Q2 2025 Canadian Natural Resources Ltd Earnings Call

Good morning. We would like to welcome everyone. To the Canadian Naturals 2025 second quarter earnings conference call and webcast.

After the presentation, we will conduct a question-and-answer session.

Instructions will be given at that time.

Please note, this call is being recorded today. August 7th, 2025 at 9:00 a.m. Mountain Time,

I would now like to turn the meeting over to your host for today's call, Lance Casson.

Manager of investor relations.

Good morning everyone and thank you for joining Canadian Naturals. 2025 second quarter earnings conference call.

As always, I'd like to remind you of our forward-looking statements and it should be noted that in our reporting disclosure, everything is in Canadian dollars unless otherwise stated.

And we report our reserves in production before royalties.

Also, I would suggest to review your advisory section, in our financial statements.

And includes comments on non-GAAP disclosures.

Speaking on today's call will be Scottsdale with our president and Victor derail our key financial officer. Additionally, the room with us, this morning is Robin zebec, CEO and P and Jrock CEO of well sounds.

Scott will start off by providing details on how strong operational performance the completion of turnarounds and a recent decree of Acquisitions set. Canadian natural law for a strong second half of the year.

And our significant return to shareholders your date.

To close, I'll summarize prior to opening up the line for questions. With that, over to you, Scott.

Thank you, Lance. And good morning, everyone.

Our Relentless focus on continuous Improvement. Combined with effective and efficient operations. Drove strong performance year-to-date in 2025.

Our ability to effectively allocate Capital across our strong asset base, provides us with a competitive advantage.

This ability, combined with creative acquisitions, creates significant long-term value for our shareholders.

Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders.

We successfully completed a plant turnaround at AOSP in the second quarter of 2025, 5 days ahead of schedule and on budget.

production and upgraded utilization at Horizon and AOSP before and after the turnaround was high,

Driven by strong performance from our reliability enhancement and debt on the bottlenecking projects.

In in July 2025 oil, sands Mining, and upgrading production averaged approximately 602,000 barrels per day with upgrader utilization of 106%, and we expect the second half of 2025, to continue to deliver strong operating results.

In this second quarter of 2025, despite the plant, turnaround at AOSP, which reduced production levels in the quarter by approximately 120,000 barrels per day. We achieved quarterly production volumes totaling approximately 1.420 million views per day, including liquids production of 1.019 million barrels per day, and natural, gas production of 2.4 BCF per day.

Total corporate production on a Boe basis. In the second quarter of 2025 was up approximately 135,000 boies per day. From the second quarter of 2024 reflecting opportunistic, Acquisitions and organic growth across our asset base achieved in the last 12 months.

On the acquisition front, we closed the pallets or block on June 26th.

Originally, we budgeted to close this acquisition on March 1st 2025.

Which would have added production of approximately 50,000 bews per day, including 20,000 barrels, per day of Manville Lake, crude oil and ngls in the second quarter of 2025.

This acquisition and production were included in our original 2025 capital, budget and production guidance. But due to the delayed closing in late June, it added only 2,000 barrels per day to our production levels for the second quarter.

This acquisition also included approximately 1.1 million, net Acres of high-quality land.

With currently identified significant like crude oil, inventory of approximately 850 locations.

Subsequent to quarter. End on July 2nd, we closed an acquisition of liquid Rich Monty assets located in the Grand Prairie area.

For approximately 750 million.

With production from the acquisition of approximately, 32,000 bees per day, including 12 125 barrels per day of NGL.

Our original 2025 capital budget and production. Guidance did not include this acquisition. These assets are directly adjacent to our existing Monty assets. Providing opportunities for synergies while adding approximately 120,000 net Acres of high-quality land. We currently identified significant liquidity, inventory of approximately 100

50 locations.

To summarize our combined recently closed accretive Acquisitions have added approximately 82,000 boies per day of production, which includes approximately 32 and a half thousand barrels per day of liquids. And total inventory of roughly 1,000 light oil and liquid Rich drilling locations.

Further related to these acquisitions are full-year results. The capital budget will essentially remain unchanged from the guidance provided in the first quarter, excluding the purchase price of the Grand Prairie acquisition, which closed on July 2.

