Suncor Energy Inc.

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Good day and thank you for standing by. Welcome to the Suncor Energy first quarter 2026 financial results call. At this time, all participants are in a listen-only mode. 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. 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 Albadawi. Please go ahead.

Thank you, Operator, and good morning. Welcome to Suncor Energy's first 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 first 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 first 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 Upstream, 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 first quarter was about maintaining momentum following a very strong 2025, and that is exactly what we did. Troy will cover financial performance, and I will focus on what we can control Operational performance, starting with a quick comment on safety, our highest priority. I'm pleased to report the first quarter represented best ever performance in process safety as our teams navigated the often harsh conditions of a Canadian winter. Moving on, upstream production, 875,000 barrels a day, our highest first quarter ever, and our second highest quarter overall on record, only exceeded by the fourth quarter of last year. 22,000 barrels a day higher than our previous best first quarter, which was last year. Achieved with Fort Hills at a record 187,000 barrels a day, higher than the quarter a year ago. E&P at 76,000 barrels a day was 14,000 barrels a day higher year on year, and our highest quarter since our North Sea asset sale in 2022. Lastly, firebag, our large high-value in situ, continued near record rates at 247,000 barrels a day. Despite these results, it could have been better. We were negatively impacted by 14,000 to 15,000 barrels a day due to a natural gas curtailment from a third-party unplanned outage. Fortunately, the issue was resolved with production restored by the end of the quarter. Upgrader utilization, 96%. Here again, good, but it could have been better. An unplanned decoak of Syncrude's A3 coaker following the discovery of cracked valves on the reactor with temperatures approaching minus 40 degrees C. Out of an abundance of caution, we shut down the unit, completed repairs, and had it back online in March. Reflecting back over the last three years, first quarter production is up 133,000 barrels a day. No costly acquisitions, no major new startups, simply performance. Refining throughput, 498,000 barrels a day in the quarter. Again, our highest first quarter ever and our second highest quarter overall, only exceeded by the fourth quarter of last year. 15,000 barrels a day higher than our previous best first quarter, which was in 2025. All four refineries exceeded last year's quarterly throughput. Edmonton, our number one moneymaker, maximized distillate and achieved best ever throughput of 160,000 barrels a day. And Montreal introduced much needed jet fuel into the market and also achieved a best ever quarter at 155,000 barrels a day. Refining utilization, 107% on our previous 466,000 barrel a day capacity, or 97% on our new 10% higher re-rated capacity of 511,000 barrels a day, as communicated at our recent I-Day. Excluding our Commerce City refinery, which undertook its spring turnaround, our network averaged 100% on the higher re-rated capacity, led by Edmonton at 101% of its new capacity. Over the last three years, first quarter throughput is up 130,000 barrels a day. No costly acquisitions, no expensive new projects, performance. Product sales. 681,000 barrels a day, our highest quarter of any quarter ever, 34,000 barrels a day higher than our previous best, the third quarter of 2025, and 76,000 barrels a day higher than our previous best first quarter, which was last year. Achieved through a strategic shift starting in the second half of 2023, previously we were value over volume, Now we're value and volume, challenging ourselves to not only place more total barrels into the market, but also place more barrels in the highest value change within the market. To illustrate, Petro Canada retail volumes, Canada's number one brand, were up 9% year on year. After never achieving 600,000 barrels a day sales in any quarter, we've now exceeded 600,000 seven quarters in a row. Over the last three years, first quarter product sales are up 166,000 barrels a day, or 32%. No costly acquisitions, no expensive new projects, again, performance. So how are we continuing to establish record results period after period? Through crystal clear priorities, ambitious