Q1 2025 Suncor Energy Inc Earnings Call
I'm a star footballer, I'm a fighter, it won't break, I'm invincible And I would ever stay away, my love, I'm a foe, I don't need battery
Thank you. Thank you.
Speaker Change: Good day, and thank you for standing by. Welcome to the Suncor Energy First Quarter 2025 Financial Results Call. At this time, all participants are in a listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press Star 11 again. To withdraw your question, press Star 11 again.
Troy Little: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Suncor Energy Senior Vice President of External Affairs, Mr. Troy Little.
Troy Little: Thank you operator and good morning. Welcome to Suncor Energy's first quarter earnings call.
Please note that today's comments contain forward-looking information.
Troy Little: Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our first quarter earnings release as well as in our annual information form, both of which are available on CDAR, Edgar and our website, suncor.com
Troy Little: Certain financial measures referred to in these comments are not prescribed by Canadian generally accepted accounting principles.
Troy Little: For a description of these financial measures, please see our first quarter earnings release.
Rich Kruger: We will start with comments from Rich Kruger, President and Chief Executive Officer, followed by Chris Smith, Suncor's Chief Financial Officer.
Rich Kruger: Also on the call are, Peter Zebedee, Executive Vice President Boyle Sands, Dave Oldreive, Executive Vice President Downstream, and Shelley Powell, Senior Vice President Operational Improvement and Support Services.
Rich Kruger: Following the formal remarks, we'll open the call up to questions. Now I'll hand it over to Rich to share his comments.
Rich Kruger: Good morning. Suncor's first quarter was about maintaining momentum in starting 2025 strong. I believe we successfully accomplished both objectives. I'll comment on some operational highlights and Kris will further focus on financial performance. I'll start with personal safety.
Rich Kruger: Previously shared that 2024's performance was as good or better than 2023's best ever, with recordable and lost time events down significantly. I'm pleased to report the positive performance has continued year-to-date 2025.
Rich Kruger: Special call out to Dean Wilcox's base plant team. Winners of the John T. Ryan.
Rich Kruger: 2024 National Safety Award for Outstanding Safety Performance in Major Projects and Civil Work This is awarded annually by the Canadian Institute of Mining and it's the Holy Grail and Mind Safety.
Rich Kruger: Process Safety, previously shared that 2024's performance was best ever, First Cortile in North America. Will the first quarter of 25th?
Rich Kruger: Performance, Demonstrated Continued Improvement, significantly better than 2024's. Personal belief, you can't be a well-run company without being a safe company.
Rich Kruger: Upstream production, 853,000 barrels a day, our highest first quarter ever, and our second highest quarter ever.
Rich Kruger: 18,000 barrels a day higher than our previous best first quarter, which was achieved last year. Upgrader utilization of very strong 102% is the fourth quarter out of the last five where we've been at 99% for a higher.
Rich Kruger: continued high performance from our profitability pay sitter firebag at 248,000 barrels a day. Results particularly good considering harsh weather for much of February and Alberta.
Rich Kruger: Refining throughput, 483,000 barrels a day, far and away the highest first quarter in our history.
Rich Kruger: 28,000 barrels a day higher than our previous first quarter. Again, set last year.
The third consecutive quarter above 100% The third consecutive quarter above 100%
In fact every refinery achieves higher throughput and higher utilization. [inaudible]
Rich Kruger: Year on Year, and our overall bottom line is within 5,000 barrels a day of our best ever quarter of any quarter.
Rich Kruger: Refined product sales, 605,000 barrels a day. Here again, far and away the highest first quarter in company history, 24,000 barrels a day, higher than the previous best first quarter. Thank you very much.
Rich Kruger: Again, set last year. The third highest quarter ever with the top two quarters being the last two.
Rich Kruger: In fact, the past five quarters have been our highest in company history [inaudible]
Rich Kruger: In 1954, a gentleman named Roger Bannister, the world's first four-minute-miler said records are meant to be broken, and that is exactly what Suncor teams continue to do, break records
Rich Kruger: Total Costs, OSNG, $3.3 billion, down $143 million, or $4.2% in absolute dollars, versus the first quarter of last year, despite higher production and throughput across the board.
Rich Kruger: 3-4% higher absolute volumes, 4% lower absolute costs, operating leverage, achieved with a culture in a mindset that every barrel and every dollar matter.
Rich Kruger: I want to take you back 12 months ago, investor day, May 2024. We established several objectives for the three years, 24 through 26, to improve performance, create shareholder value, they were tied to production growth,
Cost reduction, free funds flow, growth and net debt.
Rich Kruger: At the end of last year or into 24, we reported on the first year progress, production growth, we have achieved 75% of our three-year target, breakeven reduction, 70% or $7 a barrel U.S. of the three-year target.
Rich Kruger: Free Funds Flow, 2.3 billion or 70% of the three-year target, and of course, net debt achieved our $8 billion target in the third quarter of last year. The bottom line, one year into our three-year plan.
Rich Kruger: We've exceeded every single target, essentially achieved two years of our planned improvements in the first year but the best and most important part we aren't done yet.
Rich Kruger: What gives me this confidence in the first four months of the year I've spent a lot of time in the field.
at our plant sites in our mines.
Rich Kruger: Meeting with and talking to you, a hard working, card carrying, operational and technical experts. I spent time at the base plant looking at our U-1
and Reviewing Autonomous Hall Truck Operations.
Time at Syncrued, Mildred Lake, and Aurora Mines
Rich Kruger: Observing Best in Class, Trucking Shovel Operations, Touring Syncruise Heavy Equipment Maintenance Shops, or Hills, inspecting the major news state of the art heavy equipment arrivals. I've been at our Montreal and Sarnia refineries with teams driving industry leaving utilization, touring our retail site network, meeting petrol, Canada associates across the country.
Rich Kruger: Why do I and my colleagues spend all this time in the field? Because Suncor's leadership team knows the game is one on the field with the players and on the field is where you'll find us. So what did I see that reinforces were not done yet?
Baseplant, Autonomous Hall Truck Operations, Mike Gartenberg's team.
Rich Kruger: At Year-In 2024, we achieved our objective of 91 autonomous holotrusts moving all productive
Rich Kruger: Since then we've increased our fleet to more than a hundred trucks on the way to 140.
Rich Kruger: In nine months, we've achieved performance equal to staffed operations versus a typical industry benchmark of two years. We're leveraging data analytics, creating a new world-class AHS Command Center.
Rich Kruger: We're collaborating with our partners Komatsu and SMS to upgrade AHS software to improve all whether or what we call mud mode operating performance.
Rich Kruger: The productivity expectations we have in the AHS at the base plant is expected to yield the equivalent of 10 free 400 ton of hall trucks by 2026.
Coat Drum, Coat Boiler Replacement, and Co-Generation Project.
Mike Higgs, Team
Speaker Change: 400 megawatt gas-fired generators, added new high-efficiency heat recovery steam generators, excuse me, we completed the project and achieved start-up in the fourth quarter of last year. We've now tested each unit at over 400 megawatts.
Speaker Change: The project will meet steam needs for the base plant with surplus power exported to the Alberta grid, improves reliability, lowers cost, generates power revenue and lowers emission.
Speaker Change: Syncrued, Aurora, Mine, Truck Loading Operation, Alex Stark's team, Aurora supplies two-thirds of Syncrued's mine-bitchment. The mine is supported by a fleet of 70-75 caterpillar, 797-400 tonne haul trucks.
Speaker Change: Historically, we've loaded each truck to 93% of capacity or 370 tons per truck.
Speaker Change: Alex's team has increased its load factor to over 100% now, a full 10% increase, 30-40 more tons of productive ore on each and every track.
Speaker Change: achieved through shovel operator best practices and load sensing technology. The impact, lower unit cost, higher productivity, equal to 7-3-400 time trucks.
Speaker Change: Ford Hills, New Hydraulic Shovel, Shovel, Callister Gibbons Team, last Thursday I attended a ceremony commissioning the world's largest hydraulic shovel, the PC9000.
Speaker Change: First of its kind, serial number number one, designed in partnership with Kamatsu and SMS.
Speaker Change: Purpose-built for Suncor to be perfectly paired with our Kamatsu 400-Kun truck fleet, larger bucket.
Speaker Change: Longer reach, greater digging force, swivel capacity for dual-side loading, the results, faster loading, less repositioning, less spillage [inaudible] more so, more so
Speaker Change: Having seen it and walked on it personally, the PC 9000 is a beast.
Speaker Change: Personally taught, I personally pulled out my stopwatch on my phone in time loading operations, four scoops, 404 tons in one and a half minutes, folks, that's fast.
Speaker Change: Deployed in Fort Hill Center Pit, we've got a second shovel scheduled for delivery in July , and two more next year.
Speaker Change: This is an example of vision, partnership, technology, and scale, driving productivity and lowering costs. Refining operations, I spend time with Carter Putin's Sarnia team and Isabelle Arbor's Montreal team.
Speaker Change: Seen how maintenance and reliability best practices are driving higher utilization, how turnaround benchmarking in risk-based work selection are reducing capital and operating costs, how low-cost de-bottle-necking is achieving record-setting, refining throughput.
Speaker Change: Two examples I want to share with you of grassroots focus on driving performance and adding value.
Fred Jones,
Speaker Change: Process Operator Sarnia Refinery. Brad had the idea to spend $200,000 for tie-ins to maintain flow and flexibility during our recent April turnaround.
Speaker Change: $200,000 added $4 million in jet fuel margin, a 20-to-1 payout in one month, well done Brad,
Crude Unit Operator
of $300,000.
Speaker Change: to increase refining capacity by 500 barrels a day is adding more than a million dollars in margin every year, 2025 will be the first full year.
These examples illustrate the power of clear simple priorities. [inaudible]
focusing on the fundamentals, understood and embraced top to bottom delivering results.
Speaker Change: Supply Trading and Marketing in the first quarter I witnessed Paula O'Shaughnessy's, Paula Dema's and Derrick Davies teams supplying and trading in volatile east-west crude and refined product markets to capture premium margins at lower cost. [inaudible]
Speaker Change: and lastly, I spent time with Pat Richie's, Petrol Canada Retail and Holesale Associates working in partnership to increase market share and site margins nationwide.
Speaker Change: I'll stop there, but here again, these are only a few examples I could share of Suncor teams.
Speaker Change: Technical, Operational and Commercial, working together to deliver industry leading results, teams with the drive of fierce competitors and the determination of champions, teams unstoppable in their commitment to be the best of the best.
with that, I'll turn it over to Chris.
Chris: All right, thanks Rich and good morning everyone. Building on Rich's comments, it was yet another strong operational and financial quarter as we continue the positive momentum we built in 2024.
Chris: But first with respect to the business environment in the quarter, there was obviously a lot of uncertainty around the impact of U.S. Terrace but in the end the commodity prices across the quarter remained constructive [inaudible] there was a lot of uncertainty in the quarter,
Chris: In the quarter WTI and the light heavy differential remained relatively flat versus Q4, at $71.40 US a barrel and $12.65 US a barrel respectively.
Chris: While synthetic crude decreased about $3 a barrel, averaging a discount of US $235 a barrel to TI.
Chris: On the refining side, New York Harbor 211 Cracking Marges, and Approve, versus Q4, US $2.25 a barrel, driven largely by improving distillate cracks
Chris: and our 5-2-2-1 Refining Index remain strong at US $26.80 a barrel.
Chris: Finally, natural gas prices increased by $0.60 Canadian to GJ versus Q4, averaging about $2.00 to GJ in the quarter, but obviously remain attractively priced for natural gas consumers like our business.
Chris: Rich has already detailed our Q1 operational performances remarks, so I won't repeat them here other than a few points.
Chris: Oilsand's production in the quarter was 791,000 barrels per day, within situ averaging 283,000 barrels per day in the quarter, Ford Hill is continuing to deliver solid operations with 176,000 barrels per day in the quarter.
Chris: while upgrading with strong at both base plant and sinkroot at 103 and 100% utilization respectively.
Chris: E&P averaged 62,000 barrels a day in the quarter, which is up 5,000 barrels per day from Q4, despite some temporary logistics challenges at Newfoundland Loading Terminal in the quarter, which have since been resolved.
Chris: In addition to very strong refining throughput and refined product sales in the quarter, our refining business also posted a very strong margin capture, averaging 99% on a life-o-basis when compared to our 5-2-2-1 index.
Chris: This high asset utilization and margin capture is a reflection of the powerful combination of strong asset reliability and our best in class supply and marketing business which maximizes value across our various trade channels.
Chris: We also continue to demonstrate operating leverage with total OS and G expense of $3.3 billion, which is down quarter over quarter, while production and sales were up in both the upstream and the downstream.
Chris: While Capital Expenditures totaled $1.1 billion in the quarter, including 600 million of economic investments.
and 500 million of sustaining and maintenance capital. [inaudible]
Chris: This strong operational performance and cost management led to very positive financial results in the quarter [inaudible]
Chris: We generated $3 billion of adjusted funds from operations or $2.46 per share in the quarter and adjusted operating earnings of $1.6 billion or $1.31 per share.
Chris: I think it's worth noting that when comparing quarter over quarter, Q1 25 to Q1 24, despite a 7% decline in WTI, an average 24% decline in New York Harbor and Chicago 211 cracks.
Chris: You see that our ASFO preshare is the same and our free fund flow preshare is actually 6% higher. This is a clear demonstration of the impact of our improving performance. [inaudible]
Speaker Change: As Rich just said, at Suncor every barrel and every dollar matters, and this is proof of that.
Speaker Change: In the quarter, we also return nearly one and a half billion dollars to shareholders, including $705 million in dividends and $750 million in share buybacks, which was 1.1% of our float.
Speaker Change: We continue to focus on returning 100% of excess funds to shareholders while prudently investing in the business to grow returns to our shareholders.
Speaker Change: As expected, we saw a working capital increase during the quarter of about a billion dollars contributing to net debt at quarter end being 7.6 billion dollars which is aligned with our debt management and capital allocation strategy.
Speaker Change: Overall, first quarter operational and financial performance, demonstrate a continued relentless focus on executing the fundamentals of our business and generating value for our shareholders of our business.
Speaker Change: Now before handing it back to Rich, I just want to make a few comments on the second quarter.
