Good day, and thank you for being here. Welcome to the Suncor Energy First Quarter 2022 Results Conference Call. I will now turn the call over to your host today, Mr. Trevor Bell, Vice President of Investor Relations. Please proceed.

Thank you, operator, and good morning. Welcome to Suncor's first quarter earnings call. With me this morning are Mark Little, President and Chief Executive Officer; and Alister Cowan, Chief Financial Officer. Please note that today's comments contain forward-looking information. The actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our first quarter earnings release, as well as our current annual information form. Both of those are available on SEDAR, EDGAR and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian GAAP. For a description of these financial measures, please see our first quarter earnings release. Following our formal remarks, we'll open up the call to questions. Now I'll hand it over to Mark for his opening remarks.

Great. Well, thanks, Trevor, and good morning, and thank you for joining us. I concluded my remarks on our fourth quarter call by saying that Suncor is well positioned to deliver higher production and substantial free funds flow in 2022, with a clearly defined capital allocation framework that accelerates shareholder returns and debt reduction. I also reiterated my commitment to strengthen safety, reliability, and operational excellence to improve Suncor's performance in a meaningful and sustainable way. While we still have work to do, I'm pleased to report that we're making progress and that all parts of Suncor are shifting into high gear. Today's record financial results are due to our operating performance and strengthening market conditions. Before we go into the results, I would like to walk through the unique advantages of Suncor's physically integrated model in the current macro environment, which underpins our confidence in continuing to grow shareholder returns. In a time of global energy scarcity, our physically integrated model is in an enviable position. In the past, the integrated model gave Suncor and its shareholders downside protection. Today, it gives us upside opportunity. Crude oil and refined product markets gained strength in Q1, which accelerated in late March and early April, on the back of a global energy shortage. Cracking margins are responding to low inventory levels, refinery rationalizations, and significant crude feedstock shortages throughout the system. Record diesel cracks are providing an additional pricing uplift to our sweet synthetic crude oil due to its significantly higher distillate cut relative to other supply options. And while crude prices and cracking margins are certainly strong compared to recent years, there are even more competitive advantages for us on both ends of our integrated model. Within the upstream, we have the highest SCO conversion ratio amongst peers and expect SCO production this year to be the highest ever in the company's history. In the downstream, Suncor's refinery production is heavily weighted towards distillate production, which is well above industry average. We are seeing significant value capture on both ends of our integrated model under current market conditions. Putting this together, approximately 60% of our enterprise-wide production is weighted to SCO and distillate, both of which are trading at significant premiums and with a strong macro demand outlook for both. A combination of operational improvements and strong market conditions over the past year have driven free funds flow that is much stronger than the scenario presented at our 2021 Investor Day. This has enabled us to significantly increase shareholder returns and the pace of debt repayment. Specifically, in the quarter, we bought nearly 1.5% of the outstanding shares for $830 million and reduced net debt by $730 million. Suncor's Board of Directors approved a quarterly dividend of $0.47 per share, which represents an increase of 12% over the prior quarter dividend and is the highest quarterly dividend per share in the company's history. Also, the Board approved an increase of the company's NCIB program up to a maximum of 10% of Suncor's public float. With respect to capital allocation, we continue to accelerate progress against our 2021 Investor Day plan. Our plan is to use half of our free funds flow to buy back shares and have to repay debt until our net debt reaches $12 billion. Once at $12 billion, our plan is to direct 75% of free funds flow to buying back shares and 25% to debt reduction. For clarity, once net debt is at a $9 billion floor, we'll direct all free funds flow to shareholder returns. With current strip pricing, we expect to be in a position to achieve our $12 billion net debt target during the second half of this year and move to this increased share buyback level. It is important to note that our net debt includes our capital lease obligations of $2.8 billion. You'll find these details and further supporting illustrations as part of Slide 6 within the first quarter Investor Relations