Q1 2025 Imperial Oil Ltd Earnings Call
Please standby.
Speaker Change: Good day and welcome to the Imperial oil first quarter 2025 earnings call. Today's conference is being recorded at this time I'd like to turn the conference over to Peter Shah Vice President of Investor Relations. Please go ahead.
Speaker Change: Good morning, everyone welcome to our first quarter earnings Conference call I'm joined this morning by Imperial Senior management team, including Brad Corson, Chairman and CEO, John Whalen, President, Dan Lyons Senior Vice President Finance and administration, Cheryl Gomez Smith Senior Vice President of the upstream and Scott Maloney Vice.
Speaker Change: President of the downstream.
Speaker Change: Todays comments include reference to non-GAAP financial measures the definitions and reconciliations of these measures can be found in the attachment six of our most recent press release and are available on our website with a link to this conference call. Today's comments may contain forward looking information any forward looking information is not a guarantee of future performance and actual future.
Speaker Change: Performance and operating results can vary materially depending on a number of factors and assumptions.
Speaker Change: Forward looking information and the risk factors and assumptions are described in further detail on our first quarter earnings release that we issued this morning as well as our most recent Form 10-K.
Speaker Change: All of these documents are available on SEDAR and Edgar and our website. So I'd ask you to refer to those.
Speaker Change: 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 Good morning, everybody and welcome to our first quarter earnings call I Hope, everyone is doing well and it was great to see many of you at our recent Investor day in Toronto.
Speaker Change: As you are likely aware this will be my last earnings call with John replacing me. Following next week's AGM in my retirement.
Speaker Change: Before I leave I am really pleased to report another strong quarter for Imperial with earnings of $1 billion $288 million, which represents an increase of earnings per share by 13% year over year and by 6% on a sequential quarter basis. This represents.
Speaker Change: Our highest ever first quarter earnings in the company's history.
Speaker Change: We also generated free cash flow of $1 billion $150 million and ended the quarter with nearly $1.800 billion of cash on hand, so that puts us in a very strong financial position and as you may have seen in the release. This morning, we intend to renew our normal.
Speaker Change: Course issuer bid later this quarter.
Speaker Change: So while there is ongoing volatility in commodity prices I remain very confident in our ability to grow shareholder value over the long term.
Speaker Change: Our upstream assets contributed solid production for the quarter just shy of the record first quarter production, we posted a year ago when adjusting for the divestment of X T O Energy, Canada improved egress continued to support narrower heavy oil differentials than we've seen in the past and especially during the winter months.
Speaker Change: And this in turn supported our price realizations are.
Speaker Change: Our downstream business delivered once again with strong margin capture and are recovering crack spread environment.
Speaker Change: This business continued to benefit from many durable competitive advantages, including integration proximity the feedstocks and market efficient logistics and our strong market position.
Speaker Change: Over the next few minutes, Dan and I will detail the results of this strong quarter.
Speaker Change: So now let's review the first quarter results.
Speaker Change: And as I, just noted earnings for the quarter were $1 $288 million with cash from operating activities of $1 billion $760 million when excluding the impact of working capital.
Speaker Change: Again, this represents our highest ever first quarter earnings.
Speaker Change: Sounded so good the first time I just had to say it again.
Speaker Change: These results reflect the strength of our integrated business model and our ability to capture value for our shareholders.
Speaker Change: In the upstream we achieved total production of 418000 gross oil equivalent barrels per day in the first quarter.
Speaker Change: Volume was supported by higher year over year production at Cold Lake, including continued strong results of Grand Rapids.
Speaker Change: We also utilized our enhanced winter operating procedures at Kearl to manage through the extreme cold weather conditions in February.
Speaker Change: Syncrude production was steady year over year in the downstream refinery throughput averaged 397000 barrels per day, which equates to a refinery utilization of 91% while petroleum product sales averaged 455000 barrels per day.
Speaker Change: Renewable diesel project construction continued at the Strat Kona refinery and we are on track to startup mid 2025.
Speaker Change: We paid $307 million in dividends and finished the quarter with nearly $1.800 billion of cash on hand, we remain fully committed to returning surplus cash to shareholders in a timely manner and intend to renew our normal course issuer bid shortly towards the end of the second quarter and with that I'll pass.
