Suncor Energy Inc.

Thank you for standing by, and welcome to the Suncor Energy first quarter 2020 financial results call. All lines are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, please press star, then the number one on your telephone keypad. I would now like to turn the call over to Mr. Trevor Bell, Vice President, Investor Relations. Please go ahead. Thank you.

Thank you, Operator, and good morning. Welcome to Suncor's first quarter earnings call. With me this morning are Mark Little, President and Chief Executive Officer, and Alistair Cowan, Chief Financial Officer. Please note that today's comments contain forward-looking information. The actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our first quarter earnings release, as well as our current annual information form. Both of these are available on CDAR, EDGAR, and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian GAAP. For a description of these financial measures, please see our first quarter earnings release. Following remarks, we'll open up the call to question. Now I'll hand it over to Mark for his comments.

Good morning, everyone, and thanks for joining us today. At Suncor, our purpose is to provide trusted energy, that enhances people's lives while caring for each other and the earth. As we navigate these challenging times, our purpose continually reminds us that we have a critical role to play by providing energy to our customers while supporting the health and wellness of our employees, our customers, and the community. Safety is at the core of Suncor's values, and we've moved quickly to respond to the COVID-19 pandemic to ensure the health and safety of our workforce in all our global locations. Our experience with the Calgary floods in 2013 and the Fort McMurray forest fires in 2016 has allowed us to proactively initiate our business continuity plans and effectively respond to this evolving circumstances related to COVID-19, despite the pandemic being very different than what we have faced before. Steps that we have taken include reducing staff at all our sites and offices to only essential personnel, implementing health surveys and temperature testing at all our facilities as well as at airports for individuals flying into our northern facilities. Adapting to longer shift rotations to reduce travel exposure and modify busing and flight logistics to maintain proper distancing. Closing common areas in all our oil sands camps along with providing full service meals and deep cleaning of facilities. implementing several on-the-job protocols such as physical distancing and elevated hygiene practices, adding health protective measures for our employees and customers at our 1,800 Petro-Canada locations, and finally, we've been talking with our employees about mental health, and we have professional support available for all our employees and their families. These steps have been very successful in keeping our employees safe and we continue to adapt our response as the situation evolves. Our employees provide an essential service, supplying the trusted and reliable energy required for the transportation of critical supplies and goods across Canada. During this period, many of our customers are essential workers, such as truck drivers, where we've made an extra effort to provide sanitized, welcoming, and fully functioning truck stops to support and protect these critical individuals. It's our honor to be able to play our part alongside all Canadians through these challenging times. We've recently implemented a $3 million essential worker and community support program at more than 1,800 locations across Canada. The Suncor Energy Foundation, together with our employees, has also donated $2 million to support charities and critical organizations to help communities get through this. In support of Canada's northern communities, we leveraged the company's supply chain to purchase and donate N95 masks to the federal government to ensure northern medical facilities did not run out of these vital supplies. Before we get into operational and financial updates, I want to thank all our workers, suppliers, and partners, and the many other essential workers across Canada and in all the countries in which we operate for all of their efforts in keeping us safe, healthy, and providing us with what we need so that we can be cared for and care for each other. At this time, I would also like to extend our thoughts and best wishes to all the residents in Fort McMurray who were impacted by the recent flooding. We continue to work in the region, assisting and providing lodging to displaced residents, and in any other manner we are able to do so. The convergence of global events has created a turbulent market situation. The COVID-19 pandemic and the associated rapid demand reduction is unlike anything that's occurred in modern times. Concurrently, the OPEC Plus failure to reach consensus in early March resulted in increased oil supply into an already oversupplied global market. These events have resulted in market conditions which require a thoughtful and measured response. And we provided updated corporate guidance on March 23rd, reflecting our response, which included increased liquidity and reduced capital and operating expenses and adjusted production. Our continued focus on maximizing value also meant that we optimized the bitumen through our upgraders and minimized bitumen sales into the market, particularly towards the end of the quarter. As part of this focus, working with our partners, we reduced our Fort Hills operations in April to one fully utilized mine train. This decision is expected to contribute $200 million towards our operating cost reduction target and $100 million of our capital reduction target. Finally, our substantial Substantial marketing experience and midstream logistics network has allowed us to focus on managing market exposures and capturing opportunities in real time. Our midstream strength has been even more valuable in this volatile environment. As global inventories have continued to rise, we anticipate crude oil to reach full storage capacity in the near term, although we are encouraged by the pace of production shut-ins globally. This phenomenon means upstream production will either be shut in or be forced to balance with downstream product demand, increasing commodity price volatility. Our team has made significant progress in executing, in a short period of time, the business decisions we announced in March. We have put in place controls that make our workplace and retail sites as safe as possible, while operating our assets safely and reliably and maintaining the financial strength of the company. We understand that the fundamentals of the market recovery will be dependent on how quickly governments restart their economies and the discipline of our industry to achieve and maintain a balanced oil market. However, the pace of these factors is uncertain. Since our March update, we continue to monitor market conditions, analyzing various recovery scenarios potential timelines, and their impacts on future operating cash flow, capital expenditure plans, financial health, and flexibility of the company. Although we expect the crude market to substantially recover by 2022, the risk of an extended period of economic uncertainty, translating into weaker commodity prices and higher volatility, remains possible. Balance sheet strength. and financial health of Suncor are the foundations of our capital allocation framework. It is not something that can be put at risk by precision of models or, to describe it more bluntly, spreadsheet math. Financial health and resilience are maintained by taking actions which are measured, prudent, and proactive. As we have consistently stated, hope is not a strategy. In the second quarter, we know our industry is being challenged by both a significant supply and demand imbalance, which has resulted in the largest collapse in crude prices ever. These market conditions require decisive leadership and action. We have decided to target a further reduction in our 2020 capital expenditure program, revising the range from $3.6 to $4 billion. This represents an additional capital reduction of $400 million at midpoint compared to our March 23rd guidance. Our board of directors remains committed to the overall business strategy of leveraging our long life, low decline asset base while providing energy to our customers and returning value to shareholders. However, after having taken into account the significant capital and operating cost reductions announced to date the Board believes that a reduction of the current level of dividends is required to drive down the cash break even of the company to a WTI price of $35 U.S. a barrel. As a result, the Board has decided to reduce the dividend by 55% to a quarterly cash dividend of $0.21 per common share, down from $0.465 per common share. This will take effect for the dividend payable on June 25, 2020. The total actions taken with today's announcement and the March update targets a reduction in our capital spend by $1.9 billion, or 33%, and our operating costs of $1 billion, or 10%. It also decreases our use of cash by $4.5 billion on an annualized basis versus our original 2020 plan. The implementation of these decisions is expected to reduce our breakeven costs from $45 U.S. a barrel to $35 U.S. a barrel, covering all planned operating and administrative costs, sustaining capital and dividends. These actions not only support our strong balance sheet, financial health, and high investment grade ratings, but adds to the resilience of the company to maintain its focus on long-term value creation. I'll now pass it off to Alistair to go through some of the quarterly financial results.