Suncor Energy Inc. (NYSE:SU) Q2 2025 Earnings Call Transcript

Suncor Energy Inc. (NYSE:SU) Q2 2025 Earnings Call Transcript August 6, 2025

Operator: Good day, and thank you for standing by. Welcome to the Suncor Energy Second Quarter 2025 Financial Results Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Suncor Energy’s Senior Vice President of External Affairs, Mr. Troy Little.

Troy Little: Thank you, operator, and good morning. Welcome to Suncor Energy’s Second 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 second quarter earnings release as well as in our current annual information form, both of which are available on SEDAR, 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 second quarter earnings release. We will start with comments from Rich Kruger, President and Chief Executive Officer; followed by Kris Smith, Suncor’s Chief Financial Officer.

Also on the call are Peter Zebedee, Executive Vice President, Oil Sands; and Dave Oldreive, Executive Vice President, Downstream. Following the formal remarks, we’ll open the call up to questions. Now I’ll hand it over to Rich to share his comments.

Richard M. Kruger: Thanks, Troy. Our second quarter was about completing major maintenance and project activities and positioning for a strong second half. We successfully accomplished both. I’ll highlight operational performance. Kris will cover financial. But let me first start with personnel and process safety. Following our 2 safest years ever in 2023 and 2024, I’m pleased to report the first half of 2025 has been even safer in all categories across the board, a credit to our employees and our contractors. Upstream production, our highest second quarter and our highest first half in company history. First half at 831,000 barrels a day beat our previous best set last year by 28,000 barrels a day. For those keeping score, our past 4 quarters have all set quarterly records.

First half Upgrader utilization, 94% despite major base plant turnaround activity. Over 2 years, the first half of ’25 versus the first half of ’23, we’ve achieved a production increase of 89,000 barrels a day. This increase alone would rank as Canada’s 10th largest oil producer. Refining throughput, again, highest second quarter and highest first half in company history. First half at 462,000 barrels a day beat our previous best, also set last year by 20,000 barrels a day. Like the upstream, our past 4 quarters have all set quarterly throughput records. First half refining utilization, 99% here again, despite major turnaround activity. Over 2 years, the first half of ’25 versus the first half of ’23, we’ve achieved a throughput increase of 81,000 barrels a day.

This increase alone would rank as essentially Canada’s 10th largest refinery. Product sales, same story, highest second quarter and highest first half in company history. First half at 603,000 barrels a day beat our previous best once again set last year by 15,000 barrels a day. Like refining and Upstream, our past 4 quarters have all set quarterly sales records. We’ve had 13 months in our history with sales greater than 600,000 barrels a day, 9 of the 13 have been in the past 12 months. Over 2 years, first half of ’25 versus first half of ’23 achieved a product sales increase of 72,000 barrels a day. This increase alone equivalent to 5% of Canada’s entire refined product sales. Operating costs. First half OS&G $6.46 billion, down $135 million versus the first half of ’24 despite higher production, higher refining throughput and higher product sales.

Over 2 years, the first half of ’25 versus the first half of ’23, OS&G is down $765 million despite 89,000 barrels a day higher production, 81,000 barrels a day higher refining throughput and 72,000 barrels a day higher product sales. The message, we continue to achieve higher performance, significantly higher volumes, significantly lower costs, setting records, raising the bar quarter-on-quarter, year-on-year, operating leverage creating value. Through our people, their expertise, commitment and determination focused on what we can control, embracing a culture that every barrel and every dollar matter. Let me move to turnarounds. Historically, greater than 20% of our capital, $1.25 billion per year has been spent on turnarounds. For 2 years, we’ve been focused on improving cost and schedule performance via benchmarking, risk-based work selection, work planning and execution.

In May of last year, at our Investor Day, we committed to reduce turnaround costs by $250 million per year over 3 years. With that backdrop, I’ll highlight second quarter performance. Edmonton refinery, large work scope, including major crude unit. Previous turnaround of the same unit was 44 days. Our 2025 plan was 41 days. We completed it in 36, improving from the fourth quartile in North America to the second quartile. Previous cost, $159 million. This year, $142 million, $17 million or 11% lower. Complements to Gavin Knight and the Edmonton team. Sarnia refinery, also several units, including major crude, previous turnaround of the same scope, 44 days. Our 2025 plan was 40 days. We completed it in 28, improving from fourth quartile to first quartile.

Previous cost, $108 million, this year, $94 million, $14 million or 13% lower, credit to Lesli De Carolis and the Sarnia team. Base Plant Upgrader 1 initial estimate was synced with the Coke drum replacement project at greater than 100 days. Our 2025 plan required the turnaround completion in less than 91. We completed it in 67. Planned cost, $259 million, we completed it for $231 million, $28 million or 11% lower, improving from fourth quartile performance to second. Well done to Bruce Durnford and the Base Plant team. 2025’s turnaround schedule is split between the second and third quarters with third quarter events including Firebag plant 92, Montreal Refinery, Edmonton Refinery and Syncrude 1 coker. Overall, we project 2025 performance to be approaching industry second quartile with second quartile in North America representing best-in-class in Canada.

