Good day, and welcome to the Imperial Oil 4th Quarter 2025 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Peter Shaw, Vice President of Investor Please go ahead.

Good morning, everyone. Welcome to our 4th Quarter Earnings Conference Call. I am joined this morning by Imperial's senior management team, including John Whelan, Chairman, President and CEO, Dan Mayans, Vice President of Finance and Administration, Cheryl Gomez-Smith, Senior Vice President of the Upstream, and Scott Maloney, Vice President of the Downstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with the link to this conference call. Today's comments may contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future performance. Operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described further in detail on our fourth quarter earnings release that would be issued this morning as well as our most recent 10K. All these documents are available on CDAR+, EDGAR, and our website, so I would ask you to refer to those.

John is going to start this morning with some opening remarks and then hand it over to Dan who's going to go through the financial update and then john will provide operations update once that is done we will follow with the q a so with that i will turn it over to john for his opening remarks thank you peter good morning everybody and welcome to our fourth quarter and full year earnings call i hope everyone is doing well and that your year is off to a good start and as always we appreciate you taking the time to join us this morning let me start by saying i'm very pleased to report another strong quarter We generated just over $1.9 billion in cash flow from operations in the quarter and $6.7 billion for the full year. At year-end 2025, our cash on hand exceeded $1.1 billion after funding our capital program and returning $2.1 billion to shareholders in the quarter and $4.6 billion over the year, including dividends and the completion of our normal course issuer bid. Our integrated business model continued to demonstrate resilience, with stronger downstream profitability in the quarter, and we continue to generate substantial free cash flow over a range of oil price environments, with nearly $1.4 billion generated in the fourth quarter when WTI averaged less than $60 U.S., and $4.8 billion generated throughout 2025. While our financial results in the quarter were very strong, operationally we encountered extremely wet conditions at Curl in October and additional maintenance in our eastern manufacturing hub in December. I'll touch further on these events and how we've moved past them during the asset updates. On the project front, we achieved first production from the Coal Lake Lemming SAGD project in the beginning of November. As expected, production is currently ramping up to a peak of around 9,000 barrels per day. Now, I'd like to briefly highlight two identified items that affected the quarter's results. First, we announced our decision to cease production at our Norman Wells Asset in the Northwest Territories by the end of the third quarter of 2026, as it reaches the end of economic life after several decades of successful operations. This somewhat accelerated end of field life versus the end of the decade resulted in a one-time charge of $320 million after tax, which is included in our fourth quarter identified items. I would like to take a moment to thank our Imperial team members and our partners that have contributed to and are still supporting our efforts at Norman Wells. As we continue to supply essential energy products to the north, and as we move forward with the decommissioning at Norman Wells, our focus will remain on strong relationships and working closely with local communities. Separately, we completed a comprehensive review of our inventory practices across the company, informed by external benchmarking and inventory management best practices. Based on the review, we identified opportunities to further enhance our inventory management, such that we can run more efficiently with optimized inventory levels while maintaining critical supplies. While we have recognized a one-time charge of $156 million after tax in our fourth quarter earnings to reflect the optimization of materials and supplies inventory, we expect to realize significant operating and working capital efficiencies going forward. Moving back to the overall results, the fourth quarter saw us continue our long track record of delivering industry-leading returns to shareholders. We paid $361 million in dividends and completed the accelerated share repurchases under the NCIB in mid-December, with share repurchases totaling $1.7 billion in the quarter. In total, we returned $4.6 billion of cash to shareholders in 2025 and exceeded $23 billion over the past five years. I'm also pleased to share that this morning we declared a dividend of $0.87 per share, payable on April 1, 2026. The increase of $0.15 per share is the largest nominal dividend increase in company history. To provide some context, 10 years ago, our quarterly dividend was $0.14 per share. As we move into 2026, we remain focused on our core strategy of being the most responsible operator, maximizing the value of existing assets, progressing our restructuring plan, and continuing to deliver industry-leading shareholder returns. This strategy has allowed us to increase our quarterly dividend per share by 295% and repurchase 34% of our outstanding shares since 2020. With that, I'll now pass things over to Dan to walk through the financial results in more detail.

