Q2 2024 Imperial Oil Ltd Earnings Call
Okay.
Operator: Good day, and welcome to the Imperial Oil second quarter 24 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Peter Shaw, Vice President of Investor Relations. Please go ahead.
Speaker Change: Good day and welcome to the Imperial oil second quarter 'twenty four earnings call.
<unk> conference is being recorded at this time I would like to turn the conference over to Peter Shah Vice President of Investor Relations. Please go ahead.
Peter Shaw: Morning, everyone. Welcome to our second quarter earnings conference call. I'm joined this morning by Imperial's senior management team, including Brad Corson, Chairman, President, and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Sherry Evers, Senior Vice President of Sustainability, Commercial Development, and Product Solutions; and Cheryl Gomez-Smith, Senior Vice President of the Upstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to today's conference call.
Speaker Change: Good morning, everyone welcome to our second quarter earnings Conference call I'm joined this morning by Imperial Senior management team, including Brad Corson, Chairman, President and CEO, Dan Lyons Senior Vice President Finance and administration, Sherry <unk> Senior Vice President of sustainability commercial development and product.
Speaker Change: Actions and Cheryl Gomez Smith senior Vice President of the upstream.
Speaker Change: Todays comments include reference to non-GAAP financial measures definitions and reconciliations of these measures can be found in the attachment six of our most recent press release and are available on our website with a link to todays conference call.
Peter Shaw: Today's comments may also contain forward-looking information. However, any forward-looking information is not a guarantee of future performance or actual performance, and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described in further detail in our second quarter earnings release that we issued this morning, as well as in our most recent Form 10-K. All these documents are available on CDAR Plus, EDGAR, and our website.
Todays comments may also contain forward looking information any forward looking information is not a guarantee of future performance and actual performance and operating results can vary materially depending on a number of factors and assumptions.
Forward looking information and the risk factors and assumptions are described in further detail on our second quarter earnings release that we issued this morning as well as our most recent Form 10-K.
All of these documents are available on SEDAR, plus Edgar and our website. So I'd ask yes, so I would ask that you refer to those.
Peter Shaw: So I would ask that you refer to those. Brad is going to start with some opening remarks and then hand it over to Dan, who is going to provide a financial update, and then Brad will provide an operations update. Once that is done, we will follow up with the Q&A session. So with that, I will turn it over to Brad for his opening remarks.
Brad is going to start with some opening remarks, and then hand it over to Dan who is going to provide a financial update and then Brad will provide operations update once that is done we will follow with the Q&A session. So with that I will turn it over to Brad for his opening remarks.
Bradley Corson: Thank you, Peter. Good morning, everybody, and welcome to our second quarter earnings call. I hope everyone is doing well. I wanted to start today's call by taking a moment to talk about the serious wildfire situation that has occurred across Western Canada over the past few weeks. We are deeply thankful for the courageous work of the emergency services as they battle the fires in very difficult conditions to keep our community safe. Our thoughts are with the community of Jasper and others who have been tragically impacted by the destruction of the devastating fires and now as the communities work to rebuild.
Brad: Thank you Peter Good morning, everybody and welcome to our second quarter earnings call I Hope everyone is doing well I wanted to start today's call by taking a moment to talk about the serious wildfire situation that has occurred across western Canada over the past few weeks we.
We are deeply thankful for the courageous work of the emergency services as they battle the fires in very difficult conditions to keep our community safe.
Speaker Change: Our thoughts are with the community of Jasper and others, who have been tragically impacted by the destruction of the devastating fires and now as the communities worked to rebuild.
Bradley Corson: There have been large fires in the Fort McMurray region near our curl operations and, to a lesser extent, around Cold Lake. The teams at our operations have been working closely with local and provincial agencies to ensure we're taking the necessary precautions to protect our people and our assets. Fortunately, to date, there have been no impacts on our production, and the situation has improved over the past few days. And, of course, it's a situation that we will continue to closely monitor and take appropriate action.
Speaker Change: There have been large fires in the Fort Mcmurray region near our current operations and to a lesser extent around cold Lake.
Speaker Change: The teams at our operations have been working closely with local and provincial agencies to ensure we are taking necessary precautions to protect our people and our assets and Fortunately to date, there have been no impacts to our production and the situation has improved over the past few days.
Speaker Change: And of course, it's a situation that we will continue to closely monitor and take appropriate actions.
Bradley Corson: Now turning to our performance over the quarter, our upstream saw record production coupled with stronger price realizations due to the combined benefit of strengthening WTI prices and the tightening of WCS crude differentials. We were pleased to see the successful startup of TMX in May, bringing additional egress capacity for Western Canadian crudes, which has resulted in a structural tightening of the differential, reduced price volatility, and a net benefit to Imperial. Our downstream business also performed well over the quarter and contributed very solid earnings despite significant turnaround activity and some softening of refinery crock spread. The downstream continues to realize the structural benefits of the Canadian market, including advantaged feedstocks and import parity prices.
Speaker Change: Now turning to our performance over the quarter, our upstream saw record production, coupled with stronger price realizations due to the combined benefit of strengthening WT high prices and the tightening of WCS crude differentials.
Speaker Change: We were pleased to see the successful startup of <unk> in may bringing additional egress capacity for western Canadian crudes, which has resulted in structural tightening of the differential reduced price volatility and a net benefit to imperial.
Our downstream business also performed well over the quarter and contributed very solid earnings despite significant turnaround activity and some softening of refinery crack spreads.
Speaker Change: The downstream continues to realize the structural benefits of the Canadian market, including advantaged feedstocks and import parity pricing.
Bradley Corson: So now let's review the second quarter results. I'm very pleased to report a strong second quarter, with earnings per share up over 80% year-over-year. These results were underpinned by strong operations, which included the safe and successful execution of several major plan turnaround activities across our integrated portfolio. And while we still have some scheduled turnaround work ahead, we're well positioned for a strong second half of the year. Earnings for the quarter were $1,133,000,000, with cash from operating activities of $1,508,000,000 when excluding the impact of working capital.
Speaker Change: So now let's review the second quarter results I am very pleased to report a strong second quarter with earnings per share up over 80% year over year.
Speaker Change: These results were underpinned by strong operations that included the safe and successful execution of several major planned turnaround activities across our integrated portfolio.
Speaker Change: And while we still have some scheduled turnaround work ahead, we are well positioned for a strong second half of the year.
Speaker Change: Earnings for the quarter were $1 billion $133 million with cash from operating activities of $1.508 billion when excluding the impact of working capital I am very pleased by the strong financial results, we achieved especially from a quarter which includes.
Bradley Corson: I'm very pleased with the strong financial results we achieved, especially from a quarter that included significant planned turnarounds, both in the upstream and downstream. In the upstream, we achieved total production of 404,000 gross oil equivalent barrels per day in the second quarter. This marks the highest ever second-quarter production over the past 30 years when adjusting for the sale of XTO in 2022. The results were underpinned by strong and reliable operations across all of our assets and successful turnaround execution at Curl and Syncrude.
Speaker Change: Significant planned turnarounds, both in the upstream and downstream.
Speaker Change: In the upstream we achieved total production of 404000 gross oil equivalent barrels per day in the second quarter. This marks the highest ever second quarter production over the past 30 years when adjusting for the sale of <unk> in 2022.
Speaker Change: <unk>.
Speaker Change: The results were underpinned by strong and reliable operations across all of our assets and successful turnaround execution at Pearl and Syncrude.
Bradley Corson: Perl had another fantastic quarter and matched the asset's record for highest second quarter production. This result contributed to achieving the highest first half production in the asset's history, and you may recall this follows a record second half in 2023. Coal Lake also saw a strong second quarter, including first production from our Grand Rapids Phase One project, the industry's first solvent-assisted SAGV operation, which we will discuss in more detail shortly. In the downstream, we continue to see strong operating performance as well. Refinery throughput averaged 387,000 barrels per day, which equates to a refinery utilization rate of 89 percent and includes the successful month-long turnarounds at both Sarnia and Stratcona.
Speaker Change: Carl had another fantastic quarter and match the assets record for highest second quarter production. This result contributed to achieving the highest first half production and the assets history.
Speaker Change: And you May recall this follows a record second half in 2023.
Speaker Change: Cold Lake also saw a strong second quarter, including first production from our Grand Rapids Phase One project. The industry's first solvent assisted sag the operation, which we will discuss in more detail shortly.
Speaker Change: In the downstream, we continued to see strong operating performance as well.
Speaker Change: Our refinery throughput averaged 387000 barrels per day, which equates to a refinery utilization in the quarter of 89% and includes the successful month long turnarounds at both Sarnia and stress Kona.
Bradley Corson: Overall, we feel very positive about the strong first half of the year and are well positioned to meet our annual guidance. We continue to deliver significant value to our shareholders through our reliable and growing dividend and share repurchase program. And consistent with our commitment to return surplus cash to shareholders, we announced this morning our plans to accelerate repurchases under the normal course issuer bid with a target to complete the program prior to the end of this year. With that, I'll pass things over to Dan to discuss our financial results in more detail.
Speaker Change: Overall, we feel very positive about the strong first half of the year and are well positioned to meet our annual guidance.
Speaker Change: We continue to deliver significant value to our shareholders through our reliable and growing dividend and share repurchase programs.
Speaker Change: And consistent with our commitment to return surplus cash to shareholders. We announced this morning, our plans to accelerate repurchases under the normal course issuer bid with a target to complete the program prior to the end of this year.
Speaker Change: With that I'll pass things over to Dan to discuss our financial results in more detail.
Dan Lyons: Thanks, Brad. Starting with financial results for the second quarter, we recorded net income of $1,133,000,000, an increase of $458,000,000 from the second quarter of 2023, primarily reflecting higher realizations and volumes in the upstream and lower turnaround impacts in the downstream. Looking sequentially, our second quarter net income is down $62 million from the first quarter of 2024, reflecting lower margins in the downstream and lower volumes in the upstream, partly offset by higher realizations in the upstream.
Dan: Thanks, Brad starting with financial results for the second quarter, we recorded net income of $1 billion $133 million, an increase of $458 million from the second quarter of 2023, primarily reflecting higher realizations and volumes in the upstream and lower turnaround.
Dan: Impacts from the downstream looking sequentially, our second quarter net income is down $62 million from the first quarter of 2024, reflecting.
Speaker Change: Lower margins in the downstream and lower volumes in the upstream partly offset by higher realizations in the upstream.
Dan Lyons: Now looking at each business line, upstream earnings of $799 million are up $241 million from the first quarter, driven primarily by higher realizations, partly offset by lower volumes associated with a high level of turnaround activity. Downstream earnings of $294 million are down $337 million from the first quarter, mainly reflecting lower refining margins and turnaround impact.
