Q2 2024 MEG Energy Corp Earnings Call

Joelle: Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to MEG Energy's 2024 Q2 Resolved Conference Call. All lines have been placed on mute to prevent any background noise.

Joel: Good morning, my name is Joel, and I will be your conference operator today.

Joelle: Good morning. My name is Joelle and I will be your conference operator today. At this time, I would like to welcome everyone to the MEG Energy's 2024 Q2 Resolve conference call.

Joel: At this time, I would like to welcome everyone to the MEG Energy's 2020 Q2 resolved conference call. All lines have been placed on mute to prevent any background noise.

Joelle: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the two. Thank you. Mrs. Darlene Gates, CEO, you may begin your conference. Thank you, Joelle.

Joel: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the two. Thank you.

Joelle: All lines have been placed on mute to prevent any background noise.

Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, followed by the 2. Thank you. Mrs. Darlene Gates, CEO , you may begin your conference.

Joel: Mrs. Darlene Gates, CEO, you may begin your conference.

Darlene Gates: Thank you, Joel. Good morning, everyone, and thank you for joining us to review MEG Energy's second quarter, 2024 financial and operating results. With me on this call this morning, are Ryan Kubik, Archie Financial Officer, Lyle Hughes-Debsky, our Senior Vice President of Legal and Corporate Development, and Erik Alson, our Senior Vice President of Marketing.

Darlene M. Gates: Good morning, everyone, and thank you for joining us to review MEG Energy's second quarter 2024 financial and operating results. With me on this call this morning are Ryan Kubik, our Chief Financial Officer, Lyle Yuzdepski, our Senior Vice President of Legal and Corporate Development, and Eric Alson, our Senior Vice President of Marketing. I'd like to remind our listeners that this call contains forward-looking information. Please refer to the cautions in our disclosure documents filed on CDAR and our website.

Speaker Change: Thank you, Joelle. Good morning, everyone, and thank you for joining us to review MEG Energy's second quarter 2024 financial and operating results.

Speaker Change: With me on this call this morning are Ryan Kubik, our Chief Financial Officer, Lyle Yuzdepski, our Senior Vice President of Legal and Corporate Development, and Eric Alson, our Senior Vice President of Marketing.

Darlene Gates: I'd like to remind our listeners that this call contains forward-looking information. Please refer to the advisories in our disclosure documents filed on Cedar and our website.

Speaker Change: I'd like to remind our listeners that this call contains forward-looking information. Please refer to the advisories in our disclosure documents filed on CDAR and our website.

Darlene Gates: I'll keep my remarks brief today for further detail on our second quarter results. Please refer to yesterday's press release.

Darlene M. Gates: I'll keep my remarks brief today. For further detail on our second quarter results, please refer to yesterday's press release. I'd like to begin today by providing an update on our wildfire situation. Last week we proactively evacuated non-essential personnel from the site and continued to operate our Christina Lake facility with a reduced and essential workforce.

Speaker Change: I'll keep my remarks brief today. For further detail on our second quarter results, please refer to yesterday's press release.

Darlene Gates: I'd like to begin today by providing an update on our wildfire situation. Last week, we proactively evacuated non-essential personnel from the site and continued to operate our Christina Lake facility with a reduced and essential workforce. To date, the wildfire has not directly impacted our facility, and production remains steady. I'm pleased to share that we have started to return evacuated workers to site as of today. I want to express my appreciation for our dedicated team for their ongoing efforts in ensuring safe and continuous operation of Christina Lake. They also exemplified collaboration with our industry partners and communities.

Speaker Change: I'd like to begin today by providing an update on our wildfire situation.

Speaker Change: Last week, we proactively evacuated non-essential personnel from the site and continued to operate our Christina Lake facility with a reduced and essential workforce.

Darlene M. Gates: To date, the wildfire has not directly impacted our facility, and production remains steady. I'm pleased to share that we have started to return evacuated workers to site as of today. I want to express my appreciation for our dedicated team for their ongoing efforts in ensuring the safe and continuous operation of Christina Lake. They also exemplified collaboration with our industry partners and communities. I want to recognize Alberta Forestry and Parks for their selfless support in ensuring the safety of our people and communities. Thank you for everything that they are doing to help keep us all safe and for their ongoing efforts.

Speaker Change: To date, the wildfire has not directly impacted our facility and production remains steady.

Speaker Change: I'm pleased to share that we have started to return evacuated workers to site as of today.

Speaker Change: I want to express my appreciation for our dedicated team for their ongoing efforts in ensuring safe and continuous operation of Christina Lake.

Speaker Change: They also exemplified collaboration with our industry partners and communities.

Darlene Gates: I want to recognize Alberta Forestry and Parks for their selfless support in ensuring the safety of our people and communities. Thank you for everything that they are doing to help keep us all safe and their ongoing efforts.

Speaker Change: I want to recognize Alberta Forestry and Parks for their selfless support in ensuring the safety of our people and communities. Thank you for everything that they are doing to help keep us all safe and their ongoing efforts.

Darlene Gates: Moving on to business results. I'm proud of Meg's strong safety operating and financial performance in the second quarter of 2024, which demonstrates the team's continuous focus on operational excellence. These business results mean that Meg expects to reach its US $600 million net debt target in the third quarter. And I'm pleased to announce that Meg's board of directors has approved an inaugural quarterly cash dividend of $0.10 per share. This announcement is a culmination of a robust multi-year debt repayment and capital allocation strategy, and highlights Meg's maturation as a senior Canadian oil producer. Further to our longstanding commitment, shareholder returns will rise to 100% of free cash flow, with an emphasis on continued share buybacks and a quarterly-based dividend.

Darlene M. Gates: Moving on to business results, I'm proud of MEG's strong safety, operating, and financial performance in the second quarter of 2024, which demonstrates the team's continuous focus on operational excellence. These business results mean that MEG expects to reach its U.S. $600 million net debt target in the third quarter. And I'm pleased to announce that MEG's Board of Directors has approved an inaugural quarterly cash dividend of $0.10 per share.

Speaker Change: Moving on to business results.

Speaker Change: I'm proud of MEG's strong safety, operating, and financial performance in the second quarter of 2024, which demonstrates the team's continuous focus on operational excellence.

Speaker Change: These business results mean that MEG expects to reach its U.S. $600 million net debt target in the third quarter, and I'm pleased to announce that MEG's Board of Directors has approved an inaugural quarterly cash dividend of $0.10 per share.

Darlene M. Gates: This announcement is the culmination of a robust multi-year debt repayment and capital allocation strategy and highlights MEG's maturation as a senior Canadian oil producer. Further to our longstanding commitment, shareholder returns will rise to 100% of free cash flow with an emphasis on continued share buybacks and a quarterly-based dividend. This dividend equates to an approximate 1.5% annual yield at MEG's current share price, a level that is positioned to grow through disciplined capital allocation.

Speaker Change: This announcement is the culmination of a robust multi-year debt repayment and capital allocation strategy and highlights MEG's maturation as a senior Canadian oil producer.

Speaker Change: Further to our long-standing commitment, shareholder returns will rise to 100% of free cash flow, with an emphasis on continued share buybacks and a quarterly-based dividend.

Darlene Gates: This dividend equates to an approximate 1.5% annual yield at Meg's current share price, a level that is positioned to grow through disciplined capital allocates.

Speaker Change: This dividend equates to an approximate 1.5% annual yield at MEG's current share price, a level that is positioned to grow through disciplined capital allocation.

Darlene Gates: Foundation. The dividend will be payable on October 15th, 2024, to shareholders of record at the close of business on September 17th, 2024. Recorded $354 million of adjusted funds flow in the second quarter, and after funding $123 million in capital expenditures, we generated $231 million of free cash flow. That free cash flow facilitated the repayment of US $53 million in senior notes and allowed for the repurchase of $68 million or $2.2 million make shares. Year-to-date, we have repaid US $158 million of debt and repurchased $7 million shares to $195 million of share repurchase. Net debt, as of June 30th, was US$634 million.

Darlene M. Gates: The dividend will be payable on October 15, 2024 to shareholders of record at the close of business on September 17, 2024. MEG recorded $354 million of adjusted funds flow in the second quarter, and after funding $123 million in capital expenditures, we generated $231 million of free cash flow. That free cash flow facilitated the repayment of US $53 million in senior notes and allowed for the repurchase of $68 million, or $2.2 million next year. Year-to-date, we have repaid US $158 million of debt and repurchased 7 million shares, totaling $195 million of share repurchase. The net debt as of June 30th was U.S. $634 million.

Speaker Change: The dividend will be payable on October 15, 2024 to shareholders of record at the close of business on September 17, 2024.

Speaker Change: MEG recorded $354 million of adjusted funds flow in the second quarter, and after funding $123 million in capital expenditures, we generated $231 million of free cash flow.

Speaker Change: That free cash flow facilitated the repayment of U.S. $53 million in senior notes and allowed for the repurchase of 68 million or 2.2 million mixed shares.

Speaker Change: Year-to-date, we have repaid U.S. $158 million of debt and repurchased 7 million shares, totaling $195 million of share repurchases.

Speaker Change: Net debt as of June 30th was U.S. $634 million.

Darlene M. Gates: Another milestone in the second quarter was the start-up of the Trans Mountain Expansion Pipeline. MEG began shipping on our 20,000 barrel per day contracted capacity of Candace West Coast to Candace West Coast, and our first cargo left the dock in. This was an important milestone which removed long-standing Western Canadian transportation constraints, which we believe will lead to narrower and less volatile Canadian heavy oil differentials, improving MEG's netbacks and profitability. This was evident in the tightening of the WCF to WTI differential of US $5.70 per barrel in Q2, relative to the first quarter of 2024. Our second quarter average bitumen realization after net transportation and storage expense of $74 per barrel represents a 28% increase over the same period in 2023.

