Suncor Energy Inc.

Good day, and thank you for standing by. Welcome to the Suncor Energy fourth quarter 2025 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Suncor Energy Senior Vice President of External Affairs, Mr. Adam Albeldawi. Please go ahead.

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 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 fourth quarter earnings release. We will start with comments from Rich Krueger, President and Chief Executive Officer, followed by Troy Little, Suncor's Chief Financial Officer. Also on the call are Peter Zebedee, Executive Vice President, Oil Sands, Dave Oldreve, Executive Vice President, Downstream, and Shelly Powell, Senior Vice President, Operational Improvement and Support Services. Following the formal remarks, we'll open the call up to questions. Now, I'll hand it over to Rich to share his comments.

Thanks, Adam. Our fourth quarter of 2025 was about finishing a very good year on a very strong note, and that is exactly what we did. I'll review operational performance. Troy will cover financial. Let me start with safety. 2025 was the safest year in company history, our third consecutive safest ever. across the board. Fewer incidents, lower severity, both personnel and process safety. Relative to 2022, injuries and incidents are down 70% in three years. This is a credit to our people, our priorities, and our processes. Now, I recognize we put out an operational update earlier in the year, so I'll be relatively brief in summarizing some operational performance. Upstream production, 909,000 barrels a day in the fourth quarter, our best quarter of any quarter ever. 34,000 barrels a day higher than our previous best, which was the fourth quarter of 24th. Full year at 860 KBD, again, best ever by 32,000 barrels a day versus 24, our previous best, and 20,000 barrels a day above the high end of our original guidance. Over the last two years, we've increased production 114,000 barrels a day with the same asset base. No costly acquisitions, no major capital-intensive projects, growth from within. Upgrader utilization, an outstanding 106% for the quarter and 99% for the year. Again, best evers. Refining throughput, 504 KBD in the fourth quarter, our best quarter of any quarter, again, ever. 12,000 barrels a day higher than our previous best, which was literally the prior quarter. Full year at 480, best ever. by 15,000 barrels a day versus 2024, our previous best, and 30,000 barrels a day above the high end of original guidance. Over the last two years, we've increased throughput 60,000 barrels a day with the same asset base. No costly acquisitions, no major capital-intensive projects, growth from within. Refining utilization, 108% for the quarter, 103% full year. both best ever. All four refineries operated at 100% or higher for the second consecutive quarter. Product sales, 640,000 barrels a day in the quarter, our best fourth quarter ever, 27,000 barrels a day higher than our previous best, which was last year. Full year at 623 KBD, also best ever, by 23,000 barrels a day versus 24, our previous high. And 38,000 barrels a day above the high end of our original guidance. Over the last two years, product sales have increased 70,000 barrels a day supported by the same assets. After never having achieved 600,000 barrels a day sales in any quarter ever, we've now exceeded 600,000 barrels a day in six consecutive quarters. Capital and costs, OS&G, full year, $13.2 billion, within 1.5% of 2024, despite nearly 4% higher upstream production, more than 3% higher refining throughput, and nearly 4% higher refined product sales. Higher absolute volumes, lower unit costs. Capital, full year at 5.66 billion, down 510 million versus 24, and 540 below original guidance. Yet we executed our business plan as designed. We simply delivered it at a lower cost. How? Through rigorous value testing, challenging design bases, quality job planning, disciplined cost stewardship, and superior execution once in the field. To institutionalize, we now perform detailed readiness reviews before we spend money and comprehensive post-execution reappraisals after we spend money. Simply put, we are increasingly better stewards of our shareholders' capital. Final reflections on 2025. Best ever in most all regards, safety, operational integrity, reliability, et cetera. With volumes, every category, upstream and downstream, quarterly and full year was best ever. Breaking records largely set a year ago. For more than two years, Peter's upstream team, Dave's downstream team, and Shelly's central support team have not only been breaking records, they have been shattering records. All above the high end of guidance for two years in a row. how through crystal clear priorities, establishing ambitious daily, weekly, monthly performance targets, embracing industry best practices, promoting collaboration and teamwork, and by rewarding our teams when they deliver with performance-based incentives. we continue to systematically raise the bar, delivering higher, more reliable, more rateable operational results, and consequently higher, more reliable, more rateable cash flow. Now I'll turn the clock back two years. Suncor's Investor Day in the spring of 2024. We outlined a series of commitments for a three-year period, 2024 through 2026, including upstream production growth Reduction in WTI breakeven, increase in annual free funds flow, reduction in annual capital spend, and a net debt target with 100% of excess funds to buybacks thereafter. One year ago, February 25, we detailed progress after the first year of the plan. Recall we achieved nearly two full years of progress in one year. At the time, I hinted at the possibility of perhaps achieving a three-year plan in two years. However, behind the scenes, I challenged our team to do exactly that. Now, two years into an ambitious three-year plan, very pleased to report, we indeed achieved three years of performance improvement commitments in two years, three and two. 114,000 barrels a day of production growth in two years versus a target of 108,000 barrels a day in three. Greater than $10 a barrel reduction in breakeven in two years versus a target of $10 a barrel in three. Greater than $3.3 billion increase in annual refunds flow in two years versus a target of 3.3 in three years. Capital reduced to $5.7 billion in two years versus a target reduction of three years. Net debt of $8 billion achieved in the third quarter of 2024, nine months early, and at $6.3 billion today, our lowest in more than a decade. Bottom line, we met or exceeded every single target a full year or more early. In life, trust and credibility are earned by delivering on commitments, and today's Suncor delivers. So what does all this mean? We're bigger, better, higher performing, more reliable, more rateable, financially stronger and more resilient, better equipped to compete and win. We were previously a high-cost producer. Now we are a low-cost producer. Our balance sheet is rock solid, with net debt nearly half of what it was three years ago. In fact, the lowest level since explicitly 2014, with tremendous flexibility and optionality. Like an industrial machine, increasingly generating cash with less relative dependence on oil prices. Proof? Year on year. WTI was down 15%. Our AFFO was down 8%. and our free funds flow down six. In 2025, share buybacks of more than $3 billion were $250 million per month throughout the year, increasing to 275 in December. We were 250 million a month in January of 25 with WTI at $75 a barrel, and we were $275 million in December with WTI at $58 a barrel. We previously announced our plan to continue at this 10% higher level in 2026. Buybacks were independent of oil price in 2025, despite low oil price in 2026. Over the past three years, we've repurchased 163 million shares, more than 12% of our float, at an average price of $50 a share. Along with dividends, buybacks are a fundamental tenant of our shareholder value proposition. So now, what's next? 2026 and beyond, that's the exciting part. We are far from done yet. We know that you don't make the Hall of Fame with a few good seasons, or in Bill Belichick's case, by deflating footballs before a championship game. It takes sustained excellence, high performance, exceptional and consistent delivery of results, So we will detail a new value improvement plan on March 31st in Toronto, two horizons, short term, the next three years, longer term, the next 15 years. The longer term horizon will focus on bitumen supply and development options. We know it needs to be bold and ambitious, clear and compelling, to keep your interest and support. So stay tuned. I wouldn't miss it. I can't wait to hear what we have to say. With that, I'll turn it over to Troy.

