Imperial Oil Limited

Please stand by. Good day, and welcome to the Imperial Oil First Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Peter Shaw, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to our First Quarter Earnings Conference Call. I am joined this morning by Imperial's Senior Management Team, including John Whalen, Chairman, President, and CEO. Dan Lyons, Senior Vice President, Finance and Administration, Cheryl Gomez-Smith, Senior Vice President of the Upstream, and Scott Maloney, Vice President of the Downstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in attachment six of our most recent press release and are available on our website with the link to this conference call. Today's comments may contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future performance, and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described in further detail on our first quarter earnings release that we issued earlier this morning, as well as our most recent Form 10-K. All these documents are available on CDAR+, EDGAR, and our website, so I'd ask you to refer to those. John is going to start this morning with some opening remarks and then hand it over to Dan, who's going to provide the financial update. And then John will provide his operations update. Once that is done, we will follow with the 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 first quarter earnings call. I hope everyone is doing well, and as always, we appreciate you taking the time to join us this morning. Since our last earnings call, we've seen significant volatility, in commodity markets driven by geopolitical events in the Middle East. This has served to tighten the supply-demand balance for a range of commodities globally, resulting in a materially different outlook for this year and potentially beyond. It also reinforces the strategic importance of commodity and product supply from Canada to the rest of the world. Our longstanding business model uniquely provides significant leverage to upside conditions while also protecting against downside scenarios. This is a substantial long-term structural benefit that allows us to return additional surplus cash to shareholders at higher prices while adhering to our investment plans and strategic priorities over a range of price scenarios. There continues to be a dynamic global backdrop. However, our corporate strategy and investment plans remain consistent. We continue to maximize the value of our existing assets and progress material, high-quality, organic growth opportunities, leveraging our competitive advantages of technology, scale, integration, execution excellence, and very importantly, our people. Speaking of technology and scale, we also continue to advance our business transformation restructuring plans. As a reminder, we expect to capture significant long-term efficiency and effectiveness benefits as we further leverage rapidly advancing technology and ExxonMobil's global capability centers. Now, from a financial perspective, cash flows from operating activities were $756 million in the quarter. Excluding the impact of working capital, cash flows from operating activities were over $1.2 billion. Moving to operations, I want to highlight several achievements. At Curl, production was in line with our second best first quarter ever, despite the impact of a third-party natural gas supply outage. At Coal Lake, we achieved our highest first quarter production in over eight years, supported by new, technology-advantaged, low-cost volume that is transforming the asset. In the downstream, our renewable diesel facility at Strathcona captured significant value compared to more costly imports. In terms of capital allocation, our approach remains consistent with our long-standing priorities, which begins with investing in the business to sustain and grow value. Next, a reliable and growing dividend remains a key priority. Our annual dividend has grown for 31 years. And then, as we generate surplus cash above and beyond our commitments, We look to return that to shareholders in a timely manner. And as you've seen in the release, we intend to renew our normal course issuer bid at the end of June. Overall, I'm excited about the opportunities in front of us, including our long-term in situ growth potential. We continue to construct the enhanced bitumen recovery technology pilot at our Aspen lease, which can unlock significant new low-cost volume growth for Imperial and its shareholders. With that, I'll pass things over to Dan to walk through the financial results in more detail.