Speaker Change: Now looking at each business line upstream earnings of $799 million or up $241 million from the first quarter, driven primarily by higher realizations, partly offset by lower volumes associated with a high level of turnaround activity downstream earnings of 290.
Speaker Change: 4 million are down $337 million from the first quarter, mainly reflecting lower refining margins and turnaround impacts finally, our chemicals business generated earnings of $65 million up $8 million from the first quarter, reflecting higher volumes move.
Dan Lyons: Finally, our chemicals business generated earnings of $65 million, up $8 million from the first quarter, reflecting higher volume. Moving on to cash flow. In the second quarter, we generated about $1.6 billion in cash flows from operating activities, excluding working capital effects of $121 million. Cash flows from operating activities for the second quarter were about $1.5 billion, up about $400 million from the second quarter of 2023, in line with earnings. We ended the quarter with just over $2 billion of cash on hand.
Speaker Change: On to cash flow.
Speaker Change: In the second quarter, we generated about $1 $6 billion in cash flows from operating activities.
Speaker Change: Excluding working capital effects of $121 million cash flows from operating activities for the second quarter were about $1 $5 billion up about $400 million from the second quarter of 2023 in line with earnings we ended the quarter with just over 2 billion.
Speaker Change: Our cash on hand.
Dan Lyons: Discussing CapEx, capital expenditures totaled $462 million in the second quarter, down $31 million from the second quarter of 2023. In the upstream, second quarter spending focused on smaller projects to sustain and grow production at Curl, Syncrude, and Cold Lake, as well as progressing the In-Pit Tailings Project at Curl and the S.A. Sag-Dee Grand Rapids Project at Cold Lake. In the downstream, second quarter spending mainly included progressing a renewable diesel project at Strathcona.
Speaker Change: Discussing capex capital expenditures totaled $462 million in the second quarter down $31 million from the second quarter of 2023, and the upstream second quarter spending focused on smaller projects to sustain and grow production at curl Syncrude and cold lay.
Speaker Change: As well as progressing the in pit tailings project get Carl and the ESA Saggy Grand Rapids project at Cold Lake and the downstream second quarter spending mainly included progressing our renewable diesel project abstract Kona.
Dan Lyons: Year to date capital expenditures totaled $958 million, which is consistent with 2023 year to date spend. Our full year guidance remains $1.7 billion. Shifting to shareholder distributions, in the second quarter of 2024, we paid $321 million in dividends. On June 24th, we mentioned the renewal of our normal course issuer bid, which allows us to purchase up to 5% of our outstanding common shares over the following 12 months. We started purchasing shares ratably in July, but as Brad mentioned, we plan to accelerate our purchases and complete the program prior to year-end, in line with our long-standing practice of returning surplus cash to shareholders. Lastly, this morning, we announced a third quarter dividend of $0.60 per share, in line with our second quarter dividend. Now I'll turn it back to Brad to discuss her operational performance. Thanks.
Speaker Change: Year to date capital expenditures totaled $958 million, which is consistent with 2023 year to date spend our full year guidance remains $1 7 billion.
Speaker Change: Shifting to shareholder distributions in the second quarter of 2024, we paid $321 million in dividends.
Speaker Change: On June 24, we mentioned the renewal of our normal course, issuer bid, which allows us to purchase up to 5% of our outstanding common shares over the following 12 months, we started purchasing shares ratably in July, but as Brad mentioned, we plan to accelerate our purchases and complete the probe.
Speaker Change: Graham prior to year end in line with our long standing practice of returning surplus cash to shareholders. Lastly, this morning, we announced a third quarter dividend of <unk> 60 per share in line with our second quarter dividend now I'll turn it back to Brad to discuss our operational performance.
Bradley Corson: Thanks, Stan. Now, I'll cover our operating results for the quarter. Upstream production for the quarter averaged 404,000 oil equivalent barrels per day, which is down 17,000 barrels per day versus the first quarter and up 41,000 barrels per day versus the second quarter of 2023. While the second quarter typically has higher levels of planned maintenance activity, affecting the sequential comparison, I'm very pleased to see a greater than 10% increase in quarterly production year over year and the achievement of the highest second quarter production in over 30 years when So now I'd like to move on and talk specifically about Kerl.
Brad: Thanks, Stan So now I'll cover our operating results for the quarter upstream.
Bradley Corson: Kerl's production in the second quarter averaged 255,000 barrels per day, which was down 22,000 barrels per day versus the first quarter and up 38,000 barrels per day from the second quarter of 2023. As I mentioned earlier, this matched the best second quarter production ever achieved at Curl and resulted in a record first half production of 266,000 barrels per day. And these record first half results follow a record second half of 2023, which further reinforces our confidence in the production guidance we set for Curl.
Brad: Production for the quarter averaged 404000 oil equivalent barrels per day, which is down 17000 barrels per day versus the first quarter and up 41000 barrels per day versus the second quarter of 2023.
Brad: While the second quarter typically has higher levels of planned maintenance activity affecting the sequential comparison I'm very pleased to see a greater than 10% increase in quarterly production year over year and the achievement of the highest second quarter production and over 30 years when adjust.
Speaker Change: <unk> for the sale of X T O.
Carl: So now I'd like to move on and talk specifically about Carl <unk>.
Speaker Change: <unk> production in the second quarter averaged 255000 barrels per day gross.
Speaker Change: Which was down 22000 barrels per day versus the first quarter.
Speaker Change: And up 38000 barrels per day from the second quarter of 2023 as I mentioned earlier. This matched the best second quarter production ever achieved at Kearl and resulted in record first half production of 266000 barrels per day.
Speaker Change: And these record first half results followed a record second half of 2023, which further reinforces our confidence in the production guidance, we set for <unk>.
Bradley Corson: During last quarter's call, I highlighted that the team was hard at work optimizing the schedule and scope of the annual turnaround with the goal of continuing to minimize downtime and cost. I'm very pleased to share that the team delivered. The planned turnaround work was completed in under 20 days for the first time in the asset's history, and at a cost below our guidance as well. We've talked extensively about the step change improvement we made in 2021 when we moved from two turnarounds per year to one.
Speaker Change: During last quarter's call I highlighted that the team was hard at work optimizing the schedule and scope of the annual turnaround with the goal of continuing to minimize downtime and costs.
Speaker Change: I am very pleased to share that the team delivered on this.
Speaker Change: The planned turnaround work was completed in under 20 days for the first time in the assets history.
Speaker Change: And at a cost below our guidance as well.
Speaker Change: We've talked extensively about the step change improvement we made in 2021, when we moved from two turnarounds per year to one.
Bradley Corson: Looking more closely at the number of days required for the turnaround activity, at that time, we were averaging approximately 70 days per year with two turnarounds. We have now reduced that duration by more than 70% with this year's results.
Speaker Change: Looking more closely at the number of days required for the turnaround activity.
Speaker Change: At that time, we were averaging approximately 70 days per year with two turnarounds.
Speaker Change: We have now reduced that duration by more than 70% with this year's results and while we are thrilled with this important achievement. The team is already looking ahead for additional opportunities to reduce turnaround durations and costs even further.
Bradley Corson: And while we are thrilled with this important achievement, the team is already looking ahead for additional opportunities to reduce turnaround durations and costs even further. And turning to costs, Kurl's unit cash operating costs in the quarter were $22.12 U.S. per barrel. While we saw an increase versus the first quarter due primarily to the plan turnaround cost, which we generally expense, we also saw a decrease of about $6 US per barrel compared to the second quarter of 2023, which reflects our focus on cost reductions, including improvements to our plan turnarounds and reliability.
Speaker Change: And turning to cost curls unit cash operating costs in the quarter were $22 12 U S per barrel.
Speaker Change: While we saw an increase versus the first quarter due primarily to the planned turnaround costs, which we generally expense. We also saw a decrease of about $6 U S per barrel compared to the second quarter of 2023.
Speaker Change: Which reflects our focus on cost reductions, including the improvements to our planned turnarounds and reliability.
Bradley Corson: This second quarter performance is also contributing to our year-to-date unit cash costs of $21.45 U.S. per barrel, a $5 U.S. per barrel decrease versus the first half of 2023. With the turnaround behind us now and our expectation for higher volumes in the second half of the year, we expect to make further progress on unit costs towards our $20 US per barrel or below target. Overall, PERL continues to deliver great results, and with a turnaround in the rearview mirror, it is well positioned for a strong second half, and now turning to Cold Lake.
Speaker Change: This second quarter performance is also contributing to our year to date unit cash cost of $21 45.
Speaker Change: <unk> per barrel, a $5 U S per barrel decrease versus the first half of 2023.
Speaker Change: With the turnaround behind us now and our expectation for higher volumes in the second half of the year, we expect to make further progress on unit costs.
Speaker Change: Towards our $20 U S per barrel or below target.
Speaker Change: Overall <unk> continues to deliver great results and with the turnaround in the rearview mirror and is well positioned for a strong second half.
Speaker Change: And now turning to Cold Lake.
Bradley Corson: Coal Lake production for the second quarter averaged 147,000 barrels per day, which was up 5,000 barrels per day versus the first quarter and up 15,000 barrels per day versus the second quarter of 2023. You may recall that we went through an extended period of lower production in 2023 due to production and steam cycle timing. So I'm very pleased to see this strong performance so far this year, and we are squarely on track to meet our annual guidance. This strong production, along with lower energy costs, resulted in unit cash costs of $14.30 U.S. per barrel, which is a decrease of over $3 U.S. per barrel compared to last year.
Speaker Change: Cold Lake production for the second quarter averaged 147000 barrels per day, which was up 5000 barrels per day versus the first quarter and up 15000 barrels per day versus the second quarter of 2023 you.
Speaker Change: You may recall that we went through an extended period of lower production in 2023 due to production and steam cycle timing. So I'm very pleased to see.
Speaker Change: This strong performance so far this year and we are squarely on track to meet our annual guidance.
Speaker Change: This strong production along with lower energy costs resulted in unit cash costs of $14 30 U S per barrel, which is a decrease of over $3 U S per barrel compared to last year.
Bradley Corson: And this includes the impacts of Grand Rapids phase one, which achieved first oil in May and contributed about three thousand barrels per day to our second quarter results. Grand Rapids continues to ramp up with the pumps installed on the majority of well pairs, and the remaining pumps are on track to be installed over the next several weeks. In June, Grand Rapids achieved production of about eight thousand barrels per day and is currently producing 10,000 to 12,000 barrels per day as we just completed the month of July.
Speaker Change: And this includes the impacts of Grand Rapids Phase, one, which achieved first oil in may and contribute about 3000 barrels per day to our second quarter results.
Speaker Change: Grand Rapids continues to ramp up with the pumps installed on the majority of well pairs and the remaining pumps are on track to be installed over the next several weeks in June Grand Rapids achieved production of ABA.