Darlene Gates: Another milestone in the second quarter was the start-up of the Trans Mountain Expansion pipeline. Make began shipping on our 20,000-barrel-podate contractive capacity of Candace West Coast to Candace West Coast, and our first cargo left the dock in June. This was an important milestone which removed long-standing Western Canadian transportation constraints, which we believe will lead to narrower and less volatile Canadian heavy oil differential and proving makes net backs and profitability. This was evident in the tightening of the WCS to WTI differential of US $1.70 per barrel in Q2 relative to the first quarter of 2024. Our second quarter average vitamin realization after net transportation and storage expense of $74 per barrel represents a 28% increase over the same period in 2023.

Speaker Change: Another milestone in the second quarter was the start-up of the Trans Mountain Expansion Pipeline. MEG began shipping on our 20,000 barrel per day contracted capacity of Candace West Coast to Candace West Coast, and our first cargo left the dock in June .

Speaker Change: This was an important milestone which removed long-standing Western Canadian transportation constraints, which we believe will lead to narrower and less volatile Canadian heavy oil differentials, improving MEG's net backs and profitability.

Speaker Change: This was evident in the tightening of the WCS to WTI differential of U.S. $5.70 per barrel in Q2, relative to the first quarter of 2024.

Speaker Change: Our second quarter average bitumen realization after net transportation and storage expense of $74 per barrel represents a 28% increase over the same period in 2023.

Darlene Gates: On our operating front, vitamin production for the quarter averaged approximately 100,500 barrels per day, representing a 17% increase over the second quarter of 2023. This improved performance was driven by continued strong results from our recent safety pads and reduced turnaround scope. We converted the first group of wells from our newest pads production late in the quarter, and they are ramping up in line with expectation. Our second quarter seemed to el-racia of 2.44 reflects planned circulation of steam to these new wells.

Darlene M. Gates: On the operating front, bitumen production for the quarter averaged approximately 100,500 barrels per day, representing a 17% increase over the second quarter of 2023. This improved performance was driven by continued strong results from our recent CYCPADS and reduced turnaround scope. We converted the first group of wells from our newest pad to production late in the quarter, and they are ramping up in line with expectations. Our second quarter steam-to-oil ratio of 2.44 reflects planned circulation of steam to these new wells.

Speaker Change: On our operating front, bitumen production for the quarter averaged approximately 100,500 barrels per day, representing a 17% increase over the second quarter of 2023.

Speaker Change: This improved performance was driven by continued strong results from our recent Psych-D pads and reduced turnaround scope.

Speaker Change: We converted the first group of wells from our newest pad to production late in the quarter, and they are ramping up in line with expectations.

Speaker Change: Our second quarter steam-to-well ratio of 2.44 reflects planned circulation of steam to these new wells.

Darlene Gates: As we move into the second half of 2024, we anticipate higher production volumes with the addition of these new wells coming on. This, coupled with the start-up of the second pad late in the year, positions us for a strong exit to 2024. Operating expenses net of power revenue in the second quarter averaged in industry-leading $6.62 per barrel. We continue to benefit from low natural gas prices and power revenues offsetting 54% of energy operating costs during the quarter. This results in the $0.99 per barrel of energy operating cost net of power revenues.

Darlene M. Gates: As we move into the second half of 2024, we anticipate higher production volumes with the addition of these new wells coming on stream. This, coupled with the startup of a second pad late in the year, positions us for a strong exit in 2024. Operating expenses net of power revenue in the second quarter averaged an industry-leading $6.62 per barrel.

Speaker Change: As we move into the second half of 2024, we anticipate higher production volumes with the addition of these new wells coming online.

Speaker Change: This, coupled with the start-up of a second pad late in the year, positions us for a strong exit to 2024.

Speaker Change: Operating expenses net of power revenue in the second quarter averaged an industry-leading $6.62 per barrel.

Darlene M. Gates: We continue to benefit from low natural gas prices and power revenues, offsetting 54% of energy operating costs during the quarter. This results in $0.99 per barrel of energy operating cost net of power revenue. Capital investments in the quarter totaled $123 million, primarily directed towards drilling activity on site deep pads and our short cycle redevelopment and infill program. Engineering and design work on our facility expansion plan continues to progress, with a final investment decision expected later in the year. On our 2024 Capital and Operating Guidance, it remains unchanged. Now, for a brief update on Oil Temp. pathway to life

Speaker Change: We continue to benefit from low natural gas prices and power revenues, offsetting 54% of energy operating costs during the quarter. This results in $0.99 per barrel of energy operating costs net of power revenues.

Darlene Gates: Capital investments in the quarter totaled $123 million, primarily directed towards drilling activity on safety pads, and our short cycle redevelopment and infill programs. Engineering and design work on our Facility Expansion Plan continues to progress, with a final investment decision expected later in the year.

Speaker Change: Capital investments in the quarter totaled $123 million, primarily directed towards drilling activity on site-deep paths and our short-cycle redevelopment and infill programs.

Speaker Change: Engineering and design work on our facility expansion plan continues to progress with a final investment decision expected later in the year.

Darlene Gates: On our 2024 capital and operating guidance, it remains unchanged.

Speaker Change: On our 2024 Capital and Operating Guidance, it remains unchanged.

Darlene Gates: Now, to a brief update on the Oil-Tenth Pathways Alliance. Regulatory applications to the Alberta Energy Regulator seeking approvals for pathways CO2 transportation network and storage are continuing, and the front-end engineering and design on the proposed 400-kilometer CO2 transportation line is now more than 75 percent complete. Formal consultation engagement with Indigenous groups along with the proposed CO2 transportation corridor and storage network continues. And the Pathways Alliance continues to work actively with both the federal and Alberta governments on the necessary policy and co-financing frameworks required to move the project forward.

Speaker Change: Now, to a brief update on the Oil Tens Pathways Alliance.

Darlene M. Gates: Regulatory applications to the Alberta Energy Regulator seeking approvals for Pathways CO2 Transportation Network and Storage Hubs are continuing, and the front-end engineering and design on the proposed 400 km CO2 transportation line is now more than 75% complete. Formal consultation and engagement with Indigenous groups along with the proposed CO2 transportation corridor and storage network continues. And the Pathways Alliance continues to work actively with both the federal and Alberta governments on the necessary policy and co-financing frameworks required to move the project forward.

Speaker Change: Regulatory applications to the Alberta Energy Regulator seeking approvals for Pathways CO2 transportation network and storage hubs are continuing and the front-end engineering and design on the proposed 400 kilometer CO2 transportation line is now more than 75% complete.

Speaker Change: Formal consultation engagement with Indigenous groups along with the proposed CO2 transportation corridor and storage network continues.

Speaker Change: And the Pathways Alliance continues to work actively with both the federal and Alberta governments on the necessary policy and co-financing frameworks required to move the project forward.

Darlene Gates: Lastly, I'd like to welcome Mike McCallister to the Board of Directors, effective July 1st. Mr. McCallister brings over 40 years of energy industry experience, having held several executives and technical overseeing operations, development, marketing, and corporate services. His experience and expertise will be of significant benefit to our board as we execute our strategic initiative.

Darlene M. Gates: Lastly, I'd like to welcome Mike McAllister to MEG's Board of Directors, effective July 1st. Mr. McAllister brings over 40 years of energy industry experience, having held several executive and technical positions overseeing operations, development, marketing, and corporate services.

Mike Mcallister: Lastly, I'd like to welcome Mike McAllister to MEG's Board of Directors, effective July 1st.

Mike Mcallister: Mr. McAllister brings over 40 years of energy industry experience, having held several executive and technical roles, overseeing operations, development, marketing, and corporate services.

Darlene M. Gates: His experience and expertise will be of significant benefit to our board as we execute our strategic initiative. 2024 has been a milestone year for MEG as we reach the culmination of our balanced sheet improvement strategy, and the TMX startup diversifies market access and offers the potential for improved netbacks on all our products. With our commitment to returning 100% of free cash flow to shareholders, the introduction of a base dividend, and our transition to self-funded moderate organic growth production, MEG has solidified its position as a leading pure-play oil investor.

Mike Mcallister: His experience and expertise will be of significant benefit to our board as we execute our strategic initiatives.

Darlene Gates: 2024 has been a milestone year for Meg as we reach the culmination of our balance sheet improvement strategy, and the TMX startup diversifies market access and offers the potential for improved netbacks on all our production. With our commitment to returning 100 percent to free cash flow to shareholders, the introduction of a base dividend, and our transition to self-funded moderate organic growth production, Meg has solidified its position as a leading pure-play oil investment.

Speaker Change: 2024 has been a milestone year for MEG as we reach the culmination of our balance sheet improvement strategy and the TMX startup diversifies market access and offers the potential for improved netbacks on all our production.

Speaker Change: With our commitment to returning 100% to free cash flow to shareholders, introduction of a base dividend, and our transition to self-funded moderate organic growth production, MEG has solidified its position as a leading pure-play oil investment.

Darlene Gates: On behalf of Meg's board of directors and our management team, I want to thank you for your continued support.

Darlene M. Gates: On behalf of MEG's board of directors and our management team, I want to thank you for your continued support. With that, I'll turn it back over to Joelle to begin the Q&A. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by the number on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the number. If you are using a speakerphone, please lift the handset

Speaker Change: On behalf of MEG's Board of Directors and our management team, I want to thank you for your continued support.

Joel: With that, I'll turn it back over to Joelle to begin the Q&A.

Speaker Change: With that, I'll turn it back over to Joelle to begin the Q&A.

