Q2 2025 Imperial Oil Ltd Earnings Call

Turn the conference over to Peter Shaw, vice president of investor relations. Please go ahead.

Good morning everyone and Welcome to our second quarter earnings conference call. I am joined this morning by Imperial senior management team including John whan, chairman president and CEO, Dan Lions, senior vice president, finance and administration.

Cheryl golden Smith, Senior vice president of the upstream and Scott Maloney, vice president of the downstream.

Today's comments include references to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 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 4 looking information. Is not a guarantee of future performance and actual future performance. And operating results can vary materially depending on the number of factors and assumptions.

Forward-looking information in the risk factors and assumptions that are described in further detail in our second quarter earnings release, which we issued this morning, as well as in our most recent Form 10-K. All these documents are available on Cedar, plus EDGAR, and our website. So, I ask you to reference those.

John is going to start with some opening comments and then hand it over to Dan who's going to provide a financial update and then John will provide an operations update. And once that's done we will follow with Q&A session. So with that, I will turn it over to John for his opening remarks.

Thank you, Peter, good morning everybody and welcome to our second quarter earnings call. I hope everyone is doing well.

I'm really pleased to kick off my first earnings call with strong results for the second quarter.

We generated cash flow from operations of nearly 1.5 billion dollars and end at the quarter with approximately 2.4 billion dollars of cash on hand.

And we achieved these results while successfully completing significant plan, turnaround activity of across our integrated portfolio,

At the macro level, our upstream price realizations continued to benefit from improved egress in Western Canada.

while in the downstream margins were supported by higher crack spreads. Since the last quarter

our resilient business model and strong financial positions have allowed us to remain focused on delivering safe, reliable operations, while executing on our business plans and strategy, despite significant Market volatility,

I also want to highlight some major projects and milestones we achieved in the quarter.

At curl, we completed work that doubles the turnaround interval at 1 of our 2 trades.

The next turnaround of the K2 train is now scheduled for 2029.

At Cole Lake, we finished construction of the new sagd Redevelopment project at lemming and initiated steaming in the final days of the quarter. Setting us up for first production late this year.

At Strathcona, construction of the renewable diesel facility was completed, and I'm very pleased to share that first production of renewable diesel began in July.

When I think broadly about the outlook for future investments.

I'm very encouraged by the constructive dialogue and level of engagement with the federal government and the work that is now ongoing to potentially support industry and major projects in Canada.

It's still early but initial conversations have been encouraging.

And finally, our philosophy of returning Surplus cash in a timely manner is unchanged, as such, I'm pleased to announce that we've chosen to accelerate share repurchases through our ncib once again and plan to complete the program by year. End.

And on that note, I'll turn it over to Dan to discuss our financial results in more detail.

Thanks, John. Starting with financial results for the second quarter, we reported net income of 949 million down 184 million from the second quarter of 2024, primarily driven by lower Upstream realizations, partly offset by higher production volumes. When comparing sequentially second quarter. Net income is down, 339 million from the first quarter of 2025 primarily driven by lower Upstream realization and downstream margin capture.

Moving on to cash flow in the second quarter. We generated 1,465 million in cash flows from operating activities. Excluding favorable work and Capital Tax of 52 million cash flows from operating activities for the second quarter of 1 billion. 413 million down 95 million from the second quarter of 2024 in line with earnings.

As John mentioned, we ended the quarter in a strong position.

With about $2.4 billion of cash on hand.

shifting to capex Capital expenditures total 473 million in the second quarter, 11 million higher than the second quarter of 2024, primarily due to project timing,

In the upstream, second quarter spending of $353 million focused on sustaining capital occurring in Cold Lake in the downstream. Second quarter spending related primarily to our renewable diesel project at Strathcona.

Now, in terms of shareholder distributions, we paid $367 million in dividends in the second quarter of 2025. On June 23rd, we announced the renewal of our Normal Course Issuer Bid, which allows us to purchase up to 5% of our outstanding common shares over the next 12 months. We started purchasing shares in July, and as John noted, we plan to accelerate.