Speaker Change: <unk> 8000 barrels per day.
Speaker Change: And is currently producing 10 to 12000 barrels per day as we just completed the month of July.
Bradley Corson: On-site reservoir performance continues to be monitored and is aligned with our expectations as we ramp up production and solvent injection. We are well on our way to reaching the expected 15,000 barrels per day of efficient, lower unit cash cost barrels as we complete this important step in our strategy to transform Coal Lake. We expect phase one alone will lower Cold Lake's unit costs by around one dollar US per barrel.
Speaker Change: On site reservoir performance continues to be monitored and is aligned with our expectations as we ramp up production and solvent injection.
Speaker Change: We are well on our way to reaching the expected 15000 barrels per day of efficient lower unit cash cost barrels as we complete this important step in our strategy to transform cold Lake.
Speaker Change: We expect phase one alone will lower cold lake's unit costs by around $1 U S per barrel I am very proud of the work. The project team has done to accelerate this project.
Bradley Corson: I'm very proud of the work the project team has done to accelerate this project by a year and deliver the industry's first ever SA-SAG-V development. I also wanted to take a moment to provide a brief update on our Lemming redevelopment project, which is another key project for us at Coal Lake. The focus for this year continues to be on facility construction and well completion. During the quarter, fabrication started on various units as civil work continued on site, with installation expected in the coming week.
Speaker Change: A year and deliver industry first ever SA Sag D development.
Speaker Change: I also wanted to take a moment to provide a brief update on our lending redevelopment project, which is another key project for us at Cold Lake.
Speaker Change: The focus for this year continues to be on facility construction and well completions during the quarter fabrication started on various units at civil work continued on site with installation expected in the coming weeks.
Bradley Corson: We are progressing on the plan for startup in 2025, with the project expected to average about 9000 barrels of production per day at peak. I would also like to remind everyone that Cold Lake has just started its planned turnaround at Masquois and will run through to mid-September with an expected volume impact of 3,000 barrels of per day in 2024. Now, a few comments on Syncrude.
Speaker Change: We are progressing on plan first startup in 2025 with.
Speaker Change: With the project expected to average about 9000 barrels per day of production at peak.
Speaker Change: I would also like to remind everyone that cold Lake has just started its planned turnaround at mass floor and will run through to mid September with an expected volume impact of 3000 barrels per day in 2024.
Bradley Corson: Imperial's share of Syncrude production for the quarter averaged 66,000 barrels per day, which was down 7,000 barrels per day versus the first quarter and flat versus the second quarter of 2023. During the quarter, Syncrude completed its two-month-long coker turnaround ahead of schedule and is expected to start a hydrotreater turnaround at the end of the third quarter. During the quarter, Syncrude leveraged the bi-directional function of the InterConnect pipeline to export about 2,000 barrels per day, our share, of bitumen to maximize mine production during the Coker turnaround.
Speaker Change: And now a few comments on Syncrude.
Speaker Change: Imperial share of Syncrude production for the quarter averaged 66000 barrels per day.
Speaker Change: Which was down 7000 barrels per day versus the first quarter and flat versus the second quarter of 2023.
Speaker Change: During the quarter Syncrude completed its two month long Coker turnaround ahead of schedule and is expected to start a hydro treater turnaround at the end of the third quarter.
Speaker Change: During the quarter Syncrude leverage the bi directional function of the interconnect pipeline to export about 2000 barrels per day, our share of bitumen to maximize mine production during the coker turnaround.
Bradley Corson: Once the turnaround was completed, Syncrude reversed the pipeline flow in order to import bitumen and maintain high upgrader utilization rates, helping to produce about 5,000 barrels per day, our share of incremental Syncrude Suite premium. The interconnect pipeline is an important tool that provides optionality, ensuring the team is able to maximize both mine productivity while also maintaining high upgrader utilization rates. So now let's move on and talk about the downstream, which is another positive story. In the second quarter, we refined an average of 387,000 barrels per day, resulting in a utilization of 89%.
Speaker Change: Once the turnaround was completed syncrude reverse the pipeline flow in order to import bitumen and maintain high upgrader utilization rates, helping to produce about 5000 barrels per day, our share of incremental syncrude sweet premium.
Speaker Change: The interconnect pipeline is an important tool that provides optionality ensuring the team is able to maximize both mine productivity, while also maintaining high upgrader utilization rates.
Speaker Change: So now let's move on and talk about the downstream, which is another positive story.
Speaker Change: In the second quarter, we refined an average of 387000 barrels per day, resulting in a utilization of 89%. This was down 20000 barrels per day versus the first quarter due to month long turnarounds at both stress Kona and Sarnia.
Bradley Corson: This was down 20,000 barrels per day versus the first quarter due to month-long turnarounds at both Strathcona and Sarnia, and down slightly by 1,000 barrels per day versus the second quarter of 2023. However, I'm pleased to highlight that Nanticoke achieved record April throughput, which contributed to its highest ever first half throughput record. And from a financial perspective, our structurally advantaged downstream business remained quite profitable in the quarter, despite the significant turnaround activity and narrower crude differentials that affected margin caps. Canadian crack spreads have softened in 2024. However, they do remain above the average of the last five years, so it's important to keep that in context.
Speaker Change: And down slightly by 1000 barrels per day versus the second quarter of 2023.
Speaker Change: I'm pleased to highlight that nanticoke achieved record April throughput, which contributed to its highest ever first half throughput record.
Speaker Change: From a financial perspective are structurally advantaged downstream business remains quite profitable in the quarter. Despite the significant turnaround activity.
Speaker Change: And narrower crude differentials that affected margin capture.
Speaker Change: Canadian crack spreads have softened in 2024, however, they do remain above the average of the last five years. So it's important to keep that in context.
Bradley Corson: In the third quarter, there is a planned turnaround at our Nanticoke refinery that is scheduled to start in early September and finish in late October. Strathcona will also be executing its second smaller turnaround, which will include work to enable the co-processing of vegetable oils alongside conventional feedstock. We continue to progress the construction of Canada's largest renewable diesel facility at our Strathcona refinery that will add 20,000 barrels a day of throughput capacity when completed.
Speaker Change: In the third quarter, there was a planned turnaround at our nanticoke refineries that is scheduled to start in early September and finished in late October.
Speaker Change: <unk> will also be executing its second smaller turnarounds, which will include work to enable the co processing of vegetable oils alongside conventional feedstock.
Speaker Change: We continue to progress the construction of Canada's largest renewable diesel facility at our stress Kona refinery that will add 20000 barrels a day of throughput capacity when completed modules continue to arrive.
Bradley Corson: Modules continue to arrive on site, and I'm pleased with the progress of the construction, which will continue into next year. The Strathcona Renewable Diesel Project is a highly attractive and strategic opportunity within our portfolio and one that leverages the numerous competitive advantages we have, including our location, scale, expertise, and technology. Another exciting milestone in the quarter was the completion of the Calgary Renewable Diesel Blending and Offloading Distribution Terminal, which will further develop our capabilities to continue to meet our customers' demands for lower emission fuel options. Petroleum product sales in the quarter were 470,000 barrels per day, which is up 20,000 barrels per day versus the first quarter and down 5000 barrels per day versus the second quarter of 2023.
Speaker Change: On site and I am pleased with the progress of the construction, which will continue into next year.
Speaker Change: The stress Kona renewable diesel projects is a highly attractive and strategic opportunity within our portfolio and one that leverages. The numerous competitive advantages, we have including our location scale expertise and technology.
Speaker Change: Another exciting milestone in the quarter was the completion of the Calgary renewable diesel blending and Offloading distribution terminal, which will further develop our capabilities to continue to meet our.
Speaker Change: Customers' demands for lower emission fuel options.
Speaker Change: Petroleum product sales in the quarter were 470000 barrels per day, which is up 20000 barrels per day versus the first quarter and down 5000 barrels per day versus the second quarter of 2023.
Bradley Corson: We continue to see steady refined product demand, with gasoline, diesel, and jet demand generally consistent with the prior year. During the quarter, we completed the proactive replacement of a segment of the Winnipeg products pipeline after a routine inspection found riverbank erosion was causing stress on the pipeline. The maintenance work required several weeks of horizontal drilling under the Red River, with the first of the two pipelines being returned to service in May and the second pipeline returning to service in late June.
Speaker Change: We continue to see steady refined product demand with gasoline diesel and jet demand generally consistent with prior year.
Speaker Change: During the quarter, we completed the proactive replacement of a segment of the Winnipeg products pipeline. After a routine inspection found river bank erosion was causing stress on the pipelines.
Speaker Change: The maintenance work required several weeks of horizontal drilling under the Red River with the first of two pipelines being returned to service in May and the second pipeline returning to service in late June.
Bradley Corson: We worked closely with impacted neighbors and communities, as well as the Manitoba government and regulators and also customers throughout this process to ensure they had the latest information on the status of the maintenance work. Our priority was returning the pipeline to service on time and in the safest, most environmentally responsible way, and we appreciate everyone's patience and understanding as we completed this important work. I also want to thank our team for working nonstop since March to complete the work as we committed and minimize the disruption to our customers and communities.
Speaker Change: We worked closely with impacted neighbors and communities.
Speaker Change: As well as the Manitoba government and regulators and also customers throughout this process to ensure they have the latest information on the status of the maintenance work.
Speaker Change: Our priority was returning the pipeline into service on time and in the safest most environmentally responsible way and we appreciate everyone's patience and understanding as we completed this important work.
Speaker Change: I also want to thank our team for working nonstop since March to complete the work as we committed and minimize the disruption to our customers and communities.
Bradley Corson: And turning now to chemicals, earnings in the quarter were $65 million, which was up $8 million versus the first quarter and down $6 million versus the second quarter of 2023. The higher earnings versus the first quarter were the result of strong polyethylene sales.
Speaker Change: And turning now to chemicals earnings in the quarter were $65 million, which was up $8 million versus the first quarter and down $6 million versus the second quarter in 2023.
Speaker Change: The higher earnings versus the first quarter were the result of strong polyethylene sales.
Bradley Corson: And before I wrap up, I'd also like to highlight the ongoing work that the Pathways Alliance is progressing. Pathways continues to make progress on the engineering and design of the proposed carbon capture and storage pipeline project, with regulatory filings continuing through the second quarter. In parallel, we continue to have constructive discussions with the federal and provincial governments in order to finalize the fiscal frameworks necessary for these important projects to proceed smoothly. And so, to wrap up.
Speaker Change: And before I wrap up I'd also like to highlight the ongoing work that the pathways Alliance is progressing pathways continues to make progress on the engineering and design of the proposed carbon capture and storage pipeline project with regulatory filings continuing through the second quarter.
