Q3 2024 Suncor Energy Inc Earnings Call - Q&A
1.
Speaker Change: Good day and welcome to the Suncor Energy 3rd Quarter 2024 Financial Results Call.
At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1 1 again.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Troy Little, Suncor Energy's Senior Vice President of External Affairs. Please go ahead.
Speaker Change: Thank you, Operator, and good morning. Welcome to Suncor Energy's third quarter earnings call.
Please note that today's comments contain forward-looking information.
Speaker Change: Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our third quarter earnings release as well as in our current annual information form, both of which are available on CDAR, EDGAR, and our website, suncor.com.
Speaker Change: Certain financial measures referred to in these comments are not prescribed by Canadian Generally Accepted Accounting Principles.
Speaker Change: For a description of these financial measures, please see our third quarter earnings release.
Speaker Change: We will start with comments from Rich Kruger, President and Chief Executive Officer, followed by Chris Smith, Suncor's Chief Financial Officer.
Speaker Change: Also on the call are Peter Zebedee, Executive Vice President Oil Sands, Dave Oldreve, Executive Vice President Downstream, and Shelley Powell, Senior Vice President Operational Improvement and Support Services.
Speaker Change: Following the formal remarks, we'll open up the call to questions. Now, I'll hand it over to Rich to share his comments.
Rich Kruger: Good morning. Let me start with Happy Holidays. More on this later.
Rich Kruger: Three months ago, I stated our second quarter was about execution and momentum.
Rich Kruger: Execution of major planned turnaround events and momentum in targeted improvement areas.
Conversely, our third quarter was about performance and delivery. Performance.
Speaker Change: largely unencumbered by major maintenance activities and delivery on commitments articulated during our May 21st Investor Day. As usual, Krist will detail quarterly results. I'll provide some color commentary, starting with safety.
Speaker Change: Personnel safety, core value, top priority. Continues to be strong year on year. Lost time events down 40 percent, recordables down 23 percent. Rates are at or near our best ever.
Speaker Change: Similarly, process safety performance here today is at a best-ever level, positions us within the first quartile in North America.
Speaker Change: I'll highlight our oil sands team for their third quarter performance, particularly those at Firebank.
Speaker Change: In early July, with wildfires in the region, we moved firebag to essential personnel only. As a precaution, we shut in production site-wide, thereafter restarted the least affected well pads, was touch and go for several weeks,
Speaker Change: Our teams work closely with local and provincial authorities and responders. Our number one focus was to protect our people and protect our assets. I'm pleased to say the entire situation was managed incident-free.
Speaker Change: the credit to our people procedures and site leadership. Production impact was material however but limited to July only at 60,000 barrels a day for the month.
Every quarter I talk about reliability or asset utilization.
Speaker Change: Because the incremental barrel produced or refined is the most profitable barrel produced or refined. It's delivered at little to no incremental cost, essentially flows to the bottom line.
Speaker Change: At today's Suncor, the full utilization of installed capacity closely follows safety in our priorities. And as full utilization is achieved, we turn to low-cost e-bottlenecking.
Speaker Change: This clear, simple operational framework is delivering tremendous value company-wide. I'll illustrate with refining throughput and upstream production.
Speaker Change: The mining throughput in the third quarter was 488,000 barrels a day.
up 25,000 barrels a day, or 5%
Speaker Change: compared to a strong third quarter of 23. It was the best quarter of any quarter in company history. In fact, there isn't even a close second. It's 20,000 barrels a day or 4.3% higher than our previous best quarter.
Speaker Change: achieved with a hundred and five percent overall refining utilization in the quarter.
Speaker Change: This was our highest overall network utilization in any quarter in history and all four refineries achieved 100% or higher every single facility, led by Commerce City at 109% and Sarnia and Montreal with best-evers both at 106%.
Speaker Change: Year-to-date utilization is 98% compared to 88% at the same time last year. We're on pace to blow away our previous high.
Speaker Change: refined product sales of 612,000 barrels a day in the third quarter, the highest quarterly sales in our history in our first quarter ever with sales above 600,000 barrels a day. For those that are keeping track, this is now back to back to back.
record quarterly, our quarterly records.
Speaker Change: Upstream production, third quarter, 829,000 barrels a day, up 138,000 barrels a day, or 20% from the third quarter of last year. It was our best third quarter in company history, within 6,000 barrels a day of our best quarter ever.
Speaker Change: Performance exceeded our prior best third quarter by 67,000 barrels a day, and this was achieved despite a 20,000 barrel a day wildfire impact I mentioned at Firebag and a 10,000 barrel a day turnaround impact at Mackay River.
Speaker Change: Upgrader utilization in the third quarter is at an unprecedented 99%. Recall each additional 1% utilization adds 20 million dollars a year in free funds flow.
Speaker Change: Year-to-date utilization is at 96%, including the impact of turnarounds. Our best prior annual average was last year at 92%.
were set to beat that in 2024.
Speaker Change: Bottom line, third quarter and year-to-date reliability or asset utilization has been exceptional. On-trend for best-evers across the board, upstream and downstream. Here again, a credit to our people, their expertise, their teamwork, and their determination.
Speaker Change: Profitability. Chris will cover overall profitability. I'll highlight cost management and operating leverage.
Speaker Change: Year-to-date 2024 total OSNG, all in, top to bottom, is $9.65 billion.
Speaker Change: down $340 million versus year-to-date 2023. However, upstream production is 87,000 barrels a day higher year-on-year.
The finding throughput is 49,000 barrels a day higher year-on-year.
Speaker Change: and refined product sales are 51,000 barrels a day, higher year on year. You get the message, free barrels, higher absolute volumes, lower absolute costs. The Oxford Dictionary's definition of operating leverage in a nutshell.
Speaker Change: Every business segment or major operated asset, upstream, downstream, corporate, is at lower absolute and or unit cost in the first nine months of this year compared to the first nine months of last year.
I'll offer you another perspective on year-on-year cost performance.
Speaker Change: Let's assume for a moment that our fourth quarter 23 acquisition of Total's 31% interest in Fort Hills never happened.
Speaker Change: In other words, take on all impacts in 2024 of the additional ownership. So we'll have an apples-to-apples, year-on-year performance with the exact same asset base.
Speaker Change: Total OS&G year-on-year, down $880 million, yet upstream volumes are up 34,000 barrels a day and refining, of course, is up 49,000 barrels a day.
Speaker Change: I'll repeat that apples-to-apples $880 million lower cost year-on-year with higher volumes.
Speaker Change: Bottom line, operating leverage is being achieved any way you slice it. I've said it before, cost management is about attention to detail, discipline and accountability, a mindset that every dollar matters. Cost conscious, determined, results oriented. Today's Suncor.