Thanks, Rich. I think the strong performance of the quarter and full year have been covered very well. And you can all find the detailed financials in our quarterly disclosure. So I won't repeat any of that here. Instead, as we transition from one year to the next, I would like to focus in on our financial resiliency and how that benefits those who choose to invest in us over the long term. Starting with our balance sheet, as Rich mentioned, our net debt closed the year at a greater than 10-year low of $6.3 billion, well under one times debt-to-cash flow at $50 per barrel WTI, and even lower at current strip commodity pricing. Looking behind that number, during the quarter, we renewed our credit facilities with a consortium of Canadian, U.S., and international banks for tenors of three and four years, providing us with $5.2 billion in available liquidity, not including our cash on hand. In addition, in November, we took the opportunity to refinance $1 billion in Canadian dollar debt in two note tranches of two and five years. achieving the lowest Canadian energy industry spreads in those tenors in more than 15 years. When the near-term commodity price environment is uncertain, we believe investors look for companies that tangibly demonstrate their balance sheet resilience. And I would like to thank both our banks and our bondholders for the confidence they have shown in our business. Next, as you would have seen, our year-over-year share buybacks and dividend per share increased by 4% and 5% respectively, when over the same time period, average crude prices decreased by $11 per barrel. This ability to offer stable, predictable shareholder returns is backed up by a WTI break-even in the low 40s, a uniquely integrated set of assets, the flexible character of our capital expenditure plans, as well as the continuous improvement mindset that is embedded at every operation and with every one of our 15,000 plus employees to our recently implemented operational excellence management system. At Suncor, our future is not defined by commodity cycles. It is instead defined by how well we perform through them. There is perhaps no better proof point of that than a comparison of the first and fourth quarters of 2025. Q4 AFFO of $3.2 billion was 6% higher than Q1, even though the average oil price had decreased from $71 to $59 per barrel. Finally, Rich referred earlier to the stewardship of our shareholders' capital, and I wanted to expand on that a little, specifically as it relates to shareholder returns. I hear many companies refer to returning surplus cash to their shareholders in the form of share buybacks. Suncor doesn't think of our shareholders' money that way. We don't pay you what is left over. We pay you first. We look at our cash flow results, pay our dividends, fund our buybacks, and only then consider our spending on other things. On that note, I'm pleased to say that we have continued shareware purchases of $275 million per month into January and February, a level started in December of 2025, which represents an increase of 10% over the average monthly buyback in 2025. With that, I will turn the call back over to Adam so that we can take some questions.