daily, weekly, monthly, quarterly performance targets, collaboration and teamwork, applying best practices, focusing on value, and by recognizing and rewarding our teams when they deliver. Our continuous improvement is not limited to a select area or two. It's across the board, systematically raising the bar, delivering higher, more reliable, more rateable operational performance, and with that, higher, more reliable, more rateable cash flow. I'll share an example, a recent example of our team's adding value. We've described how our Fort Hills plant has capacity above its nameplate with stream day capacity of about 220,000 barrels a day versus an original design basis of 194,000 barrels a day. During our recent I-Day, we detailed how we will monetize this capacity over time increasing annual production from 175,000 barrels a day in 2025 to 200 in 2028. However, for our teams, that timing wasn't good enough. As a result, in late April, we negotiated a commercial agreement with Syncrude's owners, whereby Fort Hills purchases ore from Syncrude's Aurora mine and processes it at spare Fort Hills plant capacity. Everybody wins, Fort Hills, Syncrude, the province of Alberta through royalties, and with Suncor on both sides of the deal, we win twice. Incremental volumes, incremental value in today's price environment. We moved the first load of ore literally before the ink was dry on April 29th. An example of today's Suncor, operationally excellent and commercially opportunistic. The non-operational highlight of OneCube was on March 31st, our I-Day in Toronto, with the agenda as follows. First, we talked about today's Suncor, how the company has been rebuilt to compete and win with superior performance and safety, reliability, cost management, and volumes, and the delivery of our 2024 I-Day commitments in two years versus a plan of three. 114,000 barrels a day of upstream production growth over those two years and a 10% higher refining capacity. $10 a barrel reduction in our corporate break-even and more than $3.3 billion per year in incremental three funds flow. The day continued with the theme of we're not done yet, outlining an ambitious set of new commitments over the next three years. Another 100,000 barrels a day of upstream production growth, a further $5 a barrel reduction in enterprise break-even, and an additional $2 billion a year in free funds flow. Then the long-anticipated topic of our long-term oil sands outlook. where we detailed our large, long-life, high-quality reserves and resource base. 2P reserves of 7 billion barrels, the longevity with a 25-year reserve life, contingent resources of 30 billion barrels, literally a century of development opportunities, and 11 billion barrels or 60% higher than our last assessment a decade ago. contained within 22 billion barrels of high-quality in situ, adjacent to existing assets, commercial with today's technology, and expected future prices, with the entire assessment validated by third-party independent experts. Development plans. We discussed standardized modules, design one, build many, focused in the resource-rich corridor south of Firebag and east of our base plant. All 100% Suncor owned with regulatory approvals in place. We highlighted extensive regional synergies, synergies unique to Suncor, providing lower capital costs, well below greenfield development. Sequence to maximize efficiency and capture lessons learned, a 400,000 barrels a day portfolio at an average capital cost of about $30,000 per flowing barrel. But the best part? We described how all barrels are not created equal, quantifying the structural shift over time from mining barrels to in situ, with cash flow per barrel of in situ roughly two times mining's current level, a resulting outlook of long-term value growth with moderate volume growth. Finally, we detail what's in it for our shareholders. Double-digit annual growth rates in free funds flow and free funds flow per share, increasing cash returns via dividend growth and rateable buybacks, and importantly, achievable in a $65 a barrel WTI environment with upside if prices are higher. Bottom line, we have a clear, definitive plan to compete and win short-term and long-term, plan built around what we can control and what we can confidently execute, and a plan coupled with high performance that we believe offers a compelling value proposition, ensuring Suncor will stand on the podium in any and all business environments, delivering reliable, superior shareholder value, a must-own oil and gas stock, or a foundational building block for any investment portfolio. With that, I'll turn it over to Troy.

Thanks, Rich. We ended the first quarter in a very different place than where we started, with March's average WTI price being 50% higher than January. For Suncor, this is exactly the environment we're built for. Our integrated model was constructed to capture opportunity when others cannot. Our Q1 financial results reflect that. $4 billion in adjusted funds from operations, up $1 billion, or 32% year over year. $2.9 billion in free funds flow, up $1 billion, or 53% year over year. And we returned $1.5 billion to shareholders, $825 million in buybacks and $712 million in dividends. And that doesn't reflect the increase in our buyback on April 1st to $350 million per month, the second increase since last November. Rather than walking through our quarterly report, I will focus on a few specific items. Let me start with downstream margin capture, an area where our business results are differentiated this quarter. Our 99% capture will likely be a surprise to many in a rise and crack environment. where it's often difficult to fully capture increases in real time because of lags in market pricing response. The strong margin capture this quarter is a testament to the great work by our sales and marketing and supply and trading teams, who took advantage of market dislocations in real time, in particular in export markets. In March, for instance, we were able to capitalize on our existing trading relationships in 45 countries to send diesel and jet to places like the Philippines and Puerto Rico, both at significant premiums to market pricing. We have spent years building up the logistics and commercial capabilities to act on opportunities just like these, and that investment paid off meaningfully this past quarter. Moving to our balance sheet for a moment, as you would have seen, Q1 included a working capital build of $1.7 billion, almost all of which was directly related to the strong positive move upwards in the business environment in March. At the end of Q1, our accounts receivable and inventory balances stored significant amounts of cash from higher prices, a lot of which has already been released to us in the past two weeks through the normal industry settlement cycle. Recall that working capital is a tool that Suncor uses to drive returns in our downstream. Sufficient inventories in the right place and at the right time can provide opportunities for our supply and trading colleagues to take advantage of margin opportunities that others cannot. So we manage our working capital very tightly, but with a view that we don't want to miss solid business opportunities. This working capital increase contributed to a temporary increase in our net debt of $500 million versus Q4 2025, despite much higher free funds flow. Again, driven by the timing of the normal settlement cycle. We remain very pleased with the current state of our balance sheet, continuing to be significantly within our guardrail of one times net debt to cash flow at $50 per barrel WTI. Turning to capital allocation, let me be clear about how we think about returning cash to shareholders. We believe that a steady, growing base dividend plus consistent, rateable buybacks provides long-term investors with a predictable framework they can count on through the cycle. Supporting this ability to deliver consistent cash returns to shareholders is a world-scale, long-life, high-quality resource base with no expiration risk, an integrated model that delivers through all cycles, and a clear phased plan to develop our assets and grow value while maintaining capital discipline. The recent increase in our buybacks to $350 million per month wasn't a short-term reaction to recently improved market conditions. It reflected our confidence in the business plan that we put forward in our investor day. Let me close with a discussion around profitability and long-term repeatable earnings power. You are all familiar with the reduction in our break-even of the last two years of $10 per barrel. These reductions make Suncor highly resilient in lower commodity price environments. What is perhaps not as well understood is how the improvements we have already made have even more impact in a high commodity price environment. As an example, if we applied the business environment of 2022 when we last saw a strong commodity price environment, to an annualized Q1 2026, today's Suncor would generate the same AFFO or higher at oil prices that are over $15 per barrel lower than 2022, assuming all other pricing was consistent with that year. So we are not just well-suited amongst our competitors in a lower commodity price scenario. We are also positioned to capture significant value at higher prices also. And this will only grow as we continue to improve further in the years ahead, in part driven by our structural move towards higher margin-in-situ production. Bottom line, this quarter, again, demonstrates the strength of Suncor's uniquely integrated model, strong operating and financial performance, delivering reliable value to our shareholders. 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. Thanks. Good morning. And thanks for the rundown, as always. You know, Rich and Troy, you've both, you know, delved into the downstream, how the dynamics are changing and how you're running that business. So the question is almost like twofold. One is, is is 680,000 in the first quarter in terms of refined product sales, that certainly looks very conservative vis-a-vis what your annual guidance looks like. But perhaps some more important questions are around what's going on in terms of maybe your, how much market share are you capturing domestically, do you think? And then does the international hold that much more promise? I'm just trying to get a better understanding of what the dimensions of that refined product sale number could look like going forward.

Greg, I'll offer this, Rich. I'll give you a quick comment or two, and then I'll ask Dave to comment more fully. As we've evolved this kind of, I refer to it as a strategic shift over the last few years, it's still a work in progress. We are continuing to find ways to add and create value, and it's underpinned, obviously, by refining performance. but it further integrates into the distribution logistics. On Investor Day, we talked about how a couple years ago we had reach into 20-some countries around the globe. Now that's 45 countries. So this is a strategy that continues to develop and unfold. And with it, you're seeing the higher sales volumes. Clearly, there were opportunities in the market that also created value for us to the point of, for example, we were able to buy competitors' volumes on the dock or at a tailgate and then turn around and, because of our unique capabilities, deliver it with material uplifts. So I think it's a little bit less of characterizing that outlook as conservative, and really it's more about our teams continue to aggressively pursue and capture value, and that is resulting in higher volumes. Dave, any comments you'd add on to that? I know I gave a mouthful there. You had quite a bit of it.

Greg, maybe I'll just comment on the sales numbers specifically. You know, I think about the sales as where did the volume come from and where did it go? because you've got to produce it to sell it, and then we have to find the right channels to sell it. So where did it come from in the first quarter? Because we did hit a record plus throughput. Throughput was up versus first quarter prior year. That's pretty obvious. We also had some non-crude inputs, custom blends, particularly into our Edmonton refinery, which created more products for us to sell. We'll continue to do that going forward, so I think there's some good news on that. We drew some inventory, and that's really, you know, as Troy talked about, We had a pretty unique market present itself in March, and we took the opportunity to scale up our logistics systems on export to capture margins that were uniquely more profitable than Canadian alternatives. And that's kind of our commercial... Commercial intensity, our ability to be flexible and our superior trading skills allowed our team to do that. And just as an example, our Burrard, Vancouver dock is where we do most of our West Coast diesel exports. And that's our most profitable logistics and lowest cost logistics option for exports. We did 14 cargoes in the first quarter. That's compared to 28 cargoes in the full year of last year. So we've been able to scale that up to capture a pretty unique opportunity. I'd expect us depending on where the market goes, to have that ability going forward.

Thanks, Dave. Yeah, that's terrific. Thanks very much for that. Maybe just to shift into the upstream, and Rich, I know there's a big, big focus obviously moving ahead in terms of the shift towards in situ and the better netbacks and so on. But if you come back to Fort Hills, you're through the remediation plan. I hear you in terms of what you're saying around increased volumes and higher plant utilization. But with the streamline move into the north pit then, is there a unit cost reduction story that'll begin to take shape potentially in, you know, 27, 28, beyond the volumetric numbers you're talking about simply, you know, with the plant?

No doubt about it. Again, I'll have Peter comment a little bit more fully. If you dial the clock back, and I guess it was about two years ago now, when we had the three-year, we called it the recovery plan at Fort Hills. It had a premise of getting up to 175, but a change we made in that was not explicitly to the recovery plan years one through three. but it was years 4 through 44 where we said opening two pits in the north will create more value over the long term. And so what we shared with the market, there were some incremental capital costs as we bought some new equipment, trucks and shovels, and then we said we appreciate your patience because you won't see that bend in the unit operating costs until we put those two minds in play. So I think that outlook remains the same. It was a bit deferred from what we would have earlier characterized in the recovery plan. Peter, though, you want to comment more generally about, you know, Fort Hills, your progress, priorities?

Yeah, I would say, you know, our short-term focus, Greg, is to fill out the Fort Hills plan through the use of these incremental volumes that we're getting from Syncrude Aurora that will also, you know, directionally support reducing unit costs given the denominator is going to increase. Longer term, as you said, our focus is opening up North Pit 2. We expect the first ore from North Pit 2 to come in the first quarter of 2027. And as that North Pit opens up, and the mining volumes reduced due to reduced stripping, we do expect improvement in unit cost in that 27, 28 timeframe.

So Greg, between the two of us, that was a long answer to yes, we expect to be driving down unit costs as we put all the building blocks in place at Fort Hills.

All right, thank you very much.

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. The first one for me, Rich, is you've alluded in the past to the flexibility around your base plan to upgrade as providing quote unquote craft cocktails to some of your customers and differentiating your offerings versus other peers or competitors. Can you and the team talk about the opportunities this affords you in terms of improving profitability, especially in this obviously very tumultuous commodity price environment? And that's mostly from the upstream, but I also recognize that there's opportunities in the downstream as well.

Thanks, Dennis. You know, it's a good question in that because we actually benefited from that materially in the first quarter with the unplanned decoat at Syncrude and then being able to move product across to the base plant. But, Dave, I'd really want you to even comment explicitly about, you know, our ability to continue to feed, for example, our Edmonton refinery plant. with uh had a record refining result and yet it uh it works off of a you know its appetite is pretty heavy you know synthetic crudes and uh despite disruptions in our upstream how we kept that thing full and and uh that craft cocktail concept how we're how we're putting it in practice yeah absolutely i think edmonton's a great example and and it

I alluded to this in the last question around the non-crude feedstocks into Edmonton Refinery. These are these craft cocktails that Rich likes to talk about. Edmonton was a clear example of the value of our integration in the past quarter. We highlighted in Investor Day that we made some changes at Edmonton to improve diesel yields. Small investment, $100,000 moves to add piping to modify a gas oil hydrotreater so we could pull diesel off the gas oil hydrotreater. What that did is gave us a 16,000 barrel a day diesel yield increase, but it also allowed us to have spare capacity in our gasoline producing assets. With that, we were able to take these craft cocktails from the base plant, run those directly into the secondary units at Edmonton, and not only get the diesel yield up from the first part of that project, but we were able to incrementally run more rate at Edmonton of non-crude inputs, these craft cocktails of about 9,000 barrels a day. So 160 record rate at Edmonton. We actually were about 169 of inputs. And that allowed us to have great yields as well as improved volumes. So it's just a great example of Suncor integration coming together to improve not only reliability, volumes, as well as yields in our refineries.

One other comment I'd make, too, is much like the downstream Dave refinery by refinery and the re-rate we had last year, You know, we've been working hard to determine what are the physical capabilities of our upgraders. And last year, we ended up at 99% for the year. And I'm smiling over at my partner over here, Peter, because if he'd have been 99.5 or higher, I would have said, okay, it's time to re-rate those beasts. So even though we ended up 96% for the quarter overall, and we've described that as something that, you know, we left something on the table, we were disappointed in that, the base plant was well over 100%. And so we have capacity there. And the same philosophy we've applied here to all of our facilities is determining that limit. What can we do to further extend that limit safely, reliably? We're doing the exact same thing across the upstream and seeing similar results.

Great. Really appreciate that color and context from the entire team. My follow-on is on Fort Hills here, as you kind of answered my question on the upgrade or throughput for the quarter. at Fort Hills and appreciate the context around, we'll call it regional integration with a proximity to Aurora North mine site. How does this opportunity set help maybe adjust mine progression, mine plan, and the ability to manage both obviously the higher fines content resource to the western edge, as well as the opportunities to, we'll call it, optimize and push beyond the 220,000 barrel a day productive capacity at the facility.

Peter? Yeah, thanks, Dennis. And obviously this gives the Fort Hills team and the Aurora team, frankly, more degrees of operating freedom in terms of blend management, as you said, managing out the right blends into the Fort Hills plant to optimize bitumen recovery. I would say our mine plans for the development of the Fort Hills mine remain the same today. This is essentially a shorter-term opportunity that we're taking to fill out the Fort Hills plant, and then we're going to transition to full Fort Hills volumes in the coming years. We will obviously look for opportunities to reduce operating costs, stripping volumes, etc., should those be warranted by, you know, the use of these incremental volumes. But for now, the four bills of mind plan remains as intended.

I'll just add to that, you know, the vast majority of our assets in the region are certainly, you know, operated and 100% owned. Syncrude is, you know, the exception in that. But how we look at it, is we look at it as, you know, what's the economic maximization or optimum across it? And we try not to get fussed with that ownership. And then when we see an opportunity, we work it with the partners via a commercial solution. And this ore transfer is an example of that, where there can be more value created by doing that than if we each just stuck with our own individual assets and kept them separately. And that mindset has been a huge... huge part of our story over the last few years of optimizing Suncor the whole and not a series of individual assets great I appreciate that color I'll turn it back one moment for our next question that will come from the line of Neil Mehta with Goldman Sachs your line is open

Yeah, thanks so much, Rich. One micro question and one macro question. So the micro question is, you know, can we spend some time talking about your favorite child, Firebag? And, you know, specifically, you know, what are the things that you're watching here over the course of this year to see if it stays in your good graces?

Well, it is. It's got a place in my heart that lasts a long time, decades, decades, I'm sure. Peter just literally got back from there yesterday. We're in the middle of our spring turnaround, and we've described that as, you know, that's a pretty big event for us this year. It's the biggest turnaround firebags had for a while. It's a key part of the volume story, and we're, what, Peter, a few weeks in right now. And, you know, we never declare victory until the whistle blows, but things are going quite well. And that asset in particular, its size, its quality, the expertise we have on the technical and operational personnel, whether that's looking at improved drilling techniques, whether that's looking at expanded solvent applications, steam reliability, it's literally a playground of opportunities. And with the quality of the people we have and the focus they've been providing, We keep seeing ways to make it better. You know, in Investor Day, we talked about growth from some of the near-term priorities, infield drilling, the ultimate use of non-condensable natural gas. But it doesn't stop there. We're looking at what are the limiters in any particular piece of equipment or ongoing debottlenecking. And even though it was just literally a month ago or five weeks ago that we put out an investor day plan, that just is a point in time. And we're already looking at avenues to go above and beyond and add value. And those are things we'll talk about over time. But I really, really, you know, love all my kids. Just happen to love a few of them, maybe a little bit more at times. And, you know, and firebags sitting there right on my knee getting all my attention.

Yeah, that's great. Peter, was there any... thing you want to add from your recent trip?

Well, yeah, sure. A couple things. Neon spent some time with the Fire Big team yesterday. We're right in the midst of our spring turnaround, as Rich mentioned. It is our single biggest opportunity this year to deliver above our plans. The team is laser focused on bringing that turnaround in uh on on schedule on budget uh it's going extremely well um so that's kind of job one at the moment and then uh secondary to that it's the second biggest opportunity for us is to continue drilling out these sidetracked wells that we have in inventory at the firebag site we plan to do 20 of them this year again these are just producing wells so High return wells, quick returns for us, and the PADS team is out there actively working to bring these online.

Wayne, we haven't talked a lot about it on this call, but we're in the midst of kind of the two big upstream turnarounds for the early part of the year at the Baseline and Firebag. And we anticipate that those should be wrapped up before the end of the second quarter. And that'll position us for the kind of the typical second half of the year sprint that we do in our business. And then if I flip to the downstream, Dave has had in the first quarter, he had work at both Sarnia and Commerce City, which are now largely behind us. And he's got pretty clear sailing till late in the third quarter before we do some work in in Edmonton and Montreal. So, you know, it's focused on getting that planned work done over the next several weeks. And then thereafter, it's getting, you know, it's that sprint that really delivers in the second half of the year. And we're right on target to do exactly that.

Yeah, Richard, the follow-up to the macro, I mean, you've been in this business since, what, 1981 when you started with Exxon, and so... Hey, hey, hey, hey, no age comments. Hey, you still look younger than most of us. The question that I guess a lot of us would love to get your perspective on is put this moment in time in history where we're dealing with tremendous volatility and there's a lot of geopolitical risk and we're moving headline to headline. What do you think are the long-term implications of the current conflict? And does that change the way that you think big oil should be thinking or running their business? Or do you stay the course?

Well, you know, one of the benefits, one of the few benefits of getting older is you do see things in perspective a little bit. And obviously, this is just the fundamental nature of a global commodity. We've got ups and downs in the cycle. And we've seen those before. I would say that each of them have a level of uniqueness. And this one has even... more uniqueness. I think that the fundamental question is, does it reset? Does it become a geopolitical premium or something on security of supply? I would also say, though, that in our business, given the long-term capital-intensive nature, I think the best companies over time don't overreact to what could be short-term phenomena either on the upside or the downside. And I think the plan we put out in Investor Day gives us a rock-solid value-creating plan. And our vision today is that we will march along that plan and continue to deliver on it. If, as time goes on, the dust settles, you know, we determine that we're in a different world, in a for a more enduring basis than we perhaps were a few months ago. We'll re-examine those, and I think what we shared with Investor Day, we have material upside potential to do more if the world calls for that. But I don't mean to make light of the current environment, At Suncor, we are acutely focused on what we can control and delivering on it. And in times like this, I think Troy described it well. You really see the synergistic effects of the asset base and the organization we've built in times like this. Whether prices are going up, whether they're going down, or whether they're stable, this company is built to deliver, generate cash in any and all of those environments. So kind of a long answer, Neil, to, you know, very, very interesting in it, but we are continuing to focus on the plans we've already laid out. Thanks, Chris. That's okay.

One moment for our next question. And that will come from the line of Patrick O'Rourke with ATB Cormark Capital Markets. Your line is open.

Hey, good morning, guys, and congratulations on another strong quarter here. I'm just going back to the refinery business downstream here, just taking a look through some of the numbers. One thing that stood out to us was the sales to throughput ratio, the sales to refinery output ratio. And we've seen sort of a bit of progression of that over the past couple of years, and I realize it'll ebb and flow a bit. What's sort of the outlook for squeezing some incremental value out of this for the rest of the year?

Patrick, this is a really cool question. And the reason it is, is we spend on these calls and things, we talk so much about crude unit throughput and utilization, and that's kind of the barometer that we use. But as we all know, there's more to it than that. There are other dimensions. of ability to add value. So, Dave, why don't you talk about, as your team has, you know, maximized the utilization of the crude units, what you're also doing and some of the impacts you're having in other areas.

