Q1 2024 Suncor Energy Inc Earnings Call

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Operator: Good day, and welcome to the Suncor Energy first quarter 2024 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Troy Little, Vice President of Investor Relations. You may begin.

Good day.

Troy Little: To the Suncor energy first quarter 2024 results conference call.

Operator: At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is right to win.

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

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

Troy Little: Thank you operator and good morning.

Troy Little: I'll come to Suncor Energy's first quarter earnings call.

Troy Little: Please note that today's comments contain forward looking information.

Troy Little: Actual results may differ materially from the expected results because of various risk factors and assumptions are detailed in our first quarter earnings release as well as in our current annual information form.

Troy Little: All of which are available on SEDAR Edgar.

Troy Little: And our website <unk> dot com.

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

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

Troy Little: We will start with comments from rich Kruger, President and Chief Executive Officer.

Kristopher P. Smith: Chris Smith and <unk>.

Kristopher P. Smith: <unk> Chief Financial Officer.

Troy Little: Also on the call are Peter <unk> Executive Vice President oil Sands, Steve <unk> Executive Vice President downstream.

Troy Little: Powell Senior Vice President operational improvement and support services.

Troy Little: Following the formal remarks, we'll open up the call to questions.

Richard M. Kruger: And hand, it over to rich to share his comments.

Richard M. Kruger: Good morning. First quarter. Following a strong fourth quarter in 2023, I would characterize our first quarter as even stronger. How so? I recognize I'm gonna start sounding like a broken record here, but by focusing on the fundamentals of safety, reliability, profitability, coupled with a determination to deliver on commitments. Chris will highlight our results in more detail in a moment, but what I'd like to do is highlight some of the more notable achievements, starting, of course, with the fundamentals.

Troy Little: Our first quarter following a strong fourth quarter 2023, I would characterize our first quarter as even stronger so how so I recognize I'm going to start sounding like a broken record here, but by focusing on the fundamentals safety reliability profitability coupled.

Richard M. Kruger: With a determination to deliver on our commitments, Chris will highlight our results in more detail in a moment. So what I'd like to do is highlight some of the more notable achievements starting of course with the fundamentals safety no life altering or life threatening injuries lost time incidents down 50% year on year.

Richard M. Kruger: Safety, no life-altering or life-threatening injuries, lost time incidents down 50% year on year, recordable incidents down 20% year on year, process safety events down greater than 50% year on year, and performance safety events down greater than 50% year on year, achieving first quartile US fuel and petrol chemical manufacturers performance. How so?

Richard M. Kruger: Recordable incidents down 20% year on year.

Richard M. Kruger: Process safety events down greater than 50% year on year, achieving first quartile U S fuel and Petro chemical manufacturers.

Richard M. Kruger: This is really a tribute to our people, our processes, our priorities, and site leadership. The second fundamental I'd like to continue with is reliability. I'll start with refining.

Richard M. Kruger: Performance.

Richard M. Kruger: How so this is really a tribute to our people our processes, our priorities and site leadership second.

Richard M. Kruger: Second fundamental I'd like to continue with reliability I'll start with refining refining throughput 455000 barrels a day up 88000 barrels a day from a year ago or 24% highest first quarter in our Companys history, driven by best ever first quarter utilization of 98%.

Richard M. Kruger: Refining throughput, 455,000 barrels a day, up 88,000 barrels a day from a year ago, or 24%. Highest first quarter in our company's history, driven by the best ever first quarter utilization of 98% and led by Edmonton at in excess of 100%. Achieved by operational excellence, improved winterization, and once again, the focus of our people, product sales 581,000 barrels a day, our highest order ever, a tribute to Dave Oldreive's sales and marketing team for aggressively moving barrels and capturing value, upstream production 835,000 barrels a day, up 93,000 barrels a day or 13% from a quarter a year ago, the highest quarter in our There are many, many multiple best evers.

Richard M. Kruger: And led by Edmonton in excess of a 100% achieved by operational excellence improve winter innovation and once again the focus of our people.

Richard M. Kruger: Product sales 581000 barrels a day, our highest quarter ever.

Richard M. Kruger: Attribute to Dave own dreams, a sales and marketing team marketing team for aggressively moving barrels and capturing value.

Richard M. Kruger: Upstream production 835000 barrels a day up 93000 barrels a day or 13% from a quarter a year ago highest quarter in our company's history. There are many many multiple best Evers, Chris will detail a few shortly but I'll continue I'd like to highlight one in particular upgrader utilization.

Richard M. Kruger: Chris will detail a few shortly, but I'll continue. I'd like to highlight one in particular, upgrader utilization combined at an impressive 102% Achieved in part via a very tangible competitive differentiator, I am growing to understand and recognize more and more the longer I'm here, and this is our physical integration, reminds us of situ operations interconnected to two large upgraders. The flexibility and optionality that this integration provides us is truly The ability to move molecules, bitumen, partially processed hydrocarbons, water, steam again, all to maximize value. I guess to say it differently, there's integrated, and there's Suncor integrated, and they are not the same.

Richard M. Kruger: <unk> combined at an impressive 102% and.

Richard M. Kruger: <unk> in part via a very tangible competitive differentiator I am growing to understand and recognize more and more of the longer I'm here and this is our physical integration.

Richard M. Kruger: <unk> mines sit you operations interconnected to two large upgrader flex.

Richard M. Kruger: Flexibility and Optionality that this integration provides us is truly unparalleled the ability to move molecules bitumen, partially processed hydrocarbons water steam again, all to maximize value I guess to say it differently. There is integrated and Theres Suncor integrated and they are not.

Richard M. Kruger: The last thing I'll mention is it's one thing to have a physically integrated kit, but it's something entirely different to capitalize on it. And that's exactly what Peter Zebedee's entire oil sands team did throughout the first quarter. Well done.

Richard M. Kruger: The same.

Richard M. Kruger: The last thing I'll mention is it's one thing to have a physically integrated kit, but it's something entirely different to capitalize on it and that's exactly what Peter's empties entire oil sands team did throughout the first quarter well done.

Richard M. Kruger: So if you look at where we are on production reliability, the year to date, and the first quarter, everything is consistent with our first quarter's expected contribution to our full year guidance. In fact, I would say every major asset upstream and downstream delivered at or above our own internal expectation. The third fundamental I'll comment on is profitability. Chris will dig into AFFO, free funds, and shareholder distributions, so I won't steal his thunder.

Richard M. Kruger: So if you look at where we are on the production reliability.

Richard M. Kruger: Year to date, the first quarter everything is consistent with the first quarter as expected contribution to our full year guidance. In fact, I would say every major asset upstream and downstream delivered at or above our own internal expectations.

Richard M. Kruger: The third fundamental I'll comment Don profitability, Chris, we'll dig into <unk> free funds shareholder distributions. So I won't steal his thunder, but I will I would like to comment on one essential aspect of profitability cost management.

Richard M. Kruger: But I would like to comment on one essential aspect of profitability, cost management. Total OS&G revenue in the first quarter, fall in, top to bottom, was $3.4 billion, for all practical purposes essentially flat with the first quarter of 2023. However, as I mentioned, we produced 93,000 barrels per day more in the upstream, essentially three Mackay rivers, we refined 88,000 barrels a day more in the downstream, essentially in additional Sarnia, and we sold 66,000 barrels a day, additional amount of products, refined products, this year versus last.

Richard M. Kruger: Tony.

Richard M. Kruger: S and G. In the first quarter call. It top to bottom was $3 $4 billion for all practical purposes, essentially flat with the first quarter of 2023.

Richard M. Kruger: However, as I mentioned, we produced 93000 barrels.

Richard M. Kruger: Per day more in the upstream essentially three Mackay rivers.

Richard M. Kruger: We refined 88000 barrels a day more in the downstream essentially an additional sarnia.

Richard M. Kruger: And we sold 66000 barrels a day additional.

Richard M. Kruger: Of products refined products this year versus last year.

Richard M. Kruger: We did all of that at essentially no extra cost, zero, nada. That's leverage. In fact, all major assets, every single one, upstream and downstream, operated safely and efficiently at lower unit costs in the first quarter of 2024 than they did in the first quarter of 2023. I gotta say I love free barrels.

Richard M. Kruger: We did all of that at essentially no extra cost zero not that's leverage in fact, all major assets every single one upstream and downstream operated safely and efficiently at lower unit costs in the first quarter of 2024 than they did at.

Richard M. Kruger: The first quarter 2023, I got to say I love free barrels bottom line 2024 off to a strong start good momentum and we intend to keep it going.

Richard M. Kruger: Bottom line, 2024 is off to a strong start, good momentum, and we intend to keep it going. You may have seen or may be aware that on May 21st, we're going to provide an update via webcast on our overall story and our near-term outlook. Specifically, our management team will outline the next two to three years' expectations, financial and operating, our outlook on volumes, CapEx, our $5 barrel reduction and breakeven, etc. We're also going to detail expected shareholder returns and capital allocation at various prices. Later in the year, we'll see you at this point, but we anticipate a more comprehensive investor day with a longer-term outlook. So, stay tuned.

Richard M. Kruger: Troy Little and his IR team will provide further details in the days ahead. As I look at the second quarter, recognizing that this update is only a couple weeks away, I'll skip my usual detail on performance improvements and highlight only a couple of items. We've talked at length on earlier calls about mining fleet upgrades and the cost savings opportunities they provide, so I just wanted to comment on our conversion to autonomous haul trucks at the base plant. That continues as planned. Six months ago, on a call, we were talking about how we had 3031 trucks operating autonomously. Today, that number is 56 trucks.

Richard M. Kruger: You may have seen or may be aware that our may 'twenty, one we're going to provide an update via webcast on our on our overall story in our near term outlook.

Richard M. Kruger: And at year end, we're on plan for 91, or the full base plant or fleet. Recall, the impact is $1 million per truck per year in sustainable savings and an additional productivity gain. During the Q&A, I would urge someone to ask Peter Zebedee about what he has seen in autonomous productivity. We've also commented about acquiring 55 new 400-ton trucks to replace twice as many less efficient third-party trucks. The first 16 of those are now in operation.

Richard M. Kruger: 21 more are on their way to Fort Hills over the next few months through November, and the final 18 of the 55 will arrive at the base plant starting in the fourth quarter of this year, continuing into the first quarter of next year. Recall, in total, these trucks will lower our overall corporate breakeven by on the order of about $1 per barrel US.

Richard M. Kruger: Specifically, our management team will outline the next two to three years expectations financial and operating our outlook on volumes Capex are $5 a barrel reduction in breakeven.

Richard M. Kruger: Sarah we're also going to detail expected shareholder returns and capital allocation at various prices.

Richard M. Kruger: Later in the year, we will see you at this point, but we anticipate a more comprehensive investor day with a longer term outlook. So stay tuned for a little and his IR team will provide further details in the days ahead.

Richard M. Kruger: As I look at the second quarter recognizing that this uptick is only a couple of weeks away I'll Skip my usual detail on performance improvements and highlight only a couple of items.

Richard M. Kruger: We've talked at length on earlier calls about mining fleet upgrades and the cost savings opportunity. They provide so I just wanted to comment on our conversion to autonomous haul trucks at the base plant that continues as planned six months ago on a call. We were talking about how we had $30 31 trucks.

