Q1 2026 Canadian Natural Resources Ltd Earnings Call

May 7, 2026

Speaker #2: Instructions will be given at that time. Please note that this call is being recorded today, May 7, 2026, at 7:00 AM Mountain Time. I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations, please go ahead.

Operator: I would now like to turn the meeting over to your host for today's call, Lance Casson, Manager of Investor Relations. Please go ahead.

Speaker #2: Good morning, everyone. And thank you for joining CANADIAN NATURALS 2026 first quarter results conference call. Before we begin, I'd like to remind our forward-looking statements and, as should be noted, that in our reporting disclosures, everything is in Canadian dollars unless otherwise stated.

Lance Casson: Good morning, everyone, and thank you for joining Canadian Natural's 2026 Q1 results conference call. Before we begin, I'd like to remind of our forward-looking statements, and it should be noted that in our reporting disclosures, everything is in Canadian dollars unless otherwise stated, and we report our reserves and production before royalties. Also, I'd suggest you review the advisory section in our financial statements that include comments on non-GAAP disclosures. Speaking on today's call will be Scott Stauth, our President, and Victor Darel, our Chief Financial Officer. Additionally, in the room with us this morning is Robin Zabek, CEO of E&P, and Jay Froc, CEO of Oil Sands. Scott will first run through our operational highlights that once again includes production records in the quarter.

Speaker #2: And we report a reserves and production before royalties. Also, I'd suggest you review the advisory section in our financial statements that include comments on non-GAAP disclosures.

Speaker #2: Speaking on today's call will be Scott Stout, our President, and Victor Darel, our Chief Financial Officer. Additionally, in the room with us this morning is Robin Zaback, CEO of E&P, and Jay Frock, CEO of Oil Sands.

Speaker #2: Scott will first run through our operational highlights that once again includes production records in the quarter, Victor will then summarize our strong financial results, and our significant returns to shareholders year-to-date that includes an increased pace to our share buybacks.

Lance Casson: Victor will then summarize our strong financial results and our significant returns to shareholders year to date, that includes an increased pace to our share buybacks. To close, Scott will summarize prior to open up the line for questions. With that, over to you, Scott.

Speaker #2: To close, Scott will summarize prior to opening up the line for questions. With that, over to you, Scott.

Speaker #3: Thank you, Lance. Good morning, everyone. We have a long track record of being an effective and efficient operator while consistently delivering top-tier operational and financial performance through a relentless focus on continuous improvement.

Scott Stauth: Thank you, Lance. Good morning, everyone. We have a long track record of being an effective and efficient operator while consistently delivering top-tier operational and financial performance through a relentless focus on continuous improvement. Quarterly production averaged approximately 1,643,000 BOEs in Q1 2026, which included total quarterly liquids production of approximately 1,198,000 barrels per day, 66% of which was SCO, light crude oil, and NGLs. Production in Q1 delivered year-over-year growth of approximately 64% or 61,000 BOEs per day from Q1 of 2025 levels, whereas quarterly liquids production of approximately 1,198,000 barrels per day was an increase of 24,000 barrels per day or 2% from Q1 2025 levels. Quarterly production levels in Q1 2026 included the following production records.

Speaker #3: Quarterly production averaged approximately 1,643,000 BOEs in Q1 2026, which included total quarterly liquids production of approximately 1,198,000 barrels per day. 66% of which was SCO light crude oil and NGLs.

Speaker #3: Production in Q1 delivered year-over-year growth of approximately 4% or 61,000 BOEs per day from Q1 of 2025 levels, whereas quarterly liquids production of approximately 1,198,000 barrels per day was an increase of 24,000 barrels per day or 2% from Q1 2025 levels.

Speaker #3: Quarterly production levels in Q1 2026 included the following production records. Record quarterly North American E&P liquids production of approximately 773,000 BOEs per day which includes record liquids production of 329,000 barrels per day and record natural gas production of 2.668 ECF per day.

Scott Stauth: Record quarterly North American E&P liquids production of approximately 773,000 BOEs per day, which includes record liquids production of 329,000 barrels per day and record natural gas production of 2.668 Bcf per day. Record quarterly production at Jackfish of approximately 134,000 barrels per day. As a result of strong production volumes combined with robust netbacks, we have reduced our net debt below CAD 16 billion as at the end of April 2026, which resulted in targeted shareholder returns increasing to 75% of free cash flow on a forward-looking basis, as evidenced by our robust share repurchases of approximately CAD 360 million since March 31st.

Speaker #3: Record quarterly production at Jackfish of approximately 134,000 barrels per day. As a result of strong production volumes combined with robust net facts, we have reduced our net debt below $16 billion as at the end of April 2026.

Speaker #3: Which resulted in targeted shareholder returns increasing to 75% of free cash flow on a forward-looking basis as evidenced by a robust share repurchases of approximately 360 million since March 31st.

Speaker #3: Also, in April, at our world-class Oil Sands mining and upgrading assets, we achieved strong monthly production of approximately 630,000 barrels per day or approximately 52% of Q1 2026 liquids production, resulting in upgrader utilization of 106%.

Scott Stauth: In April, at our world-class oil sands mining and upgrading assets, we achieved strong monthly production of approximately 630,000 barrels per day, or approximately 52% of Q1 2026 liquids production, resulting in upgraded utilization of 106%. These strong production volumes are high value with strong SCO prices at a premium to WTI, averaging approximately $5.70 per barrel on the forward strip for the remainder of 2026, generating significant free cash flow. As a result of industry-leading operating costs, increased commodity prices, combined with the SCO premium, our net backs are very strong. Put simply, the cash flow generation from oil sands mining and upgrading assets is significant and best in class.

Speaker #3: These strong production volumes are a high value with strong SCO prices at a premium to WTI averaging approximately US dollars $5.70 per barrel. On the forward strip for the remainder of 2026, generating significant free cash flow.

Speaker #3: As a result of industry-leading operating cost increased commodity prices combined with the SCO premium our net back are very strong. Put simply, the cash flow generation from Oil Sands mining and upgrading assets is significant and best in class.

Speaker #3: As mentioned, Jackfish production has been strong as a result of new pike pad at pike one, which came on in late Q4 of 2025.

Scott Stauth: As mentioned, Jackfish production has been strong as a result of new pad at Pike One, which came on in late Q4 of 2025. The second new pad at Pike One came on production in late March 2026 and continues to ramp up. Current combined production from the two new pads at Pike One is approximately 41,000 barrels per day and continues to exceed expectations with an SOR of approximately 1.8. As a result of strong performance from these Pike One pads and through facility optimizations, including pipeline interconnectivity and debottlenecking, Jackfish exceeded its facility nameplate capacity of 120,000 barrels per day by approximately 14,000 barrels per day on the average in Q1. Another example of Canadian Natural's continued and consistent focus on delivering results through strong execution.

