.

Speaker Change: In addition to strong operations, our downstream business benefited from improving crack spreads over the quarter.

Speaker Change: I really believe the strength of our downstream results this quarter.

Speaker Change: Clearly demonstrates the value of integration between our business lines, which remains a source of differentiation and a significant competitive advantage for us.

Bradley William Corson: As I mentioned earlier, our NanoCoke refinery achieved its highest ever first quarter throughput. In addition to strong operations, our downstream business benefited from improving crack spreads over the quarter. I really believe the strength of our downstream results this quarter clearly demonstrates the value of integration between our business lines, which remains a source of differentiation and a significant competitive advantage for us. In the second quarter, there are planned turnarounds at both our Sarnia and Strathcona refineries. The Sarnia turnaround began in early April and will be complete in the coming days, while the Strathcona turnaround began in mid-April and is expected to be complete by mid-May.

Speaker Change: Within the second quarter, there are planned turnarounds at both our Sarnia and stress Kona refineries.

Speaker Change: Sarnia turnaround began in early April and will be complete in the coming days.

Speaker Change: While the stress Kona turnaround began in mid April and is expected to be complete by mid may.

Both turnarounds are currently tracking in line with our guidance for the year.

Speaker Change: At our <unk> refinery construction work continues on Canada's largest renewable diesel facility with a number of process unit modules arriving on site.

Speaker Change: Including the 155 foot tall main reactor, which weighed over 1 million pounds and was fully.

Bradley William Corson: Both turnarounds are currently tracking in line with our guidance for the year. At our Strathcona refinery, construction work continues on Canada's largest renewable diesel facility, with a number of process unit modules arriving on site, including the 155-foot-tall main reactor, which weighed over 1 million pounds and was fully installed this quarter. Overall, we've made a lot of progress on construction over the past few quarters, and it's hard to believe that less than a year ago, we just started talking about mobilizing our contract workforce.

Installed this quarter.

Speaker Change: Overall, we've made a lot of progress on construction over the past few quarters and it's hard to believe that less than a year ago. We've just started talking about mobilizing our contract workforce and looking at the site today everything is really coming together nicely and the facility is starting to take shape.

Speaker Change: On the feedstock side, we continue to execute our contracting strategy to ensure adequate supply to the facility.

Speaker Change: As we have shared previously the main source of feedstock for the facility will be from crops in Western Canada.

Bradley William Corson: And looking at the site today, everything is really coming together nicely, and the facility is starting to take shape. On the feedstock side, we continue to execute our contracting strategy to ensure adequate supply to the facility. As we have shared previously, the main source of feedstock for the facility will be from crops in Western Canada.

Speaker Change: We also want to thank the government of Alberta for their recent recognition of the project's benefits to the agricultural industry through the agro processing investment tax credit program.

Speaker Change: Imperial's facility will provide an important new lower emission offering.

Speaker Change: This transportation sector in support of our collective greenhouse gas emissions reduction goals.

Bradley William Corson: We also want to thank the Government of Alberta for their recent recognition of the project's benefits to the agricultural industry through the AgriProcessing Investment Tax Credit Program. Imperial's facility will provide an important new lower emission offering to Canada's transportation sector in support of our collective greenhouse gas emissions reduction goals. Petroleum product sales in the quarter were 450,000 barrels per day, which is down 26,000 barrels per day versus the fourth quarter and down 5,000 barrels per day versus the first quarter of 2023.

Speaker Change: Petroleum product sales in the quarter were 450000 barrels per day.

Speaker Change: Which is down 26000 barrels per day versus the fourth quarter and down 5000 barrels per day versus the first quarter of 2023.

Speaker Change: We continue to see steady refined product demand with gasoline and diesel at approximately 90% of historical range and jet at about 100%.

I also wanted to highlight the continued strong performance of our retail brand in the market.

Speaker Change: Based on recently published data our <unk> brand has now achieved a leading market share in Canada on a standalone basis. This builds on our previous position of holding a leading market share when combining our two retail brands and so mobile.

Bradley William Corson: We continue to see steady, refined product demand, with gasoline and diesel at approximately 90% of historical range and jet at about 100%. I also wanted to highlight the continued strong performance of our retail brand in the market. Based on recently published data, our ESSO brand has now achieved the leading market share in Canada on a stand-alone basis. This builds on our previous position of holding the leading market share when combining our two retail brands, ESSO and Mobil.

Speaker Change: This significant achievement has been enabled by the hard work our teams.

Speaker Change: Two.

Speaker Change: Build and develop strategic partnerships with best in class convenience retailers as well as Canada's leading loyalty program.

Speaker Change: The optimal.

I am very proud of this achievement and we are committed to continuing to enhance our brand and product offering to further strengthen our market position.

Speaker Change: During the quarter, we made the decision to proactively replace a section of the Winnipeg products pipeline following routine inspections that identified increase Permian pipeline, where it crosses the red the Red River.

Bradley William Corson: This significant achievement has been enabled by the hard work our teams have put in and developed strategic partnerships with best-in-class convenience retailers as well as Canada's leading loyalty program, PCOptimal. I'm very proud of this achievement, and we're committed to continuing to enhance our brand and product offering to further strengthen our market position. During the quarter, we made the decision to proactively replace a section of the Winnipeg Products pipeline following routine inspections that identified increased spraying on the pipeline where it crosses the Red River, which we believe to have been caused by ground movement on the riverbed.

Speaker Change: Which we believe to have been caused by Brown movement on the River Bank.

Speaker Change: Imperial is committed to the safety and integrity in all of our operations and we made this important decision to ensure the continued integrity of the lines.

Speaker Change: Our team has worked hard to upgrade our logistics network in the region and has added rail offloading capability to our windows.

Speaker Change: Peg terminal, which will help to ensure the continued supply of fuel to the Legion and minimize disruption to our customers while maintenance work is completed.

Speaker Change: Currently we have begun horizontal drilling work to replace a segment of the pipeline and drilling activity will take place over several weeks.

Bradley William Corson: Imperial is committed to safety and integrity in all of our operations, and we made this important decision to ensure the continued integrity of the line. Our team has worked hard to upgrade our logistics network in the region and has added rail offloading capability to our Winnipeg terminal, which will help to ensure the continued supply of fuel to the region and minimize disruption to our customers while maintenance work is completed. Currently, we have begun horizontal drilling work to replace a segment of the pipeline, and drilling activity will take place on several. Imperial has extensive experience using horizontal directional drilling technology, and we will be working very closely with provincial regulators while the work is executed and providing regular updates to the community.