All maintenance. Capital related to the Grand Prairie asset and other Acquisitions. We've noted will be covered by our 2025 budget.

While maintaining our Capital guidance, we provided in the first quarter for the year.

We're also targeting to close the AOSP swap in the third quarter. We plan to update our annual 2025 core fit production guidance after that swap closes.

I will now run through the second quarter operational results.

on the conventional side of the business, primary heavy oil production, averaged approximately 87,300 barrels per day in the second quarter and increase of 10% or the second quarter of 2024 reflecting strong drilling results from our multilateral well program

We continue to achieve strong results, from our drilling programs across our conventional en assets. As we are realizing Capital efficiencies resulting, in high levels of activity without increasing capital.

this includes our multilateral heavy oil program where we are targeting to drill, 26 more wells in 2025 than originally, budgeted

Importantly.

The low operating costs on these multi-lateral, Wells, Drive, strong results on Capital. Adding significant value,

Every oil operating cost averaged 17.44 per barrel. In the second quarter of 2025 comparable with the second quarter of 2024,

Pelican Lake production average approximately 43,100 barrels per day. In the second quarter, a decrease of 4% from the second quarter of 2024 reflecting low. Natural field declines from this long life, low decline asset operating costs of Pelican Lake average 9.1% per barrel in the quarter comparable to the second quarter of last year.

North American lake crude oil and NGL production averaged approximately 140,700 barrels per day in the second quarter, which is up 31% from the second quarter of 2024.

Primarily driven by production from our duvet assets.

and the addition in addition to strong dealing results and our liquidity Rich natural gas assets,

operating costs on our light oil and NGL operations, average $10.94 per barrel, a decrease of 24% compared to the second quarter of 2024 level of 13.75 cents per barrel, reflecting higher, production volumes,

on a duvet assets, We are continuing to achieve strong production results and further cost reductions on these Assets in the short time that we've owned them

Through our culture of continuous Improvement. We remain confident, we will continue to realize more value for shareholders than what was originally planned.

For at the time of the acquisition.

Our teens efforts have resulted in strong operating costs. During the first 6 months of these operating these assets averaging, 8 dollars and 43 cents per barrel. And the second quarter of 2025 to decrease of more than 11% compared to the first quarter of 2025 when operating costs were 952 per HBU.

This results in annual operating cost Savings of approximately 60 million dollars as compared to our original Target of 40 million.

Our extended, well lengths in the duvet are on average 20% longer than our 2024 well lengths. Optimized completion designs combined with strong execution continue to lower development costs.

On a length-normalized basis, combined drilling and completion costs for 2025 are now targeting an improvement of approximately 16% or $2 million per well lower compared to 2024 costs.

That's a further improvement of dollars per well, compared to the first quarter of 2025.

we remain on track to achieve 2025 budget production of approximately 60,000 barrels per day in the dubernet E per day in the Dubai.

North American natural gas production. For the second quarter averaged approximately 2.4 BC up per day. An increase of 14% over the second quarter of 2024

Operating costs on a North American Natural Gas. Average adult 7 per mcf which is 10% lower compared to the second quarter of 2024 of $119 per mcf primarily the result of higher production volumes,

In our thermal in situ operations. We achieved strong thermal production in the second quarter averaging approximately 274,800 barrels per day. This is up 3% from the second quarter of 2024 resulting from our Capital efficient thermal pad, add development program.

Is comparable to the second quarter of 2024.

A primrose. We target to drill a CSS pad in the third quarter of this year with production targeted to come on in 2026.

At jackfish during the month of July, we brought on production. A recently drilled saggy pad a Kirby we are targeting to bring the recently drilled 5. Well pair of saggy pad on production in the fourth quarter of 2025

At Pike we completed drilling 2, sagg deep pads which will be tied into the existing jackfish facilities and targets to keep the jackfish plants at full capacity. The first of these 2 pads is targeted to come on in production in the first quarter of 2026. And the second pad will be on production in the second quarter.

At our commercial scale. Solvent sag, d-pad. And Kirby North, we began solving injection in June of 2024 and the second quarter of 2025, we executed work overs on 2. Well pairs to enhance, SOS solve a recovery and production Trends will continue to be be monitored over the coming months.

