Good day, and welcome to the Suncor Energy First Quarter 2024 Results Conference Call. I would now like to hand the conference over to your speaker, Mr. Troy Little, Vice President of Investor Relations. You may begin, sir.

Thank you, operator, and good morning. Welcome to Suncor Energy's first quarter earnings call. Please note that today's comments contain forward-looking information. Actual results may differ materially from the expected results because of various risk factors and assumptions that are detailed in our first quarter earnings release as well as in our current Annual Information Form, both of which are available on SEDAR+, EDGAR and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian Generally Accepted Accounting Principles. For a description of these financial measures, please see our first quarter earnings release. We will start with comments from Rich Kruger, President and Chief Executive Officer; followed by Kris Smith, Suncor's Chief Financial Officer. Also on the call are Peter Zebedee, Executive Vice President of Oil Sands; Dave Oldreive, Executive Vice President, Downstream; and Shelley Powell, Senior Vice President, Operational Improvement and Support Services. Following the formal remarks, we'll open up the call to questions. Now I'll hand it over to Rich to share his comments.

Good morning. First quarter, following a strong fourth quarter 2023, I would characterize our first quarter as even stronger. How so? I recognize I'm going to start sounding like a broken record here, but by focusing on the fundamentals of safety, reliability, profitability, coupled with the determination to brand commitments. Kris will highlight our results in more detail in a moment. So what I'd like to do is highlight some of the more notable achievements starting, of course, with the fundamentals, safety. No life-altering or life-threatening injuries, lost time incidents down 50% year-on-year, recordable incidents down 20% year-on-year, process safety events down greater than 50% year-on-year achieving first quartile U.S. fuel and petrochemical manufacturers performance. How so? This is really a tribute to our people, our processes, our priorities and site leadership. Second fundamental I'd like to continue with is reliability. I'll start with refining. Refining throughput was 455,000 barrels a day, up 88,000 barrels a day from a year ago or 24%. This is the highest first quarter in our company's history, driven by the best-ever first quarter utilization of 98% and led by Edmonton in excess of 100%, achieved by operational excellence, improved winterization and once again, the focus of our people. Product sales were 581,000 barrels a day, our highest quarter ever. This is a tribute to Dave Oldreive's sales and marketing team for aggressively moving barrels and capturing value. Upstream production reached 835,000 barrels a day, up 93,000 barrels a day or 13% for the quarter compared to a year ago, marking the highest quarter in our company's history. There are many notable achievements. Kris will detail a few shortly, but I'll continue. I want to highlight one in particular. Upgrader utilization combined at an impressive 102%, achieved in part via a very tangible competitive differentiator, our physical integration. This allows us the flexibility and optionality to maximize value. It is important to capitalize on this integration, and that's exactly what Peter Zebedee's entire Oil Sands team did throughout the first quarter, well done. Looking at production reliability year-to-date, everything is consistent with the first quarter's expected contribution to our full year guidance. In fact, I would say every major asset, upstream and downstream, delivered at or above our own internal expectations. The third fundamental I'll comment on is profitability. Kris will dig into AFFO, free funds, shareholder distributions, so I won't steal his thunder, but I would like to comment on one essential aspect of profitability, cost management. OSG in the first quarter all in, top to bottom, was $3.4 billion, for all practical purposes essentially flat with the first quarter of 2023. However, as I mentioned, we produced 93,000 barrels per day more in the upstream and refined 88,000 barrels per day more in the downstream. We did all of that at essentially no extra cost. In fact, all major assets, every single one upstream and downstream operated safely and efficiently at lower unit costs in the first quarter of 2024 than they did in the first quarter of 2023. I got to say I love free barrels. Bottom line, 2024 is off to a strong start with good momentum, and we intend to keep it going. You may have seen or may be aware that on May 21, we're going to provide an update via webcast on our overall story and our near-term outlook. Specifically, our management team will outline the next 2 to 3 years' expectations, financial and operating. Later in the year, we'll see at this point, but we anticipate a more comprehensive Investor Day with a longer-term outlook. So stay tuned. As I look at the second quarter, recognizing that it's only a couple of weeks away, I'll skip my usual detail on performance improvements and highlight only a couple of items. We've talked at length on earlier calls about mining fleet upgrades in the cost savings opportunity they provide. So I just wanted to comment on our conversion to autonomous haul trucks at the base plant. That continues as planned. Six months ago, we were talking about how we had 30, 31 trucks operating autonomously. Today, that number is 56 trucks. And at year-end, we're on plan for 91. Recall the impact is $1 million per truck per year in sustainable savings and an additional productivity gain. During the Q&A, I would urge someone to ask Peter Zebedee what he has seen in autonomous productivity. We've also commented about acquiring 55 new 400-ton trucks to replace less efficient third-party trucks. The first 16 of those are now in operation, and more will arrive at the base plant starting in the fourth quarter of this year continuing into the first quarter of '25. In total, these trucks will lower our overall corporate breakeven by approximately USD 1 per barrel. Turnarounds in the second quarter are significant, with about 75% of our 2024 turnaround activity scheduled in this quarter. Our priority here is to execute safely, cost-effectively, on schedule and position for a strong second half. At this point in time, we're a month into the second quarter. Turnarounds are going well. A month ago, we discussed implementing a new operational excellence management system. This system provided each site with a list of operational requirements or expectations. Today, we judged that our original system is too complex to meet our high performance expectations. Consequently, we're implementing a new revised operational excellence management system, consisting of 21 processes associated with how we work. We've developed this with subject matter experts, frontline employees, and leaders across the organization, with the objective of reducing performance variations and institutionalizing improvements. Our vision is to become consistently and reliably excellent. Implementation has started at each operating site and will continue throughout 2024 and much of the first half of 2025. I want to shout out to Shelley Powell and her leadership team for driving what I believe will be this game-changing work. With that, I'll turn it over to Kris, who will provide additional comments on financial and operating performance.