Radar purchases and complete the program prior to your end in line with our long-standing practice of returning Surplus cash to shareholders. Lastly, this morning we announced the third quarter dividend of 72 cents per share in line with our second quarter dividend. Now, I'll turn it back to John to discuss our operational performance. Thanks Dan. Now, I want to take the next few minutes to share the key highlights from our operating results. Upstream production for the quarter averaged 427,000 oil equivalent barrels per day up, 9,000 barrels, per day versus the first quarter and up 23,000 barrels per day versus the second quarter of 2024.

This marks, the highest second quarter production in over 30 years.

I'm extremely pleased to see our asset teams deliver such strong results in the quarter that include a turnaround activity at both curl and Cold Lake.

For the first half of the year, we achieved the highest ever production from our heavy oil assets,

And are well positioned for strong second, half of the year.

Now, moving to curl.

Curls set a record, averaging 275,000 barrels per day in Q2, which represents a second quarter production record and growth of 19,000 barrels per day versus Q1.

And we beat our previous second quarter record by 20,000 barrels per day, gross.

This year's curl plan turnaround on the K2, train was a major success. The turnaround was completed safely and successfully in under 19 days.

The team. Also completed work to enable a doubling of of the turnaround interval.

As we outlined at our investor day.

Turnaround optimization as 1 of the key components of our plan, to increase production to 300,000 barrels per day.

Turning the costs curls unit cash costs to the quarter were 18.86, cents us per barrel.

We realized a decrease of nearly $2 us per barrel compared to the first quarter, including the expense of our plan turnaround.

When compared to the second quarter last year, we achieved a decrease of over $3 us per barrel.

The second quarter's performance contributed to our year-to-date unit. Cash costs of $19.70 per barrel were nearly $2 per barrel lower compared to the first half of 2024, with the turnaround behind us and our outlook for higher volumes. In the second half of the year, we expect to make further progress on unit cash cost reductions.

Moving to Cole Lake.

Coal production, averaged 145,000 barrels per day, including 23,000 barrels per day from Grand Rapids. Now, this is down 9,000 barrels per day versus the first quarter of 2025 primarily driven by planned turnaround at Macos and well ahead of schedule.

Another highlight is reaching a key Milestone at our Lemmings. Sagd Redevelopment project.

the project started steam injection in June with first oil expected, late this year and ramping up in 2026,

Is a niche opportunity for us to develop additional resource at the original Cole Lake pilot location with 9,000 barrels per day at Peak production.

I also want to take a moment to Broad provide a brief update on the Ebert pilot project at our Aspen lease, which utilizes transformative new solvent technology. That's designed to unlock low cost low emissions volume growth from our significant high quality undeveloped in situ opportunities.

We completed several Key Construction Milestones, this quarter and remain on track for an early 2027 startup.

And next, I want to quickly cover sink fruit Imperial. Sheriff sink crew production for the quarter average 77,000 barrels per day, which is about 4,000 barrels per day versus the first quarter and up 11,000 barrels per day versus the second quarter of 2024.

Sink crew continued to utilize the interconnect pipeline to import b****, men and gas oil to ensure High upgrader utilization and this enabled an additional 8,000 barrels per day. Our share of syncrew sweet premium production

in early September, I'll note that SRT will begin at 50 de cocer, turnaround with a forecasted annual impact of 6,000 barrels per day, Imperial shear,

And now moving to the downstream.

We refined an average of 376,000 barrels per day, reflecting a utilization of 87%.

This compares to 387,000 barrels per day a year ago and 397,000 barrels per day in the first quarter. Lower throughput reflects higher unplanned downtime and the impacts from planned turnarounds at Strathcona and Nico compared to our first quarter of 2025.

During the quarter we completed construction and commissioning of the renewable diesel facility located at the Strathcona. Refinery

And I'm very excited to announce the successful startup. And first production in July,

As we've said before, we now plan to optimize production around supplier capabilities.

This project at its peak generated close to 600 jobs and was completed safely while achieving industry-leading costs and scheduled performance.

The project provider provides a new lower emissions offering to Canada's Transportation sector and aligns with our long-term strategy of of advancing responsible Energy Solutions, while delivering strong returns.

This project combines many of our competitive advantages including integration proprietary technology, scale Advantage, Logistics and proximity to feed stocks and markets.

And when you couple these advantages with the growing demand for renewable diesel in Canada, driven by layered provincial and federal regulations and increasing demand from customers to meet their own emissions reduction goals, we are confident in robust margin uplift as we ramp up in line with third-party hydrogen supply.