Bottom line, we are exceeding our improvement targets initially focused on duration and cost, now interval extensions. In fact, our 2026 business plan, which is under development includes interval extensions on future Base Plant and Syncrude cokers, Edmonton and Sarnia refineries and all Firebag plant turnarounds. Therefore, based on our improvement and our confidence, we are raising our annual turnaround capital reduction target by $100 million from $250 million per year to $350 million per year. This does not include the added benefit of higher uptimes and associated volumes. I want to talk about 2 capital projects completed in the second quarter. Base Plant U1 Coke drum replacement, the most extensive Coke drum replacement project in industry history, 8 100-foot tall 26-foot diameter drums weighing nearly 300 tons each, new drums, foundations, cutting decks ancillary systems.

40 heavy lifts with one of the world’s largest cranes, the heaviest equivalent to 620 Ford F-150 pickup trucks. We funded it at $1.2 billion. Initially scoped at more than 100 days, we committed to 91 in guidance, reviewed by third-party experts for validity. Well, Ryan Jackson and his team completed it in an astounding 67 days, a 24-day improvement versus guidance, $165 million or 14% below funding. The project was literally executed flawlessly. Every detail was mapped out. Every scenario was contemplated. We built full-scale models to practice the most critical steps. Bottom line, we systematically derisked the entire event. World-class performance by any standard. Now decades of benefits, modernized design, upgraded metallurgy, automated controls, enhanced safety systems, lower maintenance costs and higher reliability.

I would urge you to check out our website for a 3-minute video on the project. Second project, Syncrude, Mildred Lake West mine extension, $1.5 billion gross project to develop 730 million barrels of bitumen replacing the North mine. Project involved a new mine, haul roads, transport bridge, power lines and pipeline. The oil sands lease is literally the size of Manhattan. We developed it without a new tailings pond or processing plant. We achieved first ore in April 6 months ahead of schedule at a cost $100 million below funding. Kudos to Niaz Ahmed and Adrian Larkin and their teams. Our 2025 project and turnaround performances illustrate that today’s Suncor delivers, beating ambitious benchmark-based performance improvement targets. Guidance.

Last December, we issued a 2025 capital guidance range of $6.1 billion to $6.3 billion. Since then, we have accelerated turnaround improvements, executed major capital projects under budget and performed better across a wide range of base business activities with an intense organization-wide focus on capital and capital efficiency. As a result, today, we issued a revised lower 2025 capital range of $5.7 billion to $5.9 billion, a midpoint reduction of $400 million. Incremental free funds will go to buybacks. And although it’s too early in the year to update volumes, year-to-date performance points to the high end of all guidance ranges. Institutionalizing operational excellence. 15 months ago on our first quarter 2024 earnings call, I described Suncor’s long-standing system to manage risk reliability and overall operational performance, a system that provided sites with operational requirements or expectations, but a system that left it up to each site to determine how to meet the expectations, I shared with you that we judged that system to be too complex and insufficient in meeting our high-performance standards of today.

As a result, we designed an entirely new system to achieve operational excellence based on work processes, processes such as managing reliability and managing maintenance, 21 standards detailing how to achieve operational excellence based on industry best practice was developed by subject matter experts and frontline employees for more than a year. Our objective to ensure clarity, consistency and quality in how we operate. Conversion from the old system to our new system started in earnest in late 2024. I’m pleased to report we achieved our ambitious time line with all sites now fully converted to our new system. The new system is literally a game changer, institalizing operational excellence, reducing site-by-site variation and elevating overall performance.

I personally reviewed page all 21 work processes and practices. And based on my 40 years of experience, I can attest it’s best-in-class. Special call out to Sylvie Tran and her team who led this work and to our site leaders for embracing the change. With that, I’ll turn it over to Kris.

Kristopher P. Smith: Great. Thanks, Rich, and good morning, everyone. We definitely was a stellar quarter and a showcase of operational excellence. Now before I review the quarter results, I do want to highlight our exceptional shareholder returns in Q2 delivered during a major turnaround quarter and ongoing commodity price volatility. In Q2, we again returned nearly $1.5 billion to shareholders, including $697 million in dividends and $750 million in share buybacks. Year-to-date, our buybacks are nearly double those of our nearest oil sands competitor. We have repurchased 2.3% of our equity float so far this year or nearly 1.2% per quarter, supporting future dividend and free funds flow per share growth. Since the beginning of 2023, we’ve returned $13.6 billion to our shareholders via share buybacks and dividends, representing 22% of our average market cap through that period.