Speaker #3: The second new pad at pike one came on production in late March 2026 and continues to ramp up. Current combined production from the two new pads at pike one is approximately 41,000 barrels per day and continues to exceed expectations with an SOR of approximately 1.8.

Speaker #3: As a result of strong performance from these pike one pads and through facility optimizations including pipeline interconnectivity and debottlenecking, Jackfish exceeded its facility nameplate capacity of 120,000 barrels per day by approximately 14,000 barrels per day on the average in Q1.

Speaker #3: Another example of Canadian naturals continued and consistent focus on delivering results through strong execution. Additionally, as part of our defined medium growth strategy in thermal in situ, we are progressing front-end engineering in 2026, including the balancing long lead equipment items on the 30,000 barrel per day Jackfish expansion project and the 70,000 barrel per day pike two growth project.

Scott Stauth: Additionally, as part of our defined medium growth strategy in thermal in-situ, we are progressing front-end engineering in 2026, including the balancing long lead equipment items on the 30,000-barrel-per-day Jackfish expansion project and the 70,000-barrel-per-day Pike Two growth project. We remain focused on executing our prudent and efficient 2026 capital program as outlined in our updated 2026 guidance previously released in March, and we continue our short and medium-term growth plans across our top-tier asset base. Our ability to effectively allocate capital across our strong asset base provides us with a unique competitive advantage, and when combined with accretive acquisitions, creates significant long-term value for our shareholders. Now, I will turn it over to Victor for our Q1 financial review.

Speaker #3: We remain focused on executing our prudent and efficient 2026 capital program as outlined in our updated 2026 guidance previously released in March, and we continue our short and medium-term growth plans across our top-tier asset base.

Speaker #3: Our ability to effectively allocate capital across our strong asset base provides us with a unique competitive advantage and when combined with a creative acquisitions creates significant long-term value for our shareholders.

Speaker #3: Now I will turn it over to Victor for our first quarter financial review.

Speaker #2: Thanks, Scott, and good morning, everyone. The first quarter of 2026 delivered strong financial results reflecting consistent execution in our operations, our high-quality, diverse asset base, and disciplined capital allocation framework.

Victor Darel: Thanks, Scott, good morning, everyone. Q1 2026 delivered strong financial results reflecting consistent execution in our operations, our high-quality, diverse asset base, and disciplined capital allocation framework. These were further supported by strengthening prices for our products during the quarter. In Q1, we generated adjusted net earnings of CAD 2.4 billion or CAD 1.17 per share, and adjusted funds flow of CAD 4.4 billion or CAD 2.10 per share. These results demonstrate the significant cash-generating capability of our diverse, long-life, low-decline asset base and supported by industry-leading cost performance across our operations. Net earnings for the quarter were approximately CAD 1.3 billion, reflecting strong operational earnings and certain non-cash items, including impacts related to long-term LNG agreement, translation of USD debt, and higher share-based compensation expense driven by appreciation of the company's share price in the quarter.

Speaker #2: These were further supported by strengthening prices for our products during the quarter. In Q1, we generated adjusted net earnings of $2.4 billion or $1.17 per share and adjusted funds flow of $4.4 billion or $210 per share.

Speaker #2: These results demonstrate the significant cash-generating capability of our diverse, long-life, low-decline asset base and supported by industry-leading cost performance across our operations. Net earnings for the quarter were approximately $1.3 billion, reflecting strong operational earnings and certain non-cash items, including impacts related to the long-term LNG agreement, translation of US dollar debt, and higher share-based compensation expense driven by appreciation of the company's share price in the quarter.

Speaker #2: Our free cash flow generation in the quarter allowed us to continue delivering meaningful shareholder returns during which we returned approximately 1.5 billion directly to shareholders in the quarter, including 1.2 billion in dividends, and $300 million through share repurchases, which we managed prudently on a forward-looking annual basis.

Victor Darel: Our free cash flow generation in the quarter allowed us to continue delivering meaningful shareholder returns, during which we returned approximately CAD 1.5 billion directly to shareholders in the quarter, including CAD 1.2 billion in dividends and CAD 300 million through share repurchases, which we manage prudently on a forward-looking annual basis. As announced previously in March, the board increased our quarterly dividend, bringing the annualized dividend to CAD 2.50 per common share and marking 26 consecutive years of dividend increases with a compound annual growth rate of 20%. This dividend track record reflects the sustainability of our business model, the strength of our balance sheet, and the durability of our assets.

Speaker #2: As announced previously in March, the board increased our quarterly dividend, bringing the annualized dividend to $2.50 per common share and marking 26th consecutive years of dividend increases with a compound annual growth rate of 20%.

Speaker #2: This dividend track record reflects the sustainability of our business model, the strength of our balance sheet, and the durability of our assets. With these results, the board has approved a quarterly dividend of $62.50 per common share, payable on July 7, 2026, to shareholders of record at the close of business on June 19, 2026.

Victor Darel: With these results, the board has approved a quarterly dividend of CAD 0.625 per common share, payable on 7 July 2026 to shareholders of record at the close of business on 19 June 2026. Subsequent to quarter end, strong operating performance combined with robust netbacks allowed us to continue to accelerate debt reduction and share buybacks. As a result, buybacks from 1 April to 5 May increased, as Scott mentioned, to approximately CAD 360 million, with direct returns to shareholders in the form of dividends and share buybacks for the year to date of approximately CAD 3.2 billion. Looking forward, we remain focused on disciplined execution of our capital program while continuing to prioritize balance sheet strength and shareholder returns.

Speaker #2: Subsequent to quarter end, strong operating performance, combined with robust net backs, allowed us to continue to accelerate debt reduction and share buybacks. As a result, buybacks from April 1st to May 5th increased as Scott mentioned to approximately $360 million, with direct returns to shareholders in the form of dividends and share buybacks for the year to date of approximately $3.2 billion.

Speaker #2: Looking forward, we remain focused on disciplined execution of our capital program, while continuing to prioritize balance sheet strength and shareholder returns. With our high-quality production mix, strong cost structure, and substantial free cash flow at current strip pricing, our next targeted debt level of $13 billion is approaching at which time we increase shareholder returns to 100% of free cash flow.

Victor Darel: With our high-quality production mix, strong cost structure, and substantial free cash flow at current strip pricing, our next targeted debt level of CAD 13 billion is approaching, at which time we increase shareholder returns to 100% of free cash flow. Our balance sheet is strong, liquidity equally so, supported by internally generated cash flow and undrawn credit facilities, providing us with ongoing financial flexibility to deliver shareholder returns, drive resource value growth, and deliver on strategic growth opportunities, as demonstrated by the accretive acquisition we did here early in Q1 of this year. Overall, our Q1 results reinforce the competitive advantages of Canadian Natural: scale, asset base, cost leadership, and a clear framework for capital allocation that supports long-term value creation for shareholders, all of which look to be strengthening into Q2 of 2026. Thank you.