Speaker Change: We're into our second quarter turnaround program and it is on plan for our 2025 guidance.
Speaker Change: Sarnia Refinery started its cue crewed unit 1 turnaround on March 29th, which includes plan maintenance work on the cat cracker and alcholation units, and I'm pleased to say the team has made great progress on the event against the plan.
Speaker Change: As well, the Edmonton Refinery Spring Turnaround, which includes the Sour Crude Unit, Hydrotreaters, Solfer Train, and Delayed Coker Unit, started on April 15th and is also proceeding very well and on plan.
Speaker Change: and lastly, the base plant, Upgrader One Turnaround, which includes the Coke Drone Replacement Project, is also underway. The event started on May 1st and is a planned 91-day outage. [inaudible]
Speaker Change: We are extremely pleased with the planning and preparation the team is done going into this event and we're very well positioned for the execution of both the turnaround and this important project.
Speaker Change: and we look forward to completing all these events and reporting on them at the end of our second quarter.
Speaker Change: Finally, I want to take a moment to acknowledge the market conditions we're currently facing. With WTI prices currently bouncing around $60 a barrel amid the market uncertainty we've seen over the last few months [inaudible]
Speaker Change: I'm very pleased that the significant strides we've made over the last two years to improve our operational and financial performance.
Speaker Change: Significantly reduced our WTI break even, and strength in our balance sheet, has significantly improved our company's resiliency, and positioned Suncor to weather these uncertain times, and continue to generate solid pre-castflow for our shareholders.
Speaker Change: Suncor is a resilient company with a best in class integrated business model and a highly focused and capable team. You heard many examples from Rich, both of which will prove to be a significant advantage during these times like these and position us extremely well into the future.
and with that, Rich, I'll turn it back to you.
Rich Kruger: Thanks, Chris. A couple of comments before we just dive into the Q&A.
Rich Kruger: I'll end with a quote from the late Academy Awards when you're after Gene Hackman. In the 2000 film, The Replacements, Hackman, Start with Counter Reaves, the quote, Winners always want the ball when the game is on the line.
Rich Kruger: Folks, I am seeing Suncor teams company-wide continue to show me they want the ball with that I'll turn it back to Troy
Troy Little: Thank you, Rich. I'll turn the call back to the operator to take some questions
Thank you.
Speaker Change: And our first question will come from the line of Dennis Fong with CIBC. Your line is open.
Dennis Fong: Hi, good morning, and thanks for taking my questions as well as congratulations for a very strong first quarter.
Dennis Fong: My first question here, you had to contend with the impact of colder weather in January and February . Can you talk towards your strategy around managing the various
Speaker Change: Yeah, I'll take it. You know, thanks, Dennis. You know, I don't mean to be for Smith here, but the last time I checked, it's always cold in Canada in the first quarter. [inaudible]
Speaker Change: So we have taken a strategy of philosophy. We're not going to be a weather taker [inaudible]
We're going to be a weather maker.
Speaker Change: And so what Peter and Dave have done is they've focused, they've designed into our operation the resiliency for extremely cold weather conditions. Whether that's the fuel in our hall trucks, whether that's supplemental winterization at our refineries. We face this
Speaker Change: This uncertainty, this variability every year, and for the last two years we have been very focused on how do we engineer or design out?
Speaker Change: that risk of that variability. So if, you know, if you want to further examples, I can, I can ask Peter and Dave to comment, but, but we, like so many other things in our company, we've looked at it and just not accepted the outcome, but saying, what can we do?
Speaker Change: That can change or improve our performance independent of what the circumstances would be and I think our winterization program is a you didn't you didn't read about winterization in our press release because we've engineered to accommodate and deal with it.
Speaker Change: I appreciate that color. I'm not sure if Peter was going to step in there.
Speaker Change: I don't know, do you have anything to add particular to that? Maybe I just had a couple things, Dennis. I can't leave you much, please. I also, you know, you really start to see the strength of our integration across oil sands come out here. So, where, you know, an issue crops up in a single asset, we can really lessen or buffer out that impact by movie barrels across our integrated production system. And you saw that.
Speaker Change: and the high asset transfers that we reported on this quarter. That's really the strength of Suncor and the strength of Suncor integration coming through.
Speaker Change: I can add a little bit for a refinery perspective as well. It's Dave here. You know, if there's thousands and thousands of things you have to get right for winterization to work at a complicated refinery, and I've seen these things all over the world. And the key really is to learn from past winters and make sure you capture the learnings of the instruments and the various things that freeze up and make sure you have a disciplined approach. [inaudible]
Speaker Change: to ensure that they're in good shape for the fall and winter. And the other thing that is probably interesting and people may not appreciate is we start our winterization program sometime around July . It's a middle of summer and that's when we're starting to focus on it because we know winter comes every...
Read here. Thank you guys.