Our integrated business model, coupled with focused operational performance delivers high-quality cash flows that are reliable across the commodity cycle, which we are deploying to ensure strong returns for our shareholders. Now turning to the second quarter overall performance. It was a quarter marked by continued volatility in crude oil prices. WTI range from the high 50s to the mid-70s in Q2, all within a very short window, averaging USD 63.70 per barrel for the quarter, a drop of almost $8 a barrel from Q1. Also the light heavy differential tightened to $2.45 a barrel versus Q1, averaging USD 100 per barrel discount relative to WTI, while synthetic crude improved by $3 a barrel to a $1 per barrel premium versus TI. 2-1-1 cracking margins improved in the quarter driven by improving gasoline cracks and distillate cracks and our 5-2-2-1 refining index grew to USD 27.85 per barrel.

Meanwhile, the Canadian dollar strengthened with the CAD to USD exchange rate moving from $0.70 to $0.72. Even with this headline crude price volatility, our integration across the value chain allows us to offset those headwinds, delivering reliable and high-quality cash flows. An example, based on our publicly shared sensitivities, an $8 drop in WTI and a 2-point strengthening of the Canadian dollar would have about a $0.5 billion impact on quarterly AFFO, all else being equal. However, our best-in-class integrated model, which captured stronger refining margins and improved synthetic pricing, coupled with strong operational performance mitigated over half that impact. That’s an equivalent to an extra month of share buybacks at our current pace.

That’s the value of our unique integrated business. It enables us to reduce the inherent short-term variability of cash flow in a commodity business and deliver more stable, resilient results and cash for our shareholders. Looking to the second half of 2025, we expect continued commodity market volatility, including ongoing concerns around global trade and tariffs. That said, the refining outlook remains constructive for Suncor with positive supply-demand balances, low product inventories, especially in distillate and announced refinery closures supporting demand for our exports. As a 2-1-1 refiner, Suncor benefits from widening distillate cracks, and our traders are actively pursuing margin-enhancing opportunities, both domestically and leveraging Suncor’s export capacity from both the West and East Coasts.

On Q2 operational performance, even though it was a heavy turnaround quarter, impacting production and refinery throughput, we were still able to put a number of records on the board. Upstream production was 808,000 barrels per day in the quarter, the highest second quarter in company history. Oil sands production in the quarter was 748,000 barrels per day, reflecting the impact of the turnaround and Coke drum replacement project at Base Plant Upgrader 1. Meanwhile, E&P averaged 60,000 barrels per day in the quarter, which is in line with Q1 production. Also, despite the significant amount of turnaround activity in the downstream in the quarter, overall refining utilization remained extremely robust at 95% with crude throughput of 442,000 barrels per day, the highest second quarter in company history.

Refined product sales remained consistently strong at 600,000 barrels per day, thanks to our sales and marketing and supply and trading teams who ensured continued product supply to key markets and that we maximize margin across our value chain. To that point, downstream margin capture relative to our 5-2-2-1 index averaged 96% in the quarter despite the impact of planned maintenance at both Sarnia and Edmonton. Even with all the planned maintenance, our focused execution, integrated model and cost and capital management delivered solid financial results in the quarter. We generated $2.7 billion in adjusted funds from operations or $2.20 per share in the quarter and adjusted operating earnings of $873 million or $0.71 per share. Total OS&G expense was $3.2 billion, which was down over $130 million versus Q1.

Capital expenditures totaled $1.65 billion in the quarter, including $674 million of economic investments and $975 million of sustaining and maintenance capital. And as Rich has already mentioned, we are reducing our full capital year guidance by $400 million to $5.7 billion to $5.9 billion. Our balance sheet remains very strong with net debt at quarter end at $7.7 billion and trailing 12-month net debt to AFFO at well below 1x. In Q2, we realized an expected working capital release of $269 million with a drawdown in inventories following the Q1 build in support of turnarounds. As a reminder, we expect net debt to fluctuate around our $8 billion target as we actively manage working capital and ensure continued deployment of 100% of excess funds to shareholders.

Overall, it was a very strong quarter on every front, and people across the company continue to drive for more improvement, focusing on delivering industry-leading reliability and operational uptime, along with improving cost and capital efficiency. As an example of that, after in-depth work by our technical and operating teams, we are extending all future U2 coker furnace outages — outage intervals by a year. This move delivers a triple benefit, it reduces our capital spend for 2025. It enhances profitability by delivering a greater proportion of higher-value SCO relative to non-upgraded bitumen and it supports future plans to extend U2 major turnarounds from 5- year to 6-year intervals. At Upgrader 1, the combination of the new Coke drums and reliability improvements have already enabled us to extend the turnaround interval from 5 to 6 years with minimal maintenance required between turnarounds, translating into lower cost, higher reliability and more production between turnarounds.

