Earnings Call Transcript - SU Q4 2025

Operator, Operator

Good day, and thank you for being here. Welcome to the Suncor Energy Fourth Quarter 2025 Financial Results Call. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker, Suncor Energy's Senior Vice President of External Experience, Mr. Adam Albeldawi. Please go ahead.

Adam Albeldawi, Senior Vice President of External Experience

Thank you, operator, and good morning. Welcome to Suncor Energy's Fourth Quarter Earnings Call. Please note that today's comments contain forward-looking information. Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our fourth 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 fourth quarter earnings release. We will start with comments from Rich Kruger, President and Chief Executive Officer; followed by Troy Little, Suncor's Chief Financial Officer. Also on the call are Peter Zebedee Executive Vice President, 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 the call up to questions. Now I'll hand it over to Rich to share his comments.

Richard Kruger, President and Chief Executive Officer

Thanks, Adam. Our fourth quarter of 2025 was about finishing a very good year on a very strong note, and that is exactly what we did. I'll review operational performance. Troy will cover financial. Let me start with safety. 2025 was the safest year in company history, our third consecutive safest ever across the board with fewer incidents and lower severity, both personnel and process safety. Relative to 2022, injuries and incidents are down 70% in three years. This is a credit to our people, our priorities, and our processes. Now I recognize we put out an operational update earlier in the year, so I'll be relatively brief in summarizing some operational performance. Upstream production was 909,000 barrels a day in the fourth quarter, our best quarter of any quarter ever, 34,000 barrels a day higher than our previous best, which was the fourth quarter of '24. Full year at 860 kbd, again, best ever by 32,000 barrels a day versus '24, our previous best and 20,000 barrels a day above the high end of our original guidance. Over the last two years, we've increased production by 114,000 barrels a day with the same asset base, no costly acquisitions, no major capital-intensive projects, just growth from within. Upgrader utilization was an outstanding 106% for the quarter and 99% for the year, again, best ever. Refining throughput was 504 kbd in the fourth quarter, our best quarter of any quarter again ever, 12,000 barrels a day higher than our previous best, which was literally the prior quarter. Full year at 480 was the best ever, by 15,000 barrels a day versus 2024, our previous best and 30,000 barrels a day above the high end of our original guidance. Over the last two years, we've increased throughput by 60,000 barrels a day with the same asset base, again, no costly acquisitions or major capital-intensive projects, just growth from within. Refining utilization was 108% for the quarter and 103% for the full year, both best ever. All four refineries operated at 100% or higher for the second consecutive quarter. Product sales were 640,000 barrels a day in the quarter, our best fourth quarter ever, 27,000 barrels a day higher than our previous best, which was last year. Full year at 623 kbd, also best ever, by 23,000 barrels a day versus '24, our previous high and 38,000 barrels a day above the high end of our original guidance. Over the last two years, product sales have increased by 70,000 barrels a day, supported by the same assets. After never having achieved 600,000 barrels a day in any quarter ever, we've now exceeded 600,000 barrels a day in six consecutive quarters. Capital and cost, OS&G. Full year $13.2 billion within 1.5% of 2024, despite nearly 4% higher upstream production, more than 3% higher refining throughput, and nearly 4% higher refined product sales, higher absolute volumes, lower unit costs. Capital for the full year was at $5.66 billion, down $510 million versus '24 and $540 million below original guidance. Yet we executed our business plan as designed. We simply delivered it at a lower cost. How? Through rigorous value testing, challenging design bases, quality job planning, disciplined cost stewardship, and superior execution once in the field. To institutionalize, we now perform detailed readiness reviews before we spend money and comprehensive post-execution reappraisals after we spend money. Simply put, we are increasingly better stewards of our shareholders' capital. Final reflections