Speaker Change: <unk> has extensive experience using horizontal directional drilling technology, and we will be working very closely with provincial regulators, while the work is executed and providing regular updates to the community.

Speaker Change: Overall, the work remains on schedule and within our original timeframe of a return to service in June.

Speaker Change: Until that time, we will continue to take the necessary steps to ensure the reliable fuel supply the Winnipeg and the surrounding area.

Speaker Change: I'd like to thank our partners in government, our neighbors in the surrounding communities and our customers for their understanding and patience as well as our employees and contractors that are working around the clock to return the pipelines to service.

Bradley William Corson: Overall, the work remains on schedule and within our original timeframe of a return to service in June. Until that time, we will continue to take the necessary steps to ensure a reliable fuel supply to Winnipeg and the surrounding area. I'd like to thank our partners in government, our neighbors in the surrounding communities, and our customers for their understanding and patience, as well as our employees and contractors who are working around the clock to return the pipelines to service.

Speaker Change: Turning now to chemicals earnings in the quarter were $57 million in the first quarter, which was up $40 million versus the fourth quarter and up $4 million versus the first quarter in 2023.

Speaker Change: Higher earnings were driven by the absence of the gas cracker turnaround that occurred between mid September and the end of October last year.

Speaker Change: Before I wrap up I would also like to highlight that the pathways Alliance continues to make progress on the engineering and design of the proposed carbon capture and storage project with regulatory filings beginning in March starting with transportation network applications.

Bradley William Corson: Turning now to chemicals, earnings in the first quarter were $57 million, which was up $40 million versus the fourth quarter and up $4 million versus the first quarter of 2023. The higher earnings were driven by the absence of the gas cracker turnaround that occurred between mid-September and the end of October last year.

<unk>.

Speaker Change: This is an important milestone as we continue to work with governments to advance the plans for this very important project.

Bradley William Corson: Before I wrap up, I would also like to highlight that the Pathways Alliance continues to make progress on the engineering and design of the proposed carbon capture and storage project, with regulatory filings beginning in March, starting with transportation network applications. This is an important milestone as we continue to work with governments to advance the plans for this very important project. In parallel, we continue to have constructive discussions with the federal and provincial governments in order to finalize the fiscal frameworks necessary to ensure the investability of these important projects and support Canada's ambitious ambition to achieve net zero by 2050.

Speaker Change: In parallel we continue to have constructive discussions with the federal and provincial governments in order to finalize the fiscal frameworks necessary to ensure the invest ability of these important projects and support Canada's ambitious ambition to achieve net zero by 2050.

Speaker Change: Wrapping up this was another strong quarter and an excellent start to the year underpinned by reliable operations across our integrated business model and in particular, the continued progress <unk> has made in growing production and reducing its cost structure.

Bradley William Corson: Wrapping up, this was another strong quarter and an excellent start to the year, underpinned by reliable operations across our integrated business model and, in particular, the continued progress CURL has made in growing production and reducing its cost structure. I would also like to thank our entire workforce for their hard work and commitment that has supported these results. As we start the second quarter, we have a higher level of planned turnaround activity, and we will be very focused on executing this work safely and efficiently.

Speaker Change: I would also like to thank our entire workforce.

Speaker Change: Their hard work and commitment that has supported these results.

Speaker Change: As we start the second quarter, we have a higher level of planned turnaround activity.

Speaker Change: We will be very focused on executing.

Speaker Change: This work safely and efficiently.

I am also very excited that we are close to seeing first production from Grand Rapids, and the continued progress of our stress Kona renewable diesel project.

Speaker Change: Projects are an important part of our commitment to continue to deliver energy that society needs, while generating value for our shareholders and reducing emissions.

Bradley William Corson: I'm also very excited that we are close to seeing first production from Grand Rapids and the continued progress of our Strathcona Renewable Diesel Project. Both projects are an important part of our commitment to continue to deliver energy that society needs while generating value for our shareholders and reducing emissions. As I look ahead, I remain confident in our ability to deliver on our commitments and achieve our guidance for 2024, and I look forward to continuing to bring you updates throughout the year. As always, I'd like to thank you once again for your continued interest and support. And now we'll move on to the Q&A session, so I'll pass this back to Peter.

Speaker Change: As I look ahead I remain confident in our ability to deliver on our commitments and achieve our guidance for 2024 and I look forward to continuing to bring you updates throughout the year.

Speaker Change: As always I will.

Speaker Change: I'd like to thank you once again for your continued interest and support.

Speaker Change: And now we'll move niche Q&A session. So I'll pass it back to Peter.

Peter: Thank you Brad as always be depreciated, if you could limit yourself to one question plus a follow up so we've yet to as many questions as possible. So with that operator could you. Please open up the call for the first question.

Speaker Change: Thank you for that.

Speaker Change: Via the telephone and we'd like to ask a question. Please signal by pressing star one on your telephone keypad.

If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Peter Shaw: Thank you, Brad. As always, we'd appreciate it if you could limit yourself to one question plus a follow-up so that we can get to as many questions as possible. So with that, operator, could you please open up the call for the first question?

Speaker Change: Please press star one to ask a question.

Speaker Change: First question comes from Manav Gupta UBS.

Manav Gupta: Congrats on a very strong quarter again, and all of that I think I'll just add that.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. Your first question comes from Manav Gupta, UBS.

Manav Gupta: My question relates to the startup of the Amex look on paper it looks like you're in upstream and downstream volumes Mackie, Ghana, but do you have a very unique portfolio. The upstream is a lot more levered to the bitumen prices into heavy and the downstream uses a lot less WCS and other kinds of crudes, So technical ESPN.

Manav Gupta: Stock's up David will be a compression of differentials, but let's see.

Manav Gupta: On the heavy side and somewhat modest on the light side. So our upstream technically should benefit a lot more and the downstream there will be a little cleanup, but not as much. So can you just talk about the portfolio as it relates to the startup of <unk> contracting differentials.

Manav Gupta: Congratulations on another very strong quarter and all the records you set at KURLS. My question here relates to the startup of TMX. Look, on paper, it looks like your upstream and downstream volumes match each other, but you have a very unique portfolio where the upstream is a lot more levered to bitumen prices, which are heavy, and the downstream uses a lot less WCS and other kinds of crudes. So technically, as TMX starts up, there will be a compression of differentials, but you see more on the heavy side and somewhat modest on the light side.

Speaker Change: Yes. Thanks for the question Manav and I think you've characterized it quite accurately for us.

Manav Gupta: <unk> is going to be very advantageous not just for the industry, but for imperial overall.