Also, at Fort Hills, we are extending our primary separation cell outages from every 6 months to once annually, moving this fall’s turnaround to the spring of ’26. These are tangible examples of the continuous improvement at Suncor, which marks a step change in our capital and operating profile and a clear illustration of Suncor’s disciplined and focused actions on driving real shareholder value. We could not be more proud of what the Suncor team continues to achieve and its relentless pursuit of continuous improvement. And with that, Rich, I’ll turn it back to you.

Richard M. Kruger: Thanks, Kris. I’ll be quick. Today’s Suncor about delivering operational excellence and high performance. We’re sitting here in mid-2025. The year is shaping up to a good one, but I can assure you, we are not done yet. We’re operationally focused, financially strong and determined to compete and win. With that, I’ll turn it back to Troy.

Troy Little: Thank you, Rich. I’ll turn the call back to the operator to take some questions.

Q&A Session

Operator: [Operator Instructions] And our first question will come from the line of Greg Pardy with RBC.

Greg M. Pardy: Thanks for the really engaging summary. A couple of questions. Maybe just the first one, Rich, as it relates to stream day capacity now on U1. So with the project having gone well, enhancements in place and so forth, has the stream day capacity risen there?

Richard M. Kruger: Yes, I’ll ask Peter to comment in a second, Greg. But I’ll just make one comment. The project was not only executed incredibly well. But what was equally satisfying was the start-up. We turned the key and this thing, the engine roared and this thing has been humming ever since. Peter, do you want to comment specifically on what we’re seeing?

Peter D. Zebedee: Yes. Thanks very much, Rich. Thanks, Greg. Stream day capacity on U1 remains the same today as it was historically around 140,000 barrels per day range. The real benefit of the drum replacement on U1 is the upgraded metallurgy, like Rich referred to earlier and our ability to extend the turnaround intervals now structurally to 6 years. So that’s a combination of the work done to upgrade the metallurgy on the U1 drums plus also some work that we did in the coker fractionation section, specifically around improving reliability around the trades and some of the flushing and the pump around circuits that we have there to manage falling. So at the end of the day, it will be a calendar day increase, but stream day remains the same.

Greg M. Pardy: Okay. Understood. And then it’s really a financial question. But between the lower CapEx, which from everything you said, sure sounds like it’s going to be a structural reduction of $400 million plus margin enhancement and then when you relate that to your $8 billion net debt target, is $8 billion the right number on a go-forward basis, just presumably given better cash flow generation? And then is there any consideration or discussion amongst you in terms of doing a bigger buyback in addition to the NCIB sale like an SIB, if you did go the route of with a higher allowable debt number?

Richard M. Kruger: A very fair question, Greg. The $8 billion was determined by kind of 1x coverage in a $50 a barrel WTI world. And as we put that 3-year plan together, it was as we execute and deliver on that 3-year plan, there’s no doubt about it. We are ahead of schedule on delivering on that plan and in a number of areas exceeding it. We — I think that’s something that we will need to examine and as the business performance continues to achieve, it’s natural to look at that. We haven’t done it yet. But I think it’s a fair question and something I would anticipate we’ll talk about more in the future. Kris, do you have anything else you’d add on that one?

Kristopher P. Smith: Not really too much, Rich. I think you just hit it on the head that as we’re accelerating the pace of our improvement and we’re looking at all dimensions of the business, we’re certainly not looking at moving off our net debt target plan today. But we are generating a lot of cash flow. And Greg, you really pointed out the fact that we’ve got a lot of tailwinds behind us in terms of that cash generation. We are focused on increasing to the maximum amount possible excess free funds flow to our shareholders. And so we’ll be looking at all dimensions. We’re just really pleased with how fast we’ve been moving, but we’re not putting our foot off the pedal either. We need to continue focusing on driving that TI breakeven down and ensuring that we’re managing the balance sheet and returning cash to shareholders.

Richard M. Kruger: One other point I’d make and it relates to the buyback, it’s a bit like a dividend in that we’ve talked about a reliable and growing dividend, a commitment to our shareholders is of the utmost priority to us. And Kris commented in his remarks about the our ability because of the nature of our business and the integration on it to really kind of dampen out the volatility in a commodity. And each month this year, the dividend has been — excuse me, the buybacks have been $250 million a month, and we kind of look aside say, yes, what is oil price. It’s not something that we wring our hands or fret on. So that predictability, that confidence that quality and cash flows that not only the dividend but the buyback provides are both high priorities for us. And if and as we can ratchet up that continued buyback based on the performance of the enterprise, that will certainly be something we will evaluate.

Operator: One moment for our next question. That will come from the line of Dennis Fong with CIBC.

Dennis Fong: Congratulations on a record Q2. Rich, I appreciate your opening comments in relation to, obviously, the OEMS implementation. I was actually hoping you could talk a little bit more towards how you’re really driving the stronger turnaround performance and reducing the — we’ll call it, the variation around kind of the performance of all of your individual assets and how that translates through into again, that higher confidence around stronger turnaround performance.