Joel: Thank you.

Joel: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please put your hands up before pressing any keys. One moment, please, for your first question.

Joelle: Thank you. Ladies and gentlemen, we will now begin the question and answer session.

Joelle: Should you have a question, please press star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys.

Joelle: One moment, please, for your first question. Your first question comes from Greg Pardy with RBC. Your line is now open. Thanks. Good morning.

Greg Pardy: Your first question comes from Greg Party with RBC. Your line is now open.

Speaker Change: One moment, please, for your first question. Your first question comes from Greg Party with RBC. Your line is now open.

Greg Pardy: Thanks. Thanks, good morning.

Darlene M. Gates: Thanks for the rundown, Darlene, and good move on the dividend. A couple of questions, but maybe the biggest one is, I realize it's still early, but how are you thinking about just the pace of your capital investment? Obviously, not so much this year, but more as we get into 2025 and 2026. Thanks, Greg. Good morning.

Greg Pardy: Thanks for the rundown, darling, and good move on the dividend.

Greg Pardy: Thanks. Thanks. Good morning. Thanks for the rundown, Darlene, and good move on the dividend. A couple of questions, but maybe the biggest one is, I realize it's so early, but

Greg Pardy: A couple of questions, but maybe the biggest one is, I realize it's still early, but how are you thinking about just the cadence of your capital investment? Obviously not so much this year, but more as we get into 2025 and 2026.

Greg Pardy: How are you thinking about just the cadence of your capital investment? You know, obviously not so much this year, but more as we get into 2025 and 2026.

Darlene Gates: Thanks, Greg.

Darlene M. Gates: When we look at the 25 and 2026, as you know, with a strong operating performance, a strong financial performance, as we look ahead now, we're going to be focusing ourselves on moderate growth of three to 5% per year. Our team is evaluating those opportunities that we have right now. I would call them modest, bottlenecking growth.

Darlene Gates: Good morning. When we look at the 25 and 2026, as you know, with a strong operating performance, a strong financial performance, as we look ahead now, it's going to be focusing ourselves on moderate growth, 3% to 5% per year. Our team is evaluating those opportunities that we have right now. I would call them Modesty Bottleneck and Growth. They're very rapidly efficient. Most of those projects are projects that we have experienced with. And the team is really refining those projects of how to integrate them and deliver the most rapidly efficient program. I look ahead at the numbers; of course, we haven't finalized any of these numbers.

Speaker Change: Thanks, Greg. Good morning. When we look at the 2025 and 2026, as you know, with a strong operating performance, a strong financial performance, as we look ahead now, it's going to be focusing ourselves on moderate growth, 3 to 5 percent per year.

Speaker Change: Our team is evaluating those opportunities that we have right now. I would call them modesty, bottleneck, and growth.

Darlene M. Gates: They're very capital efficient. Most of those projects are projects that we have experience with. And the team is really refining those projects on how to integrate them and deliver the most capital efficient program. As I look ahead at the numbers, of course, we haven't finalized any of these numbers, but I don't see any year exceeding, you know, they should range between 550 and 650. That would be sort of that capital cadence over the next several years to deliver that moderate growth program that the team is proposing. Okay. Okay. Thanks for that!

Speaker Change: They're very capitally efficient, most of those projects are projects that we have experience with, and the team is really refining those projects of how to integrate them and deliver the most capitally efficient program.

Speaker Change: As I look ahead at the numbers, of course, we haven't finalized any of these numbers, but I don't see any year exceeding, you know, they should range between 550 to 650, would be sort of that capital cadence over the next several years to deliver that moderate growth program that the team is proposing.

Darlene Gates: But I don't see any year exceeding; you know, they should range between 550 to 650 would be sort of that capital cadence over the next several years to deliver that moderate growth program that the team is proposing.

Greg Pardy: Okay, okay. Thanks for that.

Darlene M. Gates: And I'm going to shift gears entirely. If we roll back the clock, like this time last year, WCS spreads were, I don't know, you know, $10 or so, $10, $11, and some of that obviously impacted by outages on wildfires earlier in the season in 2023. Have the spreads surprised you guys a little bit as to how wide they are?

Greg Pardy: And I'm going to shift gears entirely. If we roll back to clock like this time last year, WCS spreads were, I don't know, you know, ten bucks or so, ten eleven dollars. And some of that obviously impacted by outages on wildfires earlier in the season in 2023. Have the, have the spreads surprise you guys a little bit as to how wide they are. And then, but more importantly, I'm interested in what you think the path might be around spreads, particularly as we get into the autumn timeframe.

Speaker Change: Okay, okay. Thanks for that. And I'm going to shift gears entirely.

Speaker Change: If we roll back the clock, like this time last year, WCS spreads were, I don't know, you know, $10 or so, $10, $11, and some of that obviously impacted by outages on wildfires earlier in the season in 2023. Have the spreads surprised you guys a little bit as to how wide they are? But more importantly, I'm interested in what you think the path...

Erik Alson: And then, but more importantly, I'm interested in what you think the path might be around the spread, particularly as we get into the autumn timeframe. Thanks, Greg. It's Eric.

Speaker Change: might be around spreads, particularly as we get into the autumn time frame.

Erik Alson: Looking at the differentials, say Q3, differentials have widened slightly on available inventory and a number of unplanned outages in pads two and three in Mexico. We'll still see the typical widening, seasonal widening in the winter, but our view remains unchanged that Edmonton differentials will largely range in that minus 10 to minus 15 range. Okay. Terrific. Thanks very much. Your next question comes from Menno Hulshof with TD Cowan. Your line is now open. Good morning, everyone.

Eric Olson: Thanks, Greg. It's Eric.

Greg Pardy: Thanks, Greg.

Speaker Change: Looking at the differentials, let's say Q3, differentials have widened slightly on available inventory and a number of unplanned outages.

Darlene Gates: The potentials of white and slightly on available inventory and a number of unplanned outages in pads, two pads, three in Mexico. We'll still see the typical widening, seasonal widening in the winter. But our view remains unchanged that Edmonton differentials will largely range in that minus ten to minus fifteen range. Okay.

Speaker Change: In PADS 2, PADS 3 in Mexico, we'll still see the typical widening, the seasonal widening in the winter, but our view remains unchanged that Edmonton differentials will largely range in that minus 10 to minus 15 range.

Greg Pardy: Terrific. Thanks very much.

Speaker Change: Okay. Terrific. Thanks very much.

Menno Hulshof: Your next question comes from Meadow, Menow, Wholeshoff with Judy Cowan. Your line is now open. Good morning, everyone. And thanks for taking my questions. Maybe I'll just start with one on the game plan for the base dividend, which has been said fairly conservatively. And I understand this is a really volatile business, but is the plan or the hope maybe to rateably grow the dividend? And how important is that to the board?

Speaker Change: Welcome.

Speaker Change: Your next question comes from Menno Hulshof with TD Cowan. Your line is now open.

Ryan M. Kubik: And thanks for taking my questions. Maybe I'll just start with one on the game plan for the base dividend, which has been set fairly and conservatively. And I understand this is a really volatile business. But is the plan or the hope maybe to consistently grow the dividend? And how important is that to the board? Hey, Menno. It's Ryan.

Menno Hulshof: Good morning, everyone, and thanks for taking my questions.

Menno Hulshof: Maybe I'll just start with one on the game plan for the base dividend, which has been set fairly conservatively, and I understand this is a really volatile business, but is the plan or the hope maybe to rateably grow the dividend, and how important is that to the board?

Ryan Kubik: Hey, Manow, it's Ryan. You are right. We did intentionally set that base dividend at the low end of the spectrum. We don't feel we're here to compete on dividend yield against peers or other industries, quite frankly. So the plan is to add value through a base dividend. And we know that that accrues over time as you pay that base dividend, keep it stable, and grow it over time. And so that is the plan. We are still emphasizing our commitment to deliver 100% free cash flow returns to shareholders. And that's going to be largely concentrated on share buybacks at the moment.

Ryan M. Kubik: You are right; we did intentionally set that base dividend at the low end of the spectrum. We don't feel we're here to compete on dividend yield against peers or other industries, quite frankly. So the plan is to add value through a base dividend, and we know that that accrues over time as you pay that base dividend, keep it stable, and grow it over time. And so that is the plan. We are still emphasizing our commitment to deliver 100% free cash flow returns to shareholders, and that's going to be largely concentrated on share buybacks at the moment.

Menno Hulshof: Hey, Menno. It's Ryan. You are right. We did intentionally set that base dividend at the low end of the spectrum. We don't.

Menno: feel we're here to compete on dividend yield against peers or other industries, quite frankly. So the plan is to add value through a base dividend. And we know that that accrues over time as you pay that base dividend, keep it stable and grow it over time. And so that is the plan.

Menno: Still emphasizing our commitment to deliver 100% free cash flow returns to shareholders and that's going to be largely concentrated on share buybacks at the moment.

Ryan Kubik: But with the base dividend at a relatively low level, we do expect that we can grow that dividend over time as we grow production through the projects that Darmine was just mentioning. And as we buyback our shares over time. So the plan would be to grow it over time. And we have set a level that we think we could sustain through the cycle. The oil price cycle that is.

Ryan M. Kubik: But with the base dividend at a relatively low level, we do expect that we can grow that dividend over time as we grow production through the projects that Darlene was just mentioning and as we buy back our shares over time. So the plan would be to grow it over time, and we have set a level that we think we can sustain through the cycle, the oil price cycle that is. Terrific. Thanks for that, Ryan.

Menno: But with the base dividend at a relatively low level, we do expect that we can...

Menno: grow that dividend over time as we grow production through the projects that Darlene was just mentioning.