Great. Thanks, Rich, and good morning, everyone. While we saw synthetic crude prices weaken versus the prior quarter, it still remained a strong price and margin environment in the first quarter of the year. WTI averaged USD 77 a barrel in the quarter, and the light-heavy differential tightened slightly versus Q4, averaging USD 19 a barrel. However, we also saw the synthetic crude oil price weaken, averaging USD 7 a barrel lower than WTI in Q1 due to strong regional upgrading production and egress constraints across the basin. We've already seen suites strengthen as we move into the second quarter, recovering to a premium over WTI which we expect to continue going forward. On the refining side, cracking margins remained robust with some softening of diesel cracks, being offset by strengthening gasoline cracks. Our refining index was USD 35.95 a barrel, which is about $2.50 a barrel above Q4, helped by discounted synthetic crude oil pricing. Natural gas, a key input cost, averaged $2.20 a GJ in the quarter, and we continue to see low AECO pricing into the second quarter. With this business environment and the very strong operations that Rich just outlined, Suncor delivered solid financial results in the first quarter, generating $3.2 billion in adjusted funds from operations or $2.46 per share and adjusted operating earnings of $1.8 billion or $1.41 per share. We also returned nearly $1 billion to shareholders during the quarter, comprised of about $700 million in dividends and about $300 million in share repurchases. Our net debt, including leases, ended at $13.5 billion, down about $200 million versus the end of the prior quarter, which included a $200 million increase from changes in FX on our U.S. dollar-denominated debt. We continued our commitment to our current allocation framework by reducing debt and returning cash to shareholders. Turning to operational performance and building on Rich's comments, we continue to see very strong operations in the quarter, including several records. Our Upstream delivered total production of 835,000 barrels per day in the quarter, up 13% versus Q1 '23 and the highest in our history. This included record quarterly production in our Oil Sands segment with 240,000 barrels per day of bitumen and 545,000 barrels per day of synthetic crude oil and diesel. Fort Hills had a very strong quarter, producing 178,000 barrels per day, which was in line with our 3-year improvement plan. Per that plan, Q1 was expected to be the highest producing quarter of the year as there is planned maintenance in Q2. Overall, we remain very pleased with the progress of the Fort Hills team. Our Firebag asset also had record quarterly production of 229,000 barrels per day, including an all-time monthly record. Syncrude had a very strong upgrading quarter, achieving over 96% utilization while our base plant upgrader also achieved a record quarter with 107% utilization. Our internal bitumen transfers reached a new high at 58,000 barrels per day in Q1, demonstrating our increased level of integration within the region to maximize value. This was primarily driven by 42,000 barrels per day transferred from Fort Hills to the base plant upgrader. Our E&P segment produced 50,000 barrels a day, which included production from Terra Nova as it ramped up through the quarter. In April, it reached 20,000 barrels a day of net production. Regarding refining, utilization was impressive at 98% in the first quarter, which was 19% higher than Q1 '23, as we saw high availability across all our refineries. This supported record refined product sales of 581,000 barrels a day. Downstream margin capture remained strong in the quarter at 94% on a LIFO basis when compared to Suncor's refining index. Capital and cost remain on plan, and as Rich pointed out earlier, we essentially held our costs flat year-over-year while substantially increasing production. Rich mentioned turnarounds. In late March, we commenced the planned coker turnaround at Syncrude and turnarounds at Montreal and Sarnia refineries. These are going well and reflected in our guidance. Next week, we'll start the major turnaround at the base plant upgrader, which will also include prework for the U1 Coke drum replacement project scheduled for completion in '25. There are no changes to our production, capital or cost guidance for the year as the team remains focused on delivering on our commitments. With that, Rich, I'll hand it back to you.