And our oil sands mining and upgrading are in the second quarter of 2025. Our world-class oil sands mining and upgrading production averages approximately 463,800 barrels per day of SEO, an increase of 13% from the second quarter of 2024.

The increase is a result of the reliability enhancement project eliminating. The need for a turnaround at Horizon in 2025 and the scottford upgrader. Debottlenecking interest in AOSP acquired in December of 2024

oil. Science mining upgrading cost averaged $26.53 per barrel of the SEC of SEO and the second quarter of 2025 an increase of 2% from second quarter of 2024 reflecting the AOSP turnaround in the second quarter of 25.

Our growing world-class asset base is a strategic balanced strategically, balanced across commodity types, so that we can be flexible and capture opportunities throughout the commodity price. Cycle maximizing value, for our shareholders,

A substantial portion of our unique and diverse asset based consists of long life, low decline assets, which have significant low-risk high-value reserves, that require low maintenance Capital than most other reserves making Canadian natural. A truly robust and resilient Energy company.

I will now turn it over to Victor for our second quarter financial review.

Thanks Scott and good morning, everyone.

In the second quarter of 2025, we delivered. Excellent Financial results on the strong operational performance that Scott just discussed.

And this is highlighted by adjusted funds flow in the quarter of approximately 3.3 billion and adjusted net earnings of 1.5 billion.

These results. Also reflect the turnaround activities at AOSP that were completed in the quarter.

Results in Q2 clearly reflect our disciplined approach to Capital allocation and where Canadian natural focus and executed on our 4 pillars, where balance sheet strength and returns to shareholders when hand, in hand with resource value, growth and opportunistic acquisitions.

Returns to shareholders in the quarter. Were 1.6 billion including 1.2 billion of dividends and an additional 400 million of share repurchases.

These returns including dividend, payments and BuyBacks up to and including August 6th.

Bring shareholder returns for the year to date to 4.6 billion.

Additionally, subsequent quarter ends. The board is approved to quarterly dividend a 58.75 cents for common. Share payable on October, 3rd, 2025 to shareholders of record at the close of business on September 19th, 2025.

Net debt levels were below $17 billion at quarter end, while we had completed the acquisitions that were included in our 2025 budget.

Our balance sheet remains strong, where debt was at 0.9 times and debt to book Capital came in at 29.1%.

Liquidity of over $4.8 billion was also strong and reflects undrawn revolving bank facilities and cash on hand.

The accretive acquisitions that were completed in late 2024 and year-to-date in 2025 immediately contribute to incremental production and additional free cash flow generation.

Taken together with the strong operational results in 2025 Canadian national targets to provide similar shareholder returns in 2025 as compared to 2024.

This is targeted to be achieved, despite only allocating 60% of free cash flow in 2025 shareholder returns as compared to allocating 100% in 2024

Structure, predictable long life, low decline assets and Reserve Base combined with a consistent commitment to continuous Improvement and ability to execute on opportunistic. Acquisitions in our core areas, continues to drive significant value at Canadian natural.

We maintain our disciplined approach that contributes to our top tier US dollar, WTI break, even

That remains in the low to mid 400 WTI per barrel range.

Which we Define as the WTI price required to generate the adjusted funds flow covered. Both maintenance capital and dividends.

Returns to shareholders remain a top priority for our focused and dedicated teams where our culture and drive to do things. Right every day continues to enable material, free, cash flow generation and Returns on Capital.

And those are my comments and I'll turn it back to you Scott.

Thanks, Victor. In summary, our relentless focus on continuous improvement.

Combined with executive and efficient operations. Drove strong performance year to date in 2025.

Our ability to effectively allocate Capital across our strong asset base provides us with a competitive eventage. This ability combined with our accretive Acquisitions creates significant long-term value, for our shareholders.

Our culture of accountability and the strength of our assets is a unique advantage that results in both capital and operating cost savings and maximizes value for our shareholders.

And with that, I will turn it over for questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

Should you have a question, please? Press the star, followed by the number 1 on your touchtone phone.

You'll hear a prompt that your hand has been raised.