Yeah, for sure. And we talked about a little bit of this already. Retail growth is part of our sales story of where did the volume go. We talked about the export channel that we've maxed out to capture the market and the non-fruit inputs into the refineries. All of that really does contribute to the growing sales, but not only growing sales, but growing sales to some of our best channels. Maybe I'll give another example of what we've been doing in the last couple quarters is jet fuel in Montreal. In December of last year, we started making jet fuel in Montreal. As it turned out, it turned out to be pretty good timing to start a jet fuel business for the first time. We're at lower rates now, but that has the potential to grow it up to 16,000 barrels a day of jet fuel production. And the original plan was to sell that domestically into airports in Montreal area, a little bit into Ottawa. And then we saw this unique market blowout in the first quarter and continuing into the second quarter where jet fuel became pretty short in certain markets. The team in Montreal was able to work across, really through our whole value chain, to come up with a logistics option and quality certification to export jet, and we were able to sell jet, as Troy mentioned. into the Caribbean at $10 or $15 a barrel above our alternatives, which was pretty awesome. And then just last week, we certified our jet fuel to sell into Europe. It has some pretty unique quality requirements, and we sold our first cargo into Rotterdam last week. So that's where some of the sales are going, where we're upgrading the value chain and using our unique logistics and flexibility to try to capture value.

This may become one other comment to on the you know what we refer to as more explicitly the secondary units and I know you're you're kind of hitting on that, but I guess i'm i'm asking but i'm kind of answering is the same. The same priority and focus Dave and Peter's teams have been putting on asset utilization, where we've made investments, they don't stop at just the headline units, the upgraders, the crude units. They apply into each and every asset. And when there is spare capacity that can create value, we just don't talk about those smaller assets or smaller components as much. but they create value and they give us optionality and flexibility, whether that's custom cocktails coming out of the base plant or whether that's creating value in the downstream. And this is a part of why I think you see when, you know, for at least a few quarters in a row, you see, okay, they kind of, they got a little bit of a beat on volumes, but they got more of a beat on value. And that is not done yet. Absolutely not.

Okay, great. And then You know, I know you just sort of gave your philosophy there in terms of not overreacting to, you know, strengths in the price or weakness in the prices. But when we take a look at things, net debt in the quarter, even with some working capital bill that call it $6.8 billion, you've got the $10 billion net debt target. How do you think about timing and how you sort of release that to the equity shareholder, or is that spare capacity between where you are now and $10 billion just sort of a rainy day fund for now?

Troy, you want to comment on that?

Yeah, sure. Patrick, so obviously the first thing we're going to look at is what our expected cash flows are for the year, and obviously those have been significantly impacted by the change in business environment. But the second thing we do is we look at the sustainability of any change in our buyback. wanting to offer something to shareholders that others can't replicate, which is consistency. So while we're absolutely going to be responsive to market events, we do actually want to remove as much variability as we can because we've actually removed a lot of variability from our business results. So it's really just a question of timing and an attempt not to be pro-cyclical.

Okay. Thanks very much.

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

Good morning. I wanted to run on the theme of we are seeing a lot of interest from the U.S. refining side on pipelines which are coming out of Canada given the current geopolitical situation. There's also news articles circulating that there's another pipe project which could have secured minimum level of commitments to move ahead. Can you talk a little bit about the incremental egress capacity that is coming out of Canada and why U.S. refiners would really benefit from getting more Canadian crude into their refineries?

Thank you. You know, fundamentally, the U.S., you just look back over the last 15 years or so, and the whole U.S. energy situation has changed so dramatically, whether it's crude or gas. But there's fundamentally a mismatch in the U.S. of the crude they produce and the crude that they refine. Now, that's not, you know, everywhere, but there's a large mismatch. A lot of the U.S. refining network has been designed and geared and, you know, rebuilt over time for heavy crudes, and that's what we provide. And, you know, my personal belief is that North America is a better, safer, stronger, more prosperous, you know, region when we optimize across the energy network. And just like we've talked about how maximizing the utilization of existing assets, debottlenecking, low-cost expansions, The exact same philosophies apply on these logistics systems. When you can incrementally add a capacity on an existing pipeline, you can typically do that faster and much cheaper than building new. So I think this is a natural evolution. I think it's economically rational to keep looking at where we can expand existing capacities. In Canada, we also have that now increasingly to the west with like TMX. How can that further de-bottleneck and get more capacity? And those would be the fastest, cheapest ways to move more crude or more products to customers. So we're quite supportive of those initiatives.