Thank you, John. I'll begin by covering the fourth quarter identified items that John just mentioned and provide some additional context. First, consistent with our economic decision to accelerate the cessation of production at Norman Wells by several years, we have booked an earnings charge of $320 million. This charge includes a $108 million impairment charge to reduce the net book value of the asset to zero. The remaining $212 million reflects related contractual obligations, with about half expected to be paid later in 2026 and the other half payable over a number of years going forward. Second, the optimization of a materials and supplies inventory resulted in an unfavorable earnings impact of $156 million after tax. While this one-time charge in the fourth quarter did not impact our operating cash flow, it did impact our simplified non-GAAP measures of unit cash operating costs at Curl and Cold Lake. John will discuss these impacts in his asset updates. Turning to our underlying fourth quarter results, we recorded net income of $492 million. Excluding the two identified items I just described, net income for the quarter was $968 million, down $257 million from the fourth quarter of 2024, driven primarily by lower upstream realizations. When comparing sequentially, fourth quarter net income is down $47 million from the third quarter of 2025. When excluding identified items, net income is down $126 million, again, primarily due to lower upstream realizations. Now, shifting our attention to each business line and looking sequentially. Upstream loss, $2 million, down $730 million from the third quarter. However, excluding identified items, net income of $418 million is down $310 million, primarily due to lower realizations. Downstream earnings of $519 million are up $75 million from the third quarter. Excluding identified items, net income of $564 million is up $121 million, mainly due to higher margins. Our chemical business generated earnings of $9 million, down $12 million from the third quarter. Excluding identified items, net income of $20 million is essentially flat as we continue to operate in bottom cycle margin conditions. Moving to cash flow. In the fourth quarter, we generated $1,918,000,000 in cash flows from operating activities. Excluding working capital effects, cash flows from operating activities for the fourth quarter were $1,260,000,000, which included an unfavorable $325,000,000 related to the identified items previously discussed. Taking this into account, normalized cash flow from operating activities, excluding working capital effects, was about $1,585,000,000 in the quarter. As John mentioned, we ended the quarter in a strong cash position with over $1.1 billion of cash on hand. Shifting to CapEx, capital expenditures in the quarter totaled $651 million, $228 million higher than the fourth quarter of 2024, and $146 million higher than the third quarter of 2025. Full-year CapEx was $2 billion, consistent with our guidance, up from $1.9 billion in 2024. In the upstream fourth quarter spending of $508 million focused on sustaining capital at Curl, Syncrude, and Cold Lake. In the downstream fourth quarter CapEx was primarily spent on sustaining capital projects across our refinery network. Shifting to shareholder distributions, we continue to demonstrate our longstanding commitment to distribute surplus cash to shareholders, returning $4.6 billion over the course of 2025, including $1.4 billion of dividends and $3.2 billion in share repurchases. Looking ahead to 2026, and as John already mentioned, we announced a first quarter dividend of $0.87 per share this morning. This increase of just over 20% reflects our confidence going forward and demonstrates our longstanding commitment to deliver a reliable and growing dividend. Now, I'll turn it back to John to discuss the company's operational performance.