Should you wish to decline from the Napoleon process, please press the star, followed by the number 2.

if you're using a speakerphone,

Please lift the handset before pressing any keys.

1 moment, please for your first question.

Your first question is from Patrick oror from ATB Capital markets, please go ahead.

Hi, guys. Good morning, and thank you for taking my question, I guess. Uh, first question here is just with respect to liquidity management as we look out to 2027. It's a bit of a heavier maturity year between the term loan and one of your larger nominal debt notes that's outstanding here. Just thinking about sort of the interplay of tight credit spreads and a sticky end of the long curve, how are you sort of approaching this material as we head into 2026?

Yeah, thanks Patrick, it's Victor here. Um good question, I appreciate where you're coming at it from you know, when we look at our balance sheet now coming out of 2025 and and forecasts into 2026,

Uh, cash flow generation, the period looks strong. So I think our refinancing needs will probably be a little bit lower than, uh, than what you might be anticipating. But that said, you know, we'll look to 2026 here and, uh, to your point, uh, look at a refinancing requirements and try to pick an opportune time to to. So, as we see fit,

Okay. Thanks, and the second question, sort of more on the operational side obviously. Um, you know it's probably a smaller asset within the portfolio but conventional multilateral drilling success here at the 26 Wells of the program. Uh, a lot of you know, smaller peers that are out there. Talking about secondary recovery water flood, uh, we hear a lot on the primary side from Canadian natural. Can you maybe talk to potential opportunity staff for secondary recovery? Uh, and water, flooding your portfolio there.

Yeah, thanks Patrick. It's Scott here. So we we do look at those opportunities as well. Uh, some of the ones you're mentioning both on the Palmar and the water flood side. Um, we are, uh, commencing testing of the Palmer flood currently, uh, you know, in the clear water and, uh, we'll look to see how those results, uh, work out down the road here, but, uh, looks very promising and

We also uh, looked at uh, our Smith water flood, and have that implemented as well, in that area. Uh, that's the first area that we were in, in the, in the clear water as well, uh, tricks. So, yes, we are undertaking those activities, uh, along with the multi-lap,

Okay, thank you very much.

Your next question is from Dennis Fong from CIBC. Please. Go ahead.

Hi, good morning and thanks for taking my questions.

Acquisitions over the course of the last uh, several months. Can you talk towards your view of the A and D or m&a environment right now? Um

Obviously, uh, completing some of these Acquisitions. Uh, how do you

Can. And and do you mind touching also as well on kind of your comfort level around the policy environment? How comfortable you feel about adding these assets to your portfolio, as well as the opportunity to improve operations. Uh, bolster inventory. And any other opportunities that from the acquired, uh, assets.

Thanks Dan. Yeah, and I can speak to the Acquisitions that we just recently uh, completed here in June and July. Um, you know, we've already talked significantly about the AOSP and the dubri acquisition. So, you know, a lot about that already. But recently with the 2 acquisition, uh, they come at, uh, very creative for us. They add cash flow for us immediately. I think that's really important. When you, when you look at returns to shareholders these. These assets do bring uh significant cash flow for us. So, that's really how we look at it in terms of the on the m&a side. Uh, we're not buying something just to grow. We're buying something to add that adds, cash flow that adds inventory, uh, for our development programs, and ultimately adds, uh, additional value for our shareholders. So it's a balance between the organic growth opportunities and the accretive acquisition opportunities desk.

Great, thanks for that. Um, Scott. Um, my second question moves towards the oans, uh, Mining and upgrading a business unit, um, I guess only, I'll be in tour, you guys showcased obviously, your ability to be quite Nimble in terms of opportunities to develop other areas of the mind. Um, and kind of optimize mind progression, specifically referring to, um, the the SharkBite, uh, assets. Um, I was curious as to how you think about Horizon. Um, obviously, as you've layered on incremental uh, land adjacent to existing uh, producing projects um and how you're thinking about my progression over the next few years. Especially as you've added again uh incremental uh land or or developable opportunities in and around your existing operations.