Speaker Change: Things over to Dan to discuss our financial results in more detail. Thanks, Brad.
Dan Lyons: <unk> with financial results for the quarter, we recorded net income of $1 billion and $288 million up $93 million from the first quarter of 2024, primarily driven by higher upstream margins when comparing sequentially first quarter net income is up $63 million from the fourth.
Quarter of 2024, primarily driven by higher downstream margin capture now shifting our attention to each business line and looking sequentially upstream earnings of $731 million or down $147 million from the fourth quarter, primarily due to lower volumes.
Dan Lyons: <unk> stream earnings of $584 million or up $228 million from fourth quarter, mainly reflecting higher margin capture our chemical business generated earnings of $31 million up $10 million from the fourth quarter.
Dan Lyons: Moving on to cash flow in the first quarter, we generated $1 billion $527 million in cash flows from operating activities, excluding unfavorable working capital effects of $233 million cash flows from operating activities for the first quarter of $1 $760 million up.
Dan Lyons: $239 million from the first quarter of 2024, we ended the quarter with $1 $764 million of cash on hand.
Dan Lyons: Shifting to Capex capital expenditures totaled $398 million in the first quarter about $100 million lower than the first quarter of 2024, driven by project timing, our full year outlook remains consistent with our previously issued guidance and the upstream first quarter spending.
Dan Lyons: <unk> on sustaining and growing production at curl Syncrude in Cold Lake and the downstream first quarter spending mainly included continued progress on our renewable diesel project add stress conant.
Dan Lyons: Moving to shareholder distributions. This morning, we declared a second quarter dividend of <unk> 72 per share consistent with our first quarter dividend, a reliable and growing dividend remains the foundation of our free cash flow distribution strategy. We also remain committed to returning surplus cash to.
Brad Corson: Shareholders and as Brad noted, we intend to renew our annual and say and CIB share buyback program in June now I'll turn it back to Brad to discuss our operational performance.
Brad Corson: Thanks, Dan.
Brad Corson: 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: <unk> stream production for the quarter averaged 418000 oil equivalent barrels per day.
Brad Corson: Production was down 42000 barrels per day versus the fourth quarter and down slightly or 3000 barrels per day versus the first quarter of 2024.
Brad Corson: As you May recall was a record first quarter when adjusting for the <unk> divestment and so off to a strong start for the upstream.
Brad Corson: We typically do see lower volumes in the first quarter on a seasonal basis versus the back half of the year. In addition, we managed through some extreme cold weather. This year in February so, let's move on and talk specifically about Pearl.
Brad Corson: <unk> production in the first quarter averaged 256000 barrels per day, gross which is down 43000 barrels per day versus the fourth quarter and down 21000 barrels per day versus the first quarter record previously set in 2024.
Brad Corson: While <unk> got off to a strong start in January extreme weather conditions rolled in for most of February conditions, we haven't seen since the winter of 2022.
Brad Corson: We utilized our enhanced operating procedures, including deliberately slowing down volumes to manage through these extreme weather conditions and I'm happy to report that Pearl materially improved relative to the first quarter of 2022 under similar harsh conditions when total gross production.
Brad Corson: Average 186000 barrels per day that said, we did experience some unplanned downtime in March that impeded a faster recovery.
Brad Corson: We manage through that as well in April was a very strong month with production very close to our best ever April production record of 300000 barrels per day gross.
Brad Corson: So despite lower volumes year over year I continue to be very proud of their pearle team for their hard work their resilience and overcoming adversity and we continue to have great confidence in Pearl and our plans to grow volumes further and continue to lower the unit cash cost as you heard us detail at <unk>.
Brad Corson: <unk> D a.
Brad Corson: A good example of our continued efforts to optimize curl is taking place this month.
Brad Corson: In May we are conducting the planned turnaround at the K to train the planned turnaround will start next week and is scheduled to be completed by the end of May.
Brad Corson: And per our corporate guidance the expected volumetric impact for the year is around 9000 barrels a day.
Brad Corson: Following this year's turnaround we are targeting to run the K to train for four years double the previous interval with the next planned turnaround in 2029.