I would just like to thank our planning project and operations teams that have worked extremely hard to get this project across the finish line.

And I'd also like to thank the governments of Alberta and British Columbia, as well as Strathcona County, for all of their support.

Moving to to petroleum products. Sales, petroleum product sales in the quarter were 480,000 barrels per day, which is up, 25,000 barrels per day versus the first quarter of 2025 and up 10,000 barrels per day. Versus the second quarter of 2024 enabled by the Trans Mountain pipeline expansion.

Attorney to chemicals earnings in the second quarter were 21 million down, 10 million versus the first quarter.

And compared to the second quarter of 2024 earnings were down 44 million driven primarily by Soft polyethylene margins. And the aromatics reporting shift to our Downstream segment, which occurred in the third quarter of 2024.

Now, while we're at the bottom of the cycle, we see bottom-of-cycle conditions that have persisted. The business continues to contribute positively, given strong operational performance and the integration with the CIA refinery.

So, to wrap up, I'm very pleased with the quarter. We generated about $1.5 billion of cash from operating activities while successfully executing on significant planned maintenance.

And we set new second quarter production record in our Upstream.

Drive continued, momentum and growth.

Specifically the discipline development and employment of technology to support the execution of our strategy.

Maximizing value from our existing assets and supporting our growth investment opportunities.

This quarter was a great example of the team finding ways to win.

And winning starts with taking full advantage of our unique competitive. Advantages, advantages others, do not have.

Join the quarter. It was fantastic to achieve a significant milestone in our Downstream with the completion of the renewable diesel facility. And first production just a couple of weeks ago

And at Cole Lake we completed, as I mentioned, the lemming sag d project they've begun steaming reservoirs.

I'm looking forward to first oil late this year.

It was great to great to meet many of you uh at our investor day in mid April and I really enjoyed connecting with more of you in recent meetings and conferences and I'm very excited about the path, forward for Imperial and I'm looking forward to further engagement with you in the coming months.

As I look ahead to the second quarter of the year. We've got momentum, it's significant turnaround work behind us.

And we'll continue to focus on safe and reliable operating performance while progressing our growth initiatives.

as we announced this morning we plan on accelerating sheer repurchases under the normal course, issuer bid

I'm pleased to say that our strategy of responsibly increasing cash flow and delivering unmatched shareholder returns remains alive and well.

To wrap up, I'm extremely proud of what our team has delivered, and I want to recognize and thank them.

And, as always, I'd like to thank you for your continued interest and support.

And with that, now, I will move. We'll move to the QA session. I'll pass it back to Peter.

Thank you John. As always, we'd appreciate it, you can limit yourself to 1 question plus a follow-up, so that we can get to as many questions as possible. So with that, operator, could you please open up the lines for questions?

Thank you, if you would like to signal with questions, please press star 1 on your touchtone telephone. If you're joining us today, use a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star 1. If you would like to signal with questions,

And our first question comes from manav Gupta with UBS.

Um, good morning. Uh, my first question is, is it relates to is the decision to accelerate the ncib? Okay? Can you help us understand? Um, why this decision was taken and in terms of cash balances, how confident are you that? You can complete this entire ncib U without Levering up? But before year end thank you.

Thank you and have a good morning. Thank you for your question. Um, we we are very comfortable and confident, you know, we we've looked at when we look at, uh, we're a commodity prices. Are we look at how our business is performing? We look at the cash that we have on hand and our projections around, uh, free cash flow as we look forward. We are very comfortable in accelerating the ncib and, and, and comfortable that we will do that without leveraging, our, our balance, uh, balance sheet. So we, we can do that with free cash flow. And, you know, this is very consistent for us. As you know, we've got strong appetite for returning for shareholder returns. We got a track record of doing this. Um, you know, we've returned 20 billion dollars to shareholders since 2020, uh, 15 billion of that has been shared by backs. Uh, and this is very consistent with us. And we we're extremely confident, we're going to do this from free cash flow.