Speaker Change: During our May 21st I-Day, we detailed a number of our improvement plans. I'll provide an update on a few. Turnarounds.
Speaker Change: We previously stated the second quarter was our biggest turnaround quarter in 2024, with 80% of the year's activity planned. You recall, four big events, $800 million, completed on budget, and 10% shorter in duration. We've now completed the bulk of the year's remaining activity.
Speaker Change: specifically Base Plant U-2 Upgraders annual maintenance in Mackay River. Combine the two events again on budget ahead of schedule.
Speaker Change: For the year, total turnaround spend will be under $1 billion, down 20% from the prior five-year average.
Speaker Change: Mining. We've described our mining strategy in a nutshell as fewer trucks, bigger trucks, autonomous trucks, operated better, maintained cheaper.
Speaker Change: Update on the 55 new 400 ton trucks that will replace twice as many smaller less efficient third-party trucks. The first 35 are now in operation.
Speaker Change: Two more will arrive at Four Hills shortly. The final 18 will arrive at the base plant throughout the first quarter of 2025. These 55 new trucks will lower annual operating costs by more than 300 million dollars a year.
Speaker Change: in situ for several quarters I've talked about the value of our in situ operations.
performance records keep piling up, particularly at Firebag.
Speaker Change: through the first nine months of 2024, two record quarters, and five record months, including August at 238,000 barrels a day and September at a whopping 247,000 barrels a day at Firebank.
Speaker Change: Last quarter I highlighted an opportunity that the fire bag team identified a 1 million dollar modification to diluent stripping capacity to increase bitumen production.
Speaker Change: with the expected impact of 3 to 5 thousand barrels a day in increased annual average production and $50 million in additional free funds flow per year.
Speaker Change: The opportunity was implemented in the third quarter. It was completed in mid-August, ahead of schedule, at a cost of $500,000 versus $1 million.
Speaker Change: Incremental production to date has been more than double the three to five thousand barrels a day expected. Consequently, the incremental free funds of greater than a hundred million dollars a year. This is Suncor's version of a double-double. Half the cost, twice the value.
Ford Hills
Speaker Change: We just passed the one-year anniversary of the Total Canada acquisition.
Speaker Change: The primary asset was a 31% working interest in Fort Hills, bringing our ownership to 100%. We've articulated the benefits, production reserves, long-term bitumen supply, tax pools. I've got another example of value added from this acquisition.
Speaker Change: Recall that Fort Hills applies the PFT process technology which partially decarbonizes produced bitumen, removes the heavier asphaltene molecules, resulting in a premium value in the market.
Speaker Change: Our physical integration allows us to either direct Fort Hills directly to the market or to our base plant upgraders. Until recently, we were pipeline limited to a maximum of 65,000 barrels a day to the base plant.
However, our team identified an opportunity to increase this capacity.
Speaker Change: So, for $1 million, we have increased four hills to base plant capacity from 65,000 barrels a day to 100,000 barrels a day. We de-bottlenecked the pipeline with improved hydraulics, completed the work in six weeks with the use of surplus equipment.
This adds both operational flexibility and incremental financial value.
specifically $50 to $100 million a year.
in additional free funds flow depending on use.
Speaker Change: This is another tangible example of a competitive differentiator our peers can't replicate.
Speaker Change: I've said before, there's integration, and then there is Suncor integration. This is an example of the latter.
Speaker Change: These Fort Hills and Firebag examples are representative of the focus within the company today, a laser-like focus on asset utilization, testing facility limits, capturing value, de-bottlenecking, adding low or no-cost barrels upstream and downstream.
Speaker Change: Our teams, company-wide, are literally raising the ceiling on both our performance and our potential. With that, I'll turn it over to Chris.
Chris Smith: Great, thanks Rich. Good morning everyone. Well, before providing a brief overview of the financial and operating performance of the quarter, I want to go back to how Rich opened the call and start with Happy Holidays.
Chris Smith: You will remember that during our investor update in May, Rich talked about a Christmas present for our shareholders, specifically achieving our net debt target by year-end.
Chris Smith: As you can see from our third quarter financial results, Christmas has indeed come early.
Chris Smith: This is a significant milestone for our company and shareholders and starting in Q4, as per our capital allocation framework, we will move to 100% return of excess funds to our shareholders.
Chris Smith: This past May, at our Investor Day call, we announced a new $8 billion net debt target.
Chris Smith: That was underpinned by an ambitious plan generating substantial incremental free funds flow.
Chris Smith: Today, not only are we executing that plan, but we're ahead of it, enabling us to meet our net debt target well ahead of many external forecasts.
Chris Smith: How do we do it? By being laser focused on what we can control. Production, costs, capital, and working capital.
Chris Smith: I want to congratulate the entire Suncor team which did an amazing job delivering this result.
Chris Smith: Now by way of recap, at the beginning of the year we were returning 50% of excess funds to our shareholders.
Chris Smith: In May, we reset our net debt target to $8 billion to reflect our improved performance and business plan and increased a 75% return of excess funds.
Chris Smith: Now that we've hit our $8 billion target at the end of September, we are increasing to 100% return of excess funds starting in Q4.
Chris Smith: Our shareholders asked for a new Suncor and this is yet another example of how we're delivering.
Chris Smith: Continuing on the subject of net debt, subsequent to the quarter in October, we successfully completed a bond repurchase tender, retiring 1.1 billion dollars in principal.
Chris Smith: With interest rates coming down, building cash doesn't drive value. The tender captured significant economic value by retiring a large portion of our 2038 maturity tower.
As a result of this,
Chris Smith: We locked in annual interest savings of $70 million a year for the next 14 years. We optimized timing of retirement of the higher-interest U.S. debt. We reduced our largest maturity tower by half. And we lowered our WTI break-even while strengthening the resilience of our balance sheet.
Chris Smith: This was a win-win for both Suncor shareholders and bondholders, allowing us to strategically de-lever the balance sheet to manage our eight billion dollar net debt target.
while providing liquidity to our bondholders.
Chris Smith: Now that we've hit the $8 billion net debt target, you may still see our net debt move up and down from quarter to quarter around that number, driven by working capital movements that are a reflection of Suncor managing our business.
Chris Smith: That said, you can rest assured we will be allocating at or near 100% of excess funds on an annual basis while managing these fluctuations.
Chris Smith: and are committed to ensuring maximum return of cash to shareholders while prudently managing our business and balance sheet.
Speaker Change: Now, before handing back over to Rich, I will provide a brief overview of the financial and operating performance of the quarter, beginning with the business environment.