on 2025. Best ever in most all regards, safety, operational integrity, reliability, etc., with volumes in every category upstream, downstream, quarterly, and full year being the best ever, breaking records largely set a year ago for more than two years. Peter's upstream team, Dave's downstream team, and Shelley's central support team have not only been breaking records; they have been shattering records, all above the high end of guidance for two years in a row. How? Through crystal clear priorities, establishing ambitious daily, weekly, and monthly performance targets, embracing industry best practices, promoting collaboration and teamwork, and rewarding our teams when they deliver with performance-based incentives. We continue to systematically raise the bar, delivering higher, more reliable, more ratable operational results and consequently higher, more reliable, more ratable cash flow. Now I'll turn the clock back two years to Suncor's Investor Day in the spring of 2024. We outlined a series of commitments for a three-year period from 2024 through 2026, including upstream production growth, reduction in WTI breakeven, increased annual free funds flow, reduction in annual capital spend, and a net debt target with 100% of excess funds going to buybacks. After February '25, we detailed progress after the first year of the plan. Recall, we achieved nearly two full years of progress in one year. At the time, I hinted at the possibility of perhaps achieving a three-year plan in two years. However, behind the scenes, I challenged our team to do exactly that. Now, two years into an ambitious three-year plan, I am very pleased to report we indeed achieved three years of performance improvement commitments in two years. Three in two. 114,000 barrels a day of production growth in two years versus a target of 108,000 barrels a day in three. Greater than $10 a barrel reduction in breakeven in two years versus a target of $10 a barrel in three. Greater than $3.3 billion increase in annual free funds flow in two years versus a target of $3.3 billion in three years. Capital reduced to $5.7 billion in two years versus a target reduction of three years. Net debt of $8 billion was achieved in the third quarter of 2024, nine months early, and that stands at $6.3 billion today, our lowest in more than a decade. Bottom line, we met or exceeded every single target a full year or more early. In life, trust and credibility are earned by delivering on commitments, and today's Suncor delivers. So what does all this mean? We are bigger, better, higher performing, more reliable, more ratable, financially stronger, and more resilient, better equipped to compete and win. We were previously a high-cost producer; now we are a low-cost producer. Our balance sheet is rock solid with net debt nearly half of what it was three years ago, in fact, the lowest level since 2014, with tremendous flexibility and optionality, like an industrial machine increasingly generating cash with less relative dependence on oil prices. Proof year-on-year, WTI was down 15%. Our AFFO was down 8% and our free funds flow down 6%. In 2025, share buybacks of more than $3 billion were $250 million per month throughout the year, increasing to $275 million in December. We were $250 million a month in January of '25 with WTI at $75 a barrel, and we were $275 million in December with WTI at $58 a barrel. We previously announced our plan to continue at this 10% higher level in 2026. And buybacks were independent of oil price in 2025 despite the low oil price in 2026. Over the past three years, we've repurchased 163 million shares, more than 12% of our float at an average price of $50 a share. Along with dividends, buybacks are a fundamental tenet of our shareholder value proposition. So now what's next? 2026 and beyond. That's the exciting part. We are far from done yet. We know that you don't make the Hall of Fame with a few good seasons or, in Bill Belichick's case, by deflating footballs before a championship game. It takes sustained excellence, high performance, exceptional and consistent delivery of results, so we will detail a new value improvement plan on March 31 in Toronto, two horizons short term, the next three years, longer term in the next 15 years. The longer-term horizon will focus on bitumen supply and development options. We know it needs to be bold and ambitious, clear and compelling to keep your interest and support. So stay tuned, I wouldn’t miss it. I can't wait to hear what we have to say. With that, I'll turn it over to Troy.