Manav Gupta: Our production of course is heavily weighted towards heavy crudes and that will be.

Manav Gupta: The key focus of shipments on <unk> as it expands its capacity significantly.

Manav Gupta: So your upstream technically should benefit a lot more, and the downstream there will be a little bit of a hit, but not as much. So can you talk about the portfolio as it relates to the startup of TMX and contracting differentials?

Manav Gupta: And we will obviously benefit from both the flexibility to ship crudes on that system, but more importantly, the overall impact it will have on tightening the differentials and as I mentioned in my prepared remarks, we've already seen that that tightening occur.

Bradley William Corson: Yeah, thanks for the question Manav, and I think you've characterized it quite accurately for us.

Manav Gupta: <unk>.

Manav Gupta: By several dollars a barrel and we expect that to continue with the imminent startup of the system, we do of course.

Bradley William Corson: You know, TMX is going to be very advantageous, not just for the industry but for Imperial overall. Our production, of course, is heavily weighted towards heavy crews, and that will be, kind of, the key focus of shipments on TMX as it expands its capacity significantly. And we will obviously benefit from both the flexibility to ship crews on that system but, more importantly, the overall impact it will have on tightening the differentials.

Manav Gupta: As a refiner Canada's largest refiner, we do consume a lot of crudes.

Manav Gupta: In order to manufacture our products.

Manav Gupta: But the crudes, we refine although they are a mix of heavy crudes synthetic crudes and light crudes are more.

Manav Gupta: Kind of leverage towards the lighter crudes, which.

Bradley William Corson: And as I mentioned in my prepared remarks, we've already seen that tightening occurring, by several dollars a barrel, and we expect that to continue with the imminent start-up of the system. We do, of course, as a refiner, Canada's largest refiner, consume a lot of crude in order to manufacture our products. The crudes we refine, although they're a mix of heavy crudes, synthetic crudes, and light crudes, are more of a kind of leverage towards the lighter crudes, which will see some impact on the differential, but not as much as what we're seeing on the heavy crudes. So net-net, we are a significant beneficiary of tighter differentials. So TMX is very positive for us.

Manav Gupta: We'll see some impact to the differential.

Manav Gupta: But not as much as what we're seeing on the heavy crude so net net.

Manav Gupta: We are a significant beneficiary of tighter differentials, so tms and very positive for us.

Speaker Change: Perfect for my quick follow up here is few years back you had a project growth project has been mutually decided for multiple reasons was not the best investment at that time and one of the reasons.

Speaker Change: The volatility of the financial if the volatility is foregone is gone.

Speaker Change: Probably seven or eight years is that a possibility you could go back and take a look at that project and say we can move ahead, but that's been.

Speaker Change: Yes, so really good question.

Speaker Change: Aspen is a very high quality resource for us.

Manav Gupta: Professor, my quick follow-up here is that a few years ago you had a growth project, Aspen, which you decided for multiple reasons was not the best investment at that time, and one of the reasons was the volatility of the differentials. If volatility is gone for probably 5, 7, 8 years, is there a possibility you could go back and take a look at that project and say, "We can move ahead with Aspen?"

Speaker Change: And there are.

Speaker Change: There were several considerations for us deciding to temporarily pause that project a few years ago.

Speaker Change: Certainly one of them was volatility.

Speaker Change: More importantly, I would say was concern with egress.

Speaker Change: And our ability to access kind of full value markets for the crude that would be produced from Aspen also I think significant uncertainty.

Bradley William Corson: Yeah, it's a really good question. You know, Aspen is a very high-quality resource for us. And there are several considerations for us deciding to temporarily pause that project a few years ago. Certainly, one of them was volatility. More importantly, I would say, was concern with egress and our ability to access kind of full value markets for the crew that would be produced from Aspen. Also, I think there was significant uncertainty in the regulatory environment at the time.

Speaker Change: The regulatory environment at the time.

Speaker Change: Sure.

Speaker Change: As we sit here today, we are seeing clearly an improvement in those fundamentals.

Speaker Change: On top of that.

Speaker Change: We have been continuing to progress our own proprietary research around technology.

Speaker Change: To develop Aspen using solvent, we have a new technology that we've developed called Edr tea enhanced bitumen recovery technology.

Bradley William Corson: As we sit here today, we are clearly seeing an improvement in those fundamentals. On top of that, we have been continuing to progress our own proprietary research around technology to develop Aspen using solvents. We have a new technology that we've developed called EBRT, Enhanced Bitumen Recovery Technology. What we see is it having a potential application to Aspen and potentially resulting in lower costs. Lower greenhouse gas intensity, lower operating costs, and significantly lower water use, so a lot of benefits across all of the key metrics.

Speaker Change: We see as having potential application to Aspen.

Speaker Change: And potentially resulting in lower costs.

Speaker Change: Lower greenhouse gas intensity.

Speaker Change: Lower operating costs.

Speaker Change: Significantly lower water use so a lot of benefits across all of the key metrics.

Speaker Change: And so we've developed that technology and our research laboratory right here in Calgary.

And we're now moving to develop a.

Bradley William Corson: And so we've developed that technology in our research laboratory right here in Calgary, and we're now moving to develop a commercial pilot test of that technology. And that'll take us a few years, but certainly we see that as having the potential to really enhance the value of that development. So that's our current focus, making sure we can develop that project in a way that maximizes value for all of our stakeholders. So more to come on that.

Speaker Change: Commercial pilot test of that technology.

Speaker Change: And that will take us a few years.

Speaker Change: But certainly we see that as having the potential to really enhance the value of that development.

Speaker Change: So that's our current focus.

Speaker Change: As maintenance sure we can develop that project in a way that maximizes value to all of our stakeholders.

Speaker Change: So more to come on that.

Operator: Your next question comes from Menno Hulshof, T.D. Cowan.

Speaker Change: Thank you so much.

Speaker Change: Yes.

Menno: Your next question comes from Menno <unk> TD Cowen.

Menno Hulshof: Thanks and good morning everyone. I'll start with a question on Curl, where you clearly had another very strong quarter. You've talked about secondary recovery and mine optimization driving an increase in capacity to potentially 300,000 barrels per day. So I guess the question here is when do you think you'll be in a position to formally increase the nameplate capacity to 300? Is that still the right number, or could we see you stretch to something beyond that? Call it 310 or 320. Thank you.

Menno Hulshof: Thanks, and good morning, everyone I'll start with a question on curl, where you clearly had another very strong quarter.

Menno: You've talked about secondary recovery and mine optimization.