Brad Corson: Moving to Cold Lake for the first quarter Cold Lake production averaged 154000 barrels per day, which is down 3000 barrels per day versus the fourth quarter of 2024 and up 12000 barrels per day versus the first quarter of 2024, primarily.
Brad Corson: Even by Grand Rapids, and partially offside offset by production and steam cycle timing.
Brad Corson: New advantaged solvent assisted Sag D production is enabling transformation at cold Lake with higher production at lower unit cash costs.
Brad Corson: Our first quarter results bear that out.
Brad Corson: <unk> rapid solvent assisted Sag D production continued to exceed expectations with a quarterly average production of 23000 barrels per day supporting coal legs volume, but also improving its unit cash cost.
Brad Corson: Decreased by over.
Brad Corson: $3 U S per barrel compared to a year ago.
Brad Corson: This is exciting and gives us great confidence in future solvent assisted sag the developments as well as achievement of our production and unit cost goals for the asset.
Brad Corson: Just last week, we started the plant turnaround work on the <unk> plant at Cold Lake.
Brad Corson: Speaking with the team the work is progressing well and is expected to be completed by early June with a full year volume impact of 3000 barrels a day.
Brad Corson: The next.
Transformation of the Cold Lake asset is the lending Sag D project construction is materially complete now with commissioning progressing throughout this quarter.
Brad Corson: We are anticipating first steam to be injected this summer with first production. Following later in the year.
Brad Corson: The lending Sag D project is anticipated to produce an additional 9000 barrels per day at peak levels.
Speaker Change: I also wanted to provide a brief update on the <unk> pilot at our Aspen lease.
We recently reached a key milestone with the successful drilling of the three horizontal well pairs. As a reminder, we are construction constructing the pilot project. This year and next and then intend to startup in early 2027.
Speaker Change: <unk> is a transformative new technology that could be applied to our significant undeveloped in situ oil sands resource base to achieve low cost lower emission volume growth for decades to come.
Speaker Change: Now just a few comments on syncrude.
Speaker Change: Imperial share of Syncrude production for the quarter averaged 73000 barrels per day, which was down 8000 barrels per day versus the fourth quarter of 2024 and flat versus the first quarter of 2024.
Speaker Change: During the quarter as a result of unplanned downtime Syncrude continued to utilize the interconnect pipeline to important bitumen in gas oil ensuring the upgrader remain full and producing about 15000 barrels per day, our share of incremental syncrude sweet premium in the quarter.
Speaker Change: Moving on to the downstream, we refined an average of 397000 barrels per day, reflecting a utilization of 91%.
Speaker Change: This compares to 407000 barrels per day, a year ago, and 411000 barrels per day in the fourth quarter.
Speaker Change: Lower throughput in the first quarter reflects some additional maintenance conducted in our eastern manufacturing hub.
Speaker Change: We're conducting two planned turnarounds here in the second quarter at both stress Kona and nanticoke as we laid out in our corporate guidance outlook. As a reminder, we have our final planned turnaround at Sarnia later this year straddling the third and fourth quarters and finally, we expect to complete construction on the stress.
Speaker Change: Kona renewable diesel project facilities shortly here in the second quarter with unit startup planned for mid 2025.
Speaker Change: Petroleum product sales in the quarter were 455000 barrels per day, which is down 3000 barrels per day versus the fourth quarter of 2024 and up 5000 barrels per day versus the first quarter of 2024.
Speaker Change: And turning now to chemicals earnings in the first quarter were $31 million, which was up $10 million versus the fourth quarter.
Speaker Change: Earnings in the quarter were down $26 million versus the first quarter in 2024, primarily due to lower margins and the aromatics segments shift to the downstream, which we announced effective the third quarter of last year.
Speaker Change: In closing this was another strong quarter and I'm very proud of imperial's positioning for the future it.
Speaker Change: It has been an honor for me to lead Imperial as chairman President and CEO for nearly five and a half years I could never have imagined that my journey.
Speaker Change: Our journey would encompass both the most challenging conditions in the company's 145 year history. During the pandemic, but then followed by several record breaking achievements, both operationally and financially with the best years in the company's history.
Speaker Change: Im confident that imperial will continue to thrive and achieve even greater success in the years to come.