Perfect. My my follow up is a little bit of a tricky question but I'm going to ask it anyways. When we look at year to date relative outperformance, you have strongly outperformed your peers, you're an absolute, and a relative winner and what that does is sometimes people just want to come after you because they believe this cannot continue. I'm just trying to understand from in your opinion, why this is the Management Field. The setup is still very strong for our investment case, for Imperial where it could continue to work on an absolute and a relative basis as we move along, despite the very strong year-to-date outperformance.

Maximizing the value of our existing assets. We talked about the improvements, we're making a curl and coal Lake uh, investing selectively and growth opportunities at at those existing assets, curl co lake transformation, Strathcona, renewable Diesel and then progressing future strategic growth. So if you think about our Eber pilot and the growth opportunities that we have in our portfolio, you know we are very bullish about what that technology is going to deliver in the future and the asset Pace we have in terms of our heavy oil in situ portfolio. So I think, I think our strategy to win is strong. We've continued to focus on that. I believe we have competitive advantages that, you know, when matched up against those assets that we have, you know, take our unique competitive advantages around scale and integration technology execution and the best team in the business. When we take those competitive advantages against the advantage assets, that leads to Value Creation in the future and that's what comes back to

Us continuing to deliver unmatched industry-leading. Shareholder returns.

Um so we we are very confident that you know, the performance we've had is on the basis of that strategy and the teams and the technologies that our competitive advantages and we're going to continue to deliver that going forward.

Thank you for the detailed response and just for the record we completely agree with you. We believe the setup is very strong for your stock to continue to work. Thank you.

Thank you. Thanks for the questions and your confidence in the U.S.

And the next question comes from Dennis Fong with CIBC World Markets.

Hi, good morning. Thank you for taking my questions, and congratulations on a strong operational quarter despite plant maintenance.

Um, my first question goes a little bit into the the technology side. You've been operating a, a um, autonomous Fleet now for a little while, and I was hoping to dive into some of the insights that you might have gained from, uh, running an and deploying this technology. Can you outline some of maybe the surprising benefits? You've observed thus far with AHS deployment, um, on on your existing app base.

Morning, Dennis and thanks. Thank you for your question. Um, you know, I think we think about it when I think about the autonomous all system and which has been a huge success and very proud of what the team has done there. But it is, it's part of a

A broader technology approach that we have and I talked about our competitive advantage and technology is the first 1 on the list, um that I mentioned. So you know for us technology is the core to what we do. I mean we're more than an oil and gas company, we're more than an energy company, we're really a technology company that's managing molecules and um, so this autonomous Hall system for a successful as that's been it's part of a broader approach around technology and it's been our digital Journey that we're on the automation Journey that we're on the. Um, we talked about Ebert, you know, the technologies that we've applied. So it's part of a broader ecosystem and a way of working and part of our DNA. Now, specifically though on the autonomous, all system because it is, it is been an amazing success. And it's phenomenal when you go there and see, you know, these 80 plus trucks all all working autonomously. And um, I would say, I don't know that there's been, you know, we had high Ambitions for

For it. We we anticipated it would reduce our unit cash cost by about a dollar, a barrel, it has done that. Um, and now I think so, I don't know that we were surprised by anything, I think it's worked well and, and, uh, and I think we see actually even further optimization of that because now we're going to look at ways to, you know, further optimize the fleet, we think we're still tuning the vehicles, uh, in a in an autonomous way and then we have other autonomous opportunities around

Robotic fueling of the trucks uh robotic inspection of the vehicles and we're considering you know, other other equipment in our Fleet that we could automate. So I think if you think about the upside is we stepped into it with heavy all trucks and there's more to go.

Year interval rather than the 2-year interval.

Yeah, no, thanks for that question. Dennis. I think you know, it's uh, if you think about where we're trying to get to with curl and moving it now, you know we went up we're we're at 280 and now we're going to look at getting it to 300 and further lowering our unit cost to to 18 dollars a barrel. Now there's 3 legs to that stool that we're focused on right now. There was others that got us there in the past but the ones we're focused on now is enhancing the recovery, improving the productivity and the reliability gains uh leveraging technology again and then turn around if you know, turn around efficiency. Uh, so those are the 3 areas and enhancing recovery is enhancing the recovery in the mine and enhancing the recovery. In the plant to get more rich men, out of the oil. Sands basically improving the productivity is looking at every piece of kit. Uh, that we have our trucks, our shovels, our dozers, our Hydro transport lines, and improving the productivity and reliability of those. And we talked about the turnaround efficiency, um, the specifically on the hydro transport lines.