Richard M. Kruger: Operating autonomy sleep today that number is 56 trucks and at year end were on plan for 91 or the full base plant or fleet.

Richard M. Kruger: Recall, the impact is $1 million per truck per year in sustainable savings.

Richard M. Kruger: And an additional productivity gains.

Richard M. Kruger: During the Q&A I would urge someone to ask Peter Zebedee on what he is seeing an autonomous productivity.

Richard M. Kruger: We've also commented about acquiring 55, new 400 ton trucks to replace twice as many less efficient third party trucks. The first 16 of those are now in operation.

Richard M. Kruger: 'twenty one more are on their way to Fort Hills over the next many months through November and the final 18 of the 55 will arrive at the base plant starting in the fourth quarter of this year continuing into the first quarter of 'twenty five recall in total these trucks will lower.

Richard M. Kruger: Our overall corporate breakeven by on the order of about $1 per barrel U S.

Richard M. Kruger: Turnarounds in the second quarter. The second quarter is our big turnaround quarter for the year, upstream and downstream. In fact, about 75% of our 2024 turnaround activity, if you look at it on a spend basis, is scheduled for the second quarter. Our priority here will be to safely, cost effectively, execute on schedule to position ourselves for a strong second half. At this point in time, we're a month into the second quarter, and turnarounds are going well. We still have more work to do, so I really won't have any more detailed comments at this point.

Richard M. Kruger: Turnarounds in the second quarter second quarter is our big turnaround quarter for the year upstream and downstream in fact about 75% of our 2020 for turnaround activity. If you look at it on a spend basis is scheduled in the second quarter.

Richard M. Kruger: Our priority here will be to safely cost effectively execute on schedule and positioned for a strong second half at this point in time, we're a month into the second quarter turnarounds are going well, we still have more work to do so I really won't have any more detailed comments at this point.

Kristopher P. Smith: If you look back in time 15 years ago, about the time of the Petro Canada merger, Suncor implemented an enterprise-wide system, a management system to manage operational risk, reliability, and overall performance. Internally, we refer to it as OEMS. In essence, this system provided each site with a standard list of operational requirements or expectations, largely leaving each site to determine exactly how to achieve the expectations. Today, we sit back, and we've judged that our original system is too complex and fundamentally insufficient in meeting our high performance expectations of today.

Richard M. Kruger: If you look back in time 15 years ago about the time of the Petro Canada merger Suncor implemented an enterprise wide system management system to manage operational risk reliability and overall performance internally, we referred to it as Oems.

Kristopher P. Smith: In essence this system provided each site with a standard list of operational requirements, where expectations largely leaving each site to determine exactly how to achieve the expectations.

Kristopher P. Smith: To date, we sit back and we've judged that our original system is too complex and fundamentally insufficient in meeting our high performance expectations of today. Consequently, we're implementing a new revised operational excellence management system. It consists of 21 process.

Kristopher P. Smith: Consequently, we're implementing a new revised operational excellence management system. It consists of 21 processes associated with the work we do and how we want it done. Processes like managing maintenance, addressing risks, and completing turnarounds. Each process consists of a standard how-to embedded with industry best practices. We've developed this with subject matter experts, frontline employees, and leaders across the organization, and our fundamental objective is to reduce site-by-site performance variations through institutionalized improvements. In other words, operationally, our vision is to become consistently and boringly excellent.

Kristopher P. Smith: This associated with the work, we do and how we want it done processes like managing maintenance addressing risk completing turnarounds. Each process consists of a standard how to embedded with industry best practices. We've developed this with subject matter experts.

Kristopher P. Smith: Frontline employees and leaders across the organization and our fundamental objective is to reduce site by site performance variations and institutionalized improvements in other words operationally our vision is to become consistently and Boringly X.

Kristopher P. Smith: Our new system is clearer, simpler, and more focused with tangible leader-specific accountability. Implementation has started at each and every operating site and will continue throughout 2024 and the bulk of the first half of 2025. I want to shout out to Shelley Powell and her leadership team for driving what I believe will be this game-changing work. So with that, I'll turn it over to Chris, who will provide additional comments on financial and operating performance.

Kristopher P. Smith: <unk> or.

Kristopher P. Smith: Our new system is clear simpler and more focused with tangible leaders' specific accountabilities implementation has started at each and every operating site and will continue throughout 2024 and throughout the bulk of the first half of 2025.

Kristopher P. Smith: Want to shout out to Shelley Powell and her leadership team for driving what I believe will be this game changing work so with that I'll turn it over to Chris who will provide additional comments on financial and operating performance.

Kristopher P. Smith: Great. Thanks, Rich, and good morning, everyone. Well, while we saw synthetic crude prices weakened versus the prior quarter, it still remained a strong price and margin environment in the first quarter of the year. WTI averaged US $77 a barrel in the quarter, and the light heavy differential Titan Slightly versus Q4 averaged US $19 a barrel. However, we also saw synthetic crude oil pricing weaken, averaging US $7 a barrel below WTI and Q1 on the back of strong regional upgrading production and egress constraints across the basin.

Chris: Thanks, Rich and good morning, everyone.

Kristopher P. Smith: While we saw synthetic crude prices weakened versus the prior quarter and still remained a strong price and margin environment in the first quarter of the year.

Kristopher P. Smith: W. Ti averaged <unk> $77, a barrel in the quarter and the light heavy differential tightened slightly versus Q4, averaging USD $19 a barrel.

Kristopher P. Smith: However, we also saw synthetic crude oil pricing weakened averaging U S $7 a barrel below double UTI in Q1 on the back of strong regional upgrading production and egress constraints across the basin.

Kristopher P. Smith: However, we've already seen Sweetsend strengthen as we have moved into the second quarter, recovering to a premium over WTI, and we expect that to continue going forward. On the refining side, 2-1-1 cracking margins remain robust, with some softening of diesel cracks being offset by strengthening gasoline cracks. Our 5-2-2-1 refining index was US $35.95 a barrel, which is about $2.50 a barrel above Q4, helped by discounted synthetic crude oil prices. And finally, natural gas, which is a key input cost of operations, remains low, with AECO averaging $2.20 a GJ in the quarter, and we continue to see weakness in AECO pricing into the second quarter.

unknown: However, we've already seen suites and strengthen as we have moved into the second quarter recovering to a premium over <unk> and we expect that to continue going forward.

Kristopher P. Smith: On the refining side to one one cracking margins remained robust with some softening of diesel cracks being offset by strengthening in gasoline cracks.

Kristopher P. Smith: Our 5221 refining index was U S $35 95, a barrel, which is about $2 50, a barrel above Q4 helped by discounted synthetic crude oil pricing.

Kristopher P. Smith: And finally natural gas, which is a key input cost our operations remained low.

Kristopher P. Smith: With echo averaging $2 20, a GJ in the quarter and we continue to see weakness in <unk> pricing into the second quarter.

Kristopher P. Smith: With this business environment and the very strong operations that Rich just outlined in his opening remarks, Suncor delivered solid financial results in the fourth quarter, or first quarter, generating $3.2 billion in adjusted funds from operations, or $2.46 per share, and adjusted operating earnings of $1.8 billion, or $1.41 per share. During the quarter, we also returned nearly $1 billion to shareholders. This was comprised of about $700 million in dividends, as well as about $300 million in share repurchases.

Kristopher P. Smith: Yes.

Kristopher P. Smith: With this business environment and the very strong operations that rich just outlined in his opening remarks Suncor delivered solid financial results in the fourth quarter or first quarter generating $3 2 billion and adjusted funds from operations or $2 46 per share and adjusted operating earnings of one.

Kristopher P. Smith: $8 billion or $1 41 per share.

Kristopher P. Smith: During the quarter. We also returned nearly $1 billion to shareholders. This was comprised of about $700 million in dividends as well as about $300 million and share repurchases.

Kristopher P. Smith: Our net debt, including leases, ended at $13.5 billion, which is down about $200 million versus the end of the prior quarter and also included a $200 million increase from changes in FFAC on our U.S. dollar denominated debt.

Kristopher P. Smith: Our net debt, including leases ended at $13 5 billion.

Kristopher P. Smith: Which is down about $200 million versus the end of the prior quarter.

Kristopher P. Smith: And also included a $200 million increase from changes in FX.

Kristopher P. Smith: On our U S dollar denominated debt.

Kristopher P. Smith: We continued the commitment of our current capital allocation framework during the quarter by both reducing debt and returning cash to shareholders through share buybacks. Turning now to operational performance, and building on Richard's comments, we continue to see very strong operations in the quarter, including a number of RECs. Our upstream delivered total production of 835,000 barrels per day in the quarter, which was up 13% versus Q1'23 and was the highest in our history.

Kristopher P. Smith: We continued the commitment of our current capital allocation framework during the quarter by both reducing debt and returning cash to shareholders through share buybacks.

Kristopher P. Smith: This included record quarterly production in our oil sands segment with 240,000 barrels per day of non-upgraded bitumen and 545,000 barrels per day of synthetic crude oil and diesel. Fort Hills had a very strong quarter producing 178,000 barrels per day of paraffinic froth treated barrels, which was in line with our three-year improvement plan. Per that plan, Q1 is expected to be the highest-producing quarter of the year, as there is planned maintenance in Q2, and in the second half of the year, we will be moving more overburden as we accelerate opening the North Pitch.

Kristopher P. Smith: Turning now to operational performance and building on Rich's comments, we continued to see very strong operations in the quarter, including a number of records.

Kristopher P. Smith: Our upstream delivered total production of 835000 barrels per day in the quarter, which was up 13% versus Q1 dollars 23 and was the highest in our history. This included record quarterly production at our oil Sands segment with 240000 barrels per day of not upgrading instrument.

Kristopher P. Smith: 545000 barrels per day of synthetic crude oil and diesel.

Kristopher P. Smith: Fort Hills had a very strong quarter, producing 178000 barrels per day of paraffinic froth treated barrels and which was in line with our three year improvement plan.

Kristopher P. Smith: That plan Q1 is expected to be the highest producing quarter of the year as there is planned maintenance in Q2 and in the second half of the year, we will be moving more overburden as we accelerate opening the north pit.

Kristopher P. Smith: Overall, we remain very pleased with the progress and the focus of the Fort Hills team on delivering against our plan. Our firebag asset also had record quarterly production of 229,000 barrels per day, including an all-time monthly record in the quarter. Sengfruit had a very strong upgrading quarter, achieving over 96% utilization, while our base plant upgrader also had a record quarter with 107% utilization. Our internal bitumen transfers reached a new high at 58,000 barrels per day in Q1, demonstrating our increased level of integration within the region to maximize value.

Kristopher P. Smith: Overall, we remain very pleased with the progress and the focus of the Fort Hills team on delivering against our plan.

Kristopher P. Smith: Yeah.

Kristopher P. Smith: Our fire bag asset also had record quarterly production of 229 zero.

Kristopher P. Smith: 229000 barrels per day, including an all time monthly record in the quarter.

Kristopher P. Smith: <unk> had a very strong upgrading quarter, achieving over 96% utilization, while our base plan Upgrader also had a record quarter with 107% utilization.

Kristopher P. Smith: Our internal bitumen transfers reached a new high of 58000 barrels per day in Q1, demonstrating our increased level of integration within the region to maximize value.