I'm also very excited to see our investment decisions coming to fruition, most notably Grand Rapids that is exceeding expectations autonomous haul trucks and other reliability and production enhancements at Kearl and our stress toner renewable diesel project that is scheduled to start up in the coming months.
Speaker Change: These are just a few.
Speaker Change: For my first day at Imperial I have been consistently impressed by our team and over the past five years I've been continually reminded of the exceptional quality of our people their ingenuity their dry resilience and focus are evident every day as they work tirelessly to improve our.
Speaker Change: Business and provide critical energy supplies to society.
Speaker Change: The results of this great team had been reflected in our ability to deliver exceptional shareholder returns and that commitment remains unchanged I'm extremely.
Speaker Change: <unk> proud of what we have delivered for our shareholders in terms of share price appreciation and dividend growth and returning surplus cash through share buybacks.
Speaker Change: I'm also pleased to welcome John Whalen, who is anticipated to succeed me as chairman and CEO at our upcoming AGM next week on May eight.
Speaker Change: As I mentioned at Investor Day, John and I have known each other for over.
Speaker Change: 20 years in our pads have cross multiple times.
Speaker Change: He has worked under my leadership twice during my 42 year career and we have worked together on multiple leadership teams. Jon is returning to imperial after serving as senior Vice President of Exxonmobil upstream company since 2020 and prior to that role as many of you know John served as imperial's scene.
Speaker Change: And your vice President for the upstream from 2017 to 2020 with his extensive experience I am confident that John is the right person to lead imperial into the future.
Speaker Change: So as always I'd like to thank you once again for your continued interest and support.
Speaker Change: And wish you all the best in the future.
Speaker Change: And although I won't be leaving any more of these earnings calls rest assured I will be listening and celebrating the company's continued success.
Peter Shah: And now we'll move to the Q&A session. So I'll pass it back to Peter.
Peter Shah: Thank you Brad is always be depreciated, if you can limit yourself to one question plus a follow up so that we can get to all the questions. So with that operator can you. Please open up the line for questions.
Speaker Change: Thank you if you would like to signal what questions. Please press star one on your Touchtone telephone if you join US today use a speaker phone. Please make sure mute function is turned off to allow your signal to reach our equipment again that is star one if you would like to signal what questions and our first question.
Speaker Change: Will come from Greg Pardy with RBC capital markets.
Greg Pardy: Yes. Thanks, good morning, and look absolutely great chapter I think in Imperial's history, and Brad just all the best to you and of course welcome welcome John.
Speaker Change: Again [laughter].
Speaker Change: Two very different questions, but maybe just on the operation side I was curious.
Speaker Change: The downstream numbers looked really good and I know you alluded to.
Speaker Change: Some margin capture Im just wondering if we can dig in a little bit more into perhaps.
Speaker Change: Where you captured additional margin in the downstream in the first quarter maybe versus others.
Yeah, Thanks for the questions Greg and.
Speaker Change: And great to hear from you after seeing you at our Investor day.
Speaker Change: We talked extensively about the value of our downstream in the value of integration.
Speaker Change: The advantages we have structurally here in Canada all of those have contributed.
Speaker Change: Our success here.
Scott Maloney: In the first quarter and the downstream, but since we got Scott here.
Scott Maloney: Maybe I'll ask him to make a few more comments on what's what's unique here in the first quarter.
Scott Maloney: Yes, Thanks, Brad.
Speaker Change: We have certainly leveraged a lot of those structural advantages as Brad mentioned before to place our barrels in the highest uplift opportunities both on the eastern and Western part of Canada.
Speaker Change: That's structurally what what helped us deliver these stronger numbers. This year. We've also had some volatility in the marketplace.
Speaker Change: That volatility gives us some opportunity for.
Speaker Change: Placing those barrels in the highest uplift opportunity and as you see in typical first quarters as the quarter goes on you start to see some maintenance activity from a turnaround perspective start to play into the last part of the first quarter and that also enables some additional margin in the downstream business.
Speaker Change: Okay. Thanks for that and a completely different question I mean with the renewal of the in CIB. The last number of years has been.
Speaker Change: Really acceleration into the second half of the year, how are you thinking, especially just given the pretty sloppy oil price backdrop is the thinking that you would accelerate or that you would perhaps executed over a one year timeframe or is it all to be determined.