Speaker #2: Our balance sheet is strong, liquidity equally so, supported by internally generated cash flow and undrawn credit facilities providing us with ongoing financial flexibility to deliver shareholder returns drive resource value growth, and deliver on strategic growth opportunities as demonstrated by the accretive acquisition we did here early in Q1 of this year.

Speaker #2: Overall, our first quarter results reinforce the competitive advantages of Canadian natural, scale, asset base, cost leadership, and a clear framework for capital allocation that supports long-term value creation for shareholders.

Speaker #2: All of which look to be strengthening into the second quarter of 2026. Thank you, and with that, I'll turn it back to you, Scott.

Victor Darel: With that, I'll turn it back to you, Scott.

Speaker #3: Thanks, Victor. In summary, our relentless focus on continuous improvement combined with effective and efficient operations has driven strong performance so far in 2026. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage.

Scott Stauth: Thanks, Victor. In summary, our relentless focus on continuous improvement, combined with effective and efficient operations, has driven strong performance so far in 2026. Our ability to effectively allocate capital across our strong asset base provides us with a competitive advantage. This ability, combined with accretive acquisitions, creates significant long-term value for our shareholders. Our culture of accountability through strong shareholder alignment, as everyone at Canadian Natural is an owner, combined with our portfolio of world-class assets, creates unique advantages that result in lower operating costs, which maximizes our netbacks and free cash flow generation. Before I turn it over for questions, I wanted to note that the recent press release provided by the Oil Sands Alliance regarding competitiveness.

Speaker #3: This ability combined with accretive acquisitions creates significant long-term value for our shareholders. Our culture of accountability through strong shareholder alignment as everyone at Canadian Naturals an owner combined with our portfolio of world-class assets creates a unique advantages that result in lower operating costs, which maximizes our net backs, and free cash flow generations.

Speaker #3: Before I turn it over for questions, I wanted to note that the recent press release provided by the Oil Sounds Alliance regarding competitiveness. We are committed to work together with the provincial and federal governments with the goal of achieving a fiscal competitive MOU framework that will attract capital investment to grow the oil sands.

Scott Stauth: We are committed to work together with the provincial and federal governments with the goal of achieving a fiscal competitive MOU framework that will attract capital investment to grow the oil sands. At Canadian Natural, we are prepared to do our part and grow production, create more high-paying jobs, and help this country achieve its potential for economic prosperity. We have a good chance of achieving this if we are competitive, which means investment dollars must return value that is better than investment alternatives in other countries. As noted in the Pathways Alliance press release, we stand ready to roll up our sleeves and work with Canada and Alberta to make this happen. With that, I'll turn it over to questions.

Speaker #3: At Canadian Natural, we are prepared to do our part and grow production create more high-paying jobs and help this country achieve its potential for economic prosperity.

Speaker #3: We have a good chance of achieving this if we are competitive. Which means investment dollars must return value that is better than investment alternatives in other countries.

Speaker #3: As noted in the Oil Sounds Alliance press release, we stand ready to roll up our sleeves and work with Canada and Alberta to make this happen.

Speaker #3: With that, I'll turn it over to questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by the one on your telephone keypad.

Operator: Thank you. Your first question comes from the line of Doug Leggate from Wolfe Research. Please go ahead.

Speaker #1: Should you wish to cancel your request, please press star, followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker #1: One moment, please, for your first question. And your first question comes from the line of dog legate from Wolf Research. Please go ahead.

Speaker #4: Oh, thanks. Good morning. And Scott, thanks for your comments, especially that last comment. I wonder if I could just pick up on that and go back to your excuse me, your strategy presentation from last year.

Doug Leggate: Thanks. Good morning. Scott, thanks for your comments, especially that last comment. I wonder if I could just pick up on that and go back to your, excuse me, your strategy presentation from last year. You laid out that you've got a couple of, you know, large growth opportunities that are still currently on hold. The macro environment has changed materially since then, obviously, but you also have this, to your point over carbon pricing, I guess, with, you know, really more about the Pathways Alliance position as opposed to your position.

Speaker #4: You laid out that you've got a couple of large growth opportunities that are still currently on hold. The macro environment is changing materially since then, obviously.

Speaker #4: But you also have this to your point over carbon pricing, I guess, with as I was going to say, really more about the Oil Sounds Alliance position as opposed to your position.

Speaker #4: But I guess my question is, what would it take given the combination of changes, especially around the macro, to get you to basically give the green light to some of those growth elements?

Doug Leggate: I guess my question is, what would it take, given the combination of, you know, changes, especially around the macro, to get you to basically give the green light to some of those growth developments?

Speaker #3: Yeah. I think it's continued with the messaging that we have been talking about for some time now. In order to expand the growth and have growth in Oil Sounds operations, we need to be able to have the egress capacity long-term to do so.

Scott Stauth: Yeah. Doug, I think it's continued with the messaging that we have been talking about for some time now. In order to expand the growth and have growth in oil sands operations, we need to be able to have the egress capacity long term to do so. As you know, Doug, there's significant upside for volume development in oil sands, and we need a regulatory framework and a fiscal framework that will allow us to enact on that capacity to grow those volumes. Over a very long period of time of a decade or so in Canada, we have not had the environment regulatory-wise to be able to do so.

Speaker #3: As you know, Doug, there's significant upside for volume development in Oil Sounds. And we need a regulatory framework and a fiscal framework that will allow us to enact on that capacity to grow those volumes.

Speaker #3: And over a very long period of time of a decade or so in Canada, we have not had the environment, regulatory-wise, to be able to do so.

Speaker #3: So we're hopeful that through the MOU, and we're getting together with the rest of the Oil Sounds members, and both levels of government, that we can come to terms on an agreement that will work and bring those investment dollars towards those long-term projects.

Scott Stauth: We're hopeful that through the MOU and working together with the rest of the oil sands members and both levels of government, that we can come to terms on an agreement that will work and bring those investment dollars towards those long-term projects. We're hopeful that we'll be able to do that in short order here, Doug.

Speaker #3: And we're hopeful that we'll be able to do that in short order here, Doug.

Speaker #4: Very clear. And I hope folks are listening. My follow-up very quickly is on the dividend. I guess the cash return strategy generally, there's always a risk of perception in this business of pro-cyclical buybacks, especially when you're about to breach your debt thresholds to give 100% back to shareholders.

Doug Leggate: Very clear, and I hope folks are listening. My follow-up very quickly is on the dividend, I guess the cash return strategy generally. There's always a risk of perception in this business of pro-cyclical buybacks, especially when you're about to breach your debt thresholds to give 100% back to shareholders. You also have the lowest dividend break-even, not just in Canada, but in the industry. What would it take for you to pivot more towards more meaningful and more frequent dividend bumps, as opposed to focusing on what might be perceived as pro-cyclical buybacks? I'll leave it there. Thank you.