Speaker Change: In parallel we continue to have constructive discussions with the federal and provincial governments in order to finalize the fiscal frameworks necessary for these important projects to proceed timely.
Speaker Change: And so to wrap up.
Bradley Corson: This was a really strong quarter for us, underpinned by reliable operating performance and successful execution of significant planned maintenance at four of our major facilities. I want to recognize the dedication and hard work by all our teams that delivered these exceptional results. I'm also very excited to see the production growth from further records at Pearl and the ramp-up of Grand Rapids and the continued construction progress of our Stratona Renewable Diesel Project.
Speaker Change: This was a really strong quarter for us underpinned by reliable operating performance and successful execution of significant planned maintenance at four of our major facilities I want to recognize the dedication and hard work by all our teams that deliver these exceptional results.
Speaker Change: We're also very excited to see the production growth from further records at Pearl and the ramp up of Grand Rapids, and the continued construction progress of our stress Kona renewable diesel project.
Bradley Corson: Both the Grand Rapids and Strathcona Renewable Diesel Projects are an important part of our growth plans to meet the energy needs of society while generating value for our shareholders. (Inaudible) As I look ahead to the second half of the year, we're very focused on delivering a strong finish, and I'm confident in our ability to achieve our guidance for 2024. We remain committed to returning surplus cash to our shareholders, and as we announced this morning, we are accelerating our recently renewed normal course issuers' bid with the intent of completing it prior to year end. As always, I'd like to thank you once again for your continued interest and support. And now we'll move on to the Q&A session, so I'll pass this back to Peter.
Speaker Change: Both Grand Rapids, and stress Kona renewable diesel projects are an important part of our growth plans to meet the energy needs of society, while generating value for our shareholders.
Speaker Change: <unk>.
Speaker Change: As I look ahead to the second half of the year, we're very focused on delivering a strong finish and I am confident in our ability to achieve our guidance for 2024, we remain committed to returning surplus cash to our shareholders and as we announced this morning, we are accelerating our recently renewed normal course.
Speaker Change: Issuers bid with the intent of completing it prior to year end.
Speaker Change: As always I'd like to thank you once again for your continued interest and support.
Speaker Change: And now we'll move to the Q&A session. So I'll pass it back to Peter.
Peter Shaw: Thank you, Brad. As always, we'd appreciate it if you could limit yourself to one question plus one follow-up so that we can get to as many questions as possible. And with that, operator, could you please open up the phone line for questions?
Peter Shah: Thank you Brad as always be depreciated, you can limit yourself to one question plus one follow up so that we can get to as many questions as possible.
Speaker Change: Operator could you. Please open up the phone line for questions.
Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment.
Speaker Change: Thank you.
Speaker Change: I dialed in via the telephone and we'd like to ask the question.
Speaker Change: By pressing star one on your telephone keypad.
Speaker Change: You are using a speaker phone. Please make sure your mute function is turned off.
Speaker Change: Your signal to reach our equipment.
Operator: Again, please press star 1 to ask a question. Your first question comes from Greg Pardy with RBC Capital Markets. Thank you, and Brad, thanks for the detailed rundown.
Speaker Change: Please press star one to ask a question.
Speaker Change: Your first question comes from Greg Pardy with RBC capital markets.
Speaker Change: Please go ahead. Thanks.
Greg Pardy: Yes, Thank you and Brad Thanks for the detailed rundown.
Greg Pardy: I wanted to stay with, or just dig in rather, into maybe the Grand Rapids and in-situ in general. But the technical question, I guess, for the Grand Rapids is... What kind of recovery rate are you targeting from the reservoir with respect to just like the percentage of whatever you're bringing back? And then how much how much degree of recycling of the solvent is there? I'm just trying to get a better understanding as to how much how much of a closed system it is.
Speaker Change: Wanted to stay with.
Greg Pardy: I can just dig in rather into the Grand Rapids and in situ in general, but the technical question I guess in the Grand Rapids as well.
Speaker Change: What kind of recovery rate are you targeting from the reservoir with respect to.
Speaker Change: Just like the percentage of whatever you are bringing back and then how much how what degree of recycling of the solvent is there I'm just trying to get a better understanding as to how much of a closed system.
Bradley Corson: Yeah, thanks for that question, Greg, and good to hear from you. I don't necessarily have those specific details on the reservoir performance from a planned basis. What I will tell you, though, is based on the early data we've gathered. You know, as we just started this production in May, and as I just commented on, you know, we saw 3,000 barrels per day average for the quarter, and then 8,000 barrels per day in June, and now we're seeing 10,000 to 12,000 barrels per day.
Speaker Change: Yes, thanks for that question.
Peter Shah: Greg and good to hear from you.
Speaker Change: I don't necessarily have those specific details on the reservoir performance.
Speaker Change: From from a planned basis, what what I will tell you though.
Peter Shah: Is based on the early data we've gathered.
Speaker Change: As we just started this production up in May.
Peter Shah: And as I just commented on.
Peter Shah: We saw 3000 barrels per day average for the quarter.
Peter Shah: And then 8000 barrels per day in June and now, we're seeing 10% to 12000 barrels per day.
Bradley Corson: All of that is reflective of performance, very consistent with our planning basis. We are quite pleased with how the ramp-up has gone so far, recognizing we're at this 10 to 12,000 barrels a day range. And we still have multiple pumps still to install, which will allow us to get all the wells in a production state, as well as we're just in the process of ramping up diluent injection now as well.
Peter Shah: All of that is reflective of performance very consistent with our planning basis.
Peter Shah: We're quite pleased with how the ramp up has gone so far recognizing.
Peter Shah: We're at this 10% to 12000 barrel a day range and we still have multiple.
Peter Shah: Pumps still to install.
Peter Shah: Which will allow us to get all of the wells.
Peter Shah: In a production state as well as we're just in the process of ramping up diluent.
Bradley Corson: So we're still in, you know, I would say fairly early stages but very encouraged by the results we're seeing. And so, you know, I think we'll have more data for you in the coming quarter. And that may be a good time to talk more about some of the details of the reservoir.
Peter Shah: Injection now as well so we're still I.
Peter Shah: I would say fairly early stages.
Peter Shah: But very encouraged by the results, we're seeing and so.
Peter Shah: I think we'll have more data for you.
Peter Shah: And in the coming quarter and that might be a good time to talk more about kind of some of the details of the reservoir.
Bradley Corson: Thanks for that, and then related, but perhaps just a broader question is you've got not a JV with Suncor but I guess data sharing or a collaboration going on with respect to Aspen, and I'm just wondering how you're thinking about that partnership and then you know what the benefits are to IMO.
Speaker Change: Okay understood. Thanks for that and then.
Speaker Change: Related, but perhaps just a broader question as you.
Speaker Change: They're not a JV with suncor, but I guess.
Speaker Change: Data sharing or collaboration going on with respect to Aspen and I'm, just I'm wondering how you're thinking about that partnership and then what the benefits are.
Speaker Change: <unk>.
Peter Shah: Yes.
Bradley Corson: Yeah. Well, and I think what you're referring to is the joint pursuit of the EBRT pilot that we are in kind of the process of constructing now, and that is a partnership between us and Suncor to build that pilot and operate it. And I just want to clarify the pilot for us, which we believe has future applicability to Aspen. The partnership with Suncor is limited to this pilot. That partnership has nothing to do with Aspen per se.
Speaker Change: Well I think what you're referring to is.
Peter Shah: The.
Peter Shah: Joint pursuit of the <unk>.
Peter Shah: <unk> T pilot.
Peter Shah: That we are in the process of constructing now and that there is a partnership between us and suncor too.
Peter Shah: Build that pilot then operate it.
Peter Shah: And I just wanted to clarify.
Peter Shah: The pilot for us.
Peter Shah: We believe has future applicability to ad spend.
Peter Shah: Our partnership with Suncor is limited to this pilot.
And that partnership has nothing to do with Aspen.
Peter Shah: <unk>.
Peter Shah:
Bradley Corson: But in terms of the pilot itself, you know, we do see it as a potential enabler of new technology that we can apply to Aspen that will allow us to lower the capital cost, lower the operating cost because it uses significantly more affidavit and less steam and also, as a result, achieves much lower emissions intensity for the barrels that we would produce. Working together with Suncor allows us to expedite the progress on that pilot, allows us to jointly share in the cost of that pilot, and allows us to share technology and insights that, together, will result in a more successful pilot. So we feel quite good about the opportunity, we feel good about where we are progressing with this pilot, and we're optimistic that it'll have longer-term strategic value to us for Aspen.
Peter Shah: But in terms of the pilot itself.
Speaker Change: We do see it.
Peter Shah: As a potential.
Peter Shah: Enabler of a new technology that we can apply to a spin that will allow us to lower the capital cost.
Peter Shah: Lower the operating costs because it uses significant more.
Peter Shah: <unk> and less theme.
Peter Shah: And also as a result, then achieves much lower.
Peter Shah: Emissions intensity for the barrels that we produce.
Peter Shah: Working together with Suncor allows us to.
Peter Shah: <unk>.
Peter Shah: The progress on that pilot.
Laos us to jointly share in the cost of that pilot allows us to share.
Peter Shah: Technology and insights.
Peter Shah: We have no debt.
Peter Shah: We together will result in a more successful pilot.
Peter Shah: So we feel quite good about the opportunity we feel good about where we are progressing this pilot and we're optimistic that it will have longer term strategic value to us for Aspen.
Okay very good thanks, very much Greg.
Greg Pardy: Very good. Thanks very much, Brad.
Greg Pardy: Thanks, Greg.
Operator: Thank you. Your next question comes from the line.
Speaker Change: Thank you. Your next question comes from the line of Menno <unk> with TD Cowen.
Menno: Please go ahead, thanks, and good morning, everyone I, just I'll start with a follow up on Greg's question on the Grand Rapids, which is.
Operator: Thanks and good morning, everyone.
Operator: on Greg's question.
Operator: Obviously, it is ramping up quite nicely. I'm guessing you may not want to answer this, but what is your current thinking on the next potential growth phase in the Grand Rapids in terms of timing and size? Presumably, the next one would be in the 15,000 barrel per day range as well, but any thoughts there would be helpful. Yeah, thanks for the question.
Speaker Change: Obviously ramping up quite nicely and.
Guessing you may not want to answer this but what is your current thinking on the next potential growth phase in the.
Speaker Change: In the Grand Rapids in terms of timing and size, presumably the next one would be in the 15000 barrel per day range as well, but any thoughts there would be would be helpful.
Bradley Corson: And, and, and again, it's exciting to talk about Grand Rapids because we've been working on this project, you know, for several years, and, and, and then, more recently, we were able to accelerate it. And now we're seeing some very good reservoir results. So all that's really exciting, and all of that will inform our future development plans. I think it's a little premature for us to talk specifically about the next phase, the next volume that would come with the next phase.