Thank you, Troy. I'll turn the call back to the operator to take some questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. And our first question will come from the line of Greg Party with RBC Capital Markets. Your line is open.

Yeah, thanks. Good morning and an incredible rundown, incredible year. Rich, culture, the shift in the company's culture since your arrival and the reconstitution of the team and so forth has obviously been a huge driving force in underlying the performance. When it comes to successorship in the past, it almost looked as though a lot of those changes had been sort of preordained for years in the future. How does that change now under your watch?

Well, Greg, I think if I step back, I would say leadership development and succession planning. When I say leadership, that can be technical leadership, operational leadership, and fundamentally business leadership. To me, great companies have continuous pipelines of leadership development candidates. So more than two years ago, we started out with the development of a new leadership development framework. It is now in place. And Suncor is more about what you know, not who you know. And we value functional excellence and expertise versus generalist experience, broad-based experience sets. But you need both. But we believe you need to know your business, know it extremely well. We conceptually target multiple candidates, for example, kind of a three-to-one ratio of candidates for higher-level jobs in succession planning because things happen in life. But I'll just wrap that up with succession planning and leadership development in the broadest sense. are extremely high priorities. They have been high priorities from day one when I arrived. And quite frankly, it was one of a very short list of material commitments I made to the board and directors.

Okay, thanks for that. And I'll shift gears on you a little bit. Just, you know, the mining operations performed very well in the fourth quarter. You know, you had very mixed conditions. I'm just wondering, have there been changes that you've implemented sort of year over year to drive that performance?

Yeah, I'll make a comment or two, and then I'll ask Peter to expand on that. You know, the unique thing about mining, of course, is we have to operate in a wide range of weather conditions. And when you think of mining, there's really two, it's more than this, but two fundamental areas that affect your performance during weather events. The condition of the mine itself and the condition of haul roads. And so, haul roads are to mining like tracks are to a rail company. You have to design, operate, and maintain them exceptionally because they're kind of the, well, the tracks or the arteries of your ability to sustain. So, we put a very high priority in that. And so, although there were a lot of conditions in the fourth quarter, wet conditions, of course, it cooled off, things like this, Our fourth quarter was our best quarter ever, and as you would expect, many of the months in that quarter were our best months ever. But Peter, why don't you comment further on what we've done, particularly around the autonomous hall system and the ability to operate in all weather conditions?

I'm happy to do that. We have worked really closely, Greg, with our supplier Komatsu, in this case at Base Plant, to implement some technology on the truck. We call it Mud Mode, but essentially it reduces the slippage and stoppage of the autonomous trucks in soft conditions. That was really successful. We also learned a lot during the implementation of that. In fact, we're working on a Mud Mode 2.0, if you will, to implement here by the spring of this year. So we're excited about out of the next iteration of that technology. But really, in reality, it's a combination of multiple improvement activities across our mining operations, both in our autonomous operations, which we're now fully deployed at base plan up to 140 haul trucks running autonomously, and in our staffed operations where we're continuing to work on the fundamentals improvement activities such as more increased load factor on our trucks, reduced fueling time for pieces of equipment, optimizing our shift change. Just across the Suncor mining portfolio, last year we moved 1.4 billion tons of material. It's a 12% increase year over year in total material movement. at essentially the same cost base. And so we're just continuing to drive that efficiency year over year. We always talk to our teams about how little things add up to a lot in the mining business. And that's what the teams are focused on, these little opportunities adding up to a lot over the 1.4 billion tons to drive value.

Yeah, I'll just make one last comment and then we'll continue. You mentioned the word culture or cultural changes, Greg. One of the big things, and it's hard to see from the outside, is our shamelessly embracing industry best practices wherever they exist. In mining, whether that's hard rock mining in Canada, outside of Canada, oil sands mining. So increasingly, our leaders, our teams, observe, listen, learn, and apply industry And that is a looking from the outside in on how we can get better. And so we have embraced and modified historic practices across the board when we see someone who does something better than us. That is a very cultural aspect of today's Suncor that I believe is quite different than we were not too many years ago.

Yeah, understood. Thanks very much to both of you.