Speaker #4: But you also have the lowest dividend break-even not just in Canada, but in the industry. What would it take for you to pivot more towards more meaningful and more frequent dividend bumps as opposed to focusing on what might be perceived as pro-cyclical buybacks?

Speaker #4: And I'll leave it there. Thank you.

Speaker #3: Yeah. Thanks, Doug. You know what? I think it's important to ensure that we have the capacity to be able to do both buybacks and also continue our continue on with our 26-year of growth of our annual dividends.

Scott Stauth: Yeah. Thanks, Doug. You know what? I think it's important to ensure that we have the capacity to be able to do both buybacks and also continue on with our 26th year of growth of our annual dividends. Both of those are meaningful to our investors, and we're trying to find a balance that works for all of our shareholders and one that aligns with our capacity to be able to grow our company, grow our production, and increase our cash flow, which in turn increases more returns to shareholders. It's a little bit about doing all of it, Doug, as perceived to choosing one or the other.

Speaker #3: Both of those are meaningful to our investors, and so we're trying to find a balance that works for all of our shareholders, and one that aligns with our capacity to be able to grow our company, grow our production, and increase our FAD cash flow, which in turn increases more returns to shareholders.

Speaker #3: So it's a little bit about doing all of it, Doug, as to perceive to try to choosing one or the other.

Speaker #4: We'll continue to press on the point. Thanks so much, guys.

Doug Leggate: We will continue to press on the point. Thanks so much, guys.

Speaker #1: Thank you. And your next question comes from the line of Manav Gupta from UBS. Please go ahead.

Operator: Thank you. Your next question comes from the line of Manav Gupta from UBS. Please go ahead.

Speaker #5: Good morning. I want to congratulate you on the very strong performance on spike one. And I'm just trying to understand, can you help us understand a little bit better how can you take the learnings of spike one as you move ahead with your front-end design engineering on spike two project?

Manav Gupta: Good morning. I want to congratulate you on the very strong performance on Pike one. I'm just trying to understand, can you help us understand a little bit better, how can you take the learnings of Pike one as you move ahead with your front-end, you know, design engineering on Pike two project?

Speaker #3: Yeah, I think it's more about, from a reservoir perspective, Pike 1 would be very similar to the Pike 2 reservoir. And so, in terms of learnings for building a facility at Pike 2, I think we'd look at the assets that we've collected at Jackfish, and then at our Kirby assets as well.

Scott Stauth: Yeah. I think it's more about from a reservoir perspective, Pike 1 would be very similar to the Pike 2 reservoir. In terms of learnings for building a facility at Pike 2, I think we'd look at the assets that we've collected at Jackfish, and then at our Kirby assets as well, and take the best of both those worlds and apply our learnings into the development of facilities for Pike 2. As I mentioned, from a reservoir perspective, both reservoirs are very similar. We would take our learnings from how we drill the wells at Pike 1 and apply that with some continuous improvement methodologies to drilling the wells in Pike 2.

Speaker #3: And take the best of both those worlds and apply our learnings and into the development of the facilities for pike two. And then as I mentioned, from a reservoir perspective, both reservoirs are very similar.

Speaker #3: We would take our learnings from how we drilled the the wells at pike one and apply that with some continuous improvement methodologies to drilling the wells in pike two.

Speaker #1: Thank you very much. And I wanted to ask you about the differentials. I think Syncrude is trading almost $5 over TI. So if you could help us understand what's driving this premium and if this premium sustains itself for the next 9 or 12 months, how does CNQ benefit from it?

Manav Gupta: Thank you very much. Wanted to ask you about the differentials. I think Syncrude is trading almost $5 up over WTI. If you could help us understand what's driving this premium, and if this premium sustains itself for the next 9 or 12 months, how does CNQ benefit from it? Thank you.

Speaker #1: Thank you.

Speaker #3: Yeah. Obviously, the continuance of the premium over WTI for SEO is very beneficial to Canadian National with our significant SEO volumes. And so what we're seeing right now in the market is that the SEO barrels come at a high demand.

Scott Stauth: Yeah. You know, obviously the continuance of premium over WTI for SCO is beneficial to Canadian Natural with our significant SCO volumes. What we're seeing right now in the market is that the SCO barrels come at a high demand. They're from cracking perspective significant distillate cuts. With everything that's going on worldwide, there's simply just a greater demand out there for that light crude to create that diesel production. That would be where the demand is coming from on that perspective.

Speaker #3: They're the crack from cracking perspective, significant distillate. Cuts and so with everything that's going on, worldwide, there's just a simply just a greater demand out there for that light crude to create that diesel production so that would be the that would be where the demand is coming from on that perspective.

Speaker #1: Thank you so much.

Manav Gupta: Thank you so much.

Speaker #3: Thank you.

Scott Stauth: Thank you.

Speaker #1: Thank you. And your next question comes from the line of Dennis Fong from CIBC World Market. Please go ahead.

Operator: Thank you. Your next question comes from the line of Dennis Fong from CIBC World Markets. Please go ahead.

Speaker #6: Hi. Good morning. And thanks for taking my question. My first one focuses on oil sands mining. And I was actually hoping to understand you showcased incredibly strong recent production there at the oil sands mining and operations situation.

Dennis Fong: Hi, good morning. Thanks for taking my question. My first one focuses on oil sands mining. I was actually hoping to understand, like, you showed this incredibly strong recent production there at the oil sands mining and operations situation. When you think about now owning 100% of the mine, can you talk towards any of the incremental learnings that you found, any of the optimization techniques that you're kind of applying across both of the assets? Also understand that you've been operating it for a period of time as well prior to. As well as how does that maybe change the interrelationship between Albian and Horizon and your go-forward plans with both assets?

Speaker #6: When you think about now owning 100% of the mine can you talk towards any of the incremental learnings that you found, any of the optimization techniques that you're kind of applying across both of the assets, also understand that you've been operating it for a period of time as well prior to, as well as how does that maybe change the interrelationship between Albion and Horizon and your go forward plans with both assets?

Speaker #3: Yeah. Dennis, I think what's important to remember from overall perspective for Canadian Natural with our oil sands mining and upgrading assets, we are best in class operating cost.

Scott Stauth: Yeah. Dennis, you know, I think what's important to remember from a overall perspective for Canadian Natural, with our oil sands mining and upgrading assets, we are best in class operating cost. Anything that we've done, say, post the swap is just on the edges in terms of incremental continuous improvement opportunities. We've laid that out in terms of what they look like for savings, for warehousing costs, reductions in savings in that. We said, you know, in the range of about CAD 30 million. Utilization of equipment is probably in the range of about CAD 40 million a year. Those are significant in themselves.