deck. In addition to these actions, we're making changes to our asset portfolio to sharpen our focus and realize significant value uplift. On our last call, I mentioned initiating a sales process for Norway E&P and part of Rosebank. Since then, we have also begun the process to divest our wind assets. Based on interest from potential purchasers, we've decided to market our entire U.K. North Sea portfolio. These potential divestments offer further opportunities to accelerate progress towards our capital allocation goals. Let's go through the first quarter financial results. With $4.1 billion of adjusted funds from operations for the first quarter, Suncor posted the highest quarterly cash flow in its history, beating the prior record set in Q4 of 2021 by over 30% on an absolute and per share basis. We completed the first quarter with 766,000 barrels per day of production. This represents strong rates through February and March after a slow start in January that we discussed on our last call. Our Q1 production is a solid start towards achieving our 2022 production guidance. Turning to operations, Oil Sands delivered 417,000 barrels per day of production, and Syncrude delivered production of 182,000 barrels per day. As we continue to physically integrate our assets, it's worth looking at a couple of key performance indicators. The combined SCO production was 515,000 barrels per day at a 96% upgrader utilization and was supported by In-Situ production of 249,000 barrels per day or 98% utilization. Despite challenges in January, these utilization rates reflect the progress we're making on reliability. On the last call, I mentioned the optimization of Syncrude maintenance in support of stronger full year volumes. While SCO volumes are comparable to the last quarter, the mine performance and bitumen production have never been better. Q1 was the highest quarterly bitumen production in Syncrude's 44-year history. In line with our plan, we built sour synthetic inventory for hydrotreating in the coming months and increased the use of the interconnecting pipeline infrastructure. This optionality is just one example of the flexibility within our assets and provides further support to our full year production guidance range. With Fort Hills fully ramped up, the asset delivered 88,000 barrels per day of production. February and March production averaged approximately 90% of nameplate capacity. Our E&P offshore assets delivered 80,000 barrels per day of high-margin production as we continue to follow our disciplined free funds flow approach to these assets. Moving to the downstream, our LIFO margin is a 20% improvement compared to last quarter, while our Canadian utilization came in ahead of the industry average. As many are aware, the majority of the Canadian population had significant lockdown restrictions until the end of February. As a result, Canada's gasoline demand in the quarter lagged versus 2019, while diesel is ahead. As I look at March and April gasoline demand, it continues to improve towards higher and normalized levels. For the downstream, first quarter results are solid given this weak demand. However, with continued demand growth and strong market cracks, I expect improved results from our downstream for the remainder of the year. This is a strong business with an exceptional track record as it's outpaced its peers on refining EBITDA per barrel on a 5-year basis of 50%, improving to 60% on a 3-year basis, highlighting the benefits of its resilience, especially through volatility. Before leaving operations, I wanted to highlight the recent additions of Peter Zebedee as Executive Vice President of Mining and Upgrading; and Alister Gibbons as our VP of Fort Hills. These additions add depth to our mining team. Most of Peter's career has been spent in oil sands, mining, and tailings. Alistair brings decades of global mining and mine development experience. Combined, these two leaders bring over 50 years of direct mining and operational expertise. We know we've had challenges in our mines, and we've taken concrete actions since the fall of last year to strengthen our mining capability. Peter and Alistair are two excellent additions, bringing more senior mining expertise into our senior leadership team. Another significant milestone is our implementation of SAP. In April, we went live with our company-wide business process transformation, which moves Suncor to a common platform across the entire organization, driving productivity and cash flow improvements. Further to our commitments on safety, reliability, and operational excellence, Suncor will be hosting an oil sands operational presentation on the morning of July 13. This will be a combined in-person and webcast event with a focus on the execution of our plans. During this session, we will review the changes that we've made and are making to ensure safe and reliable operations. The presentation will feature my operational executive leaders with a particular focus on our mining operations. I'll now pass it on to Alister to go through our financial results.