Speaker Change: Yes, thanks for the question.
Speaker Change: And again.
Peter Shah: Exciting to talk about Grand Rapids, because we've been working on this project for several years and.
Peter Shah: And then more recently were able to accelerate it and now we're seeing some very good reservoir results. So all of that is really exciting and all of that will inform our future development plans I think it's a little premature for us to talk specifically about the next phase the next <unk>.
Peter Shah: Volume.
Peter Shah: That would come with the next phase.
Bradley Corson: But fair to say, you know, we're going to take all the data from this first phase, and that will inform a longer-term development strategy. And, you know, as we firm that up, we'll certainly share that with the market, you know, in future investor days. So, again, it's premature to give any details, but it's an exciting opportunity for us. We do see significant running room beyond this first phase. And so now we just need to finish the startup, gather as much data as possible, and then optimize future plans accordingly. So, more to come, but it's encouraging.
Peter Shah: But fair to say.
Peter Shah: We're going to take all the data from this first phase and that will inform our longer term development strategy.
Peter Shah: As we firm that up.
Peter Shah: Will we will certainly share that.
Peter Shah: With the market.
And future Investor days.
Peter Shah: So again premature to give any details, but it's an exciting opportunity for us we do see.
Peter Shah: Significant running room beyond this first phase.
Peter Shah: So now we just need to.
Peter Shah: <unk> finished the startup.
Peter Shah: Either as much data as possible.
Peter Shah: And then optimize future plans accordingly, so more to come but but it's encouraging.
Operator: Thanks, Brad. Maybe just a very quick follow up there. I think in the past, you've talked about an incremental 50 to 50. I think it's 50 to 55,000.
Peter Shah: Well, thanks, Brian maybe just a very quick follow up there I think in the past you've talked about an incremental $50 to 50, I think 50% to 55000 of potential growth there or is that still the right.
Operator: talked about an incremental 50 to 50; I think 50 to 55,000 of potential growth there. Is that still the right sort of range?
Speaker Change: Sort of range.
Bradley Corson: I don't remember those comments explicitly. We've definitely talked about continued growth at Cold Lake that comes both from Grand Rapids, this this phase, future phases, lemming, redevelopment, and other, if you will, transformations of that portfolio from existing technologies to new solvent-based technologies. I don't recall the 50,000 number explicitly, but we do see continued growth, and I'll have to take that away and compare that to some of our long-term plans we've shared in the past.
Speaker Change: I don't remember those comments explicitly we definitely talked about continued growth at cold Lake.
Speaker Change: That comes both from Grand Rapids.
Speaker Change: This phase future phases.
Speaker Change: I mean lead development and other if you will transformations of that portfolio.
Speaker Change: Existing technologies to new solvent based technologies.
I don't recall, the 50000 number explicitly but we do see continued growth and I'll have to take that away and compare that to.
Speaker Change: Some of our long term plans, we've shared in the past.
Operator: Okay, and yeah, I was just going to assume that the second question was a part of the first, but this second question is quite quick. Just on the renewable energy...
Speaker Change: Okay and.
Speaker Change: I'm just going to assume that second question was the part of the first but the second question is quite clear.
Operator: Just on the Strathcona Renewable Diesel Facility, it sounds like, based on your prepared comments, it's all unscheduled, but what is your best guess on the first volumes from that facility? Yeah, thanks for the comments.
Speaker Change: Quick just on the renewable stress on our renewable diesel facility. It sounds like based on your prepared comments, that's all on schedule, but.
Speaker Change: What is your best guess on first volumes from that facility.
Bradley Corson: Again, another exciting growth project for us. The construction at the refinery is going extremely well, and we would anticipate completing that construction by, you know, sometime in the spring of next year. And then that will allow us to move into commissioning, you know, sometime, later in the second quarter or around mid-year. But equally important to keep in mind, you know, this is a complex project. And what we're focused on is the construction of the facilities at our site.
Speaker Change: Yes, thanks for the comments on again, another exciting growth project for us.
Speaker Change: The construction at the refinery is going extremely well and we would anticipate completing that construction.
Speaker Change: By sometime in the spring.
Speaker Change: Our next year, and then that will allow us to move into commissioning.
Speaker Change: Some time.
Speaker Change: Later in the second quarter around mid year.
Speaker Change:
Speaker Change: But equally important to keep in mind. This is.
Speaker Change: This is a complex project.
Speaker Change: And what we're focused on is the.
Speaker Change: The construction of the facilities at our site. We're also sourcing the feedstock. We're also working with the hydrogen supplier.
Bradley Corson: We're also sourcing the feedstock. We're also working with the hydrogen supplier on the timing for their facilities and availability. So we're working to bring all that together, you know, which we're encouraged by the project, the progress we're making, and we'll continue to coordinate with them on their timing. And we're excited to bring that product to market as soon as possible.
Speaker Change: On the timing for their facilities and availability. So we're working to bring all that together.
Speaker Change: Which again.
Speaker Change: We're encouraged by the project the progress we're making.
Speaker Change: And we will continue to coordinate with them on their timing.
Speaker Change: And we're excited to bring that product to market as soon as possible.
Operator: Appreciate the thoughts, Brad. I'll turn it back.
Speaker Change: Appreciate the thoughts Brian I'll turn it back.
Brian: Okay. Thank you.
Operator: Thank you. Your next question comes from the line of Patrick O'Rourke with ATB Capital Markets.
Brian: Thank you. Your next question comes from the line of Patrick O'rourke with <unk> capital markets.
Operator: Hey guys, good morning, and thank you for taking my question. I guess my first question is with respect to Curl and going back to 2023 Investor Day, the plan to sort of get to $300,000 and then, you know, alluding to potentially beyond that. With the strong performance you've had year to date here, how does that sort of place you in achieving these targets? And what are the timeframes for moving forward around that?
Patrick O'rourke: Hey, guys. Good morning, and thank you for taking my question I guess my first question.
Speaker Change: With respect to apparel and going back to the 2023 Investor day, the plan to sort of get to 300000 and then.
Speaker Change: Alluding to potentially beyond that with the strong performance you've had year to date here how does.
Speaker Change: That sort of place in achieving these targets and what are the timeframes moving forward around that.
Bradley Corson: Yeah, thanks for the question. I'm always excited to talk about CURL because it's such a positive story and a great, you know, testimony to kind of the hard work and commitment, and really the creativity of our operations organization. You know, the key milestone that we laid out at Investor Day was to achieve 280,000 barrels a day by this year. And you know, we've represented that in guidance of 275 to 285. We feel extremely confident in our ability to achieve that based on, you know, the performance I just reported for the first half of the year, including some records I commented on, the record second half of last year.
Speaker Change: Yes, thanks for the question I'm always.
Speaker Change: Excited to talk about <unk>, because it's such a positive story.
Speaker Change: Great.
Speaker Change: Testimony to the hard work and commitment.
Speaker Change: And really creativity.
Speaker Change: Our operations organization.
Speaker Change: <unk>.
The key milestones that we laid out at Investor day was to achieve 280000 barrels a day by this year.
Speaker Change: We've represented that in guidance of $2 75 to $2 85.
Extremely confident in our ability to achieve that based on the.
Speaker Change: The performance I just reported for the first.
Speaker Change: Half of the year.
Speaker Change: Including some records I commented on the record second half of last year. So.
Bradley Corson: So, you know, what we need to deliver, and I have confidence we will, is a second half of this year that is generally in line with the second half of last year. And if we do that, and I believe we will, that will put us at the upper end of that guidance and very much achieve that 280,000 barrels a day. So that's, you know, the clear milestone we put out there. Then what we talked about at Investor Day was looking beyond 280 to what's next.
Speaker Change: What we need to deliver and I have confidence we will as the second half of this year that is generally in line with the second half of last year.
Speaker Change: Very much achieving that 280000 barrels a day so that's.
Speaker Change: That's clear.
Speaker Change: Milestone, we put out there than what we talked about at Investor day.
Speaker Change: Was <unk>.
Bradley Corson: And we've identified several opportunities that would allow us to achieve 300,000 barrels a day. The technical and operations teams are currently working to define those individual projects and the individual timing that would go with those. We haven't put a specific timeline out to the market yet for achieving 300 or anything beyond that. But rest assured, you know, it's in our sites, and we're working on those details, and our plans are to share more of those details with you at our next investor day. So, some more to come there, but everything we're achieving now not only gives us confidence in 280 but gives us confidence in higher volumes for the future.
Speaker Change: Looking beyond $2 8 million to what's next.
Speaker Change: We've identified.
Speaker Change: Several opportunities that would allow us to achieve 300000 barrels a day.
Speaker Change: So.
Speaker Change: The technical and operations teams are currently working to define those individual projects and.
The individual timing that would go with those we haven't put a specific timeline out to the market yet.
Speaker Change: For achieving 300 or anything beyond that but rest assured it's.
Speaker Change: It's in our sites and we're working on those details and our plans are to share more of those details with you at at our next Investor Day.
Speaker Change: So more to come there, but everything we're achieving now not only gives us confidence to lady but gives us confidence in the higher volumes for the future.
Operator: Okay, thank you. And my second question here is just with respect to the downstream unit. There's obviously been, you know, a lot of moving parts in the cracks market. You guys have shown some flexibility in the past in order to capture those moving parts or moving cracks across the product slate. If you could maybe speak to what you're seeing in the product demand market right now and, you know, what the best opportunities are for you.
Speaker Change: Okay. Thank you and my second question here is just with respect to the downstream unit Theres obviously been.
Speaker Change: A lot of moving parts in the <unk> market.
Speaker Change: You guys have shown some flexibility in the past in order.
Speaker Change: To capture those moving parts are moving cracks across the product slate, if you could maybe speak to what youre seeing.
Speaker Change: In the product demand market right now and what the best opportunities are for you.
Bradley Corson: Yeah, thanks for the question. And, you know, as I mentioned, we're feeling quite good about our downstream business, both in terms of, you know, the successful execution of our turnaround and also our ability to capture an advantaged market. We're seeing, I would say, stable demand across the individual product streams, and whereas in the second quarter we saw some softening of some crack spreads, what we've seen more recently as we get into the third quarter is some strengthening driven by continued low inventory levels and products, but also several refinery outages in the US, both planned and unplanned.
Speaker Change: Yes, thanks for the question.
Speaker Change: As as I mentioned.
Speaker Change: No.
Speaker Change: We're feeling quite good about our downstream business.
Speaker Change: Both in terms of the.
Speaker Change: The successful execution of our turnarounds, but also our ability to capture an advantaged market, where we're seeing.
I would say stable demand across the individual product streams.
Speaker Change: And whereas in the second quarter, we saw some softening of some crack spreads.
