Q4 2024 Imperial Oil Ltd Earnings Call

January 31, 2025

[music].

Today's conference is being recorded. At this time, I'd like to turn the conference over to Peter Shaw, Vice President of Investor Relations. Please go ahead.

Peter Shaw: Thank you and good morning everyone. Welcome to our fourth quarter earnings conference call.

Speaker Change: 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.

Speaker Change: Sherry Evers, Senior Vice President of Sustainability, Commercial Development, and Product Solutions, and Cheryl Gomez-Smith, Senior Vice President of the Upstream.

Speaker Change: Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in our attachment 6 of our most recent press release and are available on our website with a link to today's conference call.

Speaker Change: Today's comments may 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.

Speaker Change: Forward looking information, the risk factors, and the assumptions are described further in detail on our fourth quarter earnings release that we issued earlier today.

Speaker Change: All these documents are available on CDAR Plus, EDGAR, and our website, so I'd ask you to refer to those as well. 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 with the Q&A session. So, with that, I will turn it over to Brad for his opening remarks.

Brad Corson: Thank you, Peter, and good morning, everybody, and welcome to our fourth quarter and full year earnings call. I hope everyone is doing well and your new year's off to a good start.

Brad Corson: And apologies for my scratchy voice as I recover from a cold.

Brad Corson: But I'm really pleased to report another strong quarter for Imperial as we wrapped up 2024.

Brad Corson: We saw excellent operational performance across all our assets, both upstream and downstream, which largely offsets the impact of lower commodity prices on a sequential quarter-over-quarter basis.

Brad Corson: And despite the lower prices, our ability to continue to grow production and deliver strong downstream reliability resulted in a very solid end to 2024.

Brad Corson: Our upstream continues to set records, and we achieved the highest fourth quarter production in the past 30 years when adjusting for the XTO divestment.

Brad Corson: We also realized the benefits of TMX pipeline and additional egress, which resulted in much narrower and more stable differentials compared to a year ago.

Brad Corson: Our downstream business also performed very well over the quarter and contributed solid earnings with lower turnaround activity and higher utilization.

Brad Corson: We continue to benefit from the structural advantages of the Canadian market that support stronger financial performance despite softer refinery crack spreads.

Brad Corson: Over the next few minutes, Dan and I will detail the results of a very strong quarter. So now let's review the fourth quarter results.

Brad Corson: Earnings for the quarter were $1,225,000,000 with cash from operating activities of $1,650,000,000 when excluding the impact of working capital.

Brad Corson: For the full year, earnings were $4,790,000,000, down slightly from the prior year.

Brad Corson: Also worth noting that we delivered our second highest earnings per share of nine dollars and three cents. These results reflect continued strong operational performance and our ability to capture value for our shareholders.

Brad Corson: In the upstream, we achieved total production of 460,000 gross oil equivalent barrels per day in the fourth quarter.

Brad Corson: This marks the highest fourth quarter production over the past 30 years when adjusting for the historical volumes associated with the divested XTO assets and Resulted in the highest fourth quarter upstream earnings in the company's history

Brad Corson: The strong fourth quarter results also contributed to the highest annual upstream production in over 30 years at 433,000 barrels per day, even when including the divested XTO assets.

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Brad Corson: Our strong operating performance led to a unit cash cost reduction of nearly $3.00 U.S. a barrel when comparing to full year 2023.

Brad Corson: And looking ahead, we expect to continue to lower our unit cash costs based on advancing further growth and structural cost reduction initiatives.

Brad Corson: Curl continued the year with yet another strong quarter, which resulted in us achieving the asset's highest ever annual production, exceeding 280,000 barrels per day this year on a gross basis.

Brad Corson: I'm very proud of the team for achieving this production milestone, and I know they are squarely focused on carrying this momentum into 2025 and achieving even higher volumes.

I'm also extremely pleased by the performance at Cold Lake.

Brad Corson: We delivered very strong performance in the fourth quarter with the planned turnaround activity behind us and all of the new Grand Rapids wells producing.

Brad Corson: Our transformation of production and unit cash costs at Coal Lake is off to a great start as we leverage solvent recovery technology with impressive results.

Brad Corson: And in the downstream, all our assets performed very well, and with the only planned turnaround activity in the quarter being the completion of the maintenance work at NanoCoke that we discussed on our last call.

Brad Corson: Refinery throughput averaged 411,000 barrels per day, which equates to a refinery utilization in the quarter of 95%, and a full year utilization of 92%, which is at the top end of our 2024 guidance.

Brad Corson: We completed the accelerated and CIB in mid December with purchases of $1 billion $475 million in the quarter.

Brad Corson: In addition, we paid $317 million in dividends in the quarter for a total of.

Brad Corson: One $2 billion in dividends for the entire year.

Brad Corson: And in total we returned $3 $9 billion of cash to shareholders in 2024.

Brad Corson: And $16 billion over the past three years.

Brad Corson: And finally this morning, we declared a dividend of 72 cents per share payable on April one 2025.

Brad Corson: The <unk> 12 per share or 20% increase is the largest nominal dividend increase in company history.

Brad Corson: This is further demonstration of our commitment to growing the dividend and returning surplus cash to shareholders.

Brad Corson: It also reflects our confidence in delivering on the guidance we communicated in December.

Brad Corson: As we move into 2025, we remain focused on our core strategy of optimizing our existing asset base to maximize shareholder value our.

Brad Corson: A strategy that has allowed us to increase our quarterly dividend per share by over 225% since 2020.

Dan Lyons: So 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 fourth quarter, we reported net income of $1 $225 million. This represents a decrease of $140 million from the fourth quarter of 2023, primarily as the result of lower margins in our downstream business, partially offset by higher <unk>.

Dan Lyons: Extreme production when comparing sequentially fourth quarter net income is down slightly from the third quarter of 2024, primarily driven by lower prices, partially offset by stronger operational performance now.

Dan Lyons: Now shifting our attention to each business line and looking sequentially upstream earnings of $878 million or down $149 million from third quarter, primarily due to lower realizations, partially offset by higher volumes downstream earnings of 356 million.

Dan Lyons: <unk> are up $151 million from third quarter, mainly reflecting lower turnaround impacts and favorable foreign exchange and inventory effects, our chemical business generated earnings of $21 million down $7 million from the third quarter.

Dan Lyons: Moving on to cash flow in the fourth quarter, we generated $1 $780 million in cash flows from operating activities, excluding favorable working capital effects of $139 million cash flows from operating activities for the fourth quarter were 1 billion 600.

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Dan Lyons: $50 million down $147 million from the third quarter.

Dan Lyons: Of 2024, we ended the year with nearly $1 billion of cash on hand.

Dan Lyons: Shifting to Capex capital expenditures totaled $423 million in the fourth quarter down $46 million from the fourth quarter of 2023.

Dan Lyons: In the upstream fourth quarter spending focused on sustaining and growing production at curl, Syncrude and cold Lake and the downstream fourth quarter spending mainly continued.

Dan Lyons: Hey progressed I'll renewable diesel project at <unk> full year 2024 capital expenditures totaled $1 billion.

Dan Lyons: $867 million.

Dan Lyons: Shifting to shareholder distributions consistent with our strategy to timely distribute.

Dan Lyons: Free cash flow, we returned $3 $9 billion to shareholders over the course of 2024 moving into 2025, we continued to demonstrate our long standing philosophy to deliver a reliable and growing dividend as Brad already noted we declared a fourth quarter I'm, sorry, we declared a first quarter dividend of <unk> 72.

Dan Lyons: <unk> per share early this morning, which will be payable on April one. This represents an increase of 20% compared to the fourth quarter dividend of 2020 for now I'll turn it back to Brad to discuss our operational performance.

Brad Corson: Thanks, Dan I know, you've all had a chance to look through the numbers, but I do want to focus your attention on some of our key performance highlights.

Brad Corson: Extreme production for the quarter averaged 460000 oil equivalent barrels per day and as I mentioned earlier. This represents the highest fourth quarter production in over 30 years when adjusting for the <unk> divestment.

Brad Corson: Production was up 13000 barrels per day versus the third quarter and up 8000 barrels per day versus the fourth quarter of 2023, mainly due to higher volumes at cold Lake.

Brad Corson: Our upstream also delivered the best full year production and over 30 years with 433000 oil equivalent barrels per day, a 5% increase in total or a 14% per share increase versus full year 2023.

Brad Corson: So now let's move on and talk specifically about curls record year.

Brad Corson: <unk> production in the fourth quarter averaged 299000 barrels per day, gross which is up 4000 barrels per day versus the third quarter and 9000 barrels per day lower versus the fourth quarter record previously set in 2023 as Tom.

Brad Corson: <unk> curl achieved over 280000 barrels per day in 2024 and set the full year production record of 281000 barrels per day.

Brad Corson: It's also worth noting in the last five years, we have grown total production by 75000 barrels per day, which is over 35%.

Brad Corson: This marks a significant milestone in <unk> journey to deliver record production through efficient growth initiatives and achieve unit cash cost below our previously stated target of $20 per barrel.

Brad Corson: We've made major strides in lowering unit cash cost at <unk> over the past few years, the full year unit cash costs of $19 67.

Brad Corson: U S per barrel reflects the hard work of the entire curl team.

Brad Corson: Not only to meet our previously set target of $20 U S per barrel, but to beat it and.

Brad Corson: And talking with shareholder team they continue to find new opportunities and leverage the current momentum to drive down unit cash cost. Even further this is very exciting and I look forward to sharing at our upcoming.

Brad Corson: Investor Day, some of these opportunities and how they will help to support our new target.

Brad Corson: $18 U S per barrel.

Brad Corson: And as we begin 2025 <unk>.

Brad Corson: <unk> is off to a very strong start and is on track to set another record with January production over 280000 barrels per day.

Good day and welcome to the Imperial oil fourth quarter 2024 earnings call. Today's conference is being recorded at this time.

Brad Corson: Turning to another highlight of 2024.

Peter Shaw: Time, I'd like to turn the conference over to Peter Shaw, Vice President of Investor Relations. Please go ahead.

Brad Corson: <unk> for.

Brad Corson: For the fourth quarter Cold Lake production averaged 157000 barrels per day, which is up 10000 barrels per day versus the third quarter and up 18000 barrels per day versus the fourth quarter of 2023.

Brad Corson: Thank you and good morning, everyone welcome to our fourth 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, Sherri <unk> Senior Vice President of sustainability commercial development and product solutions.

Brad Corson: The impressive quarterly results were driven by better than expected production from the new Grand Rapids project, which has brought on lower cost barrels.

Peter Shaw: And Cheryl go Matt Smith, Senior Vice President of the upstream.

Brad Corson: And starting the transformation at Cold Lake and further reducing our unit cash cost towards our stated $13.

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

Brad Corson: Yes.

Brad Corson: Dollar target.

Brad Corson: The strong production resulted in unit cash costs of $14 21 U S per barrel in the quarter, which is a decrease of over $1 50.

Peter Shaw: Today's comments may 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.

Brad Corson: <unk> per barrel compared to the same quarter last year.

Peter Shaw: Forward looking information and the risk factors and assumptions are described further in detail on our fourth quarter earnings release that we issued earlier today.

Brad Corson: On a full year basis, our unit cash cost of $14 75 U S per barrel is more than $2.

Speaker Change: All of these documents are available on SEDAR, Edgar and our website. So I'd ask you to refer to those as well Brad is going to start with some opening remarks, and then hand it over to Dan Who's going to provide a financial update and then Brad will provide an operations update once that is done we will follow with a Q&A session. So with that I will turn it over to Brad for his opening.

Brad Corson: <unk> per barrel lower than last year.

Brad Corson: A major highlight this year has been our new solvent assisted Sag D production from Grand Rapids.

Brad Corson: And it continued to impress in the fourth quarter.

Brad Corson: Last quarter I highlighted Grand Rapids, achieving an average of 15000 barrels per day and not an instantaneous basis.

Peter Shaw: <unk>.

Brad Corson: Thank you Peter and good morning, everybody.

Speaker Change: Welcome to our fourth quarter and full year earnings call I hope, everyone is doing well and your new year's off to a good start.

Brad Corson: <unk> peak rates of 22000 barrels per day.

Brad Corson: While I am pleased to be able to confirm that these volumes were maintained resulting in an increase of 7000 barrels per day up to 22000 barrels per day for the fourth quarter.

