Suncor Energy Inc.

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Suncor Energy's third quarter 2002 results conference call. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. At this time, I would now like to hand the conference over to your host today, Mr. Troy Little, Vice President of Industrial Relations, Please go ahead.

Thank you, Operator, and good morning. Welcome to Suncor Energy's third quarter earnings call. Please note that today's comments contain forward-looking information. Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our third quarter earnings release as well as in our current annual information form, both of which are available on CDAR, EDGAR, and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian generally accepted accounting principles. For a description of these financial measures, please see our third quarter earnings release. We will start with comments from Chris Smith, Interim President and Chief Executive Officer, followed by Alistair Cowan, Suncor's Chief Financial Officer. Also on the call are three of our senior operating leaders. Peter Zebedee, Executive Vice President, Mining and Upgrading. Shelley Powell, Senior Vice President, In-Situ and E&P. And Arnel Santos, Senior Vice President, Refining and Logistics. Following the formal remarks, we'll open up the call to questions. Now, I'll hand it over to Chris to share his perspective on the quarter.

Great. Thanks, Troy. Good morning to everyone, and thank you for joining us. On our last call, I discussed that achieving best-in-class safety and operational performance is Suncor's core focus and that my goal every day is to execute on our plans to drive that performance. A key element in delivering this is the focus of our senior operations leaders on driving changes through the organization to the front lines. We're doing something a bit different than past calls. Our three senior operating leaders, Peter, Shelley, and Arnelle, are with Alistair and me today to demonstrate our increased focus on this and to answer any questions you may have on operations. Now, taking a brief look at the quarter, we generated $4.5 billion in adjusted funds flows from operations, which included a FIFO loss in the downstream of $585 million. And as it's designed to do, our physical integration between upstream and downstream mitigated the impact of wider heavy crude differentials, delivering strong margins. Upstream volumes came in as expected at 724,000 barrels per day during the quarter. And I expect these volumes to increase in the fourth quarter as our maintenance activities at Syncrude and Base Plant Upgrader 1 were completed in October. In the downstream, we had strong Q3 margins on the back of a 100% utilization rate and the third best crude refining throughput in our history. Downstream margin capture was 85%, reflecting higher than normal levels of processing of sweet crude in our refineries, primarily due to a planned outage in the Edmonton sulfur recovery unit in the quarter. As well, we continue to see solid volumes and margins in our sales and marketing segment, with distillate demand in particular continuing to be strong. During the quarter, we distributed $1.7 billion to shareholders in the form of dividends and share buybacks. Also, we successfully completed an upsized bond repurchase tender that resulted in buying back our debt below face value and lowering our structural break-even by nearly $1 per barrel on a WPI basis. These actions keep us on track with our capital allocation framework and move us toward our goal of reducing our net debt and, depending on commodity pricing, increasing capital allocation to share buybacks to 75% by the end of Q1 2023. Now, my comments on the quarter today are intentionally briefed because we've delivered a strong quarter in line with our expectations. Instead, the focus in my opening remarks will be on recent actions that we've taken on improving safety and optimizing our asset portfolio. Work continues across the company to improve safety and operational excellence, with a particular focus on our mining and tailings operations. My priority has been to remove distractions from the organization and to focus our employees on safe, reliable operations and our biggest opportunities. With fresh external mining perspectives and a number of leadership changes in place, we are in position to execute and deliver on our plans at an accelerated pace. In particular, there are three actions I'd like to highlight today. First, I've initiated a thorough review of the makeup of our frontline workforce with a view to reduce our exposure hours, enable robust workforce planning, which will allow safe work execution, and improve efficiency and competitiveness. As part of this, we are following through on an objective to reduce our contractor workforce in our mining and upgrading business by 20%. As of today, more than half of this objective has already been completed. And we're on track to safely achieve and sustain the full reduction by the first half of 2023. In addition to streamlining our contractor workforce, I'm also taking action to enhance our contractor management processes to ensure consistency and simplification in how we assure safe work practices in the field. And we will continue to work together with our contractors to embed industry best practices and strengthen safety culture. Second, As previously mentioned, we are installing industry-leading technologies for collision awareness on over 1,000 pieces of mobile mine equipment across our operating assets to mitigate a key risk in our mining operations. I'm pleased to say this initiative is progressing well, and two-thirds of Syncruise Aurora mine equipment will be outfitted by year-end, and installations on the remaining equipment at Aurora are expected to be completed by January 2023, nearly two months ahead of schedule. Deployment schedules for the remaining mines are on plan, with St. Croix's Mildred Lake Mine in Fort Hills going live in mid-2023 and Sunforce Base Mine being complete by the end of next year. As well, our fatigue management system installation, as discussed in previous calls, will be completed across all mines by early 2023 and is already fully installed and functioning at St. Croix's Mildred Lake and Aurora Mines. This technology has so far demonstrated the potential to reduce fatigue-related events by up to 80%. Third, and crucial to our long-term success, we are partnering with industry-leading subject matter experts to better equip our leaders across all our operations with practical skills to lead and sustain safe behaviors on the front line of our organization. I'm enhancing our leadership coaching and competency programs to ensure sustainment of visible, felt leadership. Our approach leverages human organizational performance principles consistent with other industry leaders to strengthen our safety culture while ensuring we have a strong focus on our material risks and assurance of our critical controls. These are a few key examples of how we're driving focus and improving safe, reliable operations going forward. I would now like to move to our progress on our efforts to optimize our asset portfolio towards our core integrated business. As you know, we've initiated a robust process to divest from non-core assets to increase fit and focus in our portfolio. Recently, I announced the sale of our wind assets for $730 million, and also during the quarter, we closed the sale of our Norway E&P assets. Meanwhile, the process to sell our UK E&P assets continues, and I expect that process to conclude in the coming months. A portion of the proceeds of these non-core asset sales is being used to increase our operated ownership interest in the Fort Hills asset by approximately 21%. This additional interest in Fort Hills demonstrates our confidence in the long-term value of the asset, which is backed up by a detailed assessment by our new and highly experienced mining leadership. Last week in our Fort Hills announcement, I discuss our multi-year performance improvement plan for Fort Hills, which will have short-term impacts to both production and cost over the next three years and set up the asset for long-term success. Although there is no change to our 2022 Fort Hills guidance, as we begin to execute this plan, we do expect volumes to be reduced in the fourth quarter as well as into Q123. When combined with other factors, such as extended turnarounds in our oil sands business and non-operated E&P assets, we expect overall company production to come in towards the lower end of our 2022 guidance. We continue to manage through the Four Hills Plan, and I look very forward to providing a more fulsome update on our investor presentation on November 29th. This targeted portfolio optimization focuses Suncor on our core integrated business, and along with our capital allocation framework, accelerates the execution of our plans to grow shareholder value. As well, a core part of our long-term success will also be on continuing to advance our plans to decarbonize our assets, a big piece of which is collaborating with our oil sands industry peers in the Pathways Alliance to reach net zero by 2050. I'm pleased to see the government of Alberta select the Pathways Alliance for poor space in the Cold Lake area, and this is an important milestone in Pathways' plans to develop a world-scale carbon capture system for the oil sands industry. I am encouraged by this progress, and continued industry, government, and stakeholder co-investment and collaboration will be key to the success of this world-scale endeavor. And with that, I'll now pass it over to Alistair for his comments.