Menno Hulshof: Having an increase in capacity to potentially 300000 barrels per day. So I guess the question here is when do you think youll be in a position to formerly <unk>.

Menno Hulshof: Increased nameplate. The 300 is that still the right number or could we see new stretch for something beyond that call. It <unk> to 'twenty.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Yes, thanks for the question now.

Bradley William Corson: Yeah, thanks for the question, man. You know, as you would have heard in my prepared remarks, I'm super proud of what we've been able to achieve at CURL. You know, every quarter we continue to set new records. To the point where I think everybody's expecting that, you know, quarter after quarter, but we have to not lose sight of the fact there's a lot of hard work that goes into setting these records each quarter. It's not something anybody should take for granted. Certainly, I don't take it for granted.

Speaker Change: As you would have heard in my prepared remarks.

Speaker Change: Super proud of what we've been able to achieve that Carl.

Speaker Change: Every quarter, we continue to set new records.

Speaker Change: To the point, where I think everybody is expecting that piano quarter after quarter, but we have.

Speaker Change: Not lose sight of the fact that there is a lot of hard work that goes into set means records each quarter, it's not something anybody needs to take for granted certainly I don't take it for granted it is a direct reflection of the hard work and commitment of our workforce and I am completely proud of them for.

Bradley William Corson: It is a direct reflection of the hard work and commitment of our workforce, and I'm completely proud of them for doing that. I do think we are going to continue to see greater levels of production from CURL over time, and I believe we are going to continue to achieve lower unit operating costs. And when you put those two together, we're going to continue to generate more and more value from CURL, specific to your question about, you know, the details around 300. Could it be even more than 300?

Speaker Change: Doing that.

Speaker Change: I do think we are going to continue to see greater levels of production from <unk> over time, and I believe we're going to continue to achieve lower unit operating costs and when you put those two together, we're going to continue to generate more and more value from <unk>.

Speaker Change: <unk>.

Speaker Change: Specific to your question about.

Speaker Change: The details around 300.

Speaker Change: Could it be even more than 300 the.

Bradley William Corson: The teams are working on that every day. You know, it's taken many individual projects and initiatives to get us to 270 last year and continuing to 280 this year. And it's the same to get us to, you know, ultimately the 300. So the team's working on outlining those plans. And when we hold our investor day later this year, I would expect we'd be in a position to lay out much more detail. I would maybe temper your expectations about something beyond $300,000 at this point.

Speaker Change: The teams are working on that every day.

Speaker Change: It's taken many individual projects and initiatives to get us to $2 70 last year continue into $2 80, this year and it's the same to get us to.

Speaker Change: Ultimately the 300, so the team is working on outlining those plans and when we hold our Investor Day. Later this year I would expect we'd be in a position to lay out much more detail.

Speaker Change: <unk>.

Speaker Change: I would maybe temporary your expectations about something beyond 300 at this point that doesn't mean, we don't aspire to that because we absolutely do but we got to take it one step at a time.

Bradley William Corson: That doesn't mean we don't aspire to that, because we absolutely do, but we've got to take it one step at a time. This is a large asset, and there's a lot of complexity to it, but again, we're working through those individual components one step at a time, and that's how you've seen us get to 270 to 280 and beyond, so we look forward to sharing some details of those plans because they're quite material to us. Thanks for the question.

Speaker Change: This is a large asset.

Speaker Change: And Theres a lot of complexity to it.

Speaker Change: But again, we're working through those individual components, one step at a time.

Speaker Change: How you've seen us get to $2 70 to $2 <unk> and beyond so we look forward to sharing the details of those plans.

Speaker Change: Because they are quite material to us.

Speaker Change: Thanks for the question.

Menno Hulshof: Thanks for that, Brad. The second question relates to IT. We've seen a few companies go through some pretty significant and costly upgrades to reduce cyber risk, improve data aggregation, and the like. Is that something we may see from Imperial? Or do you feel like you're already in pretty good shape on that?

Speaker Change: Okay.

Speaker Change: Okay. Thanks for that Brian.

Speaker Change: My question relates to the IP we've seen.

Speaker Change: A few companies flowed through some pretty.

Brian: Significant and costly upgrades to reduce cyber risk improve data aggregation and the like is that something we may see from imperial or do you feel like youre already in pretty good shape on that front.

Bradley William Corson: Well, you know, in terms of technology and data, and analytics in general, that's something we continue to work on every day. I mean, that is an underpinning component of our success with higher volumes, our success with lower unit operating costs. You know, we've talked at our investor day in the past about, you know, the potential for digital applications to improve or lower our operating costs by, you know, $500 million additional value. You know, I think the last time we reported up to a billion dollars.

Brian: Well.

Brian: In terms of technology and data.

Brian: Analytics in general that's something we continue to work on every day I mean that is.

Brian: And underpinning component of our success with higher volumes, our success with lower unit operating costs.

Brian: Is to apply technology.

Brian: We've talked at our Investor day in the past about.

Brian: Potential for.

Brian: Digital applications to <unk>.

Brian: Improve or lower our operating cost by <unk>.

Brian: 500 million additional value I think the last time, we reported up to $1 billion, we continue to see that.

Bradley William Corson: We continue to see that opportunity set continue to grow. And we're working on that within Imperial. We also leverage ExxonMobil and all the work they do around technology, including data analytics. So again, that's an integral part of what we do. Specific to cybersecurity, you know, that is also something we take very seriously. We recognize the growing threat of cyber security in our society and We have, you know, a team of experts both locally and working jointly with ExxonMobil to ensure we are employing the latest safeguards around cybersecurity events. And I'm quite pleased to report that, you know, we have not experienced any direct cybersecurity events. And, you know, we're going to continue to keep But that's something we have to continue to work on, you know, every day.

<unk> set continue to grow.

Tom.

Tom: And we're working on that with an imperial we also leverage exxonmobil and all the work they do around technology, including data analytics.

Tom: So again, that's an integral part of what we do.

Tom: Specific to cyber security.

Tom: It is also something we take very seriously we recognize the growing threat of cyber security in our society and we have a team of experts both locally and working jointly with Exxonmobil to ensure we are employing the latest safeguard.

Tom: It's around cyber security events.

Tom: I am quite pleased to report that we have not experienced any any direct cyber security events sand.

Tom: We're going to continue to keep that vigilance, but.

Tom: That's something we have to continue to work on every day.

Menno Hulshof: Thanks again. I'll turn it back.

Speaker Change: Thanks, again, I'll turn it back.

Operator: Thank you. And our next question comes from Dennis Fong, CIBC World Market.

Speaker Change: Thank you and our next question comes from Dennis Fong CIBC World markets.