Thanks, John. Starting with financial results for the first quarter, we recorded net income of $940 million, down $348 million from the first quarter of 2025, primarily driven by higher incentive compensation charges as a result of our higher share price. and unfavorable upstream realizations based on lower average prices across the quarter. Elaborating on the incentive compensation item, the total charge in the quarter was $143 million after tax. This mark-to-market charge was driven by a historic share price increase of almost $65 over 50% in the quarter. When comparing sequentially, first quarter income is up $448 million from the fourth quarter of 2025, primarily driven by the absence of identified items and by higher prices partially offset by lower volumes and the incentive compensation charge I just mentioned. Now shifting our attention to each business line and looking sequentially. Upstream earnings of $470 million are up $472 million from fourth quarter due to absence of identified items. When excluding those items, net income is up $52 million, primarily due to higher prices. Downstream earnings of $611 million are up $92 million from fourth quarter. Excluding identified items in the fourth quarter, net income is up $47 million, mainly due to lower operating expenses. Our chemical business generated earnings of $24 million, up $15 million from the fourth quarter, excluding identified items in the fourth quarter. Net income is up $4 million. Moving to cash flow, in the first quarter, we generated $756 million in cash flow from operating activities, excluding working capital tax. Cash flows from operating activities for the first quarter were $1 billion, $239 million, down $521 million from the first quarter of 25. Cash flows from operating activities were also impacted by unfavorable deferred tax effects of about $350 million, primarily driven by much higher commodity prices late in the first quarter as compared to the fourth quarter of 2025. As a US GAAP LIFO reporter, we tend to see transitory negative inventory-driven deferred tax impacts when prices rise and transitory positive impacts when prices fall. This is driven by our reporting earnings on a LIFO inventory basis, while our deferred taxes are calculated on a weighted average cost inventory basis consistent with Canadian tax regulations. Now, shifting to CAPEX, Capital expenditures in the first quarter were $478 million, $80 million higher than the first quarter of 2025, and $173 million lower than the fourth quarter of 2025. In the upstream, first quarter spending of $362 million focused on sustaining capital at Curl, Cold Lake, and Syncrude. First quarter CapEx was primarily spent on sustaining capital projects across our refinery network. Shifting to shareholder distributions in the first quarter, we paid $350 million of dividends. And earlier this morning, as John noted, we announced our intention to renew our NCIB in June, and we declared a second quarter dividend of 87 cents per share. in line with our longstanding philosophy of returning surplus cash to shareholders. Now I'll turn it back to John to discuss the company's operational performance.

Thanks, Dan. I want to take the next few minutes to share key highlights from our operating results. Upstream production for the quarter averaged 419,000 gross oil equivalent barrels per day, up 1,000 oil equivalent barrels per day, versus the first quarter of 2025. First quarter crude production was the second highest first quarter result in company history, just 1,000 barrels per day below the all-time first quarter record set in 2024. I'll now cover highlights for each of the assets, starting with Curl. Curl's quarterly production was 259,000 barrels per day gross, up 3,000 barrels per day versus the first quarter of 2025. As a reminder, first quarter volumes at Curl tend to be lower on a seasonal basis relative to the second half of the year. In addition, during March, a third-party regional gas supply outage required us to temporarily reduce production levels to match lower natural gas availability. Now that we're in the second quarter, the team is focused on the planned turnaround at Curl. Work this year will extend the turnaround interval at the K1 train from two to four years. similar to the work completed last year at the K2 train. This is a great example of the work we're doing to maximize the value at Curl, leading to higher volumes and lower unit cash costs. Consistent with the framework we outlined at our 2025 Investor Day, we are advancing growth at Curl across multiple fronts, including higher recovery, productivity and reliability enhancements, and the turnaround optimization work I just mentioned. Later this year, we're adding a secondary recovery project at Curl designed to capture additional bitumen from the ore already being processed through the plant, supporting incremental, capital-efficient ballings growth. Moving next to Coal Lake highlights, Coal Lake's quarterly production averaged 155,000 barrels per day, up 1,000 barrels per day versus the first quarter of 2025. We continue to see the benefits of our strategy of transforming Coal Lake production to advantage technology. With ongoing strong results from our Grand Rapids solvent-assisted SAGD project and continued ramp-up of the Lemming SAGD project, we remain confident in our strategy at Coal Lake to deliver advantaged volumes at lower unit cash costs by leveraging technology. To round out the upstream, I'll cover Syncrude. Imperial's share of Syncrude production for the quarter averaged 72,000 barrels per day, which was down 1,000 barrels per day versus the first quarter of 2025. During the quarter, Syncrude experienced unplanned downtime associated with COCR 8-3, resulting in lower volumes and additional maintenance. The interconnect pipeline was utilized to enable the export of an additional 8,000 barrels per day of bitumen and other products over the quarter. With the additional maintenance required at Syncrude this quarter, the decision was made to postpone the planned second quarter turnaround work on COGR 8-2 until the summer.