Thank you. My quick follow-up is here on the capture, which was pretty strong, 99%. I think it was flat versus the same quarter last year and probably just like 100 bps or 200 bps lower than the last quarter. I'm just trying to understand, as the cracks spike, what are the challenges of keeping capture elevated at higher cracks level? If you could talk about the headwinds and tailwinds to the capture for you as a system.

Troy briefly commented on that in his comments, but Dave and or Troy, why don't you both take that one?

Sure. And I think it's really, Manav, it's a summation of some of the comments I've already made. We have been able to be nimble and move quickly to capture market opportunities, not just domestically in Canada, but really globally. And that is a unique advantage that we have in Suncor. So I see that continuing to be something that we can continue to do and not create a particular headwind. In terms of yields, we've improved our yields, we've improved our rates. I would see that continuing through the quarter. We'll see maybe a little bit of noise around turnarounds as we get into another turnaround in the second quarter and into the third quarter. But our ability to capture the market, given our integrated nature, our strong supply and trading business, and our export logistics, I think continues to be really strong.

I would just add, Manav, with respect to pricing responsiveness, that's also where we see an impact that differs depending on the region and the market we're in. It also actually is somewhat driven by the speed at which the prices are changing. So if there's a very, very fast reset... then the impact of a delayed response is smaller. If there's more of a rateable increase over time or decrease, as can be the case, you'll actually find the impact is different. You also actually have a difference depending on what level of profitability you're at. When you're at a very high level of profitability, we do find that our competitors are willing to give away margin to get volume. At lower levels of profitability, they are less willing to do that. So that's where the duration aspect comes into it.

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 just have one follow-up question on your global marketing push, which you've addressed from a number of different angles already. But, Rich, you mentioned that you moved, if I got the number right, 14 cargoes into one. How much of that uptake is repeatable versus slumpier and more opportunistic? And how would you frame the potential margin uplift from marketing this year relative to last year or even 2024?

You know, I think the repeatable question, I think the jury's still out on that. I think it depends on two parts, kind of what The current situation in the Middle East, how and when it resolves itself, that will be part of it. But I think the other thing is that as we've established these trade routes and that when we can compete and relative to our alternatives or relative to a customer's alternatives, You know, you create new markets, markets that we can increasingly or confidently supply. So I think the repeatability, I don't know that we can answer that explicitly yet, but I do believe we are expanding our marketing reach and capabilities that will endure over a point in time. Dave, you want to add anything to that?

Sure, Rich. I would first confirm that that's absolutely correct. It will depend on the market opportunity. That's where the repeatability may have some noise. But in terms of the ability to capture how the market opportunity presents itself, We have the logistics. We've actually been growing and de-bottlenecking our logistics in the same way we've been growing and de-bottlenecking our refining capacity. So we have the logistics. We're preferentially moving logistics, particularly diesel exports, to the West Coast and jet exports off the East Coast. We have that capability that will only actually continue to grow in terms of capability. The question will be, is the market there to capture it or not? And if it is, We'll do that.

Maybe I'd add one other comment to that that I think is coming out in a lot of the answers today. On Investor Day, we had a chart really early in the deck. I believe it was titled Rebuilt to Win. And we talked about the integration of all the way, the leadership that we provide, the strategy or the strategic focus areas, the structure, and then kind of our organizational culture. What you're seeing is as all that continues to work together, that it's creating opportunities above and beyond what we could estimate at any point in time. And so our own ambitions continue to rise. And, you know, I chuckle when I read some of the reports and things that, you know, Suncor is, you know, they're conservative on this or conservative on that. That's not how we feel at points in time, but our organization is. with just crystal clear objectives, continues to find ways to add and create more value. And as we've raised the bar on our operating performance, reduced this variability we've talked about, you can do that. You can talk to customers far afield because when they know you can confidently and consistently provide them product, they're willing to enter into agreements with you where previously you couldn't have entertained because you didn't know if you could hold up your end of the deal. So the interrelationship of our underlying operating performance and what that creates for us commercially, that is a big part of the story here. And I think you're going to continue to hear us share examples of how we're increasingly commercially astute to go along with operationally excellent.

Thanks to you both. That was very helpful. I'll turn it back.

I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Adam Al-Baldaoui for any closing remarks.

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.

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