Thanks, Mark, and good morning, everyone. As Mark noted, our adjusted funds from operations per share of $2.86 is a 30% improvement compared to our previous quarterly record, which we just set in Q4 of last year and is more than double last year's results. We continue the disciplined execution of our capital allocation framework. We returned $600 million in dividends and $830 million in share buybacks, which equates to an 11% annualized cash return yield using the Q1 average share price. We acquired and canceled nearly 1.5% of our shares in the quarter at an average price of approximately CAD 38 per share. We increased our share buyback momentum in March. As of today, we have bought back over 2% of our outstanding shares. We also reduced our net debt by nearly $730 million during the quarter at roughly $15 billion of net debt. I’ll note that this includes $2.8 billion of capital leases. It's also worth noting that this net debt reduction took place despite a significant $1 billion final tax payment for 2021. This was the main use of cash and working capital during the quarter, as we had highlighted in previous earnings calls. Before I go through our financial results, I note that we have updated our segmented financial reporting to be on a pretax basis in line with our peers for comparability. As such, the adjusted funds from operations figures, which follow, will be on a pretax basis, while tax is captured at a consolidated level. So let's walk through our results. Oil Sands generated Q1 adjusted funds from operations of $3.4 billion, with an average realization of CAD 115 per barrel. As I look at realizations across Oil Sands, our bitumen realizations at CAD 103 per barrel were significantly above the benchmark due to our strategic marketing and logistics advantage. Expanding our marketing capability and driving higher realizations is a key element of our $2 billion free funds flow improvement program. E&P delivered $725 million of adjusted funds from operations in the quarter, reflecting an average price realization of CAD 123 per barrel. Moving to our downstream results. We generated $1.6 billion of adjusted funds from operations with 94% utilization. These are the second highest quarterly downstream financial results in the company's history and were achieved in a seasonally weaker quarter. Although FIFO tailwinds helped the results, I'm pleased to see strong LIFO margins that increased 20% when compared to Q4. This result is in line with strengthening cracking margins, partially offset by weaker Canadian gasoline demand in the quarter, which, as Mark highlighted, continues to strengthen monthly. As Mark discussed in detail, our downstream operations enjoy an unparalleled advantage in the current macro environment. With the current strip, we view our downstream profitability to be well above 2018 and 2019, which were record years. These operating results with progress on our $2 billion free funds flow program, are foundational to our confidence in delivering our capital allocation goals, including a record dividend of $0.47 per share, a 10% share buyback for this year, and allocating an increasing proportion of free funds flow to shareholder returns. For example, as Mark mentioned, our company-wide business process transformation based on SAP is going well. This program is the largest component of our $2 billion plan with an anticipated annual contribution of $275 million and $80 million to be realized in 2022. As a reminder, the net debt levels that Mark discussed were highlighted last year at our Investor Day as 2025 and 2030 targets and do include capital leases. At current strip, we fully expect to execute the full 10% share buyback program and achieve our $12 billion net debt level by later this year. To clarify, our forecast reflects proceeds from North Sea E&P and wind dispositions to be received in the first half of 2023. Lastly, we have updated the corporate guidance to reflect the current business environment, and these changes are a result of higher energy prices and the impact on cash cost per barrel, primarily due to natural gas, tax, and royalty guidance for 2022. While higher energy prices impacted these elements, they translate to significantly higher revenues and funds from operations. Before I pass it back to Mark, I'd like to emphasize that our 60% of corporate production weighted to SCO and distillate positions us very well in the current macro environment. Therefore, our shareholders should expect a cash return profile to be even more robust for the remainder of the year, and shareholder returns and debt reduction to be more aggressive than outlined at our Investor Day scenario a year ago. Now back to you, Mark, for some closing remarks.

Great. Well, thanks, Alister. Last call, I mentioned that Suncor's Board of Directors have endorsed a detailed operational excellence plan. I outlined the progress in my opening remarks today, and our Board and management have great confidence in our plan and the progress we're making. The Board and management team looks forward to engaging in constructive discussions with Elliott as we do with all our major shareholders to better understand their perspective. We will continue to do so with the clear goal of enhancing the long-term success of Suncor and maximizing long-term value for our shareholders. And with that, Trevor, I'll turn it back to you.

Thank you, Mark and Alister. I'll turn the call back to the operator so we can take some questions.

Our first question comes from Greg Pardy at RBC Capital Markets.

Mark, I was curious about the changes you've made in your executive leadership and how you have had time to reflect on safety and reliability. Can you share any insights on how your approach to enhancing reliability has evolved?

