Menno Hulshof: Thanks Kris. I’ll turn it back. A – Kris Smith Great. Thanks Menno.
Operator: Thank you. And our next question comes from the line of Roger Read with Wells Fargo.
Roger Read: Yeah. Thank you. Good morning. Yes. Maybe just dig in a little bit here on an operational question. Looking at two things in the oil sands, your thoughts on what we should expect in terms of royalties? And then what you are looking at in a way of cash OpEx. I know higher fuel prices have an impact. But just what are some of the thoughts in terms of cash operating costs, underlying inflation and what you can do to push back against that?
Kris Smith: Sure. Thanks, Roger. On royalties, I think we’re going to continue to see royalties were in post payout in some of the assets, but pre-payout and others, expect royalty is going to be less than 2022 versus 2023 refers at 2022 just because of where we’re going to see commodity price. But I expect we’re still going to have a healthy royalty remittance back to the province. On the cash operating cost, I mean, we’re obviously incredibly focused on that. When I was at our Investor Day, we talked about the cash operating costs and the impacts both of where we’re at structurally with our mine plans in 2023. The mine improvement plan in Fort Hills as well as where we’re at in Syncrude just in its mine cycle in 2023, which is adding some additional costs, which we’re going to be working through this year and expect that to go in the right direction as we head into next year.
But as well, we’ve been seeing inflation, but not in any way that we haven’t expected it. And the team has been doing a lot of work trying to go back to what we talked about earlier in terms of the contractor reductions, but doing a lot of work to, first of all, offset that inflation wherever we can and drive the costs further down. We set the guidance range for 2023 and communicated that at the Investor Day. We’re focused on delivering those costs within that guidance range or below. And I think one of the things on inflation; certainly, we saw extreme inflation into the back half of last year, seeing some of it come in. We’ve seen it continue into 2023, but it’s starting to mitigate a bit too. And hopefully, we’re going to continue to see inflation start to temper itself as we move into the balance of the year.
Roger Read: And can you quantify at all what part of that is related to underlying fuel costs, or what offset you might get there?
Kris Smith: Yeah, I’d say the inflation where we’re seeing inflation is on the labor side contractors. And that’s why it’s one of the areas we’ve been incredibly focused on. It’s that inflationary pressure is coming in wages and labor costs. We were seeing it in supplies and materials, but that’s starting to come off a bit. I’ve seen the steel prices inflation starting to really cool on steel. In terms of fuel, I mean, look at commodity costs, I mean, certainly, it’s been helpful where we’ve seen gas prices trend here. They’re a lot lower than what our expectation would have been going into this year. But just the — as you would know, just seeing what’s going on with global — with just temperatures, a warm winter and an oversupply of natural gas in North America, that’s been a nice surprise for our business, and there will be a bit of a tailwind on the cost side.
Roger Read: Okay. And then the unrelated follow-up, Kris, we’re all well aware you remain the interim CEO. Any updates on the timing for removing that tag?
Kris Smith: Yes. Thanks. No, I’m not in a position to make an announcement on this call. And I’ll say what I said before. The Board is going through a very diligent process, ensuring that they make the decision that’s going to take this company forward. Expect the decision is going to be very soon. It’s been communicated in the past, the best decisions expected in mid-February. I mean, we’re sitting here at February 15. So I expect the decision and the announcement will be coming fairly soon.
Roger Read: Yes, I appreciate that. I’m not real good at math, but it struck me the 15th was mid-February.
Operator: Thank you. Your next question comes from the line of John Royall with JPMorgan.
John Royall: Hi, guys. Good morning. Thanks for taking my question. So just a follow-up on Neil’s first question on capital allocation, and I just wanted to make sure I understand. You’re at about $13.5 billion of net debt today. Are you talking about possibly going to the 75% tier before you hit the $12 billion level, or is there an expectation that you’ll be delevering by $1.5 billion in 1Q? And if it’s the latter, maybe you can go through some of those drivers of deleverage? I know you’re €“ you’re closing the wind and solar assets, but then you should have the stake increase in Fort Hills going the other way. So just anything on those drivers. Thanks.
Alister Cowan: Hey, John, I’ll take that one. I said before that I’m going to look through any FX impacts to get to the $12 billion. Included in the $13.4 billion is about $750 million of FX impacts from a weaker Canadian dollar compared to when we set the targets. So I would take that also, and we fully expect to be close to the $12 billion or close enough to the $12 billion ex FX by the end of Q1. This is around, as you mentioned, the timing of closing Fort Hills, we had assumed it would be in the beginning of Q2 and much up with alongside of the UK assets in that quarter. There’ll be some noise around that. Obviously, it’s a close Fort Hills earlier, but we expect to move the beginning of Q2 to 75%, 25%.
John Royall: Okay. That’s helpful. And then maybe you could talk about the optimization you guys are doing in retail and specifically the things you’re doing around mix for operated versus non-operated stores? Just a little bit of color there would be helpful.