Speaker Change: Crude oil prices came down during the quarter with WTI averaging U.S. $75 a barrel, the light heavy differential steady at U.S. $14 a barrel, and the synthetic premium decreasing by U.S. $1.50 a barrel averaging a premium of $1.30 to WTI.
Speaker Change: On the refining side, 2-1-1 cracking margins decreased, reflecting global supply demand.
Speaker Change: However, our 5-2-2-1 refining index remained strong at U.S. $26.05 a barrel, which was $0.65 a barrel below Q2, driven primarily by lower benchmark cracks offset by lower crude oil pricing.
Speaker Change: Natural gas, a key input cost to our operations, also came down in the quarter averaging 65 cents a GJ.
Speaker Change: Now, as Rich has already gone through the operational performance in the quarter, I won't go through it in detail, other than to repeat that we saw strong operating performance in the quarter.
Speaker Change: As Rich said, this included 829,000 barrels per day of upstream production, 776,000 barrels a day from oil sands, and 53,000 barrels a day from our E&P segment.
Speaker Change: This was the best Q3 upstream volumetric performance in company history, including record Q3 upgrader utilization and firebag monthly records in the quarter.
Speaker Change: Fort Hills was right on plan at 166,000 barrels per day and we remain very pleased with the progress of the asset and the focus of the Fort Hills team on delivering against that plan.
Speaker Change: We also achieved 488,000 barrels per day of refining throughput and 105% refinery utilization in the downstream, which is our best quarter ever.
Speaker Change: As well, we saw 612,000 barrels per day in refined product sales, also a quarterly record, and 101% margin capture on a LIFO basis when compared to our 5-2-2-1 refining index.
Speaker Change: The company continued its tight cost focus, with total OS&G expenses of $3.1 billion in the quarter, which are down quarter over quarter, while production is significantly up.
Again, as Rich pointed out, this is
Speaker Change: As for CapEx, it was $1.5 billion excluding capitalized interest in the quarter.
Speaker Change: which is down from last quarter, driven by less planned turnaround and maintenance activities across the business.
Speaker Change: and is on plan for the year. We continue to prudently invest in sustaining our integrated asset base and advancing key projects like Base Plant CoGen project, the Upgrader 1 Coke drum replacement project,
Speaker Change: Fort Hills North Pit Development, and the Mildred Lake West Mine Expansion.
This record operational performance underpinned our strong quarterly financial results.
Speaker Change: Despite the drop in crude price from Q2, we generated $3.8 billion in adjusted funds from operations, or $2.98 per share in the quarter, and adjusted operating earnings of $1.9 billion, or $1.48 per share.
Speaker Change: In the quarter, we returned $1.5 billion to our shareholders, including $690 million in dividends plus $790 million in share repurchases.
while, as I've already mentioned, hitting our net debt target.
Speaker Change: Overall, the third quarter was a continued demonstration of the new Suncor's focus on delivery of the fundamentals of safety, operational reliability, cost and capital discipline, and profitability.
including strong financial returns for
Speaker Change: and rest assured that the Suncor team is focused on finishing this year strong and carrying that momentum into 2025.
Rich Kruger: And with that, I'll hand it back over to you, Rich. Thanks, Chris. Before we continue comments on full year guidance, I don't have any new numbers for you today, but I'm going to lead that horse right up to the water.
Third quarter complete.
Rich Kruger: Six weeks into the fourth upstream production. We continue to track above the high end of our guidance
Rich Kruger: Refining throughput, we also continue to track above the high end of our guidance. Refined product sales, same message, continue to track above the high end of our guidance. OS&G and CapEx, we continue to track within or better than our guidance ranges.
Rich Kruger: I've repeatedly said today's Suncor is a new Suncor. Tangible improvement plans backed by a growing list of performance proof points and a clear comprehensive roadmap in determination to compete and win.
Rich Kruger: During our May 21st Investor Day, I stated that with the plans that we had outlined at that time, we projected hitting our at or near $8 billion net target sometime mid-year 2025.
I also stated that we were committed to do better.
Rich Kruger: that we would pull every lever to accelerate achieving that target.
and the subsequent increase in buybacks.
Rich Kruger: Some of you have reminded me, I went so far as to say that I couldn't think of a better Christmas present for our shareholders than to achieve that target by year-end 2024. Well, as Chris described, Christmas is coming early this year at Suncor.
Rich Kruger: I'm sure each of you on the call had the same confidence I had that we would achieve this.
Rich Kruger: Another example of today's Suncor. Focused, determined, results-oriented. Troy has even offered to sing Michael Bublé's Santa Baby to celebrate, but in the interest of time we'll skip that. So Troy, back to you to kick off the Q&A.
Troy Little: Thanks so much, Rich. I'll turn the call back to the operator to take some questions. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1-1 again. One moment while we compile the Q&A roster.
Speaker Change: And our first question will come from the line of Dennis Fong with CIBC. Your line is open.
Speaker Change: Hi, good morning and thank you for taking my questions. First and foremost, congratulations on obviously a very strong quarter and the achievement of your net-debt floor well ahead of schedule.
Speaker Change: And frankly, knowing you, I'm sure it's never too early to ask, what are the opportunities you're most excited coming up next as we kind of look into 2025 and, frankly, beyond?
Speaker Change: Thanks, Dennis. You know, Dennis, I think what we continue to find as we create this intense focus on asset utilization
Speaker Change: and our unique level of physical integration, we keep finding examples. They don't always translate into a barrel, but they translate into dollars. When you take PFT to the base plant, we get a yield uplift and we get a higher valued product, for example.
Speaker Change: and the way these teams that are looking down the table at Dave, Peter, and Shelly, the way our operating teams are integrating, looking at our world as an entire system and capturing value wherever it lies.
Speaker Change: That to me is quite exciting and so I think the you know The best way to judge us going forward is on the incremental free cash flow we generate
Speaker Change: You know, I've been in this business a long time, Dennis, and I've seen a lot of ups and downs. This is as exciting a personal opportunity as I've ever been a part of.
The
Speaker Change: Great. No, I appreciate that, Culler. The other item that I wanted to kind of ask about was the cogeneration facility. Wanted to maybe get an update from you guys there and what you think is the opportunity or benefit once that facility or part of your base plant ramps up.
Speaker Change: Holy, Shelly Powell and her team are managing that project. Shelly, give us an update.
Speaker Change: Yeah, great. So this is a really exciting project for Suncor, and I think for the province as well. When it comes online, it's going to increase the reliability of our steam system as a base plant, and it also is going to improve the carbon intensity of our barrels.