Dennis Fong: Hi, good morning, and thanks for taking my questions. My first one is just about Grand Rapids. I know it's still very early stage, and you are currently steaming ahead with the project, as you highlighted in your prepared remarks. I was just wondering how the progress is in terms of steaming, how that could potentially translate to production ramp-up and the ultimate production in the first phase, and then on that, what would be needed for you to feel comfortable around potentially sanctioning a second phase?

Dennis Fong: Hi, good morning, and thanks for taking my questions. My first one is just on Grand Rapids, I know, it's still very early stage.

Dennis Fong: And you are.

Dennis Fong: Currently seen in the project as you highlighted in your prepared remarks.

I was just wondering how.

Dennis Fong: The progress is in terms of the steaming how that could potentially translate the production ramp up on the ultimate <unk>.

Dennis Fong: Production in the first phase and then on that how would you feel or how.

Dennis Fong: What would be needed for you to feel comfortable around potentially sanctioning a second phase.

Bradley William Corson: Yeah, thanks for the question, Dennis. We're quite pleased with the progress that we're making at Grand Rapids. You know, as we've described in the past, the first phase of starting up this SA-SAG-V development is with steam injection into the reservoir to fully heat it up before we would start producing back oil. So we started that work late last year with the first pad or set of well pairs. And then a couple months later this year, we started with the second pad and group of wells, and that is going exactly as we anticipated.

Speaker Change: Yes. Thanks for the question Dennis I mean, we're we're quite pleased with the progress that we're making.

Speaker Change: At Grand Rapids, as we've described in the past the first phase to starting up this essay Sag D development is with steam injection into the reservoir to fully seated up before we would start producing back oil.

Speaker Change: So we started that work.

Speaker Change: Last year with the first.

Speaker Change: First pad or set of well pairs.

Speaker Change: Then a couple of months later this year, we started with the second pad.

Speaker Change: And group of wells.

Speaker Change: That is going exactly as we anticipated and consequently, we would expect.

Bradley William Corson: And consequently, you know, we would expect some time early next month to start some of the initial production, and it will be a phased process over several months as we convert from this steam phase initially to installing the pumps and the wells and then gradually start bringing them on. And so.

Speaker Change: For some time.

Speaker Change: Early next month to start some of the initial production and it will be a phased process.

Speaker Change: Over several months as we.

Speaker Change: Convert from this theme phase initially to installing.

Speaker Change: The pumps in the wells and then gradually start bringing them on and so.

Bradley William Corson: You know, we'll start to see production next month, and we'll ramp it up over the course of the year. We would certainly expect by the time we get to the fourth quarter, we will be at the 15,000 barrels a day rate. And then in terms of, you know, sanctioning the next phase, that's something our teams are working on. We see a lot of potential in Grand Rapids and, you know, the potential for several more phases.

Speaker Change: We will start to see production next month, and we will ramp it up over the course of the year. We would certainly expect by the time, we get to the fourth quarter.

That we would be at the 15000 barrel a day rate.

Speaker Change: And then in terms of.

Speaker Change: Sanctioning the next phase.

Speaker Change: That's something our teams are working on we see a lot of potential at Grand Rapids sand.

Speaker Change: The potential for for several more phases, we want to make sure we capture all the learnings from this first phase.

Bradley William Corson: We want to make sure we capture all the learnings from this first phase before, you know, we start implementing a second phase. But that's something as we, you know, gain experience over the course of this year, we'll be starting to bring that kind of internal to our planning process. And that's something we'll be talking more about, you know, when we get to investor day. But I'm quite encouraged by the potential of Grand Rapids.

Speaker Change: Before we start <unk>.

Speaker Change: Implementing the second phase.

But thats something as we gain experience over the course of this year, we'll be starting to bring that kind of internal to our planning process and that's something we'll be talking more about <unk>.

Speaker Change: When we get to Investor day, but I'm quite encouraged by the potential of Grand Rapids.

Dennis Fong: Great, great. I appreciate that color and context.

Speaker Change: Alright, great I appreciate that color and context.

Dennis Fong: I wanted to shift, frankly, towards digital and AI technology. I appreciate, we'll call it, that part of your answer to Menno's question may have also partially answered this. But at an investor day in the past, you highlighted a digital twin of the Curl facility. I wanted to understand if there were any kind of further takeaways, now that you've had a few years of operation with the model versus real-time operations and maybe how that specifically improved your understanding of the ability to drive stronger utilization of the facility and or lower costs, both operating and maintenance.

Speaker Change: Wanted to shift.

Speaker Change: Towards digital and AI technology.

Speaker Change: I appreciate it we'll call it part of your answer to <unk> question May also partially answered this but at our Investor day in the past you've highlighted a digital twin of the kernel facility I wanted to understand if there were any kind of further takeaways now that you've had a few years of operation.

Speaker Change: Versus real time operations, and maybe how that specifically improved your understanding.

The ability to drive stronger utilization in that facility and or lower costs, both operating and maintenance.

Bradley William Corson: Yeah, thanks for that question, Dennis. And you know, the digital twin is an extremely cool concept and something that has a lot of value to us as we think about, you know, future optimizations at Curl. Simon's here with me, and maybe I'll ask Simon just to make a couple comments about our experience with that and where it may take us. Yeah, sure. Thanks, Brad.

Speaker Change: Yes, Thanks for that question Dennis in the digital twin is.

Speaker Change: Extremely pool concept and something that has a lot of value to us as we think about future optimizations at Kearl Symons here with me and maybe I'll ask Simon just to make a couple of comments about our experience with that and where it may take us.

Simon P. Younger: Yep, sure. Thanks, Brad. As you mentioned, we've had the digital twin at KERL up and running for... a couple of years now, and we've actually also implemented it at most of the Cold Lake plants as well. So it's been a hugely successful technology for us. It's helping us both improve costs, as you mentioned, but also improve production. So it's allowing us to do several things. For example, improve the efficiency and effectiveness of our maintenance planning, and improve the efficiency of our projects, execution, and implementation.

Simon: Sure. Thanks, Brett we've.

Simon: As you as you referenced we've had the digital twin of co up and running for.

Simon: A couple of years now and we've actually also implemented most of the cold Lake plant as well.

Simon: It's been a hugely successful technology for us is helping us both improved costs as you referenced but also improve production, so it's allowing us to do.

Simon: Several things for example, improve the efficiency and effectiveness of our maintenance planning.

Simon: Improve the efficiency and effectiveness of our projects.

Simon: Execution and implementation and it's also allowing us to optimize.