Troy Little, Chief Financial Officer

Thanks, Rich. The strong performance for the quarter and the full year has been well discussed, and you can find the detailed financials in our quarterly disclosure, so I won't go over that again. Instead, as we move from one year to the next, I want to highlight our financial resilience and how it benefits long-term investors. To start with our balance sheet, as Rich noted, our net debt ended the year at a record low of $6.3 billion, significantly below 1x debt to cash flow at $50 per barrel WTI and even lower current commodity pricing. Looking deeper into that number, during the quarter, we renewed our credit facilities with a group of Canadian, U.S., and international banks for 3 to 4 years, giving us $5.2 billion in available liquidity, not including our cash reserves. Additionally, in November, we took the chance to refinance CAD 1 billion in debt with two note tranches of 2 and 5 years, achieving the lowest spreads in the Canadian energy industry for over 15 years. In uncertain near-term commodity price conditions, we believe investors seek companies that clearly show balance sheet resilience. I want to thank our banks and bondholders for their confidence in our business. As you may have noticed, our year-over-year share buybacks and dividend per share increased by 4% and 5%, respectively, while average crude prices dropped by $11 per barrel during the same period. This capacity to provide stable, predictable returns to shareholders is supported by a WTI breakeven in the low 40s, a uniquely integrated asset portfolio, the flexible nature of our capital spending plans, and the continuous improvement culture ingrained in every operation and among our 15,000-plus employees through our recently implemented operational excellence management system. At Suncor, our future is not dictated by commodity cycles but by our performance throughout those cycles. A clear example of this is the comparison of our financial results from the first and fourth quarters of 2025, where Q4 AFFO of $3.2 billion was 6% higher than Q1, even though average oil prices fell from $71 to $59 per barrel. Lastly, Rich previously mentioned our commitment to stewarding shareholders' capital, and I’d like to elaborate on that, especially regarding shareholder returns. Many companies talk about returning surplus cash to shareholders through share buybacks. At Suncor, we do not view it that way. We do not pay you what’s left over; we prioritize your payments. We assess our cash flow, pay our dividends, fund our buybacks, and only then evaluate our spending on other projects. On that note, I’m pleased to mention that we have continued share repurchases at a pace of $275 million per month into January and February, starting in December 2025, reflecting a 10% increase over the average monthly buyback in 2025. Now, I will turn the call back to Adam for questions.

Adam Albeldawi, Senior Vice President of External Experience

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

Operator, Operator

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

Greg Pardy, Analyst

Incredible rundown, incredible year. Rich, the shift in the company's culture since your arrival and the reconstitution of the team and so forth, there's obviously been a huge driving force in underlying the performance. When it comes to successorship in the past, it almost looked as though a lot of those changes have been preordained for years in the future. How does that change now under your watch?

Richard Kruger, President and Chief Executive Officer

I believe that when we look at leadership development and succession planning, it's essential to recognize different types of leadership, including technical, operational, and fundamental business leadership. Successful companies maintain a steady stream of candidates for leadership development. Over two years ago, we initiated a new leadership development framework, which is now operational. At Suncor, the emphasis is placed on what you know rather than who you know, prioritizing functional excellence and expertise over broad-based experience. While both are important, it's crucial to have a deep knowledge of your business. We typically aim for a 3:1 candidate ratio for higher-level positions in our succession planning, as life can present unexpected changes. In summary, succession planning and leadership development are top priorities for us and have been from the moment I joined. It was one of the key commitments I made to the Board.

Greg Pardy, Analyst

Okay. And I'll shift gears on you a little bit. Just the mining operations performed very well in the fourth quarter. You had very mixed conditions. I'm just wondering, have there been changes that you've implemented sort of year-over-year to drive that performance?

Richard Kruger, President and Chief Executive Officer

Yes. I'll make a comment or two, and then I'll ask Peter to expand on that. The unique thing about mining, of course, is we have to operate in a wide range of weather conditions. When you think of mining, there's really, it's more than this, but two fundamental areas that affect your performance during weather events: the condition of the mine itself and the condition of haul roads. Haul roads are to mining like tracks are to a rail company; you have to design, operate, and maintain them exceptionally because they're kind of the tracks or the arteries of your ability to sustain. So we put a very high priority on that. And so although there were a lot of conditions in the fourth quarter, including wet conditions and the cold, our fourth quarter was our best quarter ever. As you would expect, many of the months in that quarter were our best months ever. But Peter, why don't you comment further on what we've done, particularly around the autonomous haul system and the ability to operate in all weather conditions.

Peter Zebedee, Executive Vice President, Oil Sands

Happy to do that. And so we worked really closely, Greg, with our supplier, Komatsu in this case, a base plan to implement some technology on the truck. We call it mud mode but essentially, it reduces slippage and stoppage of the autonomous trucks in soft conditions. That was really successful. We also learned a lot during the implementation of that. In fact, we're working on a mud mode 2.0, if you will, to implement here by the spring of this year. So we're excited about the next iteration of that technology. But in reality, it's a combination of multiple improvement activities across our mining operations, both in our autonomous operations, which are now fully deployed at base plant with up to 140 haul trucks running autonomously and in our staffed operations where we're continuing to work on the fundamentals and improvement activities such as increasing load factor on our trucks, reducing fueling time for pieces of equipment, optimizing our shift changes. Just across the Suncor mining portfolio, last year, we moved 1.4 billion tons of material, a 12% increase year-over-year in total material movement at essentially the same cost base. We are just continuing to drive that efficiency year-over-year. We always talk to our teams about how little things add up to a lot in the mining business. That's what the teams are focused on, these little opportunities adding up to a lot over the 1.4 billion tons to drive value.

Richard Kruger, President and Chief Executive Officer

Yes. I'll just make one last comment, and then we'll continue. You mentioned the word culture or cultural changes, Greg. One of the big things, and it's hard to see from the outside, is our shamelessly embracing industry best practices wherever they exist in mining, whether that's hard rock mining in Canada or outside of Canada, oil sands mining. Increasingly, our leaders, our teams observe, listen, learn, and apply. That is looking from the outside in on how we can get better. We have embraced and modified historic practices across the board when we see someone who does something better than us, that is a very cultural aspect of today's Suncor that I believe is quite different from how we were not too many years ago.

Operator, Operator

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

Dennis Fong, Analyst

First off, congrats on obviously another very strong quarter. My first question here, I wanted to follow a little bit along the lines of what Greg was addressing in the second question. But I wanted to maybe remind the call back to Q1 '25 where you, Rich, highlighted a lot of field-driven optimization. Can you provide maybe a bit of an update on the backlog of these field-driven optimization opportunities that you see, frankly, across upstream and the downstream? And obviously, how that has really improved the cost structure despite headwinds in things like mine plan or some of the mining KPIs?

Richard Kruger, President and Chief Executive Officer

One of the things that start with, Dennis, is it's a bit less of a backlog of field-driven optimizations because what we do now when we see that opportunity, we team tackle it. We get on with it. And what we see is, again, it ties a little bit to that cultural aspect, is that we continue to replenish our ideas and opportunities. It has been a huge part of why our refining network is now consistently at or above 100% utilization because we have been optimizing those assets through various means and fundamentally increasing the denominator. Dave, do you have an example or two you could share with Dennis?

Dave Oldreive, Executive Vice President, Downstream

Sure. In Montreal, we've experienced significant increases in our throughput. Two years ago, our plant was processing about 120,000 barrels a day, but the team knew they could achieve more if they challenged constraints. We adopted a new philosophy focusing on value and volume in our downstream operations. We run our refineries at full capacity and encourage our sales teams to maximize sales accordingly. With this in mind, Montreal addressed some key areas, particularly through small, cumulative improvements made by field operators who identified challenges and shared ideas. By replacing two control valves, one pump, and a small motor, we made a $100,000 investment that resulted in an additional 20,000 barrels a day at the refinery. This translates to a $100 million annual improvement for that $100,000 investment. We have numerous similar opportunities for improvement across the board, and this serves as a strong example of our approach.

Richard Kruger, President and Chief Executive Officer

And it starts with leadership, being interested, boots on the ground, in the field, listening to people who do the work and understand it better than anyone. And then when they see that opportunity, supporting it, promoting it, and making it happen. When you start doing that, you engage your workforce, and they come forward with more and more ideas. So you've heard us say multiple times, we're not done yet. It's not necessarily because we have this long list of things to do, but we are embedding and ingraining a culture of continual improvement and driving. In any facility, you will always have a limiter or a bottleneck. If you systematically identify what that is and attack it, then something else becomes the bottleneck. So I think on this topical area, we will never be done.

Dennis Fong, Analyst

That's obviously a lot to frankly look forward to. My second question and maybe carrying along the lines of kind of continuous improvement, finding where all the limits happen to be. I believe it was in the last conference call you highlighted single train capacity at Fort Hills to be about 110,000 barrels a day. How have you looked at the after performance of the facility? Have you been able to identify opportunities to further and consistently run at that high level and maybe even further optimize beyond the, we'll call it, 220,000 capacity of the two trains, especially as we go forward to opening up mining availability?

Richard Kruger, President and Chief Executive Officer

One quick comment, and then Peter will expand on it. As we look at this opportunity for continued growth from within, the areas where we see the biggest opportunity set are Fort Hills and Firebag with the identified opportunities where we're confident we can continue to increase their overall production levels. Peter, why don't you comment explicitly on Fort Hills and your two Ferraris?

Peter Zebedee, Executive Vice President, Oil Sands

Yes, we have been, as we mentioned in the last call, really testing what the stream day production capacity of the Fort Hills asset is. We are pleased to report rates over 220,000 barrels a day from both trains. We are looking to ensure that we can deliver that reliably day in, day out, and that will come down to ensuring we've got the right material movements from the mine in front of us to deliver the production volumes into the plant and do that sustainably while maintaining a healthy mine inventory. All this is dependent on opening up our North pit, which is the last and final pit at Fort Hills in the right manner and sequencing the material into the plant in a sustainable way, along with enhancements to the front end of the plant, where we look to kind of metal up and protect against some of that erosion that comes with higher material throughput that we're running. I know the team is very focused on doing this, and we've seen some success. The calendar day rates have come up through the fourth quarter, and we look forward to more of that here as we move along.

Richard Kruger, President and Chief Executive Officer

Dennis, I'm a lot like you. I don't remember all the numbers or get involved in a lot of the details on that stuff. But for example, why do you guys smile? One of the things we've had in Fort Hills is a nameplate at 194,000 barrels a day and had a target of 175,000 from a production level, kind of a 90% level. Our belief is with that bigger denominator that 220,000 or something, a production level in the order of 200,000 barrels a day should be the more near-term ambition. I want to save a few things for Investor Day, but I think I've just established what the minimum there might be for four barrels.

Operator, Operator

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

Menno Hulshof, Analyst

I'll start with a question on buyback guys. $275 million per month. You mentioned that the $250 million per month in 2025 was fairly oil price agnostic and that you've repurchased $275 million in January and February and that buybacks are quite senior within the capital stack. But presumably, there are conditions where you would reconsider your $275 million guide or maybe not. Any thoughts there would be helpful.

Richard Kruger, President and Chief Executive Officer

I'll make an opening comment, and then obviously, we'll turn it to Troy on this. A real key enabler in our ability to do this and make this commitment has been to reduce our overall net debt materially over a relatively short period of time and this really dramatic reduction in our breakeven. What we’ve said is we wanted to buy back shares at a rate at least consistent with dividend growth so that our overall dividend burden doesn't grow and increase our breakeven and we found we've achieved all of those. But Troy, you want to talk more explicitly about the buyback? Menno, my sense is you might be suggesting what if we were in a lower oil price world, what might that mean? But Troy, do you want to comment further?

Troy Little, Chief Financial Officer

Yes, sure. I would say to answer that question, I would look at the makeup of our business because I think when you do, you will see something unique and how we're going about this. Our level of integration and I don't just mean between the upstream and the downstream, I mean within the upstream itself, allows us to capture margin opportunities over the short term that others can't. It also drives greater utilization of the assets, both under normal conditions and also when anyone asks that experiences planned downtime. Both of these allow us to maximize and make more predictable and stable our profitability. I would also point to this attitude that I think we've conveyed about paying our shareholders first. So ultimately, they'll, rather than count on my own words, much as you pointed out, Menno, look at our 2025 track record and just watch what we're going to do in 2026.

Menno Hulshof, Analyst

Terrific. Maybe I'll just follow up with a follow-up question to Greg's on Q4 production, which was clearly very strong. Do you think production would have been even higher in the absence of wet weather in October and extremely cold December? Or was there no weather impact at all, given the mitigation work that's been undertaken?

Richard Kruger, President and Chief Executive Officer

We run an outdoor business. We mine. We mine come hell or high water, wet, dry, cold, hot, and we got to design and operate for that and maintain our assets. When it rains, we put on raincoats. When it's cold, we put on mittens. But no, we delivered throughout the entire quarter.