Speaker #3: And so anything that we've done say post the swap is just on the edges in terms of incremental continuous improvement opportunities. We've laid that out in terms of what they look like for savings for warehousing cost, reductions in savings in that.

Speaker #3: We said in the range of about $30 million, utilization of equipment is probably in the range of about $40 million a year. So those are significant in themselves.

Speaker #3: And if you look at the overall development of both of those Horizon and the Albion sites, they both present significant upside given the vast reserves that we have.

Scott Stauth: If you look at the overall development of both of those, Horizon and the Albian sites. They both present significant upside, given the vast reserves that we have. There's projects that we've also outlined in, back in the fall with our investor open house, of 150,000 barrels a day at growth opportunity at Jackfish expansion and 90,000 barrels a day at Horizon. Really that sort of lays out the upside. It shows you the robustness of the reserve capacity in both of those areas. I think, you know, owning and operating those assets, with the same mindset which we have worked on doing, since 2017, we created significant value since 2017.

Speaker #3: So there's projects that we've also outlined in back in the fall with our investor open house of $150,000 barrels a day at growth opportunity at Jackfish expansion and $90,000 barrels a day at Horizon.

Speaker #3: And so, really, that sort of lays out the upside. It shows you the robustness of the reserve capacity in both of those areas. And so, I think owning and operating those assets with the same mindset—which we have worked on doing since 2017—we've created significant value since 2017.

Speaker #3: We reduced our operating cost from $42 a barrel at Albion down to $25 or less. We have increased the production by 50,000 barrels a day for extremely low capital cost in the range of about $30 million $300 million so we have been able over time, Dennis, to extract a lot of value out of the AOSP asset while continuing to work on the fringes to find continuous opportunities.

Scott Stauth: We reduced our operating cost from CAD 42 a barrel at Albian down to 25 or less. We have increased the production by 50,000 barrels a day for extremely low capital cost in the range of about CAD 300 million. We have been able, over time, Dennis, to extract a lot of value out of the AOSB asset. We'll continue to work on the fringes to find continuous opportunities. It's all in the box of having the lowest operating cost in the industry.

Speaker #3: But it's all in the backs of having the lowest operating cost in the industry.

Speaker #6: Great. Scott, I really appreciate that context. Switching maybe to a follow-on to Manav's question on a pike, obviously really strong initial productivity from the first two pads there.

Dennis Fong: Great, Scott. I really appreciate that context. Switching maybe to a follow-on to Manav's question on Pike, obviously really strong initial productivity from the first two pads there. Can you talk towards if the strength in well pad or the well productivity is making any, we'll call it adjustments, to the way that you guys think about the Jackfish expansion scope as well as that for Pike Two? Is that changing the way that you're thinking about, say, oil treatment or any of the scope of those two expansion projects? Thank you.

Speaker #6: Can you talk towards if the strength in well pads or the well productivity is making any we'll call it adjustments to the way that you guys think about the Jackfish expansion scope as well as that for pike two?

Speaker #6: Is that changing the way that you're thinking about, say, oil treatment or any of the scope of those two expansion projects? Thank you.

Speaker #3: Dennis, it really isn't changing our perspective of how we construct the facilities. The strong performance from the reservoir is very encouraging. Again, we expect pike two to present similar results in itself.

Scott Stauth: Dennis, it really isn't changing our perspective of how we construct the facilities. The strong performance from the reservoir is very encouraging. Again, we expect Pike 2 to present similar results in itself. Again, if we look at the expansion that we're doing at Jackfish and the relative volumes that we have in the Pike area there, what I'm most excited about is, yes, we're gonna add additional steam capacity to continue to increase the barrels of production that go through the facilities there. I'm also impressed and looking forward to what the teams are gonna be able to execute in terms of exceeding the facility capacities.

Speaker #3: But again, if we look at the expansion that we're doing at Jackfish and the relative volumes, that we have in the pike area there, what I'm most excited about is, yes, we're going to add additional steam capacity to increase the continued increase the barrels of production that go through the facilities there.

Speaker #3: But I'm also impressed and looking forward to what the teams are going to be able to execute in terms of exceeding the facility capacities.

Speaker #3: And so we're starting to see an example of that right now where those facilities at Jackfish were designed for 120,000 when the quarter we saw 134,000.

Scott Stauth: You know, we're starting to see an example of that right now, where those facilities at Jackfish were designed for 120,000. You know, in the quarter, we saw 134,000. It's very, very significant. I do believe there is more to come from that perspective, and we're gonna realize that value and then continue to bolster that strong acquisition that we did back in 2019 and the strategic position that it was and execute on joining up those assets.

Speaker #3: So it's very significant. I do believe there is more to come from that perspective. And we're going to realize that value. And it continues to bolster that strong acquisition that we did back in 2019.

Speaker #3: And the strategic position that it was. And execute on drilling up those assets.

Speaker #6: Great. Thanks for that color, Scott. I'll turn it back.

Dennis Fong: Great. Thanks for that color, Scott. I'll turn it back.

Speaker #1: Thank you once again. Should you have a question, please press star, followed by the one on your telephone keypad. And your next question comes from the line of Greg Party from RBC Capital Markets.

Operator: Thank you. Once again, should you have a question, please press star followed by the 1 on your telephone keypad. Your next question comes from the line of Greg Pardy from RBC Capital Markets. Please go ahead.

Speaker #1: Please go ahead.

Speaker #7: Yeah. Thanks. Good morning. Maybe just to start with a question for Victor. So you had a pretty big working capital deficiency or a meaningful one in the first quarter.

Greg Pardy: Yeah, thanks. Good morning. Maybe just to start with a question for Victor. So you had a pretty big working capital deficiency or a meaningful one in Q1. Do you expect any of that to reverse into Q2? With respect to the CAD 13 billion net debt target, I mean, I know everything's kind of moving around, but just given the commodity price strength juxtaposed against increased buybacks, is CAD 13 billion conceivable like that you would hit that this year, do you think?

Speaker #7: Do you expect any of that to reverse into two Q? And then with respect to the $13 billion net debt target, I mean, I know everything's kind of moving around, but just given the commodity price strength, juxtaposed against increased buybacks, is $13 billion conceivable that you would hit that this year?

Speaker #7: Do you think?

Speaker #3: Yeah. Good morning, Greg. For sure, when I said it's in view, definitely when we look at forward strip pricing, we see a path to get there this year.

Victor Darel: Good morning, Greg. For sure, when I said it's in view, definitely when we look at forward strip pricing, we see a path to get there this year. I mean, as you point out, it depends on what the premiums look like for SCO, et cetera, over the course of the year. Definitely, we're optimistic that with good operating performance, it's possible. I'm not going to commit to you yet. We'll see how the next couple quarters here play out. On the working capital front, to your point, pretty regular course tax items in the Q. Otherwise, I think for the rest of the year, fairly regular working capital impacts in Q2 and Q3, nothing out of the ordinary.