One moment for our next question. And that will come from the line of Dennis Fong with CIBC. Your line is open.

Hi, good morning and thanks for taking my questions. First off, congrats on obviously another very strong quarter. My first question here, I wanted to follow a little bit along the lines of what Greg was addressing in the second question. But I wanted to maybe rewind the clock back to Q125, where you, Rich, highlighted a lot of field-driven optimization. Can you provide maybe a bit of an update on the backlog of these field-driven optimization opportunities that you see, frankly, across upstream and downstream, and obviously how that has really improved cost structure despite headwinds in things like mine plan or some of the mining KPIs?

You know, one of the things that start with Dennis is it's a bit less of a backlog of field-driven optimizations because what we do now when we see that opportunity, we team tackle it. We get on with it. And what you see is, again, it ties a little bit to that cultural, is that we continue to replenish our ideas and opportunities. And it's been a huge part of of why our refining network is now consistently at or above 100% utilization, because we have been optimizing those assets, pots and pans, and fundamentally increasing the denominator. And Dave, do you have an example or two you'd maybe share with Dennis?

Sure. Maybe, Dennis, I'll give an example out of Montreal. Montreal, we've seen some pretty significant increases in our throughput. Two years ago, we were running that plant at about 120,000 barrels a day, but we knew and the team in Montreal knew they could do more and really didn't have a signal to challenge constraints. So we've come up with a new philosophy in our downstream of value and volume. So we run our refineries full and we challenge our sales teams to sell full. And with that signal, Montreal went after a few things. One of the things they went after is, and it's in the theme of small improvements that add up big, and this is like field operators, challenging constraints, and flagging ideas. We've replaced two control valves, one pump impeller, and a small motor. $100,000 investment gave us 20,000 barrels a day at the Montreal Refinery. That's $100 million a year improvement for $100,000 investments. We have lots of other opportunities like that and lots of improvements in that space that are similar, but that's a good example.

And it starts with leadership, being interested, boots on the ground, in the field, listening to people who do the work and understand it better than anyone. And then when they see that opportunity, supporting it, promoting it, and making it happen. And when you start doing that, you engage your workforce and they come forward with more and more ideas. So you've heard us say multiple times, we're not done yet. It's not necessarily because we have this long list of things to do, but we are embedding and graining a culture of continual improvement and driving. And you always, in any facility, you will always have a limiter or the bottleneck. And if you systematically identify what that is and attack it, then something else becomes the bottleneck. So I think on this one, in this particular topical area, we will never be done.

That's obviously a lot to frankly look forward to. My second question, and maybe carrying along the lines of continuous improvement, finding where all the limiters happen to be. I believe it was in the last conference call you highlighted single-train capacity at Fort Hills to be about 110,000 barrels a day. How have you looked at the actual performance of the facility? Have you been able to identify opportunities to further and consistently run at that high level and maybe even further optimize beyond the, we'll call it, 220 capacity of the two trains, especially as you look forward to opening up mining availability?

One quick comment and then Peter will expand on it. As we look at this opportunity for continued growth from within, The areas where we see the most, the biggest opportunity set are Fort Hills and Fireback. With the identified opportunities where we're confident we can continue to increase their overall production level. Peter, why don't you comment explicitly on Fort Hills and the... Your two Ferraris you have up there.

Yeah, no, thanks a lot, Dennis. And yes, we have been, as we mentioned in the last call, really testing what the stream day production capacity is of the Fort Hills asset. We're pleased to see rates up over 220,000 barrels a day from both trains. We are looking to ensure that we can deliver that reliably day in, day out, and that is really going to come down to ensuring that we've got the right material movements from the mine in front of us, that we're able to deliver the production volumes into the plant and do that sustainably while maintaining a healthy mine inventory. That is all really dependent on making sure that we're opening up our north pits, which is the last and final pit at Fort Hills in the right manner and sequencing the material into the plant in a way that is sustainable. Along with enhancements, I would say, to the front end of the plant where we look to kind of metal up and protect against some of that erosion that comes with the higher material throughput that we're running. I know the team is really highly focused on doing this. And, yeah, we've seen some success. And you've seen the calendar day rates come up through the fourth quarter. And we look forward to more of that here as we go along.

So, Dennis, I'm a lot like you. I don't remember all the numbers or get involved in a lot of the details on that stuff. But, for example, why are you guys smiling? One of the things, you know, we've had the name plate at Fort Hills is 194,000 barrels a day and had a target of 175. From a production level, so at kind of a 90% level, our belief is with a bigger denominator, that 220 or something, a production level in the order of 200,000 barrels a day should be the more near-term ambition. And you want to save a few things for investor day, but I think I've just established, Peter, what the minimum there might be for four barrels. Okay.