Okay. A few final comments before we go to the Q&A. Tomorrow marks the anniversary of my first earnings call with Suncor. The #1 question we keep getting asked is what's different at Suncor today than a year ago. I would answer that with a lot. We've been undergoing a transformation or turnaround where we're integrating aspects of strategy, structure and culture. So what's different? We've got a new top-notch executive leadership team. We have a clear and unwavering focus on the fundamentals. Our strategies and priorities are clearer and simpler. We have a smaller, more focused above-field support organization. We have very tangible and accelerated operational performance improvement plans. We've revised how we evaluate and compensate accordingly, and we have a leadership commitment and accountability to deliver on commitments. So the bottom line, today, Suncor is increasingly focused on delivering value. We've made significant progress in a year. But make no mistake, we're not done. In addition to achieving continued financial and operating performance with a sense of urgency, 2024 will be about cultural and leadership development within the company. This includes exhibiting strong leadership qualities, including acting with integrity, business acumen, quality decision-making, and building a high-performance culture and work environment that enables all to contribute and be recognized and rewarded for it. My prediction is 2024 will be a very good year for Suncor and an exciting year to be a part of. With that, I'll turn it over to Troy to kick off our Q&A.

Thank you, Rich. I'll turn the call back to the operator to take some questions.

Our first question will come from Greg Pardy with RBC Capital Markets.

Rich, you had already touched on the question I wanted to ask, which is about what inning you believe you are in regarding the turnaround perspective. Additionally, considering the company over the next 3 to 5 years, what steps do you think are necessary to restore leadership in the country?

Greg, thanks. Appreciate your question. I think we've really hit our stride. When you start stacking together quarter after quarter, which I think we've done, there's a level of focus, energy, urgency, and results orientation that's emerging. What the market needs to see from us is consistent predictability; I use that phrase, consistently and boringly excellent. I will tell you, we are further ahead at my one-year anniversary than I would have expected us to be. That is a tribute to our people, all the way down, in fact, starting at the operational level. I commented early on about the level of physical integration. I get it. I'm a believer. I see the opportunity this provides us, and that is different. In terms of what's next, it's continuing to capitalize on that. And now, we need to move from playing checkers extremely well to playing chess effectively and thinking about longer-term issues to create and add shareholder value. As our base business runs better and better, me personally, and the executive leadership team, have more time to focus on those areas.

I'm going to change topics. Kris mentioned shareholder returns for the quarter. I have questions about what the shareholder return outlook looks like for Suncor, especially with the positive changes in the business. I think you might discuss this on the 21st, but could you give a preview of your thoughts?

Yes. Greg, thanks for that question. You saw us continue our share buybacks through the first quarter. They were probably a little lighter than we would have planned as we saw crude pricing react at the end of the quarter. You're seeing an increase in buybacks, and we've seen that in April. We've seen an increase that catches up from what we saw in the first quarter. Our increasing confidence in this business and its cash flow generation will support our discussion on capital allocation in the coming weeks on May 21st. So stay tuned for that.

One moment for our next question. And that will come from the line of Roger Read with Wells Fargo Securities.

You set it up, Rich. So let's hear about autonomous trucking in more detail.

Awesome. One, I'm a big believer in fewer, bigger autonomous-operated trucks. They're safer and more efficient. I've got this guy sitting to my left who might be withholding the productivity gains we're seeing. So let's put Peter on the spot and say, 'Peter, talk about autonomous productivity.'