Speaker Change: It's going to allow us to also export additional electricity, which is going to head to the Alberta grid and I think really serve us all well. So we're in the final stages of the project, we're well into commissioning, things are looking good, we're in the final push to get things up and going before the cold weather sets in in Fort McMurray, but we're really happy with how this is coming together.
Speaker Change: And we expect that we will do that. Hopefully by the end of the winter we'll have this beast up and running.
Great. Thank you for the color. I'll turn it back.
Speaker Change: Thank you. One moment for our next question and that will come from the line of Gregg Party with RBC. Your line is open.
Speaker Change: Yeah, thanks, good morning, and just to echo the last comment, I mean, just an outstanding quarter. Rich, I wanted to dig into what you're talking about from an operating standpoint, and...
Speaker Change: What I'm trying to better understand is that when you look at the upstream and downstream levels we're seeing, operating levels we're seeing, versus history
Speaker Change: Is this a function just of underutilization, so that the assets simply were just run in two-slack manner, or are you re-rating the assets, like Firebag?
Speaker Change: I think it's more of the latter, Greg. What we're seeing is teams going in, and the integrated nature of how we work today with our technical teams, our operational teams, our central teams that bring a level of expertise, where they're looking at assets and identifying where is the bottleneck, where's the limiting factor, the constraint, and then what does it take to modify or change that. I've used several examples throughout the year at Firebag. I used an example earlier in the year coming out of a turnaround at the Montreal Refinery. So you're incrementally
Speaker Change: literally changing the capacity or rerating the facilities as we go and you know I won't repeat it but we all know those are the most profitable barrels they're the lowest cost
Speaker Change: You know, one of the things we're trying to continue to drive down is our capital intensity.
Speaker Change: And so when we have the teams focused on this, we keep seeing examples. And what I would say, I'm.
I'm...
I'm pleased at the identification of the examples.
Speaker Change: I'm even happier with the pace at which folks are capturing them. And I use some examples, you know, Suncor is double-double, half the cost, twice the value.
Speaker Change: This is what our teams are accomplishing, and I feel a little remiss on these calls.
Speaker Change: because I have so many examples I could share across the company recognizing exactly what our teams are doing. So I think it's more of the, we're re-rating, we're raising the ceiling on the potential of this company.
Speaker Change: Okay, understood. Thanks for that. And then, related, how have you re-engineered the maintenance approach? And again, both upstream and downstream, I know turnarounds have been a bigger focus, quicker, faster, you know, cheaper, what have you, but your safety record has been extremely strong as well, so there's good integrity to what you're doing. But is there a philosophical change in how you now do maintenance?
Speaker Change: Absolutely, and I'm going to turn it over to Dave and Shelley here in a second, but I mean, you know, it all starts with safety and integrity. There's not a damn thing we're doing...
Speaker Change: that jeopardizes safety and integrity in the interest of, you know, money and cost efficiency. So it starts with that, but I think our teams, again, we're fundamentally looking at how we maintain our equipment. So, you know, we've talked about turnarounds, but let me, David, Shelly, why don't you guys comment again about kind of the mindset or the psychology on how we're executing our work.
Yeah, absolutely, Rich, and thanks for the question, Greg.
Speaker Change: I think about it a couple ways. We've talked about turnarounds before, and really the way we're approaching turnarounds is the same way we're approaching maintenance.
Speaker Change: and you could really argue some of our non-turnaround sustaining capital is largely the same approach.
Speaker Change: You know, and we said before, there's no secret to turnarounds, you have to select the right work and you have to execute it efficiently, and that's the same thing.
Speaker Change: that we try to do for turnarounds, for routine maintenance, as well as we're working going forward into our non-turnaround sustaining capital. So it all begins with benchmarking. We need to understand what competitiveness looks like.
Speaker Change: And then we need to select a work scope that's aligned with those competitive costs. And we're seeing a couple things with that. One, benchmarking allows us to set really focused and aggressive targets for the turnaround or the maintenance activity of the capital work.
but it also shows the whole organization what's possible.
Speaker Change: They know other people can do it. It's not just a message from headquarters to go cut cost. It's a
Sustaining Capital.
Speaker Change: We ensure the right work is selected to reliably achieve the run. It's about doing less work, but it's not only about doing less work. It's really about doing the right work at the right time.
Speaker Change: And then with turnarounds, as well as with maintenance and capital, we're getting better at moving the approach so we have our work list locked in earlier. We're applying our new OEMS processes.
Speaker Change: with detailed planning milestones, and that gives us the opportunity to have the work planned ahead of time to allow us to then go optimize the turnaround of the maintenance activity. And a good example is on our Montreal...
Speaker Change: turnaround. We challenged the team. They realized they had a non-competitive duration on their turnaround. So they looked, they had some time, they looked at how they could pre-build some of the components for their furnaces and more of a plug-and-play approach. And that was really the secret to shape 13 days off that turnaround.
Speaker Change: So we've had some good turnaround so far this year. I see that moving into next year and even better as we get
further allow our competitiveness journey.
Speaker Change: and then I see that also applying to maintenance as well.
with Sustaining Capital over time.
Speaker Change: It gets back to the whole cost measure, attention to detail.
Speaker Change: critically looking at what we do, how we do it, how do we compare externally. If the goal or the vision is to be the best of the best, you need to know who the best is. So the benchmarking that both Shelly and Dave are bringing in, and Peter as well, into the business so that we don't necessarily just look at how did we do this before or what was our best ever.
but the
Speaker Change: How do the best in the business do it? It is a cultural change.
and we're driving that wide and deep.
Speaker Change: and we're seeing results, and as I've said before, we're seeing results faster than what I would have expected.
Speaker Change: And I really give that, I give all that credit and tribute to our people because they want to be the best of the best.
Speaker Change: and that is exactly what we'll be. Shelly, if anything else you'd add to that? Yeah, I think I would underline the improvement that's really being driven by our Operational Excellence Management System. I think it really ties into what Dave said, and it's underpinning how we're seeing the entire system come together. So as an example, on the maintenance side of the world, we have a new process that we've implemented, Manage Threats to Availability.
Speaker Change: And what happens is we have the key people across all the different functions in our operating areas get together every morning. They look at what's happening in our operation. They discuss what those threats to the availability might be on a given day and a week and a month.
Speaker Change: and then they put their heads together and figure out how do we get in front of those threats, how do we eliminate them before they actually turn into losses, and how do we ensure that we're maintaining and preserving the safety of our operation as we go through that. So we're really seeing the benefits of that management system come to the forefront.
Excellent rundown. Thanks very much.
Thank you. One moment for our next question.
Speaker Change: and that will come from the line of Neil Mehta with Goldman Sachs. Your line is open.
Neil Mehta: Yeah, good morning, Rich and team. Appreciate the good updates here. The first question is just around working capital. It was a nice tailwind in the quarter.