In some of the things we've done with that is, we've interconnected our Crushers to allow for flexibility. We have enhanced the Metallurgy of the lines to improve the life and the wear, uh, that we're seeing on the lines and then we've upsized them as well, so we can get more product through and that allows us when we do have, uh, downtime on 1 part of our equipment, we can run more through the or transport lines. So it's a question of configuring

Duration, and interconnection of our equip our equipment, it's the Metallurgy we're using in the lines and then it's the size of the lines and working on all of those 3 things that that's, you know, specifically what we've worked around on hydro transport lines in terms of our confidence. You know, you may have heard me talk about before, you know, our goal is to be the most responsible operator. You know, it's not not just a responsible operator, but the most responsible operator and that involves safety and environment, it involves, um, the liability and our cost structure all of those things. So, when we think about what we're doing on the turnarounds, and the extension that we've had over time, reducing the duration, extending the intervals.

That's one of the best examples. I can point out, too, about being the most responsible operator, because we do that in a way that will not in any way compromise safety, integrity, or reliability. And we're getting those benefits through, you know, plowing our learnings back into our turnarounds, continuous improvement, and learning. So not only from our operations, but from our major shareholders' operations, it's applying technology, um, it's applying new equipment, and managing the wear of our assets and building in redundancy. Uh, and then executing, you know, at a higher efficiency and, um, using things like app sailors versus scaffolding and so on. So we're doing all that and in no way compromising the safety of our assets.

Alright, thanks, John. I really appreciate that. Um, detailed answer. I'll turn it back. Thanks.

Thanks, Dennis.

And we'll take a question from Greg Party with RBC Capital Markets.

Yeah. Thanks. Good morning John. I was hoping maybe to dig into some of your um opening remarks. I'm going to try and uh shoehorn 3 questions in here with uh, with Peter. Not noticing. But um, just with renewable diesel, I know you were talking about um,

Just optimization in terms of supplier. So does that mean then that you will be likely producing more?

Renewable Diesel and kind of the summer and fall versus the winter months and and then does that kind of tie into fuel specs, just curious as to how you'd be running that that, that new unit.

Yeah, thanks, Greg. I'll start, and then I might ask Scott to chime in as well. But, you know, if you step back from it, it didn't really get to the seasonal aspects. Really, um, what we were—what, you know? First, let me say I'm extremely pleased with...

Starting up this uh this project and um and you know obviously the team is going through optimizing production right now but the way we looked at this project is 3 kind of Key Parts to this it's 1 is you know at its core is the manufacturing facility that we built at the stress corner of Refinery. That's complete. It's up. It's running. We're very pleased that the the ramp up and how that's gone.

To run the facility and I would tell you on the on the first 1, you know, around the the vegetable um and agricultural oil stocks, all those ra arrangements are in place and the supply is in place and we're very comfortable with that. And then on the hydrogen, we, you know, we have sufficient gray hydrogen to start up and operate the, the the facility, but the availability of further, hydrogen, supplies and blue, hydrogen will impact the speed and the, and the ramp up of the acid. So, what we were really referring to there, is the ramp up as the hydrogen supplies, the availability of hydrogen supplies and how's that comes into the market. That's kind of what we were referring to, okay? Uh, and I'll just, I'll just flip over to Scott if you have anything further to add on that Scott. Yeah, yeah. Thanks John. Just 1 additional point for you. Greg. Um, your your comment around when we'd like to operate the facility.

Will be operating this facility year round. And in fact, we'll, we'll especially, like to be operating in the winter months. As we take advantage of the proprietary Catalyst technology that we have. As part of this project, that enables, um, a lower poor lower Cloud product that can be run in operational year round. So we'll be blending this product into, uh, diesel products that we sell into the market year round and that's 1 of the advantages. We have as part of this project

Okay. Terrific, 2 other, maybe just more or less? Footnotes, John, did you say there was a little more unplanned downtime just in refining in into, I'm just curious if there's any color around that and then are you still producing 4 or 5 thousand barrels a day of solvent at uh at your new uh uh solvent at a coal? Like that's it for me. Thanks.