Thanks, Dan. I'll now take the next few minutes to share the key highlights from our operating results. Upstream production for the quarter averaged 444,000 oil equivalent barrels per day, down 18,000 oil equivalent barrels per day versus the third quarter, and down 16,000 versus the fourth quarter of 2024. That said, for the full year, we achieved the highest annual production in over 30 years at 438,000 oil equivalent barrels per day, and in fact, our liquids production was the highest ever. I'll now cover each of the assets starting with Curl. Curl's quarterly production was 274,000 barrels per day gross, down 42,000 barrels per day versus the record quarterly production in the third quarter. As I mentioned in my opening comments, we experienced some extremely wet conditions in October that prevented us from mining per the optimized sequence in our plan. This temporarily impacted our ability to access some of the higher quality ore we were planning to mine in the quarter. However, as conditions improved, the team was able to return to normal operations. In December, Curl produced 298,000 barrels per day, achieving its second highest monthly production ever. I was pleased to see those production levels even as temperatures dropped for the last two weeks of the year. Given the performance in December, the fact that 2025 had more days over 300,000 barrels per day than any previous year, and the good start to 2026, I have high confidence in our annual guidance for the year and in the past to our target of 300 000 barrels per day returning to curl's unit costs curl's fourth quarter unit cash cost of 23.84 u.s included approximately four dollars and fifty cents u.s impact due to the inventory optimizations curl's 2025 full year unit cash cost of 19.50 cents was also impacted by the inventory optimization by about $1 U.S. Excluding these impacts, Curl's unit cash costs were well below $20 U.S. for the year and well on our path of achieving $18 U.S. per barrel. This year, we completed the K2 turnaround, advancing our plan to double our turnaround intervals to an industry-leading four years. In 2026, we will complete the program by undertaking comparable work on the other train at K1. A turnaround interval extension, along with other initiatives such as the productivity and reliability projects and secondary recovery investments, underpin our strategy to maximize value from our existing assets. Moving next to Coal Lake High Lakes. Coal Lake's quarterly production averaged 153,000 barrels per day, up 3,000 barrels per day versus the third quarter of 2025. First production from the Lemming SAG-D project was achieved in November. As we speak, the project is producing approximately 4,000 barrels per day, which gives us confidence in the ramp towards 9,000 barrels per day over the course of the year. Moving to Coal Lake unit cash costs, which were $16 U.S. during the fourth quarter and impacted by approximately $1 U.S. per barrel due to the inventory optimization. On a full-year basis, Coal Lake achieved a unit cash cost of $14.67 U.S., which was impacted about 25 cents due to inventory optimization the grand rapids sa sag d continuing continues to perform well lambing lemming sag d is ramping up and continuous efforts to improve our unit cost structure give us the confidence in reaching our unit cash cost target of 13 us per barrel in 20 27. activities in coal lake in 2026 include high value infill drilling and early development of our next SA SAGD project which will be at Mohican. This will be our second commercial solvent assisted SAGD operation and follows the successful startup of Grand Rapids in 2024. Mohican SA SAGD startup is anticipated in 2029 with a peak production of 30,000 barrels per day. And to round out our upstream I'll cover syncrude results. Imperial's share of syncrude production for the quarter averaged 87,000 barrels per day which was up 9,000 barrels per day versus the third quarter and up 6,000 barrels per day versus the fourth quarter of 2024 higher volumes reflect turnaround optimization and stronger mine performance this quarter the interconnect pipeline enabled Syncrude to produce approximately 7,000 additional barrels per day our share of Syncrude suite premium production. Now let's move on and talk about the downstream. In the fourth quarter we refined an average of 408,000 barrels per day equating to a utilization of 94 percent. Compared to the third quarter refinery throughput was down 17,000 barrels a day due to additional maintenance in our Eastern manufacturing hub in December. The maintenance was completed in December and will have no impact on our 2026 throughput. For the full year, our refineries achieved a throughput of 402,000 barrels per day, equating to a utilization of 93%. That throughput was up versus the 399,000 barrels per day achieved in 2024. With the successful completion of the CERNIA turnaround in the fourth quarter, the execution of all downstream turnarounds in 2025 occurred ahead of schedule and below budget. We also start at the Strathcona Renewable Diesel Facility mid-year. The facility is running well and has reduced our reliance on high-cost imported products and strengthened our competitive domestic supply. We continue to optimize production at the facility based on hydrogen availability. Looking ahead, we remain focused on delivery, industry-leading, operational performance, while enhancing logistics and processing flexibility to further improve our competitive position and the long-term results. Turning now to chemicals, earnings in the fourth quarter were $9 million, down $12 million from the fourth quarter of 2024, impacted by the inventory optimization. Excluding this impact, earnings were consistent with the fourth quarter of 2024. And although market conditions remain challenging, our integration with the Cerny Refinery continues to add value and provides resilience in low-price environments. In closing, 2025 was another strong year for Imperial. We generated approximately $4.8 billion in free cash flow and returned $4.6 billion to shareholders through dividends and buybacks. operationally we achieved record annual volumes in our upstream and made further progress on our unit cash costs at curl and cold lake we also successfully completed our planned turnarounds across all business lines as we look to 2026 our priorities remain clear and consistent continue to profitably grow volumes, further lower unit cash costs, and increase cash flow generation. We remain committed to optimizing production across our asset base, progressing towards our volume and cost targets, driving greater efficiency, and delivering unmatched industry-leading shareholder returns. We continue to prioritize a reliable and growing dividend and we will continue to return surplus cash in a timely manner. Our restructuring that was announced in September is progressing on plan and will advance our long-standing strategy of maximizing the value of our existing assets. In closing, let me say the combination of our financial position, strong operating results, and our strategic initiatives to further strengthen efficiency and effectiveness gives me confidence in the future of Imperial and our ability to further enhance our leading, our industry-leading position. As always, I want to thank our employees for their hard work and dedication throughout the year, and I'd like to thank all of you once again for your continued interest and support. And now we'll move to the Q&A session. I'll pass it back to Peter.

Thank you, John. As always, we'd appreciate it if you could limit yourself to one question plus a follow-up. And with that, operator, could you please open up the line for questions?

Thank you. If you would like to signal with questions, please press star 1 on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to ask questions, star one. And our first question will come from Dennis Fong with CIBC World Markets.

Hi, good morning. Thanks for taking my questions and appreciate the thorough ops update and the prepared commentary. My first question is focused on curl. So you highlighted, obviously, wet conditions driving some of the production impacts early in the quarter. Do you mind discussing some of the learnings or even implementation of different, we'll call it, maintenance or standard operating procedures that could help mitigate kind of such, we'll call it, downtime or inaccessibility to certain regions in the mine on a go-forward basis, especially as we think about, obviously, continued operations?