Neil Mehta: But the question we're getting this morning is this structural or is this is more temporary that can wind back? And I think you guys have done some good stuff around accounts receivables, payables, for example, that feels more structural but more color around that would be helpful.
Speaker Change: Well, I'll ask Chris to comment on it. This has been a, like other areas, a focus area now for us for some time. And ye of little faith. This is...
Chris Smith: structural in nature. But Chris, comment on the really the outstanding work your team has been doing. Yeah, yeah. Hey Neil, thanks for that question.
Chris Smith: Not a surprise that that might be getting asked out there, but as Rich just said, you know, certainly working capital can move around from quarter to quarter. We all know that commodity price changes or inventory management, those types of things, and we'll continue to see working capital move around. But.
Chris Smith: The key point, Rich just made it, and actually, Neil, you just said it in your own question. There are structural changes built into this. I mean, as I mentioned in my remarks, this has been driven by focus on the controllables, right? Production, cost, capital, and working capital. We've had the teams working hard this year, diving into our working capital. There is structural change that we're seeing.
and this isn't just ringing the bell.
Chris Smith: This isn't luck or a tailwind that caused $8 billion of net debt to show up at the end of Q3. Our confidence in going to the 100% payout is our view of Q4 and 2025 and the fact that as we're managing our business and our confidence around managing all those controllables.
Chris Smith: So, you know, we will see working capital move around, we know that, but we also have a lot of confidence that that working capital is well in hand and in the zone, and we're confident that we're in our net debt target zone. So anyway, thanks for the question, because I think sometimes people do think working capital is just, you're a taker on that.
Chris Smith: Sure, you can be when it comes to commodity price, but there's a lot of things that are in our control as well And and I really have to recognize again the works of the teams That have been working on all aspects of our business including this one
Chris Smith: So while some watch football on Saturday, Troy, Chris and I, we're going door-to-door collecting accounts receivable.
That's great, great colleagues.
Speaker Change: And so Rich, it's obviously been challenging on the Southern part of that asset, but the view is as you move towards the mid and then open up the North pits, things should really start moving in your direction. So just talk about what's happened on the ground there and how you see this evolving over the next couple of years.
Neil Mehta: Absolutely, Peter, you want to come in at Fort Hills? Yeah, I'm sure, thanks Neil. Yeah, you're absolutely right. We're just finishing, excuse me, the final mining in the, in the South Pics now and transitioning our, our delivery to the center and the North Pits.
The key factor there
Neil Mehta: As we stated kind of a number of years ago now is ensuring that we've got really
Neil Mehta: Solid Mine Health, a really good mineable ore inventory in front of us.
Neil Mehta: with Adequate Options for Blending and that's been the focus of the mining team.
Neil Mehta: solid productive mining and ensuring that we've got lots of blend options in front of us that will ultimately translate into more barrels through the fixed plants.
Neil Mehta: And, as I stated before, I'm really happy with the fixed plant. It's an excellent asset. It's got a significant potential to deliver high volumes, so that's not where our focus is. It's all on the front end, and it's all in the mine.
Neil Mehta: And we're just about two years into a rebased three-year plan.
Neil Mehta: and month after month, month after quarter, that Fort Hills team is hitting the milestones. They've been bang on every single month with respect to our budget and production volumes. So we're really pleased with the Fort Hills team's delivery. And I'd add, I'm smiling as I say this, not to put any added pressure on Peter, but now we're increasingly looking at, he's described these Ferraris we have for a plant, I would prefer to say Lexus, but we're looking at how can we,
Neil Mehta: continue to further de-bottleneck and support the plant with added ore over time. So while we deliver on this three-year plan, we're spending much more time now thinking about longer term and how we can get the most out of this asset. We're pretty, more to say at future calls, but we're pretty excited about the opportunities slate we have there.
Awesome. Great pump-up sound, too.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Menno Holshoff with TD Securities. Your line is open.
Speaker Change: Thanks and good morning everyone. I'll start with a question on your $3.3 billion.
Speaker Change: incremental free funds flow target by 2026 that was first talked about in May. How are things tracking internally relative to that target?
Speaker Change: Does $3.3 billion still feel like the right number and asset because it is predicated on slightly more constructive macro outlook than we're seeing today and also because you seem to be blowing through all of your other targets So any update there would be would be good. Thank you
Thank you very much.
Speaker Change: Yeah Meadow, you may recall on May 21st one of the things we did there is we gave we referred to it as the you know normalized so we gave a set of kind of the market parameters so you could use that to track how we're doing so we wouldn't be able to you know hide behind or take credit for whatever market changes so as we're looking at that and we look at it that way to really look at are we what improvements within our control are we driving
And so as we sit here, approaching year end,
Speaker Change: We are ahead of pace on essentially every commitment we articulated on May 21st.
We said we would have about a $4 a barrel.
reduction in our corporate break-even in 2024.
Speaker Change: I don't have a new number yet, but it'll be bigger than four. We said in 2024, we would, the free funds flow, the reference point would be a growth from about $5 billion. I think the number on the chart was six, three, something like that.
Speaker Change: We will be above that 6-3 for 2024. So what we plan to do, probably on a bit of an annual basis, is give very tangible updates on how are we doing versus that plan.
Speaker Change: And where we stand right now, for all of the 2024 commitments, we are ahead of pace in capturing those. And so what we're really looking at now are what are those things that were out there later in 25, in 26, what can we do to accelerate their capture and bring all that forward? Now what will be very key for us in 2025, too, is holding the gains of 2024. We've made a lot of progress on cost discipline, asset reliability and things.
Speaker Change: We're trying to be sure whether we institutionalize those and don't slip back at all. So, you know, we're a little bit of a victim of our own success in 2024, but I'll take that, I'll take that every day.
Speaker Change: Okay, thanks for that, Rich. And then maybe along a similar track, and you've answered this already to some degree, but maybe just confirm that you still see CapEx trending to less than $6 billion by 2026, excluding capital leases.
Speaker Change: Similarly, when you look beyond the next five years where we could, keyword being could, start to see Brownfield spending a new bitumen capacity, is there a rough feeling on annual spending towards the end of the decade that you could share today or is it still too early?
Speaker Change: That capital profile that we outlined in May, you know, still remains this year I think our guidance range was for 2024 was 6.3 to 6.5
Speaker Change: were tracking, quite frankly, on the low end or below that.
Speaker Change: And we're, in a part, it's not because we're altering our work plan, it's we're scrutinizing what we do, how we do it, and finding the most cost-effective ways to do it. So I think that, you know, the next several years would be very consistent.