Sure. So in terms of horizon, Dennis I I think if you look at where we're at now and for the next uh call it 7 to 8 years, we'll be progressing our way through the, southern portion of the Horizon of mine, which was required, uh, from from hotel, uh, several years back, uh, following that we'll be moving up to the north, uh, pit. The North Pitt extension area and that's where where we'll be moving in the next, uh, phase of of development there. To maintain the upgraded production levels to currently, what they are at in reference to your comments about, uh, the additional, uh,

Uh, assets, whether that's, uh, pure River, um, or uh, the North Pitt at 6.

Uh, those assets have would have or are not booked in terms of reserves, there are resource for us, but they have significant, uh, uh, uh, bmen in place and, uh, they, they potentially would be assets. That could be developed, uh, sometime down the road, that would support significant oil, sands mining development opportunities.

Thanks Scott. I'll turn it back.

Your next question is from Greg party from RBC Capital markets, please go ahead.

Yeah, thanks. Um, Scott, has there been a pronounced shift in your mind in terms of how...

Uh, candidates, the Competition Bureau either assesses or processes acquisitions. Obviously, you know, when you're spending, you know, 10% of your press release indicating that you've got these deferrals on deals and you guys do deals all the time, it just feels like something's different that might not have been there a year or two ago.

Yeah, thanks Greg. Uh, no. I don't, I don't believe there's a significant difference there. Gregg, the particular 1 that we have in the Palliser block. Uh, it was unique to a certain extent, uh, just in terms of the, uh, the amount of the facilities in the area, uh, various different, uh, competitors in the

The area, uh, I would call it, uh, a unique circumstance. Uh, I do agree with you. It took, uh, a longer, uh, process than it should have longer than we would have anticipated, uh, in the end. Um, uh, you know, uh, we were able to close the deal and and move along. If we look forward, I don't anticipate. We will see the same type of situation going forward.

And, and Scott. But I mean, obviously, the limited buybacks in Q2,

Um, obviously stand out as your as your key leveraging, so Victor, I just want to make sure I've kind of got the, the number, the targeted. Net debt number.

Uh, is around 17 billion I guess or so year end is that then put you in pretty good stead to achieve that 15 billion, net debt Target in in, you know, like next year under Futures would you like, would you expect getting their next year under futures?

We, you know, that's, we're, we're still right where we were in the last call. When we look at the back half of last year, we're looking at coming out of 2026 at that, 15 billion Target, based on the current forecast Greg. I think the rate of buyback to your point, Still Remains fairly strong. And you know, we we look at that on an annualized basis. Uh, the rate of buy back here in Q2 very similar to what we saw in q1 and at current forecasts uh you know, we'd expect a strong rate of buy back here over the last half of the year as well, so no real change in the policy there.

Okay, so no. No change in the policy but and I'm splitting hairs, but getting to 15 billion, you know, before December 31st is not unrealistic. Is that fair?

That's fair. Yeah, okay. Thanks very much. Yeah. We're we're looking at that in that 65 to 70 to 70 dollar, WTI range. So obviously it depends on pricing here and coming into 2026.

okay, understood

Yeah, thanks for the question.

Our next question is from manav Gupta from UBS Financial. Please. Go ahead.

Uh, good morning. I have 2 questions. I last time up front. First, I wanted to, if you could help us understand the benefits of closing, the AOSP deal with shell, how how much volume comes in but would that change the way you look at the mind? Also could you increase your vitamin output because you don't have to match the upgrader. And then second question is can I get your outlook on the echo pricing and going forward specially with the LG Canada. Also starting up. Thank you.

Yeah. Thanks for the, for the, for the question. Uh, I'll answer the second part first, um, with LG Canada coming on online. Um, you know, I think we're if you look at the forward strip, the pricing still, uh, does look soft in terms of echo. Uh, I think the Market's probably anticipating, um, certain amount of uh, gas that will easily be able to be turned on our view though. Is that once the second training is is brought online that uh, there will be a definitely a period of time. Uh, that it'll take to fill up the full, uh, 2 BCF of capacity of LG Canada. So I would think, uh, that we're going to see, uh, EDS and flows in terms of ACO pricing, um, and it's relative to what the

Jason is able to produce, uh, for a total egress capacity. I think that'll abs and flows over the next uh,

In the next, uh, 5 plus years.

And uh and and and on your sorry, could you repeat the first question for me?