Speaker #3: I mean, as you point out, it depends on what the premiums look like for SCO, etc., over the course of the year. But definitely, we're optimistic that with good operating performance, it's possible.

Speaker #3: But I'm not going to commit to it yet. We'll see how the next couple of quarters here play out. On the working capital front, to your point, pretty regular course tax items in the quarter.

Speaker #3: Otherwise, I think for the rest of the year, fairly regular working capital impacts in Q2 and Q3. So nothing out of the ordinary.

Speaker #7: Okay. Okay. Understood. Thanks for that. And then Scott, maybe it's kind of related to the regulatory framework and so on, but I'm more interested in how you're thinking about egress and market diversification, right?

Greg Pardy: Okay. Understood. Thanks for that. Scott, maybe, it's kind of related to the regulatory framework and so on, but I'm more interested in how you're thinking about egress and market diversification, right? There's a lot of proposals now that are cost-efficient to move barrels into the US. There's an open season with respect to Trans Mountain, and then there's this looming, you know, big million barrel a day pipeline kind of off in the future. How do you see the egress landscape shaping up? Is it better than maybe what it was a year ago? What about market diversification, you know, for a CNQ, just given your size?

Speaker #7: There's a lot of proposals now that are cost-efficient to move barrels into the US. There's an open season with respect to transmountain and then there's this looming big million-barrel-a-day pipeline kind of off in the future.

Speaker #7: But how do you see the egress landscape shaping up? Is it better than maybe what it was a year ago? And then, what about market diversification for C&Q, just given your size?

Speaker #3: Yeah. Greg, I think if you look at the short and medium term, and you compare where we're at now compared to a couple of years ago, it looks very good with the expansions.

Scott Stauth: Yeah. Greg, I think if you look at the short and medium term and you compare where we're at now, compared to a couple years ago, it looks very good. With the expansions through the main line, through the Prairie Connector opportunity and through TMX, all of them are positive for this medium-term growth that will help the industry here grow. It's very positive. I think if you looked at the expansion to the West Coast for, you know, 1 million barrel a day pipeline, I think that's very important to ensure that when you look beyond the short and sort of midterm growth platforms, we need that pipeline to be able to grow oil sands in a significant way. I would say it's all good, Greg.

Speaker #3: Through the mainline, through the prairie connector opportunity, and through TMX, all of them are positive for this medium-term growth that will help the industry here grow.

Speaker #3: So it's very positive. I think if you looked at the expansion to the West Coast for a million-barrel-a-day pipeline, I think that's very important to ensure that when you look beyond the short and sort of mid-term growth platforms, we need that pipeline to be able to grow oil sands in a significant way.

Speaker #3: And I would say it's all good, Greg. All of those point towards a very robust Western Canadian sedimentary basin development opportunity. In terms of our positioning at Canadian Natural, we'll continue to take and look at those diversification opportunities to ensure that we achieve the best net backs possible for all of our oil production and that it comes through a combination of going both south and to the West Coast.

Scott Stauth: All of those point towards a very robust Western Canadian sedimentary basin development opportunity. In terms of our positioning at Canadian Natural, we'll continue to take and look at those diversification opportunities to ensure that we achieve the best netbacks possible for all of our oil production, and that it comes through a combination of going both south and to the West Coast.

Speaker #7: Very clear. Thanks very much to both of you.

Greg Pardy: Very clear. Thanks very much to both of you.

Speaker #3: Thank you, Greg.

Scott Stauth: Thank you, Greg.

Speaker #1: Thank you. And your next question comes from the line of Patrick O'Rourke from ATB Coremark. Please go ahead.

Operator: Thank you. Your next question comes from the line of Patrick O'Rourke from ATB Cormark. Please go ahead.

Speaker #8: Hey, good morning, guys. And thanks for taking my question. I was just thinking about the Dubron A asset and now that you've had it for a period of time here, we've seen very strong IPs, maybe perhaps an update on how the wells are performing.

Patrick O'Rourke: Hey, good morning, guys, and thanks for taking my question. I was just thinking about the Duvernay asset, and now that you've had it for a period of time here, we've seen very strong IPs. Maybe perhaps an update on how the wells are performing, and where you sort of sit in terms of capital costs and improvements there and what's left.

Speaker #8: And where you sort of sit in terms of capital cost and improvements there and what's left.

Speaker #3: Yeah. The Dubron A has turned out very well for us. We are meeting the expectations from production growth perspective there. The capital cost, we have brought down significantly over time here.

Scott Stauth: Yeah, Patrick, the Duvernay's turned out very well for us. We are meeting the expectations from a production growth perspective there. The capital cost, we have brought down significantly over time here, since the acquisition. We've also had a significant reduction in the operating cost, you know, in the range of plus 2 CAD a barrel drop in operating cost. That's very significant from a netback perspective. We've applied our learnings from the Montney, brought them into the Duvernay, with some adjustments, and things have been looking very well. To the east side, there's a window of more significant liquids production as well as you move east.

Speaker #3: Since the acquisition, we've also had a significant reduction in the operating cost in the range of plus a couple of bucks a barrel drop in operating cost.

Speaker #3: And so that's very significant from a net back perspective. We've applied our learnings from the Motoney, brought them into the Dubron A. With some adjustments and things have been looking very well.

Speaker #3: To the east side, there's a window of more significant liquids production as well as you move east. So we're just at the front-end stage of looking to understand the results from that part of it.

Scott Stauth: We're just at the front end stage of, you know, looking to understand the results from that part of it. It's all very good, Patrick, and we like the play a lot. There's a significant, obviously, netbacks in there and high liquids production. It's a very good part of our portfolio.

Speaker #3: So it's all very good, Patrick. And we like to play a lot. There's significant, obviously, net backs in there and high liquids production, so it's a very good part of our portfolio.

Speaker #7: Okay. Great. And maybe this ties back a little bit to Dubron A and some of the short-cycle targets that you have. But I think at the investor day, you did a very good job of sort of laying out short-cycle, mid-cycle, long-cycle capital projects or targets that you have in the portfolio.

Patrick O'Rourke: Okay, great. Maybe this ties back a little bit to Duvernay and some of the short cycle targets that you have. I think at the Investor Day, you did a very good job of sort of laying out short cycle, mid cycle, long cycle capital projects or targets that you have in the portfolio. You're obviously a very regimented company, but we're in a very volatile commodity environment. I'm wondering if you could maybe walk us through a little bit of the process and how you're thinking about capital allocation, particularly in the shorter cycle end of the portfolios to ensure that you're maximizing value here. I think maybe shifting to oilier, more liquids-rich targets.