Yes. Thanks, Greg. I appreciate the question. I think I've talked about this maybe not in as much detail, but we've spent a lot of time getting input and assessing our safety performance, including input from third-party experts, some of which are mining brokers, some of which are global safety experts. We've obtained a lot of good feedback associated with that. As you know, we've been reorganizing the leadership team. Now I have 4 operators at the leadership table. We've doubled that and made some big changes, splitting the upstream in half as well. We've brought in significantly capable and new leaders to the table, including Bruno Francoeur here and Shelley Powell. Bruno is running the central organization. Shelly is running the In-Situ and E&P assets. I just mentioned Peter Zebedee joining the team, who is a deep mining expert. I also talked about Alister coming into Fort Hills, and we've just had Arnel Santos, Global Refining and Chemical Processing leader, join us to run the refining business. So there's been a lot of change at the leadership table. We've changed our processes within the organization. The primary focus is not just on preventing incidents, which, of course, we have an enormous focus on, but also ensuring if something does go wrong, that we've mitigated the potential consequences and put just as much focus on that as we do on preventing incidents. Finally, we're leveraging technology, making sure that we're using whatever technologies are available. On the last call, I talked about collision avoidance and fatigue management. There are other technologies that we're implementing as well. So we're getting input from third-party experts, reorganizing, bringing in new leadership, changing the processes of the organization, and leveraging technology.

Okay. The second question is about the sale of the U.K. assets. I would like to know more about what that package entails, which I believe is around 30,000 barrels a day. Is the main reason for this move to accelerate debt reduction? While you seem to have adequate funds this year, is there also a consideration of strategic alignment?

Some of this relates to the strategic fit we see. We believe we could narrow our focus. Every part of the business requires significant investment to progress. It is essential to remain disciplined with our capital deployment. Rosebank is approaching and will need considerable investments. The total size of the package is approximately 25,000 barrels a day.

Our next question comes from the line of Phil Gresh from JPMorgan.

First question, obviously, Elliott has their proposal out there with many different factors around it. I was particularly curious about your view on retail. You talked about the benefits of the integrated model, and I was just wondering how strategic you think it is to maintain control of retail assets.

Yes. Thanks, Phil. Great question. We have the best downstream business in North America, and our rack forward business in retail is a key part of that. It's also intertwined with our wholesale and industrial business. The rack forward business is generating the highest cash flow in our downstream business on a per barrel basis of any business in North America. The retail business is a very strong performer and can go head-to-head with other retail businesses. We think it's key to maximizing the value across the integrated business chain. It's one of the reasons that we've been able to deliver twice the profitability versus our next closest peer, particularly through COVID, as I highlighted in my prepared remarks. Therefore, we think we have the best downstream business in North America, and we think it's important that it stay together.

Okay. Got it. Very clear. My second question with respect to the cost factors. I was looking back at the 2021 Analyst Day where you talked about reducing the operating costs by about $1.7 billion over a multiyear period. I recognize the underlying cost environment is very different, so it's entirely outside of your control. But if I were to disaggregate the controllable versus uncontrollable factors, how would you suggest we think about where you are in that $1.7 billion trajectory of savings you're looking to get? What is still remaining? I think the slides would imply maybe $500 million will be left between '22 and '25, but just any kind of update there would be interesting.

I'll let Alister answer that.

Thanks, Phil, for the question. If I look at that, we're still on track for the $1.7 billion of cost reduction. We are actually ramping up. If you recall, last year comps were really around margin and revenue enhancement, with very little on the cost side. As we move through 2022, you're going to see more costs coming out of the business, and that will ramp up in '23 and '24, which is really in line with our plan here. We're on track. The key element is that we went live on our business process new systems at the beginning of April. You'll start to see some of those costs come out later this year. These are significant across the organization, as I talked about in my remarks. So we’re on track. You mentioned inflation. Yes, we're looking at that. We are looking at how we could mitigate that and offset as much as we can. We'll continue to attack that as we go through the remainder of the year, both on the operating cost and the capital side.

Our next question comes from the line of Neil Mehta from Goldman Sachs.

Mark, I'd love to kick off on the downstream side of the business. The refining fundamentals are very strong right now. You raised your New York Harbor indicator to $38 a barrel. I'm curious how you're capturing that in the second quarter. Does the backwardation enable you to still earn a strong margin against what you see on the screen? It appears that you have a decent amount of turnaround in Q2 in the refining side of the business. Any thoughts on your ability operationally to maximize profitability in this environment? I want to tack on there, we saw some headlines around Denver this morning about downtime. Is that plant still up and running?

Yes. Great. Thanks, Neil. Let me deal with Denver upfront. We are posting essentially everything on our public network there, just to ensure community awareness and those sorts of things. What you saw posted is kind of normal protocol, but we do not expect this to be material in any way, and we continue to make our product in Denver. On the downstream, the New York Harbor is particularly strong. It's kind of interesting. However, even as you get into the Chicago market, we're not seeing the same strength in Chicago as we are seeing in New York Harbor. That said, this is the strongest downstream market we've seen in a very long time. We see significant capture in the distillate markets. The fact that we have a very strong wholesale business and such, we've seen continued strength in the distillate side of our business with direct connection to the consumer. Therefore, we think that we have strong capture, and it’s one of the reasons I commented that we're expecting the downstream to continue to strengthen in its performance as we go forward. The market looks fantastic, and that is our focus. We've built a bunch of inventory to manage our turnarounds. Sarnia is now done. Edmonton has been in turnaround for a short period, and so has Montreal. We've built the inventory to handle this. Q2 is always, and Q3, strong quarters in the downstream, which is what we're focused on.

And then for my follow-up, your comments around the mining side of the business. As you said, you brought in new leadership to take a look at those assets. One of the questions we get from investors is whether the challenges that you're having in mining are process-driven or asset-driven. In other words, could you elaborate on whether base Syncrude, some of which are older in nature, have fundamental problems we should be worried about? Then discuss Fort Hills, which is a newer asset, whether it is a process problem, which would be more fixable, or whether there's an asset problem, which would be more problematic?

Well, I would separate this into two pieces associated. One is on the safety performance. Safety performance, as we've talked in previous calls, is in the contractor community. It's almost exclusively with young contractors with mobile equipment, which is a huge focus area. It's one of the reasons that we focused on collision avoidance as a technology that can help and also ensuring that the folks coming in fully understand the risks and are managing them accordingly. In the mining side, we think this is partly ore body-related, particularly at Fort Hills, where we've talked about unexpectedly high ore grade in the south phase of the mine. We talked about opening up the mine phase, thus some of this is just the evolution of the mine as we go. Fort Hills, the physical plant has operated extremely well. We've highlighted before that we've run this above our 100% design. I think we've put the cards on the table associated with all of this. However, I would separate safety and performance. Clearly, getting global mining expertise to the table will help manage this and ensure that we're delivering safe and reliable operations.

Our next question comes from the line of Dennis Fong from CIBC Capital.

The first one may follow a bit along the lines of what Phil was just discussing in terms of incremental free cash flow margin. By our estimates, we think there could be another $400 million to $500 million increase with 2023 free funds flow through digital initiatives, mine optimization, AHS, and increased synergies. How should we be thinking about those improvements regarding breakeven cost structure? How does that potentially influence the way you consider the existing dividend level in addition to share buybacks?

Okay. Thanks, Dennis. Yes. As we've outlined and I talked a little earlier, we'll continue to accelerate the realization of that $2 billion. In 2023, there are further several hundred million dollars of benefits to come in from that. This essentially lowers the breakeven cost structure and allows for more room to increase the dividend. By lowering costs, we allow ourselves the opportunity to continue to increase dividends in line with what we laid out at Investor Day. Also, the more stock we're buying back gives us more flexibility to increase the dividend for the remaining shareholders. You're absolutely correct there.

Maybe I can just add to that, Alister. It's interesting. We've discussed various components of our $2 billion cash flow improvement plan. Some of which is cost-oriented, some of which is margin. Interestingly, in the first quarter, we achieved a milestone because the interconnecting pipeline between Syncrude and Base Plant reached payout. It’s been in operation for a short time, and we're learning many ways to leverage it and extract additional cash. So that's just one example of how we’re able to drive better and better results.

Great. Really appreciate that incremental color. Shifting gears to my second question, upstream, more specifically, non-upgraded bitumen realizations for the quarter were considerably stronger quarter-over-quarter relative to the benchmark. Do you have any insights on what changes may have been implemented or underlying advantages Suncor has on the supply trading side, which may have driven some value capture, particularly for the upstream barrels? Obviously, there's been some strength in the downstream side.

Yes. Some of this is due to our efficient barrel in Fort Hills, which is actually coming out of the mine. Being partially de-asphalted, it needs less diluent to blend, allowing us to sell it all the way into the U.S. Gulf Coast due to our advantaged logistics. This allows us to drive much higher netbacks. You can see that it captures a higher netback associated with that. Some of this is just market access, moving the volumes and the total production out of these assets versus where we were in Q4. With Fort Hills being a larger part of our production with higher netbacks, you see this in the results.

Our next question comes from the line of Roger Read from Wells Fargo.

I would like to perhaps follow up a little bit on the maintenance and how that ties into a few of the questions already asked, particularly on the upstream side of the business. Looking ahead to the second quarter, is any part of this maintenance aimed at overall process improvements? Or is it just the basic maintenance required? I'm curious how the new management team may already be affecting that.

Yes. You see a little bit of that, Roger, at Firebag. They’re doing some work associated with it. The majority of this at this stage of the game is kind of annualized or time-based maintenance to ensure that the facility has integrity and can operate going forward. At Firebag, this is the first time we've had the two big plants down at the same time. This is really about reliable, safe operations going forward.

Okay. Shifting gears slightly, regarding the goals for $12 billion of debt, the longer-term target of $9 billion, and the process of returning via share repurchase or potentially special dividends, I'm trying to understand what remains on the table if you reach the $9 billion level. Do we assume the proceeds from the divestments in the U.K. and Norway would be used towards debt reduction?

Thanks, Roger. If you look at our allocation, we expect to get to $12 billion by the end of this year, at the same time as we bought back 10% of the stock. At that point, we switch over to 75% for buyback and 25% for debt reduction. Once we reach $9 billion, we’ve discussed, we will devote all free funds flow to 100% shareholder returns. We aren’t removing anything off the table; it’s a big buyback. It could include variable dividends. It could include special dividends. I'd like to keep my options open on that. What we are committed to is returning 100% of the free funds flow at that point back to shareholders. Regarding the asset sales, which we expect to receive proceeds next year, they go into the free funds flow, so they would be allocated at that time, with 75% towards buyback and 25% for debt reduction.

Our next question comes from the line of Menno Hulshof from TD Securities.

Most of my questions were answered already, but I'll just toss one in on market access. Trans Mountain expansion just got pushed to Q4 of next year for mechanical completion. This has me considering how tight things could get for the industry from a basin egress perspective between now and TMX? What are you currently seeing in terms of basin storage, apportionment, or anything else that comes to mind?

Thanks, Menno. That's a big question. It's interesting to see in the market for the first time ever, significant inventory draws through Q4 and Q1 within Western Canada. Now that everybody has reported, it's a little clearer as to why that happened. We are now at relatively low inventory levels coming into the maintenance season. I expect that we'll trade sideways and have a fair amount of inventory available in Western Canada through until the fall. Could we build inventory in the fourth and first quarter of next year? That is a possibility. Surprisingly, we're still moving about 100,000 barrels a day of oil by rail despite the mainline being unapportioned. There's lots of space right now to move oil, and we would expect that the mainline could stay unapportioned until the fall. Talking about late '23, the question is if the TMPL actually gets pushed to Q2 of '24; we could experience another winter and be much tighter. However, we expect late '23 to be a realistic expectation for TMPL, and the team appears to be executing well and making good progress. Our call is that the dates they have out there align with our expectations, and we anticipate it will happen at that time. Thanks for the question.

That’s really helpful, Mark. I’ll just follow up with a question on asset sales. Since you’re testing the market on a number of fronts at the moment: Norway, the U.K., wind, and solar, what does the M&A market feel like right now? Are you seeing movement in the bid-ask spread? How confident are you that you can get these deals across the line?