Uh, yeah, I think you're you're right. We did say that we had a little higher unplanned and planned downtime in the downstream in the second quarter. Um the the planned the the shutdown work might be well you know basically ahead of schedule and uh and the lower on costs so we're very pleased with that. We did have a little uptick in unplanned downtime in the quarter not nothing, significant nothing that concerns me. It's actually behind us now. So it's really nothing specific there and then the question on the solvent. So it was that can you can you repeat that 1, ya know. Are you still producing more or less 5 to is? So of the, I think you mentioned, uh, it's sort of circuit 23,000 right coming out of the Grand Rapids.

Is $4,000 to $5,000 of that still?

solvent basically, you're injecting

No, that 23,000 is bbls. That's on a bbl basis, and we're producing 23,000 barrels a day of bumin from that project.

Okay, understood. Thanks very much.

Thanks Greg.

And we'll take a question from Menno Hof with TD Securities.

Thanks and good morning everyone. I, I just have 1 question. On the, on the capex side of things you were quite a bit lower in the quarter than we were modeling, uh, what drove that? And, and given that you're trending below last year in the quarterly run rate implied in your full year. Guidance, what should we expect the Cadence of spending to look like in Q3 and Q4? And finally, is it possible that we see in Imperial test the lower end of the guidance range of?

1.9 to to 2.1 billion dollars.

Thanks Mano. I I'll I'll make a few comments and maybe I'll ask Dan to kind of chime in as well. But what we're really seeing here is it's just timing. It's really a timing effect on the capital. So at this stage there is no change to our to our guidance, in the 1.9 to 2.1 as you stated um we do expect spend to be modestly higher rate in 25 and 26 as you know, as well but it's just for what you're seeing in 25. It is just it's just a timing Milestone payments and things like that and the time which they hit. But right now we we're still

Still, um, you know, consistent with our guidance. Any, anything else? Yeah. No, that's exactly right. It really is just timing or we're comfortable with our guidance. So we'll have a little bit more spend over the back half of the year.

Terrific. Thank you. And I, I just thought of another 1, just on the ebrt side of things, um, just to dig a Little Deeper. What is the status of the 3 horizontal, welfares that you recently? Drilled, are they already in the early stages of activation? And if not what is the uh the timeline that you're targeting?

Start to, you know, salt, you know, inject solvent and you know, a little bit of steam into those wells will be at that time.

Terrific. Thank you.

Thanks mano.

And our next question will come from Patrick Oor with ATB Capital Markets.

Oh, hey guys. Good morning. And thank you for taking my question. I guess the first question you talked about, um, refined products sales going up to 4000 a day, here being enabled by the Trans Mountain expansion. If you could maybe unpack that a little bit more, and then I'd be curious to know sort of um, from a margin perspective. Uh what the impact here would be on, uh, the margins at at the refinery level from that.

Yeah, I I'll start thank you for your question Patrick and I I'll I'll kick off and again probably ask Scott to chime in a little bit. Um and so if you look at that what we were referring to there, I mean

You know, we're always working to enhance our Downstream Market position and uh and our ability to officially Supply customers. Um we did pick up some additional refined products Supply flexibility with Trans Mountain and we did take advantage of that in the second quarter. Um so overall our you know our sales so our dictated by demand and we've seen steady demand in Canada year-over-year on all the products basically that we are supplying. Um so that you know we're seeing that

Steady demand; we picked up a little extra space on Trans Mountain, which we took advantage of in the quarter. That was a mix of local sales and profitable export opportunities. So, it's all about efficient logistics and having the flexibility in the market expertise to take advantage of the demand when it's there. And that's exactly what we did in the quarter.

And then I'll just ask Scotty wants to chime in no more sure. Yeah, I just add to that that um, our primary route to Market is the manufactured products that are refineries moved through our proprietary. Um misre Logistics systems to supply, you know, primarily domestic demand across the Canadian Marketplace. And so the comment there was just reflecting the fact that as we see opportunities with some spots space available on that Trans Mountain, um, expansion pipeline, we always consider, you know, utilizing Logistics that are out there to move product to different markets to take advantage of demand um and uplift potential. And so that that's really what that that um comment refer to.