Speaker #3: And you're obviously a very regimented company. But we're in a very volatile commodity environment. So I'm wondering if you could maybe walk us through a little bit of the process and how you're thinking about capital allocation, particularly in the shorter cycle end of the portfolio to ensure that we're that you're maximizing value here.

Speaker #3: And I think maybe shifting to oilier, more liquids-rich targets and with the ebbs and flows of the oil price how you manage that on a daily basis looking forward here in 2026.

Patrick O'Rourke: You know, with the ebbs and flows of the oil price, how do you manage that on a daily basis looking forward here in 2026?

Speaker #8: Yeah. Patrick, I think patience is a really important factor. When we look at how we've laid out our plans for the capital program, which we've made some adjustments back in March, and we talked about that, the short-term development opportunities in our multi-lats liquid-rich plays we are putting significant efforts towards capitalizing on that and we're getting good results, good productivity from the wells, low operating cost, lower capital cost.

Scott Stauth: Yeah, Patrick, I think patience is a really important factor. You know, when we look at how we've laid out our plans for the capital program, which we made some adjustments back in March, and we talked about that. You know, the short-term development opportunities in our multi-lats, liquid rich plays, we are putting significant efforts towards capitalizing on that, and we're getting good results, good productivity from the wells, low operating cost, lower capital cost. Our drill times continue to improve.

Speaker #8: Our drill times continue to improve. So not only are we maximizing our ability to be able to develop these resources we're doing it in such a manner in the short-term projects that we're doing it in such a manner that we're able to improve our net backs, not just because prices are higher, today, but because if prices had remained flat, we would have had stronger net backs for the cost reductions and stronger returns just with our activities through continuous improvement.

Scott Stauth: Not only are we maximizing our ability to be able to develop these resources, we're doing it in such a manner in the short-term projects that we're able to improve our netbacks, not just on because prices are higher today, but because if prices had remained flat, we would have had stronger netbacks with our cost reductions and stronger returns just with our activities through continuous improvement. We'll continue on with that, and we're monitoring that. We've got, as I mentioned, significant drilling rigs out there working in about 21 rigs working. If you look at our medium-term plans, I think we've laid that out, as you mentioned, fairly detailed for our thermal in situ projects.

Speaker #8: So we'll continue on with that. And we're monitoring that. And we've got as I mentioned, significant drilling rigs out there working in about 20, 21 rigs working.

Speaker #8: And so then if you look at our medium-term plans, I think we've laid that out as you mentioned. Very detailed for our thermal in-situ projects.

Speaker #8: I've talked about it again today. We're continuing with the engineering for Pike and for Jackfish expansion. We're looking to proceed with long lead items there to advance those projects.

Scott Stauth: I've talked about it again today. We're continuing with the engineering for Pike and for Jackfish expansion. We're looking to proceed with long lead items there to advance those projects. Lots of confidence there. Again, you know, the longer-term projects in oil sands mining, we need to see. We're looking for positive outcomes on the MOU for development of those areas.

Speaker #8: Lots of confidence there. And again, the longer-term projects in oil sands mining, we need to see the we're looking for positive outcomes on the MOU for development of those areas.

Speaker #7: Okay. Thank you very much.

Patrick O'Rourke: Okay. Thank you very much.

Speaker #8: Thank you.

Scott Stauth: Thank you.

Speaker #1: Thank you. And your next question comes from the line of Neil Mehta from Goldman Sachs. Please go ahead.

Operator: Thank you. Your next question comes from the line of Neil Mehta from Goldman Sachs. Please go ahead.

Speaker #6: Yeah. Thanks so much. And the first question is just on natural gas. You talked about your marketing strategy around oil, but there's obviously been a lot of volatility around natural gas.

Neil Mehta: Yeah, thanks so much. First question is just on natural gas. You talked about your marketing strategy around oil, but there's obviously been a lot of volatility around natural gas. Maybe your perspective on how that changes your activity plans in gas in Western Canada, how you're thinking about marketing it. Can you talk a little bit about the global gas picture? You've got this interesting agreement in 2030 with Cheniere. Is there an opportunity to layer more of that in?

Speaker #6: So maybe your perspective on how that changes your activity plans in gas in Western Canada? How you're thinking about marketing it? And then can you talk a little bit about the global gas picture?

Speaker #6: You've got this interesting agreement in 2030 with Chenier. Is there an opportunity to layer more of that in?

Speaker #8: Yeah. Neil, if you looked at the opportunity to expand on that to capture strong global pricing, we continue to talk to folks. We'll look at those opportunities as they present themselves.

Scott Stauth: Yeah, Neil, if you looked at the opportunity to expand on that to capture, you know, strong global pricing, we continue to talk to folks. We'll look at those opportunities as they present themselves and, you know, more to come on that. We are certainly thinking about diversification. It is part of our strategy. In terms of the development on the gas side, for some time now, we've been messaging that our focus has been on the liquids-rich production. We're really not drilling any dry gas in the basin. We're looking at where the strongest returns are. That's how we manage our capital portfolio. We're focused on that.

Speaker #8: And more to come on that. But we are certainly thinking about diversification as part of our strategy. In terms of the development on the gas side, for some time now, we've been messaging that our focus has been on the liquids-rich production.

Speaker #8: We're really not drilling any dry gas in the basin. And we're looking at where the strongest returns are. That's how we manage our capital portfolio.

Speaker #8: We're focused on that. And we yes, we do have significant Motoney dry gas opportunities as well, but we'll keep those in the bank for the future.

Scott Stauth: Yes, we do have significant Montney dry gas opportunities as well, but we'll keep those in the bank for the future, and we'll capitalize in those areas that have the significant liquids production for now. It's really a focus on liquids production, high returns, and not any significant focus on drilling any dry gas wells.

Speaker #8: And we'll capitalize in those areas that have the significant liquids production for now. So it's really a focus on liquids production, high returns, and not any significant focus on drilling any dry gas wells.

Speaker #6: Yeah. That makes sense in this macro. And in the release, I thought this was interesting, the comments about piloting solvent-enhanced oil recovery in some of your in-situ assets.

Neil Mehta: Yeah, that makes sense in this macro. In the release, I thought this was interesting, the comments about piloting solvent enhanced oil recovery in some of your in situ assets. You know, it's certainly something that we've been talking a lot about, solvent recovery and the potential upside from production that could generate. You're such an interesting engineering organization. I'd be curious, how big do you think this could be as it relates to your E&P assets?

Speaker #6: And it's certainly something that we've been talking a lot about, solvent recovery and the potential upside from production that could generate. But you're such an interesting engineering organization.

Speaker #6: I'd be curious how big do you think this could be as it relates to your EP assets?

Speaker #8: Yeah. If you look at the SAGD's assets, we've and our cyclic steam at Primrose in both cases, we have deployed we've deployed a bit of butane to reduce the steam.