Great. Really appreciate that caller, everyone. I'll turn it back.

Thank you. One moment for our next question. And that will come from the line of Menno Holshoff with TD Cowan. Your line is open.

Thanks, and good morning, everyone. I'll start with a question on buyback guidance of $275 million per month. You mentioned that the the $250 million per month in 2025 was fairly oil price agnostic and that you've repurchased $275 in January and February and that buybacks are quite senior within the capital stack. But presumably there are conditions where you would reconsider your $275 million guide or maybe not. Any thoughts there would be helpful.

I'll make an opening comment and then obviously we'll turn it to Troy on this. A real key enabler in our ability to do this and make this commitment has been to reduce our overall net debt materially over a relatively short period of time and this really dramatic reduction in our break-even. And what we've said, we wanted to buy back shares at a rate at least consistent with dividend growth so that our overall dividend burden doesn't grow and increase our break-even. And we've found, you know, we've achieved all of those. But, Troy, you want to talk more explicitly about the buyback? And, Menno, my sense is you might be suggesting, you know, what if we were in a lower oil price world? What might that mean? But, Troy, you want to comment further? Yeah, sure.

I would say to answer that question, I would look at the makeup of our business. Because I think when you do, you will see something unique in how we're going about this. Our level of integration, and I don't just mean between the upstream and the downstream, I mean within the upstream itself, allows us to capture margin opportunities over the short term that others can't. It also drives greater utilization of the assets, both under normal conditions and also when any one asset experiences planned downtime. Both of these allow us to maximize and make more predictable and stable our profitability. I would also point to this attitude that I think we've conveyed about paying our shareholders first. So ultimately, though, rather than count on my own words, much as you pointed out, look at our 2025 track record and just watch what we're going to do in 2026.

Terrific. Thanks to you both for that. Maybe I'll just follow up with a question, follow up question to Greg's on Q4 production, which was clearly very strong. Do you think production would have been even higher in the absence of wet weather in October and extremely cold December? Or was there no weather impact at all given the mitigation work that's been undertaken?

You know, we run an outdoor business. We mine. We mine come hell or high water, wet, dry, cold, hot. And we've got to design and operate for that and maintain our assets. So, you know, when it rains, we put on raincoats. When it's cold, we put on mittens. But, no, we deliver throughout the entire quarter.

Great. Thanks, Rich. I'll turn it back.

And one moment for our next question. Go ahead. And that will come from the line of Neil Mehta with Goldman Sachs. Your line is open.

Yeah, good morning, Rich, and good morning, Troy and team. I guess, Rich, just what your perspective on the refining market, particularly in Canada, you ran well, but you also captured very well, and the margin premium relative to the U.S. has kind of been sustained. And so for those of us who have less visibility into the Canadian refining market in particular, just how do you think about the sustainability of the Canadian refining premium relative to the U.S.?

You know, Neil, if you look back, and you can look back over quite a long time, 15 years or so, if you were going to – if you were – choosing to be a refiner anywhere in the world and profitability was at the top of your list, I think you'd have picked Canada. And then when you say, well, why is that? Well, we've got product pricing based on import parity. We have locally advantaged crude prices. We've got a lot of structural things that contribute to an advantage. But then what you've seen here for this company now for two and a half, three years is it's an advantage structural setting with high quality asset base, but increasingly run and operated better and better and better, more opportunistic for the market. So I think that's part of the commentary that Troy had a little bit, the integrated nature, how we manage and maximize the value of molecules. And as cracks go up and down, I think the majority of those fundamental advantages we will retain those here. Dave, do you have anything else, particularly around margin capture or whatever to add?

Yeah, Rich, what I'd add to that, and I think you characterized it well, you know, I mentioned earlier we have our signal of value and volume, and really we run our refineries full, we have a signal to sell full, and then over time we improve our yields and our sales channel mix. And over the last year, we had record crude throughput, as you know. But we also had record gasoline production, record diesel production, and record jet fuel production. So we're translating that throughput into valuable products. And we've also increased our percent branded channel mix as well by growing our retail mostly and a little bit on our wholesale side of our business. So we're selling that through our most profitable tiers. So that's probably the biggest thing we've been doing is making sure the yields are strong. with the additional throughput and selling through the optimal channels to keep our margin capture up.

One other thing I'd add to it, Dave, I think what your teams have done in the collaboration between the operations the supply and trading and the marketers. Those are three functional areas of expertise, but how they work together, increasing jet fuel production in the east, optimizing diesel in the west, things to really target the market and to fine tune or moderate our facilities to meet the market demand I think that's been, I mean, I've been a part of seeing that evolve. I think that is stellar. And every molecule and every dollar matters. And last time I checked, your teams aren't dropping too many on the ground.

No, they're not. And tune in for Invest Today. We have some really great stories to tell on yield improvements as well.

That's great. That's great color. Richard, follow up is, you know, As Suncor earned the license to do M&A at this point, your mousetrap seems to be working really well. And for a long time, it was about fixing the business organically and getting the multiple up. But a lot of that's happened. And to the extent that there are other companies that could benefit from the way that you are running your business, are you a natural consolidator? Is the story you're going to tell at the end of March is one of organic and, uh, and, uh, you know, more of stay the course, just your perspective on that would be helpful.

Yeah. Start out with, you know, what our goal is to be a value creator for our shareholders. And that largely starts on a per share basis, whether that's free funds flow or whatever. In terms of earning or credibility, trust, we talked about that. It's based on delivering on commitments. I think we're past the, wow, these guys had a good quarter or two. I think we've passed that. So I hope there's probably others listening that can answer this better than I, that we've earned the trust and credibility that any and all actions we do, internal or organic or inorganic, will be in the shareholders' best interest to increase their ultimate value.

Thank you. One moment for our next question. Okay. And that will come from the line of Doug Legate with Wolf Research. Your line is open.

Well, thank you. Good morning, everybody. Thanks for having me on. Rich, I know you don't want to get in front anymore than you already have, perhaps, of March 31st. But I wonder if I could ask you to maybe put some gating items around your spending levels beyond 2026? Should we expect the 5, 6, 5, 8 to be like a cap? Or how do you think about it in terms of, you know, the proportion of cash that goes back to shareholders? Now, if I may just do an add-on to this. Some of your peers talk about a percentage of cash flow. Some talk about a percentage of free cash flow. You've obviously talked about 100% going back to shareholders because of where your debt is. But that's free cash flow, which is discretionary. on your level of spending. So what's the counting item on COPEX?

Yeah, Doug, I think it's a really relevant question. As we look at this, our view is competing and winning in today's oil and gas world There's a whole bunch of components, obviously your size and scale, the quality and longevity of your resource base, on and on. But when it's in capital, we were increasingly talking about it's not only return on capital, but return of capital. And I think Troy's introductory comments were aimed at amplifying what we believe is important to the majority of our shareholders. and what we strive to provide. And I've kind of hit on this at some investor meetings and broadly on calls. We have been constructing a longer-term plan where we can have our cake and eat it too, where we can develop incremental resources over time and we can continue to return capital to shareholders while we're doing that. We won't have to stop the presses for a multiple year period while we have, you know, our capital expenditures blows out. And key in doing that is having the optionality within the resource base, which will be a big part of our conversation on March 31st. What is our resource base? Not only our 2P reserves, but our contingent resources, what we believe we have there. the the advantages we believe those have in terms of capital efficient development lewis firebag south and firebag five phase five as we call it but how we think we can do all that and do it within within a capital construct that stays kind of at or below about that round numbers, about that $6 billion level. And then in a $60, $65 barrel world, we can continue to grow dividends. We can invest and replace production decline, perhaps even grow it. And we can continue, and this was not in a priority order, to return cash to shareholders via buybacks. So we are carefully assembling this orchestra of in such a way that we think we can offer the most value, not only long-term, but each and every quarter, each and every year to shareholders.

Troy, you have anything you'd add to that one?

I'll just add, you know, I think if you look at the model of the company that we've built here, a lot of it is around stability and predictability. You've seen that the last three years with respect to our OPEX, which is roughly remained in the same range, even though we've significantly increased both our production and our refining utilization. I think you're going to see that in CapEx, and I think we've demonstrated that so far. It's certainly our plans for the long term. And you've also already seen it in shareholder returns. We really want to be a company that investors can count on, largely regardless of what's going on in the external environment.

I'll just add one comment to that. It's not like we've operate and perform, and then see, okay, what are we, what can we do? We have had a very conscious, focused vision of what we want this company to be and where the unique space in investors' portfolio we believe we could occupy if we achieve that. And all of our efforts have been geared toward creating that company. And I think you're seeing that more and more. Predictable, rateable, reliable, industrial machine-like, the ability to return on and return of capital. All of this has been part of a very deliberate vision or plan that for several years running, and we've been putting the building blocks in place, and you're starting to see it now. And, you know, we're having fun with it, and we're not done yet.

I appreciate those answers, guys. Rich, I wonder if I could do a quick follow-up, and I know it does not affect you because your model is uniquely integrated, but obviously there's a lot of focus on what's happening to crude spreads in Canada. I just wonder if I could ask you to just reiterate your immunity to any weakness that we see in WCS, and perhaps offer any color as to what you see as a dynamic beyond the normal seasonality. Are you seeing anything materially different? Because your colleagues over at Imperial didn't seem to think there was anything materially changing. I'd love to hear your opinion on that.

Well, I think, Doug, you accurately flag one of the really fundamental attributes that makes us different. And it is this immunity or the lack of any material movement in our economic performance with WCS differentials. And that gets back to, again, this integrated aspect all the way from our upstream to our downstream, our ability to to upgrade bitumen or heavy crudes to light crudes and things. There is a unique asset base that is different for us. And so when we look at, like, world events and things, you just look back over the last decade or so what differentials have done here. You know, they've been tight of late. They've widened here a little bit. They bobble around when there's news on Venezuela and other things and or tariffs. And you know, and I don't mean to dismiss it at all, but much of that outside noise from a Suncor perspective is kind of much to do about nothing. Because of, again, what we are, who we are, and how we're constructed. Now we look for opportunities in that, and there may be opportunities for us when others, you know, When others catch COVID or catch flu, we might sneeze and have a little bit of a sniffle. So there's opportunities in that for us when others have more volatility than we have. And we think the creation of shareholder value often occurs under weaker or distressed market conditions more so than it does under strong and growing market conditions. So our vision for a number of years now has been to strengthen ourselves, to build that resiliency, that flexibility and optionality so when we see something we like or we want to do something that makes sense, we can do it confidently and without hesitation. And I think, you know, I'm kind of getting off the track of your question a little bit, but I think that's where we are. So the market conditions, we're largely market takers, but I think our unique construct gives us a... You know, we don't overreact or panic as things change. And our view right now is there's things going on around the world, but I don't think any of them are going to be fundamentally material to how we continue to deliver value.

Thanks for the answers, guys. Appreciate it.

You're welcome, Doug.

One moment for our next question. And that will come from the line of Manav Gupta with UBS. Your line is open.

Morning. I actually wanted to follow up a little bit on the refining macro. So if you look at last year, there was a very bearish sentiment in refining, but as the year progressed, bears were proven completely wrong, and you guys generated almost $4 billion in your cash from operations from refining. And we started this year with pretty much the same sentiment on refining, which was pretty negative. But when we look at the fundamentals, the cracks, Jan to Jan, are actually up. And the capacity additions are more limited. So I'm just trying to understand from where you're sitting in terms of refining macro, if you can make some comments in terms of diesel and gasoline. Do you expect 2026 to be, you know, somewhat of a similar year for 2025, which was a very strong year? If you could just talk a little bit about that.

You know, I'm going to ask Dave to comment explicitly a minute, but I'll tell you, as a large miner and a big upstream company and understanding the geopolitical uncertainties and the importance of breakeven and stuff, when I go to bed at night and say my prayers, I thank God for the downstream. Because the level of integration we have, it provides this natural hedge and support. And, you know, sometimes upstream goes up, downstream goes down, and vice versa. So it is a really fundamental part of this value proposition and what we deliver. Dave, so other than that philosophy, do you want to offer some specifics on that?

Yeah, for sure. I mean, specifically, you look even at today's cracks, and as you're aware, you know, we're soft. Gasoline is pretty soft in the mid-continent. L.A. market is strong across the board. The harbor is strong on diesel, particularly with recent cold weather, and reasonably good on gas packs. Distillate margins through 2025 were strong, and they really peaked in October and November. And I would expect diesel to continue to remain strong through the first quarter, and we've seen that trend over the last few years where diesel has been above gasoline. That plays to Suncor's strengths. We have a pretty low G-to-D ratio. We also have pretty good G-to-D flexibility, and we can win in any environment, but we really like good diesel cracks. In the fourth quarter, we achieved not only record refinery utilization, but record diesel production. How did we do that? I'll give you an example out of Edmonton. This is a little sneak preview of maybe some things we'll share at Investor Day. The first half of the story and the second half of the story, stay tuned. In the Edmonton refinery, we made a few simple routing changes that took advantage of some improved catalysts that we put in during our turnarounds and structurally increased diesel yield by 8,000 barrels a day. And that resulted in a correspondingly lower diluent production, so a much higher value product on the diesel side. We did that for a $140,000 investment, and that delivers about $45 million a year in incremental value. And then we were able to move that through our – We did that – We did that through the – Third and fourth quarter of last year. Third and fourth quarter.

So it really had minimal impact on 2025, and it's all accruing now.