Speaker Change: Driven by.
Speaker Change: Continued.
Speaker Change: Refinery outages.
Speaker Change: In the U S. Both.
Speaker Change: Planned and unplanned.
Speaker Change: So that is impacting inventories of supply going forward. So when you put all that together.
Bradley Corson: And so that is impacting inventories and supply going forward. So when you put all that together, you know, we feel quite good about our position as we move into the third quarter. And obviously, there are a lot of variables, as you mentioned, but for us, things are lining up in a good place for us.
Speaker Change: We feel quite good about our position as we move into the third quarter.
Speaker Change: And obviously there are a lot of variables as you mentioned, but for us.
Speaker Change: Things are lining up in a good place for us.
Speaker Change: Okay. Thank you very much.
Operator: Your next question comes from the line of Manav Gupta with UBS.
Speaker Change: Your next question comes from the line of Manav Gupta with UBS.
Manav Gupta: Thank you, guys. My first question is, you reiterated your guidance for 2024. Is it safe to assume that the threat of those wildfires has come in even from where it was a week ago, and at this point, you don't expect them to have a direct impact on your operations, which is what is allowing you to reiterate your guidance for the year?
Manav Gupta: Thank you guys. My first question is.
Manav Gupta: You reiterated your guidance for 2024 is it safe to assume that correct of those wildfires has come in even from that it was a week ago and at this point.
Speaker Change: Don't expect them to have a direct impact on your operations because what is allowing you to reiterate your guidance for the year.
Bradley Corson: Yeah, Manav. Thanks, thanks for the comment or the question. You know, where we sit today, we feel good about the situation in terms of no impact on our production. And certainly, we hope that will continue through the rest of the summer season. What I can't predict is whether there will be future wildfires, you know, and where those will occur or when those will occur and what risk they would present to our operation.
Manav Gupta: Yeah Manav.
Manav Gupta: Thanks for the comment or question.
Manav Gupta: Where we sit today.
Manav Gupta: We feel good about.
Manav Gupta: The situation in terms of no impact to our production.
Manav Gupta: And certainly we hope that will continue.
Manav Gupta: Through the rest of the summer season.
Speaker Change: I can't predict whether there'll be future wildfires.
Speaker Change: And where those will occur or when those will occur and what risks.
Speaker Change: They would present to our operation.
Bradley Corson: But in terms of, you know, what we've seen so far, thanks to the great work by the emergency response services, they have done a really good job in helping manage that risk for our operations. And so we would certainly hope that would continue.
Speaker Change: But in terms of what we've seen so far.
Speaker Change: Thanks to the great work by.
Speaker Change: The emergency room.
Speaker Change: Response services.
Speaker Change: They have done a really good job in helping manage that risk for our operations.
Speaker Change: And so we would certainly hope that would continue.
Operator: Perfect. My quick follow-up here is that obviously you return a lot of cash to shareholders.
Speaker Change: Perfect. My quick follow up here is obviously you would have done a lot of cash to shareholders, sometimes it gets a little.
Manav Gupta: Sometimes it gets a little bulked up, like last year in 2023; a lot of it got, you know, in the second half. So if you do complete this NCIB in the next six months, does that leave the door open for a possible SIB somewhere earlier next year? Generally, you put in an SIB in the latter half of the year. But if you could spread it out, of course, it will depend on crude prices and cracks. But does it leave the room open for a possible SIB early next year?
Speaker Change: GAAP net loss in 2020 to see a lot of it in the second half. So if you do complete this in CIB in the next six months does that leave.
Speaker Change: We'll put in for a possible <unk>.
Speaker Change: Some of the earlier next year generally you will put it in Suvs in the later half of the year, but if you could spread it out.
Speaker Change: I'll simply depend on the crude prices and cracks, but does it leave the room opened for a possible.
Speaker Change: Early next year.
Bradley Corson: Yeah, thanks. Thanks for the question. I'll give you my view on it. Dan may want to add some other comments at the end, but, you know, as you rightly pointed out, our ultimate decision is very much dependent on our surplus cash levels. And that is a function of both our operations, which are going extremely well, but also the external price commodity market, which is outside our control. We all have different views, maybe, on what the second half will look like. Right now, it looks quite supportive.
Speaker Change: Yeah. Thanks, Thanks for the question.
Speaker Change: Ill.
Dan: I'll give you my view on it Dan May want to add some other comments at the end but.
Speaker Change: Bob.
Dan May: As you rightly pointed out.
Dan Lyons: So those are important factors. The other consideration is, and we've talked about this in the past, is that regulatory processes restrict us from undertaking an NCIB and an SIB at the same time. And so one of the reasons that we want to accelerate the NCIB is that it gives us flexibility for future decisions around an SIB. And so, you know, by completing this some time in the second half of the year, then that gives us flexibility for a future SIB.
Dan May: Our ultimate decision is very much dependent.
Dan May: On our surplus cash.
Speaker Change: Levels and those are a function of both our operations, which are going extremely well, but also the external price commodity market, which is outside of our control. We all have different views maybe on what the second half will look like right.
Speaker Change: Now it looks quite supportive.
Speaker Change: So those are important factors.
Speaker Change: The other consideration is and we've talked about this in the past is the.
Speaker Change: The regulatory processes.
Speaker Change: With strict us from undertaking and CIB in and.
Speaker Change: At the same time and so one of the reasons that we want to accelerate the CIB is so that gives us flexibility.
Speaker Change: Our future decisions around and S. IP.
Speaker Change: And so.
Speaker Change: By completing this.
Speaker Change: Sometime in the second half of the year P&L.
Speaker Change: Then that gives us flexibility.
Speaker Change: For a future <unk>. The other reason we do it is it allows us to return more surplus cash.
Dan Lyons: The other reason we do it is it allows us to return more surplus cash between now and the end of the year versus extending that NCIP into next year. So we will have the flexibility to do an SIB in the first half of the year. We could even have the flexibility to do an SIB before this year is over, but step one is we have to complete the NCIP first, and that's what we're doing. Well said, Brad.
Speaker Change: Between now and the year versus extending that and CIB into into next year. So we will have the flexibility.
Speaker Change: To do an <unk> in the first half of the year, we could even have the flexibility to do an SUV.
Speaker Change: For this year is over but step one is we have to complete the NCI B first and Thats what were doing.
Operator: And look, you know, Manav, we try and, you know, the NCIB is simple and efficient. So our practice has been, we kind of, we do that as our first tool. But our overall, our overarching goal is to return surplus cash in a timely manner. So once we exhaust that tool, we've gone to the SIB historically, and that's exactly where we are today. So we'll see what the commodity markets give us. And, you know, rest assured, our philosophy of returning surplus cash in a relatively timely manner is unchanged. And so we'll, you know, accelerate the NCIB. And as Brad pointed out, that just gives us more flexibility to do an SIB if our cash balances warrant that.
Speaker Change: Dan.
Dan May: No well said Brian.
Dan May: Look.
Speaker Change: We try.
Speaker Change: In CIB is simple efficient so our practice has been we kind of we do that as our first tool.
Speaker Change: But our overall our overarching goal is to return surplus cash in a timely manner. So once we exhaust that tool we've gone to the SIV historically and Thats exactly where we are today. So we'll see what the commodity markets give us.
Speaker Change: And rest assured our philosophy of returning surplus cash.
Speaker Change: In a relatively timely manner is unchanged and so will we accelerated the NCI b and as Bob pointed out that just gives us more flexibility.
To do it.
Bob: Our cash balances more at that.
Speaker Change: Thank you so much.
Dennis Fong: Your next question comes from the line of Dennis Fong with CIBC World Markets.
Speaker Change: Thank you your next.
Speaker Change: Next question comes from the line of Dennis Fong with CIBC World markets.
Operator: Hi, good morning, and thanks for taking my questions. The first one, I wouldn't mind digging a little bit more.
Dennis Fong: Hi, good morning, and thanks for taking my questions.
Dennis Fong: The first one I wouldn't mind digging a little bit more.
Dennis Fong: On the Lemming Redevelopment Program, frankly, it's great to hear you're starting to move forward with the module construction at the facility. I was just hoping to understand how maybe your teams are looking at some of the other projects in the region, Máscua, Maquisas, and Mahican. Do similar opportunities to redevelop those regions exist? Obviously, knowing Lemming is your first and oldest facility at Cold Lake.
Dennis Fong: On the redevelopment program frankly, it's great to hear you are starting to move forward with the module construction at the facility I was just hoping to understand how maybe your teams are looking at some of the other projects in the region.
Speaker Change: Mckee, Susan Mcgee can do similar opportunities to redevelop those regions exist, obviously understanding let me answer your first and oldest facility at Cold Lake.
Bradley Corson: Yeah, thanks for the question. I mean, there are lots of considerations, you know, as we progress. These sort of redevelopments, you know, it's a function of kind of the status of the reservoir, what we see as future potential or remaining potential, what's the best technology to recover that remaining potential, is it economically viable to transition to a new technology today or do we continue with the existing one? But the reality is, we've been producing at Cold Lake for over 40 years now, but there is still a significant resource left to develop.
Speaker Change: Yes, thanks for the question.
Speaker Change: I mean, there's lots of considerations as we progress.
Speaker Change: These sort of redevelopment some it's a function of.
Speaker Change: Kind of the status of the reservoir, what we see as future potential.
Speaker Change: Remaining potential watts.
Speaker Change: The best Tech.
Speaker Change: Technology to recover that remaining potential is it economic to.
Speaker Change: The transition to a new technology today or do we continue with the existing but.
Speaker Change: The reality is we have been producing.
Speaker Change: At Cold Lake for over 40 years now, but there is still a significant resource left to develop and so.
Bradley Corson: And so our teams are looking at the entire resource base at Cold Lake, looking at what's the most efficient way to recover that resource, and that's going to precipitate future redevelopment opportunities like Lemon and as well as new opportunities like Grand Rapids. And that's what the reservoir team focuses on. And we'll be driven by the economics of those individual opportunities. So much more to come there, but we do see future opportunities without a doubt.
Speaker Change: Our teams are looking at the entire resource base of Cold Lake looking at what's the most efficient way to recover that resource and thats going to precipitate.
Speaker Change: Now future redevelopment opportunities like lemon and as well as new opportunities like Grand Rapids.
Speaker Change: That's what the reservoir team focuses on.
And we'll be driven by the economics.
Speaker Change: Of those individual.
Speaker Change: <unk> opportunity.
Speaker Change: Opportunity so so much more to come there, but we do see.
Speaker Change: Future opportunities without a doubt.
Operator: Great. I appreciate that call over here, Brad.
Great I appreciate that color there Brad.
Speaker Change: My second question is a bit of a follow up to <unk> question there.