Richard M. Kruger: Sure. Thanks, Dennis. And just a little bit. I’m going to turn it over to Dave here in a second, but just as a little bit of a recall. Literally, two years ago on this exact call, I flagged to you how we would be putting an acute focus on turnaround performance. We saw the size of the prize in terms of our capital and then what it does for days offline. And particularly in the second and third quarters where we have annual lows. And our vision at that time is we want to reduce that variability, be a more ratable manufacturing organization across the year. So we made some structural changes in terms of how we support turnarounds, leadership. I put Dave and Shelley Powell, Shelley’s not with us today, in charge from the senior-most executive level in terms of driving turnaround.

And today, we’re exceeding the targets we set but it’s not just luck and it’s not just, well, try harder. It has been a very systematic comprehensive approach to achieving best-in-class performance. Dave, why don’t you kind of comment on what are the — what constitutes — how do you achieve best-in-class turnaround performance?

David J. Oldreive: Yes. Thanks, Rich. And I think you said it well and Dennis, you pointed out that we’ve had — we’ve safely executed our turnarounds with significant improvements over historical performance. And that’s not by accident. That all starts two years ahead of a turnaround execution. And we’ve been executing the plan for the last couple of years to deliver consistent world-class turnaround performance. World-class turnaround performance really begins two years prior to the event, it starts with benchmarking. Knowing what the best of the best to deliver and rallying the site teams to hit a competitive target. It’s a challenging target, but a target that they all need to believe in if they’re going to be successful.

Once we have that, then we follow our disciplined processes. Risk-based work selection to get the right work scope, detailed planning following our OEMS work processes, that reduces variability, as Rich mentioned. And then finally, strong execution in the field. Sounds simple, there’s a lot of details that have to go in and make that happen. The most exciting part is I think we still have room to improve. We initially focused on our benchmark and our work selection and our field execution, but now we’re expanding our approach to extended turnaround intervals and that’s the duration between each outage. So we’re not done yet, lots of opportunity to continue to improve.

Richard M. Kruger: I’ll just amplify a point Dave made, the people in this room right now can talk to you about 2027 turnarounds. The work scopes that we’re trying to lock down, the materials management that we need to have, the labor strategy and requirements, two years in advance, we can now talk about that, where previously we were focused on what was immediately in front of us the next three months, six months, it’s a rigorous approach. Quite frankly, it’s what world-class organizations do, and that is increasingly what we are.

Dennis Fong: Great. Really appreciate that color and kind of the fulsomeness of the planning looking forward. My second question, if we could switch gears a little bit, it’s towards Fort Hills. I understand you’ve gone through some turnaround and maintenance there. Just from the work that we’ve done, it seems like progress has been made on the North pit as well. Can you provide us a little bit of an update as to where that’s at and how you think about the asset performance as you kind of go forward, specifically as it relates to access to resource and ore?

Peter D. Zebedee: Yes, sure. Thanks, Dennis. Yes, Fort Hills is actually delivering exactly on the 3-year plan that we set out. In fact, I think it’s 13 months in a row now they’ve had their budget…

Richard M. Kruger: They’ve actually beat it 13 months in a row. We’re going to audit that and see what’s going on. What are they leaving in the bank? We want more.

Peter D. Zebedee: And so they are reliable, predictable. Importantly, they are managing the geological risks that manifest themselves a number of years ago, and we have that well on our radar screen with controls and mitigations forward. North pit development is progressing per plan. We’re well established out there in the North pit now doing lots of stripping activities and dewatering activities. And I would say I’m confident in our ability to develop that resource per the plan and incrementally increase production from Fort Hills in the coming years.

Richard M. Kruger: Maybe I’d add just — Peter, one other comment to that is — we have a nameplate on Fort Hills of 194,000 barrels a day, the two plants and we’ve mentioned before how when we have maintenance work, we’re testing the capacity of each plant. And I think some of the numbers we’ve shared is each plant, we have confidence we can get 110,000 barrels a day or more through each plant. What Peter and his team are doing now though is they’re looking at that entire from the very front end through it the sustainability of that. Are there any things we would need to do to achieve a higher rate on a sustainable level with metallurgy, with processing capabilities, anything, and that work is still ongoing but I think it exemplifies the not only striving to achieve our commitments but then looking at, okay, and how can we make it better?

And Fort Hills is a classic example of we want to achieve that plan, but then it’s what’s next. How can we get Fort Hills create more value through further debottlenecking. And I think we’re early on, but I think we’re pretty encouraged by what we’re finding.

Operator: One moment for our next question. And that will come from the line of Neil Mehta with Goldman Sachs.