Sure. Thanks, Dennis. You know, maybe let me step back a little bit, and I think you're right. I mean, if you think about our winter operations and the steps we've made to improve performance in winter, and then wet conditions, it falls in the same category for us. So it is a good question. We look at all of these. Weather is our reality, and we need to operate efficiently and effectively through that. But let me step back a little bit to what happened in the fourth quarter. The root cause of that lower production, as we talked about, was these exceptionally wet conditions in the fourth quarter. And to give you a sense, we experienced more rain in a few days in October than we typically get all summer. So, you know, it was a significant event. And what happened there was that impacted the mobility of the equipment in the mine, and it delayed accessing high-quality ore that we had planned to get to. And unfortunately, it took a little time to recover from that, so part of it did creep into November. as well but as i said we've recovered strongly in december with our second highest uh production you know of the in the assets uh monthly production in the assets history uh and and and despite you know cold weather in the second half of december as well and i would say there's no carryover from this event but um we will be stepping back for sure and uh and looking at you know are there other things we can do around the the way we design our roads the drainage of our roads and those type of things to make sure that even in, you know, this was an extreme event, but even in those events that we can weather those better and continue to produce. But overall, I'd stay still. It was, you know, it was an extreme event. We will learn from it. I feel really good about our plans at CURL. Our guidance between 285 and 295 this year is, you know, we're very confident of that. Our path to 300,000 and the things we're doing around turnaround optimization, productivity, and reliability improvements and higher recovery. And, again, it was encouraging to see 2025 we had more days, again, above 300,000 barrels a day than we've experienced in the past. So we continue to see that metric improve, which is one we watch closely. So we'll definitely step back and learn from it, but we remain highly confident in Curl and the path forward.

Great. Really, really appreciate that thorough answer. My second question turns my attention, frankly, over to Cold Lake. You mentioned Mahecon as the next project for SA Sankey. Can you give us a little bit more of a background there? Are you targeting a similar reservoir to the Grand Rapids operation? How are you thinking about production ramp-up? And then what is the impact potentially to field SOR and operating costs once that project is fully ramped up?

Yeah, thanks, Dennis. I mean, so a couple of things. I think the, if you think about the Grand Rapids, S-A-Sag-D, that was a different reservoir. That was the Grand Rapids reservoir, which is shallower than the Clearwater, where we've been producing, you know, for almost 50 years from at Coal Lake. so the beauty of that project was it was opening up a new reservoir and it was testing a new technology and as we've talked about that's gone extremely well and you know it ramped up quicker than we anticipated it went to a higher plateau and that plateau was hanging in longer than anticipated so that one you know kind of we're we're seeing the benefit of the technology and we opened up a new reservoir um you know we talked about lemming sag d of course that goes back into the Clearwater, back into the original reservoir that we started to produce from and where we produce most of our production from today. Beauty of that is it's going right back to where we started the pilot at Coal Lake 50 years ago and capturing the remaining resource in that part of the field. Now, Mohican, it uses the same SAG-D that Grand Rapids uses, but it will be in the Clearwater reservoir that will produce that. We're very encouraged by, of course, what we've seen from Grand Rapids and how the technology is playing out. We know the Clearwater Reservoir extremely well, so we feel good about that. So we're highly confident when I think about, you know, Mohican SA-SAG-D. We're starting to invest in that now. We plan to start up in 2029 and produce 30,000 barrels a day. So I feel very good about that and glad to see that we're getting started on that project.

And our next question will come from Manav Gupta with UBS.

Good morning, guys, and congrats on that almost 21% dividend hike, better than expected. So my first question is more on how you're thinking about shareholder returns and does that leave you enough cash for a possible NCIB later in the year? And then a quick second follow-up, which I'll ask straight up, is refining came in much stronger than expected. Your refining earnings have been very resilient. And if you can talk a little bit about, you know, Imperial and the overall refining macro, and I'll turn it over. Thank you so much.

Thank you, Manav. Firstly, so if I think about the dividend, and thank you for the feedback on that. You know, first and foremost, when we thought about that dividend, you know, it reflects management's and the board's confidence in the company's strategies and plans to create value. So as you know, we're working to maximize value and to grow profitability and lower our unit costs and increase our cashflow. And we are highly confident we will do that. And that's what you see reflected in the, as you say, almost 21% dividend increase. And, you know, we're doing, of course, you know, a lot of things, you know, to focus on that. And that's going to be, and, you know, why could we do that? Well, I think it's, we've consistently increased the dividend, you know, over the last two years. It reflects our financial strength, our low break even of our business, and of course, the use of surplus cash to buy back shears. And as we mentioned earlier, that's reduced our outstanding shears by 34% since 2020. We did, as you can imagine, a full range of tests against low price scenarios, and we continue to feel very good about this level of dividend and the resilience that's in our business. So our capital allocation approach won't change. This is consistent with that. A reliable and growing dividend remains a priority. And, of course, we've been doing that for over 100 years, and this is a 32nd year of growth. And then we're going to continue to, our plans see us generating with these low break-evens, substantial free cash flow over a range of prices and scenarios, And we're going to continue to return that surplus cash flow in a timely manner, as we demonstrated, you know, this year, where we generated $4.8 billion of free cash flow and returned $4.6 billion to shareholders. So that approach and strategy continues.