Dennis Fong: My second question is a bit of a follow-up to Manav's question there, and it's just around cash positions and cash levels. Obviously, understanding last year, at the end of last year, there were specific reasons that you drove towards, we'll call it, a lower cash position at the end of 2023. Can you talk about some of your comfort levels around holding certain levels of cash now that some of the, we'll call them, major projects, whether it be the completion of Grand Rapids phase one or kind of some of the ramp down and spending on a renewable diesel facility, and in conjunction with the stronger operational performance that you're seeing across your assets? How does that maybe speak to your comfort levels with holding cash in aggregate? And at what levels do you feel most comfortable just looking forward?
Speaker Change: Is just around.
Speaker Change: <unk> cash position and cash levels, obviously understanding last year at the end of last year. There were specific reasons that neutral towards we'll call. It a lower cash position at the end of 2023 can you talk towards some of your comfort levels around holding certain levels of cash.
Speaker Change: Now that some of the we'll call it major projects, whether it be the completion of Grand Rapids phase, one or kind of some of the ramp down in spending on the renewable diesel facility and in conjunction to the stronger operational performance that you're seeing across your assets, how does that maybe speak towards your comfort levels on holding cash in aggregate and at what levels do you.
Speaker Change: You feel most comfortable just looking forward.
Dan Lyons: Yeah, you're right. We had a relatively lower cash balance at the end of the year than we had in some prior years. And we felt comfortable with that balance. You know, we don't have an explicit cash target, you know, so it really is. So, you know, we have borrowing capacity if we ever need it. We have plenty of operating cash flow. So, you know, we're not looking to carry a whole lot of cash on our balance sheet. You figure investors want that back. And that's really our philosophy. And that's unchanged.
Speaker Change: Yes.
Speaker Change: Youre right, we had relatively lower cash balance at the end of the year.
Speaker Change: We've had some prior years and we felt comfortable with that balance sheet and we don't have an explicit cash target.
Speaker Change: So.
Speaker Change: It really is.
Speaker Change: So we have borrowing capacity, if we ever needed. It we have plenty of operating cash flow. So we're not looking to carry a whole lot of cash in our balance sheet, we figure investors want that back and that's really our philosophy and that's unchanged. So theres.
Operator: So, you know, there's no magic number. You can do the math. We have X. We have X on our balance sheet. So we're going to do an SIB. But, you know, our goal is to do SIBs when we have when we have surplus cash and we've exhausted the NCIB to do those at a reasonable size in a reasonable time frame. So that'll be a call we make, you know, as our cash balances progress, as the year progresses, as we get into next year. You know, sorry, I can't give you a number, but we don't really have one. But we felt comfortable with last year's balance. So maybe that's a marker for you. Great.
Speaker Change: There is no magic number where you can do the math, we have excellent we have Exxon our balance sheet. So we're going to do in house IP, but.
Speaker Change: Our goal is to use <unk> when we have when we have surplus cash and we've exhausted the NCI to do that.
Speaker Change: Those at a reasonable size in a reasonable timeframe, so that'll be a call we make as our cash balances progress as the year progresses as we get into next year, sorry, I can't give you a number but we don't really have one but we felt comfortable of last year's balance. So maybe that's a marker for you.
Operator: Great. I appreciate that there, Dan. I'll turn it back.
Speaker Change: Great I appreciate that they are then I'll turn it back.
Operator: Thank you. Your next question comes from the line of Neal Mehta with Goldman Sachs.
Speaker Change: Thank you. Your next question comes from the line of Neil Mehta with Goldman Sachs.
Operator: Good morning, team, and thank you for taking my questions. This is Adam Widjaja speaking on behalf of Neil Mehta.
Good morning team and thank you for taking my questions. This is Adam <unk> on for Neil Mehta I wanted to start on <unk>. It looks like a pretty good update there with the main reactor installed and understand that first volumes from the asset or maybe a little bit more longer dated from where we are today, but more broadly the rd margin environment looks to be a bit tougher I wanted to get the teams.
Operator: I wanted to start on Strathcona. It looks like a pretty good update there with the main reactor installed. And I understand that the first volumes from the asset are maybe a little bit longer dated from where we are today, but more broadly, the RD margin environment looks to be a bit tougher. So I wanted to get the team's thoughts on, you know, current margins, and what it's going to take to see an inflection in margins.
Speaker Change: <unk> current margins, what's going to take to see an inflection in margins and then maybe where youre seeing the greatest signs of demand strength as you kind of look over the next 12 to 18 months.
Bradley Corson: Yeah, thanks for the question. I think it is important to distinguish, you know, the market that we see and the economic drivers for us relative to maybe what you are seeing in other places like the US. You know, for us, first of all, we continue to see this as a highly economic project, and it's underpinned by some very unique strategic synergistic elements that we have available to us. You know, we're building this renewable diesel facility integral to our Strathcona refinery, which brings significant economies of scale for us, as we can leverage the infrastructure, the operation that already exists today.
Speaker Change: Yes. Thanks for the question I think it is.
Speaker Change: Important to <unk>.
Speaker Change: Distinguish.
Speaker Change: The market that we see in the economic drivers for us relative to maybe what you are seeing in other trends like in the U S.
Speaker Change: For for US first of all we continue to see this as a highly economic project.
Speaker Change: And it's underpinned by some very unique.
Speaker Change: Strategic synergistic.
Speaker Change: Kind of elements.
We have available to us.
Speaker Change: Building this renewable diesel facility integral to our stress Kona refinery, which brings.
Speaker Change: Significant economies of scale for us as we can leverage the infrastructure the operation that already exists today.
Bradley Corson: Secondly, we've designed this facility to process agricultural feedstocks, oils that are available In the general area, we're sourcing from, you know, crops and and farms that are relatively close. So there's not significant transportation costs. And we'll be producing a product that has some other technical advantages that it can be a drop in fuel that has, properties that allow it to to be used across a wide range of temperature conditions and so it can be blended up to a very high rate or even a hundred percent drop in all that brings advantages to the product and the value of that product and then on top of that you know what is also unique versus what you see in the U.S. is the regulatory environment that we have here the clean fuels regulation the economic support that that provides also in British Columbia there's some additional regulatory incentives so all of those things together put us in a different but
Speaker Change: Secondly, we've designed this facility.
Speaker Change: To process.
Speaker Change: <unk>.
Agricultural feedstocks oils that are available.
Speaker Change: In the general area, we're sourcing from.
Speaker Change: <unk>.
Speaker Change: <unk> and farms that are relatively close so theres not significant transportation.
Speaker Change: Costs.
Speaker Change: And we will be producing a product.
Speaker Change: That has some other technical advantages that it can be a drop in fuel that.
Speaker Change: That has.
Speaker Change: Properties that allow it to to be used across a wide range of.
Speaker Change: Temperature conditions, and so it can be blended up to a very high rate or even 100% drop and all that brings advantages to the product and the value of that product and then on top of that.
Speaker Change: What is also unique versus what you've seen in the U S.
Speaker Change: Is the <unk>.
Speaker Change: Regulatory environment that we have here.
Speaker Change: The clean fuels regulation.
Speaker Change: The economic support that that provides also in British Columbia, there is some additional.
Speaker Change: Regulatory incentives so all of those things together.
Speaker Change: US in a different but much better place than what you might see in.
Speaker Change: In the U S. So again, we feel quite good about it.
Operator: Got it. That's super helpful. And maybe just shifting gears over to chemicals for a moment and the margin environment, what are you seeing in your own system from a demand standpoint, specifically on margins? And then how do you think about the supply and demand landscape evolving over the next couple of years with some global supply as expected? Thank you.
Speaker Change: Got it that's super helpful and maybe just shifting gears over to chemicals for a moment and the margin environment. What are you seeing in your own system from a demand standpoint, specifically on margins and then how do you think about the supply demand landscape evolving over the next call. It couple of years with some global supply as expected. Thank you.
Bradley Corson: Yeah, you know, we're seeing Obviously some strong performance out of our chemicals business, generally flat with what we saw a year ago, but still quite material to us. We've seen continued strength and demand, some strengthening of polyethylene realizations, which have been at somewhat depressed levels for a while, driven by global supply and demand fundamentals. You know, we are seeing that strengthening as we come out of this cycle.
Speaker Change: Yes.
Speaker Change: We are seeing.
Speaker Change: Obviously, some some strong performance out of our chemicals business.
Speaker Change: Generally.
Speaker Change: But still quite material to us.
Speaker Change: Yes.
Speaker Change: We've seen.
Speaker Change: Continued strength in demand some strengthening.
Speaker Change: <unk>.
Speaker Change: Of.
Speaker Change: Polyethylene realizations, which have been.
Speaker Change: Somewhat.
Speaker Change: Depressed levels for a while driven by global supply demand fundamentals.
Speaker Change: We are seeing that strengthening as we come out of this cycle.
Operator: But probably equally important are the strategic advantages we have in our chemicals business, recognizing it is integral to our Sarnia refinery, which is maybe somewhat analogous to what I just talked about with renewable diesel at Strathcona. You know, the chemical plant is integral. We benefit from economies of scale with access to off gas from the refinery. We have an available ethylene supply to us in the region, and we produce a premium product with a unique customer base in close proximity.
Speaker Change: Probably equally importantly are the strategic advantages, we have of our chemicals business.
Speaker Change: The chemical plant is integral we benefit from.
Speaker Change: Economies of scale with Sarnia access to.
The off gas from the refinery.
Speaker Change: We have available ethylene supply to us in the region and we produce a premium product with a unique customer base in close proximity. So we don't have significant transportation logistics to get to our customers.
Operator: So, you know, we don't have significant transportation logistics to get to our customers. So again, all that leads to a strong chemicals business for us, which has demonstrated its resilience over, you know, kind of the full cycle that we see globally.
Speaker Change: So again all of that leads to a strong.
Speaker Change: Chemicals business for us.
Speaker Change: Which has demonstrated its resilience over.
Speaker Change: The full cycle that we see globally.
Got it thanks, so much.
Operator: Your next question comes from the line of Doug Leggat with Wolf Research.
Speaker Change: Your next question comes from the line of Doug Leggate with Wolfe Research.
Speaker Change: Okay.
Operator: Hey, good morning guys. Thanks for having me on.
Operator: I'm doing well, Doug. Welcome back. Thank you.
Speaker Change: Well welcome back.
Operator: I'd love to say that garden leave is a thing. It turns out it's a nightmare, but we talk about that some of the time. Anyway, two quick questions, if I may. I wanted to ask you, I know Carol has been kind of beaten to death for a while, but you guys have been knocking it out of the park for several years.
Doug Leggate: Thank you.
Speaker Change: I'd Love to say that garden leave is a thing it turns out it's a nightmare, but talk about some of the time.
Speaker Change: Anyway to.
Speaker Change: Quick questions. If I may I wanted to ask you your bag.