Neil Singhvi Mehta: I wanted to really unpack the upstream production volumes this year. The guide is, of course, [ $810 million to $840 million ], but yet, a lot of maintenance in Q2. So the back half, it feels to us like you can get to the top end of this range full year or maybe even exceed the top end just your perspective on that, and maybe you can break it down between oil sands, Fort Hills and Syncrude.

Richard M. Kruger: Neil, if you go back, if you look at — I’m going to offer you a couple of numbers here, if you look at 2021, ’22 and ’23, during the second quarter, we averaged about 720,000 barrels a day, while we did a lot of the turnaround work. The last two years now, we’ve averaged almost 800,000 barrels a day of course, this year higher than the last. And what Peter and his team are doing as we do our major maintenance work, we talk about how we’re improving performance, but there are very, very comprehensive efforts to reduce variation, the seasonal aspect. So the interconnectedness of Fort Hills and Firebag so that if we have work going on at the — in the Base Plant line, for example, that we can keep Upgraders full or while we’re taking down Upgraders, we can divert bitumen to market.

So we’re continuing to find ways and approaches that increase overall performance. And if we go back to when we set guidance, we knew this was a heavy turnaround year. The U1 was the really the 800-pound gorilla in that. We completed it early. It’s up and running and the teams keep finding ways to do better. I’ll feel more comfortable when we get to the work that we have ongoing now over the next month or two but I think you rightfully point out when I say all indicators are pointing to the high end of guidance, I could have said that either the high end or above guidance. It’s the organization. It’s our people continuing to find ways to do things better. When we provide those clear priorities and what’s most important, what we’re seeing is an organization and an asset base deliver.

And I’ll literally comment that they are repeatedly exceeding my expectations. And I think it’s been said a couple of times, we’re not done yet.

Neil Singhvi Mehta: That’s great, Rich. And then not only on volumes but also CapEx. So the $5.7 billion, the bottom end of the new CapEx guide range is a year ahead of the ’26 schedule, so is it fair to say that we have achieved a new normal for CapEx and that the sub-6 is what we should now start to anchor to on a go forward?

Richard M. Kruger: What you rightfully flag it is what you’re seeing this year is structural in nature. We are looking at whether it’s turnarounds, whether it’s our base risk management and compliance capital every dollar matters, and we have different teams, expert-led teams of people looking at how we spend our money. And we’ve known that for us to achieve our financial objectives to achieve the resiliency we want to, we needed to be more frugal, thoughtful about managing CapEx and I think this — we’re putting the plan together for ’26 and beyond, but the — you’re really looking at the new norm. We’re not going to have these years where that capital blows out by — blows up by $1 billion or less. We want to spend within our means, be very, very thoughtful on it so that we can not only reliably increase that dividend year-on-year but we can also reliably continue to return capital to shareholders via buyback.

So I don’t have a number yet for you for ’26, ’27, ’28, but you accurately said, we are ahead of our plan to structurally lower the capital spending of this enterprise.

Operator: One moment for our next question. That will come from the line of Doug Leggate with Wolfe Research.

John Holliday Abbott: This is John Abbott on for Doug Leggate. I want to go back to the CapEx discussion earlier on capital returns and really, I mean, just what you’re doing on the cost side and you sort of think about your corporate breakeven going lower, how do you think about the future dividend capacity of the firm? I know you want a reliable dividend, you want future steady reliable dividend growth. But how do you think about your ability to grow your dividend over time? And how do you see that future capacity?

Richard M. Kruger: John, it may be you, but you sound an awfully lot like Doug on this one. I think he primed the pump on this question but Kris, why don’t you talk about it?

Kristopher P. Smith: You bet. John, Listen, and we laid this out during our Investor Day, our view is that we’re setting up this company for consistent, reliable dividend growth. And that’s how we’re going to approach our dividend. At the same time, we’re going to ensure we’re maintaining the resilience of the company and directing that substantial excess refund flow back to buyback. So — and one of the joys of this, John, is we do these buyback programs and it really the dividend growth, and we maintain that resilience and breakeven. And so it’s really a great, I call it a flywheel, that we’re establishing here just the consistency and quality of our cash flows that are growing over time that allow us to grow the dividend consistently. Our shareholders should count on that and also kicks off a lot of excess cash to return back to our shareholders.

Richard M. Kruger: And John, if I just kind of add to that. This is not hardwired, but if you look back over the last several quarters, as we improved our financial performance through the operation, we have been able to lower that net debt, drive down the breakeven, create resilience that allows us to feel comfortable in whatever world we’re in. And so as we’ve been buying back shares and increasing the dividend, the total dividend payments have really essentially remained the same. So as we continue to improve performance, buy back shares, that allows us to grow on a dividend per share basis even faster without growing the overall dividend expenditure or burden, keeping our resilience high, our breakeven low and growing the dividend.