You know, maybe I'll just add, you know, Manav, you know, we don't really see, I mean, the dividend increase is a few hundred million over the course of the year. and the dividend increase is not really based on current market conditions. As John explained, it's a longer-term outlook and confidence in our business. It's not really driven by what's happening in the short term. The NCIB, obviously, our surplus cash is a result of, you know, what happens in the short term, where prices, commodity prices are. So we still remain committed to the NCIB and expect to be able, you know, we renew that program at the end of June, and we expect to commence on that. You know, the level of that and the level of additional cash distribution beyond that will be depending on what commodity prices do. But we don't see the dividend in NCIB as competing. We see them as quite complementary.

And I'll jump over to your, thanks for that, Dan. I'll jump over to your downstream question. You know, we feel really good about that part of our business, and we saw it in the results in this order. You know, Overall, we continue to focus on further improving and maximizing the profitability of our downstream, leveraging our, as we've talked about before, our coast-to-coast network, our advantaged assets, our strong brand loyalty programs that enable us to move products into high-value markets. And, you know, and we're continuing to invest in our flexibility and our logistics to continue to improve on, you know, our position and capture high value markets. And when we look at the demand in the future, you know, we see strong liquid demand in Canada as we go forward. The mix may change a little bit. Biofuels demand is growing. Of course, we feel really well positioned for that, given our Strathconer Renewable Diesel Project and the co-processing of vegetable feedstocks at our refinery, so we feel good about that. We see a stable, you know, jet and distillate market moving forward, and we're well positioned for that. Gasoline, you know, that demand could moderate with EVs and things, but, you know, we've got plans to grow our gasoline market share in that regard. So, overall, we feel really well positioned with the assets we have and really well positioned, you know, as fuel demand, you know, kind of evolves over time. So, feeling good about that. I'll hand it over to maybe to Scott if, you know, just specifically on the quarter and your question around the performance in the quarter.

Yeah, thanks, John, and thanks, Manav, for the downstream question. Yeah, it's specifically just a couple of additional specific comments for the fourth quarter. We saw refining margins in general fluctuate throughout the quarter, but generally they were strong and they were especially strong in the month of November. And that's when we had our highest utilization month. So that really helped generate some returns for us. The other notable item for the fourth quarter was, you know, not just strong refining margins, but we noticed that the distillate refining margins were actually quite strong. And so we used, as John mentioned, our flexibility and our operational capability to tweak our refining output to maximize our distillate production. So that allowed us to take advantage of the especially high distillate margins that we experienced in the fourth quarter. So those combination of those two events really enabled a strong refining earnings for us in the fourth quarter.

Thank you.

And the next question will come from Menno Holshoff. with T.D. Cowan.

Good morning, everyone, and thanks for taking my question. Maybe I'll just start with one on optimization of materials and supplies inventory. Can you maybe elaborate on the scope of this optimization work and what practically changes in terms of procurement and inventory management looking forward?

Thanks, Mano. Yeah, thanks for that question. You know, as you know, we did record this charge around inventory optimization in the quarter. I'll tell you, we see the optimization that we're doing here provides, you know, a significant opportunity for us in how we manage our materials and supplies across the company, doing that in a consistent approach and better leveraging technology. So we, and this has all been informed by external benchmarking and a review of best practices, not just across the energy business, but beyond the energy business as well. So we took a very deep dive, and based on that benchmarking and best practices review, we studied our inventory utilization, the movement of our inventory, the age of what we have in inventory, the cost of maintaining each part versus the benefit of having it. and what technology solutions were out there for us to better manage our inventory. And we found an opportunity for significant efficiency, capture, and effectiveness to position ourselves to be industry leading. So these improvements, the improvements we made, they involve enhanced analysis, better optimization of materials that should be held in inventory, while still maintaining the critical supplies that we need. So, we're implementing this standardized approach across all of our sites that's going to improve visibility of what's in inventory for our operations and improve the utilization of inventory. And it's going to be a simpler, more efficient process to run. We'll have fewer storage requirements, fewer warehouse requirements, fewer material accounts, and that's enabled by technology and best practices because we have better improved visibility of the material, and it's going to reduce the overall complexity of the system without losing in any way the reliability and integrity of having that inventory available. So for me, this is kind of what we do. This is applying technology, best practices, looking outside of our industry to drive us to be industry leading and best in class.