And sorry, back to the second part. Is there a margin enhancement there, or is it just purely volumetric?

Yeah. So all of our, all of our movements are are meant to, um, to generate margins. So all, that's a positive return for us. Um, but as I mentioned before, we're, we're primarily placing our sales and it's the domestic Market, um, and that's where we see the higher uplift.

Okay, and then just going you, you know, you touched on Curl a little bit here. I think that the results there were a bit ahead of where we had it modeled in the quarter, and based on what I can tell from consensus, I think it was a bit ahead of most of my peers.

Um, so if you— I know you guys like to talk about days with production above 300,000. If you were to break down sort of the outperformance relative to last year in the quarter, and you were to take a look at it and say, "Okay, this is, you know what, we could attribute to better turnaround efficiency. And this is what we can attribute to today's above 300,000 or high output days," um, how would you break that down? And then, what does that sort of imply for the back half of the year and the 285, midpoint of guide?

Um, you know, I'll make a couple of comments and I'll ask Cheryl to chime in, but I think in the second quarter of the turnaround, uh, went a little better than planned. So, you know, that that did contribute somewhat to it. But also we've had uh better just general better reliability and uh and Recovery that we've seen in the asset in the second quarter which is encouraging. I mean we're still sticking to our guidance. We're not looking to change that right now. Um but you know we had yeah, a little lower on planned uh, downtime than we put into our Outlook in the second quarter a little better recovery. The turnaround was a little better as well. The combination of those things did end up with a little better second quarter which we're very pleased uh, to see

obviously, and but but generally our guidance remains uh, unchanged

Or Hydro transport lines, which is giving us additional a throughput. And then, as John mentioned that, the shorter duration turnarounds now specific to your question about the days above 300 year to date. We're tracking about where we were last year.

So, you know, we're, you know, we're halfway through the, the game a half time, here's a still quite a bit of work to be done for the rest of the year, but we've seen you from that first half really good progress with the turnaround behind us. Um, you know, continuing to look forward to a strong, third quarter and fourth quarter.

Okay, thank you very much.

And the next question.

And the next question will come from Doug legit with Wolfe research.

Hey, good morning, everyone. Thanks for taking my questions.

John, I I I I wonder if early in the call. Um, I think you were asked about the investment case and, you know, the accelerator to the ncib and all that good stuff. Um, I I wanted to ask you the question a little differently, but in a selfish way, if you like and what we think drives Market recognition of value for your stock, which is dividend growth.

So my question is that you have the lowest dividend break-even still in the industry, not just in Canada.

Uh, but your dividend growth, you know.

Could go a lot higher if you like or a lot that you're absolutely going to go a lot higher without having to rely on the BuyBacks to manage the burden because you break even is so low. So my question is why not that's my first 1. My follow-up is related. It's probably for Dan. Is there a a Target or an ideal level of Leverage for the capital search or the balance sheet that? You would think all is on normal level of everything. You're supposed to 1. That's benefited from several years of windfall, oil prices. Now, we were there. Thanks.

Thank you. Doug. Um,

Well, I think if I again step back a little bit from this and and then Dan can chime in as well, um, as you know, you know, we, we take a very disciplined approach to Capital allocation, there's no change in that philosophy. And to your point we do prior, prioritize, the reliable and growing dividend, that is our first priority in terms of returning cash to our shareholders. Um, and and and and of course, in doing that, you know, we have, you know, over that 5 year period that I talked about the 20 billion, we've returned 5 billion of that is dividends. And we had, uh, we've had a reliable and growing dividend for over 30 years now and we had a 23% annual growth rate over the last 5 years. So it is still our first priority.

Um, in terms of, you know, returning cash to shareholders, we’re also comfortable with the mix here in terms of, you know, the dividends versus share buybacks. As we've talked to investors, um, you know, the approach we've taken on share buybacks continues to get very positive feedback.

Um, so, but obviously, number one on that list after, you know, our free cash flow, we take care of our investments. It remains the dividend.