Simon P. Younger: And it's also allowing us to optimize production using AI, optimize recovery rates, optimize stream flood injection rates, optimize water balance, those are Cold Lake examples. And the technology actually is broadening beyond us and is sort of gaining widespread use in ExxonMobil as well, leveraged certainly in part by our experience here at Curl and Cold Lake. So, very much a success story, impacting the bottom line both from a cost and a production standpoint.

Production using II.

Simon: Optimize recovery rights optimize steam flood injection rates optimize water balance was a code like examples.

And the technology actually is broadening.

Simon: Beyond us and.

Simon: So we are gaining widespread use in Exxon Mobil as well leverage certainly in part by our experience year coal and Coke light so very much a success story.

Simon: Impacting the bottom line, both from a cost and.

Simon: Production standpoint.

Dennis Fong: Great. I appreciate the color and context. I'll turn it back on.

Speaker Change: Great I appreciate the color I'll turn it back.

Speaker Change: Yes.

Operator: Thank you. Your next question comes from Neil Mehta with Goldman Sachs.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Neil Mehta with Goldman Sachs.

Neil Singhvi Mehta: Yeah, good morning, Brad and team. Two quick questions for me, just one on return of capital that's been a hallmark of your leadership. As we think about the timing of share repurchases, how do you think about the NCIB? I guess that starts up here in the next couple of months. And then the SIB, you know, if we follow the cadence for the last couple of years, it's fair to assume we'll get that later this year if the commodity stays as strong or if there's potential for you to sneak one in the first half of the year. So that would be my first.

Neil Singhvi Mehta: Yes, good morning, Brad and team.

Neil Singhvi Mehta: Two quick questions for me just one on return of capital that's been a hallmark of your leadership.

Neil Singhvi Mehta: As we think about the timing of share repurchases. How do you think about the CIB I guess that starts up here in the next couple of months and then.

Neil Singhvi Mehta: DSI B and if we follow the cadence for the last couple of years is fair to assume we will get that.

Later this year, if the commodity stays as strong or is there potential for you to sneak one in the first half of the year. So that would be my first question.

Bradley William Corson: All right. Thanks, Deo.

Speaker Change: Alright. Thanks.

Bradley William Corson: Well, Dan loves to talk about Capital Distribution and share buybacks, so I'll let him talk a little bit about the cadence that we see. All right.

Speaker Change: And loves to talk about.

Speaker Change: Capital.

Distribution and share buyback, so I'll, let him talk a little bit about the cadence that we see alright, yes.

Daniel E. Lyons: As I mentioned on the call, we fully intend to file for renewal of our NCIB in late June, as we always have. The last number of years, we've accelerated that NCIB. It gives us the right to buy 5% over a full year from when we file.

Speaker Change: As I mentioned on the call.

Speaker Change: We will we fully intend to file for a renewal of our NCI in late June as we always have.

Speaker Change: And.

Speaker Change: The <unk>.

Speaker Change: Last number of years, we've accelerated that in CIB. It gives us the right to buy 5% over a full year from when we file.

Daniel E. Lyons: And over the last number of years, as you point out correctly, we've done an SIB or two. And I would say, you know, as demonstrated by our record, we remain totally committed to returning surplus cash to shareholders. And, you know, what's going to drive the timing, whether we accelerate the NCIB, whether we do an SIB or something else, is going to be the, you know, commodity price environment, as you rightly point out. And I would say, right now, that's pretty attractive.

Speaker Change: And last number of years as you point out correctly, we have done in <unk> or two and I would say.

Speaker Change: As demonstrated by our record we remain totally committed to returning surplus cash to shareholders.

Speaker Change: And.

Speaker Change: Whats going to drive the timing, whether we accelerate the CIB whether redoing.

Speaker Change: Or something else is going to be the commodity price environment as you rightly point out and I would say right now.

Speaker Change: Pretty attractive.

Daniel E. Lyons: And if things, prices stay where they are, we would expect to see our cash flow grow pretty significantly over the course of the year. So we're committed to returning surplus cash. You know, we can't say exactly when that will happen because it depends on market factors, but I think you can see from the last few years that, as we generate it, we'll send it home to our beloved shareholders.

Speaker Change: If things.

Speaker Change: This is stay where they are we would expect to see our cash flow grow pretty significantly over the course of the year. So we're committed to returning surplus cash we can't say exactly when that will happen.

Speaker Change: And our market factors, but I think you can see over the last few years as we generated we'll send it one to two our beloved shareholders.

Daniel E. Lyons: So Dan, that continues to be quite optimistic, as do I.

Speaker Change: So that continues to be quite optimistic they will go up.

Speaker Change: Yes.

Neil Singhvi Mehta: That's great. Well, thank you.

Speaker Change: That's great well. Thank you Ed and then the follow up is on the pathway to project revenue and I've talked about this a lot. There's a lot of that this project that we love including.

Bradley William Corson: And then the follow-up is on the Pathways Project. Brad, you and I have talked about this a lot. There's a lot about this project that we love, including the ability to decarbonize the oil sands. The one outstanding concern that we get from a lot of investors is the history of cost overruns in Western Canada, whether it's oil sands or coastal gas link or, and certainly TMF. L&G facilities given the tight labor market and equipment market.

Speaker Change: The ability to decarbonize.

Speaker Change: The oil sands, the one outstanding concern that we get from a lot of investors is the history of cost overruns in Western Canada, whether its oil sands.

Speaker Change: Gasoline for.

Speaker Change: Certainly <unk> and LNG facilities.

Given the tight labor market and equipment market. So just your perspective on how do we how do we get it right on the front end to make sure that contingencies are built in so when you ultimately move forward with the project.

Bradley William Corson: So just your perspective on how we get it right on the front end to make sure that contingencies are built in so when you ultimately move forward with the project, we don't have a repeat of the challenges.

That we don't have a repeat of the challenges of the past.

Bradley William Corson: Yeah, thanks for that question. Obviously, there is a sordid history of large infrastructure projects in the country. And you could probably make the same generalization globally. But I think what's different about Pathways, and what I believe will differentiate this project, is first of all, kind of the strength of bringing our six member companies together and leveraging all of our collective experiences with project execution.

Speaker Change: Yes, Thanks for that question and obviously there is a <unk>.

Speaker Change: Sorted history of large infrastructure projects in the country.

Speaker Change: Could probably make the same.

Speaker Change: Generalization globally I think whats.

Speaker Change: Different about pathways.

And what I believe will differentiate this project is first of all.

Speaker Change: Kind of the strength of bring in.

Speaker Change: Our six member companies together.

