Strathcona Resources Ltd.

Good morning. My name is Lara and I'll be your conference operator today. I would like to welcome everyone to the Q2 2024 conference call of Stress Corner Resources Limited. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. For attendees on the conference call that would like to ask a question, press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. I now introduce Rob Morgan, President and CEO of Strathcona. You may begin your conference.

Thank you and good morning, everyone. Welcome to the second quarter 2024 conference call of Strathcona Resources. As the operator mentioned, my name is Rob Morgan, President and CEO of Strathcona. And with me today is Connor Watrous, our Senior Vice President and CFO of and Angie Lau, our treasurer. Yesterday, Strathcona was pleased to release our second quarter results, second quarter 2024 results, and the news release financial statements and MD&A, which are available on Strathcona's website as well as on CDAR+. We encourage investors to read those documents in full and please take note of the advisories regarding forward-looking information and non-GAAP measures included therein. Production for the second quarter averaged approximately 182,000 BOE per day, with funds from operations of $548 million or $2.56 per share, capital expenditures of $297 million, resulting in free cash flow of $247 million or $1.15 per share. Oil production for the second quarter was consistent with the first quarter at approximately 131,000 barrels per day. Oil sales volumes increased to approximately 135,000 barrels per day in the quarter, Due to a drawdown of inventory related to the commissioning of Strathcona's new crude by rail offloading facility on the U.S. Gulf Coast. At Cold Lake, we continue to make progress on de-bottlenecking projects that have resulted in an 8% reduction in our steam oil ratio compared to the same period in 2023, improving the efficiency of our operations. Production of natural gas was $237 million per day, down 6% or approximately $16 million per day from the first quarter due to planned and unplanned third-party outages. Associated natural gas liquids production was essentially flat to the first quarter at approximately 11,500 barrels per day. At Kakwa, Strathcona has sanctioned our first pad to incorporate 2.5-mile horizontal laterals to more efficiently exploit our land base. These wells are expected to reduce costs by 10% on a per-meter basis versus our previous 2-mile laterals. At Ground Birch, initial testing of our three new drills has indicated strong results comparable to our initial two wells. The wells have been tied in and are awaiting stronger natural gas prices to preserve the economics of our investment. As third-party outages have extended into the third quarter, along with a significant turnaround at one of our facilities late in Q3, and with the continued deferral of dry gas from our ground birch wells, Strathcona is reducing its year natural gas guidance by approximately 15 million cubic feet per day, resulting in a revised corporate guidance range of 185,000 to 190,000 BOE per day. with an increased oil weighting of 72%. Our capital budget guidance remains at $1.3 billion. As of June 30th, Strathcona achieved our previously disclosed debt target of $2.5 billion. As a result, Strathcona's Board of Directors has approved a quarterly-based dividend of $0.25 per share payable on September 27th to shareholders of record on September 16th. Going forward, Strathcona's run rate debt target remains at $2.5 billion, leaving 100% of excess free cash flow beyond the base dividend available for further shareholder returns or additional investment opportunities. On July 10th, Strathcona was pleased to announce a first-of-its-kind partnership with Canada Growth Fund to develop up to $2 billion in carbon capture infrastructure on Strathcona's thermal assets with a targeted FID for the first project in mid-2025. We are excited to be a leader in the decarbonization of thermal oil production in Western Canada. Strathcona is also pleased to announce its first Investor Day to be held on Thursday, November 14th, coinciding with the release of our Q3 results. The Investor Day will provide shareholders with further details highlighting both our near and long-term plans for our assets and to properly introduce additional members of the Strathcona team. Thank you very much for your time this morning, and we'd be very pleased to answer any questions you may have.

Thank you, sir. As a reminder, please press star then the number one to ask a question. One moment please for our first question.