If that wasn't a setup, I don't know what is. As Rich mentioned, we've got over 50 units in autonomous operation in our North Sea Bank mine right now. Next week, we're going live with autonomous operations at Millennium. The team has taken an engineering approach to deliver incremental productivity out of this fleet by focusing on driving value - an extra kilometer an hour in the haul cycle, a few extra tons on the truck. Over the last six months, the team has been able to improve the productivity of that fleet by about 20%, generating the equivalent of six free haul trucks. This productivity is significant. We're benchmarking our performance internally, and we have pride on the table to improve further in the coming months. Next week, we're going live at Millennium, and there's a lot more to come on the autonomous operations for Suncor.

Thanks for sharing that, Peter.

I'm glad I thought of asking that question on my own. Can I ask you a bit more of a macro question with the startup here of TMX? How do you see that affecting overall flows or netbacks for Suncor adjusted by the fact that your Downstream business tends to benefit a little bit from the crude that has been backed up there? How should we think about the impact of TMX?

Roger, thanks for the question. The Trans Mountain pipeline is great for Canada. We've been waiting for this for some time and we're excited to start shipping on the pipeline. It benefits our industry and Suncor, allowing Canadian crude to reach new markets, which is very important for us. It reduces discounts on Canadian crude, increasing upstream profitability. There will be a partial offset from increased feedstock costs into our refineries. We think the market will rebalance and soften the downstream impact. What makes Suncor unique is our marketing capabilities for our barrels. We're positioned to take advantage of new markets through our advantaged supply trading and optimization organization. Rich mentioned our optimized feedstock into the Upgraders and refineries. We've been doing this for quite some time. In the first quarter, we delivered diesel off the East Coast to Scandinavia, capturing unique quality differentials. Similarly, we've sent diesel to Latin America where they pay extra for the high cetane. We expect TMX crude to clear into markets in California and Asia. We're strengthening relationships on the West Coast and into Asia to leverage this opportunity. We have Aframax vessels operating in the Pacific that give us an advantage on shipping costs.

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

I wanted to ask you a little about Suncor's new performance. It looks like a new Suncor – not the lower end, but you should be targeting the midpoint or even the upper end of guidance. Are we thinking about it the right way, even considering all the turnarounds?

We aim to deliver on our commitments, and we view guidance as a commitment we've made. We met all our internal targets in the first quarter, which align with that guidance. While we're not issuing anything new at this time, we're off to a very good start, and I'm leaning towards that higher end of the range.

On the refining side, gross margins and operating costs provide a solid $38 of EBITDA margin, placing you on top of North American refiners in terms of EBITDA margin per barrel. Help us understand the integration that allows you to deliver these record high EBITDA margins.

The fundamentals begin with safety, operational integrity, and reliability. Keeping our refining facilities operating at full capacity is essential. We had 99% refining utilization last year and 98% in the first quarter. The internal collaboration from our sales and marketing team improves the market for our refined products. The integrated approach across our business allows us to capitalize on our performance and maintain a strong emphasis on delivering value.

One moment for our next question, and that will come from the line of Dennis Fong with CIBC.

Shifting to the Upstream, could you talk about initiatives that helped achieve record production at Firebag and what further could be done to optimize production?

We've been consumed by the capital allocation towards mining in the last decade. As we assess and evaluate our assets, it's about optimizing what makes the most money. The operational teams at Firebag are consistently pushing themselves to fill the facility's capacity by employing innovative and cost-effective solutions. This includes adjustments to pipelines and operating procedures that keep production flowing without excessive costs. Exciting things are happening around enhancing our existing asset base and looking at future technological advancements.

The fundamentals are driven by the asset team. They are able to improve production to historically high levels by optimizing operating variables in real-time and focusing on cost-effective modifications that drive incremental production. We expect to unlock an additional 5,000 barrels per day through relatively simple projects completed by the asset team, showing ownership and initiative in performance improvement.

This demonstrates the creativity and capability of our workforce. When you provide clarity and consistency from the top and empower site leadership, you can achieve remarkable results. Our enthusiasm shows our commitment, and we believe this momentum will carry forward.

I appreciate that clarity. My follow-up question pertains to your Q1 report that highlighted 80% yield for Oil Sands Base Upgrader throughput and 85% for Syncrude. How might that evolve, and what initiatives could further interconnect various facilities?