Kristopher P. Smith: This was primarily driven by 42,000 barrels per day of bitumen transferred from Fort Hills to Base Plant Upgrader, which also provided a yield uplift and contributed to that record I just mentioned. Our E&P segment produced 50,000 barrels a day, which included 10,000 barrels a day of net production from Terranova as it continued to ramp up through the quarter. We continue to see Terranova improve through the quarter with flush production, and in April, it was at 20,000 barrels a day net production.

Kristopher P. Smith: This was primarily driven by 42000 barrels per day of bitumen transferred from Fort Hills to base plant Upgrader, which also provided a yield uplift and contributed to that record I just mentioned.

Kristopher P. Smith: Our E&P segment produced 50000 barrels a day, which included 10000 barrels a day net production from Terra Nova as it continued to ramp up through the quarter. We continued to see turnover improved through the quarter with west production and in April It was at 20000 barrels a day net production.

Kristopher P. Smith: Now with respect to the downstream, refining utilization was an impressive 98% in the first quarter, which was 19% higher than Q1 2023, as we saw high availability across all the refineries. And this supported record refined product sales of 581,000 barrels a day; downstream margin capture was also strong in the quarter at 94% on a LIFO basis when compared to Suncor's 5-2-2-1 refining index, and our integrated business model enabled by downstream partially mitigated the impacts of weaker synthetic pricing in our oil sands business.

Kristopher P. Smith: Now with respect to the downstream refining utilization with an impressive 98% in the first quarter, which was 19% higher than Q1 'twenty three as we saw high availability across all the refineries and this supported record refined product sales of 581000 barrels a day.

Kristopher P. Smith: Downstream margin capture was also strong in the quarter at 94% on a LIFO basis, when compared to <unk> 5221 refinery index.

Kristopher P. Smith: And our integrated business model enabled by downstream enabled by downstream, partially mitigated the impacts of weaker synthetic pricing in our oil sands business.

Kristopher P. Smith: Capital and costs remain on plan. And, as Rich pointed out in his remarks, we've essentially held our costs flat year over year while substantially increasing production, and our cost and capital discipline focus continues. Rich mentioned turnarounds, and in late March, we commenced the planned coker turnaround at Syncrude and turnarounds at Montreal and Sarnia refineries. All of these are going as planned and are reflected in our guidance. And next week, we'll be starting the planned major turnaround at Base Plant Upgrader, which will also include pre-work for the U1 coke drum replacement project that is scheduled to be completed in 2025.

Kristopher P. Smith: Capital costs remain on plan and as rich pointed out in his remarks, we've essentially held our cost flat year over year, while substantially increasing production at our cost and capital discipline focus continues.

Kristopher P. Smith: Rich mentioned turnarounds and in late March we commenced the planned coker turnaround at Syncrude and turnarounds at Montreal, and Sarnia refineries. All of these are going as planned and are reflected in our guidance and next week, we'll be starting the planned major turnaround at base plant Upgrader, which will also include pre work for the Yuan Coke drum replace.

Kristopher P. Smith: <unk> project that is scheduled to be completed in 25.

Kristopher P. Smith: There are no changes to our production, capital, or cost guidance for the year as the team remains laser focused on delivering on our commitment and building on this momentum, which has continued into the second quarter. And with that, Rich, I'll hand it back over to you.

Kristopher P. Smith: Yes.

Kristopher P. Smith: There are no changes to our production and capital cost guidance for the year as the team remains laser focused on delivering on our commitments and building on this momentum which has continued into the second quarter and with that rich I'll hand, it back over to you.

Richard M. Kruger: Okay, a few final comments before we go to the Q&A. Tomorrow marks the anniversary of my first earnings call with Suncor. Four full quarters in the book.

Speaker Change: A few final comments before we go into the Q&A.

Rich: Tomorrow marks the anniversary of my first earnings call with Suncor four <unk>.

Rich: For full quarters in the book.

Richard M. Kruger: And you know, the number one question we keep getting asked is, "What's different at Suncor today than a year ago?" And I would answer that, a lot. In a nutshell, we've been undergoing a transformation or a turnaround, where we are integrating aspects of strategy, structure, and culture. So what's different? We've got new top-notch executive leadership. We have a top to bottom unwavering focus on the fundamentals. Our strategies and priorities are clearer and simpler. We have a smaller, more focused above-field support organization.

Rich: The number one question, we keep getting asked is what's different at suncor to daily than a year ago.

Richard M. Kruger: And I would answer that as a lot in a nutshell, we've been undergoing a transformation or a turnaround.

Richard M. Kruger: We're integrating aspects of strategy structure and culture.

Richard M. Kruger: So what's different we've got a new top notch executive leadership team.

Richard M. Kruger: We have top to bottom unwavering focus on the fundamentals.

Richard M. Kruger: Our strategies and priorities are clear and simpler.

Richard M. Kruger: We have a smaller more focused above field support organization.

Richard M. Kruger: We have very tangible and accelerated operational performance improvement plans.

Richard M. Kruger: We've revised how we evaluate performance and compensate accordingly.

Richard M. Kruger: And we have a leadership commitment and accountability to deliver on commitments. So the bottomline today's suncor is increasingly a new suncor, we've made significant progress in a year.

Richard M. Kruger: We have very tangible and accelerated operational performance improvement plans. We've revised how we evaluate performance and compensate accordingly, and we have a leadership commitment and accountability to deliver on our commitments. So the bottom line, today's Suncor is increasingly becoming a new Suncor. We've made significant progress in a year, but make no mistake, we're not done. So if I would comment on what's next, in addition to achieving continued financial and operating performance with a sense of urgency, 2024 will be about cultural and leadership development within the company, leadership in terms of exhibiting the attributes of strong leaders, including but not limited to acting with integrity, business acumen, quality decision-making, and strong people; and culture in terms of developing a team-based, results-oriented, high-performance culture and a work So with that, I'll turn it over to Troy to kick off our Q&A.

Troy Little: But make no mistake, we're not done.

Troy Little: If I would comment on what's next in addition to achieving continued financial and operating performance with a sense of urgency 2024 will be about cultural and leadership development within the company leadership in terms of exhibiting the attributes are strong leaders, including that.

Troy Little: Not limited to acting with integrity business acumen quality decision, making strong people.

Troy Little: Culture in terms of developing a.

Troy Little: Team based results oriented high performance culture, and a work environment that enables all to contribute to be recognized and rewarded for it my prediction 2024 will be a very good year for suncor and a fun year to be a part of this team so with that I'll turn.

Richard M. Kruger: It over to Troy to kick off our Q&A.

Troy Little: Thank you, Rich. I'll turn the call back to the operator to ask some questions.

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

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q&A roster. Our first question will come from the line of Greg Pardy with RBC Capital Markets. Your line is open. Yes.

Troy Little: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star one again.

Operator: While we compile the Q&A roster.

Operator: Our first question will come from the line of Greg Pardy with RBC capital markets. Your line is open yes, Thanks, Hey, good Hey, good morning, Richard.

Greg M. Pardy: Yeah, thanks. Hey, good morning. You know, Rich, I'm going to... You've already kind of gotten into the question I was going to ask you, which is what I've asked you before: What inning do you think you're in from a turnaround perspective? And then, in addition to the things that you've talked about, if you think of the company over the next, you know, three to five years, what are the steps you need to take, I guess, in terms of, you know, restoring leadership in the country?

Greg M. Pardy: Europe had already kind of gotten into the question I was going to ask which is what I've asked it before us.

Greg M. Pardy: What inning do you think your year end from a turnaround perspective and then.

Greg M. Pardy: In addition to the things that you've talked about if you think of the company over the next three to five years.

Greg M. Pardy: What are the steps you need to take I guess in terms of restoring leadership in the country.

Richard M. Kruger: You know, Greg, thanks. I appreciate your question. You know, Greg, I think we've really hit our stride. When you start stacking together quarter after quarter, which I think we've done, there's a level of focus and energy and urgency, a results orientation that's contagious. And I think what the market needs to see from us is continued consistency, predictability, I use that phrase, consistently and boringly excellent. And I think as we continue to, you know, deliver quarter after quarter, folks will see that, I will tell you, we are further ahead at the one year anniversary for me than I would have expected us to be. And that is a real tribute to our people all the way down. In fact, starting at the bottom, at the operational level, and then the assets.

Rich: Yes, Greg. Thanks appreciate your question.

Richard M. Kruger: Greg I think we've really hit our stride.

Richard M. Kruger: When you start stacking together quarter after quarter, which I think we've done there.

Richard M. Kruger: There is a level of focus and energy and urgency of results orientation, Thats contagious and I think what the market needs to see from US is a continued consistency predictability I use that phrase consistently and boringly excellent and I think as we continue to.

Richard M. Kruger: To deliver quarter after quarter, you will see that I will tell you we.

Richard M. Kruger: Our further ahead at one year anniversary for me than I would've expected us to be and that is a real tribute to our people all the way down in fact, starting at the bottom at the operational level and then the assets and I commented on the early on about the level of physical integration.

Richard M. Kruger: And I commented early on about the level of physical integration. I get it. I'm a believer. I see what that opportunity set that provides us. And that is different. I did not have that same level of true physical integration in my past lives. So I think for us, it's, you know, in terms of what's next, it's continuing to capitalize on that. And now, go from playing checkers extremely well to playing chess extremely well and to thinking about those important longer-term issues and topics to continue to create and add shareholder value. And as our base business runs better and better, me personally and the executive leadership team have more time to focus on those areas.

Richard M. Kruger: I get it I'm, a believer I see what that opportunity set that provides us and that is different I did not have that same level of true physical integration in past lives. So I think for us it is.

Richard M. Kruger: Now in terms of the what's next is continuing to capitalize that and now.

Richard M. Kruger: Go from playing checkers extremely well to playing chess extremely well into thinking about those important longer term issues and topics to continue to create and add shareholder value and as our base business runs better and better.

Richard M. Kruger: Me personally and the executive leadership team have more time to focus in those areas.

Greg M. Pardy: Okay, thanks for that. And I'm going to completely shift gears. I mean, Chris touched on shareholder returns in the quarter, you know, in the past few weeks, even this morning, getting questions on, you know, what the shareholder return picture looks like for Suncor, just given, I guess, the favorable changes going on in the business and so forth. So, you know, you'll probably, I suspect you'll address that on the 21st, but I'm wondering if you could give us, maybe just, a preview of your thought process.

Speaker Change: Okay, Thanks for that and I'm going to completely shift gears I mean, Chris it.

Greg M. Pardy: Touched on shareholder returns in the quarter.

Greg M. Pardy: In the past few weeks, even this morning getting questions on.

Greg M. Pardy: What is the shareholder return picture look like for Suncor, just given I guess, the favorable changes going on in the business and so forth. So youll, probably I suspect you will.

Greg M. Pardy: Address that on the on the 'twenty, one, but I'm wondering if you can give us maybe just a.

Greg M. Pardy: Preview of your thought process.

Speaker Change: Yeah, Hey, Greg Thanks for that question and obviously you saw us continuing our share buybacks through the first quarter. They are probably quite honestly a little bit lighter than we would have initially planned as we saw.