Thanks really appreciate that underlying context.
Speaker Change: My second question shift, a little bit towards technology and in aggregate improving operations. I know back with the May Investored Day update, you guys talked a little bit around the Mind Connect tool, which really kind of helps optimize the Mind Fleet in aggregate. But I think the other thing that you've mentioned, at least a few times in conference calls, is that...
Speaker Change: While you present some of the really interesting opportunities, a lot of those kind of new ideas come from, we'll call it within the organization. So I wanted to kind of, like, address like, how does a mind connect to? [inaudible]
Speaker Change: Connected Tool, Doing in terms of optimizing operations, and secondarily, what is that maybe spun out in terms of incremental benefits that you maybe didn't realize right when you kind of implemented the tool to begin with? Yeah, yeah, yeah, yeah.
Paul, and the use of some mind-connect data, and how that-
Speaker Change: comes into our operating cadence and our operating performance through our operational excellence management system, so it's really about...
Speaker Change: Identifying an outlier which is delivered by the Mind Connect tool, taking immediate action and then generating the value in the field. And that's really kind of where the power comes from data and insights and technology to quick action by the leadership team.
Speaker Change: Peter, one of the things that really struck me as we sat there is the real time nature of the team leads who had the gentleman in the room with us, he talked about how they meet periodically multiple times a day, every few hours, as the opportunity is migrating from whether it's a shuttle operation or a truck efficiency and so we don't lose a moment in the ability to optimize or improve overall performance. To me, that was a, that was really a powerful.
Speaker Change: All Discussion that we had. It really is about a timely response to a variant condition.
Thank you for watching!
Great, thanks for that color, I'll turn it back [inaudible]
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Greg Pardy with RBC Capital Markets. Your line is open.
Yeah, thanks. Good morning.
Speaker Change: I wonder if we can maybe just pivot to the downstream and then specifically
Progress made on retail EBITDA growth.
Speaker Change: Like as I, you know, ride my bike around Toronto, what I see are, you know, you're closing some stations. I know there's enhancements going on elsewhere. Just curious how the strategy is unfolding and whether the retail kind of the same question but whether the retail is ultimately core to your business longer term. .
Speaker Change: Thanks, Greg. I'll ask Dave to comment in a second, but you're exactly right. If you go back to either our retail review or our investor day, we talked about how
Speaker Change: That we're looking at that portfolio of some 1600 plus sites nationwide, and we're upgrading, upgrading, major markets, the highest volume, highest margin sites, we're growing those, and then we're rationalizing on the other end of that. [inaudible]
Speaker Change: Dave, you want to comment on how we're doing? Yeah, for sure [inaudible]
Dave Oldridge: and Greg, riding your bike around, it's not helping our retailers. [inaudible]
Speaker Change: I think it's just a topic for Berger at an A&W. I've got to sign my book with a loyalty program.
Speaker Change: We do have other options though for you, Greg, and our convenience stores and our quick serve restaurants. But we are executing plans to grow our domestic retail business. I'd say actually retail and wholesale. And we've mentioned back in May that we're committing to grow that by 200 million by the end of 2026, in the back we have plans to go beyond 2026 as well. And that serves us well in terms of finding good domestic outlets for our products.
Speaker Change: and that plan involves a high grade and a transforming 20% of our network between 24 and 26 and I would say it is well on track As Rich mentioned, he likes to say we're building sites that you can take the family to for the day and enjoy hours of fun at our retail sites [inaudible]
Speaker Change: They're larger science with larger sea sores, quick serve restaurants, car washes, and all really design that cheap top returns.
Speaker Change: In the first quarter, we actually completed eight site enhancements in one new build.
Speaker Change: We also rebranded seven competitors, Patrick Canada, Brad, and that's part of a program of 20 sites which are actually [inaudible]
Speaker Change: We completed 17 up until today, so seven in the first quarter, 17 today and the final three are actually opening today, so there will be 20 new rebrands there.
Speaker Change: and that's helped us over the past year increase our petri-point's membership by over 30%.
Speaker Change: So that really material increases, we're starting to see that now in the volumes and lay into the strong Canadian brand that we have that's been really helpful through the first quarter.
Speaker Change: We saw a 6% year-on-year increase in retail, 9% year-on-year increase in our petri-pass truck stop business. So we continue to grow on that business and it's delivering.
Speaker Change: and David, I just can't build off of that one. I think it's important, Greg, to recognize all barrels aren't created equal. There is a clear, you know...
Speaker Change: Pareto Charter, Priority of the highest value barrels, the branded company owned retail in major markets, top of the food chain, and so on. And what I like, David Patrichey's teams, you know, understanding that, it's not about volumes, it's about value.
Speaker Change: But when you can couple volume with value, that's when you get the exponential effect and that's what I see the steam doing . . .
Speaker Change: Okay, Richard, it's kind of a part of the same question. I mean, back in Imperial, you did that big transaction where you guys sold off the retail for a huge price at the time. Not to put words in your mouth, but are you, you know, is this an asset that you're absolutely wed to? Or is it, you know, how do you think about the retail ultimately as a core part or not a core part of the business? [inaudible]
Speaker Change: You know, the only thing I unconditionally love are my kids and my grandkids. Everybody else has to earn their seat at the table and I'm not making a statement about retail at all, but we look at all of our assets for their ongoing contribution and their value to us. And with right now, with the value that's being created here, this is a very, very valuable part of our portfolio where we think there is continued growth. So, you know,
Speaker Change: In an uncertain world like we're in today, that full integration all the way through the value chain is another set of value opportunities for us. So, you know, I never say never, but right now that is a very, very valuable part of the company's operations. Thank you very much.
Speaker Change: Okay, thanks for that, Neil, it will blind me maybe just on a second one, so if I roll back the clock
Speaker Change: This time last year you talked about 3.3 billion of incremental, you know, free funds flow, you've accelerated it.
Speaker Change: in terms of what you've been able to achieve. But I'm just curious from what I understand that that number was actually bigger that there were headwinds that you kind of factored into the estimation of that number. And I'm just curious, what are you seeing in terms of, are the headwinds as acute as you expected or what have you? [inaudible]
I think we're seeing examples where...
Speaker Change: The, you know, you talk about inflation or things like this, that's part of it, but I also like the proactive things both Dave and Peter are doing that also affect those headwinds as we, for example, and I use a simple example as we deliver and take ownership of
Bigger All-Trocks
Speaker Change: We send home rental trucks that are smaller. Well, that also influences the market.
and so I would say the...
Speaker Change: The headwinds we're facing in Jeremy Dolomy put words in your mouth are we're probably counteracting more of those headwinds than we would have anticipated a year ago. Fair? Yeah. I agree with that. It is all about driving efficiency and productivity and getting more out of the assets that we have than what has been historically generated. So that is something that is at the forefront of our minds and our daily drive each and every day. You know, come back to a point I made, you know, just a few.
A few minutes ago, Greg Delt.
Speaker Change: We're approaching everything is we don't want to be a market taker, but a market maker. And so whether that's for goods and services, whether that's how we participate in the refined product sales is, you know, historically you could look at things and well this is up, this is down. What can we do? We're going to do.
Speaker Change: to alter that for a better outcome for Suncor. It's a mindset, it's a culture, it's just a passion for making things the absolute best they can be and I think this area on the headwinds is the same thing. We didn't get there's a, you know, whatever that number was in our, in our investor day was an offset. Okay.
Speaker Change: and we're saying, okay, well, that's just like everything else. What can we do to reduce that impact and create more value?
God, it's thanks very much.
Thank you. One moment for our next question.
Manav Gupta: and then we'll come from the line of Manav Gupta with UBS. Your line is open.
Manav Gupta: Good morning, I wanted to first focus on the refining side, a 99% capture, one of the highest we have seen in North America, help us understand a little more what's driving this high amount of capture versus relative to your peers, and how you continuously on a per barrel basis remain one of the most profitable North American refiners.
Thank you.
Manav Gupta: Dave, how are we doing? How are we doing it? It really comes down to our integration and capture value all the way through the value chain.
Manav Gupta: You know, our Suncor integration helps us, we grow our branded channels, we're leveraging our trading capacity.
Manav Gupta: We're optimizing our production and upstream and downstream assets, and as I mentioned to you.
Manav Gupta: And in response to Greg's question, you know, one of the big things that drove margin capture is improving our channel mix and we saw that specifically in the first quarter, we saw retail volumes up 6%, we saw our truck stuff business up 9%, and more importantly, even with
Manav Gupta: We've increased throughput, a record throughput at the refineries. We saw our exports down 25% in the quarter and that's really what helped drive. That's a big factor in driving the margin improvement. So we're capturing the margin capture and the improvement of that margin capture. So we're capturing the full value and we're trying to keep more and more of that domestically. [inaudible]
Speaker Change: And it's actually the other thing I'd add to it, David, I think that you're kind of the philosophy.
that over the last couple of years is our...
Speaker Change: We have said to our refining teams, run your facilities to the full extent of their capacity.
Speaker Change: The opportunity for your marketing teams is go out there and capture that improved volume mix.
Speaker Change: So, as opposed to the past, at times we've said okay, well here's what the demand is so we might have and we have actually adjusted refining throughput to meet an anticipated demand or our expectation of the markets. Last time I checked, I can never sell a barrel I don't produce or refine. So, we've turned that around and said get after it and we'll find valuable homes. [inaudible]
Speaker Change: and I think our teams have risen to that opportunity. We're ready, 100%
Speaker Change: Thank you. My second question is how you do have a big turnaround on upstream coming up, help us understand the risk planning around it and how you will make sure that this turnaround completes on time and on budget. Thank you.
Speaker Change: It's a combination of a turnaround and then a project, a project on a Coke Trump replacement. So Shelley, let me let me ask you to comment on that because the real, the real determinant of the the success of this is the 91 day Coke Trump replacement project. Talk about the preparation. You're
Speaker Change: your teams and the risk management your teams have undertaken on that. [inaudible]
Speaker Change: Yeah, for sure. So we're in a very good spot with this project. The team is in place and as you said, we are well into the start of execution with that turnaround now underway. And in fact this weekend we just completed one of our first...
Speaker Change: important list. So, it's been very good to get that behind us. It tests the team up well for the remaining and they left that activities.
Speaker Change: And as he said, coming into the event, we did a lot of work focused on risk, risk management.
Speaker Change: Risk Mitigation, and we were really well prepared. We have all of the pre-work done, and that included actually doing some early planning and preparatory lifts. So we practiced some of this stuff ahead of time to make sure that we had the equipment in the right spot. We had the people trained and ready to go and everybody knew what their role was going to be. So we're very confident we have a team that we have in place. [inaudible]
Speaker Change: A lot of these folks have actually done some of this type of work before, not necessarily at our site, but certainly the crane, the crane operator, they go around the world lifting coke drums into place. So this is just a different site for them to do that work.
Speaker Change: And we were up there as a leadership team, what, six weeks ago, six, seven weeks ago or something? And I was going to say we crawled all over that steel, but we crawled over a lot of concrete as well. And so it's a myth, it's a project.
but it's extremely integrated with the operations.
and I would say the, you know, Shelley's your team.
Speaker Change: Operations and Projects that I probably witnessed in my career. And that's what it will take for this to be a huge success. We have to be seamless in our execution and our handoffs.
Speaker Change: and we want to clear victory until we're done, but we feel quite good about our level of preparation and planning.
Speaker Change: Thank you so much for a detailed response and congrats on another strong quarter every quarter you seem to be setting new positive records. Congratulations.
Thank you.
Thank you. Dial in next quarter.
Thank you. One moment for our next question.
Speaker Change: and that will come from the line of Neil Mehta with Goldman Sachs. Your line is open. Thank you for joining us today.
Yeah, good morning, Rich and Team.
Speaker Change: Just want to start off with in a chapter macro, capital flexibility has been a hallmark of the businesses where you've run over the years and so
Speaker Change: As we think about that 6-1-6-3 at Capitol, how are you thinking about that and how do you drive and maximize capital efficiency to ensure that there's headroom to continue to return to Capitol to shareholders?
Speaker Change: Well, Suncor's version, we are rebuilt for this. We are rebuilt for this business environment, and what it allows us to do.
Speaker Change: He just execute our plans without hitting the gas or jamming on the brakes.
Speaker Change: and doing what we know is in the best long-term interest of the business. And I think that's important.
Speaker Change: We go through commodity swings in this business, you know, whether that's the early 90s, the early 2000s, or the late 90s, early 2000s, 2014, 2020, if you've been in this business long enough, you've seen this movie, it's not new.
But I'll take you take your question more explicitly.
You do get more judicious.
Speaker Change: on your economic spend. Do you establish a high hurdle for the economic payout? Do we need to spend it today or can we let the dust settle and see where we are six months or a year from now? Those are the prudent things we're doing in looking at.
Speaker Change: And as we drive down our sustainable capital to improve turnaround performance and just risk-based work selection, our overall capital decompresses
Speaker Change: We're also at a stage where a lot of our economic capital is wrapping up and so we have the ability to say kind of what's next and at what pace we talked about the beyond.
CBR project.
Shelley just commented on the U1C dip, so as those...
Kale Off, Rob,
Speaker Change: We will determine what economic capital replaces those. Does it replace it now? Does it replace it later in the macro? And I like that flexibility. But it all starts with a rock solid balance sheet, a low and very, very competitive WTI break even. And today's Suncor is rebuilt for this business environment.
Speaker Change: No, that's fairly clear, and it might be too early to comment on this rich, especially given the macro, but as we start to bridge to 26 switches
Speaker Change: coming rapidly in front of us here. How should we think about the moving pieces around Capitol? And, you know, is it fair to say there's a downward bias for all the cases of this year?
Speaker Change: I think, you know, again, if you go back to the investor deck of a year ago, we showed that 24, 25, 26, we showed that coming down and a part of that is improvement in the overall level of sustaining spend as we just make better wiser decisions there. And then, of course, the rest of it is the economic. Thank you.
Speaker Change: and we'll, I think the specific number, I think, for 26 that we showed was 5.7, so it does show coming down year on year on year, and I think that's exactly what will be driving toward, and if the business environment [inaudible]
Speaker Change: Lawrence, that further? That's exactly what we will evaluate as we go through our business planning process this year.
Okay, all right, that's really helpful. Thanks, Rich Thank you very much.
Thank you.
Thank you. One moment for our next question.
Speaker Change: and that will come from the line of Menno Hulshof with TD Securities. Your line is open.
Speaker Change: Good morning, everyone. I'll start with a bigger question on the political landscape of the event.
Speaker Change: I think it's probably too early to comment, but has there been any response from the feds on the-
Speaker Change: Group industry letter that was issued in recent weeks and I guess the more specific part of the question is have you been given any loose guidance on pathways or the oil and gas emissions cap? It feels to me like it's all generally part of the same conversation, but any thoughts there would be would be helpful.
Speaker Change: Yeah, I think you described it well. It's pretty early in it, but if I go back to the two letters that industry signed, the first one was of seven or eight weeks ago now before the election were 14 CEOs signed a letter to all of the political leaders when we looked at the ambitions of the leadership for economic growth and prosperity for Canadians, that was our call to action that energy can and should, in fact, must be a part of
Speaker Change: of that. And we said, you know, for that to occur, we're ready willing and able to do that. But we need these conditions. And so the more recent letter, which it was those original 14, and we had another long list. I think you.
Spinal count was 38 energy. [inaudible]
Speaker Change: CEOs signed on to that letter where we we iterated those conditions that we need to be a part of the you know the ambition of the economic health and prosperity of Canadians.
Speaker Change: And it's a bit early, I won't get into, you know, there are conversations going on, I won't.
Speaker Change: Get into what you know he said or she said but I think that the alignment within the industry the importance of the industry to the economic health and well being of the country I think that is understood. Do it.
Speaker Change: The political powers that be the will to enable that investment environment to allow this industry to, you know, perform to its full potential. And when we do that, Canadian's nationwide will benefit.
and Suncor looks forward to being a part of that.
Rich Kruger: Thanks for that, Rich. And then my second question is on fire bag, which continues to perform exceptionally well. Is there anything you would want to flag in terms of recent changes to surface or sub surface best practices, or is it more a function of improved execution on existing standards and protocols?
Rich Kruger: You know, Firebag is one of the few big assets that I have not-
Speaker Change: went to yet year to date, primarily because I want to stay out of their way. That team is focused like a laser.
Speaker Change: on incremental value. But what I will tell you is several of us here in the leadership team, we've got what, five now, I think it's five sessions with our technical experts, geophysicists, engineers, geologists, with logs, maps, cores, looking at how can we continue to extract and develop the full potential of this asset? We're looking at completion technologies, we're looking at the non-condensable natural gas utilization.
Speaker Change: Further infield drilling. So, you know, the folks around the table with me, we've rolled up our sleeves to engage with the folks that see the opportunities. And every time I'm in one of those sessions, I walk away with a higher ambition, a higher expectation of what that asset can do, not only in the short term, but the long term. I refer to it as everything as, you know, from a rock star to the gift that keeps on giving, I got to come up with some new phrases for it. [inaudible]
Speaker Change: because that is a winning asset and that team understands that, we're prioritizing the work, the allocation of capital to achieve it, and I think you can get used to on, you know...
My number one draft picks fire bag
Speaker Change: Just a point of clarification. Are you applying NCG already or is that future upside?
small amounts.
Speaker Change: But we see when we look at, this is a great example in today's Suncor. When we look over our fence line and look at what others are doing and try to capture and accelerate their learnings, we see an opportunity for us to further expand that redistribute steam, lower our steam oil ratio and develop incremental barrels. So yes, we've been applying it for our future will be applying it at a larger scale.
Perfect, thanks Rich, I'll turn it back [inaudible]
Speaker Change: Thank you. I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Troy Little for a closing remarks.
Speaker Change: Thank you everyone for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can add the call.
Speaker Change: I'll smile, I know what it takes to fool this town I'll do it till the sun goes down And all through the night time Oh yeah, oh yeah I'll tell you what you wanna hear Keep my sunglasses on while I shed a tear It's now or the right time Yeah, yeah I put on my armor, I'll show you how strong I am I put on my armor
Speaker Change: I'ma stop a battle, I'ma fight them in one break, I'm invincible And I'ma never stay away, mine's a powerful, I don't need batteries today I'm so confident, I'm on top of all the day, I'm standing on top of all the day [inaudible]
Speaker Change: Untouchable for today, untouchable for today, I'm untouchable for today Breakdown, only alone I will cry out now You'll never see what's hiding now, hiding out deep down Yeah, I know, I've heard that it hurts your feelings so It's the only way to make friendships grow But I don't do it right now, yeah
Speaker Change: I put my armor on, I'll show you how strong I am I put my armor on, I'll show you that I am I'm unstoppable, I'm a force you will not break I'm invincible, I win every single day I'm so powerful, I don't need batteries today I'm so confident