Scott Stauth: Yeah. You know, if you look at the SAGD assets, and our cyclic steam at Primrose, in both cases, we deployed a bit of butane to reduce the steam and reduce the overall emissions through a couple of pilot projects. We had the commercial pad at Canoe 8 in Kirby North. You know, again, what we saw in all of these aspects of what we tested so far is that we're able to see, you know, particularly on that Kirby pad, strong recoveries of the butane. Butane is a significant cost driver.

Speaker #8: And to reduce the overall emissions, through a couple of pilot projects, we had the commercial pad at CANO8 in Kirby North. And again, what we saw out of in all of these aspects of what we tested so far is that we're able to see particularly on the Kirby pad, strong recoveries of the significant cost driver or any solvent that you're injecting would be the significant cost driver.

Scott Stauth: Any solvent that you're injecting would be the significant cost driver and really where you need to focus on in terms of ensuring that you're gonna get strong returns for that type of investment. That's where the key is on that cost side of it. You know, we're telling the teams, let's ensure that we can go out and find the lowest cost alternative to capture that upside of reduced steam requirements and still have strong solvent recoveries. We're taking the path of ensuring that we really focus on getting the cost right before we deploy it in any kind of significant scale.

Speaker #8: And really where you need to focus on in terms of ensuring that you're going to get strong returns for that type of investment, that's where the key is.

Speaker #8: On that cost side of it. And we're telling the teams let's ensure that we can go out and find the lowest cost alternative to capture that upside of reduced steam requirements and still have strong solvent recoveries.

Speaker #8: So we're taking the path of ensuring that we really focus on getting the cost right before we deploy it in any kind of significant scale.

Speaker #8: If you look at if you look, Neil, at the future and what it does capture for what it can capture is helping bring reserves forward for development in our thermal in-situ assets with lower capital overall capital deployment.

Scott Stauth: If you look, Neil, at the future and what it does capture for or what it can capture is helping bring reserves forward for development in our thermal in-situ assets with lower capital, overall capital deployment. The upside is certainly there. It's just really important to ensure that you got the lowest cost alternative from a solvent perspective and designing your recovery facilities. You wanna ensure we get that right because we can get the best of both worlds with that, Neil. We can look at that long-term opportunity, and in the interim, we can continue to develop and add pad adds at low capital efficiency cost.

Speaker #8: So the upside is certainly there. It's just really important to ensure that you got the lowest cost alternative from a solvent perspective and designing your recovery facilities.

Speaker #8: Do you want to ensure we get that right? Because we can get the best of both worlds with that, Neil. We can look at that long-term opportunity and in the interim, we can continue to develop and add pad adds at low capital efficiency costs.

Speaker #6: That's great. Thanks, guys.

Neil Mehta: That's great. Thanks, guys.

Speaker #1: Thank you once again. That is star and one to ask your question. And your next question comes from the line of Manohol Shaf from TD Cowen.

Operator: Thank you. Once again, that is star and one to ask a question. Your next question comes from the line of Menno Hulshof from TD Cowen. Please go ahead.

Speaker #1: Please go ahead.

Speaker #8: Thanks, and good morning, everyone. I'll start by circling back on return of capital in the 75% return of free cash. Track that you're currently on.

Menno Hulshof: Thanks. Good morning, everyone. I'll start by circling back on return of capital and the 75% return of free cash track that you're currently on? You talked about being very active on the buyback in April and even through the beginning of May. Would you consider leaning into the balance sheet more aggressively over the near term to take advantage of higher spot prices?

Speaker #8: You talked about being very active on the buyback in April and even through the beginning of May. But would you consider leaning into the balance sheet more aggressively over the near term to take advantage of higher spot prices?

Speaker #5: It's not something that the way the free cash flow allocation policy is laid out, I think we intend to adhere to that as it's currently laid out.

Scott Stauth: You know, it's not something that the way the free cash flow allocation policy is laid out, I think we intend to adhere to that as it's currently laid out. As you know, there's gonna be lots of free cash flow generation here in the Q2 at current strip pricing, and I don't think leaning into the balance sheet will be required. I think we'll have lots of cash flow to have a very robust program. I think the target as laid out by the board here is to maintain that 75% level. That's the plan for now.

Speaker #5: As you know, there's going to be lots of free cash flow generation here in the second quarter at current strip pricing. And I don't think leaning into the balance sheet will be required.

Speaker #5: I think we'll have lots of cash flow to have a very robust program. And I think the target is laid out by the board here is to maintain that 75% level.

Speaker #5: So that's the plan for now.

Speaker #8: Okay. Thanks, Scott. And then the second question is on sulfur, which is this commodity that comes up once every 10 years or so. But clearly, prices are a lot higher.

Menno Hulshof: Okay. Thanks, Scott. The second question is on sulfur, which is this commodity that comes up, you know, once every 10 years or so. Clearly, prices are a lot higher. Can you just refresh us on your exposure to that market, how much you're currently selling into the market today, and what that could amount to in terms of quarterly revenue, if you're prepared to share that?

Speaker #8: Can you just refresh us on your exposure to that market? How much you're currently selling into the market today? And what that could amount to in terms of quarterly revenue, if you're prepared to share that?

Speaker #5: Yeah. Mano, thanks. We won't get into the exact details of the revenue from it. But I can tell you we're a significant producer of sulfur.

Scott Stauth: Yeah. You know, Menno, thanks. You know, we won't get into the exact details of the revenue from it. I can tell you we're a significant producer of sulfur at our oil sands mining operations at the upgraders, both Horizon and Scotford, also in our conventional operations in our western part of the province and in BC. Certainly, as you mentioned and indicated, sulfur has been cyclic in nature. We're certainly seeing a turn towards the upside at this point in time. It's a good position to be in, where we're able to realize strong value from the sale of those sulfur values.

Speaker #5: At our oil sands, mining operations at the upgraders both Horizon Scotford, also in our conventional operations in the western part of the province and in BC.

Speaker #5: And so certainly, as you mentioned, and indicated, sulfur is has been cyclic in nature. And we're certainly seeing a turn towards the upside at this point in time.

Speaker #5: And it's a good position to be in. Where we're able to realize strong value from the sale of those sulfur values. So we're going to continue to monitor that.

Scott Stauth: You know, we're gonna continue to monitor that and take advantage of it, as the cycle rides higher.

Speaker #5: And take advantage of it as the cycle rides higher.

Speaker #8: Okay. Thanks, Scott. I'll turn it back.

Menno Hulshof: Okay. Thanks, Scott. I'll turn it back.

Speaker #1: Thank you. There are no further questions at this time. I will now hand the call back to Lance Casson for any closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand the call back to Lance Casson for any closing remarks.

Speaker #5: Thank you, operator. And thanks to everyone. For joining our call this morning. If you have any questions, please give us a call. Have a great day.

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

Operator: This concludes today's call. Thank you for participating. You may all disconnect.