Brad Corson: Apologies for my Scratchy voice as I recover from a cold.

Brad Corson: But I'm really pleased to report another strong quarter for imperial as we wrapped up 'twenty 'twenty four.

Brad Corson: While early our data shows clear upside of the original project funding basis of 15000 barrels per day.

Brad Corson: And I continue to look forward to the first full year of Grand Rapids production at our operations in 2025, and the advancement of future solvent assisted in fact, the growth projects at Cold Lake.

Brad Corson: And despite the lower prices our ability to continue to grow production and deliver strong downstream reliability resulted in a very solid into 'twenty 'twenty four.

Brad Corson: The next step in our transformation of the Cold Lake asset is the lending redevelopment project.

Brad Corson: Our upstream continues to set records and we achieved our highest fourth quarter production in the past 30 years, when adjusting for the X T O divestment.

Brad Corson: Construction continued on the facilities through the quarter, which will leverage existing infrastructure and steam capacity.

Brad Corson: We also realized the benefits of T M X pipeline and additional egress, which resulted in much narrower and more stable differentials compared to a year ago.

Brad Corson: Startup is expected to begin in late 2025, and average about 9000 barrels per day at peak production.

Brad Corson: Our downstream business also performed very well over the quarter and contributed solid earnings with lower turnaround activity and higher utilization.

Brad Corson: And now a few comments on Syncrude.

Brad Corson: Imperial share of Syncrude production for the quarter averaged 81000 barrels per day.

Brad Corson: We continue to benefit from the structural advantages of the Canadian market that supports stronger financial performance, despite softer refinery crack spreads.

Which was flat versus the third quarter and down 4000 barrels per day versus the fourth quarter of 2023.

Brad Corson: During the quarter Syncrude continued to utilize the interconnect pipeline to import bitumen and gas oil driving record annual upgrader utilization rates and producing about 90000 barrels per day, our share of incremental syncrude sweet premium in the quarter.

Brad Corson: Over the next few minutes, Dan and I will detail the results of a very strong quarter.

Dan: So now let's review the fourth quarter.

Brad Corson: Results.

Brad Corson: Earnings for the quarter were $1 billion $225 million with cash from operating activities of $1.650 billion when excluding the impact of working capital.

Brad Corson: As we move into 2025, we look forward to continued focus on reliability and cost at Syncrude.

For the full year earnings were $4.790 billion down slightly from the prior year.

Brad Corson: Now moving on to the downstream, which also had strong operations in the fourth quarter. Overall, we refined an average of 411000 barrels per day, reflecting a utilization of 95% our highest quarter of this year.

Brad Corson: Also worth noting that we delivered our second highest earnings per share of $9 three.

Brad Corson: These results reflect continued strong operational performance and our ability to capture value for our shareholders.

Brad Corson: And compared to the third quarter, when we had turnarounds at Nanticoke and stress Kona, we processed an additional 22000 barrels per day.

Brad Corson: In the upstream we achieved total production of 460000 gross oil equivalent barrels per day in the fourth quarter.

Brad Corson: Our strong fourth quarter and the successful execution of turnarounds throughout the year enabled us to achieve the top end of our 2020 for full year guidance with throughput of 399000 barrels per day at a utilization rate of 92%.

Brad Corson: This marks the highest fourth quarter production over the past 30 years when adjusting for the historical volumes associated with the divested X T O assets and resulted in the highest fourth quarter upstream earnings in the company's history.

Brad Corson: Looking ahead to 2025, we have a lighter turnaround year compared to 2024 and are on track to have the construction. The stress total renewable diesel project facilities completed in the second quarter with expected first production in the middle of 2025.

Brad Corson: Our strong fourth quarter results also contributed to the highest annual upstream production in over 30 years at 433000 barrels per day, even when including the divested X T O assets.

Brad Corson: Petroleum product sales in the quarter were 458000 barrels per day, which is down 29000 barrels per day versus the third quarter down 18000 barrels per day versus the fourth quarter of 2023.

Brad Corson: Our strong operating performance led to a unit cash cost reduction of nearly $3 of U S. A barrel when comparing to full year 2023.

Brad Corson: Looking ahead, we expect to continue to lower our unit cash costs based on advancing further growth and structural cost reduction initiatives.

Brad Corson: Our results year over year reflects the variability in discretionary sales choices and we're not driven by market demand.

Brad Corson: Overall, we continue to see resilient demand in Canada with gasoline and diesel at approximately 90% at jet recovery over a 100% when compared to 2019.

Brad Corson: Curl continued the year with yet another strong quarter, which resulted in us achieving the assets highest ever annual production exceeding 280000 barrels per day this year on a gross basis.

Brad Corson: Turning now to chemicals earnings in the fourth quarter.

Brad Corson: I'm very proud of the team for achieving this production milestone.

Brad Corson: We're $21 million, which was down $7 million versus the third quarter, mainly driven by lower prices, partly offset by the absence of the aromatics, earning shifts in the third quarter, which we previously discussed.

Brad Corson: And I know they are squarely focused on carrying this momentum into 2025 and achieving even higher volumes.

Brad Corson: I'm also extremely pleased by the performance at Cold Lake.

Brad Corson: Earnings in the quarter were up $4 billion versus the fourth quarter in 2023 due to the absence of the prior year turnaround activity and partially offset by lower prices and the aerobatics, earning shifts.

Brad Corson: We delivered very strong performance in the fourth quarter with the planned turnaround activity behind us and all of the new Grand Rapids wells producing.

Brad Corson: Our transformation of production and unit cash cost at Cold Lake is off to a great start as we leverage solvent recovery technology with impressive results.

Brad Corson: So in closing this was another excellent quarter to finish off a very strong year.

Brad Corson: And in the downstream all our assets performed very well and we're the only planned turnaround activity in the quarter being the completion of the maintenance work at Nanticoke that we discussed on our last call.

Brad Corson: We achieved record volumes in our upstream.

Brad Corson: Significantly reduced our upstream unit costs and delivered high downstream utilization.

Brad Corson: And as we begin 2025, I am confident in the team at Imperial and our ability to deliver another very strong year as we continued to create significant value for shareholders by progressing on our journey to achieve the new volume and unit cash cost targets, we outlined.

Brad Corson: Refinery throughput averaged 411000 barrels per day, which equates to a refinery utilization in the quarter up 95% and a full year utilization of 92%, which is at the top end of our 2020 for guidance.

Brad Corson: The fourth quarter also saw us continue to maximize shareholder returns.

Brad Corson: In our recent guidance.

Brad Corson: And similarly, as we look ahead in 2025, our commitment to shareholder returns is unchanged. We have demonstrated that ongoing commitment with the accelerated completion of our CIB in December and the announcement today of our largest nominal dividend increase ever.

Brad Corson: We completed the accelerated and CIB in mid December with purchases of $1.475 billion in the quarter.

Brad Corson: In addition, we paid $317 million in dividends in the quarter for a total of.

Brad Corson: I'm very pleased by the operating momentum that we have carried into this new year and I am excited by the opportunities. We have ahead of us to increase volumes lower costs and deliver greater free cash flow for our shareholders.

Brad Corson: $1.2 billion in dividends for the entire year.

Brad Corson: And in total we returned $3 $9 billion of cash to shareholders in 'twenty 'twenty four and.

Brad Corson: And before I wrap up I would like to recognize Sherry <unk> for her many contributions and accomplishments as part of our management committee over the last four years.

Brad Corson: $16 billion over the past three years.

Brad Corson: And finally this morning, we declared a dividend of 72 cents per share payable on April one 2025.

Brad Corson: Her leadership of a diverse portfolio resulted in significant progress across many key areas of the business, including her instrumental role in pathways since day one.

Brad Corson: The <unk> 12 per share or 20% increase is the largest nominal dividend increase in company history.

Brad Corson: This is further demonstration of our commitment to growing the dividend and returning surplus cash to shareholders.

Brad Corson: We wish her all the best in her new role with Exxonmobil.

Brad Corson: As always I'd like to thank you once again for your continued interest and support.

Brad Corson: It also reflects our confidence in delivering on the guidance we communicated in December.

Peter Shaw: And now we'll move to the Q&A session and I will pass it back to Peter Thank you.

Brad Corson: As we move into 2025, we remain focused on our core strategy of optimizing our existing asset base to maximize shareholder value. Our strategy that has allowed us to increase our quarterly dividend per share.

Peter Shaw: Thank you Brad as always we would appreciate it if you can limit yourself to one question plus a follow up so that we can get to as many questions as possible. So with that operator could you. Please open up the lines for your questions.

Peter Shaw: Thank you.

Peter Shaw: You would like to signal with questions. Please press star one on your Touchtone telephone. If you are joining us today use a speaker phone. Please make sure. Your mute function is turned off to allow you.

Brad Corson: By over 225% since 2020.

Brad Corson: So with that I'll pass things over to Dan to discuss our financial results in more detail.

Peter Shaw: Your signal to reach our equipment again that will be star one if you would like to signal with questions Star one.

Dan: Thanks, Brad starting with financial results for the fourth quarter, we reported net income of $1 billion $225 million. This represents a decrease of $140 million from the fourth quarter of 2023, primarily as the result of lower margins in our downstream business, partially offset by higher.

Speaker Change: And our first question will come from the line of Manav Gupta with UBS.

Manav Gupta: Wanted to start by congratulating them management on another 20% dividend hike.

Manav Gupta: Brian If my memory is right. When you took over the quarterly dividend was close to 22, Thanks and now here is at 270 <unk>.

Dan: Upstream production when comparing sequentially fourth quarter net income is down slightly from the third quarter of 2024, primarily driven by lower prices, partially offset by stronger operational performance.

Manav Gupta: During their tenure so it does take a very strong track record of execution to achieve that so just wanted to congratulate you on that.

Dan: Now shifting our attention to each business line and looking sequentially upstream earnings of $878 million or down $149 million from third quarter, primarily due to lower realizations, partially offset by higher volumes downstream earnings of 356 million.

Speaker Change: My first question is on refining.

Speaker Change: Your earnings are up materially quarter over quarter. When you look across the U S refiners to earnings are down 50% to 70% quarter over quarter.

Speaker Change: Help us understand what's driving the resilience of refining here I understand you operated at the higher rate, but still this is in Stark contrast to what we are seeing for U S. Refiners. So if you can help us understand the resilience of refining here.

Dan: <unk> are up $151 million from third quarter, mainly reflecting lower turnaround impacts and favorable foreign exchange and inventory effects, our chemical business generated earnings of $21 million down $7 million from the third quarter.

Speaker Change: Yes, Thank you Manav and first I really appreciate your recognition of the dividend increase silver over the last few years that is some something our organization is quite proud of as we have continued to grow.

Dan: Moving on to cash flow in the fourth quarter, we generated $1 $780 million in cash flows from operating activities.

Dan: Excluding favorable working capital effects of $139 million cash flows from operating activities for the fourth quarter were $1.650 billion down $147 million from the third quarter.

Speaker Change: Our cash flow generation abilities.

And obviously return that to our shareholders. So we're all quite proud of that and thanks for that recognition.

In terms of the refining strength.

Dan: Of 2024, we ended the year with nearly $1 billion of cash on hand.

Speaker Change: I'd say, there's a couple of drivers there.

Speaker Change: First of all as I've commented on the past.

Shifting to Capex capital expenditures totaled $443 million in the fourth quarter down $46 million from the fourth quarter of 2023.

Speaker Change: The Canadian refining sector, and especially our imperial refineries are well advantaged.

Speaker Change: Versus U S counterparts.

Dan: In the upstream fourth quarter spending focused on sustaining and growing production at curl, Syncrude and cold Lake and the downstream fourth quarter spending mainly continued.

Speaker Change: We have access.

Speaker Change: Two advantaged crudes.

Speaker Change: We continue to have <unk>.

Speaker Change: Strong demand in the marketplace we have.

Dan: K progressed I'll renewable diesel project at <unk> full year 2024 capital expenditures totaled $1.867 billion.

Speaker Change: Exceptional infrastructure that allows us to move our products.

To premium outlets.

Speaker Change: And then as you also mentioned.

Dan: Shifting to shareholder distributions consistent with our strategy to timely distribute.

Speaker Change: We had really superb utilization over the quarter, which allows us to take full advantage of the market fundamentals that we see so when we put all that together are very resilient.

Dan: Free cash flow, we returned $3 $9 billion to shareholders over the course of 2024 moving into 2025, we continue to demonstrate our long standing philosophy to deliver a reliable and growing dividend as Brad already noted we declared a fourth quarter I'm, sorry, we declared a first quarter dividend of 72.

Speaker Change: Brazilians.

Speaker Change: And profitable downstream for us and we're quite happy with that.

Speaker Change: Perfect.

Speaker Change: Again is on Grad Grand Rapids is clearly, helping you drive production records at Cold Lake can you talk more about why that is not a soft <unk> actually exceeded expectations any future phases, and hondas lending, which again allow us to continue to grow the volumes accordingly. Thank you.

Dan: Per share early this morning, which will be payable on April 1st this represents an increase of 20% compared to the fourth quarter dividend of 2020 for now I'll turn it back to Brad to discuss our operational performance.

Brad Corson: Thanks, Dan I know, you've all had a chance to look through the numbers, but I do want to focus your attention on some of our key performance highlights ups.

Speaker Change: Yes. Thanks for that question, we are extremely pleased with what we're seeing at Grand Rapids.

Brad Corson: Upstream production for the quarter averaged 460000 oil equivalent barrels per day.

Speaker Change: Certainly higher volumes then.

Speaker Change: Kind of the funding basis that we previously shared with the market.

Brad Corson: As I mentioned earlier this represents the highest fourth quarter production in over 30 years, when adjusting for the <unk> divestment.

Speaker Change: With an objective of 15000 barrels a day as indicated we're seeing more in the range of 22000 barrels a day.

Brad Corson: Production was up 13000 barrels per day versus the third quarter and up 8000 barrels per day versus the fourth quarter of 2023, mainly due to higher volumes at cold Lake.

Speaker Change: It's early days.

Speaker Change: We started up Grand Rapids in terms of producing volumes back in May. So we have seven months or so of production runtime I would say our reservoir engineers are are very busy.

Speaker Change: Analyzing those results and an understanding what the implications are.

Speaker Change: For future.

Speaker Change: Phase developments at Grand Rapids, and as mentioned in the past we have several phases in the future and so that's very exciting.

Brad Corson: So now let's move on and talk specifically about curls record year.

Brad Corson: <unk> production in the fourth quarter averaged 299000 barrels per day gross which.

Speaker Change:

Speaker Change: And so.

Speaker Change: As time goes on we'll be able to better describe.

Brad Corson: It was up 4000 barrels per day versus the third quarter and 9000 barrels per day lower versus the fourth quarter record previously set in 2023.

Not just the long term productivity of Grand Rapids phase, one, but what it means for for broader developments.

Brad Corson: As targeted curl achieved over 280000 barrels per day in 2024 and set the full year production record of 281000 barrels per day.

Speaker Change: At.

Speaker Change: At Cold Lake.

Speaker Change: Way too early to tell about lending.

Speaker Change: We're in the process of constructing it but again.

Speaker Change: It's super exciting and reaffirming.

Brad Corson: It's also worth noting in the last five years, we have grown curl production by 75000 barrels per day, which is over 35%.

Speaker Change: When we could start up of production.

Speaker Change: Project like Grand Rapids, which as Youll recall, we accelerated by about a year. So we accelerated it and now we're seeing more production at all of that adds a lot of value. So I think just an exciting signal.

Brad Corson: This marks a significant milestone in <unk> journey to deliver record production through efficient growth initiatives and achieve unit cash costs below our previously stated target of 20 U S dollars per barrel.

Speaker Change: What's ahead for the future.

Speaker Change: Thank you.

Brad Corson: We've made major strides in lowering unit cash cost at <unk> over the past few years.

Dennis Fong: And the next question will come from Dennis Fong with CIBC.

Brad Corson: Full year unit cash costs of $19.67.

Dennis Fong: Hi, Good morning, and thanks for my question for taking my questions.

Brad Corson: U S per barrel reflects the hard work of the entire curl team.

Dennis Fong: I guess the first one here is.

Dennis Fong: I guess congratulations on another strong quarter at Pearl.

Brad Corson: Not only to meet our previously set target of $20 U S per barrel, but to beat it.

Dennis Fong: Hoping you can kind of dive in a little bit more in Q.

Dennis Fong: Initiatives that you're currently undergoing that are helping kind of maintain again these high levels of performance, namely kind of focusing on maybe a little bit around the autonomous fleet as well as on the technology.

Brad Corson: Investor Day, some of these opportunities and how they will help to support our new target.

Dennis Fong: Technological advancements that you're applying to production.

Brad Corson: $18 U S per barrel.

Yes, it's a great question Dennis.

Brad Corson: And as we begin 2025 <unk>.

Dennis Fong: As you know I am Super proud of what the team's been able to achieve that apparel is.

Brad Corson: <unk> is off to a very strong start and is on track to set another record with January production over 280000 barrels per day.

Dennis Fong: Just been kind of a.

Dennis Fong: Steady.

Dennis Fong:

Dennis Fong: A steady result of record after record after record.

Brad Corson: Turning to another highlight of 2024.

Dennis Fong: As you know from the guidance, we set out in December we are anticipating further production records further.

Brad Corson: <unk> for.

Dennis Fong: Reduction in unit cash.

Dennis Fong: The net result of that is continued.

Dennis Fong: Both.

Dennis Fong: Cash generation.

Brad Corson: The impressive quarterly results were driven by better than expected production from the new Grand Rapids project, which has brought on lower cost barrels.

Dennis Fong: Cheryl is sitting right next to me here and.

Dennis Fong: She's she's got she's got her hand on the wheel for Carl I'm going to let her make a couple comments about <unk>.

Brad Corson: And starting the transformation at Cold Lake and further reducing our unit cash cost towards our stated $13.

Brad Corson: Specific to some of those growth initiatives great. Thank you Brad.

Speaker Change: Brad mentioned, we're continuing to transform our mining business and I think it's important to start with the exceptional progress that we made in 2024 and have a rapidly improving competitiveness.

Brad Corson: Yes.

Brad Corson: Dollar target.

Brad Corson: The strong production resulted in unit cash costs of $14 21 U S per barrel in the quarter, which is a decrease of over $1 50.

Speaker Change: Based on a highlight a few things we're going to continue on our journey with reliability and maintenance improvement.

Speaker Change: The second part is around mine fleet productivity gains and that gets to your question specifically about our EHS.

Brad Corson: <unk> per barrel compared to the same quarter last year.

Brad Corson: On a full year basis, our unit cash cost of $14.75 per barrel is more than $2 U S per barrel lower than last year.

Speaker Change: AAJ trucks.

Speaker Change: I am pleased to report that we've seen anywhere from 8% to 10% increase in productivity, resulting from the automated trucks. We're.

Speaker Change: We're going to continue with Debottlenecking and optimization, including digital initiatives and we've got a full slate of digital that we're leveraging across the board, but both within the plant as well as the mine.

Brad Corson: A major highlight this year has been our new solvent assisted Sag D production from Grand Rapids.

Brad Corson: And it continued to impress in the fourth quarter.

Speaker Change: And finally <unk>.

Speaker Change: Anchor it and we're really building a continuous improvement culture.

Brad Corson: Last quarter I highlighted Grand Rapids, achieving an average of 15000 barrels per day and added instantaneous basis.

Speaker Change: Looking for those next opportunities across all of that slate. So plenty of opportunity as we look forward I think the most important building on that foundation in 2024.

Brad Corson: <unk> peak rates of 22000 barrels per day.

Brad Corson: While I am pleased to be able to confirm that these volumes were maintained resulting in an increase of 7000 barrels per day up to 22000 barrels per day for the fourth quarter.

Speaker Change: And thanks for that Cheryl Lynn and Cheryl mentioned this continuous improvement.

Speaker Change: Mindset and I have to brag, a little bit on on one example of that is around our turnaround duration and youll recall, how just a few years ago. We were doing two turnarounds a year each one about 35 days in duration. So about 70 days total.

Brad Corson: While early our data shows clear upside of the original project funding basis of 15000 barrels per day.

And I continue to look forward to the first full year of Grand Rapids production at our operations in 2025, and the advancement of future solid assistance bag the growth projects at Cold Lake.

Speaker Change: And we took a decision to reduce.

Speaker Change: From two turnarounds a year to one turnaround a year extend that interval between turnarounds from 12 months or 24 months. So that took us from 70 days to about 35 days.

Brad Corson: The next step in our transformation of the Cold Lake asset is the lending redevelopment project.

Brad Corson: Construction continued other facilities through the quarter, which will leverage existing infrastructure and steam capacity.

Speaker Change: Then the team continues to look for ways to improve on the efficiency of those turnarounds.

Brad Corson: Startup is expected to begin in late 2025, and average about 9000 barrels per day at peak production.

Speaker Change: And this last year they completed.

Speaker Change: The seasonal turnarounds in less than 20 days. So we've gone from 70 days a year 20 days a year and were taken some steps in this year's turnaround.

Brad Corson: And now a few comments on Syncrude.

Brad Corson: Imperial share of Syncrude production for the quarter averaged 81000 barrels per day.

Speaker Change: To equip ourselves to potentially extend the interval, even further and reduce that annual turnaround impact or something even less than what we've seen historically. So just another great example of how the team.

Brad Corson: Which was flat versus the third quarter and down 4000 barrels per day versus the fourth quarter of 2023.

Brad Corson: During the quarter Syncrude continued to utilize the interconnect pipeline to import <unk> and gas oil driving record annual upgrader utilization rates and producing about 90000 barrels per day, our share of incremental same crude sweet premium in the quarter.

Speaker Change: Continues to capture benefits, but doesn't stop there it looks for what's next and I think Thats a good example.

Speaker Change: Yeah.

Speaker Change: I appreciate that that underlying Con X 10, just kind of the holistic approach that you're taking to two development.

Brad Corson: As we move into 2025, we look forward to continued focus on reliability and cost at Syncrude.

Speaker Change: My second question and if you'll let me.

Speaker Change: Taking a slightly different direction.

Brad Corson: Now moving on to the downstream, which also had strong operations in the fourth quarter. Overall, we refined that average of 411000 barrels per day, reflecting a utilization of 95% our highest quarter of this year.

Speaker Change: You've obviously done a great job executing on projects that grow and develop.

Speaker Change: Listing assets within your portfolio.

Speaker Change: Can you remind me a little bit on the priorities. The company has our focus is on when you're allocating capital whether it's the growth M&A A&D or shareholder return and specifically to you Brad obviously you have in the prior.

Brad Corson: When compared to the third quarter, when we had turnarounds at nanticoke and stress colder we processed an additional 22000 barrels per day.

Speaker Change: Positioned to this one historical experience with evaluating assets, both within your portfolio and outside of the company and how you kind of rank in order and even look or evaluate.

Brad Corson: The strong fourth quarter and the successful execution of turnarounds throughout the year enabled us to achieve the top end of our 2020 for full year guidance with throughput of 399000 barrels per day at a utilization rate of 92%.

Speaker Change: How you examine your existing portfolio versus what or how you can make it better.

Speaker Change: Yeah. Thanks, Thanks for that question.

Brad Corson: Looking ahead to 2025, we have a lighter turnaround year compared to 2024 and are on track to have the construction the stress coda renewable diesel project facilities completed in the second quarter was expected first production in the middle of 2025.

Dan Lyons: I'll I'll offer a few comments and Dan may want to jump in as well, but I mean fundamentally on our capital allocation strategy is underpinned by this long standing.

Dan Lyons: Approach commitment principle that we are going to return surplus cash to our shareholders and so that starts with this reliable and growing dividend and as you saw it today.

Dan Lyons: We have action that with another very material dividend increase.

Brad Corson: Discretionary sales choices and were not driven by market demand.

Dan Lyons: <unk>.

Dan Lyons: We then look at.

Dan Lyons: Other opportunities to efficiently return surplus cash to shareholders.

Brad Corson: Overall, we continue to see resilient demand in Canada with gasoline and diesel at approximately 90% at jet recovery over a 100% when compared to 2019.

Dan Lyons: And so our and CIB has been our go to for many many years and then where we've had additional capacity beyond that.

Brad Corson: Turning now to chemicals earnings in the fourth quarter.

Dan Lyons: We look to to exercise an SCB and we've done a few of those in our history and maintain the aperture for that in the future. So.

Brad Corson: We're $21 billion, which was down $7 million versus the third quarter, mainly driven by lower prices, partly offset by the absence of the aromatics, earning shifts in the third quarter, which we previously discussed.

Dan Lyons: That's kind of the basic.

Dan Lyons: Building blocks of all of our capital allocation I guess I should mentioned that as well we're at a level of debt that we're very comfortable with so we don't see.

Dan Lyons: <unk>.

Dan Lyons: Really a priority to pay down debt at this point, we're at a very low <unk>.

Brad Corson: So in closing this was another excellent quarter to finish off a very strong year.

Dan Lyons: The level of debt leverage so we're quite comfortable with that then the question on <unk>.

Dan Lyons: M&A opportunities really.

Brad Corson: We achieved record volumes in our upstream.

Dan Lyons: Hubs too.

Brad Corson: Significantly reduced our upstream unit costs and delivered high downstream utilization.

Dan Lyons: Looking at.

Dan Lyons: Potential.

Dan Lyons: Opportunities outside our portfolio versus what we already have within our portfolio.

Brad Corson: And as we begin 2025 card.

Brad Corson: Confidence in the team at Imperial and our ability to deliver another very strong year as we continued to create significant value for shareholders by progressing on our journey to achieve the new volume and unit cash cost targets, we outlined at our recent guidance.

Dan Lyons: And we're in I think a really unique position of having a deep inventory of really high quality investment opportunities and so we're allocating capital for those as they relate to the existing assets. You know you hear us talk about what we're doing at Kearl and Cold Lake what we're doing at stress.

Dan Lyons: But then looking to the future.

Dan Lyons: We're quite excited by the potential of the Aspen project.

Dan Lyons: So we are actively progressing our pilot project that will allow us to fully validate and commercialize.

Brad Corson: I'm very pleased by the operating momentum that we have carried into this new year and I am excited by the opportunities. We have ahead of us to increased volumes lower costs and deliver greater free cash flow for our shareholders.

Dan Lyons: The E B R T solvent technology, which we believe.

Speaker Change: <unk> will significantly unlocks.

Speaker Change: Value for Aspen relative to other solvent technologies so as.

Brad Corson: Now before I wrap up I would like to recognize Sherry <unk> for her many contributions and accomplishments as part of our management Committee over the last four years her leadership of a diverse portfolio resulted in significant progress across many key areas of the business <unk>.

Speaker Change: That's a very material investment for us material.

Speaker Change: Production growth opportunity so as we look at other M&A opportunities.

Speaker Change: We're comparing those to things like Aspen.

Speaker Change: And so strategically to pursue an acquisition.

Brad Corson: <unk> her instrumental role in pathways since day, one we wish her all the best in her new role with Exxonmobil.

Speaker Change: It needs to compete with what's already in our portfolio it needs to have unique synergies and be really consistent with our longer term strategies Ed that aperture is open.

Brad Corson: As always I'd like to thank you once again for your continued interest and support.

Brad Corson: And now we'll move to the Q&A session and I will pass it back to Peter Thank you. Thank.

Speaker Change: We have.

Speaker Change: An internal team of folks that are regularly evaluating opportunities.

Brad Corson: Thank you Brad as always be depreciated, if you can limit yourself to one question plus a follow up so that we can get to as many questions as possible. So with that operator could you. Please open up the lines for questions.

Speaker Change: But up till now we haven't seen anything that we believe.

Speaker Change: As more value accretive than the projects within our portfolio like Aspen, So we don't need.

Speaker Change: Thank you.

Speaker Change: I would like to signal with questions. Please press star one on your Touchtone telephone. If you are joining us today use a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again that will be star. One if you would like to signal with questions.

Speaker Change: To make an acquisition.

Speaker Change: But we're looking for something if it makes sense.

Speaker Change: So that's how I would characterize that and anything else on capital allocation no I think I think you've covered it well, Brad but just maybe.

Speaker Change: Star one.

Speaker Change: Summarizing a reliable growing dividend sort of the first place in the first stop for our free cash flow.

Speaker Change: And our first question will come from the line of Manav Gupta with UBS.

Speaker Change: And then we go to sustaining capital and then we look at high return growth projects, which would include as Brad said potential M&A, but it's a <unk>.

Manav Gupta: Wanted to start by congratulating the management on another 20% dividend hike.

Speaker Change: Brian If my memory is right when you took over.

Speaker Change: High bar, given our return expectations and our internal portfolio.

Speaker Change: Or can the dividend growth close to 22, thanks and now here is it to 72 cents during their tenure. So it does take a very strong track record of execution to achieve that so just wanted to congratulate you on that.

Speaker Change: And then since we're happy with our debt level after that.

Speaker Change: Turning to surplus cash to shareholders. So that's in a timely in a timely way so no.

Speaker Change: No change to that it's been our consistent foster for quite a while.

Speaker Change: My first question is on refining.

Speaker Change: Great really appreciate the context from both of you I'll turn it back thank you.

Speaker Change: Earnings are up materially quarter over quarter. When you look across the U S refiners to earnings are down 50% to 70% quarter over quarter.

Speaker Change: And the next question will come from Greg Pardy with RBC.

Yes. Thanks, good morning, Thanks for the rundown.

Speaker Change: Help us understand what's driving the resilience of refining here I understand you operated at a higher rate, but still this is in Stark contrast to what we are seeing for U S. Refiners. So if you can help us understand the resilience of refining here.

Brad and maybe just first off just all the very best to Sherry go into X O N.

Speaker Change: <unk>.

Speaker Change: Wanted to ask you really on two fronts, one is tactical a little bit more around cold Lake, but probably the bigger one is how are you how are you thinking about the.

Manav Gupta: Yeah. Thank you Manav and first I really appreciate your recognition of the.

Speaker Change: The tariff threat that you've got going on I'm sure you've had time to analyze that and then there is the relationship with Exxon.

Manav Gupta: The dividend increase silver over the last few years that is some something our organization is quite proud of as we have continued to grow.

Speaker Change: How well equipped are either withstand something like that and then secondly is is as it relates to shareholder returns.

Manav Gupta: Our cash flow generation abilities, and obviously return that to our shareholders. So we're all quite proud of that and thanks for that recognition.

Is it really just essentially driven by cash balances. So in other words, if we did see tariffs and cash balances still ticked up to levels, where you could repurchase stock how would you sort of think about those I know very hypothetical, but obviously just a huge issue obviously overhang candidate right now.

Manav Gupta: In terms of the refining strength.

Manav Gupta: I'd say, there's a couple of drivers there.

Manav Gupta: First of all.

Speaker Change: Alright, thanks for that Greg.

Manav Gupta: As I've commented on the past.

Speaker Change: Yes, obviously a lot of.

Manav Gupta: The Canadian refining sector, and especially our imperial refineries are well advantaged.

Speaker Change: Interest and discussion over over tariffs.

Speaker Change: You know really across all sectors, but especially energy.

Manav Gupta: <unk> U S counterparts.

Speaker Change: And.

Manav Gupta: We have access.

Speaker Change: As I've talked in the past U S and Canada are really strong energy partners and benefit from each other and the U S heavily dependent on Canada's heavy crude.

Manav Gupta: Two advantaged crudes.

Manav Gupta: We continue to have.

Strong demand in the marketplace we have.

Manav Gupta: Exceptional infrastructure that allows us to move our products.

Speaker Change: So we don't know whats going to happen with tariffs.

Manav Gupta: To premium outlets.

Speaker Change: And I don't have any unique insight, but I along with many others have spent a lot of time educating on both sides of the border around.

Speaker Change: And then as you also mentioned.

Speaker Change: We had really superb utilization over the quarter, which allows us to take full advantage of.

Speaker Change: The unique integral.

Speaker Change: Of the market fundamentals that we see so when we put all that together are very we're still resilient.

Speaker Change: Energy system that exists.

Speaker Change: How that is mutually beneficial.

Speaker Change: To both countries.

Speaker Change: And profitable downstream for us and we're quite happy with that.

Speaker Change: And so.

Speaker Change: I am hopeful that as we move forward.

Speaker Change: My second is on Grad Grand Rapids, its purely helping you drive production records at Cold Lake can you talk more about why that is not a soft phase one actually exceeded your expectations any future phases as lenders lending, which again allows us to continue to grow there.

Speaker Change: <unk> will prevail in.

Speaker Change: We will end up with no tariffs.

Speaker Change: No restrictions on energy flow I believe thats, a win win scenario and anything else any tariffs.

Speaker Change: Volumes at Cold Lake. Thank you.

Speaker Change: Will result in negative impacts.

Speaker Change: Yes. Thanks for that question, we are extremely pleased with what we're seeing at Grand Rapids.

Speaker Change:

Speaker Change: Broadly to the economy customers. So let's hope we avoid those.

Speaker Change: But I can't control that.

Speaker Change: Certainly higher volumes then.

Speaker Change: So what we're focused on is what can we control and what we control is ensuring that we have yet.

Speaker Change: Kind of the funding basis that we previously shared with the market with an objective of 15000 barrels a day as indicated.

Speaker Change: We're seeing more in the range of 22000 barrels a day.

Speaker Change: The lowest cost of supply we have.

Speaker Change: Options.

Speaker Change: <unk>.

Speaker Change: It's early days.

Speaker Change: For where we.

Speaker Change: We started up Grand Rapids in terms of producing volumes back in may so.

Speaker Change: <unk>, our crude and products in the market.

Speaker Change: We're trying to do that.

Speaker Change: We have seven months or so of production runtime I would say our reservoir engineers are our very busy.

Speaker Change: At the lowest possible cost and I believe that gives us unique resilience.

Speaker Change: Analyzing those results and an understanding what the implications are.

And you know, we obviously produce heavy crude we also are acquiring light crudes.

Speaker Change: For future.

Speaker Change: Phase developments at Grand Rapids, and as mentioned in the past we have several phases in the future and so that's very exciting.

Speaker Change: To meet our refinery.

Speaker Change: Bonds and some of those even as we see.

Speaker Change:

Speaker Change: And so.

Speaker Change: If heavy crudes are impacted negatively with value, we would expect to see some offset of that with the light crudes that we're running at a refinery. So the strength of integration I think makes us.

Speaker Change: As time goes on we'll be able to better describe.

Speaker Change: Not just the long term productivity of Grand Rapids phase, one, but what it means for for broader developments.

Speaker Change: At.

Much more resilient than others.

Speaker Change: At Cold Lake.

Speaker Change: <unk>.

Speaker Change: Way too early to tell about lending.

Speaker Change: So.

Speaker Change: February one appears to be a big day.

Speaker Change: We're in the process of constructing it but again you know.

Speaker Change: For tariffs and so we'll be watching that closely but I am confident.

Speaker Change: It's super exciting and reaffirming.

Speaker Change: That.

Speaker Change: When we could start up of production.

Speaker Change: We will continue.

Speaker Change: Projects like Grand Rapids, which as you'll recall, we accelerated by about a year. So we accelerated it and now we're seeing more production at all of that adds a lot of value. So I think just an exciting signal.

Speaker Change: To be.

Speaker Change: Profitable, we will continue to generate.

Speaker Change: Material cash flow it would be in a position to return that to our shareholders.

Speaker Change: And that clearly underpinned our decision to raise the dividend today.

Speaker Change: Of what's ahead for the future.

Speaker Change: Dan anything you want to talk about with respect to shareholder returns or anything like that yeah, Yeah Greg.

Speaker Change: Thank you.

Speaker Change: And the next question will come from Dennis Fong with CIBC.

Speaker Change: You had kind of asked it.

Speaker Change: Returns to shareholders in buybacks in particular will be driven primarily by cash balances or other factors like the tariffs and I would say, it's going to be primarily by cash balances.

Dennis Fong: Hi, Good morning, and thanks for my question for taking my questions.

Speaker Change: I guess the first one here is.

Speaker Change: I guess congratulations on another strong quarter at Pearl.

Speaker Change: Hoping you can kind of dive in a little bit more in Q.

Speaker Change: Especially given our low breakeven our ability to generate cash going forward through a range of environments. Our low debt level, we don't need to have a huge amount of cash to sort of.

Speaker Change: Initiatives that you're currently undergoing that are helping kind of maintain again these high levels of performance, namely kind of focusing on maybe a little bit around the autonomous fleet as well as on the technical of technological advancements that you're applying to production.

Speaker Change: Protect us going forward. However of course will take into account the environment whatever whatever is happening at the time as we make those decisions, but generally speaking our philosophy has been consistent it's timely return of <unk>.

Speaker Change: Yes, it's a great question Dennis.

Speaker Change: As you know I am Super proud of what the team's been able to achieve that apparel is.

Speaker Change: Surplus cash to shareholders.

Speaker Change: Okay. So, yes, very very logical.

Speaker Change: Just been kind of a.

Speaker Change:

Speaker Change: And Brian I wanted to come back to your you're thinking just around acquisitions versus organic.

Speaker Change: Steady.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Steady result of record after record after record.

As you know from the guidance, we set out in December we are anticipating further production records further.

Speaker Change: And I've mentioned before every company seems to have significant growth initiatives underway right. Now so when you kind of weigh acquisitions, where there may already be in egress solution in place.

Speaker Change: Reduction in unit cash.

Speaker Change: The net result of that is continued.

Speaker Change: Versus your organic growth initiatives, where they're potentially could see some limitations on pipe capacity and so forth is that kind of dialed into your thinking when you. When you go through that that LP model.

Speaker Change: Both.

Speaker Change: Cash generation.

Speaker Change: Cheryl is sitting right next to me here and.

Speaker Change: She's she's got she's got her hand on the wheel for Carl I'm going to let her make a couple of comments about <unk>.

Speaker Change: Yes, certainly we would look at all aspects of that.

Brad Corson: Specific to some of those growth initiatives great. Thank you Brad.

Speaker Change: When we look at what's the cost competitiveness of an opportunity what's the long term running room of an opportunity.

Speaker Change: What are any unique egress considerations are there unique.

Speaker Change: Based on a highlight a few things we're going to continue on our journey with reliability and maintenance improvement.

Speaker Change: Tax pool considerations, what's the.

Speaker Change: Part is around mine fleet productivity gains and that gets to your question specifically about our EHS.

Speaker Change: Carbon.

Speaker Change: Intensity.

Speaker Change: So we will take all of those things into account.

Speaker Change: <unk> trucks.

Speaker Change: And back to my earlier comment.

Speaker Change: I am pleased to report that we've seen anywhere from 8% to 10% increase in productivity, resulting from the automated trucks. We're.

Speaker Change: At least up until this point when we look at.

Speaker Change: The value, we see of an Aspen development it wins relative to anything else. We would we would see when we look at all those factors together.

Speaker Change: We're going to continue with debottlenecking and optimization, including digital initiatives.

Speaker Change: Full slate of digital that we're leveraging across the board, but both within the plant as well as the mine.

Speaker Change: And finally.

Speaker Change: Anchor it and we're really building a continuous improvement culture.

Speaker Change: Perfect. Thanks very much.

Speaker Change: Thanks, Greg.

Speaker Change: Looking for those next opportunities across all of that slate, so plenty of opportunity as we look forward, but I think most important is building on that foundation in 2024.

Speaker Change: And we have a question from Menno <unk> with TD Securities.

Speaker Change: Thanks, and good morning, everyone I'll start with a question on <unk>.

Speaker Change: <unk> can we just get an update on the status of toll negotiations last I heard and its been a while but I believe the guide was from some of your peers was that it could be a midyear event, but with all of the uncertainties, including tariffs is it fair to assume that nature is too optimistic at this stage.

And edge, thanks for that Sheryl and Cheryl mentioned this continuous improvement.

Speaker Change: Mindset and I have to brag, a little bit on one example of that is around our turnaround duration and youll recall, how just a few years ago. We were doing two turnarounds a year each one about 35 days in duration. So about 70 days total.

Speaker Change: Thank you.

Speaker Change: Yes, menno. Thanks, Thanks for that question.

Speaker Change: And we took a decision to reduce.

Speaker Change: I don't have a very specific update on that.

Speaker Change: From two turnarounds a year to one turnaround a year.

Speaker Change: Our teams are certainly directly engaged on it.

Speaker Change: And that interval between turnarounds from 12 months or 24 months. So that took us from 70 days to about 35 days since.

Speaker Change: But I don't I don't have a very specific outlook on what's a refresh timing.

Speaker Change: Then the team continues to look for ways to improve the efficiency of those turnarounds.

Speaker Change: I would say, obviously that you know.

Speaker Change: More broadly speaking we've been very pleased with the operation to start up the operation of <unk>.

Speaker Change: And this last year they completed.

Speaker Change: The seasonal turnarounds in less than 20 days. So we've gone from 70 days a year 20 days a year and were taken some steps in this year's turnaround to equip ourselves to potentially extend the interval, even further and reduce that annual turnaround impact of <unk>.

Speaker Change: And we are shipping on it on a regular basis.

And that's really all are in a position to comment on at this point.

Speaker Change: Got it thanks, Thanks, Brad for that and then maybe the second question would be on <unk>.

Speaker Change: In the press release, you you reiterated that you are still tracking to a mid year startup, but can we maybe just get a bit more detail in terms of what still needs to happen to get that project across the line and then when you think about sort of cash flow positivity is that is it possible that we see that in the second half of 2025 or is that more like.

Speaker Change: <unk> EBIT less than what we've seen historically so just another great example of how the team continues to capture benefits, but doesn't stop there it looks for what's next.

Speaker Change: I think thats a good example.

Speaker Change: Yeah.

I appreciate that that underlying context, and just kind of the holistic approach that you're taking to two development.

Speaker Change: <unk>.

Speaker Change: 2026 events.

Speaker Change: Yes. Thanks for the question I mean, we're certainly excited by this project.

Speaker Change: My second question and if you'll let me.

Speaker Change: We view it as quite strategic for us to expand our.

Speaker Change: Taking a slightly different direction.

Speaker Change: Obviously done a great job executing on projects that grow and develop existing assets within your portfolio.

Speaker Change: Our slate of product offerings to the market.

Speaker Change: Can you remind me a little bit on the priorities of the company has our focus is on when you're allocating capital, whether it's fee growth M&A A&D or shareholder return and specifically to you Brad obviously you have a.

Speaker Change: <unk>.

Speaker Change: Important.

Speaker Change: The opportunity for us to help.

Speaker Change: Decarbonize.

Speaker Change: The industry. So we view it as very positive and as Youll recall, there's there's multiple components to the project at the core of the project.

Speaker Change: Prior.

Speaker Change: Position to this one historical experience with evaluating assets both within your portfolio and outside of the company. How are you kind of rank in order and even look or evaluate.

Speaker Change: Is the manufacturing facility that we're building at strapped holder refinery.

Speaker Change: And that construction is well advanced.

Speaker Change: How you examine your existing portfolio versus what or how you can make it better.

Speaker Change: Modules have been delivered we're in the process of hooking them up.

Speaker Change: Yeah. Thanks, Thanks for that question.

Speaker Change: I'll I'll offer a few comments and Dan may want to <unk>.

Speaker Change: And we expect to complete that construction.

Speaker Change: In the second quarter, which would that position us to start production somewhere around mid year.

Speaker Change: Dump in as well, but I mean fundamentally on our capital allocation strategy. It is underpinned by this long standing.

Speaker Change: Now also.

Speaker Change: Two other really key.

Speaker Change: Approach commitment principle that we are going to return surplus cash to our shareholders and so that starts with this reliable and growing dividend and as you saw it today.

Speaker Change: Integral components is first of all the.

Speaker Change: The vegetable.

Speaker Change: Our agricultural oil supply stream and so we are have been in the process of negotiating.

Speaker Change: We have action that with another very material dividend increase.

Speaker Change: Supply arrangements and.

Speaker Change: <unk>.

Speaker Change: We have sufficient supply established for us to be able to start to shoot it up.

Speaker Change: We then look at.

Speaker Change: Other.

Speaker Change: <unk> to efficiently return surplus cash to shareholders.

Speaker Change: And then we're looking at longer term.

Speaker Change: So our and CIB has been our go to for many many years and then where we've had additional capacity beyond that.

Speaker Change: Relationships as well.

Speaker Change: So that work continues but but ready to start up and then and then the third really important component is the supply of hydrogen and so that work is underway by air products.

Speaker Change: We've look to to exercise an S b.

Speaker Change: And we've done a few of those in our history and maintain the aperture for that in the future. So.

Speaker Change: And also.

Speaker Change: That's kind of the basic built.

Speaker Change: Working to be in a position to.

Speaker Change: Building blocks of all of our capital allocation I guess I should mentioned that as well we're at a level of debt that we're very comfortable with so we don't see.

Speaker Change: Supply us with.

Speaker Change: Initial additional supplies beginning in the second quarter mid year timing.

Speaker Change: When we start up I would expect we'll be at.

Speaker Change: <unk>.

Speaker Change: Really a priority to pay down debt at this point, we're at a very low.

Speaker Change: Add some reduced rates as part of.

Speaker Change: Level of debt leverage so we're quite comfortable with that and then the question on <unk>.

Speaker Change: A typical startup and then over time as we look at.

Speaker Change: How to optimize each of those components with market conditions that.

Speaker Change: M&A opportunities really.

Speaker Change: <unk> two <unk>.

Speaker Change: Looking at.

Speaker Change: Potential.

Speaker Change: And that will determine how quickly we ramp up what's the ultimate.

Speaker Change: Opportunities outside our portfolio versus what we already have within our portfolio.

Speaker Change: Product volumes.

Speaker Change: Just like any other product.

Speaker Change: And we're in I think a really unique position of having a deep inventory of really high quality investment opportunities and so we're allocating capital for those as they relate to the existing assets. You know you hear us talk about what we're doing at Kearl and Cold Lake what would do with it stress.

Speaker Change: Our refinery that we're constantly optimizing overtime.

Speaker Change: Based on the cost of.

Speaker Change: Cost and availability of feedstocks, coupled with market conditions and demand for the product.

Speaker Change: But we feel really good about being able to start up mid year in terms of.

Speaker Change: But then looking to the future.

Speaker Change: Positive cash flow Yeah, we view this.

Speaker Change: We're quite excited by the potential of the Aspen project.

Speaker Change: As a as a very profitable undertaking for us and we would expect to see positive cash flow in the second half of this year.

Speaker Change: So we are actively progressing our pilot project that will allow us to fully validate and commercialize.

Neil Mehta: And moving on to Neil Mehta with Goldman Sachs.

Speaker Change: The E B R T solvent technology, which we believe.

Neil Mehta: Yes, thanks, so much Brad and team I just wanted to spend some time on upstream cash costs, where I know you guys are targeting $18 at curl and at $13 at Cold Lake.

Speaker Change: Will will significantly unlocks.

Speaker Change: Value for Aspen relative to other solvent technologies so as.

Speaker Change: That's a very material investment for us material.

Neil Mehta: Are you in that journey, what's the next step and what does this quarter tell you about your ability to ultimately get there.

Speaker Change: Production growth opportunity so as we look at other M&A opportunities.

Speaker Change: We're comparing those to things like Aspen.

Neil Mehta: Yes. Thanks for the question I mean, we're well on the journey you know were obviously below $20 at at Curl now and.

Speaker Change: So strategically to pursue it.

Speaker Change: Zishan.

Speaker Change: It needs to compete with what's already in our portfolio it needs to have unique synergies and be really consistent with our longer term strategies Ed that aperture is open.

Neil Mehta: And we're in the.

Neil Mehta: $14 range at Cold Lake and so well on our way.

Speaker Change: Maybe I'll ask Cheryl.

Speaker Change: To make a couple of comments about some of the near term initiatives that we have underway, but but.

Speaker Change: We have.

Speaker Change: Internal team of folks that are regularly evaluating opportunities.

Speaker Change: As we laid out that guidance back in December we feel quite confident in being able to achieve that.

Speaker Change: But up till now we haven't seen that I'd say that we believe is more value accretive than the projects within our portfolio like Aspen, So we don't need.

Brad Corson: Sure. Thanks, Brad So let me add a little bit more about about Karl starting with <unk>.

Brad Corson: When you think about what's going to enable us to get to that $18. A unit cash goal, it's really about leveraging the scale that we have as well as continued focus on reliability and optimization to add we have that incremental production, we're going to be leveraging.

Speaker Change: To make an acquisition.

Speaker Change: But we're looking for something if it makes sense.

Speaker Change: So that's how I would characterize that there is anything else on capital allocation no I think I think you've covered it well Brad yes.

Brad Corson: It's likely our fixed cost structure occur.

Speaker Change: Just maybe.

Speaker Change: Summarize the reliable and growing dividend sorry, the first place the first stop for our free cash flow.

Brad Corson: A very powerful lever in terms of that lowering our unit costs.

Brad Corson: So you heard me mentioned before at that continued focus on reliability maintenance optimization for deployment of digital solutions.

Brad Corson: And then we go to sustaining capital and then we look at high return growth projects, which would include as Brad said potential M&A, but it's a.

Brad Corson: And so that that in itself will that improve productivity as well as lower.

Brad Corson: High bar, given our return expectations and our internal portfolio.

Brad Corson: <unk> com.

Brad Corson: If I think about the cold Lake side that too is going to be leveraging our scale and as we grow our production mix to the higher volume that's going to leverage that fixed cost base, but we're also introducing lower cost barrels into the mix.

Brad Corson: And then since we're happy with our debt level after that.

Brad Corson: Returning to surplus cash to shareholders. So that's in a timely in a timely way so we're.

Brad Corson: No change to that it's been our consistent foster for quite a while.

Speaker Change: And Brad mentioned about the progress the early.

In fact that we're getting from Grand Rapids.

Speaker Change: Great really appreciate the context from both of you I'll turn it back thank you.

Speaker Change: Sandy as it continue this year with learning which are lower cost.

Speaker Change: And the next question will come from Greg Pardy with RBC.

Speaker Change: It's growing and transforming our volume at Cold Lake both AAN.

Greg Pardy: Yes. Thanks, good morning, Thanks for the rundown.

Speaker Change: Numerator and denominator opportunity at both Cold Lake as always Karl.

Speaker Change: Brad and maybe just first off just all the very best to Sherry go into X O N.

Karl: Well, that's the follow up it just the curly talked about 280 to $2 90. This year with the goal of getting to 300, plus I guess the question is how plus plus.

Speaker Change: Wanted to ask you really on two fronts, one is tactical a little bit more around cold Lake, but probably the bigger one is how are you how are you thinking about the.

Speaker Change: Just your perspective on.

In a capital efficient way, how big could curl b.

Speaker Change: The tariff threat that you've got going on I'm sure you've had time to analyze that and then there is the relationship with Exxon.

Speaker Change: In the context of the budget that you laid out.

Speaker Change: How well equipped are either withstand something like that and then secondly is is as it relates to shareholder returns.

Speaker Change: Yeah. Thanks al.

Speaker Change: Ill try to answer that.

Speaker Change: Yes.

Speaker Change: I think it's too early to tell how big plus could be but the reason.

Speaker Change: Is it really just essentially driven by cash balances. So in other words, if we did see tariffs and cash balances still ticked up to levels, where you could repurchase stock how would you sort of think about those I know very hypothetical, but obviously just a huge issue obviously overhang candidate right now.

Speaker Change: We shared that guidance is we do see the potential for.

Speaker Change: For future volumes above 300 and <unk>.

How much above 300.

Speaker Change: Ill be determined by our ability to continue to unlock.

Greg Pardy: Alright, thanks for that Greg.

Greg Pardy: Yes, obviously, a lot of interest and discussion over over tariffs.

Speaker Change: Cost efficient barrels as we go forward.

Speaker Change: We've been on this journey.

Speaker Change: You know really across all sectors, but especially energy.

Speaker Change: For five years, now if not longer but especially the last five years.

Greg Pardy: And.

Speaker Change: Where we were at around 200 205 back in.

Greg Pardy: As I've talked in the past U S and Canada are really strong energy partners and benefit from each other and the U S heavily dependent on Canada's heavy crude.

Speaker Change: 2019.

Speaker Change: And then we've continued to take.

Speaker Change: Ari thoughtful very capital efficient steps to enable us to grow that.

Greg Pardy: So we don't know whats going to happen with tariffs.

Speaker Change: As announced we set another we set a record last year, we set another record this year now with 281000 and we see.

Greg Pardy: And I don't have any unique insight, but I along with many others have spent a lot of time educating on both sides of the border around.

Speaker Change: An increasing number of days that are above 300000 for individual days and in some cases weeks and months in now.

Speaker Change: The unique integral.

Greg Pardy: Energy system that exists.

Speaker Change: What the team is focused on is how can they string together more of those days.

Greg Pardy: How that is mutually beneficial.

Greg Pardy: To both countries.

Greg Pardy: And so you know.

Speaker Change: And of course be able to offset any.

Greg Pardy: I'm hopeful that as we move forward.

Speaker Change: Any planned downtime like like a turnaround so we see the potential for something above 300, but until we knocked out a barriers to get us from two <unk> to two <unk>.

Greg Pardy: <unk> C will prevail in.

Greg Pardy: We will end up with no tariffs.

Greg Pardy: No restrictions.

Greg Pardy: Energy flow I believe thats, a win win scenario and anything else any tariffs.

Speaker Change: And heading towards 300, I don't know that we fully realize what that potential is but we're going to only pursue it.

Greg Pardy: Will result in negative impacts.

Speaker Change: It's capital efficient, but we've got a great base there.

Greg Pardy:

Greg Pardy: Broadly to the academy customers so.

Speaker Change: <unk>.

Greg Pardy: Let's hope we avoid those.

Speaker Change: With material fixed cost so generally.

Greg Pardy: But I can't control that.

Greg Pardy: So what we're focused on is what can we control and what we control is ensuring that we have yet.

Speaker Change: We could add additional barrels they're going to come at a lower variable cost to us.

Speaker Change: And that adds value to the cash flow for the asset.

Greg Pardy: The lowest cost of supply we have.

Speaker Change: So more work to come there but.

Speaker Change: I hope as you've seen us demonstrate over the last couple of years, where we're laser focused on it.

Greg Pardy: Options.

Greg Pardy: For where we.

Greg Pardy: Place, our crude and products in the market.

Brett: Thank you Brett.

Brett: And the next question will come from Doug Leggate with Wolfe Research.

Greg Pardy: We're trying to do that.

Greg Pardy: At the lowest possible cost and I believe that gives us unique resilience.

Brett: Okay.

Brett: Hey.

Speaker Change: Good morning, everybody. Thanks for taking my questions, Hey, Brian upcoming here.

Greg Pardy: And you know, we obviously produce heavy crude we also are acquiring light crudes.

Speaker Change: So I've got to breakeven questions. If I may the both might be Don's daily linked but I'd love your perspective on it.

Greg Pardy: To meet our refinery.

Speaker Change: First of all.

Speaker Change: Someone I think it was manav alright, Greg touched on the dividend earlier.

Rugs, and you know some of those even as we see.

Speaker Change: 20% another sizable bump obviously, but what I'm curious about is where do you see your breakeven today with.

Greg Pardy: If heavy crudes are impacted negatively with value, we would expect to see sub offset of that with the light crudes that we're running at a refinery. So the strength of integration I think makes us.

Speaker Change: With the capital.

Speaker Change: The growth of what is today of others.

Speaker Change: <unk> on where you see the growth going how does your breakeven evolve because not headroom for dividend growth remains on a potent advantage for you guys relative to your peers.

Greg Pardy: Much more resilient than others.

Greg Pardy: So you know February what appears to be a big day for.

Speaker Change: My follow up is on.

Speaker Change: It's also kind of a breakeven question related to the balance sheet.

Greg Pardy: For tariffs and so we'll be watching that closely but I am confident that.

Speaker Change: You guys got.

Speaker Change: Stellar one of the best if not the best balance sheet in the industry on Hawthorne for a long time.

Greg Pardy: We will continue.

Speaker Change: We think of the ESI.

Greg Pardy: To be.

Speaker Change: We tend to think about the question earlier about cash balances.

Greg Pardy: Profitable, we will continue to generate.

Greg Pardy: Material cash flow it would be in a position to return that to our shareholders.

Speaker Change: Really think about Oh, yeah, but you've also got the stellar balance sheet. So so I'm wondering if you could give us an idea where would you be comfortable.

Greg Pardy: That clearly underpinned our decision to raise the dividend today.

Speaker Change: With your balance sheet moving to over time.

If I could circle back on the dividend question, where would you be comfortable with the dividend breakeven moving to overtime and I appreciate the chance to ask your question.

Greg Pardy: Dan.

Greg Pardy: You want to talk about with respect to shareholder returns or anything like that yeah, Yeah Greg.

Greg Pardy: You kind of asked it.

Speaker Change: Yeah, Thanks, Doug happy new year.

Greg Pardy: No.

Greg Pardy: Returns to shareholders in buybacks in particular will be driven primarily by cash balances or other factors like the tariffs and I would say, it's going to be primarily by cash balances.

Speaker Change: I'll, let Dan take take those questions.

Speaker Change: But first.

Speaker Change: I would just.

Speaker Change: Emphasize the work we have done to grow volume to lower unit cost continues.

Greg Pardy: Specially given our low breakeven our ability to generate cash going forward through a range of environments. Our low debt level, we don't need to have a huge amount of cash to sort of.

Speaker Change: Continues to allow us to improve our breakeven.

Speaker Change: Ed.

Speaker Change: What we're doing with the dividend is integral to that strategy.

Greg Pardy: Protect us going forward. However of course will take into account the environment whatever whatever is happening at the time as we make those decisions, but generally speaking our philosophy has been consistent it's timely return of <unk>.

Speaker Change: Believe we have set our breakeven including dividend is about.

Speaker Change: 35.

Speaker Change: <unk>, a barrel, but ill, let Dan kind of walk you through that.

Speaker Change: Yes, Thanks, Brad Hey, Doug, Yes, we are.

Greg Pardy: Surplus cash to shareholders.

Just lastly.

Greg Pardy: Okay. So, yes, very very logical.

Speaker Change: This guidance call I guess, we had in December.

Greg Pardy:

Speaker Change: Which included of course are.

Speaker Change: And Brian I wanted to come back to your you're thinking just around acquisitions versus organic.

Speaker Change: Most current outlook on volumes and capital and everything we said our cash breakeven was for <unk> U S. Dollar is less than 25 and four.

Speaker Change: With dividends as sustaining capital less than 35. So those are those are those are great numbers, obviously and as Brad pointed out.

Speaker Change: Versus your organic growth initiatives, where they are.

Speaker Change: We continue to our goal is to work that down through volume growth and unit Count unit cash cost reductions, which gave you a headroom for dividend increases and other things and keeping the breakeven tight.

Speaker Change: You can see some limitations on pipe capacity and so forth is that kind of dialed into your thinking when you. When you go through that that LP model.

Speaker Change: I would say, we like the low breakeven that we're not wedded to them.

Yes, certainly we would look at all aspects of that.

Speaker Change: You know when we look at.

Speaker Change: Those are pretty low and that wouldn't.

Speaker Change: What's the cost competitiveness of an opportunity what's the long term running room of an opportunity.

Speaker Change: It Wouldnt stop us from growing the Devon did.

Speaker Change: If we are above some.

Speaker Change: Already you need egress considerations are there unique.

Speaker Change: Our breakeven went up a little bit I mean, that's a good reason for the breakeven to go up as you've increased your dividend a bad reason would be higher unit costs and things like that.

Speaker Change: Tax pool considerations, what's the.

Speaker Change: So I can't give you a detailed numbers except to say, we're going to keep working it and on the breakeven side with our volumes and unit cash cost.

Speaker Change: Carbon.

Speaker Change: <unk> city.

Speaker Change: So we'll take all of those things into account.

Speaker Change: And back to my earlier comment.

Speaker Change: And on the dividend side, what we do as we look out over a future period, we put some conservative assumptions on that and we say, okay, what kind of dividend increase could we sustain that's kind of our model and we'd like to and Thats. What led to this 20% dividend increase this year and last year in fact, so we see.

Speaker Change: At least up until this point when we look at the.

Speaker Change: The value, we see of an Aspen development it wins relative to anything else. We would we would see when we look at all those factors together.

Speaker Change: Alright, thanks very much.

Speaker Change: With our outlook even at conservative.

Greg Pardy: Thanks, Greg.

Speaker Change: And we have a question from Menno <unk> with TD Securities.

Speaker Change: Estimates, we see room to continue to grow our dividend in a robust fashion, but we will always be careful and make sure. It's sustainable so that's probably not get into the detail, but hopefully that gives you some more some more color on our thinking.

Speaker Change: Thanks, and good morning, everyone I'll start with a question on <unk>.

Speaker Change: It does Don what about the balance sheet in terms of the <unk> side, because obviously, you've got a lot of headroom if he doesn't want to take advantage of that.

Speaker Change: I feel like we answered. This question just recently, maybe the prior earnings call I'm not sure.

Speaker Change: Thank you.

Speaker Change: Yeah look is it possible, we could we could borrow to buy back shares and it certainly is it hasn't been our practice, we said, we're happy with our debt level about $4 billion.

Speaker Change: Yeah Menno. Thanks, Thanks for that question.

Speaker Change: I don't have a very specific update on that.

Speaker Change: And you were kind of returning 100% of free cash flow beyond that certainly we would be willing to leverage our balance sheet for attractive investment opportunities M&A things that things that made sense for us we're accretive met our criteria.

Speaker Change: Our teams are certainly directly engaged on it.

Speaker Change: But I don't I don't have a very specific outlook on what's a refresh timing.

Speaker Change: I would say, obviously that you know more broadly speaking we've been very pleased with the operation to start up the operation of <unk>.

Speaker Change: It certainly remains a possibility for <unk>.

Speaker Change: For buybacks, but.

Speaker Change: That's not what we've historically gone.

Speaker Change: So I'll just leave it at that.

Speaker Change: And we are shipping on it on a regular basis.

Speaker Change: Yeah.

Speaker Change: One everyone listening thing I'm going to completely <unk>. So let me let me just clarify the question then I'll. Let you guys go sorry for this so I guess the way I think about it is you can borrow at very very low cost of funds your projects and growth Carol on the.

Speaker Change: And that's really all of in a position to comment at this point.

Speaker Change: Got it thanks, Thanks, Brad for that and then maybe the second question would be on <unk>.

Speaker Change: Tremendous free cash flow you have is available for the <unk> side, So I think about it more as leveraging for.

Speaker Change: Project finance as opposed to but at the end of the day cash at some point I get it but thank you. So much guys for the answers and I appreciate the time.

Speaker Change: We don't think you are alluding to tick down.

Speaker Change: And the next question will come from Patrick or ROE with ATB capital markets.

Speaker Change: Lee with <unk>.

Speaker Change: 2026 of that.

Speaker Change: Yes. Thanks for the question I mean, we're certainly excited by this project.

Speaker Change: Good morning, guys. Congratulations on the dividend increase and very comprehensive rundown so far.

Speaker Change: We view it as quite strategic for us to expand our.

Speaker Change: And I'll just ask a couple of quick questions here I guess.

Speaker Change: Our slate of product offerings to the market.

Speaker Change: You talked about sort of the final steps with getting the renewable diesel facility on.

Speaker Change: It's a really important.

Speaker Change: Opportunity for us to help.

Speaker Change: The noise in the renewable and the <unk> market here with.

Speaker Change: Decarbonize.

Speaker Change: I think there is an anti dumping lawsuit that's been launched.

Speaker Change: The industry. So we view it as very positive and as Youll recall, there's there's multiple components to the project.

Speaker Change: Maybe walk us through some of the puts and takes around that market, you've talked about sort of transportation advantaged offtake for.

Speaker Change: At the core of the project.

Speaker Change: Is the manufacturing facility that we're building at strapped holder refinery.

Speaker Change: Imperial here out of the facility and how youre viewing the market and the risk right now.

Speaker Change: And that construction is well advanced.

Speaker Change: Yeah.

Speaker Change: Yeah. Thanks, Thanks for the question Patrick.

Speaker Change: Modules have been delivered where the process of looking them up and we expect to complete that construction in.

Speaker Change: And I've talked about this a little bit in the past.

Speaker Change: There are certainly other examples of renewable diesel projects.

Speaker Change: Both sides of the border that are struggling.

In the second quarter, which would that position us to start production somewhere around mid year.

<unk>.

Speaker Change: Our project is very unique and very different and.

Speaker Change: It should not be characterized the same as these other challenged projects we have multiple.

Speaker Change: Now also.

Speaker Change: Two other really key.

Speaker Change: Integral components is first of all the.

Speaker Change: Attributes that are quite favorable to our economic proposition starting with the fact that we are building. This.

Speaker Change: The vegetable.

Speaker Change: Our agricultural oil supply stream and so we are have been in the process of negotiating.

Speaker Change: Renewable diesel facility within our existing stress Kona facility, which gives us tremendous economies of scale unique aspects too.

Speaker Change: Supply arrangements said.

Speaker Change: We have sufficient supply established for us to be able to start the shoot it up.

Speaker Change: <unk> two rail facilities all of those sorts of things that allow it to be more.

Speaker Change: And then we're looking at longer term.

Speaker Change: Relationships as well.

Speaker Change: So that work continues but but ready to start up and then the.

Speaker Change: Efficient.

Speaker Change: Our stand alone facility somewhere else. So that's a big plus for us secondly.

Speaker Change: Third really important component is the supply of hydrogen and so that work is underway by air products.

Speaker Change: We are building it to process agricultural crops and oils from them that are readily available in close proximity and so the transportation cost for those oils is.

Speaker Change: And also.

Speaker Change: Working to be in a position to.

Speaker Change: Supply us with.

Speaker Change: Initial additional supplies beginning in the second quarter mid year timing.

Speaker Change: Affordable quite efficient we're also leveraging our proprietary catalyst from Exxonmobil that will allow us to produce a premium product relative to its.

Speaker Change: When we start up I would expect we'll be add some reduced rates as part of it.

Speaker Change: A typical startup and then over time as we look at.

Speaker Change: Utility over a wide range of operating conditions, especially cold weather.

Speaker Change: How to optimize each of those components with market conditions.

Speaker Change: And so that allows it to be.

Speaker Change: That will determine how quickly we ramp up what's the ultimate.

Speaker Change:

Speaker Change: 100% drop in fuel for regular diesel.

Speaker Change: Product volumes.

Speaker Change: Lee just like any other product.

Speaker Change: Does not have to be blended as much it can be but it doesn't have to be.

Speaker Change: Our refinery that we're constantly optimizing overtime.

Speaker Change: It also can be used year round versus just seasonally so all of those things are advantaged on top of that what also underpins. The economics is we already have it.

Speaker Change: Based on the cost of.

Speaker Change: Cost and availability of feedstocks, coupled with market conditions and demand for the product.

Speaker Change: We feel really good about being able to start up mid year in terms of.

Speaker Change: And our product offering a base level demand forward doable fuels to blend.

Speaker Change: Positive cash flow Yeah, we view this as a very profitable undertaking for us and we would expect to see positive cash flow in the second half of this year.

Speaker Change: So today, we purchased those out of the market in the future will now be producing them ourselves.

Speaker Change: Add more cost efficiently than buying from somebody else so that enhances the economics.

Neil Mehta: And moving on to Neil Mehta with Goldman Sachs.

Speaker Change: Certainly a lot of.

Neil Mehta: Yes, thanks, so much Brad and team I just wanted to spend some time on upstream cash costs, where I know you guys are targeting $18 at curl and at $13 at Cold Lake.

Speaker Change: Questions about what's the future of the carbon market.

I would just offer there that.

Speaker Change: We plan to sell this product into multiple.

Speaker Change: Provincial markets, which many of them have their own stated carbon policies.

Neil Mehta: Or are you in that journey, what's the next step and what does this quarter tell you about your ability to ultimately get there.

Speaker Change: And require bids for low carbon fuels. So when I put all that together we continue to believe we have a differentiated offering here relative to others.

Neil Mehta: Yeah. Thanks for the question I mean, we're well on the journey you know were obviously below $20 at at curl now.

Speaker Change: So I hope that helps clarify that.

Neil Mehta: And we're in the.

Neil Mehta: $14 range at Cold Lake and so well on our way.

Speaker Change: Yes.

Speaker Change: Terrific and very comprehensive.

Speaker Change: And then just.

Neil Mehta: Maybe I'll ask Cheryl.

Speaker Change: Secondly, and I think this sort of on the political front here, but with you.

Neil Mehta: To make a couple of comments about some of the near term initiatives that we have underway, but but.

Speaker Change: Sort of a pro rogation in Parliament.

Speaker Change: And potentially a bit of a shift in sentiment towards carbon here both from both sides of the political spectrum.

Neil Mehta: As we laid out that guidance back in December we feel quite confident in being able to achieve that.

Speaker Change: I'm wondering if you can provide an update on the pathway is project here.

Neil Mehta: Sure. Thanks, Brad So let me add a little bit more about about Karl starting with <unk>.

Speaker Change: I know that there were some of the sort of critical long lead time item.

Neil Mehta: When you think about what's going to enable us to get to that $18. A unit cost of coal, it's really about leveraging the scale that we have as well as continued focus on reliability and optimization.

Speaker Change: That needs to be ordered in very short order and sort of what the plan is.

Speaker Change: With respect to that as we head towards the end of the year.

Neil Mehta: We have that incremental production, we're going to be leveraging.

Speaker Change: Yeah, Patrick Thats, a great question.

Neil Mehta: Basically our fixed cost structure occur.

Neil Mehta: A very powerful lever in terms of that lowering our unit costs.

Speaker Change: And an important opportunity for me.

Neil Mehta: So you heard me mentioned before at that continued focus on reliability maintenance optimization for deployment of digital solutions.

Speaker Change: Two.

Speaker Change: To reemphasize that the.

Speaker Change: The six companies that have formed together the pathways alliance and have been working together for multiple years continue to see.

Neil Mehta: And so that that in itself will.

Neil Mehta: To improve productivity as well as lower.

Neil Mehta: If I think about the cold Lake side that too is going to be leveraging our scale and as we grow our production mix to the higher volume that's going to leverage that fixed cost base, but we're also introducing lower cost barrels into the mix.

The importance and the value of Decarbonising our industry.

Speaker Change: And that's what brought us together and.

Speaker Change: Irrespective of.

Brad Corson: And Brad mentioned about the progress the early term in fact that we're getting from Grand Rapids.

Speaker Change: Political parties.

Speaker Change: We believe that support.

Speaker Change: We in Canada.

Neil Mehta: Sandy as it.

Neil Mehta: This year with lending which are lower cost.

Speaker Change: I think our <unk>.

Speaker Change: <unk> with a tremendous a download of resources third largest oil reserves in the world.

Neil Mehta: It's growing and transforming the volume at Cold Lake both AAN.

Numerator and denominator opportunity at both Cold Lake and Kearl.

Speaker Change: And that puts us in a tremendous position to support.

Speaker Change: Well, that's the follow up it just the curly talked about 280 to 290 this year with the goal of getting to 300, plus I guess the question is how plus plus.

Speaker Change: <unk> energy availability globally, but to be competitive and sustainable long term. Our view is we need to be cost competitive.

Speaker Change: And we need to be carbon competitive and so to be carbon competitive over the long term, we need to continue to look to decarbonize. So.

Neil Mehta: Just your perspective on.

In a capital efficient way, how big could curl b.

Neil Mehta: In the context of the budget that you laid out.

Speaker Change: Our discussions with the governments federal and provincial continue.

Neil Mehta: Yeah. Thanks al.

Speaker Change: As we look to establish all the necessary fiscal support.

Neil Mehta: Ill try to answer that.

Neil Mehta: Yes.

Neil Mehta: I think it's too early to tell how big plus could be but the reason.

Regulatory policy support.

Speaker Change: So that we can progress it investment.

Neil Mehta: We shared that guidance is we do see the potential for.

Speaker Change: We still have work to do there.

Speaker Change: We're not at the point yet of committing to the.

Neil Mehta: For future volumes above 300 and <unk>.

Neil Mehta: How much above 300 will be determined by our ability to continue to unlock.

Speaker Change: Pipe, which is kind of the first critical step and as you point.

<unk> pointed out.

Speaker Change: There is some urgency around that.

Neil Mehta: No cost efficient barrels as we go forward.

Speaker Change: Based on our original objective.

Neil Mehta: We've been on this journey.

Neil Mehta: For five years now if not longer by the especially the last five years.

Speaker Change: 2030 startup at this time goes on it becomes increasingly difficult to meet that startup timing.

Neil Mehta: Where we were at around 200 205 back in.

Speaker Change: But we continue the work and.

Neil Mehta: 2019.

Speaker Change: We continue the engineering work, we continue the permitting work we continue the environmental studies we continue.

Neil Mehta: And then we've continued to take.

Neil Mehta: Very thoughtful very capital efficient steps to enable us to grow that.

Speaker Change: Digital collaboration all with an objective of moving this project forward.

Neil Mehta: As announced we set another set.

Set a record last year, we set another record this year now with 281000 and we see it.

Speaker Change: As timely as we can because we think it's important.

Neil Mehta: Increasing number of days that are above 300000 for individual days and in some cases weeks and months and now you know.

Speaker Change: So more to come.

Speaker Change: Hopefully we will get.

Speaker Change: Further clarity from the government.

Speaker Change: These open items and we could move forward.

Neil Mehta: What the team is focused on is how can they string together more of those days.

Speaker Change: Thank you.

Neil Mehta: And of course be able to offset any.

Speaker Change: Thank you.

Speaker Change: And that does conclude the question and answer session I will now hand, it back over to Peter Shah for any additional or closing remarks.

Neil Mehta: Any planned downtime like like a turnaround so we see the potential for something above 300, but until we knocked out barriers to get us from $2 80 to two <unk> and heading towards 300, I don't know that we fully realize what that potential is but we're going to only pursue.

Speaker Change: Well, thank you everybody and on behalf of the management team we want to thank you for joining our call. Today. If you have any further questions. Please don't hesitate to reach out to anybody on the IR team and we'd be happy to answer your questions and with that thank you very much and have a great day and great weekend.

Neil Mehta: If it's if it's capital efficient, but we've got a great base there.

Speaker Change: Thank you.

Neil Mehta: With the.

That does conclude today's conference we do thank you for your participation and have an excellent day.

Neil Mehta: With material fixed cost so generally.

Neil Mehta: If we could add additional barrels they're going to come at a lower variable cost to us and that adds value to the cash flow for the asset.

Speaker Change: Yeah.

Neil Mehta: So more work to come there but.

Neil Mehta: I hope as you've seen us demonstrate over the last couple of years, where we're laser focused on it.

Brett: Thank you Brett.

Speaker Change: And the next question will come from Doug Leggate with Wolfe Research.

Brett: Hey.

Speaker Change: Good morning, everybody. Thanks for taking my questions, Hey, Brian upcoming here.

Speaker Change: So I've got to breakeven questions. If I may the both like the Dun's daily like but I'd love your perspective on it.

Speaker Change: First of all.

Speaker Change: Someone I think it was manav alright, Greg touched on the dividend earlier.

Speaker Change: 20% is another sizable bump obviously, but what I'm curious about is where do you see your breakeven today with.

Speaker Change: With the capital.

Speaker Change: The growth of what is today of others.

Speaker Change: <unk> on where you see the growth going how does your breakeven evolve because not headroom for dividend growth remains on a potent advantage for you guys relative to your peers.

Speaker Change: My follow up is on us.

Speaker Change: Is also kind of a breakeven question related to the balance sheet.

Speaker Change: You guys got stellar one of the best if not the best balance sheet in the industry in Hawthorne for a long time.

Speaker Change: If we think about ESI we.

Speaker Change: And we tend to think about the question earlier about cash balances, we don't really think about when we get but you've also got the stellar balance sheet. So so I'm wondering if you could give us an idea where would you be comfortable.

Speaker Change: But your balance sheet moving to overtime and I guess, if I could circle back on the dividend question, where would you be comfortable with the dividend breakeven moving to overtime and I appreciate the chance to ask a question.

Speaker Change: Yeah, Thanks, Doug happy new year.

I'll, let Dan take take those questions.

Speaker Change: But first.

Speaker Change: Just.

Speaker Change: Emphasize the work we have done to grow volume to lower unit costs.

Speaker Change: <unk> continues to allow us to improve our breakeven.

Speaker Change: Ed.

Speaker Change: What we're doing with the dividend is integral to that strategy.

Speaker Change: Believe we have set our breakeven including dividends is about.

Speaker Change: 35.

Speaker Change: <unk> dollars, a barrel, but I'll, let Dan kind of walk you through that.

Dan: Yes, Thanks, Brad Hey, Doug Yeah.

Speaker Change: Just lastly.

Dan: This guidance call I guess, we had in December.

Dan: Included of course are.

Dan: Most current outlooks on volumes of capital and everything we said our cash breakeven was for WTS use dollars less than 25 and four.

Brad Corson: With dividends as sustaining capital less than 35. So those are those are those are great numbers, obviously and as Brad pointed out.

Brad Corson: We continue to our goal is to work that down through volume growth and unit Count unit cash cost reductions, which gave you a headroom for dividend increases and other things and keeping the breakeven type.

Brad Corson: I would say, we like the low breakeven is that we're not wedded to them.

Brad Corson: Those are pretty low and that wouldn't.

Brad Corson: It Wouldnt stop us from growing the Devon did.

Brad Corson: If we are above some.

Brad Corson: Our breakeven went up a little bit I mean, that's a good reason for the breakeven to go up as you've increased your dividend a bad reasonably be higher unit cost and things like that.

Brad Corson: So I can't give you a detailed numbers except to say, we're going to keep working it and on the breakeven side with our volumes and unit cash cost.

Brad Corson: And on the dividend side, what we do as we look out over a future period, we put some conservative assumptions on that and we say, okay, what kind of dividend increase could we sustain that's kind of our model and we'd like to and Thats. What led to this 20% dividend increase this year and last year in fact, so we see.

Brad Corson: With our outlook even that conservative.

Brad Corson: Estimates, we see room to continue to grow our dividend in a robust fashion, but we'll always be careful and make sure. It's sustainable so it's probably not get into the detail, but hopefully that gives you some more some more color on our thinking.

Speaker Change: It does Don what about the balance sheet in terms of the <unk> side, because obviously, you've got a lot of headroom if he doesn't want to take advantage of that.

Speaker Change: I feel like we answered. This question just recently, maybe the prior earnings call I'm not sure.

Speaker Change: Yeah look is it possible, we could we could borrow to buy back shares and it certainly is it hasn't been our practice, we said, we're happy with our debt level about $4 billion.

Speaker Change: It certainly remains a possibility for <unk>.

Speaker Change: For buybacks, but.

Speaker Change: That's not what we've historically done.

Speaker Change: So maybe I'll just leave it at that.

Speaker Change: Yeah.

Speaker Change: One everyone listening thing Im a complete limitation. So let me let me just clarify the question then I'll. Let you guys go sorry for this so I guess the way I think about it is you can borrow at very very low cost of funds your projects and growth Carol on the.

Speaker Change: Tremendous free cash flow you have is available for the <unk> side, So I think about it more as leveraging for.

Speaker Change: Project finance as opposed to but at the end of the day cash at some point I get it but thank you. So much guys for the answers and I appreciate the time.

Speaker Change: We don't think you are alluding to take that.

Speaker Change: And the next question will come from Patrick or ROE with ATB capital markets.

Speaker Change: Good morning, guys. Congratulations on the dividend increase and very comprehensive rundown so far.

Speaker Change: I'll just ask a couple of quick questions here I guess.

Speaker Change: You talked about sort of the final steps with getting the renewable diesel facility on.

Speaker Change: Noise in the renewable and the <unk> market here with.

Speaker Change: I think theres, an antidumping lawsuit that's been launched.

Speaker Change: Maybe walk us through some of the puts and takes around that market, you've talked about sort of transportation advantaged offtake for.

Speaker Change: Imperial here out of the facility and how youre viewing the market and the risk right now.

Speaker Change: Yeah.

Speaker Change: Yeah. Thanks, Thanks for the question Patrick.

Speaker Change: And I've talked about this a little bit in the past you know.

Speaker Change: There are certainly other examples of renewable diesel projects.

Speaker Change: Both sides of the border that are struggling.

Speaker Change: <unk>.

Speaker Change: Our project is very unique and very different and.

Speaker Change: Should not be characterized the same as these other challenged projects we have multiple.

Speaker Change: Attributes that are quite favorable to our economic proposition starting with the fact that we are building. This.

Speaker Change: Renewable diesel facility within our existing stress coda.

Speaker Change: Facility, which gives us tremendous economies of scale unique aspects too.

Speaker Change: Utilities to rail facilities, all of those sorts of things that allow it to be more.

Speaker Change: <unk>.

Speaker Change: On a stand alone facility somewhere else. So that's a big plus for us secondly.

Speaker Change: We are building it to process agricultural crops and oils from them that are readily available in close proximity and so the transportation cost for those oils is quite affordable quite.

Speaker Change: <unk>.

Speaker Change: We're also.

Speaker Change: Leveraging our proprietary catalyst from Exxonmobil that will allow us to produce a premium product relative to <unk>.

Speaker Change: Utility over a wide range of operating conditions, especially cold weather.

Speaker Change: And so.

Speaker Change: And that allows it to be.

Speaker Change: <unk>.

Speaker Change: 100% drop in fuel for regular diesel.

Speaker Change: Does not have to be blended as much it can be but it doesn't have to be.

Speaker Change: It also can be used year round versus just seasonally so all of those things are advantaged on top of that what also underpins. The economics is we already have it.

Speaker Change: At our product offering a base level demand forward doable fuels to blend and so today, we purchased those out of the market in the future will now be producing them ourselves.

Speaker Change: Ill add more cost efficiently than buying from somebody else so that enhances the economics.

Speaker Change: Certainly a lot of you.

Speaker Change: No questions about what's the future of the carbon market I would just offer there that.

Speaker Change: We plan to sell this product into multiple.

Speaker Change: The provincial markets, which many of them have their own <unk>.

Speaker Change: Stated carbon policies.

Speaker Change: And require bids for low carbon fuels. So when I put all that together we continue to believe we have a differentiated offering here relative to others.

Speaker Change: So I hope that helps clarify that.

Speaker Change: Yes.

Speaker Change: Terrific and very comprehensive.

Speaker Change: And then.

Speaker Change: Just sort of secondly in this sort of on the political front here, but.

Speaker Change: Sort of a pro rogation in Parliament.

Speaker Change: And potentially a bit of a shift in sentiment towards carbon here.

Speaker Change: From both sides of the political spectrum.

Speaker Change: I'm wondering if you can provide an update on the pathway is project here.

Speaker Change: Know that there were some of the sort of critical long lead time items that need to be ordered in very short order and sort of what the plan is.

Speaker Change: With respect to that as we head towards the end of the year.

Speaker Change: Yeah, Patrick Thats, a great question.

Speaker Change: And an important opportunity for me.

Speaker Change: Two.

Speaker Change: To reemphasize that the.

Speaker Change: The six companies that have formed together the pathways alliance had been working together for multiple years continue to see.

The importance and the value of Decarbonising our industry.

Speaker Change: And that's what brought us together and.

Speaker Change: Irrespective of.

Speaker Change: Political parties.

Speaker Change: We believe that support.

Speaker Change: We in Canada.

Speaker Change: I think our blessed with a tremendous a download of resources third largest oil reserves in the world.

Speaker Change: And that puts us in a tremendous position to support.

Speaker Change: Energy availability globally, but to be competitive and sustainable long term. Our view is we need to be cost competitive.

Speaker Change: We need to be carbon competitive and so to be carbon competitive over the long term.

Speaker Change: Need to continue to look to decarbonize. So.

Speaker Change: Our discussions with the governments federal and provincial continue as we look to establish all the necessary fiscal support and regulatory policy support so that we can progress it investment.

Speaker Change: We still have work to do there.

Speaker Change: Not at the point yet of committing to the.

Speaker Change: Type.

Speaker Change: As kind of the first critical step and as you point.

Speaker Change: Ill point out.

Speaker Change: There is some urgency around that.

Speaker Change: Based on our original objective.

Speaker Change: <unk> 30 startup that as time goes on it becomes increasingly difficult to meet that startup timing.

Speaker Change: But we continue the work and we.

Speaker Change: We continue the engineering work, we continue the permitting work we continue the environmental studies we continue.

Speaker Change: This collaboration all with the objective of moving this project forward.

As timely as we can because we think it's important.

Speaker Change: So more to come.

Speaker Change: Hopefully we will get.

Speaker Change: Further clarity from the governments.

Speaker Change: These open items and we could move forward.

Thank you.

Speaker Change: Thank you.

Speaker Change: And that does conclude the question and answer session I will now hand, it back over to Peter Shah for any additional or closing remarks.

Speaker Change: Thank you and that does conclude today's conference. We do thank you for your participation and have an excellent day.

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