Speaker Change: with our May 21st I-Day. And then I think longer term, you know, that's still work in progress. But I want to give you just, I've shared this with a number, but I want to give you just a little bit of context on that. Is, here's the issue we face. If we were to elect...
Speaker Change: to maintain the capacity of this enterprise at the roughly 800,000 barrels a day.
roughly.
Speaker Change: The base plant contributes about, round numbers, 30% of that, about 240,000 barrels a day. We're just walking around numbers. So the issue this corporation faces, if we wanted to maintain it flat, is how do we replace 30% of our production in a decade?
Speaker Change: If we all jumped on a plane and flew to Midland, Texas and pulled all the operators around the room, they're faced with how do they replace 30% every friggin' year.
Speaker Change: Deep Bottleneck and Expand a Fort Hills to continue to get more out of this rock star of a fire bag.
Speaker Change: That will allow us to compete and to continue return significant capital to our shareholders While making the investments that make this company strong for the long term. So, you know, we've talked about it investor day We've showed some charts
Speaker Change: I'm looking forward to when folks stop asking me about what's going to happen a decade from now because what I can assure you It'll be in the shareholders best interest. It'll be very very thoughtful, and I'm not losing any sleep over that I think we have a wealth of opportunities
That's very helpful. Thanks, Rich. I'll turn it back.
Speaker Change: Thank you. One moment for our next question. And that will come from the line of Manav Gupta with UBS. Your line is open.
Speaker Change: Good morning, guys. My first question is it looks like, you know, both Syncrude as well as the Basemine are doing very well, exceeding expectations, and can you help us remind what role is that bi-directional pipe playing in the outperformance of both these assets at this point of time?
Speaker Change: Yeah, I'll make a couple of comments and then I'll ask Peter if he has anything.
Speaker Change: to add to it. You know, one of the things just broadly...
Speaker Change: when we have maintenance in the mine at the base plant, we can backfill the upgrader with firebag barrels. And increasingly, I've described...
Speaker Change: Ford Hills barrels, and we get even an uplift when the Ford Hills barrels come in. So we've created the base plant and the upgraders much like a refinery that can be fed through multiple feedstocks. That is part of our winning formula.
Speaker Change: Now, as we've extended in the bi-directional pipeline to Syncrude, we've kind of let them in on that party.
Speaker Change: So when Syncrude has challenges or maintenance in the mine, we can keep the upgraders full or we can move different products because of the different pots and pans at the base plant or Syncrude.
Speaker Change: to maximize the value of each and every molecule. So that's a long answer to say that's been very, very important.
Speaker Change: to the performance at Syncrude. Peter, anything you would add to that on the bi-directional line? Yeah, no, I think a good way to think about it is that it really helps to buffer out variability in the upstream. And so we like to keep those upgraders running extremely steady. That's where they run the best. That's where we maximize our yield benefits off the upgraders. And so having the ability to flexibly move bitumen where we need it.
Speaker Change: when we need it is really what is differentiating, and you've seen that start to manifest in the very high-upgrader utilizations that we've seen both at Suncor and at the base plant. So as an operator, it offers yet another degree of operational flexibility and allows us to keep the overall system stable, and as Rich said, we're hunting for every...
Speaker Change: bit of value, every barrel, making sure we're maximizing our margins on that.
on the Integrated Production System.
Speaker Change: And just to comment on that, this is, you know, we talked about this before.
Speaker Change: Keeping the upgraders full is so essential because, depending on whether it's Syncrude or the base plant, round numbers, they operate at $5 or $6 a barrel.
Speaker Change: Roughly, something like that. Different processes, so a little different cost. Well, if they take a low-value to bitumen product, and upgrade it to a high-value product, so the uplift is tremendous. So, job one is to keep the upgraders full.
Speaker Change: And I think that's exactly why you're seeing record utilization rates because of our organization recognition of where value is created. And when we put barrels in the upgraders...
Speaker Change: We actually reduce our total production Because of the consumption the shrinkage that goes in it we reduce the barrels
Speaker Change: but we greatly enhance the value. And so that's those are the examples why I keep saying that you know, I think they just judge us on the value we keep creating because that's exactly how we have the entire organization focused is on value.
Perfect moment quick follow-up here is
Speaker Change: If we adjust for the FIFO, your refining earnings are almost flat quarter over quarter. Now when I look across the North American comp group, earnings are down in some cases 60 percent, some cases 90 percent. So how have you been able to achieve a relatively flat quarter in refining while all your peers are down 60 to 70 percent?
Rich Kruger: Yeah, you know, I'm gonna turn it over to Dave. I know, I know, wouldn't you rather have our downstream than anybody else's downstream? I sure would. Dave, you want to comment on that? Hey, thanks, Rich, and we continue to make our downstream better.
Dave Oldreve: I think of it in two aspects. One, we delivered record rates in the quarter, and that certainly helped, but we also had strong margin capture. So both of those contributed to.
Dave Oldreve: to Strong Free Funds Flow, or AFFO, coming from our downstream. Richard mentioned the record's 488,000 barrels a day.
Dave Oldreve: 20 KBD over a prior record. We set monthly and quarterly rates in Montreal. Commerce City ran 109% in the quarter. And Edmonton, actually, we ran into a few external speed bumps, a rail strike.
Dave Oldreve: are really helping remove distractions at our assets and our teams. My teams tell me that every day. It may sound a bit cliche, but our leaders are able to act as leaders and our engineers get to be engineers and it's a lot of fun for them and they get to go bust through constraints.
Dave Oldreve: We're using benchmarking, and we're improving our turnarounds, and we have this culture of busting through constraints. I'll give you a couple examples.
that also kind of highlight.
Dave Oldreve: just how structural some of these improvements are. If you think, for Xarnia, we completed our turnaround in the second quarter, and in that turnaround we increased the size of the feed control valve on our crew unit. That added 3,000 barrels a day of capacity. That's about a $20 million value for less than a $100,000 investment.
Dave Oldreve: We talked about, I talked about earlier in Greg's question around our Montreal turnaround using that plug-and-play approach to make the turnaround shorter and we can continue to use that approach going forward. Once Montreal started up the team was focused on conducting a bunch of test runs.
Dave Oldreve: and they were able to structurally add 12,000 barrels a day of capacity in both their light and heavy crude modes. And that's a $50 million uplift for no incremental investment.
Dave Oldreve: And I get really excited because what we're seeing now when we use our benchmark, and we have this culture of constraint busting, and we're challenging the organization, we're seeing everyone contributing. So I actually get more excited about the small opportunities.