Terrific. That's very helpful. And then maybe the second question, more so related to the outlook for Western Canadian heavy oil. There's clearly a lot of moving parts at the moment, including increased risk of Venezuelan supply and rising apportionment on the Enbridge main line, which is catching a lot of people by surprise. But what are you seeing on the ground in terms of shifting fundamentals for Canadian heavies since the Venezuelan news first broke, if anything at all? Thank you.

Yeah, we are not seeing any big changes, to be honest. You know, of course, we're staying very well informed around everything that's happening in Venezuela. We're watching that closely. But, you know, we're not seeing any significant. I mean, the differential did, you know, kind of widen a bit originally when there was this talk at the 50 million barrels coming to the Gulf Coast. seemed to be a little bit of overreaction. That kind of, you know, came back down. It's pretty marginal, if any, impact that we're seeing right now. You know, and then if we think longer term about this, obviously, I think the outlook around Venezuela does remain uncertain. There's a lot of things that need to happen before we probably see, you know, longer term production increases there, stability, investment conditions like the legal and commercial constructs in the country, infrastructure and supply chain improvements and things. But we are watching that. We'll continue to watch that closely. But our real focus is, when I think about Imperial, is again, our balanced integrated business model, low break-evens that keep us resilient across a range of macro environments. And of course, we're not standing still. We're continuing to improve our competitive position, growing profitable volumes, lowering unit costs, increasing cash flow. And that's That's what we focus on. That's the part we control, and that's where we're putting our position. As I look forward, I see Imperial being in a very strong competitive position, and I see a huge role, of course, for Canada when you think about global supply-demand balance as well, regardless of what happens with Venezuela over time.

Thanks, John. I'll turn it back.

Thank you. And the next question will come from Patrick O'Rourke with ATB Capital Markets.

Good morning, guys, and thanks for taking my question. Maybe just to go back to Curl here, and you talked about the high output in December, how that has sort of continued on into January here. I know, you know, weather from time to time, it impacted this quarter. It's impacted quarters in the past. I think Fort McMurray's had about a 50-degree swing in temperature this month. And then if you could sort of benchmark those 300,000-barrel-a-day high-output days, what's sort of the goal as a percentage of the days for 2026 or total nominal days you would be looking to hit this year?

Thanks, Patrick. I've got Cheryl here with me, and she's the expert on all things curl. I'm going to pass this one over to Cheryl.

Sure. So thank you for the question. And let me hit the first one, Patrick, around cold weather protocols. And we've talked to you about this before. And what I would start out saying is we're applying those learnings and we're seeing the benefits. And you heard John mention December. We're seeing the same thing with January. So the protocols are working as intended. If I sit back and I think about what allowed us to recover in fourth quarter and as we're heading into the first quarter, technology. and what we're leveraging is our or selectivity process we're making sure we're being very deliberate and thoughtful in terms of prioritizing our shovels and making sure we're getting to that that good or the other thing I'll highlight that we did in fourth quarter is we did obtain regulatory approval to use a secondary process a chemical for fines management so as we look forward we're going to be looking for the secondary and tertiary recovery so what gives me confidence as I look forward in the 300 days so first of all we've got a well-defined path. The second thing, and you've heard me mention this before, which is we're building on a strong foundation. And this goes back to being culture of continuous improvement as well as most responsible operators. So, continued focus on facility integrity, risk management, environmental stewardship. The second item, continued focus on productivity and reliability. So, specifically, what that might mean is enhanced mine planning and fleet optimization. The third thing is turnaround interval optimization, so not only short, even duration of each turnaround, but making sure we're advancing and getting to this one turnaround every four years schedule. The fourth thing I'll mention is recovery projects. And in particular, at the end of this year, we're going to bring on our float column cell projects. So that will allow us, again, from a secondary recovery standpoint, to get the fines management and improve our bitumen recovery. The other thing I'll tell you is, you know, we don't see 300,000 barrels a day as the end state. So we always challenge our organization to do better, and we do see opportunity for more than 300,000 barrels. We've got a roadmap. We have credibility, and we've built the history of curl to outperform. So what I would say is this is the continuation of our journey.

Okay, great.

And then just on the downstream, it looked at, at least on my numbers, like market capture was up a little bit. You talked about the flexibility of the kit. As we roll into 2026 here, maybe if diesel and distillate gets a little bit softer, just what you're seeing boots on the ground in terms of those local markets today, looking out into 2026.

Thanks, Patrick.