Greg Pardy: Yeah, It's a great question, Greg and and Theres no doubt Theres a lot of uncertainty in the market.
<unk>.
Greg Pardy: With this first quarter results.
Is the strong resilience that we provide.
Greg Pardy: With the integrated nature of our business model, coupled with just the underlying strength of our assets. So that allows us to.
Greg Pardy: Kind of maintain consistency and our strategies.
Greg Pardy: And avoid having to make fundamental changes and with respect to the CIB.
Greg Pardy: <unk>.
Greg Pardy: Obviously, we're going to monitor.
Greg Pardy: What those external factors are.
Greg Pardy: We're in a very strong cash position right now.
Greg Pardy: We have no reason to believe that's going to fundamentally change as we move to the second half of the year and so consequently.
Greg Pardy: We'll be taking a decision as we go as to what's the right pace.
Greg Pardy: But as you point out.
Speaker Change: Over the last couple of years certainly it's Ben.
Greg Pardy: Our behavior, our approach to accelerate the CIB.
Greg Pardy: And really a key driver there is this underlying principle of we want to return surplus cash to shareholders in a timely manner and so accelerating the NCI b in the past has given us that flexibility and as we look to the future. We will continue to make those assessments whether whether.
Greg Pardy: That is appropriate or not.
Greg Pardy: You know and I don't want to get too far ahead of myself.
Greg Pardy: Ahead of John and the rest of the leadership team, but one of the reasons we've accelerated in the past is to give us flexibility.
Greg Pardy: And S I b if that was necessary.
Greg Pardy: To further return surplus cash so.
Still a lot of uncertainty several months ahead for for the year.
Greg Pardy: But what you can count on us we will be returning surplus cash in a timely manner.
Greg Pardy: Alright, thanks, very much and good luck.
Greg Pardy: Thanks, Greg.
Speaker Change: And our next question will come from Manav Gupta with UBS.
Good morning, Brad I think a lot of investors, who would echo that I am what today is a much stronger company than it was five years ago. I think if you look at the stock price itself.
Speaker Change: Exactly five years currently below $21 stock price appreciation is clearly reflecting the good work that you have put in.
Speaker Change: My first quick question Hana as he looked at it I mean, there's a lot of focus on coal cash cost, but if you look at quarterly cash costs again down about 18%, Italy.
Speaker Change: Now you, obviously have gotten happens being better than expected and lemon coming on later in the air. So how should we think about the cash cost at cold Lake for the rest of the and maybe more importantly for 2026.
Speaker Change: Yes, thanks for the comment Manav in.
Speaker Change: Thanks, so much.
Speaker Change: Words and in recognition of of what.
Speaker Change: The whole team has accomplished.
Speaker Change: Which is obviously reflected in our share price and that has very much been.
Speaker Change: Collective effort of this great organization and team that that have surrounded and supported me over the last five years.
Speaker Change: With respect to your question I'm glad you you called out Cold Lake.
Speaker Change: We have.
Speaker Change: Talked extensively over the last years about curled because we've been on an important journey to get Perl to $20. A barrel. We've achieved that now we're working quite diligently to get curled $18 a barrel.
Speaker Change: But what's been progressing in parallel to that is a really important strategy.
To improve the structural costs at cold Lake as well Grand Rapids and in.
Speaker Change: In SA.
Speaker Change: SA Sag D as a technology.
Speaker Change: As a key enabler because it fundamentally as our lower cost barrels that we're bringing on.
Speaker Change: As I noted.
Speaker Change: <unk> two a year ago Cold Lake.
Speaker Change: Cash costs are down $3, a barrel and this is all on our journey as we've talked about at Investor day, too to get us to $13 a barrel. So.
Speaker Change: As the year goes on we're going to continue to strive for further improvements continued.
Speaker Change: Grand rapid success.
Speaker Change: And strong volume performance will contribute to that.
Speaker Change: And then certainly as we start up levy.
Speaker Change: Those are lower cost barrels as well and so those will further support this journey to $13 a barrel so.
Speaker Change: Several months ahead of us.
Speaker Change: But.
Speaker Change: The strategy is that we are continuing to work on our cost structure.