Yeah, and just maybe just to add to that. I mean, we see, as you kind of alluded to Doug the, the share buyback, and the dividend growth is complimentary right? It it obviously the share buyback, you know, reduces the absolute level of the dividend and, you know, a job point of that we've had, uh, pretty strong growth in the dividend and and that's our Target. And we want to keep that we want it to be reliable sustainable. But clearly growing, um, you know, and at a strong rate, that's certainly, you know, we'll see where the markets go, but that's how we've looked at it that hasn't changed. Um, now with regard to, um, you know, the, the The Leverage question, uh, you know, we've been at, at 4 billion of debt, you know, gross debt for, for, for some time and we've said, we're comfortable with that level of that. Now, if you're looking at net debt, it will, it will vary obviously we grow, you know, when we're not doing BuyBacks throughout the ncib market because we've exhausted it, you'll tend to see the cash go up and so net debt goes down. But then, you know, we kick into the ncib, you know, the cash comes back.

Down. So we're not really focused on the net debt; that's sort of a little bit of noise in the system. You know, we like our overall debt level, and as John said, you know, a reliable and growing dividend, and you know, surplus cash, where we remain, our philosophy remains to return that to the shareholders in a timely manner. And, uh, you know, that's reflected in our certainly, our NCIB and the acceleration of the NCIB and in the past, you know, um, depending on the market conditions, you know, SIBs as well.

So I'll keep pending on the topic but I appreciate you taking my questions. Thanks.

And the next question will come from Lydia Gold with Goldman Sachs.

Hi team. Thanks so much for taking my question. I just wanted to dive more into the SAG D projects queued up at Cold Lake. Could you talk a bit more about these opportunities and remind us of the timing and the next steps to get these online and maybe as a follow-up, uh, talk about how this technology gives you a competitive Advantage relative to peers.

Thank you. Uh, I'll start again. I may ask Cheryl to chime in on that, but um,

Number 1, I think, I think.

You know, it, it does. Give us a significant competitive Advantage, obviously, many are using sagd, but what we're generally applying at Cole Lake as we transform the asset with new technology is essay sagd, which is a solvent. Assisted sagd. That's what we're applying at Grand Rapids. And what we're, you know, seeing great success with at Grand Rapids and we have other solvent related technologies that we plan to apply at co lake in the future. We talked about the lemming 1 that is saggy, that's not solvent. Assisted that's kind of a very unique Niche opportunity. We saw its mean it's quite amazing. This is the pilot location at Cole Lake that started in 1975. So 50 years ago, we're going back to that pilot location, where applying sag B, which is a technology that Imperial and invented and uh, but others are using today. Um, and we're applying that there to

You know, produce the remaining resource in that location. So we have fa sagd at Grand Rapids. Today producing Beyond be above our expectations and that I think both, well, for the future, we have future pads, uh, to develop in that space. And then the next up for us is Macon essay, sagd, which we're planning to start up in 2029 with a peak rate of 30,000, barrels a day and the key, with all of this is, you know, we're transforming the technology and the recovery at uh, that we're using at Cold Lake, which we've been doing for 50 years. Um, and we continue to do that.

And it's lowering the cost structure and lowering the emissions of the production. And, you know, the beauty of Cold Lake is, as I mentioned, we've been at this for 50 years, we have Decades of of remaining inventory at Coe Lake in front of us.

So really exciting what we're doing there and I do think it gives it is absolutely competitive advantage and I'll ask Cheryl if she wants to add anything more to that. Yeah, maybe just a little bit more. In terms of timing is John mentioned, we're pleased with the results from Grand Rapids, Phase 1. Our next 3 pads are currently in development and we're going to be leveraging, our existing plant capacity and that'll make that will offer significant inventory to sustain production at lower capital, and then John mentioned as well, the Macon, uh, essay, what's unique about that. And that will be our first commercial Clearwater, Cafe development. And that 1. We're expecting about 2029 startups, um, at the end of the day, we're

Checking about 30,000 uh peak from that clear water. So we're on track to about 50,000 uh from our estimate of 50,000 barrels per day of SAGD production by the 2030 time frame.

Thanks so much. I'll turn it back over.

Thank you, Lydia.

Thank you. And this concludes the question and answer session.

I'll now turn the call back over to Peter Shaw for closing remarks.

Great, thank you. On behalf of the management team, I would like to thank everyone for joining this morning. If there are any further questions, please reach out to the IR team, and we'll be happy to answer your questions. With that, thanks very much. And for those in Canada, enjoy the long weekend.

Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect.