Suncor Energy Inc.

Good day and welcome to the Suncor Energy third quarter 2024 financial results 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, Suncor Energy's Senior Vice President of External Affairs. 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 Rich Krueger, President and Chief Executive Officer, followed by Chris Smith, Suncourse Chief Financial Officer. Also on the call are Peter Zebedee, Executive Vice President, Oil Sands, Dave Oldreve, 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.

Good morning, let me start with happy holidays more on this later three months ago I stated our second quarter was about execution and momentum. execution of major plan turnaround events and momentum and targeted improvement areas. Conversely, our third quarter was about performance and delivery performance largely unencumbered by major maintenance activities and delivery commitments articulated. during our May 21st Investor Day. As usual, Chris will detail quarterly results. I'll provide some color commentary, starting with safety. Personnel safety, core value, top priority. Continues to be strong year on year. Lost time events down 40%. Recordables down 23%. Rates are at or near our best ever. Similarly, process safety performance year-to-date is at a best-ever level, positions us within the first quartile in North America. I'll highlight our oil sands team for their third quarter performance, particularly those at Firebag. In early July, with wildfires in the region, we moved Firebag to essential personnel only. As a precaution, we shut in production site-wide, thereafter restarted the least affected well pads, was touch-and-go for several weeks, Our teams worked closely with local and provincial authorities and responders. Our number one focus was to protect our people and protect our assets. I'm pleased to say the entire situation was managed incident-free, a credit to our people, procedures, and site leadership. Production impact was material, however, but limited to July only at 60,000 barrels a day for the month. Every quarter, I talk about reliability or asset utilization. Because the incremental barrel produced or refined is the most profitable barrel produced or refined. It's delivered at little to no incremental cost, essentially flows to the bottom line. At today's Suncor, the full utilization of installed capacity closely follows safety in our priorities. And as full utilization is achieved, we turn to low-cost e-bottlenecking. This clear, simple operational framework is delivering tremendous value company-wide. I'll illustrate with refining throughput and upstream production. Refining throughput in the third quarter was 488,000 barrels a day, up 25,000 barrels a day, or 5%, compared to a strong third quarter of 23. It was the best quarter of any quarter in company history. In fact, there isn't even a close second. It's 20,000 barrels a day, or 4.3% higher than our previous best quarter. Achieved with 105% overall refining utilization in the quarter, This was our highest overall network utilization in any quarter in history, and all four refineries achieved 100% or higher every single facility, led by Commerce City at 109%, and Sarnia and Montreal with best-evers, both at 106%. Year-to-date utilization is 98% compared to 88% at the same time last year. We're on pace to blow away our previous high. High reliability and resulting throughput enabled us to confidently and aggressively market and sell. The result, refined product sales of 612,000 barrels a day in the third quarter, the highest quarterly sales in our history in our first quarter ever with sales above 600,000 barrels a day. For those that are keeping track, this is now back to back to back record quarterly, our quarterly records. Upstream production, third quarter, 829,000 barrels a day, up 138,000 barrels a day, or 20% from the third quarter of last year. It was our best third quarter in company history, within 6,000 barrels a day of our best quarter ever. Performance exceeded our prior best third quarter by 67,000 barrels a day. And this was achieved despite a 20,000 barrel a day wildfire impact, I mentioned that firebag, and a 10,000 barrel a day turnaround impact at Makai River. Upgrader utilization in the third quarter is at an unprecedented 99%. Recall, each additional 1% utilization adds $20 million a year in free funds flow. Year-to-date utilization is at 96%, including the impact of turnarounds. Our best prior annual average was last year at 92%. We're set to beat that in 2024. Bottom line, third quarter and year-to-date reliability or asset utilization has been exceptional. On trend for best-evers across the board, upstream and downstream. Here again, a credit to our people. their expertise, their teamwork, and their determination. Profitability. Chris will cover overall profitability. I'll highlight cost management and operating leverage. Year-to-date 2024, total OS&G all in top to bottom is $9.65 billion, down $340 million versus year-to-date 2023. However, Upstream production is 87,000 barrels a day higher year-on-year. Refining throughput is 49,000 barrels a day higher year-on-year. And refined product sales are 51,000 barrels a day higher