Speaker Change: Really across all our assets, but specifically here at Cold Lake and Grand Rapids, lapping everything we're doing.
Speaker Change: With these these new developments are targeted towards lower cost lower cost.
Speaker Change: So I feel quite good about that.
Speaker Change: I don't know that Theres really anything else I would add at this but kind of watch this space.
Speaker Change: Because it's really exciting.
Speaker Change: What the team is doing at Cold Lake.
Speaker Change: Perfect My quick follow up here it is.
Speaker Change: Do you have a unique refining system and look at your.
Speaker Change: Levered to the east coast crack Chicago cracks, even divest cost correct.
Speaker Change: We had a relatively tougher macro environment and I just wanted to understand from you from your refining system.
Speaker Change: Have you seen any signs of the recessionary demand kick in or the markets either supplying to the underlying demand remains.
Speaker Change: Relatively resilient, even if the macro seems choppy. So if you could help us in that.
Speaker Change: Yes. Thanks.
Speaker Change: And I mean, I think it is a good question.
Speaker Change: I think I continue to come back to our resilience.
Speaker Change: We have a diverse customer base.
Speaker Change: We have broad infrastructure cost across the country and all of that allows us to take full advantage of the highest value markets that we see.
Speaker Change: We have not seen any.
Speaker Change: Material degradation in the band.
Speaker Change: There are always seasonal variations in all of our products.
Speaker Change: But nothing that I would say is is particularly noteworthy at this point.
Speaker Change: Also contributing to that is when you look at <unk>.
Speaker Change: Product inventories across the country.
They do not not specifically for us but for the industry.
Speaker Change: And globally those those inventories are kind of at the lower end of the five year band. So you know all of that contributes to the strength in the marketplace as well.
Speaker Change: Thank you.
Manav: Thanks Manav.
Speaker Change: And our next question will come from Dennis Fong with CIBC World markets.
Speaker Change: Hi, Good morning, Thank you for taking my questions and I'd like to reiterate my congratulations on a job very well done.
Speaker Change: To you, Brad and an incremental welcome to John.
Speaker Change: My first question focuses a little bit on the upstream side I was hoping you could provide a little bit of incremental data points or clarity that really drive the confidence at running four year intervals between major maintenance as well as can you discuss some of the changes in either equipment or operating procedures that allow you for kind of maybe more minor maintenance to be conducted.
Speaker Change: That is like moderate or little impacts to output.
Dennis: Yeah. Thank you Dennis.
Dennis: I appreciate.
Dennis: Your comments there at the beginning.
Dennis: And it's you know it's an exciting journey, we've been on with turnarounds at Pearl When you think about where we were just a just a few years ago, we were conducting two turnarounds per year.
Dennis: And then moved to one turnaround per year and now over the last couple of years, we've reduced the duration of each of those turnarounds.
Dennis: And as I mentioned, we're getting ready to start one of those turnarounds here next week and we expect to complete it essentially in the same month, which historically, we would have never had kind of turnaround is limited to just one month of the year, but as we look to the future. We see this says.
Dennis: Integral and key to continuing to improve our our volume performance in and fundamentally our cost performance as well.
Dennis: We are planning after this turnaround to be in a position that we can run much longer between turnarounds.
Dennis: And targeting for years.
Dennis: But with that I've got Cheryl right here.
Dennis: She's she's right in the middle of of this strategy and spent a lot of time with the car.
Dennis: As they've.
Dennis: Refine that approach and demonstrating to her with confidence that this is achievable, but maybe I'll, let her talk a little bit about some of the details alright. Thanks Brad.
Speaker Change: I mentioned, we've been on a journey to optimize our turnaround activity. This year. We are spending time to do the work that will support this further extension to a four year interval.
Speaker Change: So whats made the difference and what I would say along this journey, we've been integrating technology really looking at our data and analytics to make better decisions, we've been benchmarking continuing to leverage.
Speaker Change: Global learnings.
Speaker Change: And then one of the things that you heard during Investor day, as I mentioned that we're sitting on a foundation of a continuous improvement mindset, and especially when I think about turnaround activity and how we optimize that it's really focusing on driving clarity and a relentless focus on what needs to be done in a turnaround versus what we can do outside of a turnaround.