Dave Oldreve: Our team at the Montreal Terminal recently changed the material of the totes that they receive additives in. It sounds like a small thing, it's worth $50,000 a year, not a big deal in the big scheme of things, but you add those up. If we get 15,000 people in this company doing that, we're going to continue to drive improvements.
So those small wins continue to add up.
Dave Oldreve: You know, in terms of margin capture, you know, with our refineries running full and we had more volume to capture margin on, but it also lowers our operating costs.
Dave Oldreve: SETI operations allow us to go optimize between our refineries and across our logistics network. We move record volumes of diesel from the west to the east through the corridor.
Dave Oldreve: which help drive volume. And another example of optimizing molecules is we began moving intermediate components between Sarnia and Montreal to allow us to run higher rates during our turnarounds. And we'd like that so much that we're doing that also in the fourth quarter to manage some smaller maintenance events.
Dave Oldreve: We're growing our sales and marketing organization. That's where our highest.
Dave Oldreve: Highest value products are sold through our sales and marketing domestic sales, through our retail and our wholesale channels. We're up quarter on quarter and we're up year on year on both retail and wholesale volumes, and we're seeing record jet fuel production and sales.
Dave Oldreve: Petro-Canada in the quarter regained its number one share of the market so lots of things going on to help us capture that 100% margin capture for the quarter and drive volumes to our shareholders. So I think it's I think it's structural and I think there's more upside to it going forward.
Thank you for a detailed response. I'll turn it over.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Roger Reed with Wells Fargo Securities. Your line is open.
Roger Reed: Yeah, thanks. Good morning. A lot of the stuff's been covered here, but I think question wise, I'd like to go is.
Roger Reed: You've done a lot on the cost side, right? And a portion of that is clearly just running better, so you lower your per barrel or per unit costs. And another part is you're just taking costs out of the system.
Roger Reed: If you're running your refineries above 100%, probably not a lot more we're going to get on the top side there. So I was just curious, as you look at the downstream and at the upstream operations, what's the next thing you want to do in terms of improving the overall cost structure?
Roger Reed: I think it's a combination. Continuing to operate well, it's been mentioned a couple times. Shelley mentioned it. Our new, and I mentioned I think two calls ago, our operational excellence management system that really digs into the details of how we manage threats to availability, how we manage turnarounds, how we conduct safe operations, and on and on. It's just continuing to do everything better.
That is a part of it.
Roger Reed: and that's what the best do. And the other aspect of it is continuing to find those large and small opportunities.
that just keep adding value.
Roger Reed: It's interesting. I like the nature of these calls. A year ago, 15 months ago, it was kind of a, well, what the hell can you guys do to get off your knees and back on your feet? And now folks are asking, how high can we take this?
We believe we can continue
Take this enterprise higher.
Roger Reed: But it's no one or two things. It's 15,400 people focused like a laser.
Roger Reed: on adding or creating value, and that's cultural. We don't talk about culture a lot, but increasingly, what we're fundamentally doing here is changing the culture of this organization. When we're done on this call, this team goes over and we're meeting for the next day and a half with 450 leaders in our company to talk about leadership, culture, what it's like at today's Suncor.
Roger Reed: That's all part of it. So, you know, where is the limit and what's next? I don't know what the limit is, and I think there continue to be a lot of areas for us to add value.
Speaker Change: Well, let me let me follow up on that just one other way so other companies
Speaker Change: you know, very large oils and even some of the smaller refinery, refining companies, you know, we've seen them maybe carve out underperforming assets, right, dispositions, addition by subtraction, in a sense, to help out costs and margins.
Speaker Change: You haven't really had to move out of a lot of stuff, you've actually probably consolidated a little bit, so I'm just curious are there, you know, we should think about maybe a pairing in the future, a little bit here and there to further improve the structure.
Speaker Change: Well, you know, our model at The Essence is we like to operate with 100% ownership.
Speaker Change: to an integrated asset base. For all the examples, I won't go through them again, where we can add and create value. So we'll continue to look at opportunities that align with that. And then on anything that is not aligned with that, we will continually ask and look at its performance and say, are assets worth more to us, or are they worth more to others?
Speaker Change: You know, we haven't had anything of a material nature since, I guess, our wind and solar sale of a year ago, a little bit more than a year ago, and our North Sea assets. So we'll always be looking at the asset base where we can enhance it and or what doesn't, you know, fit with our proposition to win.
Thank you.
One moment for our next question.
Speaker Change: And that will come from the line of Doug Legate with Wolf Research. Your line is open.
Doug Legate: Thank you, thank you everyone, appreciate you taking my questions. Rich, nothing short of an impressive delivery as you, as everyone has opined this morning, but I've got two questions I was hoping you could clarify.
Doug Legate: So one is, you know, we've obviously, um, weather is always a factor when you look at utilization rates and your, you know, things seem to be a bit of a tailwind this year. So I'm trying to understand.
Doug Legate: What inning do you think you're actually in on a normalized basis on execution? And I guess it's another way of asking, how much of the $10 do you think you've actually achieved? And at what point will you give us the upside case?
You know we
In the $10-a-barrel, we...
Doug Legate: We designed that, we showed you in the May 21st update, that we thought we'd target about four of it in $4 a barrel in 2024, two in 2025, and four in 2026, and that just tied with the activities, the work we had planned. We're going to capture more of it this year.
Doug Legate: And now we're looking at those things that are on our radar screen of work in later 25 and 26, you know, what are the opportunities to bring it forward to accelerate it?
Doug Legate: at a rate or a pace faster than we had even anticipated, you know, as recently as literally six to nine months ago.
And, you know, Doug, on the utilization rates and the...
Speaker Change: you know, weather and winterization. The, uh, you know, we're looking at what are the things we can do to be more immune? We know we operate in the environment we operate in. So we've, uh, I think Dave's in the, in his refining sector has looked long and hard on how we can do that. We're doing the same things across our upstream assets, trying to create a level of.
Speaker Change: a bit of an immunity to what conditions. Mining, for example, the miners love it this time of year. Once it starts to get up in Canada at a Celsius minus.
Speaker Change: Minus 5 to minus 10, that's when they smile and they come out to play. Because trucks can operate most efficiently. Now they don't like minus 30, minus 35, they want to go hibernate. So there's a sweet spot in there. So we're trying to build our operations, whether it's through autonomous systems, working with original equipment manufacturers on further winterization of our equipment. We're trying to do things that allow us to be more predictable, readable, stable.
Speaker Change: throughout the year and you know whatever obviously the business environment from a cost standpoint but then operationally just throughout the you know inevitable swings we have in the business. That is the vision to be more predictable, rateable, consistent you know week after week, month after month.
Speaker Change: I know it's a work in progress and a tremendous, tremendous effort all around.