Kristopher P. Smith: Through the first quarter, they're probably, quite honestly, a little bit lighter than we would have initially planned as we saw crude pricing and the market just react at the end of the quarter. We're certainly seeing an increase in buybacks, we saw that in April, a bit of that catch up from what we saw in the first quarter. But as well, I think the read across, Greg, you've already said it is, you know, our increasing confidence in this business and its cash flow generation. We will talk about our capital allocation policy and our view of the business going forward on May 21. So it's only a couple weeks away. So I would just say stay tuned.

Kristopher P. Smith: Crude pricing and the market just just reactive at the end of the quarter.

Kristopher P. Smith: We're certainly youre seeing an increase in buybacks, we've seen that in April bidder that catch up from what we saw in the first quarter, but as well I think the read across Greg you've already said it is our increasing confidence in this business and its cash flow generation.

Kristopher P. Smith: We will talk about our capital allocation policy and our view of the business going forward on May 20, <unk>. So it's only a couple of weeks away. So I would just say stay tuned.

Greg M. Pardy: Okay, thanks very much.

Speaker Change: Okay. Thanks very much.

Operator: Thank you. One moment for our next question, and that will come from the line of Roger Read with Wells Fargo Securities. Your line is open.

Greg M. Pardy: Yes.

Speaker Change: Thank you one moment our next question.

Roger David Read: And that will come from the line of Roger read with Wells Fargo Securities. Your line is open.

Roger David Read: Yeah, thank you. Good morning. All right.

Roger David Read: Yes. Thank you good morning.

Richard M. Kruger: All right, you set it up, Rich, so let's hear about autonomous trucking in more detail. You know, one thing I'm a big believer in fewer, bigger, autonomously operated trucks. They're safer, they're more efficient. And so, you know, I've got this guy sitting to my left that is, you know, apparently withholding the productivity gains we're seeing. So let's, let's put Peter on the spot and say, Peter, talk about autonomous productivity.

Roger David Read: Alright.

Richard M. Kruger: Set it up rich so, let's let's hear about <unk>.

Richard M. Kruger: Animas trucking in more detail.

Richard M. Kruger: Awesome.

Richard M. Kruger: I'm, a big believer in fewer bigger autonomous operated trucks.

Peter: They're safer, they're more efficient and so the.

Richard M. Kruger: I've got this guy sitting to my left that is apparently eased with holding the productivity gains we're seeing so let's let's put Peter on the spot and say Peter talk about autonomous productivity.

Peter D. Zebedee: Well, if that wasn't a setup, I don't know what it was. You know, as Rich mentioned, Roger, we've got over 50 units in autonomous operations at North Sea Bank mine right now. And actually next week, we're going live with autonomous operations at Millennium. But I do want to give a big shout out to the team that's been working on this.

Speaker Change: That wasn't a setup.

Speaker Change: Thank you very much.

Peter D. Zebedee: As rich mentioned, Roger we've got over 50 units and autonomous operations at our North Steve Bank mine right now and actually next week, we're going live with autonomous operations at Millennium.

Peter D. Zebedee: But I do want to give a big shout out to the team that's been working that they've taken a real.

Peter D. Zebedee: They've taken a real, you know, almost an industrial engineering approach to delivering incremental productivity out of this fleet. And it's by focusing on the things that drive value, an extra kilometer an hour in the haul cycle, a few extra tons on the truck. And just given the amount of cycles that we're doing, that really adds up. In fact, over the last six or so months, the team has been able to improve the productivity of that fleet by about 20%. And generating, you know, the equivalent of six free haul trucks. That is just incredible.

Peter D. Zebedee: Almost an industrial engineering approach to delivering incremental productivity out of this fleet and it's by focusing on the things that drive value.

Peter D. Zebedee: An extra kilometer an hour in the hall cycle, a few extra tons on the truck and just given the amount of cycles that we're doing that really adds up and in fact over the last six or so months. The team has been able to improve the productivity of our fleet about 20% and generating.

Peter D. Zebedee: <unk> be.

Peter D. Zebedee: The equivalent of six free haul trucks.

Peter D. Zebedee: That is just incredible and while we benchmark ourselves internally, we also benchmark externally and we still got some.

Peter D. Zebedee: And while we benchmark ourselves, you know, internally, we also benchmark externally. And we've still got some pride on the table to go after in the coming months. So I'm really excited about this. The team's doing an excellent job. We've got a big...

Peter D. Zebedee: Price on the table to go after in the coming months. So I'm really excited about this the team is doing an excellent job. We've got a big week next week going live at Millennium and lots more to come on the autonomous operations from Suncorp.

Roger David Read: Thanks for sharing that with me, Peter. Yeah, I'm glad I thought of asking that question on my own. Can I just ask you maybe a little bit more of a macro question with the startup here of TMX, kind of how you see that affecting overall flows or netbacks for Suncor adjusted by the fact that your downstream business tends to benefit a little bit from, you know, the crude that has been backed up there. So when you look at it on a net basis to the corporation, how should we think about the impact of TMX? Thanks.

Speaker Change: Thanks for sharing that with me Peter.

Roger David Read: Yeah.

Roger David Read: Yes.

Roger David Read: I'm glad I thought of asking that question on my own.

Roger David Read: Yeah.

Roger David Read: Okay.

Roger David Read: Can I just ask you maybe a little bit more of a macro question with the start up here <unk> kind of how you see that affecting.

Roger David Read: Overall flows or net backs for suncor adjusted by the fact that you are.

Roger David Read: Downstream business tends to benefit a little bit from there.

Roger David Read: The crude that has been backed up there. So when you look at it on a net basis to the corporation, how should we think about the impact of Tms.

Roger David Read: Dave.

Richard M. Kruger: So Roger, thanks for the question. And you know, as we've been saying by us and by others before, the completion of this Trans Mountain Pipeline is great for Canada. We've been waiting for this for some time, and we're excited to start shipping on it. It's good for our industry. It's good for Suncor.

Roger David Read: Okay.

Roger David Read: Sure.

Peter: So Roger Thanks for the question and as you know and it's been set by us and by others before the completion of this Trans mountain pipeline is great for Canada.

Richard M. Kruger: We've been waiting for this for some period of time and we're excited to start shipping on the pipeline.

Richard M. Kruger: It allows Canadian crude to reach new markets, and that's very important for us. It enables growth of Alberta production and Suncor production, and it reduces the discounts, as you point out, on Canadian crude. This will clearly increase the profitability of our upstream, although there'll be a partial offset by increased feedstock costs into our refineries. We think the market will rebalance, and there'll be some softening of that downstream impact.

Richard M. Kruger: It's good for our industry.

Richard M. Kruger: Good for Suncor It allows Canadian crude to reach new markets and Thats very important for us and enables growth of Alberta production and Suncor production.

Richard M. Kruger: And it reduces the discounts as you point out on on Canadian crude this will clearly increase the profitability of our upstream there'll be a partial offset.

Richard M. Kruger: Bye.

Richard M. Kruger: Increased feedstock costs into our refineries, we think the market will rebalance some softening of that of that downstream impact.

Richard M. Kruger: But what I can tell you, and what's probably unique to Suncor is the way we're marketing the barrels off TMX. I think it gives us a bit of a competitive advantage. We're well positioned to take advantage of new markets available for accrued through our Advantage Supply Trading and Optimization organization. Rich mentioned how we optimize feedstock into the upgraders. We optimize feedstock into the refineries.

Richard M. Kruger: But what I can tell you <unk> probably unique to suncor is the way we're marketing.

Richard M. Kruger: The barrels at <unk> I think it gives us a bit of a competitive advantage.

Richard M. Kruger: We're well positioned to take advantage of new markets available for our crude through our advantaged supply trading and optimization organization Rich mentioned, how we optimize.

Richard M. Kruger: Feedstock into the upgraded as we optimize feedstock into the refineries we also optimized our.

Richard M. Kruger: We also optimize where our products go into the market, crude and refined products. Now, we're growing our capabilities in this space. And over the last number of years, both in the crude and the product space, we've got a pretty sophisticated trading platform. And what might make us a bit unique is we're not relying on third-party trading shops. This allows us to capture the full value of the transaction by transaction by acting directly with customers.

Richard M. Kruger: Where our products go into the market crude and refined products.

Richard M. Kruger: We're growing our capabilities in this space over the last number of years both of them both on the crude and the product space.

Richard M. Kruger: Pretty sophisticated training platform well it might make us a bit unique is we're not relying on third party trading shops. Now this allows us to capture the full value of the transaction by transaction interacting directly with customers, it's kind of consistent with our integrated model across all of our business lines, where we're trying to work directly with the customer to remove.

Richard M. Kruger: It's kind of consistent with our integrative model across all of our business lines, where we're trying to work directly with the customer to remove the intermediary and capture the full value. And we've been doing this across our platform for some time.

Richard M. Kruger: The intermediary and capture the full value.

Richard M. Kruger: And we've been doing this across our platform for some time in fact in the first quarter, we delivered diesel off the east coast.

Richard M. Kruger: In fact, in the first quarter, we delivered diesel off the East Coast to Scandinavia, capturing unique quality differentials in that market. Similarly, we've been able to capture quality differentials off the West Coast down into Latin America. We're already leveraging this experience, our capabilities. We've got some established relationships, and we expect the crude oil coming off TMX to clear into primarily California markets as well as Asia, and our trading offices in Calgary, Houston, and London have been working to strengthen those relationships along the west coast and into Asia, which is where we expect the volumes to clear.

Richard M. Kruger: To Scandinavia, capturing unique quality differentials in that market.

Richard M. Kruger: Similarly, we've been able to capture.

Richard M. Kruger: Quality differentials off the off the West coast down in Latin America, we're already leveraging this experience our capabilities and we've got some established relationships and we expect crude oil coming off <unk> to.

Richard M. Kruger: To clear into primarily the California markets as well as as well as Asia and our trading offices in Calgary, Houston and in London have been working to strengthen those relationships along the west coast and into Asia.

Richard M. Kruger: We've leased Aframex vessels that are operating in the Pacific. This gives us an advantage in shipping costs. So we're well positioned to deliver volumes to our customers and quote, remove that middleman, and capture the full value for Suncor. And this is where you'll see us differentiate ourselves. You can do the math in your models around how you see the upstream versus downstream playing out, but I think what you want to think about is how we differentiate ourselves in this space on the trading side.

Richard M. Kruger: Which is where we expect the volumes to clear.

Richard M. Kruger: Least aframax vessels that were operating in the Pacific is gives us an advantage on shipping costs. So we're well positioned to deliver volumes into our customers and remove that middleman and capture the full value for suncor.

Richard M. Kruger: So this is where youll see us differentiate ourselves you can do the math in your models around how you see the upstream versus downstream play.

Richard M. Kruger: Played out, but I think what you want to think about as we differentiate ourselves in this space on the trading side.

Speaker Change: Thank you for that.

Speaker Change: Thank you one moment our next question.

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

Richard M. Kruger: And that will come from the line of Manav Gupta with UBS. Your line is open.

Manav Gupta: So I wanted to ask you a little bit about, you know, when we look at the new Suncor, one of the older Suncors, always off to a slightly weaker start and trying to then catch up and try and meet the lower end of the guidance and so. But this looks like a new Suncor, you're off to a very strong start, and it looks like not the lower end, but you should be targeting the midpoint or even the upper end of the guidance. Are we thinking about it the right way, even taking into consideration all the turnaround? But this is a very strong start and looks like a new Suncor here.

Manav Gupta: So I wanted to ask you a little bit about when you look at.

Manav Gupta: Darden's, new some goodwill on the older. Some cool is always off to a slightly weaker start and trying to.

Manav Gupta: Catch up and try and meet the lower end of the guidance and so but this looks like a new suncor you are off to a very strong stock.

Manav Gupta: And it looks like not the lower end, but you should be targeting the midpoint or even the upper end of the guidance or are we thinking about it the right way, even taking into consideration all the done around but this is a very strong start and it looks like some color here.

Richard M. Kruger: We aim to deliver on our commitments, and we look at guidance as a commitment we've made. And we did, as I commented that in the first quarter, we've met all of our internal targets, which are consistent with that guidance. You know, we're not issuing anything new at this time. We've got a lot of months ahead of us. And in particular, we've talked about it, Manav, we talked last year about, you know, we need to kind of get through the big turnarounds to know where we're positioned. But we're off to a very good start. And I think the, you know, looking higher in that range, that's where I'm looking.

Manav Gupta: We aim to deliver on our commitments and we look at guidance as a commitment we've made and where we did as I commented that we in the first quarter. We've met all of our internal targets, which are consistent with that guidance.

Richard M. Kruger: Issuing anything new at this time, we've got a lot of it.

Richard M. Kruger: Lot of months ahead of us and in particular, we've talked about it manav, we talked last year about we need to kind of get through the big turnarounds to know where we're positioned but were off to a very good start and I think the.

Richard M. Kruger: Looking at higher in that range.

Richard M. Kruger: That's where I'm looking.

Manav Gupta: Perfect. My quick follow-up here is, I mean, you look at the refining side, gross margin 4575, operating cost 715, that's a solid $38 of EBITDA margin. That probably puts you on top of the North American refiners in terms of EBITDA margin per barrel. So help us a little bit understand the kit, the integration, what's allowing you to deliver these record-high EBITDA margin barrels in your refining system. You, you've, you've

Richard M. Kruger: Okay.

Manav Gupta: Follow up here is on when you look at the refining side gross margin $45 75 operating cost saving gifting.

Manav Gupta: Solid $38 of EBITDA margin that probably puts you on top of in terms of the North American refiners in terms of EBITDA margin, but about also help us little bit understand the get the integration, what's allowing you to deliver these record high EBITDA margin better than your refining system.

Richard M. Kruger: Well, you've read it correctly, and you know, it all starts with safety, operational integrity, and reliability, keeping these facilities operating just, you know, at their full capacity. And again, I won't repeat the statistics, but I look at what we were able to do in the first quarter, but even go back before that, look at the second half of last year, 99% refining utilization, 98% in the first quarter, when you typically have And it gets back to this, the whole commentary Dave just had on the integration with our sales and marketing team; with increasing confidence that their transactions can be backed by barrels because they're being reliably refined, they can get out there and aggressively market, whether that's domestic or across the border or into new markets. And so it all fits together. And that's when you have one team focused on, you know, one, one Suncor goal.

Manav Gupta: You've you've read it right correctly and.

Richard M. Kruger: It all starts with the safety operational integrity and reliability.

Richard M. Kruger: These facilities operating.

Richard M. Kruger: At their at their full capacity.

Richard M. Kruger: Again, I won't repeat the statistics, but I look at what we've what we're able to do.

Richard M. Kruger: In the first quarter, but if you go back before that look at the second half of last year, 99% refining utilization, 98% in what in the first quarter. When you typically have whether working against you and you often have some demand variations on different products and it gets back to this.

Richard M. Kruger: The whole commentary, Dave just had on the integration with our sales and marketing team with increasing confidence that their transactions can be backed by barrels because they are being reliably refined zinc.

Richard M. Kruger: They can get out there and aggressively market, whether thats domestic or across the border are new markets and so it all fits together and that's when you have one team focused on one.

Richard M. Kruger: One suncor goal and Thats, what youre seeing and I think it.

Richard M. Kruger: And that's what you're seeing. And I think the glass isn't full yet. This is, this is new territory for us to operate in this way, and the team is very excited about continuing to do it and deliver value.

Richard M. Kruger: We're not that glass is not fully yet. This is this is new territory for us to operate in this way and the team is very excited about continuing to do it.

Richard M. Kruger: And deliver value.

Speaker Change: Thank you.

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

Speaker Change: Got it.

Speaker Change: Thank you one moment our next question.

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

Dennis Fong: Hi, good morning, and thanks for taking my questions. The first one that I have, and this is shifting a little bit more to the upstream, I was hoping you could talk about some of the initiatives that you're focusing on that helped you achieve record production at Firebag, and specifically maybe what further could be done to optimize production both there and at the other assets, base plants, Syncrude, and Four Hills.

Dennis Fong: Hi, good morning, and thanks for taking my questions. The first one that I have and it's shifting a little bit more to the upstream I was hoping you can talk towards some of the initiatives that you're focusing on that helped you achieve record production at fire bag.

Dennis Fong: And specifically, maybe what further can be done to optimize production, both there and at the other assets.

Dennis Fong: Based client Syncrude and Fort Hills.

Richard M. Kruger: Let me make a comment on Firebag and then Dave and or Peter want to comment on it. If you go back over the last decade for us, we have been consumed by the development and startup and the modifications at Fort Hills on the mining side. And when you look at capital allocation, mining has kind of demanded a lot of capital. And the phrase I've used before is, I think, as I look at our downstream and our in situ, that for a whole variety of reasons that we won't debate, they took a bit of a backseat to mining over time. Well, to me, what gets to sit in the front seat is what makes the most money.

Speaker Change: Let me, let me make a comment on fire bag, and then as Dave Andrew or Peter want to comment on it. If you go back over the last decade for us.

Richard M. Kruger: We have been consumed by the.

Richard M. Kruger: The development and startup and the modifications at Fort Hills on the mining side and when you look at capital allocation that mining has kind of demand and a lot of capital in the phrase I've used before is I think.

Richard M. Kruger: As I look at our downstream and our in situ that for a whole variety of reasons that we wont debate. They took a bit of a back seat to mining over time, well to me what gets to sit in the front seat is what makes the most money.

Richard M. Kruger: And so when we look at all of our assets, we look at them individually. And we've looked at Firebag, and we've seen some very low-cost debottlenecking opportunities to just continue to fill the capacity of the facility. But the creativity, I'll give you one example of this team. We had some work, some routine work we would do that would have taken some ability to clear water out of the system. And the team looked at, well, that's our bottleneck. What alternatives do we do?

Richard M. Kruger: So when we when we look at all of our assets, we look at them individually and we've looked at fire bag and we've seen some very low cost debottlenecking opportunities to just continue to.

Richard M. Kruger: Fill the capacity of the facility, but the creativity I'll give you. One example of this team that we had some work.

Richard M. Kruger: <unk> work, we would do that would have taken some.

Richard M. Kruger: So our ability to clear water out of the system and the team looked at well that's our bottleneck what alternatives do we do so we took a water line that normally went one direction and we made some minor modifications or reversed it to go another direction. So that as we did this maintenance we could continue.

Richard M. Kruger: So we took a water line that normally went in one direction, and we made some minor modifications, reversed it to go in another direction so that as we did this maintenance, we could continue production. So those aren't fundamental shifts or the development of new resources, but they're really looking at your business, rolling up your sleeves, looking at it in detail, and asking the question, "what's possible?" And when you get really smart, energized people focused on what's possible, they produce amazing results. And that's exactly what we're seeing at Firebag right now.

Richard M. Kruger: Production. So those are fundamental shifts or development of new resources, but they are really looking at your business rolling up your sleeves looking at it in detail and asking the question, what's possible and when you get really smart energized people focused on what's possible there.

Richard M. Kruger: <unk> amazing results and Thats exactly what were seeing at fire bag right now the next thing not leaving a lot of room for Peter and Shelly here because this one excites me now when we continue to look at what's possible in May and sits you front, we're getting the most out of our existing asset base, but we're also looking at.

Peter D. Zebedee: The next thing, I'm not leaving a lot of room for Peter and Shelley here because this one excites me. Now, when we continue to look at what's possible on the in-situ front, we're getting the most out of our existing asset base. But we're also looking at those in-situ technologies and looking at what's possible. We've got pilots for, you know, enhanced using solvents at it. We've now got a 50-50 pilot with Imperial Oil at their Aspen facility where we'll be looking at their EBERT technology, the enhanced bitumen recovery that darn near eliminates steam and replaces it with solvent.

Peter D. Zebedee: Those in situ technologies and looking at what's possible we've got pilots for.

Peter D. Zebedee: Enhanced using solvent static we've now got a 50 50 pilot with Imperial oil at the Aspen facility, where we'd be looking at their <unk> technology, the enhanced bitumen recovery that darn near eliminate steam and replaces it with solve it. So we're trying to get every.

Peter D. Zebedee: So we're trying to get everything out of it today while we look at this enormously large, valuable resource for the long term. You know, I'm looking at Dave and Peter. I need to apologize because, you know, this one gets me excited. But is there anything else you would add?

Speaker Change: Out of it today.

Speaker Change: While we look at this enormously large valuable resource for the long term.

Peter D. Zebedee: I'm looking at David and Peter I need to apologize gives you.

Peter D. Zebedee: This one gives us a decided but is there is there anything else you would add maybe a couple of things rich and I think it comes back to those.

Peter D. Zebedee: Yeah, maybe a couple things, Rich. And I think it comes back to those fundamentals. And these are really driven by the asset team. If you just look at the base ability of the steam assets in and of themselves, the team's been able to improve that to levels beyond which we've ever been able to achieve historically.

Peter D. Zebedee: And these are really driven by the asset team. If you just look at the base the ability of the steam assets ended of themselves the team's been able to improve that to levels beyond <unk>.

Peter D. Zebedee: And so that just enables high, consistent production. They're optimizing all of the operating variables in real time, and they're looking for those, you know, back to riches, free barrels type of concepts. They're looking for those free to no dollar type of incremental production things and very simple projects that are done within the control of the asset team. We expect to unlock an additional 5,000 barrels per day that's included in our guidance. And it's things like water piping from one unit to another. It's about the removal of a hydraulic restriction and building a stripping unit.

Peter D. Zebedee: Which we've ever been able to achieve historically and so that just enables high consistent production, they're optimizing all of the operating variables in real time and are looking for those back to Richard's free barrel type of concept there looking for those free to know.

Peter D. Zebedee: Type of incremental production things Im very simple projects that are done within the control of the asset team. We expect to unlock an additional 5000 barrels per day. That's included in our guidance and it's things like water piping from one unit.

Peter D. Zebedee: To another it's about a removal of a hydraulic restriction that don't even stripping unit. So these are all things that the asset team has taken control of Amazon themselves and there is a lot of pride and ownership by the team. That's driving this performance improvement. So it's just been really great to see you have heard a lot of comments today about.

Peter D. Zebedee: So these are all things that the asset team's taken control of in and of themselves. And there's a lot of pride and ownership by the team that's driving this performance improvement. So it's just been really great to see. You've heard a lot of

Richard M. Kruger: You've heard a lot of comments today about our team and our people. And you know, and that's what, you know; they're the ones that show up on the field and win the game.

Richard M. Kruger: Our team and our people and Thats what.

Richard M. Kruger: Are the ones that show up on the field and win the game when you have the clarity and consistency from the top and then you unleashed the site leadership and the creativity of our organization 16000 strong.

Richard M. Kruger: When you have clarity and consistency from the top, and then you unleash the site leadership and the creativity of an organization 16,000 strong, you can do amazing things. And so going back to Greg's, you know, early question, kind of where are we on that? We're hitting our stride, but this team's got a lot of endurance, too. And I think you know, there's a if you see sound like we have some enthusiasm, excitement, you're reading this right, because we're seeing it, and we're feeling it. And I think that's going to continue.

Richard M. Kruger: You can do amazing things and so going back to Greg's early question, who kind of where are we on it we're hitting our stride.

Richard M. Kruger: But this this team has got a lot of endurance too and I think there is.

Richard M. Kruger: Sounds like we have some enthusiasm excitement you are reading this right because we're seeing it and we're feeling it and I think thats going to continue.

Dennis Fong: Great I appreciate that color, Rich and Peter. My second question is related to a little bit of incremental disclosure you had in the Q1 report where you highlighted an 80% yield for oil sands base upgrader throughput and 85% for Syncrude. I was hoping you could talk about how, A, that might evolve through time as the feedstock and DE1 and U2 adjust, and secondarily, any further initiatives to interconnect the various mines and in-situ facilities to the upgraders and between the various upgraders.

Speaker Change: Great I appreciate that color rich.

Dennis Fong: Rich and Peter.

Dennis Fong: My second question is related to a little bit of incremental incremental disclosure you added in the Q1 report where you highlight.

Dennis Fong: 80% yield for oil Sands base, upgrader throughput and 85% we're seeing crude I was hoping you can talk towards how that might evolve through time as the feedstock into you wanting you to adjust and secondarily any further initiatives to interconnect the various mines and in tissue facilities to the upgrader is.

Dennis Fong: Between the various upgrader.

Kristopher P. Smith: Dennis, it's Chris here. I'll hand it over to Peter in a moment.

Dennis Fong: Hey, Dennis it's Chris here I'll hand, it over to Peter in a moment I think as we're just providing disclosure to give our investors a view into actually a really key component of how we drive value and I think it really is part of the story I mentioned in my opening comments about some of the.

Kristopher P. Smith: I think we're just providing disclosure to give our investors a view into actually a really key component of how we drive value. And I think it really is part of the story I mentioned in my opening comments about some of the paraffinic froth treated bitumen we're moving down from Fort Hills and the yield uplift that we're seeing in base plant upgrader. And it actually was a contributor, but it wasn't the full story.

Kristopher P. Smith: Paraffinic froth treated bitumen work moving down for Fort Hills, and the yield uplift that were seeing and based plant upgrader and it actually was a contributor it wasn't the full story.

Kristopher P. Smith: The story of our base plant upgrader performance starts with reliability, availability, and really utilizing that asset to its full potential. But there was a piece of that story around utilization or yield uplift from Fort Hills paraffinic froth treated bitumen, which is an example because, as you pointed out, we're starting to move more volumes regionally. We actually manage the region for optimization, not specific single assets by themselves, and that translates through it. So this yield piece is a bit of a proof point. And Peter, do you want to just add what you're seeing in terms of yields?

Peter: The story the story of our grades are based played upgrader performance starts with reliability availability and and really utilizing that asset to its full potential but there was a piece of that story around the utilization or the yield uplift from Fort Hills, Paraffinic froth treated bitumen, which as an example, because as you pointed out we're starting to.

Peter: A move more volumes regionally, we actually manage the region for optimization not not specific single assets by themselves and that translates through it. So this yield pieces.

Peter: A bit of a proof point.

Kristopher P. Smith: Peter do you want to just add like what Youre seeing in terms of yield from yes, certainly those upgrades like our PFT were seeing plus 6% yield uplift from that PFT and of the base Upgrader and again Dennis This just comes back to optimizing the physical integration that we have as a company in the region.

Peter D. Zebedee: Yeah, and certainly those upgraders like PFT, we're seeing, you know, plus 6% yield uplift from that PFT into the base upgrader. And again, Dennis, this just comes back to optimizing the physical integration that we have as a company in the region. You know, we've moved Firebag over to Syncrude, we've moved Firebag, of course, into base plants, etc.

Peter D. Zebedee: We've moved fire bags over to Syncrude fire Badger core center base plants et cetera.

Peter D. Zebedee: And that's something that the team's looking at, you know, in near real time to deliver the most value. But beyond that, with Kent's development team, we're also exploring further opportunities for increased integration across our producing assets. And so, you know, stay tuned to that. There's a lot more to come there. We still think there's more value to be able to deliver by increasing our optionality in the region beyond what we have today. So Dennis, if I could add one...

Peter D. Zebedee: Thats something that the team is looking at and near real time to deliver the most value, but beyond that with <unk> development team. We're also exploring further opportunities for increased integration across our producing assets.

Peter D. Zebedee: And so stay tuned on that Theres a lot more to come there we still think there is.

Peter D. Zebedee: More value to be able to deliver by increasing our optionality in the region beyond what we have today. So Dennis if I could add one other point to keep coming back to the theme of free barrels. So that PFT. If we didn't have the ability to get it to our upgrader and capture the entire 6% uplift.

Peter D. Zebedee: Dennis, if I could add one other point to it. It keeps coming back to the theme of free barrels.

Richard M. Kruger: So that PFT, if we didn't have the ability to get it to our upgraders and capture the entire 6% uplift ourselves, we would sell that PFT on the market, and we would likely have to split that somewhere; some refiner or someone might pay some incremental value for that. But inevitably, in a commercial transaction, you would split it. So it gets right back to what Dave was describing, and with this level of integration, we're increasingly looking at how we can cut out the middleman in this thing and maximize value for ourselves. And I think PFT, the physical connection with the base plant and the upgraders, are yet another example of how we're able to do that in a way that our peers can't do.

Richard M. Kruger: Ourselves, we would sell that DFT in the market.

Richard M. Kruger: And we would likely have to split that in somewhere some a refiner or someone might pay some incremental value for that.

Richard M. Kruger: Inevitably in a commercial transaction you would split it so it gets right back to what Dave was describing is with this level of integration. We're increasingly looking at how can we cut out the middleman in this thing and maximize value for ourselves and I think PMT the physical connection with the base plant and the upgrader are yet another.

Richard M. Kruger: Other example of how we're able to do that in a way that our peers can't do it.

Richard M. Kruger: Great, I appreciate the color and good to see the field driven initiatives you highlighted in previous conference calls are paying some dividends here. I'll turn it back.

Speaker Change: Great I appreciate the color and good to see the field driven initiatives that you highlighted in previous conference calls our pay some dividends here.

Speaker Change: I will turn it back.

Operator: Thank you. One moment for our next question, and that will come from the line of Menno Hulshof with TD Cowan. Your line is open.

Speaker Change: Thank you one moment for our next question.

Menno Hulshof: And that will come from the line of mono wholesales with TD Cowen Your line is open.

Menno Hulshof: Thanks and good morning everyone. I'll start with a question on the Canadian diesel market. I was on another call yesterday, and there was a reference to what they were calling a global diesel recession. So I guess my question is, what is your take on that? And more importantly, how does the Canadian diesel market differ from the global markets? And how do you think, at a high level, Suncor is positioned relative to? Dave, do you want to comment? Sure.

Menno Hulshof: Thanks, and good morning, everyone I'll start with a question on the Canadian diesel market.

Dave: I was on another call yesterday, and there was a reference to what they were calling our global diesel recession. So I guess my question is what is your take on that.

Dave: And more importantly, how does the the Canadian diesel market differ from the global markets and how do you think at a high level Suncor is positioned on a relative basis.

Dave Oldreive: Dave, you want to come up? Sure, happy to take that one.

Menno Hulshof: Dave you want to comment sure happy to take that one thanks for the question Menno.

Dave Oldreive: Thanks for the question, Menno. You know, I think we're seeing some softening in the diesel market. I mean, actually, if you look at the cracks, year on year for the first quarter, you know, it was a more challenging environment in the first quarter of this year than last year. We were, the harbor was down about $10, Chicago was down about $12, our 5-2-2-1 crack softened that a bit because of our propensity to make diesel, our capability to make diesel. We were about $7 a barrel.

Dave Oldreive: I think we're seeing some softening in the diesel market I mean, if you look at the cracks.

Dave Oldreive: Year on year for the first quarter.

Dave Oldreive: It was a more challenging environment in the first quarter of this year than last year, we were.

Dave Oldreive: However was down about $10 Chicago was down about 12 or 5221 crack.

Dave Oldreive: Soften that a bit because of our propensity to make diesel our capability to make these were about $7 a barrel.

Dave Oldreive: We did see gasoline cracks pick up through the quarter and that that kind of helped the market overall But even with a $7 barrel headwind we were able to deliver higher profitability than last year And that's as Rich pointed out that's reliability and a bunch of other things You know, one of the things we can do in Suncor is we've got a network across the country that we can optimize Particularly where we put our diesel we were able to stand up additional logistics capability in Edmonton to move more diesel east, And that allowed us to put the diesel into the most profitable markets where we can again sell direct to customer, taking that intermediary out of the business transaction and capture all the value. And we have logistics assets on both coasts, out of Montreal and out of Burrard that allow us to export diesel into profitable markets.

Dave Oldreive: And we did see gasoline cracks pick up through the quarter and that kind of help the market overall, but even with the $7 a barrel headwind, we were able to deliver higher profitability than last year and thats as rich pointed out thats reliability, a bunch of other things.

Dave Oldreive: One of the things we can do in Suncor is we've got a network across the country that we can optimize.

Dave Oldreive: Particularly where we put our diesel we were able to stand up additional logistics capability in Edmonton to move more diesel east.

Dave Oldreive: And that allowed us to put the diesel into the most profitable markets, where we can again sell direct to customer taking that intermediary out of the out of the business transaction and capture all the value and we have logistics assets on both coasts out of Montreal and out of berard that allow us to export diesel into profitable markets in our trading organization has been able to.

Dave Oldreive: And our trading organization has been able to do a really nice job finding those niche markets that make a lot of sense for us. And I mentioned Scandinavia earlier, you know; Scandinavia saw some unique differentials with the conflicts, you know, nearby them in Eastern Europe and paid an additional premium for cloud barrels that we, low cloud barrels that we make in Canada. Similarly, off the West Coast, we sent diesel down to markets in Latin America; they pay extra for a cetane, and we make a high cetane due to our high hydrocracking capabilities in the market. So, some really interesting things we've been able to do to capture the diesel markets.

Dave Oldreive: So a really nice job finding those niche markets that makes a lot of sense for us and I mentioned Scandinavia earlier.

Dave Oldreive: <unk> and avs awesome unique differentials with the conflicts.

Dave Oldreive: Nearby them in.

Dave Oldreive: In eastern Europe, and have them pay us additional premium for cloud barrels that low cloud barrels that we make in Canada.

Dave Oldreive: Similarly off the West Coast, we said diesel down to markets in Latin America, they pay extra for cetane, and we make a high <unk> due to our high hydrocracking capabilities in the market. So some really interesting things we've been able to do to capture the diesel markets I'd say, hey, we cant control, where the market goes but.

Dave Oldreive: But what we can do is make sure we find the homes and to the best customers and capture the full value on the value chain.

