Suncor Energy Inc.

Good day and welcome to the Suncor Energy fourth quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Troy Little, Vice President of Investor Relations. Mr. Little, the floor is yours.

Thank you, operator, and good morning. Welcome to Suncor Energy's fourth 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 fourth quarter earnings release, as well as in our 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 fourth quarter earnings release. We will start with comments from Rich Krueger, President and Chief Executive Officer, followed by Chris Smith, Suncor's Chief Financial Officer. Also on the call are three of our senior operating leaders, Peter Zebedee, Executive Vice President, Oil Sands, Dave Oldreave, Executive Vice President, Downstream, and Shelley Powell, Senior Vice President, Operational Improvement and Support Services. Following the formal remarks, we'll open up the call to questions. Now, I'll hand it over to Rich to share his comments.

Thanks, Troy. Good morning. The fourth quarter, I would characterize it as strong results across the board, safety, upstream production, downstream reliability, cost management. We finalized the Fort Hills purchase. It was about delivering on commitments for our company. Chris will detail the fourth quarter, but first I'd like to provide a little bit of a look back at 2023 overall. For context, on my first earnings call 10 months ago, I outlined four things you could expect to see from Suncorp. One, an intense focus on the fundamentals. Two, a simpler, more focused organization. Three, a shareholder-oriented executive leadership team. And four, an overall urgency to improve performance. So how are we doing? Let me start with a focus on the fundamentals, and first and most importantly, the fundamental of safety. The fourth quarter of the year was our safest quarter in 2023, and 2023 was the safest year in the company's history. We had no life-altering or life-threatening injuries for the first time since 2015. We had a nearly 50% reduction in lost time incidents year on year. We had our best ever recordable incident rate in the downstream and our second best ever in the upstream. How? leadership, workforce engagement, risk management, procedures, and technology. I'll continue with a second fundamental, asset reliability, starting with the upstream. Our bitumen upgraders, or our moneymakers, full-year utilization of 92% are best ever. We had 91% at the base plant, 93% at Syncrude. This is the first time in our history that both assets are were at or above 90%, and combined, they were 3% higher than our previous best ever. How? Operational excellence by our site teams and our unique intersite physical integration. I'll continue with the downstream liability. Crude unit utilization, 90% for the full year. Nothing to brag about, but it's a tale of two halves. 82% utilization in the first half and 99% utilization in the second half. For the full year, Sarnia Refinery had its best ever utilization. Edmonton had its second best ever and Montreal its third best ever. How? Again, leadership workforce commitment to perform. I'll continue with delivering on commitments and I'll highlight upstream production. We finished the year at 746,000 barrels a day, second highest in our company history, including 808 KBD in the fourth quarter. We achieved external guidance for the first time in six years, highest ever annual production at Syncrude in its 45-year history, and at Firebag in its 20-year history. Fort Hills delivered on year one of a three-year plan. Full year was at 147,000 barrels a day, and the fourth quarter at a very strong 186,000 barrels a day. How? I'll begin to sound like a broken record. Leadership, clear priorities, workforce focus. We understand that trust and credibility are based on delivering on commitments. The secondary I highlighted you could expect from Suncor was a simpler, more focused organization. Well, we have a new executive leadership team, smaller at eight versus previous nine. Four of us were new in 2023, a fifth in 2022. Individually, the functional expertise on this team is outstanding. But we're even better collectively or in terms of a team competency. Our newest member of our team, Kent Ferguson, joined us here a month or so ago as our Senior VP of Strategy, Sustainability, Commercial, and Development. And Kent's in the room with us this morning as well. We reorganized and refocused our above field or our non-operating workforce, a 20% reduction in headcount completed in five months last year between June and November. And we did this through the elimination of work, work that was judged to be low priority or simply unaffordable. We spent $275 million in severance cost to achieve a $450 million annual savings starting this year, $50 million above our target. You do the math on that, that's about an eight-month payout. Our central above-field teams have clear priorities, and they are very intensely focused on operational support and improvement. Another change we made above field is we consolidated corporate-wide strategy, commercial, sustainability, and development work, not only to increase efficiency, but even more importantly, to ensure we focus on the highest value work. Simultaneously in the second half, an area we haven't talked about, we restructured and reorganized our upstream and downstream operational site teams. So we now have a common site design across the company, operations, maintenance, engineering, etc., with crystal clear site accountabilities. The benefits of this are common operating standards, applications of best practices, and natural improvement networks across the company. I would say the early results in this are positive, greater clarity, accountability. We're seeing it in the improvements in the execution of our work. An example, although early 2023, our cost per barrel was at or below guidance across all upstream oil sands sites. And for the first time in company history, we executed our turnaround scope upstream downstream $1.3 billion in aggregate on budget and on schedule. Third area I promised you could see was a shareholder oriented executive leadership team. Well, in the year, we high-graded our asset portfolio to strengthen our competitive advantage and add shareholder value. We did that in part by acquiring the remaining 46% interest in Fort Hills in two separate transactions that totaled $2.2 billion. Both transactions we consider to be at attractive prices. The second one, Total Canada, also provides large and immediate tax benefits as articulated in our release. These acquisitions address our long-term bitumen supply uncertainty, but in addition, they enable material regional synergies with a large footprint of our operations. In the year, we also sold non-core UK North Sea upstream assets for $1.1 billion and the solar and wind business for about $700 million, or a combined $1.8 billion. In the year profitability and shareholder returns, we had AFFO of 13.3 billion, the second highest in our history, despite oil prices being the seventh highest over the same period of time. We generated free funds flow of 7.5 billion, second highest, and we executed a $5.7 billion capital program, again, within our guidance. We distributed $5 billion to shareholders, 2.8 in dividends, 2.2 in buybacks, and when combined, this is a 9.1% cash return in the year. Where we are today and going forward, continued priorities are to lower our overall corporate WTI breakeven and increase free cash flow, free funds flow per share. In terms of continuing to improve and the urgency to do that, I'll talk a bit more about that when Chris is done, but I would say that despite overall strong financial and operating performance in 2023, I look at it as we also left some on the table. We missed our refining utilization guidance by a couple percent, really attributed to a slow recovery in the first half of the year at Commerce City. And we had disappointing project execution at Terranova and the subsequent delayed startup with the ramp-up of that asset now going on. So in summary, 2023 I would say was a good year in many areas, very good in other areas. but I believe we can do better, and that's exactly our plan. So I'll come back to 2024 in a few minutes, but first I'll turn it over to Chris, who will talk about our fourth quarter summary.