Uh, how does the eosp transaction change the Outlook? And is there a way you would change the mind also? Just because probably you can produce more vitamin and just speculating because you don't have to match the upgraded. But if you could talk about how that transaction changes, our ability to operate the AOSP mind. Once you do become the 100% owner,

Right. So just to clarify for you. They they they swap involves uh, Canadian natural, uh cornering 31000 barrels a day of uh, Berman production so that's important to us. Um, we see 100% ownership of the mine. Uh,

Important to us. Just from a synergies with Horizon perspective, uh, we will no longer have a, a JV, uh, in terms of the minds, it's easier for us to, to be able to move our equipment back and forth, whether That's Heavy, Haul, trucks, uh, cranes, uh, people and, and other, uh, types of, uh, uh, assets that we can move back and forth to optimize. And, and warehousing is a is another 1 that we look at where we will no longer have to maintain, uh, 2 separate, uh, uh, uh, uh, warehouses Warehouse.

WTI and Benjamin pricing over the long term. But I can tell you that there are significant opportunities both at Horizon and AOSP to increase production.

Thank you. Next question.

Your next question is from Neil. Mehta from Goldman Sachs, please go ahead.

Yeah, thank you. Uh, once the marketing team here and just talk about the WCS, heavy differential, um, obviously year-over-year, we tightened up uh, nicely. Um, but we've seen it widen out here and just your perspective on whether this tightening that we've seen more recently is structural post TMX, and given the tightness of heavy on the Gulf Coast, or as OPEC brings barrels back online and Canadian production does seem like it is growing that we're going to move back to, let's call it the the 13 run rate you were at, uh, for the balance. You know, most of, uh, most of last year into the early this year.

Yeah, good question. Neil. I think the way to look at it is we would anticipate the uh, WC up differential to vary in the range of 10 to 13 dollars. There's going to be times when it could be more than that or wider than 13, there's going to be times when it will be lower than 10 and and yes, that will vary depending on on Opex production potentially but it'll also has uh, impacts just within North America in terms of the refinery, uh, turnaround time. And so those, all those situations are going to impact it. But the structural change happened, when TMX came online in May of 2024, we anticipate the differentials, uh, will be in a pretty solid range bound at uh, 10 to 13 dollars, okay? That's really helpful. And the same question on the SEO premium, we obviously had a lot of Maintenance in the second quarter as it relates to the upgrades. It had been kind of bouncing at a discount of a couple bucks up until this point. Uh,

SEO also is influenced by the strength of distillate which trades at a decent premium to mow gas right now. So how how are you guys thinking about, uh, pricing relative to TI?

Again, same same type of scenario, uh, probably, uh, you look at a range bound of, uh, you know, minus buck and a half to, uh, you know, plus, uh, buck and a half. It'd be somewhere in that range Neo. Um, and, and of course, you mentioned on the, on the, on the distillate side, as well. So, um,

And, and you'll have times of the year where we saw a strong strong, Q2 as you mentioned related to maintenance. So, I expect to have some flows to to move on a go forward basis. Just like to have done in the back on the, in the path relative to turnaround activities. And uh, so if you look back over time, the uh, that differential has, you know, it has varied from, you know, minus 2 to plus 3, and so I I don't think you'll see any structural shifts going forward here.

It's really helpful. Thanks. Okay.

Your next question is from Menno Health. From TD Cowen, please go ahead.

Thanks and good morning everyone. I I'll start with a question on synthetic. You talked about 600 2,000 barrels a day for the month of July with, with little to no turnaround activity, tied to SEO production, the second half what, uh, could get in the way of your being able to maintain 600,000 barrels a day or even a bit higher through the, through the end of the year.

Yeah, good question, man. I I think, you know, you know, we should be looking within that range. Um, it there isn't anything necessarily stopping us. We have the the turnarounds that have been worked through at AOSP and, uh, Horizon has, uh, all all things look really good at Horizon as well in terms of the upgraders, uh, performance. So, um, you know, you you you would have noted. We had a very strong q1, uh, where everything went uh, uh, very well for us. Uh, really solid, a road conditions, it through the winter time. You don't quite see those solid, uh, Hall road conditions, uh, in the summer and fall that you do in the in the winter time. But uh, you know, in that range in that 600 range, I think is probably a good uh, uh, run rate to consider now.