So I think these are very interrelated, but they’re all driven by improving the fundamental performance of the enterprise. And then it’s sources and uses of funds kind of come thereafter. But I feel quite good about what we’re achieving in being able to buy back shares and enable a very competitive growing per share dividend year-on-year-on-year. That’s the construct we’ve been after and if you look back over multiple quarters now, you see that occurring in the bottom line numbers.

John Holliday Abbott: Appreciate that. And then just a quick — just another quick one from us. I mean, how are you sort of looking at portfolio clean up in this environment here. I mean, I guess, in particular, the non-op assets on the — in the Northeast, on the East Coast.

Richard M. Kruger: Yes. A couple of things. We’ve put such priority on getting the most out of the asset base we have, I think Commerce City is a great poster child on that. Commerce City had an operational incident in late 2022, the first half of ’23 was a difficult recovery period. And since then, that refinery has been performing at an extremely high level. And the East Coast is a little bit of — it’s a tale of two cities there. You’ve got the non-operated platforms, Hebron and Hibernia and then the two, one operated on non-operated floaters. And what we’ve been — our focus has been completing the work that we had targeted at Terra Nova for us, participating in the work on West White Rose. And then as we look at the relative contribution and value of those assets, it’s the same question we ask really of kind of anything, are they worth more to us or they are worth more to someone else.

But we’re not — at Suncor, we want to be sure we get best value for anything we might either choose to buy or sell. And you — when an asset is — performs at its highest level, you don’t put a for sale sign up or hold a garage sale when you’re not performing at your best. And I think that’s exactly what we’re starting to do across our asset base. And then we’ll make the judgments, do they — are they worth more to us or worth more to others. Asset sales is always an interesting conversation because we’ve got the outside world listening, but I have a lot of our internal world listening to in terms of Uh Oh, are we on the block or not? And the message we give always to our employee base perform at the highest level possible and all the rest of it will take care of itself.

Operator: One moment for our next question, and that will come from the line of Manav Gupta with UBS.

Manav Gupta: I just wanted to ask you that something which is somewhat underappreciated in your portfolio because there was so much focus on this turnaround is the growth potential. At what point will you guys start talking a little more or giving us more details about multistage Lewis in situ project or Firebag debottleneck or Firebag expansion all of which could actually add to your volumes on a go- forward basis. So when can we start expecting you to talk about those growth projects?

Richard M. Kruger: So Manav, I’m going to let — I know it’s just you and I on the phone, so I’m going to let you inside the tent. Here’s the plan, a year — a little over a year ago, 1.5 years ago, we put out a 3-year plan, ’24, ’25, ’26, and we have been blowing the doors off of that plan. We have been exceeding it. And what my intent is we get to the end of the year, we put our head up and say, how are we doing on that 3-year plan. And I could think of nothing better than either getting close or achieving that 3-year plan in 2 years. And so then the question becomes what’s next? And that’s not a commitment we’re going to do that. The vectors are pointing in the right direction. And if at that time, I feel we will have re-earned the credibility to talk about the long term.

And I’m spending — and this leadership team is spending a lot of time on that right now, and I like it. I like how it looks. In fact, we spent two days with our Board last week looking at longer-term plans and options in different business environment. And one of the things I will tell you that I don’t [ like ], I didn’t appreciate and I don’t think we’ve done as good a job as we could do, is helping the outside world understand the internal options that this company has for either — certainly for value growth, value over volume for the long term. So I see that as something in the first half of 2026, we’ll give you a very fulsome longer-term outlook on what is this company going to look like 5, 10, 15 years from now, but it is a work in progress right now, and I like what I’m seeing.

Manav Gupta: Perfect. My quick follow-up is if you could provide us some comment on the refining macro. It looks like some of the global capacity additions have come to end and outlook is better. So if you could help us understand how you’re looking at both the diesel and the gasoline market and general refining cracks on a go-forward basis.

Richard M. Kruger: Sure. I’ll turn it to Dave here in a second. But I think it’s important where crude is truly a global market and you’ve got most differences based on location and type of things. Refining, we’ve got a bit of a different situation here because of some of the structural advantages, access to crude supplies dislocations in pricing from New York and Chicago and then, of course, the performance of our asset base. So that’s all quite good. But Dave, do you want to comment on kind of — and Kris made some comments in his opening about kind of the fundamentals and what we see.

David J. Oldreive: For sure. And thanks, Manav, for the question. Refining macro environment, we see it being fairly robust over the short term. As you pointed out, there’s some capacity offline, there’s capacity that came on that is struggling to get to full capacity. And we’re seeing particularly diesel cracks being very strong. And that’s, in part, a global trend that’s, in part, a U.S. trend with some renewables that are offline due to the lack of incentives in that space. But in any case, it provides a pretty robust environment for us. And we, as you know, we are diesel machines in Suncor. We make a lot of diesel and strong diesel cracks are good for our business going forward. We completed turnarounds in Edmonton and Sarnia this past quarter on primarily diesel producing units, and we’re now producing record diesel production.