We see this into 26, and we think there's opportunity to grow that even further in 2026. And then we sold that through our domestic channels as well as we have export capacity off both coasts. But we're not done yet. Tune in for more on that one, on that story in March. Thanks, David.

Perfect. My quick follow-up is, and maybe you'll again talk more about the analyst tape, but You know, you took over the operations of Syncrude. We are seeing some improvements. Help us understand that the changes you brought about once you kind of started operating that asset on your own versus the JV entity that existed in between. If you could talk a little bit about that.

Yeah, I think some of the key things is, you know, Syncrude is fully part of the Suncor family. And so what that means is best practices, central support, and just the scale and efficiency that come with, as opposed to being a joint venture and kind of an island, you're now part of a continent. And so we have brought the best to bear. We have also, whether it's best practices or people, we've moved people into Syncrude, moved Syncrude individuals out to other operations. So they're just getting the full benefit of this storyline we've told, how we're systematically reducing variation asset to asset. And while we're doing that, we're elevating the overall performance across the enterprise. So SynQ being a fully-fledged part of the family has been a big part of that. Everything we're doing applies to them equally, as it would to any other asset. And that makes a difference.

Thank you. Congrats on the great result. And again, once loved the choice of the song that plays before the call starts. So thank you for that. Thanks, Manal.

Thank you. As a reminder, if you have a question, please press star 1-1. And our next question will come from the line of Patrick O'Rourke with ATB. Your line is open.

Great. Good morning, guys. Congratulations on a strong quarter. I was going to ask on Syncrude, but that was a very comprehensive answer there. So maybe I'll talk about sort of the refinery, the throughput levels that you've had here, been able to achieve over 100%. And you spoke to raising the denominator earlier on the call. At what point do you think about sort of formalizing those levels here?

I'll give you a little bit of a peek behind the curtain. With what we have been doing to systematically, across the entire network, de-bottleneck and add capacity, we now run two sets of books. So externally, the nameplate of our system is 466,000 barrels a day. It's been that way for a long time. So as we continue to report to you, that's the denominator. But what you're seeing as we're getting north of 100%, What you really know is the denominator is bigger than that. And so the second set of books is the internal books, the drive to be the best we can be. So this team in this room sits down weekly, monthly, and literally daily and looks at performance. And we compare performance to our internal books with a bigger denominator so instead of looking at 103 105 we might be looking at something that's 95 96 and then as opposed to patting ourselves on the back for being north of 100 we're saying huh at 95 96 where's that last four or five percent so that's the philosophy of how we're doing things And we need to think about when we go externally and say, okay, the new denominator is X, because we don't want anybody to miss the memo when we do that. And a year from now, say, well, now these guys, they were 103% in 2025, and now they're only 97%. Man, their performance went down. You've got to look at the barrels and the percentages. But we know as we continue to be north of 100%, at some point in time, we have to come clean on what is the real capacity of this network. And it's well above 466.

Okay, great. And then maybe just on the return of capital, thinking about the debt position of the company here, $6.3 billion versus the $8 billion target. I know there's a bit of working capital impact in the fourth quarter and historically a bit of a reversal of that in the first. But let's say we get towards the end of the year and the commodity conditions have been such that you're still sitting well below that $8 billion. How do you think about the signals for releasing that to shareholders and what's the preferred vehicle If you do make that decision, maybe I'll add this Sort of instance you touch on inorganic. Is there any potential that you would see that as dry powder where you can create per share accretion?

Troy you want to comment a bit?

Yeah, you know, I don't think we look at dry powder for and I think you're suggesting acquisitions and in terms of where the balance sheet is. I think we let the opportunities define whether we want to do something like that. And I think we have an excellent track record of it, both from a disposition perspective as well as an acquisition perspective. When we think of return on capital, we do look at it over a longer time period than one month. We look at it over a full year. You are right that the normal trend is for us to have a working capital release in Q4 and then actually a usage in Q1. I don't expect that to be any different this year. It's important to go back to what I said about the order in which we pay things. If people think about the balance sheet and how it's used around share buybacks or capital, Ultimately, there's some clarity in the order we're paying out our cash flow because we actually look at it as though we're looking at the benefits of what our capital spending is versus the cost of any leverage that are associated with it. So it's not so much funding the buybacks themselves off the balance sheet. It's actually funding what's at the end of the line. So stay tuned. If operations continue to improve on the path they have, that gives us more direction to increase those buybacks, but it's not so much related to where our debt levels are. Okay. Thank you.

Thank you. I'm showing no further questions at this time. I would now like to turn the call back to Mr. Adam Aldaldawi for closing remarks. Your line is open.

Thank you everyone for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can end the call.

This concludes today's conference call. Thank you all for participating. You may now disconnect.