Yeah, there's not a single item there, it's a mix of all of those enablers and it really going to get us from where we are right now to this four year interval.
Speaker Change: Great really appreciate that incremental clarity.
Speaker Change: My second question here is maybe targeted to Brad and maybe John.
Speaker Change: Through time Imperial has acted opportunistically and even counter cyclically in terms of spending or deploying capital, especially as compared to some of your peers.
Speaker Change: Given the combination of the balance sheet strength that you see today the longer duration view that imperial takes on investment cycles. How are you strategically thinking about potentially taking advantage of all the uncertainty we see today in the market.
Yeah. Thanks, Thanks for that question and and.
Speaker Change: Certainly that has our strategy and in the past of ensuring that we are optimizing our capital.
Speaker Change: How we target specific projects and really focused on highest return.
Speaker Change: And I.
Speaker Change: I take that part of your underlying question is really about M&A.
Speaker Change: Type opportunities and as I mentioned in the past.
Speaker Change: The aperture has always been open and but the bar is high because.
Speaker Change: We have a very high quality portfolio today.
Speaker Change: And so anything we would pursue would have to compete with that.
Speaker Change: And so you know.
Speaker Change: I don't expect that's going to fundamentally change, but you know John is here and he'll he'll be kind of steering the ship now.
Speaker Change: In the future and so maybe I'll, let him talk a little bit about that yes. Thanks Brad.
Speaker Change: It will not fundamentally change I think it first maybe I should say.
Speaker Change: I'm really humbled and excited to return to imperial in this role and as the Canadian they.
They have the opportunity to lead this company with such a long proud Canadian history of over 145 years.
Speaker Change: Truly is an honor I also and I would echo many of the comments that were in the questions and opening remarks today that I recognize that had some really big shoes to fill coming in behind Brad as he has mentioned we've known each other for over 20 years and I know, what a great leader and a great person he is.
Speaker Change: And imperial's performance under Brad has been outstanding and I'm committed to making sure that we continue that outstanding performance going forward and I'm committed to ensuring our shareholders and stakeholders and employees are proud to be a part of an associated with this company, but what youll see under my leadership.
Speaker Change: Imperial's strategy to win will remain very consistent and it's really about increasing cash flow and delivering unmatched industry, leading shareholder returns and that focus will be the same will be on maximizing the value of our existing assets.
Speaker Change: Targeted optimization and continued structural cost improvements, it's going to be investing on select growth opportunities within those enhance those assets like enhancements at curl in cold Lake and stress Cola.
Speaker Change: And then progressing some future strategic growth when we think about our <unk> business.
Speaker Change: Continuing to assess opportunities as the.
Speaker Change: Energy transition landscape evolves, and then utilizing technology and so on to take advantage of that and our relationship with Exxonmobil. So youll see a very consistent strategy, which I think has been a successful strategy. As we go forward that will be working very hard to leverage our competitive advantages I think we have advantages that others.
Speaker Change: Do not have around technology around scale integration.
Speaker Change: Execution excellence doing the right thing the right way to a high standard each and every time.
Brad Corson: And what Brad talked about our people.
Brad Corson: The best people the best team in the business with World class capabilities built up over generations through rigorous development and challenging cross functional assignments that you really do give us the best business. The best people in the business. So the way I look at it is we're going to take those competitive advantages that are unique to us apply them too.
Brad Corson: Our advantaged assets and opportunities and that's going to deliver leading value creation.
Brad Corson: And unmatched industry, leading shareholder returns going forward. So I'll just use that opportunity to say that.
Speaker Change: I also want to say, thanks to Brad and the whole team here who have been in.
Brad Corson: Very gracious with their time.
Speaker Change: <unk> me over the last month and a half for a couple of months and we've had.
Speaker Change: Very kind of structured thoughtful rigorous handover. So thank you.
Speaker Change: And our next question will come from Menno <unk> with TD Cowen.
Menno: Good morning, everyone and congrats to the to the both of you I'll start with a question on the February cold snap. It sounds like you are opening in your opening comments, Brad it sounded like things went reasonably well under the circumstances, but were there any additional earnings that came out of that beyond what was learned in.
Menno: 2022, and do you have any new ideas on warrant that could get done to to mitigate downtime related to extreme cold that going forward.