Moving a little more locally. If we think about our business in Canada, our best outlook for our products is through our retail network. And we’re seeing retail sales for Petro-Canada brand up 8% year-on-year, thanks to our retail growth. So we see strong global as well as strong local environment for our downstream business.

Operator: One moment for our next question. And that will come from the line of Menno Hulshof with TD Cowen.

Menno Hulshof: I just have one question on the deployment of autonomous haul at Syncrude. Can we maybe get a refresh on where things stand on that front? And whether the economics and cost savings are going to look any different from deployment as [ peter talked ] about?

Richard M. Kruger: Yes, absolutely. I’ll turn it to Peter in just a second, but I’ll give you a couple of numbers. It was in May of last year, we had 20 trucks that were autonomous at that time. In May of this year, we had 120 and we’ve talked about the savings that go with each truck. Our plan is to be 150 or more by the end of the year. Peter, do you want to give a little bit of an update on it?

Peter D. Zebedee: Yes. Thanks, Menno. Things are going really well with the Base Plant continuing deployment. As Rich said, we’re really scaling that up through to the end of the year, and we’re seeing some real efficiency gains and our ability to extract productivity out of that system. Our plan for Syncrude is to implement autonomous haulage into Syncrude in 2026. The economic case is consistent with that of the base plant, different starting points, just given the different types of operations. But we really see this as a move for us. It helps us to improve safety. Again, this is a real kind of systems engineering approach, and we really believe as time goes on, our ability to extract a differentiated productivity relative to our staff fleet that remains robust and will be the basis of our mine plans going forward.

Richard M. Kruger: So all the expected benefits, safety, direct cost productivity. All of those, we are on track to see or achieve all of those or more than we would have hoped for.

Operator: One moment for our next question. And that will come from the line of Patrick O’Rourke with ATB Capital Markets.

Patrick Joseph O’Rourke: Thanks for a very comprehensive and spirited rundown so far. I guess the first question I would have…

Richard M. Kruger: I think that was feedback for me.

Patrick Joseph O’Rourke: I guess the first question I would have, you kind of touched a little bit on Fort Hills and nameplate capacities there and some of what you’ve been achieving. But I guess when you look at the asset, what your high output days look like right now? What’s the variability? And I guess you pointed to the top end of production guidance for the full year, but how does that come into play here?

Richard M. Kruger: Peter, I didn’t put Patrick up to this question because I want to know too, Patrick. So Peter, you comment on how you’re — some of the testing you’re doing and what you’re seeing.

Peter D. Zebedee: I think I said three years ago when I started here, that plant is a Ferrari, and I think that’s proving true. Stream day capacities, we have demonstrated stream day capacities in excess of 220,000 barrels a day. So we know that potential is there. The work of the team is to ensure that we can do that reliably going forward and as well, coupled with the mine plan to support those types of rates while still managing all of the risks that I talked about earlier. So it’s a balance, but we are quite confident based on the testing we’ve had over the last couple of months here that the stream day capacity of that plant is quite robust.

Richard M. Kruger: And a real enabler is going to be when you get both of those two pits in the North mine kind of conditioned and ready to go. That’s when we’ll rev up that Ferrari.

Patrick Joseph O’Rourke: Okay. Great. And this is more of sort of a strategic question. But obviously, on the back of the success that you’ve had with [ OMES ], I think you touched on maybe asset disposition side a little more earlier in the call. But when you look at the success in the implementation there and you think about the potential for acquisitions and creating shareholder value through implementing that on other assets. What does that sort of look like for you right now? And how is that appetite versus some of the organic greenfield growth opportunities you talked about earlier?

Richard M. Kruger: Well, I’ll reiterate. I believe we have more internal opportunities than perhaps we understood or certainly then we help the outside world understand so as we look at kind of our base capability to create value with what we have, that gives us a better lens to look at external opportunities. Do they add to the enterprise or they just make the enterprise different or bigger. And we’re not about being different or bigger, we’re about being more valuable. So the more we’ve sharpened our understanding of our stand-alone internal set that really allows us to say is I shared the example with our Board last week. You go by the mall just because there’s a for sale sign up doesn’t mean you got to buy. And it’s all about can we create value in a unique way relative to our other opportunities. And I’ll never say never, but I like a lot of the cards we’re holding.

Operator: I’m showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Rich Kruger for any closing remarks.

Richard M. Kruger: Okay. I’ll be brief on it, folks. I hope what you’re hearing over — Patrick referred to the spirited conversation. So today, Suncor, this is a different company. We’ve got great assets, great people, strong results, team-based results-oriented high performance, a different attitude, a different culture and I understand we play a little song at the start of each of these. I listened to the one today. And my favorite line is you can keep the silver, we came for gold. That is the attitude at this company today and look forward to sharing our future progress and results with you on subsequent calls. Thank you.

Troy Little: 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 now end the call.

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