Speaker Change: And leveraging all of our collective experiences with project execution.

Bradley William Corson: On top of that, key factors here in Canada have been regulatory approvals and other interferences and delays. We're trying to address as much of that up front as we can in order to minimize it, because it's in everybody's best interest for us to deliver these projects, not just on time or on budget but also at the lowest possible cost. And so that's what we're working hard on. We've got lots of people working on the project design planning assumptions. And we're going to continue to test these across a range of scenarios.

Speaker Change: On top of that P&L key factors.

Speaker Change: Here in Canada have been around regulatory approvals.

Speaker Change: And other interferences and delays.

Speaker Change: We're trying to address as much of that upfront as we can.

Speaker Change: In order to minimize it because it's in everybody's best interest for us to deliver these projects not just on time or timely but also.

Speaker Change: At the lowest possible cost and so that's what we're working hard on we've got.

Speaker Change: Lots of people working on the project design planning assumptions.

Speaker Change: And we're going to we're going to continue to test those across a range of scenarios.

Bradley William Corson: And we're going to, as we always do with major projects, apply reasonable contingencies into that planning basis. But, above all else, I think what's most important for the Pathways Project and, you know, and for our collective objectives between us and the government is for us to get on with this project and start moving it forward, because it does have many components. You know, there are individual capture projects, many of those, there is the large pipeline, there is the sequestration hub.

And we're going to.

Speaker Change: As we always do with major projects is apply reasonable contingencies.

Speaker Change: Into that planning basis.

Speaker Change: Yes.

Speaker Change: But above all else I think what's most important.

Speaker Change: For the pathways project in P&L and for our <unk>.

Collective objectives between us and the governments is for us to get on with this project.

Speaker Change: To start moving it forward because it does have many components to it.

Speaker Change: There is the individual capture projects many of those there is the large pipeline, there's the sequestration hub and so we need to be able to execute that work.

Bradley William Corson: And so we need to be able to execute that work, you know, in a very, kind of Dave Hughes, Daniel Lyons, Greg Pardy, Bradley Corson, Kaleinoheaokealaula Akamine, Simon Younger, Menno Hulshof, Manav Gupta, Sherri Evers, Douglas Leggate, Peter Shaw, Imperial, to do what's needed to be most cost-effective and And so again, we need to do that in a staged and orderly fashion, or else it will drive significant cost increases. So again, it all comes down to having a well thought out, orderly plan and then being able to execute that plan. But I'm, I'm optimistic we can achieve that.

Speaker Change: In a very.

Speaker Change: Kind of.

Speaker Change: Staged.

Speaker Change: Oregon is the way and not.

Speaker Change: Schedule ultimately.

Speaker Change: Drive the timeline for the project.

Speaker Change: You need to have time.

Speaker Change: To do what's needed to be most cost effective.

Speaker Change: And not not.

Speaker Change: <unk> had a P&L are.

Speaker Change: Deadlines become.

The determining factor because there will be many.

Speaker Change: Thousands of workers that we will be two employee to execute this project and so again, we need to do that in the states and orderly fashion are also will drive significant cost increases. So again it all comes down to have a well thought out and orderly plan and then being able to execute.

Speaker Change: To that plan.

I'm optimistic we can achieve that.

Bradley William Corson: Brad, the one quick follow-up question is, do you believe that we're on track to maybe not maybe officially FID this project to put an order for pipe or to make a big step forward this calendar year by the end of this year? It's still too early to call.

Speaker Change: Brad one quick follow up.

Do you believe that we're on track to maybe.

Bradley William Corson: Officially this project to put an order for pipe or to make a big step forward.

Bradley William Corson: In this calendar year by the end of this year or it's still too early to call.

Bradley William Corson: Well, that's certainly the objective. And that is, it's critical for us to make a mill reservation for the pipe order by the end of the year in order for us to achieve the 2030 startup timing that we've laid out. I'm encouraged by the discussions that are ongoing between the Pathways member companies and the provincial and federal governments, but we still have work to do. But I think everybody is committed to that timeline, and so I continue to be optimistic. Okay, thank you, sir.

Bradley William Corson: Well, that's certainly objective.

Bradley William Corson: And that is it's critical for us to make a one mill reservations for the pipe order by the end of the year in order for us to achieve the 2030 startup timing that we've laid out.

Bradley William Corson: Ill.

Bradley William Corson: Encouraged by the discussions that are ongoing.

Bradley William Corson: Queen the pathways member companies and the provincial and federal governments.

Bradley William Corson: But we still have work to do.

Bradley William Corson: But I think everybody's committed to that timeline and so I continue to be optimistic.

Speaker Change: Okay. Thanks.

Speaker Change: Yes.

Thank you.

Operator: Your next question comes from Patrick O'Rourke, ATB. Please go ahead. Hey, good morning.

Speaker Change: Your next question comes from Patrick O'brien.

Speaker Change: Okay.

Operator: Hi, good morning. It's Nolan Aikens here. I'm standing by for Patrick, and thanks for taking the question. The first question I wanted to ask here is on operating costs, you know, it's up slightly year over year at Cold Lake and materially down a bit at Curl. How much is energy cost playing into that, and what's the key driver for the improvements at Curl, and what's left to do there

Patrick O'brien: Please go ahead.

Patrick O'brien: Sure.

Patrick O'brien: Hi, good morning.

Non agency I'm standing on for Patrick.

Speaker Change: Taking my question.

Speaker Change: Our next question I wanted to ask here is on operating costs.

Speaker Change: Up slightly year over year Cold Lake.

Speaker Change: Down a bit.

Carol.

Speaker Change: How much of the energy cost playing into that and what's the key drivers to be improvements at Kearl, what's what's left to do there.

Bradley William Corson: Yeah, thanks for the question, Patrick. You know, we talk about operating costs, you know, pretty much on every earnings call because it is a key priority for us. I'm quite pleased with the progress we're making at CURL. There are many components that go into CURL's cost structure.

Carol: Yes, thanks for the question Patrick.

Carol: We talk about operating costs pretty much on every earnings call because it is a key priority for us.

Speaker Change: I'm quite pleased with.

Speaker Change: The progress we're making at Pearl there is many components that go into <unk> cost structure.

Bradley William Corson: You know, one of the most significant ones we've talked about of late is the autonomous hauled trucks. And, you know, over the course of the last couple of years, we've been gradually converting that fleet to entirely driverless. And we completed that work late last year. And our assessment is that it's contributing at least a dollar per barrel to our cost structure. But that's just one of many things.

Speaker Change: One of the most significant ones.

Speaker Change: We've talked about of late is the.

Speaker Change: Autonomous haul trucks.

Speaker Change: And.

Speaker Change: Over the course of the last couple of years, we've been gradually converting that fleet to entirely driverless and we completed that work late last year.

Speaker Change: And our assessment is that contributing at least $1 per barrel.

Speaker Change: <unk>.

Speaker Change: Savings to our cost structure.

Speaker Change: But that's just one of many things.

Bradley William Corson: You know, I talked a little bit about our turnaround plans for this year. That's been an ongoing focus for us, you know, dating back a few years now where we went from two turnarounds to one turnaround per year, which saved, you know, several tens of millions of dollars for us. Now we're on this cadence of one turnaround per year, but we're looking at how we can do that more efficiently and at lower cost, and you know our guidance for this year for essentially the same scope as last year has us doing that work in a shorter period of time and at lower cost, so you know that's another example of how the cost structure kind of leverages.

Speaker Change: Talked a little bit about our turnaround plans for this year.

That's been an ongoing focus for us.

Speaker Change: Adding back a few years now where we went from two turnarounds to one turnaround per year, that's saved P&L.

Speaker Change: Several tens of billions of dollars.

Speaker Change: For US now we're on this cadence of one turnaround per year, but we're looking at how we can do that more efficiently and at lower cost than <unk>.

Speaker Change: Our guidance for this year for essentially the same scope as last year has us doing that work in a shorter period of time and a lower cost so.

Speaker Change: That's another example, but.

Speaker Change: The cost structure.

Speaker Change: Kind of Leverages.

Bradley William Corson: Initiatives around every part of our business, our contracting strategy, our maintenance strategy, you know, our energy usage, all these things together are what's driving these approvals. You know, one thing that differentiates Cold Lake from Pearl is that the nature of that operation is very different.

Speaker Change: Initiatives around every part of our business our contracting strategy are maintenance strategy.

Speaker Change: Yes.

Speaker Change: Our energy usage, all all of these things.

Speaker Change: <unk>.

Speaker Change: Together is what's driving these improvements.

Speaker Change: One thing that differentiates cold Lake from Pearl is.

Speaker Change: The nature of that operation is very different.

Bradley William Corson: It's very steam intensive and, consequently, very dependent on fuel gas. And so that's, that's a key driver in its cost structure. But beyond that, all the other things like I just talked about at Curl, you know, with contracting strategy, maintenance, energy usage, we're continuing to look at ways to improve those as well. And then with Grand Rapids starting up, as I mentioned, that'll take about a dollar per barrel out of the cost structure for Cold Lake overall. So there are a lot of really important initiatives there.

Speaker Change: Barry steam that Tensive, Consequently, very dependent on.

Speaker Change: On fuel gas and so that's that's a key driver in.

Speaker Change: Its cost structure, but beyond that all the other things like I've just talked about apparel.

Speaker Change: With contracting strategy maintenance energy usage, we're continuing to look at ways to improve those as well and then.

Speaker Change: With Grand Rapids, starting up as I mentioned that will take about a $1 per barrel.

Speaker Change: Out of the cost structure.

Speaker Change: For Cold Lake overall, so a lot of really important initiatives there.

Operator: Thanks for the color on that. One second question I'll ask here is on capital builds; how are you expecting working capital builds and leases to impact cash balances down here, appreciating that commodity prices are unpredictable?

Speaker Change: Thanks for the color on that one.

Speaker Change: Second question I'll ask is.

Speaker Change: Capital builds.

Speaker Change: What are you expecting working capital build some leases.

Speaker Change: Impact cash balances to bounce here appreciating that commodity prices are unpredictable.

Speaker Change: Maybe I'll ask Dan to talk about that yeah look I mean, working capital bounces around and it's as you point out it's super hard to really predict quarter to quarter.

Daniel E. Lyons: Maybe I'll ask Dan to talk about that. Yeah, look, I mean, working.

Daniel E. Lyons: Yeah, look, working capital bounces around, and it's, as you point out, it's super hard to really predict quarter to quarter. You know, we had a $450 million hit this quarter, driven by inventory and some tax payables. So I would say going forward, you know, we kind of forecast zero, but you know, the inventory piece of the working capital bill should reverse itself out. So it's really hard to say what it'll do over the next few quarters, but we don't expect continued significant working capital hits.

Daniel E. Lyons: We had a 450 million dollar hit.

Daniel E. Lyons: This quarter.

Daniel E. Lyons: Driven by buy buy buy inventory and.

Daniel E. Lyons: Some tax payables so.

Daniel E. Lyons: I would say going forward.

Daniel E. Lyons: We kind of forecast zero, but the inventory piece of the working capital build ships should reverse itself out. So it's really hard to say what it will do over the next few quarters, but we don't expect.

Daniel E. Lyons: Continued significant working capital, it's noise that bounces around so.

Daniel E. Lyons: It's noise that bounces around. So the hit we took this quarter, we wouldn't expect that to be repeated. And, you know, if prior trends are predictors of the future, we'll probably see some unwind of some of that, especially in inventory.

Daniel E. Lyons: We took this quarter, we wouldn't expect that to be repeated.

Daniel E. Lyons: And if prior trends are.

Daniel E. Lyons: Our predictions of the future will probably see some unwind of some of that especially out of inventory.

Operator: Thanks for that, Cheryl. I'll turn it back.

Daniel E. Lyons: Okay.

Speaker Change: So I'll turn it back.

Peter Shaw: Thank you. This does conclude today's question and answer session. I'd now like to turn the call back to Peter Shaw, Vice President of Investor Relations, for closing remarks.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: It does conclude today's question and answer session I would now.

Speaker Change: I would like to turn the call back to Peter Shah Vice President of Investor Relations for closing remarks.

Speaker Change: Yes.

Peter Shaw: Thank you. On behalf of the management team, I would like to thank everyone for joining us this morning. As always, if there are further questions, please don't hesitate to reach out to anybody on the IR team, and we'd be happy to answer your questions. With that, thank you very much and enjoy the rest of your day.

Peter Shaw: Thank you on behalf of the management team I would like to thank everyone for joining us. This morning as always if there are further questions. Please don't hesitate to reach out to anybody on the IR team and we'd be happy to answer your questions with that thank you very much and enjoy the rest of your day.

Operator: This does conclude today's call. Thank you for your participation. You may now disconnect.

Peter Shaw: Okay.

Speaker Change: This does conclude today's call.

Speaker Change: Thank you for your participation.

Speaker Change: Now disconnect.

Speaker Change: [music].