I will hand that one off over to Scott. Yeah, thanks, Patrick. Yeah, we have, you know, Even throughout the fourth quarter, we saw some fluctuation in the refining margin, so it's down a little bit from the peak that we saw in November, but we're still seeing positive margins out there and running our units full to capture that margin. We've shared in the past with our downstream business in particular, we feel like we have assets located throughout the country to be able to go after the demand, and especially demand where the margin presents itself in each of the markets across the country. And so that, combined with our logistics network that allow us to efficiently get the product to the marketplace, we feel like that's a resilient business for us. And so, you know, even when the margins tick down a little bit, we still feel like that's a profitable business that we will continue to generate positive returns. And then when the market, based on global supply and demand balances, kind of blows out a little bit, you know, we'll be there and we'll be able to capture that enhanced margin like we did in the fourth quarter of this year.

Okay.

Thank you very much.

And the next question comes from Neil Mehta with Goldman Sachs.

Good morning, John and team. You know, the first question I had is just around Syncrude. And it was a good quarter here from a production standpoint. Just your perspective on where we are on the journey at Syncrude. Any things that you and your partner are focused on there? And while we're on the topic of Syncrude, any thoughts on realizations in a pretty good distillate market right now?

Yeah, not a lot to say on Syncrude. I mean, we're pleased to see the performance improvement over the last couple of years at Syncrude. And, you know, and I feel that as a partner in that, we contribute to that. You know, we look at the learnings we have at Curl, and we contribute that to, you know, know, we kind of bring those learnings to bear at Syncrude. And I think the operator has been improving their performance. And, you know, of course, we've been involved in Syncrude from the beginning, the only owners that are in there today that have been. So we've learned from Syncrude over the years as well and been able to apply those things at Curl. So I'm pleased to see the performance improvement. And, you know, we're a big part of that and supporting that going forward. And maybe I'll ask Scott on the diesel question.

Yep, sure. Yeah, as we look at the distillates market, you know, the global supply-demand balance has really, you know, created supply-demand imbalances in certain locations. And so that's really what's pushed up a little bit more of the distillate margin, even versus the gasoline margins that we've seen over the last several months. And so, you know, as I mentioned before, we're uniquely advantaged to be able to, you know, tune our refinery to make sure we're putting the output matching the margins that are available in the marketplace and then leveraging our logistics to get there. The other factor that is starting to play into the Canadian marketplace is the onset of additional renewable diesel. And our unique position there by producing renewable diesel at our Strefkona refinery has enabled us to bring that locally produced product to market and blend into our diesel sales throughout the year with our technology to be able to blend that year round. And so we're seeing the benefit of that versus having to import additional renewable diesel from other markets. And so that's the other thing that's supporting our distillate plans and margin capture on the downstream.

That's helpful. And, John, I'd love your perspective on where you stand in terms of continuing to drive efficiency and reduce costs. That's something that Exxon talked about this morning. But I think since the last call, you announced an update of the sales to campus and relocation of some of the staff. And so just talk about organizationally some of the changes that you are making and how that fits into it in terms of driving some of the cost calls you have.

Well, that, yeah, that is a big part of it. But I would say everything we've been doing over the last number of years to reduce our cost structure, You know, we talk about the curl journey we're on and Coal Lake and so on. All of those things contribute to that as well. So it's not, we've been part of that, you know, moving our cost structure down. And you see that in our results. The restructuring piece that we announced in September, of course, that, you know, that really is consistent with our strategy to, you know, maximize value, use technology and leverage our relationship with ExxonMobil. And so, as we talked about at the time, you know, that with data availability, processing capabilities, technology in general growing, and, you know, we see that all around us, it's moving in leaps and bounds at an accelerating pace. So, it's that kind of, you know, that aspect of it. And then, in addition to that, we see these global capability centers growing both in terms of not just, you know, capacity, but capability, the type of work that those global Capability Centers were doing, we saw an opportunity to move through a transformation, and we announced the reduction of about 20% of our staff with a focus on our above field staff. And that, you know, so that's going to be a two-year process. And then we said when we get down to that smaller size, we'll move the majority of our folks to sites predominantly Strathcona and Edmonton. And we see that efficiency capture to be $150 million a year starting in 2028. That's the annual savings we would get from that, just from the efficiency side of things, which is, you know, we are capturing efficiencies and getting smaller, and then we're also outsourcing work to these global capability centers. The net effect of that is $150 million per year. But as we talked about, we also believe as we do that, we're going to be able to further accelerate the application of technology and leverage a more broader global fleet of learning that we can learn from, that's going to improve our effectiveness as well. So I would say it's, you know, we announced it in September. We're currently going through the staffing of the future organization. We're starting to outsource work to those, more work, because we've already been outsourcing work in the past, continuing to outsource work to those global centers. The restructuring is going to take place over a couple of years. We're going to manage that in a very rigorous, orderly fashion to migrate work and capture the plan efficiencies. And it's going as per plan. And so, it is going to contribute significantly to our, you know, again, our leading position and our foundation for growth going forward. Yeah. Thanks, Jeff.