Speaker Change: Carol has been kind of beaten to death for a while but you guys have been knocking at the park for several years.
Operator: I want to understand what maintenance scheduling is, what role that plays in the potential, I don't want to call it de-bottlenecking, but the ability to enhance long-term production capacity. We've seen that one of your competitors obviously changed their maintenance scheduling to instead of once every year, once every couple of years. What have you guys been doing there, and what role is that playing in changing production capacity? My follow-up is a quick one for Dan. I just wonder, with everything that's going on today coming out of maintenance, Dan, where would you say your dividend break-even is today? And those are my two questions for each guy.
Speaker Change: I wanted to understand what the maintenance scheduling.
Speaker Change: Rove up please.
Speaker Change: The potential I don't want to call it debottlenecking, but to enhance the long term production capacity, we've seen obviously Europe.
Speaker Change: One of your competitors, obviously changed their maintenance and drilling incurred instead of once every year one could be couple of years. What have you guys been doing there and what role is up playing changing the production capacity. My follow up is a quick one for Dan I, just wonder with everything that's going on today coming out of maintenance done where would you where would you say your dividend breakeven.
Operator: All right. Thanks. Thanks, Doug.
Speaker Change: Alright, thanks, Thanks, Doug.
Speaker Change: Im inferring that your question around kind of turnarounds is mainly applicable to hurdle.
Bradley Corson: And I'm inferring that your question around the kind of turnarounds is mainly applicable to curl. Yeah. And, but if not, let me know. Okay. So for Curl, this has been a significant focus of ours. And I think an area where we are a leader in this space. If you go back to 2021 at Curl, and prior to that, we were typically having two turnarounds per year, which would be one on each train. And they were roughly an average of 35 days long each.
Ann: Yes Ann.
Speaker Change: But if not.
Speaker Change: Let me now okay. So for apparel.
Speaker Change: This has been a significant focus of ours and I think an area that.
Speaker Change: We are a leader in this space that if you go back.
Speaker Change: So 2021 at curl and prior to that we were typically having two turnarounds per year, which would be one on each train and they were roughly an average of 35 days each so about 70 days.
Speaker Change: As a turnaround activities.
Bradley Corson: So, about 70 days of turnaround activity. Subsequent to that, in the 2021-2022 timeframe, we... We were able to demonstrate to ourselves that we could shift from two turnarounds a year to one turnaround a year, and that obviously allowed us to reduce our volume impacts of turnarounds by half and also significantly reduce our cost structure at Curl. Now that we have a few years of run time on it, it has proven very successful for us, and every time we do one of those turnarounds on the extended interval, it further validates, you know, the decision we took and our ability to maintain the full integrity and reliability of the system, but with less downtime.
Speaker Change: We're able to demonstrate to ourselves that we could shift from two turnarounds a year to one turnaround a year.
Speaker Change: <unk>.
Speaker Change: And that obviously allowed us to reduce our volume impacts of turnarounds.
Speaker Change: And half.
Speaker Change: And also significantly reduce our cost structure at curl that now that we have a few years of run time on that has proven very successful for us.
Speaker Change: And every time, we do one of those.
Speaker Change: Turnarounds on an extended interval.
Bradley Corson: And we have further now employed more technology, you know, more opportunities, to take that one turnaround per year and now shorten it to less than 20 days. And that's what I was referring to in my earlier comments about how we've now achieved essentially a 19 day turnaround, which is our only turnaround for the year, and you compare that to a few years ago when we had 70 days per year. So 70 to 19, a huge improvement in our overall production capability, a huge improvement in our cost structure. And I would just say we're not done yet.
Speaker Change: It further validates.
Speaker Change: <unk>.
Speaker Change: And we further now have employed or technology.
Speaker Change: More opportunities to take that one turnaround per year and now shorten it to less than 20 days.
Speaker Change: And Thats, what I was referring to in my earlier comments about we've now achieved essentially a 19 day turnaround.
Speaker Change: And our overall product production capability huge improvement in our cost structure and I would just say we're not done yet.
Bradley Corson: You know, the team is actively working on further opportunities to reduce the duration of our turnarounds, and so I'm quite encouraged by that. And all that, of course, then translates to more production from curl. It's part of our roadmap that got us to 280 for this year, and we expect to reach 300 in future years. It's allowing us to reduce our cost structure from the high 20s U.S. dollar per barrel down to a target of $20 this year, and we believe there's an opportunity to go even lower than $20. So huge value at curl, and I think that's a great lead-in to Dan to talk about, you know, what that means about breakevens and dividends and all that sort of thing.
Speaker Change: The team is actively working on further.
Speaker Change: For this year and we expect to 300.
Speaker Change: In future years, it's allowing us to reduce our cost structure from the high Twenty's U S dollar per barrel down to a target of $20. This year and we believe there is an opportunity to go even lower.
Speaker Change: Then $20 so.
Speaker Change: Huge value at Kearl.
Speaker Change: And I think that's a great lead in to Dan to talk about what does that mean about breakeven dividends and all that sort of thing.
Dan Lyons: Yeah, so Doug, I heard you say dividend. What was your specific question about the dividend?
Dan May: Yes, so Doug just I heard you say dividend what was your specific question about the dividend.
Douglas Leggate: Yeah, basically, I don't know if you've got a chance to look at our reinstatement materials, but there's an extraordinary correlation or market recognition of value with long-term sustainable dividend growth on a per share basis. And you guys have, you've led, I don't want to make the pitch here, but you've led the whole industry, not just your Canadian peers, but the global majors. However, the big difference is you've still got a relatively low yield, and we think you have a lot of firepower to sustain that dividend growth relative to peers that maybe don't have it, right?
Dan May: Yes, so basically.
Speaker Change: I don't know if <unk> got a chance to look at our reinstatement materials, but there was extraordinary correlation or market recognition of volume with long term sustainable dividend growth on a per share basis.
Speaker Change: You guys have.
Speaker Change: You've led I don't want to make the pitch here, but you've led the whole industry not just your Canadian peers, but the global majors.
Speaker Change: However, the big differences, you've still got a relatively low yield on <unk>.
Speaker Change: Thank a lot of firepower to sustain that dividend growth relative to peers that maybe don't hop right. So what I'm trying to figure out is where do you see your dividend breakeven today. So that we can kind of put a hand get a handle on what the sustainable growth capacity continues to be from Peter because ultimately that's what we think drives you.
Douglas Leggate: So, what I'm trying to figure out is where you see your dividend break even today, so that we can kind of get a handle on what the sustainable growth capacity continues to be for Imperial, because ultimately, that's what we think drives your share price. So I hope that's a clear enough articulation of the question.
Speaker Change: Share price.
Speaker Change: All of that is accrued enough.
Speaker Change: Articulation of the question yes.
Dan Lyons: You know, as we've said before, our break even with sustaining capital and dividends, you know, for our last investor days, was about $35 US WTI. And you know, as you have well stated, our philosophy is to have reliable and growing dividends. And, you know, both of those are important. We really want to continue to grow it strongly as we have in the past. You know, when I got here, I think the dividend was $0.16 a share; now it's $0.60.
Speaker Change: Yes.
Speaker Change: There as we've said before our breakeven with sustaining capital and dividend.
Speaker Change: For our last Investor day about 30 foot our U S. W. Ti.
Speaker Change: And as.
Speaker Change: As you well stated.
R. R R.
Speaker Change: Philosophies to have reliable and growing dividend.
Speaker Change: And both of those are important we will we want to continue.
Speaker Change: Continue to grow it strongly as we had in the past.
Speaker Change: And I got here I think the dividend was <unk> 16, a share now at 60, So we've had some strong growth.
Dan Lyons: So we've had some strong growth, but it's important that that growth be sustainable. And, you know, we look at the break even closely; we look at various scenarios. But I think, you know, and certainly we believe we have room for continued strong growth. And that goes to really what Brad was saying, how do we do that? Well, it's supported by stronger structural free cash flow, and that comes from volume growth. And that comes from lower unit op-eds, right, and we're working both of those hard.
Speaker Change: But it's important that that growth to be sustainable and we look at the breakeven closely we look at various scenarios, but I think.
Brad: And certainly we believe we have room for continued strong growth and it goes to really what Brad was saying how do we do that well, it's supported by stronger structural free cash flow in and that comes from volume growth and that comes from lower unit Opex right and we're working both of those hard and.
Dan Lyons: And as our plans come to fruition, that just supports further dividend growth in the future. So, you know, we had a significant increase earlier this year. And as we go through time, we can, we'll continue to look at that in the context of our business and hope to show continued growth and, very importantly, sustainable growth.
Brad: As our plans come to fruition that just supports further dividend growth in the future. So we.
Speaker Change: We had a significant increase.
Brad: Yeah.
Earlier this year.
And as we go through time, we will continue to look at that in the context of our business.
Brad: And hope to show continued growth and very importantly, sustainable growth.
Operator: So right around $35 is the answer, Dan, for the current level.
Speaker Change: So right around 35 <unk> for the current level.
Dan Lyons: Yeah, well, that's the most recently disclosed level in our investor day, you know. When we do our next investor day, we'll, you know, put out the most current number, but but, you know, that's, that's a good ballpark number to work with, certainly. Tremendous.
Brad: Yes, well that's that's.
Brad: Most recently disclosed level at our Investor day.
Brad: We do our next Investor day well.
Brad: Put out the most current number but that's that's that's a good ballpark number to work with certainly.
Douglas Leggate: Tremendous. Thanks very much indeed, guys. I appreciate you taking the time to answer my questions.
Speaker Change: Tremendous thanks, very much indeed, guys I appreciate you taking my questions.
Doug Leggate: Thanks, Doug.
Peter Shaw: This does conclude today's question and answer session. I would now like to turn the call back to Peter Shaw for any additional or closing remarks.
Doug Leggate: This does conclude today's question and answer session I would now like to turn the call back to Peter Shah for any additional or closing remarks.
Peter Shaw: Thank you. On behalf of the management team, I would like to thank everyone for joining us this morning. As always, if anyone has further questions, please don't hesitate to reach out to the Investor Relations team, and we'd be happy to answer those questions. And with that, we thank you very much, and we hope you enjoy the rest of your day and the weekend.
Thank you on behalf of the management team I would like to thank everyone for joining us. This morning as always if anyone has further questions. Please don't hesitate to reach out to the Investor relations team and wed be happy to answer those questions and with that we thank you very much and we hope you enjoy the rest of your day and the weekend. Thank you.
Operator: This does conclude today's call. Thank you for your participation. You may now disconnect.
Doug Leggate: This does conclude today's call.
Thank you for your participation you may now disconnect.
Doug Leggate: [music].
Doug Leggate: Sure.
Doug Leggate: [music].
Okay.