Now let's move to the downstream.

In the first quarter, we refined an average of 384,000 barrels per day, equating to a utilization of 88%. Compared to the first quarter of 2025, refinery throughput was down 13,000 barrels a day. During the quarter, we experienced unplanned downtime, and Strathcona was impacted by the disruption of synthetic crude feedstock caused by the Syncrude-Coker outage until alternative supply was put in place. As I mentioned in my opening remarks, our renewable diesel facility at Strathcona captured significant value compared to more costly imports during the first quarter. even as we continue to optimize around hydrogen availability. We are now executing the planned turnaround at Strathcona that began in early April and is scheduled to be completed in just over a week's time. The work is focused on the crude unit, which achieved the longest ever run length of 10 years before this planned turnaround. From a strategic perspective, we continue to invest in our structurally advantaged downstream with a view to maximizing earnings and cash flow across the value chains. Investment in 2026 includes digital infrastructure enhancements and targeted projects to strengthen logistics and feedstock flexibility. Petroleum product sales were 441,000 barrels per day, down 14,000 barrels per day compared to the first quarter of 2025, due primarily to a reduction in opportunistic supply sales partially offset by increased retail sales. Overall, across our Canadian network, we saw very similar demand for each of our primary petroleum products in the first quarter of 2026 relative to 2025. Turning now to chemicals. Earnings in the first quarter were $24 million, down $7 million from the first quarter of 2025 due to lower product pricing, partially offset by reduced feed stock calls. In closing, I would like to reiterate that despite the dynamic geopolitical environment, our priorities remain clear and consistent. We are focused on continuing to profitably grow volumes, further lowering unit cash costs, and increasing cash flow generation. We remain committed to maximizing the value of our existing asset base, progressing our volume and cost targets, driving greater efficiency and effectiveness, and delivering unmatched industry-leading shareholder returns. Operationally, our focus remains on execution excellence and being the most responsible operator. This includes safely and effectively completing the planned turnaround at Strathcona, as well as the planned turnaround at Curl in May. Both are important to sustaining reliability, capturing value from our assets, and supporting long-term performance. Looking ahead, our restructuring is firmly in the implementation phase and progressing well. We are taking a robust and disciplined approach with a focus on maintaining safe, reliable operations. This work is being advanced in an orderly manner with clear line of sight to the expected benefits over time, including improved efficiency, improved effectiveness, competitiveness, and long-term value creation. Finally, our capital allocation priorities remain unchanged. We expect to continue generating cash beyond the needs of our capital plan and our dividend, and our commitment remains to return that cash to shareholders in a timely manner. As noted in the press release this morning, we intend to renew our normal course issuer bid in late June.

As always, I want to thank our employees for their commitment, professionalism, and teamwork.

Their dedication to safe operations, execution excellence, and customer and community service is what makes our achievements awesome. And I'd like to thank all of you once again for your continued interest and support. Now we'll move to the Q&A session.

I'll pass it back to Peter. Thank you, John. As always, we'd appreciate it if you could limit yourself to one 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 using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. And the first question is from Dennis Fong with CIBC World Markets.

Hi, good morning, and thanks for taking my questions. The first one for me is just really around the upstream. Can you maybe discuss, we'll call it the progress around the pipeline of SA SAGD projects at Cold Lake? I know that there's kind of a long duration strategy around kind of growing or layering in projects between now and 2050. As the world kind of obviously evolves in terms of diversifying supply chains globally, can you talk about opportunities to maybe accelerate some of that pipeline of projects as well as your appetite for that?