And the next question will come from Doug Leggett with Wolf Research.

Hey, guys. I know a lot of stuff's been hit, so I want to try and come back to a couple of things to get some clarification. Obviously, a lot of focus on Carol today. Maybe you could just help us with, if you strip away weather, what do you think today is the sustainable production capacity, gross production capacity at Carol?

Thanks, Doug. And, you know, I mean, of course, you know, our guidance is for 2026 is where we're focused, the 285 to 295,000 barrels per day. But I'll pass off to Cheryl to, you know, kind of put a little more color to that.

Sure. And, you know, I'll go back to the 300 KBD is our target for this year, 285. Obviously, we're going to continue to focus on winterization and maybe a little bit more color on that which is really around maximizing the reliability of our existing kit and closing the gaps of targeted areas one of the areas I've mentioned before is we're continuing to de bottleneck our hydro transport line that's building capacity on the front end the other thing is I think about mining and specifically for 2026 at the end of this year we'll be moving into the East pit so we've got opportunity both from the front end we're de bottlenecking the facilities and of course working on water management and hailing throughout this process. So what I would say is we've got good line of sight and a well-defined path to get to 300 kVD. And so that'll be our target for this year. But like I said, at 285 and continuing to grow up 300 plus.

So to be clear, there's nothing terminal or it was very much just a one-off weather event in the fourth quarter. No reason for yourself to be reacting like this.

That's right. The wet weather in October is...

Yeah, no, we remain very confident. Doug, we remain very confident in the 285 to 295 target for this year, the past of 300. And as Cheryl said, you know, we see potential upside beyond that.

Yeah, we're just trying to understand why the market is being so short-sighted, I guess, is my issue. But thank you for the clarification. My follow-up, I'm afraid, Mr. Lyons, you're up. So 20% dividend bump, I think, when I've hit on it earlier. So I've asked you this question multiple times, multiple different ways. Are you prepared to lead in your balance sheet? Are you prepared to allow your dividend break even to move up? Well, based on today's decision, you don't – maybe I'm wrong on this, but you don't have a big step change in free cash flow capacity outside of what the commodity gives you. So can you help us reconcile which of those two is supporting the dividend growth? Is it the break-even creeping up, or is it the balance sheet a little bit, or is there something in the outlook that we don't currently have into – we've not currently taken into account?

Okay, thanks, Doug. Appreciate the recurring question. Sorry. You know, I would say, you know, when we look at the dividend, you know, we're not, you know, as I said a little bit earlier, we're not looking at the short-term environment or even the current strip. You know, we're looking at a long-term outlook, and, you know, our goal is to grow the dividend robustly but sustainably, so we obviously do stress tests and things. But what if that long-term outlook is, you know, the work we're doing to reduce unit OPEX, you know, the incremental volume growth we're pursuing at Curl and Cold Lake, so the growth capital, the secondary recovery that Cheryl talked about, and also the restructuring, which, you know, improving our cost structure as well as generating more revenue over time. We roll all those things into our outlook, and then, you know, we run various cases, and we see what we think we can handle sustainably. And that's how we get to the dividend. So, you know, we're committed to continue that process. And, you know, so, yeah, you're right. As you increase the dividend, if nothing else happens, the break even moves up. But if you're running down your unit costs, as we are at Curl and Cold Lake, you know, that kind of offsets that. But, you know, we don't have a specific breakeven target, right? So, you know, if we have to go above a certain dollar breakeven, we won't increase the dividend. That's not really, you know, that's not really – there's no set number of breakeven that we're trying to achieve. We're trying to grow the dividend sustainably, robustly, you know, over time. So, you know, I don't know if that's a satisfying answer. And, of course, the whole buyback is really about returning surplus cash as we generate it over time, which we'll continue to do.

Yeah, I think, Dan, it does indeed. I'll congratulate you on lulling the market into a false sense of sub-10% dividend growth, because I think this surprised a lot of people. And it seems that, you know, a low dividend growth per share does correlate extremely well with your share performance. One month of, you know, wet weather seems to have overlooked this very significant move you made today. So we'll continue to watch it. I'll continue to ask it. But a very impressive move, I guess, would be our conclusion. Thanks so much.

Thanks, Doug. And that does conclude the question and answer session. I'll now turn the conference back over to Peter Shaw, Vice President of Investor Relations, for closing remarks.

And so on behalf of the management team, I'd like to thank everyone for joining us this morning. If there are any further questions, please don't hesitate to reach out to the Investor Relations team. We'll be happy to answer your questions. With that, thank you very much and have a great day.

Thank you. That does conclude today's conference. We do thank you for your participation.

Have an excellent day.