Speaker Change: and as we buy back our shares over time. So the plan would be to, you know, grow it over time and we have set a level that we think we can sustain through the cycle.

Menno Hulshof: Terrific.

Speaker Change: The oil price cycle, that is.

Darlene M. Gates: And then my second question is on turnarounds. My understanding is that 2024 is a light turnaround year with activity relatively evenly spread across the year. As we look into 2025 and 2026, should we assume turnarounds are going to look more like they have historically, or do you see the potential to do those more efficiently as well? Yeah, Neil, thanks for that question. I know a lot of people are asking about the turnarounds. And technically, this should have been a major turnaround year, and the team did some exceptional work.

Menno Hulshof: Thanks for that, Ryan. And then my second question is on a turnaround. My understanding is that 2024 is a light turnaround year with activity relatively evenly spread across the year.

Speaker Change: Terrific. Thanks for that, Ryan. And then my second question is on turnarounds. My understanding is that 2024 is a light.

Speaker Change: turnaround year with activity relatively evenly spread across the year. As we look into 2025 and 2026, should we assume turnarounds are going to look more like they have historically, or do you see the potential to do those more efficiently as well?

Menno Hulshof: As we look into 2025 and 2026, should we assume turnarounds are going to look more like they have historically, or do you see the potential to do those more efficiently as well?

Darlene Gates: Yeah, Neil. Thanks for that question. I know a lot of people are asking about the turnarounds. And technically, this should have been a major turnaround year. And the team did some exceptional work looking at our performance of our asset and testing and challenging some of those capital efficiency opportunities. With our team, they had identified that we could minimize the turnaround's scope this year. And that's part of what I mentioned is helping us with our production performance, because it's not only just cost, but it also impacts production, as you know. As we look ahead, the continued work that the team has done to optimize the turnarounds is currently; the schedule would be every three years.

Speaker Change: Yeah, Neil, thanks for that question. I know a lot of people are asking about the turnarounds.

Speaker Change: Technically, this should have been a major turnaround year and the team did some exceptional work looking at our performance of our asset and testing and challenging some of those capital efficiency opportunities.

Darlene M. Gates: Looking at our performance of our asset and testing and challenging some of those capital efficiency opportunities. With our team, they have identified that we could minimize the turnaround scope this year, and that's part of what I mentioned is helping us with our production performance, because it's not only just cost, but it also impacts production, as you know. As we look ahead, the continued work that the team has done to optimize the turnarounds is currently the schedule would be every three years. We do a major turnaround, and then for two of our facilities or two of our plants. And then on the third year, it's a lighter scope.

Speaker Change: With our team, they have identified that we could minimize the turnaround scope this year, and that's part of what I mentioned is helping us with our production performance.

Speaker Change: because it's not only just cost but it also impacts production as you know.

Speaker Change: As we look ahead, the continued work that the team has done to optimize the turnarounds

Darlene Gates: We do a major turnaround, and then for two of our facilities or two of our plants. And then on the third year, it's a lighter scope. That's kind of a sequence today.

Speaker Change: is currently, the schedule would be every three years, we do a major turnaround for two of our facilities or two of our plants. And then on the third year, it's a lighter scope. That's kind of the sequence today.

Darlene M. Gates: That's kind of the sequence today, but what I'm seeing the team evaluating right now is moving that frequency to every four years. That decision hasn't been taken at this time, but I suspect, based on the work that they're doing, that looks promising. So more to come by year-end. We'll roll that out by Q4, give you more insights on the work that the team has progressed on, but expect them to, either way, deliver some improvements in turnaround efficiency. Thanks, Darlene.

Darlene Gates: What I'm seeing the team evaluating right now is moving that frequency to every four years. That decision hasn't been taken at this time, but I suspect, based on the work that they're doing, that looks promising. So more to come by year end, we'll roll that out by Q4, give you more insights on the work that the team has progressed, but expecting them to either way deliver some improvements on turnaround efficiency.

Speaker Change: What I'm seeing the team evaluating right now is moving that frequency to every four years. That decision hasn't been taken at this time, but I suspect, based on the work that they're doing, that looks promising. So more to come by year end.

Speaker Change: We'll roll that out by Q4, give you more insights on the work that the team has progressed, but expecting them to either way deliver some improvements on turnaround efficiency.

Darlene Gates: I'll turn it back.

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

Neil Mehta: Your next question comes from Neil Metta with Goldman Sachs. The line is...

Joelle: I'll turn it back. Your next question comes from Neal Mehta with Goldman Sachs. Your line is now... Yeah, good morning, Darlene and team, and I hope everybody stays safe from your team up there.

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

Darlene Gates: Yeah, good morning, darling, and team, and hope everybody stays safe from your team up there. My first question is just really on these economic growth projects, and you're in flight here on that third processing train, the skim tank, and then the steam optionality tie in. Can you talk about how those are developing and the biggest part of it, of course, is the third processing train. So if you could spend a little more time on that, peace would be great.

Neil Singhvi Mehta: Yeah, good morning, Darlene and team, and hope everybody stays safe from your team up there. My first question is just really on these economic growth projects, and you're in flight here on that third processing train, the skim tank, and then the steam optionality tie-in.

Darlene M. Gates: My first question is really about these economic growth projects. And you're in flight here on that third processing train, the skim tank, and then the steam optionality tie in. Can you talk about how those are developing? And the biggest part of it, of course, is the third processing train. So if you could spend a little more time on that, you could.

Speaker Change: Just can you talk about how those are developing, and the biggest part of it, of course, is the third processing train, so if you could spend a little more time on that piece, it'd be great.

Darlene Gates: Sure, Cam. This is, you know, as we look at our strategy and hitting these major milestones and introducing ourselves, moving toward 100% free cash flow or focus continues on shareholder values. And returns.

Darlene M. Gates: This is you know, as we look at our strategy and hitting these major milestones and introducing ourselves moving toward 100% free cash flow, our focus continues on shareholder value, and we're, And as we evaluate our strategy, looking at our resources, it really starts with the delineation program that over the last two years has been identifying our resource to the southeast, but also now to the northwest, looks extremely promising. Our focus will be on capital-efficient programming and self-funded, okay? So that was the challenge that was given to the team.

Speaker Change: Sure can. This is, you know, as we look at our strategy and hitting these major milestones and introducing ourselves moving towards 100% free cash flow, our focus continues on shareholder value and and returns.

Darlene Gates: And as we evaluated our strategy, looking at our resource, it really starts with the delineation program. Over the last two years, it has been identifying our resource to the southeast, but also now to the northwest looks extremely promising. Our focus will be on capital efficient programming and self-funded. Okay, so that has been the challenge that was given to the team. As I looked at that, you know, over the last year, the team has brought production up to the full capacity of the facility both on processing and on. as they look ahead to grow the production moderate growth.

Speaker Change: And as we evaluated our strategy, looking at our resource, it really starts with the delineation program over the last two years has been identifying our resource to the southeast but also now to the north.

Speaker Change: West looks extremely promising.

Speaker Change: Our focus will be on capital-efficient programming.

Speaker Change: and self-funded. So that has been the challenge that was given to the team. As I looked at that, you know over the last year the team has brought production up to the full capacity of the facility both on processing and on steam.

Darlene M. Gates: As I looked at that, you know, over the last year, the team has brought production up to the full capacity of the facility, both on processing and on steam. As they look ahead to growth in production, moderate growth, how can we most efficiently do that? We've got a program in place that delivers programs around $20,000 to $25,000 per flowing barrel, and that includes an integration of both installing additional processing capacity – that's our ability to increase our fluid handling – and the front-end engineering design is in progress right now and should be complete in the second half of this year that will allow us to make a decision integrated with upgrading our steam system to allow access to both the Northwest and the Southwest. We bring those two Directionally, they look like they're sitting between $20,000 and $25,000 per flowing barrel.

Darlene Gates: How can we most efficiently do that? We've got a program in place that delivers programs around a 20 to 25,000 per floor of barrel, and that includes an integration of both installing additional processing capacity. That's our ability to increase our fluid handling, and the front-end engineering design is in progress right now and should be complete in the second half of this year that will allow us to make decisions integrated with upgrading our steam system to allow access to both the Northwest and the Southeast. We bring those two programs together; directionally, they look like they're sitting between that 20 and 25,000 per flowing barrel.

Speaker Change: As they look ahead to growth of production, moderate growth, how can we most efficiently do that?

Speaker Change: We've got a program in place that delivers programs around a $20,000 to $25,000 per flowing barrel and that includes an integration of both installing additional processing capacity, that's our ability to increase our fluid handling.

Speaker Change: And the front-end engineering design is in progress right now and should be complete in the second half of this year that will allow us to make a decision integrated with upgrading our steam system to allow access to both the northwest and the southeast.

Speaker Change: We bring those two programs together, directionally they look like they're sitting between that $20,000 and $25,000 per flowing barrel.

Darlene Gates: As they brought those two projects forward, there was also an identification for some efficient project execution strategy to optimize cost and labor as we brought those projects together, and that's why you're hearing us integrate those two.

Darlene M. Gates: As they brought those two projects forward, there was also an identification of some efficient project execution strategies to optimize costs and labor as we brought those projects together. And that's why you're hearing us integrate those two. The third one you mentioned and asked about was the skim tank.

Speaker Change: As they brought those two projects forward, there was also an identification for some efficient project execution strategy to optimize costs and labours as we brought those projects together. And that's why you're hearing us integrate those two.

Darlene Gates: The third one you mentioned and asked about was the skim tank, and that's really about piecing your equipment delivery and how to create value over your investment period. With the turnaround, we can bring that tank in to optimize our turnaround and help with some of the scheduling and efficiency of the startup of the plant, and so the skim tank was something that the team identified that while it's needed as part of the third processing training, we could optimize turnaround with the addition of accelerating that into the program, and that's why that came into the 2024 capital.

Speaker Change: The third one you mentioned and asked about was the skim tank. And that's really about pacing your equipment delivery and how to create value over your investment period.

Darlene M. Gates: And that's really about pacing your equipment delivery and how to create value over your investment period. With the turnaround, we can bring that tank in to optimize our turnaround and help with some of the scheduling and efficiency of the startup of the plant. And so that skim tank was something that the team identified that while it's needed as part of the third process, we could optimize turnarounds with the addition of accelerating that into the program. And that's why that came into the program. [inaudible] Thanks, Darlene.

Speaker Change: With the turnaround, we can bring that tank in to optimize our turnaround and help with some of the scheduling and efficiency of the startup of the plant, and so the skim tank was something that the team identified that, while it's needed as part of the third processing training.

Speaker Change: We could optimize turnarounds with the addition of accelerating that into the program. And that's why that came into the 2024 capital.

Erik Alson: The follow-up is just to Greg's question on the differential. I think some investors we speak to have been surprised. It has traded wider, despite us being in a seasonally tighter period for the demand for WCS, given refiners are running hard. And then you get into Q4 and you tend to get maintenance and you get the blend ratios and all that stuff. So is there something that we could be missing here?

Neil Mehta: Thanks, darling, and the follow-up it's just on Greg's question on the differential. I think some investors we speak to have been surprised. It has traded wider, despite we are in the seasonally tighter period for the demand for WCS given refiners are running hard, and then you get to Q4 and you tend to get maintenance and you get the blend ratios and all that stuff.

Speaker Change: Have a great day.

Speaker Change: Thanks Darlene. The follow-up is just on Greg's question on the differential. I think some investors we speak to have been surprised.

Speaker Change: It has traded wider, despite we are in a seasonally tighter period for the demand.

Speaker Change: for WCS given refiners are running hard and then you get into Q4 and you tend to to get maintenance and you get the blend ratios and all that stuff so.

Neil Mehta: Is there something that we could be missing here? The fact that TMX went so over budget is bleeding into the differential, and maybe the new mid-cycle isn't 10 to 15; it's a little bit wider. Just wanted to push back and get your perspective on that.

Speaker Change: So, is there something that we could be missing here? The fact that TMX went so over budget, you know, that it is bleeding into the differential and maybe the new mid-cycle isn't 10 to 15, it's a little bit wider. I just wanted to push back and get your perspective on that.

Erik Alson: The fact that TMX went so over budget is bleeding into the differential, and maybe the new mid-cycle isn't 10 to 15, it's a little bit wider. I just wanted to push back and get your perspective on that. Thanks for the question. This is Eric again.

Darlene Gates: Thanks for the question.

Eric Alson: This is Eric again. The near-term issues that you're seeing, again, refineries are running hard. They're not necessarily the refineries that are running heavy crudes. So I had mentioned some of the unplanned outages we've seen in Pads Two and Pads Three, that's impacted heavy crude demand, so you're seeing that impact in the differentials. With some of the reliability issues with refineries in Mexico, what that is meant is more availability of Mexican crude in the U.S. Gulf Coast. That's put additional pressure on availability and differentials as well, so that's what you're seeing in the near-term.

Erik Alson: The near-term issues that you're seeing, again, refineries are running hard; they're not necessarily the refineries that are running heavy crude. So I had mentioned some of the unplanned outages we've seen in pads two and pads three that have impacted heavy crude demand. So you're seeing that impact in the differentials. Some of the reliability issues with refineries in Mexico, what that has meant is more availability of Mexican food in the U.S. Gulf Coast.

Speaker Change: Thanks for the question, this is Eric again.

Speaker Change: The near-term issues that you're seeing, again, refineries are running hard. They're not necessarily the refineries that are running heavy crudes.

Speaker Change: So, I had mentioned some of the unplanned outages we've seen in PADS 2 and PADS 3 that's impacted heavy crude demand, so you're seeing that impact in the differentials.

Speaker Change: which

Speaker Change: Some of the reliability issues with refineries in Mexico, what that has meant is more availability of Mexican food in the U.S. Gulf Coast.

Erik Alson: That's put additional pressure on availability and differentials as well. So that's what you're seeing in the near term. The longer-term dynamic as inventories are drawn down, there's a fair bit of inventory built around the startup of TMX as well as one of the big pad two refiners earlier in the year that was down for an extended period of time. There was a lot of heavy crude inventory that was built at that time.

Speaker Change: That's put additional pressure on availability and differentials as well. So that's what you're seeing in the near-term. The longer-term dynamic is...

Eric Alson: The longer-term dynamic as inventories are drawn. There's a fair bit of inventory built around the start of the TMX, as well as one of the big pad two refineries earlier in the year that was down for an extended period of time. There was a lot of heavy crude inventory that was built at that time. Those inventories are drawing and have been drawing pretty heavily for the past couple of months. Williams. We'll be reaching operational minimums inventory-wise here in 3Q. And again, my expectation is we'll see a little bit of the seasonal widening as you get into the winter.

Speaker Change: inventories are drawn there's a fair bit of inventory built around the startup of TMX as well as

Speaker Change: One of the big Pad 2 refiners earlier in the year that was down for an extended period of time. There was a lot of heavy crude inventory that was built at that time. Those inventories are drying and have been drying pretty heavily for the past couple of months.

Erik Alson: Those inventories are drying and have been drying pretty heavily for the past couple of months. We'll be reaching operational minimums inventory-wise in 3Q. And again, my expectation is you'll see a little bit of the seasonal lightening as you get into the winter. The nice thing is that with TMX online.

Speaker Change: We'll be reaching operational minimums inventory-wise here and...

Speaker Change: 3Q and again my expectation is you'll see a little bit of the seasonal lightening as you get into the winter. The the nice thing is with TMX online

Eric Alson: The nice thing is with TMX online, the volatility that you've seen in the past are now protected with that from an unconstrained egress perspective. So as you roll into the coming year, the benefit of TMX, lower inventories, you'll see the differentials in that $10-$15 range that we've been talking about.

Erik Alson: The volatility that you've seen in the past is now protected with that from an unconstrained egress perspective. So as you roll into the coming year, the benefit of TMX, lower inventories, you'll see the differentials in that $10 to $15 range that we've been talking about. Thanks, team. Appreciate it. More color.

Speaker Change: The volatility that you've seen in the past are now protected with that from an unconstrained egress perspective. So as you roll into the coming year, the benefit of TMX, lower inventories, you'll see the differentials in that $10 to $15 range that we've been talking about.

Neil Mehta: Thanks, Dave. Appreciate it more color.

Speaker Change: Thanks team, appreciate more color.

John Royall: Your next question comes from John Royall with JP Morgan. Your line is...

Darlene M. Gates: Your next question comes from John Royall with J.P. Morgan. Your line is now... Hi, good morning. Thanks for taking my question. So you mentioned some modest growth through the bottlenecks, obviously, in addition to the third processing train. And you gave some good color on Neil's question, but can you talk about what the ultimate capability is of the asset and how large you think it can get to over the long term, relative to the 125 posts on the third train? Thanks, John. Great question!

Speaker Change: You're welcome.

Speaker Change: Your next question comes from John Royall with J.P. Morgan.

John Royall: Hi, good morning. Thanks for taking my question. So you mentioned some modest growth through DiBottle Next, obviously, in addition to the third processing train. And you gave some good color on Neil's question. But can you talk about what the ultimate capability is of the asset and how large you think it can get to over the long-term relative to the 125 post-the third train?

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

John Macalister Royall: So you mentioned some modest growth through the bottlenecks, obviously, in addition to the third processing train, and you gave some good color on Neil's question, but can you talk about what the ultimate capability is of the asset and how large you think it can get to over the long term relative to the 125 post the third train?

Darlene M. Gates: What comes along with this is the ability to increase capacity, right? The plant right now is at full capacity, and so without introducing these opportunities, we're not able to grow production. So that's the first place is very efficient. How do we create the capacity?

Darlene Gates: Thanks, John.

Darlene Gates: Great question. What comes along with this is the ability of capacity, right? Right now is at full capacity. And so, without introducing these opportunities, we're not able to grow the production. So that's the first place. It is very efficient. How do we create the capacity, the processing side with the steam allows us to take it from about, I would say, somewhere between 125 to 135,000 in production. That allows the team now, when you're thinking about capital efficiency, we'll pace the paths that come in to fill that capacity of the plant. And that's how we'll manage. Again, if we're in a volatile environment, how we pace the growth and why we give the range three to five percent, we'll manage that based on the macro environment that we're in to return the best returns to our shareholders.

Speaker Change: Thanks, John . A great question. What comes along with this is the ability to

Speaker Change: of capacity, right? The plant right now is at full capacity. And so without introducing these opportunities,

Speaker Change: We're not able to grow the production. So that's the first place is very efficient. How do we create the capacity? The processing side with the steam allows us to take it from about, I would say somewhere between 125,000 to 135,000 in production.

Darlene M. Gates: The processing side with the steam allows us to take it from I would say somewhere between 125,000 and 135,000 in production. That allows the team now, when you're thinking about capital efficiency, we'll pace the paths that come in to fill that capacity of the plant. And that's how we'll manage again if we're in a volatile environment, how we pace the growth, and why we give the range of three to 5%. We'll manage that based on the macro environment that we're in to return the best returns to our shareholders. So, about 125 to 135.

Speaker Change: That allows the team now, when you're thinking about capital efficiency...

Speaker Change: We'll paste the pads that come in to fill that capacity of the plant.

Speaker Change: And that's how we'll manage, again, if we're in a volatile environment, how we pace the growth, and why we give the range 3 to 5 percent. We'll manage that based on the macro environment that we're in to return the best returns to our shareholders.

Darlene Gates: So about 125 to 135; to go beyond that, we still have the ability to continue to optimize the facility. The resource looks outstanding; the delineation program through the last two years continues to demonstrate that the northwest of our resource looks even better than some of the southeast that we've been pursuing. And so we have a long runway ahead for opportunities. And now it's really just pace growth as we move that forward. To go beyond 135, then some additional optimization will be required in the facility. And I think we can optimize our way back up to about 145 to 150.

Darlene M. Gates: To go beyond that, we still have the ability to continue to optimize the facility. The resource looks outstanding. The delineation program through the last two years continues to demonstrate that the northwest of our resource looks even better than some of the southeast that we've been pursuing.

Speaker Change: So about 125 to 135.

Speaker Change: To go beyond that...

Speaker Change: We still have the ability to continue to optimize the facility.

Speaker Change: The resource looks outstanding. The delineation program through the last two years continues to demonstrate that the northwest of our resource

Darlene M. Gates: And so we have a long runway ahead for opportunities, and now it's really just paced growth as we move that forward. To go beyond 135, then some additional optimization will be required in the facility.

Speaker Change: looks even better than some of the Southeast that we've been pursuing. And so we have a long runway ahead for opportunities, and now it's really just pace growth as we move that forward.

Speaker Change: To go beyond 135, then some additional optimization will be required in the facility and I think we can optimize our way back up to about 145 to 150.

Darlene M. Gates: And I think we can optimize our way back up to about 145 to 150. Great. Thank you. And then just to follow up on the wildfires, I think you mentioned bringing people back following the wildfire. So is it safe to say the near-term risk has completely come and gone, and then has enough of the surrounding area been burned off such that there's a lower risk around the next wildfire, should there be one?

John Royall: Great. Thank you. And then just to follow up on the wildfires, I think you mentioned bringing people back following the wildfire.

Speaker Change: Great, thank you. And then, just to follow up on the wildfires, I think you mentioned bringing people back following the wildfire, so is it safe to say the near-term risk has completely come and gone? And then, has enough of the surrounding area been burned off such that there's lower risk around the next wildfire, should there be one?

Darlene Gates: So is it safe to say the near-term risk has completely come and gone, and then has enough of the surrounding area been burned off such that there's lower risk around the next wildfire, should there be one? So you know, this is, you know, what you count on Meg is our operations team out at the site, you know, and the collaboration that they have done with Alberta for three in part. We have installed, over the years, through a lot of work, is fire breaks is what I call them. To be frank, the fire was all around one of our disposal wells.

Darlene M. Gates: So, you know, this is what you count on MEG is our operations team out at the site and the collaboration that they have done with Alberta Forestry and Parks. We have installed, over the years, through a lot of work, fire breaks, is what I call them.

Speaker Change: So, you know, this is, you know, what you count on MEG is our operations team out at the site.

Meg: you know, and the collaboration that they have done with Alberta Forestry and Parks. We have installed over the years through a lot of work, it's fire breaks is what I call them.

Darlene M. Gates: To be frank, the fire was all around one of our disposal wells, the brakes worked extremely effectively, the team managed it very well, and so they were able to demonstrate that the mitigations that they put in place were effective. I will never tell you that we're out of the woods, I think we're going to see the fires here for a while, but I'm confident, as you can see, I wouldn't bring the team back if we weren't confident in the safety of our people and several of the communities. A couple of the communities have also been mobilized back to their communities, so we are seeing the progress that Alberta Forestry and Parks is making Thank you. Your next question comes from Dennis Fong with CIBC. Your line... Good morning, and thanks for taking my questions. The first one is a bit of a follow-on to John Royall's question.

Darlene Gates: The breaks worked extremely effective. The team managed it very well. And so they're able to demonstrate that the mitigations that they put in place are effective.

Meg: To be frank, the fire was all around one of our disposal wells. The brakes worked extremely effective.

Speaker Change: The team managed it very well, and so they're able to demonstrate that the mitigations that they put in place are effective. I will never tell you that we're out of the woods. I think we're going to see the fires here for a while.

Darlene Gates: I will never tell you that we're out of the woods. I think we're going to see the fires here for a while. But I'm confident, as you can see; I wouldn't bring the team back. We weren't confident in the safety of our people. And several of the communities, a couple of the communities have also been mobilized back to the community. So we are seeing the progress that Alberta for three in part is making. And I expect that we will continue to monitor these throughout the summer because of lightning strikes and those kinds of things that are just present in our world that we're in today.

Speaker Change: But I'm confident, as you can see, I wouldn't bring the team back if we weren't confident in the safety of our people. And several of the communities, a couple of the communities have also been mobilized back to the community. So we are seeing the progress that Alberta Forestry and Parks is making.

Speaker Change: And I expect that we will continue to monitor these throughout the summer because of lightning strikes and those kind of things that are just present in our world that we're in today.

Dennis Fong: Your next question comes from Dennis Fong with C.I.B.C.

Speaker Change: Thank you.

Darlene M. Gates: As you march through these de-bottlenecking operations, it sounds like oil processing capacity after this third processing train isn't as much going to be the limitation of the facility and rather steam generation. So, as you step into what you just highlighted as maybe a higher-quality reservoir towards the northwest, driving down that reservoir should then potentially be able to increase production given your existing steam capacity or the expanded steam capacity. Is that a way to potentially optimize the field and kind of pull the most out of your CPF without actually having to install additional steam capacity after these sets of projects have been completed to, we'll call it, outperform that 135 number that you just stated? Sorry, Dennis. It was a little broken up, but if I don't get your answer correct, just shoot me back another question.

Dennis Fong: Your line. Hi, good morning, and thanks for taking my questions. The first one is a bit of a follow-on to John Royall's question.

Speaker Change: Your next question comes from Dennis Fong with CIBC.

Darlene M. Gates: So I think what you're asking is, can we optimize further? So, yeah, absolutely. Your steam is what you're using to deploy your best resource. If you have higher saturation, better resources, then your steam is more effective.

Dennis Fong: Hi, good morning, and thanks for taking my questions. The first one is a bit of a follow-on to John Royall's question.

Dennis Fong: As you march through the debobble-meeting operations, it sounds like oil processing capacity after this third processing train isn't as much going to be the limitation of the facility and rather steam gen. So as you step into what you just highlight as maybe a higher quality reservoir towards the west, the driving down that should then potentially be able to increase production given your existing steam capacity or the extended steam capacity. Is that a way to potentially optimize the field and kind of pull the most out of your CPF without actually having to install additional steam capacity after the sets of projects have been completed?

Dennis Fong: As you...

Speaker Change: march through these de-bobblenecking operations.

Speaker Change: It sounds like oil processing capacity after this third processing train isn't as much going to be the limitation of the facility and rather steam gen. So, as you step into what you just highlighted as maybe a higher quality reservoir towards the northwest,

Speaker Change: driving down or should then potentially be able to increase

Speaker Change: production given your existing steam capacity or the expanded steam capacity.

Speaker Change: Is that a way to potentially optimize the field and kind of pull the most out of your CPF without actually having to install additional steam capacity after kind of these sets of projects have been completed to, we'll call it, outperform that 135 number that you just stated?

Dennis Fong: So we'll call it outperformed that 135 numbers that you just stated.

Darlene Gates: Yes, so Dennis, it was a little broken up, but if I don't get your answer correct, just shoot me back another question. So I think what you're asking is, can we optimize further? So yeah, absolutely.

Speaker Change: Sorry Dennis, it was a little broken up but if I don't get your answer correct just shoot me back another question.

Dennis Fong: So I think what you're asking is, can we optimize further? So yeah, absolutely. Your steam is what you're using to deploy out to your best resource. If you have higher saturation, better resource, then your steam is more effective.

Darlene Gates: Your steam is what you're using to deploy out to your best resource. If you have higher saturation, better resource than your steam is more effective. And so if we have the ability in the northwest, looks like it's better resource, the steam will have lower steam to oil ratios. And therefore you don't need to bring on as additional steam to increase your production.

Darlene M. Gates: And so if we have the ability in the Northwest, which looks like it's a better resource, the steam will have lower steam to oil ratios. And therefore, you don't need to bring on as much additional steam to increase your production. Great. And then I guess the pseudo-follow-up to that would be just around oil processing capacity. Once this third processing train is complete, what do you think the facility itself could potentially do? Obviously, knowing that there's a steam constraint that may limit the actual total production level from the field.

Dennis Fong: And so if we have the ability in the Northwest, it looks like it's a better resource, we'll have lower steam-to-oil ratios, and therefore you don't need to bring on as additional steam to increase your production.

Dennis Fong: Great. And then I guess the suitable look to that would be just around oil processing capacity.

Speaker Change: Great. And then I guess the pseudo follow-up to that would be just around oil processing capacity. Once this third processing train is complete, what do you think the facility itself could potentially do? Obviously, understanding that there's a steam constraint that may limit the actual total production level from the field.

Darlene Gates: Once this third processing train is complete, what do you think the facility itself could potentially do? Obviously, understanding that there's a steam constraint that may limit the actual total production level through from the field. Okay, Dennis, that's the work that the team is doing right now as we do the engineering work and the optimization of these projects. The team is looking at those optimizations of what the processing capability can do. We expect that with the existing design as they've laid it out, gets us to that 125 to 135. And we'll require some optimization work to go above the 135 as it sits today.

Darlene M. Gates: Yeah, Dennis, that's the work that the team is doing right now; we do the engineering work and the optimization of these projects. The team is looking at those optimizations of what the processing capability can do.

Speaker Change: Dennis, that's the work that the team is doing right now, is we do the engineering work and the optimization of these projects.

Dennis Fong: The team is looking at those optimizations of what the processing capability can do.

Darlene M. Gates: We expect that the existing design, as they've laid it out, gets us to that 125 to 135, and we'll require some optimization work to go above the 135, as it sits today. But again, the team is doing that work as we speak, and we'll probably continue to provide updates as we get that refined. Great, great. And then my second question, just on the marketing side of things. I really appreciate all the color and context that you've provided already.

Speaker Change: We expect that with the existing design as they've laid it out, gets us to that 125 to 135 and will require some optimization work to go above the 135.

Darlene Gates: But again, the team is doing that work as we speak, and we'll probably continue to provide updates as we get that refined in.

Speaker Change: as it sits today. But again, the team is doing that work as we speak, and we'll probably continue to provide updates as we get that refined in.

Dennis Fong: Great, great.

Eric Alson: And then my second question, just on the marketing side of things. And really appreciate all the color and context that you've provided already. Just as team X throughput stabilizes towards kind of the normal operating levels, how has maybe the ability to gain access to certain markets, both through the West Coast and the US Gulf Coast for your marketing operations, maybe change or evolved as you've been able to kind of test the markets and gain realization in either of those two sales points, and how might that shift going into the future? Especially giving the current dynamics on heavy oil?

Speaker Change: Great, great. And then my second question, just on the marketing side of things.

Speaker Change: and really appreciate all the color and context that you've provided already. Just as TMEX throughput stabilizes towards kind of the normal operating levels.

Darlene M. Gates: Just as TMEX throughput stabilizes towards kind of normal operating levels, how has maybe the ability to gain access to certain markets, both through the West Coast and the U.S. Gulf Coast for your marketing operations, maybe changed or evolved as you've been able to kind of test the markets and gain realizations in either of those two sales points, and how might that shift going into the future, especially given the current dynamics on heavy oil? Oh, thanks for the question. This is Eric.

Speaker Change: How has maybe the ability to gain access to certain markets both through the West Coast and the U.S. Gulf Coast for your marketing operations maybe changed or evolved as you've been able to kind of test the markets and gain realizations in either of those two sales points, and how might that shift going into the future, especially given the current dynamics on heavy oil?

Eric Alson: No, thanks for the question.

Erik Alson: Access to tidewater has been great. With TMX coming into service, we're pleased to see how well that new infrastructure has been operating. There were questions about that initially, but Trans Mountain has performed extremely well. Between the assets that we have with TMX, the access to the Gulf Coast, and the assets that we have there, the international reach has been great. We continue to access new international customers and continue to grow the sales portfolio.

Eric Alson: This is Eric. The access to tidewater has been great. With TMX coming into service, we're pleased to see how well that new infrastructure has been operating. There were questions about that initially, but Trans Mountain has performed extremely well. Between the assets that we have with TMX, the access to the Gulf Coast, and the assets that we have there. The international reaches has been great. We continue to access new international customers and continue to grow the sales portfolio. My expectation is we'll continue to see significant value from the international market.

Speaker Change: Thanks for the question. This is Eric. The access to tidewater has been great.

Speaker Change: With TMX coming into service, we're pleased to see how well that new infrastructure has been operating. There were questions about that initially, but Trans Mountain has performed extremely well.

Speaker Change: Between the assets that we have with TMX, the access to the Gulf Coast, and the assets that we have there, the international reach has been great. We continue to access.

Speaker Change: new international customers and continue to grow the sales portfolio.

Speaker Change: My expectation is we'll continue to see significant value from the international market.

Eric Alson: Chris, thanks. I appreciate the call.

Erik Alson: My expectation is that we'll continue to see significant value from the international market. Thanks. I appreciate the call. I'll turn it back on. Your next question comes from Mike Warner with Yahoo!. Your line is now open. Hi, I just wanted to say congratulations to the team on a standout first quarter.

Joel: I'll turn it back.

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

Mike Warner: Your next question comes from Mike Warner with Yahoo. Your line is now open. Hi, I just wanted to say congratulations to the team on a standout first quarter.

Speaker Change: Thank you. Your next question comes from Mike Warner with Yahoo. Your line is now open.

Mike Warner: Hi, I just wanted to say congratulations to the team on a standout first quarter.

Darlene M. Gates: My question is, as you transition to 100% free cash flow to shareholders in Q3, you foresee down the line, Q4 2024, Q1 2025, the necessity to do a significant issuer bid to take up. [inaudible] Thanks for the question. We will, you know, I guess we will continue to use the NCIB. That's the most effective way to buy back shares. But there is a limit to the NCI

Darlene Gates: My question is, as you transition to 100% recast flow to shareholders in Q3, do you foresee down the line Q4, 2024, Q1, 2025, the necessity to do a significant issue a bit to take up some share buybacks, or do you see that just continuing on through an NCIB? Thanks very much. Thanks for the question. We will continue to use the NCIB. That's the most effective way to buy back shares, but there is a limit on the NCIB program. So your question really revolves mostly around what oil price we're going to see and how much revenue we generate as a result of that.

Mike Warner: My question is, as you transition to 100% free cash flow to shareholders in Q3,

Mike Warner: Do you foresee down the line Q4 2024, Q1 2025, the necessity to do a significant issuer bid to take up some share buybacks or do you see that just continuing on through an NCIB?

Speaker Change: Thanks very much.

Speaker Change: Thanks for the question.

Speaker Change: We, you know, I guess we will continue to use the NCIB. That's the most effective way to buy back shares. And, but there is a limit on the NCIB program. So your question really revolves mostly around what oil price we're going to see and how much revenue we generate as a result of that.

Darlene M. Gates: So your question really revolves mostly around what oil price we're going to see and how much revenue we generate as a result of that. So we will continue to pay the base dividend, subject to board approval, obviously, but depending on conditions at the time, that will use up some of the free cash flow that we're generating and emphasize the NCIB program that is capped at 10% of our shares. So in a good world, we buy back 10% of our shares, and we have excess cash left over.

Darlene Gates: So we will continue to pay the base dividend, you know, subject to board approval, obviously, but depending on conditions at the time, that will use up some of the free cash flow that we're generating, will emphasize the NCIB program. That is capped at 10% of our shares. So, in a good world, we buy back 10% of our shares, and we have excess cash left over. At that point in time, you would have to consider to return 100% of free cash flow. You would have to consider an SIB program, which is a little bit more opportunistic.

Speaker Change: So, we will continue to pay the base dividend, subject to board approval obviously, but depending on conditions at the time. That will use up some of the free cash flow that we're generating, we'll emphasize the NCIB program, that is capped at 10% of our shares.

Speaker Change: So, in a good world, we buy back 10% of our shares and we have excess cash left over. At that point in time, you would have to consider, to return 100% of free cash flow, you would have to consider an SIB program.

Darlene M. Gates: At that point in time, you would have to consider returning 100% of free cash flow; you would have to consider an SIB program, which is a little bit more opportunistic. You largely would, those are larger bids, and you would build cash in advance of those SIB kinds of programs. But we have seen peers use those programs, and it would be something we would consider if necessary.

Darlene Gates: Largely, those are larger bids, and you would build cash in advance of those SIB kind of programs, but we have seen peers use those programs, and it would be something we would consider if necessary. But first, you use up your NCIB.

Speaker Change: which is a little bit more opportunistic. Those are larger bids and you would build cash in advance of those SIB kind of programs, but we have seen peers use those programs and it would be something we would consider if necessary, but first you use up your NCIB.

Darlene Gates: Great, thanks.

Speaker Change: Great, thank you.

Darlene M. Gates: But first, you use up your NCIB. Great. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by 1. Your next question comes from Patrick O'Rourke with ATB Capital Markets. Your line is now open.

Joel: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one.

Speaker Change: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. Your next question comes from Patrick O'Rourke with ATB Capital Markets. Your line is now open.

Patrick O'rourke: Your next question comes from Patrick O'Rourke with ATB Capital Markets. Your line is now up. Oh, hey guys.

Erik Alson: Hey guys, thanks for the update and congratulations on the inaugural dividend there. I just maybe wanted to ask sort of a bit of a follow-up on Dennis's question, maybe a little bit of nuance here, but given you have some pretty significant experience marketing in the Gulf and now you're marketing, you know, on the West Coast, I'm kind of curious what the, from a pricing dynamics perspective, the demand for those barrels once you get them to the end of TMX looks like from a discounting to WTI perspective and how you've seen sort of the refinery complex, particularly in Pad 5, be able to sort of absorb what's a bit of a different and maybe slightly more nuanced crude slate coming down to them than they may have seen before and, you know, how they're reacting to that. Thanks for the question. This is Eric.

Patrick O'rourke: Thanks for the update, and congratulations on the inaugural dividend there. I just maybe wanted to ask sort of a bit of a follow-up on Dennis' question, maybe a little bit of nuance here, but given you have some pretty significant experience, marketing in the golf, and now you're marketing on the West Coast.

Patrick O'rourke: Oh, hey, guys. Thanks for the update and congratulations on the inaugural dividend there. I just maybe wanted to ask sort of a bit of a follow-up on Dennis's question, maybe a little bit of nuance here.

Speaker Change: Given you have some pretty significant experience marketing in the Gulf, and now you're marketing on the West Coast, I'm kind of curious what, from a pricing dynamics perspective, the demand for those barrels, once you get them to the end of TMX,

Patrick O'rourke: I'm kind of curious what from a pricing dynamics perspective, the demand for those barrels, once you get them to the end of TMX, looks like from a discounting to WTI perspective, and how you've seen sort of the refinery complex, particularly in pad five, be able to sort of absorb what's a bit of a different and maybe slightly more nuanced, crude slate coming down to them than they may have seen before and how they're reacting to that.

Speaker Change: looks like from a discounting to WTI perspective.

Speaker Change: and how you've seen sort of the refinery complex, particularly...

Speaker Change: In Pad 5, be able to sort of absorb what's a bit of a different and maybe slightly more nuanced crude slate coming down to them than they may have seen before and, you know, how they're reacting to that.

Eric Alson: Thanks for the question.

Eric Alson: This is Eric. As we look at the sales from Trans Mountain, some of the early netbacks as we think about where the barrels are landing. We've got the committed capacity that's moving; probably half of the barrels are moving into the US West Coast, the other half moving into Eastern Asia, largely China. What we've seen from a dynamic perspective is the heavy high tans are largely going to Asia at this point, with light truths and low tans mostly pointed to the US West Coast.

Erik Alson: As we look at... the sales from Trans Mountain and some of the early netbacks as we think about where the barrels are landing. We've got, of the committed capacity that's moving, probably half of the barrels are moving into the US West Coast, the other half moving into Eastern Asia, largely China. What we've seen from a dynamic perspective is heavy, high-tans are largely going to Asia at this point, with light crudes and low tans mostly pointed to the US West Coast.

Speaker Change: Thanks for the question. This is Eric.

Speaker Change: As we look at...

Speaker Change: and the sales from Trans Mountain.

Speaker Change: Some of the early netbacks as we think about where the barrels are landing.

Speaker Change: We've got, of the committed capacity that's moving, probably half of the barrels are moving into the U.S. west coast, the other half moving into eastern Asia, largely China.

Speaker Change: What we've seen from a dynamic perspective is the heavy high tans are largely going to Asia at this point with light crudes and low tans.

Eric Alson: One of the opportunities that's out there in front of us is for the pad five, the West Coast for Finers to build more familiarity with processing heavy high tans. We know those kind of early runs are taking place with the West Coast for Finers, and my expectation is we'll see more of a demand pull for heavy high tans into the West Coast as well. So we're very encouraged by what we see to date and continue to see the opportunity for upside as our product moves into the West Coast.

Erik Alson: One of the opportunities that's out there in front of us is for the PAD5, the West Coast refiners, to build more familiarity with processing heavy, high-tan. We know those kind of early runs are taking place with the West Coast refiners, and my expectation is we'll see more of a demand pull for heavy, high-tannes into the West Coast as well. So we're very encouraged by what we see to date and continue to see the opportunity for upside as our product moves into the West Coast. Okay, and then.

Speaker Change: mostly pointed to the U.S. West Coast. One of the opportunities that's out there in front of us is for the PAD5, the West Coast refiners, to build more familiarity with processing heavy high TAN.

Speaker Change: We know those kind of early runs are taking place with the West Coast refiners, and my expectation is we'll see more of a demand pull for heavy high tans into the West Coast as well.

Speaker Change: So, we're very encouraged by what we see to date and continue to see the opportunity for upside as our product moves into the West Coast.

Patrick O'rourke: Okay, and then just with respect to the buyback here, you know, when I look at the way you've done it sort of on a monthly or on a quarterly basis, there is some lumpiness to it that, you know, sort of, you know, call it is in line with some of the free cash flow profiles. Just wondering that, you know, as you hit the 600 million, you got a ton of flexibility on the balance sheet.

Ryan M. Kubik: and Ryan Kubik.

Darlene M. Gates: Just with respect to the buyback here, when I look at the way you've done it on a monthly or quarterly basis, there is some lumpiness to it that is in line with some of the free cash flow profiles. I was just wondering, as you hit the $600 million, you have a ton of flexibility on the balance sheet. Is there any desire to move to something that's sort of rateable on an annualized basis and remove some of the lumpiness in the way that you guys buy back shares in the market?

Ryan M. Kubik: Okay, and then...

Speaker Change: Just with respect to the buyback here, you know, when I look at the way you've done it, sort of on a monthly or on a quarterly basis, there is some lumpiness to it that, you know, sort of,

Darlene Gates: Is there any desire to move to something that's sort of readable on an annualized basis and remove some of the lumpiness to the way that you guys buy back shares in the market here? You know, on the buyback we are very programmatic about how we do it. I think you'll continue to see us do that. The movement in the amount that gets bought back is really driven by the free cash flow that we're generating, oil prices, volumes, et cetera, and our needs for cash, you know, to pay bills, et cetera. And so it is very programmatic.

Ryan M. Kubik: Is there any desire to move to something that's sort of rateable on an annualized basis and remove some of the lumpiness to the way that you guys buy back shares in the market here?

Darlene M. Gates: You know, on the buyback, we are very programmatic about how we do it. I think you'll continue to see us do that. The movement in the amount that gets bought back is really driven by the free cash flow that we're generating, oil prices, volumes, etc., and our needs for cash, you know, to pay bills, etc.

Speaker Change: You know on the BiBRAC, we are very programmatic about how we do it. I think you'll continue to see us do that the

Speaker Change: The movement in the amount that gets bought back is really driven by the free cash flow that we're generating, oil prices, volumes, etc., and our needs for cash, you know, to pay bills, etc. And so, it is very programmatic. We'll continue to just...

Darlene M. Gates: We'll continue to just look at what cash is sitting in the bank account at the end of the month. We'll pull back what we need to run the business, and then the rest goes to buying back stock and paying our dividend. And so, that's the approach. We do just try to hit the volume-weighted average price as we buy back and be programmatic rather than opportunistic in those buybacks. So, you'll continue to see that approach going forward. Your next question comes from John Royall of J.P. Morgan. Your line is now open. Hi, thanks for coming back to me.

Darlene Gates: We'll continue to just look at what cash is sitting in the bank account at the end of the month. We'll hold back what we need to run the business, and then the rest goes to buying back stock and paying our dividend. And so that's the approach. We do just try to hit the volume-weighted average price as we buy back and be programmatic rather than opportunistic in those buybacks. You'll continue to see that approach going forward.

Speaker Change: Look at what cash is sitting in the bank account at the end of the month. We'll hold back what we need to run the business and then the rest goes to buying back stock and paying our dividend. And so that's the approach. We do just try to hit the volume weighted average price as we buy back.

Speaker Change: and be programmatic rather than opportunistic in those buybacks. You'll continue to see that approach going forward.

John Royall: Your next question comes from John Royal with JP Morgan. Your line is now. Hi, thanks for coming back to me. I just had a very quick housekeeping follow-up for Ryan. I think you have about 100 million remaining on the 2027 bonds. Is the intention to get this down to zero before you flip to 100% returns of capital?

Speaker Change: Okay, thanks.

Speaker Change: Ryan.

Speaker Change: Your next question comes from John Royall with JP Morgan. Your line is now open.

Ryan M. Kubik: I just had a very quick housekeeping question for Ryan. I think you have about $100 million remaining on the 2027 bonds. Is the intention to get this down to zero before you flip to 100% returns on capital? Hey, John. Yeah, good question. That is exactly the intent. We'll hit our net debt target in Q3, probably mid-Q3. And then, further to that, we'll continue to buy back those 2027 bonds and give ourselves a nice liquidity runway out to 2029.

John Macalister Royall: Hi, thanks for coming back to me. I just had a very quick housekeeping follow-up for Ryan. I think you have about $100 million remaining on the 2027 bonds. Is the intention to get this down to zero before you flip to 100% returns of capital?

Ryan Kubik: Hey, John, good question. That is exactly the intent. We'll hit our net debt target in Q3, probably mid-Q3, and then further to that we'll continue to buy back those 2027 bonds and give ourselves a nice liquidity runway out to 2029. That would be our next bond maturity. So take out that full 100 million of 2027's. We expect that's going to turn in Q3 as well, and then we'll dial up to the 100% free cash flow return.

Ryan M. Kubik: That would be our next bond maturity, so take out that full 100 million of 2027s. We expect that's going to occur in Q3 as well, and then we'll dial up to the 100% free cash flow return.

Ryan M. Kubik: Hey John , yeah, good question. That is exactly the intent. We'll hit our net debt target in Q3.

Speaker Change: probably mid Q3 and then further to that we'll continue to buy back those 2027 bonds and give ourselves

Speaker Change: A nice liquidity runway out to 2029, that would be our next bond maturity, so take out that full $100 million of 2027s. We expect that's going to occur in Q3 as well, and then we'll dial up to the 100% free cash flow returns.

Darlene Gates: Thank you very much.

Darlene M. Gates: Thank you very much. There are no further questions at this time. I will now turn the call over to Darlene Gates for closing remarks. Thank you, Joelle, and thank you to everybody that joined us this morning for our Q2 Results conference call. We look forward to updating you again when we release our Q2 results in November. I hope everyone has a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line. BF-WATCH TV 2021

Joel: There are no further questions at this time.

Speaker Change: Thank you very much.

Darlene Gates: I will now turn the call over to Darlene Gates for closing remarks. Thank you, Joel, and thank you to everybody that joined us this morning for Q2 results conference call.

Speaker Change: There are no further questions at this time. I will now turn the call over to Darlene Gates for closing remarks.

Darlene M. Gates: Thank you, Joelle. And thank you to everybody that joined us this morning for our Q2 results conference call. We look forward to updating you again when we release our Q2 results in November . I hope everyone has a great day.

Darlene Gates: We look forward to updating you again when we release our Q2 results in November.

Darlene Gates: I hope everyone has a great day.

Joel: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in ASAP. Please disconnect your line.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.