Thanks, Dennis. I'll make a few comments on that. You know, I think Maybe I'll step back first and talk about our capital plans in light, as you say, of the current situation and commodity prices. Every year, we review our corporate plan, and we consider that over a range of inputs and a range of price scenarios, and we pace our investment strategy to maximize value at the end of the day. And, you know, looking at that both in terms of our existing assets and progressing advantage growth. So, we remain very focused on curl, getting it to 300,000 coli, getting it to 165,000 barrels per day. And in the downstream, you know, flexibility and logistics projects. And, of course, we're advancing our EBER pilot. So, I think at the high level, you shouldn't expect or anticipate major changes. You know, we weren't. waiting for a price signal to drive pace. We're looking at maximizing value for shareholders over a long-term view, and we believe we're progressing our growth opportunities at the appropriate pace to do just that. So that's kind of at the highest level. If you think at Coal Lake, I mean, we continue to work through this transformation of the asset. As I mentioned, Grand Rapids SA SAGD is continuing to perform very well, above 20,000 barrels a day. We're ramping up the Lemming SAGD, which is going back into where the original pilot was. That's ramping up towards 9,000 barrels per day. And then in the future plans, we have Mahican, which we've started to invest in, and that's still on track to bring on 30,000 barrels a day of advantaged technology volumes starting up in 2029. So we continue to progress those at a pace we think that makes sense. And, you know, stepping back from that at Coal Lake, If you think about the percentage, we talk about this transforming the asset. In 2020, all of our production there was coming from CSS and Steamflood, and not from what we're today characterizing as advantage technology. In 2025, that was 20% was coming from advantage technology, largely the SA SAG-D at Grand Rapids. You go ahead five more years, that's going to be up to 45%. Five years after that, it's going to be 60%. And by the time you get to 2040, which is less than 15 years from now, about two-thirds of our production will come from advantage technology at Coal Lake. So we continue to progress that at a pace we think that makes sense.

Great.

Really appreciate that color and context there, John. My second question shifts the focus back towards the downstream. And I was hoping you could provide us or at least remind us about the flexibility in terms of refining assets, as well as kind of revealing any opportunities to capitalize on dislocations in the markets, whether it be locally or globally, as well, and kind of maybe specifically focusing around distillates and jet fuel, just given how desirable those products happen to be.

Yeah, I'll make a few comments. I'm going to ask Scott to chime in as well. You know, we feel really good about the, obviously, our downstream business, the margin capture that we're able to get. Canada remains advantaged globally in terms of margin that we get. And then Imperial remains advantaged within Canada. So we really like our position. We do, you know, so we're really looking to maximize sales locally. However, given the current environment, we do look at you know, the export market as well and, you know, and look to overall maximize the margin, our margin capture in that regard. So, you know, there are some constraints about what we can export when you look at logistics and so on, but we do continue to look across the whole portfolio and how to maximize overall capture, but we're really pleased with the advantage we have in Canada. And I think you saw us do that in the first quarter in terms of margin capture as we benefit from producing renewable diesel, the flexibility we've had to produce into the highest value products and into the highest value markets. So kind of high level, that's how I think about it. And I'll ask Scott to add some color to that.

Sure. Thanks, John. Appreciate the question, Dennis. First on the gas to diesel and jet splits within our refineries, we look at that from an optimization standpoint every single month. And so as we think about the feedstocks, we're sending to our refineries, we're doing that based on the value we can achieve on the finished products that are manufactured. And so certainly in this time period, we've been maximizing our production of diesel and jet molecules over gasoline. And that is a balance because, you know, a large portion of our production goes to supply customers within the Canadian marketplace. And we can efficiently supply those customers within the Canadian marketplace with our coast to coast logistics network moving the barrels from our refineries in eastern and western Canada to those customers. And so that's where we see the highest uplift. And as John mentioned, we do opportunistically look at exporting additional production on top of that. And certainly that is an opportunity in this sort of marketplace when you're seeing margins increase in other markets.

Thank you very much for that caller. I'll turn it back.

And the next question will come from Greg Party with RBC Capital Markets.

Yeah, thanks. Thanks. Good morning, guys. And as always, thanks for the detail rundown. John, I wanted to come back to just the progress in terms of the restructuring that's going on, maybe to better understand perhaps at what stage you're at in terms of transferring workflows from from IMO into some of the Exxon mobile excellence centers and so forth. And then also just in terms of the technology we're talking about in terms of those advancements and how that's being incorporated, maybe what stage are we at and what are the things that you're looking for in terms of, you know, key benchmarks of success?

Thanks, Greg. Yeah. You know, as we step back in from this restructuring, it's all driven around, as you, as you pointed to, you know, leveraging rapidly advancing technology environment and the growth that we've seen in these global capability centers that ExxonMobil has. And, you know, that basis, that case for action remains really strong, and both of those things draw up the decision, and we feel very good about that. And it advances our longstanding strategy about maximizing value and leaning into technology and leaning into our relationship with ExxonMobil. I would say I feel very good about the progress we're making, and we are advancing that transition on track today. If I think about that, if you look at it, well, basically it's pretty rateable in terms of the – we're doing two things. We're outsourcing work, and we're capturing efficiencies. And as I've mentioned before, about 40% of the – reduction in positions or the value is actually pure efficiency. And about 60% is outsourcing work to these global capability centers where we already have work being done for us today. So we have very rigorous plans on the transfer of that work to those global capability centers and the positions where we will capture efficiencies. And each department and group within Imperial has detailed roadmaps on how they're progressing that. It's going to be pretty rateable. You know, we have had people leave the organization late last year. We've had people leave the organization in the first quarter of this year, you know, in the range of about 130 people in the first quarter of this year. And that's going to continue pretty rateably quarter by quarter and year by year this year and next year. So that's progressing well and on track, and you'll see it kind of pretty rateably over that period. The technology... I think a couple of things. Part of it is what we put in place that it's enabled us to move at this pace. And then the second part of it is as you move that into these global capability centers, we're going to be able to deploy technology more quickly at scale in the future. So a lot of it was putting the digital programs that we've spoken about in the past, putting in place digital technologies. our data lakes, getting our data organized and in a structure that could be used in an efficient way, regardless where the work was being done, putting digital twins in place, and then automating some of our work. So that enabled us to continue on this path. And then as we move these workflows into global capability centers, we see greater opportunity, AI, machine learning, and so on, to further automate those workflows. And we're going to be able to do that more quickly and at scale when that work is being, you know, at a global capability center and being done in a broader sense across Exxon Volvo's network.

Okay.

I hope that answers the question.

No, no, it does. I mean, I think it's usually these announcements, they come out and then, you know, the focus is on cost of the future. But obviously there's, you know, there's a transition to go through. So it's good to understand that. some of the context there. So let me just pose maybe a related question. Then in terms from your perspective as the CEO, the capability of Imperial to go execute Aspen in the future and recognizing there's a pilot there and there's a bunch of work to do and so forth. It certainly sounds from where you're sitting that the only change in terms of where corporate strategy might be headed is not necessarily in terms of what you're going to deliver, but just where it's going to be delivered from and at what cost. Is that the right way to think about it?

Absolutely. That's exactly the way to think about it. Nothing is changing in our company in terms of the governance of our company, the the skill sets we will have on the ground to support the assets we have today to support growth into the future. We will have, you know, we're still going to be an organization of 4,000 people after we go through this transition. And our growth plans, you know, I really believe this sets us up to continue to deliver industry leading performance and actually build the foundation for us to grow. And of course, if you think about an Aspen project, We're not sitting here today with the project team waiting for that project to come. We build up capability when we see those projects coming in. Of course, a lot of it is done by contractors, but we will need additional capability. We're going to be in a better position to build up that capability because we're going to have support networks globally that are there that we can leverage and ramp up. It doesn't change anything with our governance, doesn't change anything with our strategy. I'm as bullish or more bullish than I've ever been on our future in-situ portfolio. The technology and, you know, we have the ability to double our production with that future in-situ portfolio. And, you know, when the time is right, when the technology is ready and the investment environment is there, we have the capability to do that.

All right. Very good. Thanks, John.

And moving on to Menno Holschoff with TD Callen.

Thanks, and good morning, everyone. I'll start with a question on Curl. In your opening remarks, you touched on some of the initiatives you're pursuing to drive production above 300,000 barrels a day on a sustained basis, and you talked about turnaround optimization, but can you elaborate on where things stand on the key pieces within enhanced bitumen recovery and the overall performance of the equipment.

Yeah, that's right, Matt. I mean, I'm going to ask Cheryl to chime in here. But, you know, we've got these three focus areas that we've had, which is around productivity and reliability improvement, the turnarounds, and then the one you mentioned around enhanced recovery. And we have specific projects focused on enhanced recovery. And so we're working all three of those components. Those are the things that will unlock and get us to 300,000 barrels a day, $18 a barrel. And I'm going to let Cheryl talk about a couple of the enhanced recovery projects that we have that we're progressing right now.

Sure. Thanks, John, and thank you for the question, Menno. You know, John references three items. I'd probably say there are more. This is a space where this is kind of our ultimate and equation. So when I think about CURL and where we're headed with 300 KBD, I have very strong confidence in our future. And you've heard me say this before, which is we're anchored and we're building on a strong foundation. We're leveraging scale, such that our incremental production really leverages this fixed high-cost structure. We're doing recovery projects. We've got two in the hopper right now. One is called KFCC, and that's going to come online at the end of the year. And that captures additional bitumen from ore already processed. The second one is called CST or poor sand sealings that's in development. Think of this as where you get aeration in the system and it makes bubbles so the bitumen droplets, you're able to recover more bitumen. The other and in this space is the turnaround optimization that John mentioned and then technology solutions. This really hits on that productivity and reliability space. You've heard me mention about we're continuing to upsize our hydro transport lines We're looking at mine automation where we're looking for more remote, semi, and automated mining. This really takes the physical operations out. Continuing with our fleet optimizations on the autonomous side. And then the other thing I find interesting with CURL is just by design, your hull distances get longer as mine develops. So there's cost headwinds. Our intent is to more than offset those via scale optimization and technology solutions. And the final thing I'll leave you with, and this is one of the Key milestones I'm very proud of. By late this summer, Curl is on target to hit our 1 billion barrels of production. So this is a significant milestone and very much looking forward to it.

Yeah, thanks, Cheryl.

That is a big number. Second question, maybe on the recent... increase to the SEO premium. Uh, what is your marketing team seeing day to day in terms of rising SEO demand to meet diesel and jet supply shortfalls? And how long do you think a premium pricing could, uh, could persist?

I'm going to, I'm going to, uh, ask Scott to, to take that one.

Yeah. So, um, you know, we, we, I mentioned before that, uh, certainly we're, we're optimizing our refineries to, um, to manage additional diesel and jet production. We feel like there's ample feedstocks in the marketplace to do that. And with the demand profile within Canada in particular, there's even some imported jet from other markets into portions of Western Canada. So we see you know, some ongoing ability to continue pushing jet production and sales into the Canadian marketplace and believe we have enough feedstocks to do that.

Yeah, and I would just add, you know, obviously synthetics are trading higher, you know, because they're a good way to make diesel and jet. And, you know, that's probably, you know, we're not going to predict the future synthetic premium, but that may persist for a little bit as these margins stay quite high.

Terrific.

Thanks to you all. I'll turn it back.

And we'll take a question from Neil Meda with Goldman Sachs.

Yeah, thank you. And this might be for you, Dan, with just your perspective on return of capital, which has really been the hallmark of Imperial over the last couple of years. And as we've gotten into a firmer commodity environment, you know, Certainly the NCIB will get turned on, but how do you think about, you know, buying back stock here and the potential for an SIB and if there's any price sensitivity around shrinking the share account because stock's not done really well. So any perspective around that would be great.

Sure, Neil. You know, bottom line is, you know, no change in the way we look at this consistent with, you know, John's kind of remarks and earlier on. You know, we're committed, obviously, to the reliable and growing dividend. We, you know, paid our April 1 dividend at the higher rate of 87 cents, which is a 20% increase from the prior. And as you noted, you know, we said we're going to renew our NCIB, you know, at the end of June when we can. And we'll certainly plan to proceed with that. And, you know, and then the question is, okay, is there an SIB in there somewhere, too? And the answer is it's just going to depend on where cash goes, right? I mean, right now at current prices, if those persist, you know, we'll have a lot of cash, right? So that would certainly be a possibility. But we'll just have to see what happens. So I'd say no change in our philosophy. We remain committed to returning cash to shareholders. And as we generate the cash, you know, based on, you know, commodity prices, we'll continue to return that, you know, really as we have in the past. So no change to our philosophy here. I would say we're not really setting our prices at a great run. And as I said in my opening remarks, the mark to market was so big it showed up as a factor because of the rapid rise in the share price. But we believe that reflects value. And we see the share buybacks as an efficient way to return cash. So we'll continue to return cash.

Yeah, thank you. Thanks, Dan. It's been a great run. So just to follow up on the questions about, you know, what you want to accomplish during the turnarounds that you referenced earlier for both Strathcona and Curl, can you give us, you know, pull back the onion a little bit and talk about specifically what are the two or three things you want to accomplish at both of those turnarounds that we should be focused on?

I mean, I'll make a few high-level comments, and then Cheryl and Scott can chime in. But being at Strathcona with the turnaround of the crude unit, again, it's had a 10-year run. So there are some, you know, we monitor obviously the integrity of the unit, and there are some elements, components that need to be changed out at that point. They've come to the, you know, towards the end of their life. So part of that is just the maintenance that comes with it. Um, so, but, but 10 years is a long time to run a unit and we look to continue to optimize that. There's that, but at certain points you do need to go in and make some adjustments. Then at curl, I mean, there is again, the same thing we've been, uh, you know, there are some elements that components and things that we do need to change out. They come to end of life. Uh, in general, we try to have redundancy when we do that, but you don't have that full redundancy to do it everywhere. But a big part is some of the upgrades that we're doing. Cheryl mentioned it already. I mentioned it, but it's, um, Some of the upgrades we're doing to allow us to get that turnaround to go from a two-year interval to a four-year interval. So that's metallurgy improvements, size of transport lines and things like that, that will allow us to go longer. So that's at the high level. Maybe, Scott, anything further on the Strathcona?

Maybe just one other comment. Yeah, just to confirm, it is an extended turnaround interval length. So that is something that we're pretty proud of, actually, getting the units to run this long. But it is a normal turnaround from a work scope perspective. We don't plan to add any new equipment or things like that. But one other comment I'd share is that with our new renewable diesel unit located at our Strathcona refinery, that continues to run during this turnaround. And so we continue to manufacture renewable diesel, and that's really been a bright spot for us in the first quarter. And so that has not been impacted by the turnaround activity in Strathcona in the first quarter to date.

Sure, and I'll answer, I'll give a little bit of context for CURL. So the K-1 scope that we've got this year is essentially the same scope that we had for K-2 last year. So the work we completed on K-2 gives us confidence as we head into the turnaround in May. And a couple key items there, we have some modifications on the primary separation sale, and then we've got some hardening on our surge bins. And those are really the key items to enable the four-year turnaround. We do have a couple incremental items to work for K1 around the flair. But in general, I would say the majority of the scope is exactly what we did last year for K2.

Awesome.

And we'll take a question from Doug Leggett with Wolf Research.

Thank you. Good morning, everyone. I guess this might be for Dan. Dan, royalties in Canada are typically priced off WPI, which obviously has gone into overdrive here. And WCS has blowed out quite a bit. I wonder if you could walk us through how we should think about that. You're getting, obviously, royalties priced on one number, but you're getting realizing prices at a different number, particularly on the heavy oil and the wet. Obviously, your production is more heavy than light. So can you walk us through that? And I guess if I could risk a follow-up here, this is a really – I know it's a stupid question before I ask it, but I'm going to ask it anyway. And it's about technology on things like SAGD – Where does it sit? Does it sit at ExxonMobil or does it sit at Imperial? And the stupid bit of my question is, one kind of helped feeling that we're coming into a very different era for oil prices, you know, with UAE pulling out of OPEC and, you know, maybe there is a restocking cycle and underinvestment and all the rest of it. Imperial has never operated outside of the US, outside of Canada, my apologies. Is there ever a situation where the heavy oil opportunities in places like Venezuela might change that, or does it all sit with ExxonMobil? Thanks.

Okay, so maybe I'll take the first one on royalties. You know, you're right. I mean, it's pegged. The royalties are pegged. The royalty rates, I should say, are pegged to WTI, but the actual royalty payment is tied to your realizations on bitumens. So, and that's been the case for a long time. And I would say, on balance, you know, we feel the royalty regime in Canada is attractive. And in particular, for Curl, which is pre-payout, even at the, you know, the very highest royalty rate, you know, which is over 120 Canadian WTI, we tap out at 9% gross. which, so we have, you know, really great leverage to the upside on prices. So, yeah, we don't see it as a significant issue. I mean, the spread has widened out a bit. It's, you know, it's like maybe 15, I haven't looked today, but 15-ish, you know, so which is, you know, historically, you know, not very wide. So, it's the rates that are set on the WTI, but the actual payments are based on your realizations of bitumen, you know, actual prices. So, yeah. It's really, you know, to us, you know, overall, given the way the rates work, a good regime, and we don't see it as a headwind. We see it as more of a tailwind in a high-price environment, especially for an asset like Curl.

Thank you, Doug.

And let me take the, yeah, the technology question, Doug. I think, here's how I think about it. You know, we basically have access to all of ExxonMobil's technology. And they have access to ours. So in terms of, you know, at the high level, is Imperial looking to expand its footprint beyond Canada? We're not. We're focused on Canada. But we basically have shearing agreements on the technology. And Imperial has largely the heavy oil-related technologies, SAGD, the technologies we use at Curl, the paraffinic froth treatment and so on. That has been developed. by Imperial. So Imperial has kind of been the center of excellence around heavy oil technology. So if ExxonMobil were to decide to look at Venezuela or whatever, they could utilize some of our heavy oil technology involved in that. Right now, we at Imperial are not looking to go outside of Canada. The flip side of that is we get to take advantage of ExxonMobil's technology. So we talked a lot about renewable diesel here today. We're using a low-temperature proprietary technology that allows us to use that our renewable diesel can be used year-round in cold weather environment. That's an ExxonMobil developed technology that we have full access to and we're able to use to give us a competitive advantage with our renewable diesel project. Some of the metallurgy we use at Curl on our hydro transport lines has come from metallurgical technology advancements that ExxonMobil has developed. We just used... the ExxonMobil Proxima carbon fiber material in one of our bridges at Curl. So we have full access and we use much of their process optimization technology in our downstream and in our upstream as well. So we have full and free access to their technology. We use it in areas when it comes to heavy oil. That technology development has largely occurred through Imperial and will continue to occur You know, we just announced last year how we donated our technology center here to SAIT, which was a $37 million donation, the largest ever donation to an educational institution in Alberta. But we'll continue to have research at that research center going forward in specific to heavy oil, you know, optimization, as well as tailings work and so on. So that's kind of how we do that.

Maybe not such a dumb question, John. That's very informative. Thanks very much indeed.

You love your questions, Doug, just for the record.

Thank you. Thanks, guys.

And that does conclude the question and answer session. I will now turn the conference back over to Peter Shaw, Vice President of Investor Relations, for closing remarks.

Thank you. So on behalf of the management team, I'd like to thank everyone for joining us this morning. If there are any other further questions, please don't hesitate to reach out to the investor relations team and we'll be happy to answer your questions. With that, thank you very much and have a great day.