Okay, thanks for that. Scott. And then then flipping over to turn arounds. The

The acceleration at the AOSP in the quarter, that that seems to be a trend. We've we've seen similar updates from some of your peers, including Suncor yesterday. So so my question is, what, what is driving better than expected turnaround execution for yourselves? And then On a related note, how much contingency is typically belt into the into the timeline for a given turnaround?

Yeah, really good question. Um, you know, for us, I would say that the opportunities, uh, such that happened here with being 5 days early, uh, AOSP. It's really just a matter of, uh, you know, if you look at all the manpower required on site, uh, you know, we're driving for efficiencies, uh, lots and lots of labor required, uh, taking units apart, um, doing inspections, doing cleaning of vessels, and so on and so forth.

The teams that are driving those, uh,

Turnaround activities are have have that same continuous Improvement culture that we do have with the rest of our operations in the company. So they're expected and they do look at ways of trying to find efficiencies in momento. So you really, you know, there isn't a typical a lot of built-in contingency, you know, probably in the 10% range um of of estimates when they're

Building their, um, turnaround, uh, schedules. So they're enticed and, uh, we certainly, uh, encourage the teams to continue their opportunities that they look at to create those efficiencies and find ways to have the Manpower on site be more effective and and more efficient.

Thanks again, I'll I'll turn it back.

Your next question is from Doug Ledic from

Wolfe research. Please go ahead.

How's it going? It's Mikey, trustworthy on for Doug, like it. Thank you for taking my call. I just wanted to kind of get some insight and get your view on where do you see capacity to grow the dividend, especially in light of some of the...

the Acquisitions. They were described for the, uh, in the first release.

And I want to go for a business.

No, thanks for the question. Obviously, we've had a long history of growing the dividend every year now for 25 years. There's definitely some good incremental cash flow coming off the acquisitions.

Um, I wouldn't want to step into the board shoes there, but I would just say that as we go forward, I'd anticipate that there'd be some room for dividend growth here, um, into 2026, should the board, uh, continue to, uh, pursue the track record that we have seen in the past.

And Nick, and I would just add to that. If, if you look at the history of the company over the past 25 years, the opportunities for the board to consider, uh, adding an increasing. The dividend payout Has Come On The Backs of both organic and, uh, opportunistic acquisition opportunities that, uh, the companies take it on or the past 35 years. And I think that's really important to remember, um, you know, the the future doesn't always represent the past Nick. But for a company, uh, with the strengths of the assets that we have it is extremely important to the board and to the management team to, uh, maintain uh, the the, the the, the dividend, the value of the dividend is brought been brought to the shareholders and it's very important to us. So we're going to, you know, make sure that we continue to operate our assets and, and grow, organically, and find opportunity to Acquisitions. When we can to help support continued growth to that dividend.

Thank you and uh, from a Halo my followup kind of ties into that. So where where do you kind of? See your post dividend break even right now for your metrics? And is there a threshold that you're comfortable? Um what's the, I guess, what's the threshold that you're comfortable? Going to taking it from from its previous? Uh

From his previous, um, I guess a dollar amount.

You're asking whether Break Even is next.

Yeah. What is it? Yeah I'm actually. What is the uh post dividend Break Even currently? And is there a range that you're looking to kind of stick within I guess as as you kind of

Feel comfortable with maintaining your balance sheet.

Are very valuable shareholders and shareholder returns. So that's we calculated after the, uh, dividend.

Yep. And is there a threshold? That's the targeted threshold we're looking to stay within, essentially in the 40 to 45 range.

We're comfortable in that range now. So essentially, the answer is yes, and obviously, we take a view to commodity prices going forward, as the board assesses that in future.

Periods.

Okay, thank you for taking my question.

Thank you.

Ladies and gentlemen, as a reminder, should you have any questions, please press the star key followed by the number 1?

We will pause a moment for further questions.

There are no further questions at this time, please proceed with closing remarks.

Thank you, operator. And thanks, everyone, for joining our call this morning. If you have any questions, please give us a call. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.