Speaker Change: Showing up in the numbers obviously, but I guess my follow-up is a little bit selfish
Speaker Change: I know we'll get a chance to get into this next week.
Speaker Change: If you could forgive me this one, a very large company with a very long runway, it's kind of hard to move the needle in terms of market recognition of value from a DCF standpoint. Obviously, the break even coming down big, big positive to the free cash flow. But in our, from our sense, market recognition of value flows through the dividend.
Speaker Change: So, when you talk about the $10 drop in dividend breakeven, my question is, what happens to the dividend policy as you deliver the reduction in that breakeven? What happens to your dividend growth story as you go forward?
Speaker Change: You know, I think Doug, the last time we met, we talked about this as well, the, you know, what I'd say fundamentally, we want to have a track, a predictable, reliable, growing dividend that, do we want it to be the highest yield? No, we would prefer to have a high fundamental, you know, underlying share price on it, but predictable and reliable and growing over time.
Speaker Change: And a bit inside our brain right now is with our ability to be buying back shares.
Speaker Change: It's even better if we're able to buy back shares at a rate equal to or greater than the fundamental growth rate on a dividend per share, because then that helps with this whole break-even concept that we're not growing our dividend in absolute terms.
Speaker Change: But it's increasingly manageable as we strengthen the business. So, you know, I brought in several concepts in that but that's fundamentally what we're trying to do reliable and growing dividend
Speaker Change: and in absolute terms buyback share equal to or greater than that growth in the dividend rate so that the total dividend doesn't continue to grow over time.
Appreciate the answers. Thank you, Richard.
Speaker Change: Is that fair? Oh no, that's a great summary, Rich. And Doug, I think, you know, we laid it out in our May 21st investor update. We absolutely do view that this dividend will grow over time.
Speaker Change: and we'll grow rateably and reliably on the back of us continuing to grow free cash flow in this business. And obviously, as Rich said, buying back our shares.
Speaker Change: just provides another flywheel to that dividend. And at the same time, we're driving down our break-even so that we're resilient and we don't get ahead of our headlights and we keep the company very resilient in that respect too.
Speaker Change: And just one final point, I think everyone knows this, we look at the dividend as a commitment, an obligation. It's in our break-even. So, you know, in any business environment, we want to be that, you know, reliable and growing mantra, so the dividend is extremely important to us.
Appreciate it, guys. Thank you so much.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Patrick O'Rourke with ATB, your line is open.
Mr. O'Rourke, is your line on mute?
Hey, good morning. Can you hear me?
Speaker Change: Thanks for taking my questions. I've got two for you here. My first question is on firebag performance. The nameplate capacity is about 215,000 barrels per day in your updated corp presentation. You've spoken to 230 plus. I'm seeing that asset run considerably higher than that on a full month basis in September. Where is the run rate for the asset sitting now and what's the max single day production been from the asset so far this year?
Speaker Change: Firebank's the gift that keeps on giving as we keep finding opportunities to increase it so I think I mentioned
Speaker Change: September was a monthly record high at 247,000 barrels a day. I mean, if I were to slip and let the cat out of bag, I might say October is even higher than that. We're still finalizing some of the numbers on it, but we're having stream days, you know, in the north of 250. And that, again, it gets back to what we're trying to do with all of our assets.
Speaker Change: operate them. We start out each day looking at what are our threats to availability. We're focused like a laser on them. We're looking at debottlenecking to, you know, incrementally increase that capacity. And I think firebag is kind of the epitome of our strategy and the results it produces.
Speaker Change: Sorry Peter, I didn't say I was going to slip out of the bag that October is better. I couldn't help myself.
Second question?
Speaker Change: Second question is on synchro to operating costs in the quarter, obviously very good. Could you provide a breakdown between kind of what was structural and durable there and what was helping support some of those lower energy input costs?
Speaker Change: Peter, you got any comments on Syncrude? Yeah, I would say, I mean, and not just at Syncrude, but across the region, we've been really focused on improving the overall productivity of our mining business.
Speaker Change: And so the more that we can do with what we have already offsets more expensive alternatives that we would have to bring in to complete the work required. So am I confident that these cost savings are structural and sustainable? The answer is yes.
Speaker Change: and that is absolutely the focus of the team to drive it and continue to improve on our mining productivity so that it drives more expensive third-party costs out.
Speaker Change: And then you start to see that on the Syncrude bottom line, but indeed across Fort Hills and Base Plant, it's the same story.
Speaker Change: And Peter, keep me honest here, in delivering a barrel to the market of a product, the cost component, if you break a syncude or the base plant into three pieces, you've got the mining, extraction and the upgrading.
Speaker Change: and you've got tailings and other things to deal with, but mining is the highest.
Speaker Change: single cost component of that, and then depending on which asset, either upgrading or extraction are closer, they're similar numbers. So when you hear our strategy, it's heavy focused on driving mining costs down. It's heavy focused on maximizing upgrading utilization.
Speaker Change: It's the difference at Suncorp today is we're zeroed in with lasers and rifles versus shotguns to identify where the biggest prize, aggressively target it, capture it, and then move on to the next prize.
Speaker Change: Bringing a performance focus to the mining business is absolutely critical because you see a result in the bottom line cost. We have done that by benchmarking both externally but also internally. We mentioned a couple of calls ago about our Mine Connect program where we can literally benchmark
Speaker Change: very minor details of our mining operations and really look to optimize that across our various mines.
Speaker Change: And focusing on the small things in a business that moves 1.3 billion tons a year really adds up to a lot on the bottom line. And so, while we will focus on an extra kilometer an hour faster on the haul cycle or an extra ton on the truck,
Speaker Change: That adds up when you're moving as many cycles as we are, and that's what the teams have been doing.
Thank you for calling on Alternate Back.
Speaker Change: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Troy Little for any closing remarks.
Rich Kruger: I'm going to briefly turn it back over to Rich. Yeah, I'll just wrap up quickly, you know, thank you for your questions today. But the themes I'd like you to recall is what we're talking about is cross-functional teamwork.
Rich Kruger: with a level of clarity and focus on results and value.
Rich Kruger: that is part of an evolving or part of today's Suncor. This is the culture, increasingly the culture of this company and what our job is to continue to promote that culture and institutionalize it deep, embedded in the very fabric or DNA of this company and that's exactly what the folks on this phone call today are working on each and every day.
Speaker Change: So with that, thank you. Troy. Thank you, everyone, for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can end the call.
Speaker Change: This concludes today's program. Thank you all for participating. You may now disconnect.
Speaker Change: ... Go Go Go Go Go Go Go Go Go by Uncle Blair Go Go Go Go Go Go Go go go go Go Go Go Go