We're aiming to provide investors visibility into how we drive value. The yield is related to maximizing our physical integration, especially in terms of feedstock transfer between our facilities. We're pushing to create greater efficiencies and better utilization of our upgrader systems, looking for continuous optimization along the entire value chain.

We're seeing about 6% yield uplift from paraffinic froth treated bitumen into our upgrades. The team's focus on integration is driving this improvement, and we are also exploring further opportunities for enhanced integration across our asset portfolio.

By maximizing our existing resources and optimizing our logistics, we're capturing full value that's otherwise lost if we relied on external transactions. This is a competitive advantage unique to Suncor, and we see exceptional potential moving forward.

One moment for our next question, and that will come from the line of Menno Hulshof with TD Cowen.

Regarding the Canadian diesel market, I heard about a potential global diesel recession. What is your take on it? How does the Canadian diesel market differ, and how does Suncor stand out?

We are indeed seeing some softening in the diesel market. If you look at year-on-year cracks, it's a more challenging environment this first quarter. Despite a headwind, we managed to maintain higher profitability through reliable operations and strategic market position. Our ability to optimize our logistics to move diesel to the most profitable markets is key in capturing value. Suncor's trading capabilities enable us to engage directly with customers, removing intermediaries and maximizing value. Our logistics assets permit exports to profitable markets. In the past quarter, we delivered diesel to unique markets like Scandinavia and captured quality differentials that allow us to maximize margins. Our trading platform has been established effectively over time, allowing us to leverage our market position.

One moment for our next question, that will come from the line of John Royall with JPMorgan.

Can you discuss your refining reliability? You've had a strong stretch of three quarters in utilization. What has led to this improvement? Can we expect more stability moving forward?

Kris, go ahead.

We had a challenging first half of '23, but we've made fundamental changes in our downstream that are beginning to move the needle. We assigned lines of accountability, set clear expectations, and focused on the fundamentals. The improvements are driven by increased reliability and operational accountability, which should lead to continued positive trends in the second half.

John, it’s been an aggregate of changes leading to improvements in reliability, moving toward a high-performance culture across the organization. It's a collective effort and focus on achieving our operational goals.

One moment for our next question, and that will come from the line of Dennis Fong with CIBC.

I have a question on working capital. You had a headwind of about $380 million in Q1. Can you discuss this further? Should we expect to recover some of this as the year progresses?

You're right, John, Q1 was driven primarily by higher sales volume pricing. We typically see a build in working capital during Q1, particularly in preparation for turnarounds. Expect to see those inventories wind down as we support these activities in Q2.

One moment for our next question, and that will come from the line of Patrick O'Rourke with ATB Capital Markets.

You've done some asset trades here. Can you comment on your views on the overall asset portfolio and potential M&A opportunities on both sides of the ledger?

We constantly evaluate our asset portfolio based on their delivery of value in various market conditions. Our focus is on integrating our Upstream and Downstream assets, retaining those that align with our long-term strategy for maximizing shareholder value. We always assess potential opportunities, but nothing currently stands out on our radar.

On the return of capital policy, considering your structural improvements, how do you intend to allocate that incrementally towards dividends versus share buybacks?

We'll elaborate on this on May 21st, but our current capital allocation framework is resilient, ensuring a reliable dividend and focusing on optimizing capital investments. Our approach will reflect our confidence in future cash flow generation, and we aim to ensure our policies align with maximizing shareholder value.

One moment for our next question, and that will come from the line of Menno Hulshof with TD Cowen.

Could you discuss the replacement of OEMS? How much is this going to cost, and are there any risks in migrating to the new system? How quickly do you expect the project to pay off?

When implementing change like this, thoughtful management is essential to avoid dropping any processes. We feel good about the progress we've made, and the cost is primarily in terms of time for collaboration and development. There isn't a significant cost associated with it presently. The new system requirements are designed to drive clarity and efficiency in operations and are well aligned with best practices across the industry.

We're excited about this initiative. It focuses on standardizing procedures across our sites, driving repeatable and predictable outcomes. The aim is to uplift all operations through this shared framework.

We performed assessments based on industry best practices to define a customized solution that will drive long-term value. This initiative, developed collaboratively with front-line workers and leaders, is set to be game-changing for Suncor.

I'm showing no further questions in the queue at this time. I would like to turn the call back over to Mr. Troy Little for any closing remarks.

Thank you, everyone, for joining our call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team.

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