Menno: Yeah. Thanks, Thanks, Menno and appreciate kind of your question.
Menno: Yeah.
Menno: And I'm going to turn it over to Cheryl in a minute, but but I would just reflect on you know.
Speaker Change: This February was a challenging February from a weather standpoint.
Menno: But as I mentioned.
Menno: We learned from the 2022 incident around.
Menno: Kind of what were some operating improvements we could put in place we developed.
Menno: Some additional protocols, which now we put in effect.
Menno: And really leverage them to get us through a similar period this year than what we saw in 2022, but with much much better results and so you know.
Menno: While I would say it was unfortunate that the net result was still lower volumes compared to <unk>.
Menno: Last quarter or last.
Menno: I'm quite proud.
Menno: And then get it further demonstrated the strength of those protocols, but as always there's learnings and insights and we're going to continue to strive to be better.
Speaker Change: In these sort of situations when they occur in the future and so maybe I'll ask Cheryl to comment a little bit on some of those.
Speaker Change: Insights that we gained in how we're going to learn from those in the future.
Cheryl: Thank you, Brad and maybe a little bit of start a cold weather protocols, we exit.
Speaker Change: I mean weather conditions, so think of this.
Speaker Change: One five degrees Celsius minus 35 degrees Celsius.
Speaker Change: What we do is reduced through play aligned with our equipment strategy and focus on maintaining equipment integrity February 2020, or 2025 with an important Murray region. One of the highest number of cold extreme cold days versus 2022, we applied the learnings from 2022 and the protocols work as intended.
Brad Corson: And and Brad mentioned of course, we've got from our production with April very strong months with production just below our best ever still on target to meet external guidance.
Brad Corson: In terms of what comes next and that's a great question going forward, we're looking at where can we build capacity and redundancy.
Brad Corson: I mentioned during IR Investor day, some of the things that we're doing it with our hydro transport line.
Brad Corson: That allows us to further strengthen this performance going forward to quote unquote, whether it's storms.
Brad Corson: Okay. Thanks for that Tim.
Brad Corson: Oh, sorry, I think my phone cut out I think I'm dropping <unk> go ahead, Sir you are still open.
Okay terrific, yes, so maybe yes. Thanks for that is very helpful. Maybe I'll. Just second question is on the <unk> pilot that was touched on in the prepared remarks could you maybe just expand your comment on the scope of the pilot and the I guess the more important piece is the key deliverables that you've identified that ultimately constitute success.
Brad Corson: And then how are you risking the overall.
Brad Corson: Chances of success of EBIT PRT ultimately I.
Brad Corson: I suppose being a catalyst for Aspen sanctioning.
Brad Corson: I'll, let <unk> comment on that again, sorry, so as Brad mentioned, we're constructing a short term small scale pilot and that's just because the commercial potential of our enhanced bitumen recovery technology, Aspen leasing apartment Murray Aerion startup in 2027 and <unk>.
To run the pilot for several several years and there's three key areas that we really need to validate one of them is the production uplift. The second one is around overall recovery and then the project itself is really dependent on solvent recovery pile.
Brad Corson: Pilot is intended to de risk. These technologies and this is a step that we've taken with all technology.
Brad Corson: As highlighted before.
Brad Corson: This is a transformative technology and it will allow us to be more globally competitive capital efficient and highly resilient so even.
Brad Corson: Even though we are looking at this we need to take the time and this is a staged approach really does derisk. The technology. So that's the time, we'll be taking with the pilot going forward.
Brad Corson: Thank you ill turn it back.
Speaker Change: Thank you and that does conclude the question and answer session. I will now turn the conference back over to Peter Shaw, Vice President of Investor Relations for closing remarks.
Speaker Change: Thank you and so on behalf of the management team I. Thank you for joining us. This morning, if theres any further questions. Please don't hesitate to reach out to anybody on the Investor Relations team will be happy to answer your questions and with that I'll add one more thank you to Brad for his time over the last five and a half years at Imperial and we wish everybody on the call a great day.
Speaker Change: Thank you.
Speaker Change: Thank you that does conclude today's conference. We do thank you for your participation have an excellent day.
Speaker Change: Yeah.