Speaker Change: Thank you one moment our next question.

Operator: Thank you. One moment for our next question, which will come from the line of John Royall with J.P. Morgan. Your line is open.

Dave Oldreive: That will come from the line of John Royall with Jpmorgan. Your line is open.

John Macalister Royall: Hi, good morning. Thanks for taking my question.

John Macalister Royall: Hi, good morning, Thanks for taking my question.

John Macalister Royall: So, I think Manav got into this a little bit, but just wanted to ask a little more specifically, can you talk about the reliability of refining? You've had a really strong stretch of three quarters here in terms of utilization. I think it's probably the best three quarters consecutively I can find in your history. Can you talk about what's going on right there? And I know 2Q is a big quarter from a turnaround perspective, but should we expect more of the same in the second half and going forward?

John Macalister Royall: So I think Manav got into this a little bit, but just wanted to ask a little more specifically.

John Macalister Royall: Can you talk about the reliability and refining you've.

John Macalister Royall: <unk> had a really strong stretch of three quarters here in terms of utilization may pick it up.

John Macalister Royall: Probably the best three quarters consecutively I can find it in your history can you talk about what's going right. There and I know <unk> is a big quarter from a turnaround perspective, but should we expect more of the same in the second half and going forward.

Dave Oldreive: Go ahead. Sure. Happy to take that one.

Dave Oldreive: Thanks for the question, John. The answer: expect more of the same. I'll tell you. I'll tell you the answer ahead of time, Dave, on that one.

Speaker Change: Please go ahead, Sir I'm happy to take that one thanks for the question John the answer I expect more of the same.

Dave Oldreive: Yes.

Speaker Change: I would tell you the answer ahead of time.

Dave Oldreive: So performance review. Okay, so coming up, you know, we had a pretty challenging first half of the year in 23. And we made a number of changes in the downstream that I believe are beginning to move the needle, particularly in our refining assets. I'll be honest, it's relatively simple stuff.

Dave Oldreive: The performance of your gaming.

Speaker Change: Got it okay, so coming out.

Dave Oldreive: You did point out we had a pretty challenging first half of the year in 'twenty three and.

Dave Oldreive: And we made a number of changes in the downstream that I believe are beginning to move the needle, particularly in our refining assets.

Dave Oldreive: We started by creating clear lines of accountability, setting clear expectations, and really laser-focusing on the fundamentals. Simple things like, you know what? Safety performance improves when the sites actually steward safety results through the line chain of command and not through a central organization. In a similar vein, we've created clear stewardship for our assets around the whole balanced portfolio results, detailed stewardship across our asset mix to me, and then I steward for Rich as well.

Dave Oldreive: Honest, it's relatively simple stuff, we started by creating clear lines of accountability setting clear expectations and really laser focus on the fundamentals.

Dave Oldreive: Simple things like web safety improvement safety performance improves when the sites actually Stuart safety results through the line chain of command and not to a central organization in a similar vein, we've created clear stewardship to our assets around our whole balanced portfolio results detailed stewardship.

Dave Oldreive: Across our asset mix to me and then I steward to the rich as well we've created just a clearer sense of accountability in the organization would create a detailed scorecards as well, which which really allow us to measure across our balanced portfolio of results, but also stack the sites up against each other so there's a little bit of internal.

Dave Oldreive: We've created a clearer sense of accountability in the organization. We've created detailed scorecards as well, which really allow us to measure results across a balanced portfolio and also stack the sites up against each other. So there's a little bit of internal competitive tension that the organization is rising to. So it's, it's actually pretty pretty simple stuff so far. We've also been rolling out our, as Rich mentioned earlier, OEMS work processes; we're in the early stages of that.

Dave Oldreive: Competitive tension.

Dave Oldreive: But the organization is rising too.

Dave Oldreive: So, it's actually pretty pretty simple stuff so far.

Dave Oldreive: We've also been rolling out are as rich mentioned earlier Oems work processes. We're in early stages of that but there is huge section in the organization and we're seeing we're seeing immediate benefits coming from that already and I think you can expect EBIT more of that as we as we go forward. These are.

Dave Oldreive: But there is huge suction in the organization, and we're seeing immediate benefits coming from that already. And I think you can expect even more of that as we go forward. These are really simple, well-designed processes that will create consistent work processes across the organization and allow us to operate with. You know, it's no secret that our Commerce City refinery was part of the challenge in the second half or the first half of last year and even into 2022 to some extent.

Dave Oldreive: Really simple well design processes that will create consistent work processes across the organization and allow us to operate with excellence.

Dave Oldreive: So theres no secret our Commerce City refinery was part of the challenge.

Dave Oldreive: In the second half or the first half of last year and even into 2022 to some extent we've made changes there in terms of our leadership team we've undertaken a reliability of recovery initiative.

Dave Oldreive: We've made changes to our leadership team. We've undertaken a reliability and recovery initiative led by our VP down in Commerce City. They're doing a tremendous job, and that work is sponsored by me. In fact, we have stewardship from them to me this afternoon on how that's going. We do that monthly, and they're making incredible progress on their journey. So, I would say, hey, more to come in that space, but we think we've made some fundamental shifts in just how we're driving accountability in New York and John Fishridge.

Dave Oldreive: <unk> Bye RVP down in Commerce city. They are doing a tremendous job that work is sponsored by <unk>. In fact, we have stewardship from them to me. This afternoon on how that's going we do that monthly and Theyre, making incredible progress in their journey.

Dave Oldreive: I would say more to come in that space, but we think we've made some some fundamental shifts in just how we're driving accountability in the organization. John This rich I'd add one other thing to it because I think it's true not only in the downstream, but in the upstream last year, while we were going through a number of other changes day then Peter.

Richard M. Kruger: John, this is Rich. I'd add one other thing to it, and I think it's true not only downstream but upstream as well. Last year, while we were going through a number of other changes, Dave and Peter realigned all, and I mentioned this on the last call, all of their operating sites to the same kind of organizational structure. So now, whether it's operations managers, maintenance managers, or technical managers, we have networks nationwide of people who have the same jobs and the same accountabilities.

Richard M. Kruger: <unk> realigned all and I mentioned this on the last call all of their operating sites to the same kind of organizational structure. So now whether it's operations managers maintenance managers technical managers, we have we have networks nationwide of people who have the same jobs.

Richard M. Kruger: So although he referenced that we'll show sites against each other, I think the other aspect of it is that we've greatly enhanced the collaboration across sites. And even something as simple as we've said before, we went to one incentive scorecard for Suncor. Suncor wins and loses as a team, and that collaboration, I see it not only across the downstream or the upstream but between the upstream and downstream. And so, you know, these are not, you know, single things you point at as the solution, but it's the aggregate, it's the puzzle of connecting these pieces that creates a results-oriented, high-performance culture, and that is exactly what we're driving toward.

Richard M. Kruger: And the same accountabilities so although he referenced that will you know.

Richard M. Kruger: We'll show sites against each other I think the other aspect of it we've greatly enhanced the collaboration across sites and an even something as simple as we've said before we went to one.

Richard M. Kruger: Incentive scorecard for Suncor, Suncor wins and loses as a team and that collaboration I see it not only across the downstream or the upstream but between the upstream and downstream and so these are not single things you point out that this was the solution.

Richard M. Kruger: It's the aggregate it's the puzzle of connecting these pieces that gets a results oriented high performance culture and that is exactly what we're driving towards.

John Macalister Royall: That's very helpful. Thank you.

Speaker Change: That's very helpful. Thank you and then.

Speaker Change: Second one is maybe just more of a housekeeping one for Chris.

John Macalister Royall: And then the second one is maybe just a more of a housekeeping one for Chris, but you had a working capital headwind of about $380 million in 1Q. Can you talk about the drivers there? Is that mostly price? And then last year, you had a much larger headwind in 1Q, but you got a lot of it back in 2Q through 4Q. Should we expect to get any of that 1Q build back as we progress through the year? Yeah, thanks.

John Macalister Royall: You had a working capital headwind of about $380 million in <unk>.

John Macalister Royall: Can you talk about the drivers there is that mostly price and then last year you had a much larger headwind in <unk>, but you've got a lot of it back in <unk>.

John Macalister Royall: Should we expect to get any of that once you build back as we progress through the year.

Kristopher P. Smith: Yeah, thanks for that, John. Yeah, you're absolutely right the way you just framed it. I mean, Q1, primarily driven by higher sales volumes and pricing. So that's what we saw in the working capital kind of use of cash. And that's not unusual as well.

Chris: Yes, thanks for that John Yes, Youre, absolutely right. The way you just framed it I mean Q1.

Chris: Primarily driven by higher sales volumes pricing. So that's what we saw on the working capital kind of use of cash.

Kristopher P. Smith: And that's not unusual as well, we usually see a bit of a working capital build.

Kristopher P. Smith: We usually see a bit of a working capital build in Q1, particularly as we're prepping for turnarounds. And then, similarly, as we're heading into Q2, we're going to start to see inventories wind down as we support these turnarounds that we've been talking about. So I think the way you just described it, the good news is, from my perspective, we didn't see the large swing that we saw in Q1 of 2023. And so that's really what, you know, kind of the drivers behind what you saw in Q1. And then what kind of what should we expect as we come out of Q2?

Kristopher P. Smith: In Q1, particularly as we're prepping for turnarounds and then similarly, as we're heading into Q2 youre going to start to see inventories wind down as we are supporting these turnarounds that we've been talking about so I think the way you just described it the good news is from my perspective is we didnt see the large swing.

Kristopher P. Smith: What we saw in Q1 of 2023.

Kristopher P. Smith: And so that's really what.

Kristopher P. Smith: Kind of the drivers behind what you saw in Q1, and then what kind of what we should expect as we come out of Q2.

Speaker Change: Thank you.

Operator: Thank you. Thanks, John. One moment for our next question, and that will come from the line of Patrick O'Rourke with ATB Capital Markets. Your line is open.

Speaker Change: Yes, Thank you Shaun.

Patrick O'rourke: One moment for our next question.

Patrick O'rourke: And that will come from the line of Patrick O'rourke with ATB capital markets. Your line is open.

Patrick O'rourke: Hey, good morning, guys. And it's been a pretty comprehensive run through so far on a lot of the operational questions that I had. So maybe I'll ask something a little bit broader and more philosophical. You've obviously done some horse trading of assets here, Fort Hills, consolidating the working interests there, being the biggest piece of asset sales. Just wondering, you know, there's been some media reports about potentially opening things up again on the retail side.

Patrick O'rourke: Hey, good morning, guys and it's been pretty constant.

Patrick O'rourke: Comprehensive run through so far on a lot of the operational questions that I had so maybe ill ask something a little bit broader and more philosophical you've obviously done some horse trading of assets here Fort Hills consolidating the working interest there.

Patrick O'rourke: The biggest piece some asset sales just wondering.

Patrick O'rourke: Then there was some media reports about potentially opening things up again on the retail side maybe.

Patrick O'rourke: Maybe some broader commentary with respect to your views of the overall asset portfolio, potential M&A opportunities on sort of both sides of the ledger there. You know, I know the focus has been operations and improvements at the mines, and things are doing great, but on that front, do you look at transactions in this environment?

Patrick O'rourke: Some broader commentary with respect your views of the overall asset portfolio potential M&A opportunities on sort of both sides of the ledger there.

Patrick O'rourke: I know the focus has been in operations and improvements of the mines and things are doing great, but on that front, but if you look at transactions in this environment.

Richard M. Kruger: Yeah, sure, Patrick, you know, I just come in and we look at all of our assets all of the time in terms of their, you know, delivery of value today and what further potential they have at cost, a range of market conditions. You know, if you look at, you know, fundamentally who we are and what our, our core winning proposition is, it's this heavy integration between our upstream and our downstream assets that are fundamentally underpinned That's the family photo.

Patrick O'rourke: Yeah.

Speaker Change: Yes, sure Patrick I just commented we look we look at all of our assets all of the time in terms of their delivery of value today and what further potential they have in our costs a range of market conditions.

Richard M. Kruger: If you look at fundamentally who we are and what are our core winning proposition.

Richard M. Kruger: This this heavy integration between our upstream and our downstream assets that are fundamentally underpinned by large long life oil Sands resources. That's the family photo now that doesn't mean, we have we don't have cousins and Anson uncles and stuff that are part of the family, but they've got a.

Richard M. Kruger: Now, that doesn't mean we don't have cousins and aunts and uncles and stuff that are part of the family, but you know that they've got to contribute. And so we look at all of our assets all the time. I feel quite good about our asset base. But that doesn't mean we're not always looking for is there something that's worth more to someone else? Or is there something else out there that can enhance or add to, you know, our portfolio?

Richard M. Kruger: And so we look at all of our assets all the time I feel quite good about our asset base, but that doesn't mean, we're not always looking at is is there something thats worth more to someone else or is there something else out there that can enhance our ad too.

Richard M. Kruger: So you've acknowledged a few things we've done here in the recent, you know, year or so, Fort Hills, the renewable power business, things like that, the, you know, North Sea assets. We'll continue to look at that. I don't I'm not signaling anything. I don't have anything on the, you know, view screen right now. But that's just what we do as we manage a portfolio.

Richard M. Kruger: Our portfolio. So you have acknowledged a few things we've done here in the recent year or so Fort Hills.

Richard M. Kruger: The renewable power business things like that the North Sea assets will continue to look at that I don't Im not signaling anything I don't have anything on the view.

Richard M. Kruger: <unk> screen right now, but thats just what will you do is we manage a portfolio.

Patrick O'rourke: Okay, great. And then maybe, you know, on the return of capital policy, I'm not sure if you're able to forecast here at Strip, but in terms of the next hurdle at the 12 billion, you know, timeframe, potentially around that, and then thoughts with the structural improvement, to the business that you're making and the, you know, the increasing free cash flow that those generate, how do you think about allocating that structural improvement between say dividends and and, you know, the balance being the NCIP?

Speaker Change: Okay, Great and then maybe on the return of capital policy.

Patrick O'rourke: Im not sure if youre able to forecast here at strip, but in terms of the next hurdle at the 12 billion timeframe potentially around that and then thoughts with the structural improvements to the business that youre, making any increasing free cash flow of those generate how you think about allocating that.

Patrick O'rourke: Structural improvement between say dividends and the balance being the NCI.

Richard M. Kruger: Yeah, you know, we will talk about this at length on May 21st, but let me just comment a little bit. The current capital allocation framework with the tiers, I think it's important that was put in place, what, Chris, 2021 or so? And, you know, things change over time. And I think, you know, I'll just reiterate Chris's point made a few minutes ago, that when we look at the underlying performance of the business and our confidence in that business to, you know, deliver incremental cash, that's different today than it was a few years ago.

Speaker Change: Yes, we.

Richard M. Kruger: We'll talk about this at length on the 20 <unk> of May 21st, but let me just comment a little bit the current capital allocation framework with the tiers I think it is important that was put in place what Chris 2021 and.

Richard M. Kruger: And things.

Richard M. Kruger: Things change over time, and I think I'll, just reiterate Chris's point made a few minutes ago is when we look at our underlying performance of the business and and our confidence in that business to deliver incremental cash that's different today than it was a few years ago.

Richard M. Kruger: So as we look at capital allocation, I mean, we want to have a strong, resilient balance sheet. We want to continue to pay a reliable and growing dividend. But we also look at, you know, what exactly does it take? So all of those things are kind of works in progress. And what we plan to do on the 21st is kind of, you know, share that philosophy with you about how we see our performance in the world we're operating in today. And what does that mean? So that's, that's a long answer to stay tuned. Okay, thank you very much.

Richard M. Kruger: So as we look at capital allocation, we want to wrap up a strong resilient balance sheet, we want to continue to pay a reliable and growing dividend.

Richard M. Kruger: First from a sustaining capital.

Richard M. Kruger: Take care of the assets you have but.

Richard M. Kruger: But we also look at what exactly does it take so all of those things are kind of works in motion and what we plan to do on the 20 <unk> is kind of <unk>.

Richard M. Kruger: Share that philosophy with you how we see our performance in the World. We're operating in today and what does that mean, so that's that's a long answer to stay tuned.

Richard M. Kruger: Okay. Thank you very much.

Speaker Change: Thank you one moment our next question.

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

Patrick O'rourke: Yes, thanks for letting me back on. I dropped the call halfway through your answer, Dave, but I'll be sure to pull the transcript. Yeah, it was just dead silence after your answer.

Speaker Change: Yes, thanks for letting me back on I dropped the call halfway through your answer David but I'll be sure to to pull the transcript. So my second.

Speaker Change: Second we want to take that first.

Patrick O'rourke: Okay.

Speaker Change: Yes. It was just dead silence after the answer but.

Patrick O'rourke: Second question was on the replacement of Oems, If I, if I wrote that down correctly.

Speaker Change: The question I guess is how much is that going to cost do you see any risk in migrating to the new system and how quickly do you expect that project to pay out. Thank you.

Menno Hulshof: But the second question was on the replacement of OEMS, if I wrote that down correctly. The question, I guess, is how much is that going to cost? Do you see any risk in migrating to the new system? And how quickly do you expect that project to pay off? Thank you.

Patrick O'rourke: Yeah.

Speaker Change: I'm sorry go ahead.

Richard M. Kruger: Yeah, you know, you know, Menno, the, the, I think anytime you have change, particularly in an operation, you need to be very, very thoughtful about your management of the change process as you go from one way of doing things to another. And I'm looking down the table here at Shelley, Peter, and Dave, and they meet comprehensively. I know they meet monthly on this very topic, but I also know since their offices are right down the hall, they talk about it daily. So we want it to be very thoughtful as we do it. So we don't drop anything in the process, and I would say we feel good, quite good about that.

Menno Hulshof: Yes.

Richard M. Kruger: <unk>.

Richard M. Kruger: I think anytime you have changed particularly that at an operation needed to be very very thoughtful about your management of change process. As you go from one way of doing things to another and Im looking at down the table here at Shelly, Peter and Dave and they meet comprehensively I know they meet monthly on this.

Richard M. Kruger: Very topic, but I also know since their offices are right down the hall. They talk about this daily. So we wanted to be very thoughtful as we do it. So we don't drop anything in the process and I would say we feel good quite good about that the cost.

Richard M. Kruger: The cost, it's, the cost has been incurred. The cost is people's time to collaborate and develop the systems and the vision of where we are and where we want to go. So there's not a cost.

Richard M. Kruger: The cost has been incurred the cost is people's time to collaborate and develop the systems and the vision of where we are and where we want to go. So there is not a cost there is a benefit that comes with this and I would say I'll shut up and let the my three experts talk about it.

Richard M. Kruger: There's a benefit that comes with this. And I would say, I'll shut up and let my three experts talk about it, but a real test in the operational world is whether or not you're asking the operations to do something different, are you pushing it on them? Or are they pulling it to them? And by the way, when we put this together with fundamental first-level individuals involved, site leadership, there is a pull and a draw.

Richard M. Kruger: A real test I always in the operational World is as Youre asking the operations to do something different are you pushing it on them or are they pulling it to them and by the way. We put this together with fundamental first lot level individuals' involve site leadership there is a pull.

Richard M. Kruger: They are seeing how the new system can make their lives clearer, simpler, better, safer, more efficient, and more productive. That, to me, usually is the biggest indication of whether we are doing the right thing. Are the operations calling for it? You know, maybe, Shelly, if you have any other comments, you've been driving this train.

Richard M. Kruger: Draw they are seeing how the new system can make their life clearer a simpler better safer more efficient more productive that to me usually is the biggest indication of how are we doing the right thing or the operations, calling for maybe Shelley. If you have any other comments you've been drive.

Shelley Powell: Yeah, for sure. We're really excited about this. I would say that at the heart of it is really a fundamental shift in defining how work happens at each site. As Rich mentioned, we had kind of been leaving it up to each site to figure out how to do work. This change is really about implementing standardized processes across all of our sites, so that we really get repeatability within one site.

Shelly: This train.

Shelly: For sure. We're really excited about this I would say at the heart of it is really the fundamental shifts in defining how work happens at each site I think rich mentioned, we have kind of been leaving it up independently to each site to figure out how to do work. This team is really about implementing standardized process.

Shelley Powell: Across all of our sites, so that we really get repeatability within one site, we get consistency across multiple sites really driving to predictable outcomes at the end of this so this is about I'm sure you've heard the phrase that a rising tide lifts all boats.

Shelley Powell: We get consistency across multiple sites, really driving to predictable outcomes at the end. So this is about, I'm sure you've heard the phrase that a rising tide lifts all boats. This is about OEMS being that tide, lifting all of our sites so that we have consistent, predictable outcomes at the end. And just one more plug.

Shelley Powell: This is about Oems being that tide lifting all of our sites. So that we have consistent predictable outcomes at the end of this is just one more plug for Shelly and her team before we launched off we didn't just.

Shelley Powell: And just one more plug for Shelley and her team. Before we launched off, we didn't just cook this here in this tower in Calgary. They went and did a comprehensive assessment of industry best practices. Who's the best at this? And we didn't copy and paste any one. We took what we thought were the best attributes of components across the industry, not just oil and gas, but manufacturing to safely manage cost, reliability, risk, etc.

Shelley Powell: Cook. This here in this tower in Calgary, They went and did a comprehensive assessment of industry best practices Who's the best at this and we didn't copy and paste any one we took what we thought were the best attributes of components across the industry, not just oil and gas but man.

Shelley Powell: Are you factoring to safely manage cost reliability risk et cetera, and so we've created a one of a kind here, but it's based on the best of what we've seen across the globe I think the way they've done this I've been a part of a lot of these things over 40 years might have.

Shelley Powell: And so we've created a one of a kind here, but it's based on the best of what we've seen, you know, across the globe. I think the way they've done this, I've been a part of a lot of these things over four years, but my hat's off to the way this team developed what I think is going to be a game changer for this company for a long time. That's very helpful. I'll turn it back.

Richard M. Kruger: Thank you. I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Troy Little for any closing remarks.

Troy Little: Hats off to the way. This team developed what I think is going to be a game changer for this company for a long time.

Troy Little: That's very helpful I'll turn it back.

Troy Little: Thank you I'm showing no further questions in the queue at this time I would like to turn the call back over to Mr. Choi little for any closing remarks.

Troy Little: Thank you, everyone, for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team.

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

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

Troy Little: Yeah.

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

Operator: Okay.

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