year-on-year. You get the message. Free barrels, higher absolute volumes, lower absolute costs. The Oxford Dictionary's definition of operating leverage in a nutshell. Every business segment or major operated asset, upstream, downstream, corporate, is at lower absolute and or unit costs in the first nine months of this year compared to the first nine months of last year. I'll offer you another perspective on year-on-year cost performance. Let's assume for a moment that our fourth quarter 23 acquisition of Total's 31% interest in Fort Hills never happened. In other words, take on all impacts in 2024 of the additional ownership. So we'll have an apples-to-apples, year-on-year performance with the exact same asset base. Total OS&G year-on-year, down $880 million, yet upstream volumes are up 34,000 barrels a day, And refining, of course, is up 49,000 barrels a day. I'll repeat that. Apples to apples, $880 million lower cost year-on-year with higher volumes. Bottom line, operating leverage is being achieved any way you slice it. I've said it before. Cost management is about attention to detail, discipline, and accountability, a mindset that every dollar matters, cost-conscious, determined, results-oriented, today's Suncorp. During our May 21st I-Day, we detailed a number of our improvement plans. I'll provide an update on a few. Turnarounds. We previously stated the second quarter was our biggest turnaround quarter in 2024 with 80% of the year's activity planned. You recall four big events, $800 million, completed on budget and 10% shorter in duration. We've now completed the bulk of the year's remaining activities. specifically base plant U2 upgraders, annual maintenance, and Mackay River. Combine the two events, again, on budget, ahead of schedule. For the year, total turnaround spend will be under $1 billion, down 20% from the prior five-year average. Mining, we've described our mining strategy in a nutshell as fewer trucks, bigger trucks, autonomous trucks, operated better, maintained cheaper. Update on the 55 new 400-ton trucks that will replace twice as many smaller, less efficient third-party trucks. The first 35 are now in operation. Two more will arrive at Fort Hill shortly. The final 18 will arrive at the base plant throughout the first quarter of 2025. These 55 new trucks will lower annual operating costs by more than $300 million a year. For several quarters, I've talked about the value of our in situ operations. Performance records keep piling up, particularly at firebag. Through the first nine months of 2024, two record quarters and five record months, including August at 238,000 barrels a day and September at a whopping 247,000 barrels a day at firebag. Last quarter, I highlighted an opportunity that the firebag team identified, a $1 million modification to diluent stripping capacity to increase bitumen production with the expected impact of 3,000 to 5,000 barrels a day in increased annual average production and $50 million in additional free funds flow per year. The opportunity was implemented in the third quarter. It was completed in mid-August ahead of schedule. at a cost of $500,000 versus a million. Incremental production to date has been more than double the 3,000 to 5,000 barrels a day expected. Consequently, the incremental free funds of greater than $100 million a year. This is Suncor's version of a double-double, half the cost, twice the value. Fort Hills, we just passed the one-year anniversary of the Total Canada acquisition. The primary asset was a 31% working interest in Fort Hills, bringing our ownership to 100%. We've articulated the benefits of production reserves, long-term bitumen supply, tax pools. I've got another example of value added from this acquisition. Recall that Fort Hills applies the PFT process technology, which partially decarbonizes produced bitumen. Removes the heavier asphaltene molecules, results in a premium value in the market. Our physical integration allows us to either direct Fort Hills directly to the market or to our base plant upgraders. Until recently, we were pipeline limited to a maximum of 65,000 barrels a day to the base plant. However, our team identified an opportunity to increase this capacity. So for $1 million, we have increased Fort Hills to base plant capacity from 65,000 barrels a day to 100,000 barrels a day. We de-bottlenecked the pipeline with improved hydraulics, completed the work in six weeks with the use of surplus equipment, This adds both operational flexibility and incremental financial value, specifically $50 to $100 million a year in additional free funds flow, depending on use. This is another tangible example of a competitive differentiator our peers can't replicate. I've said before there's integration, and then there is Suncor integration. This is an example of the latter. These Fort Hills and Firebag examples are representative of the focus within the company today, the laser-like focus on asset utilization, testing facility limits, capturing value, de-bottlenecking, adding low or no-cost barrels upstream and downstream. Our teams company-wide are literally raising the ceiling on both our performance and our potential. With that, I'll turn it over to Chris.