It's a great question. The oil and natural gas side is complicated because volatility in commodity price is immense. Consequently, whether we're able to conclude these sales for fair value, time will tell. In wind and solar, that's a different scenario. We've had a massive response to selling our wind and solar business, with current investment inquiries that are slowing down the process. I’m very confident that this will proceed and we will achieve good value. However, the oil and gas side is more complicated, yet we did our deal on Golden Eagle last year, and we're quite happy with that. So we will wait and see how it plays out. Time will tell.

Our next question comes from the line of Manav Gupta from Credit Suisse.

I had a quick question. We're seeing a very interesting dynamic here. Syncrude sweet is trading almost $7 over WTI, while WCS is trading 15% below, and bitumen is about 20%. I know you have the flexibility in the system to make one product a little more than the other. Can you remind us how much more Syncrude sweet you can actually make at the expense of bitumen? What’s the flexibility in the system?

Great question, Manav. Syncrude, the physical asset is only capable of producing one product, and that's sweet synthetic crude. As you pointed out, it's trading at a significant premium. This reinforces my earlier point about both sides of our integrated model creating tremendous wins for us moving forward since both the upstream and downstream business have great opportunities during these market conditions. This positions us very well for the second and third quarter.

In the past, you have indicated that on a normalized base on refining, you are confident that refining and marketing can generate cash from operations of around $4 billion. In light of the current environment, I assume the $4 billion is conservative considering your refining capture and your system. While it's not an easy question, do you see on track for cash from operations to potentially reach $5 billion or $6 billion this year? Can you elaborate?

We'll let you come up with those numbers. However, I would state that when we talk about the $4 billion, we consider that to be kind of a normal market for our downstream business with demand back. This is not a normal market. We're experiencing tremendous strength. Therefore, we expect this year’s performance to exceed what we saw in 2018 and 2019.

Our last question comes from the line of Doug Leggate from Bank of America.

Mark, I realize you're doing the event on July 13. Given the strong performance in the quarter, could you provide any early insights into what your new management team is seeing or doing, or initiatives identified to address concerns about operations in the past, specifically reliability and safety?

Yes. Thanks, Doug. Much of this involves lessons learned from third-party experts. We've received both boots-on-the-ground feedback in the mine and assessed our performance against global super majors. We've learned about driving standardization and having a core of excellence within the company. We’ve enhanced that significantly with the reorganization. Bringing in new leaders has been a major focus. Peter has been on the ground for just over a month, almost like a cold eyes expert, examining operations. Some things have impressed him, while others he feels need change. This has led to a heightened focus on not just preventing incidents but also ensuring we have the capacity to ensure safety. At the core of the organization, we're emphasizing standardized risk assessments across all of our facilities, rather than each facility managing their own. This enables us to share talent and best practices across the organization. These are a few highlights in the process. We think it's important for our major investors to meet these people and hear from them directly about the work they're doing, which is why we prepared for the event on July 13. We are excited about the leadership they bring to our organization.

I appreciate the answer. I look forward to that event. My follow-up is related to the allocation of free cash flow. Clearly, we are all resetting our views regarding mid-cycle refining. Your organic self-help $2 billion target seems to be gathering traction. Have you had any dialogue regarding the allocation of free cash flow toward capital returns to shareholders, including share buybacks and others? It seems your cash return capacity could be substantially above what you outlined last year.

Yes, Doug. I'll take that. We haven’t had specific dialogue, but we talk to shareholders frequently. We are consistent with our Investor Day framework laid out last year. It's fair to say that stronger business conditions have accelerated our cash returns. We're achieving our goal of $12 billion in net debt by the end of this year while buying back much more stock than previously expected. Notably, last year, we assumed a long-term WTI price of $55, which is significantly lower than today. Therefore, we're allocating far more free cash flow to shareholder returns, as outlined today.

We have no further questions at this time. Now I'll turn the call back over to Trevor Bell, Vice President of Investor Relations, for any closing remarks.

Great. Well, thank you, operator, and thanks, everyone, for joining us today. If there are any follow-up questions, please reach out to myself and the IR team. We would be happy to help. That concludes today's call. Thank you.

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