Operator, Operator

One moment for our next question, and that will come from the line of Neil Mehta with Goldman Sachs.

Neil Mehta, Analyst

I guess, Rich, just wanted your perspective on the refining market, particularly in Canada. You ran well, but you also captured very well in the margin premium relative to the U.S. has been sustained. For those of us who probably have less visibility into the Canadian refining market in particular, just how do you think about the sustainability of the Canadian refining premium relative to the U.S.?

Richard Kruger, President and Chief Executive Officer

Neil, if you look back and you can look back over quite a long time, 15 years or so, if you were going to choose to be a refiner anywhere in the world and profitability was at the top of your list, I think you had to pick Canada. When you say, well, why is that? We have product pricing based on import parity, we have locally advantaged crude prices. We've got a lot of structural things that contribute to an advantage, but then what you've seen here for this company now for 2.5, 3 years is an advantaged structural setting with a high-quality asset base, but increasingly run and operated better and better, more opportunistic for the market. I think that's part of the commentary that Troy had a little bit, the integrated nature, how we manage and maximize the value of molecules as prices fluctuate. The majority of those fundamental advantages we will retain here. Dave, do you have anything else, particularly around margin capture or whatever to add?

Dave Oldreive, Executive Vice President, Downstream

Yes, Rich, what I'd add to that, and I think you characterized it well. I mentioned earlier, we have our signal of value and volume. We run our refineries full. We have a signal to sell oil. And then over time, we improve our yields and our sales channel mix. Over the last year, we had record crude throughput, as you know, but we also had record gasoline production, record diesel production, and record jet fuel production. We are translating those throughputs into valuable products. We've also increased our percentage branded channel mix as well by growing our retail mostly and a little bit on our wholesale side of our business. Selling through our most profitable tiers is probably the biggest thing we have been doing—making sure the yields are strong with the additional throughput and selling through the optimal channels to keep our margin capture.

Richard Kruger, President and Chief Executive Officer

One other thing I'd add to it, Dave. I think what your teams have done in the collaboration between the operations, the supply and trading, and the marketers—that’s three functional areas of expertise. How they work together—such as increasing jet fuel production in the East, optimizing diesel in the West—is stellar. Every molecule and every dollar matters. Last time I checked, your teams aren't dropping too many on the ground.

Operator, Operator

One moment for our next question, and that will come from the line of Doug Leggate with Wolfe Research.

Douglas George Blyth Leggate, Analyst

Rich, I know you don't want to get too far ahead of March 31. But I wonder if I could ask you to maybe put some gating items around your spending levels beyond 2026. Should we expect the $5.6 billion, $5.8 billion to be like a cap? Or how do you think about it in terms of the proportion of cash that goes back to shareholders? Some of your peers talk about a percentage of cash flow; some talk about a percentage of free cash flow. You've obviously talked about 100% going back to shareholders because of where your debt is. But that's free cash flow, which is discretionary around your level of spending. So what's the capping item on CapEx?

Richard Kruger, President and Chief Executive Officer

Yes. Doug, I think it's a really relevant question. As we look at this, our view is that competing and winning in today's oil and gas world involves a whole bunch of components. Obviously, your size and scale, the quality and longevity of your resource base, and so on, but in terms of capital, we are increasingly talking about not just return on capital but return of capital. Troy's introductory comments were aimed at amplifying what we believe is important to the majority of our shareholders and what we strive to provide. I had kind of hit on this at some investor meetings and broadly on calls; we have been constructing a longer-term plan where we can have our cake and eat it too, where we can develop incremental resources over time and continue to return capital to shareholders while doing that. We won't have to stop the presses for a multiple-year period while our capital expenditures blow out. Key in doing this is having the optionality within the resource base, which will be a big part of our conversation on March 31. One is our resource base, not only our 2P reserves, but our contingent resources, what we believe we have there, the advantages we believe those have in terms of capitally efficient development, Lewis, Firebag South, or Firebag Phase 5 as we call it, but how we think we can do all that while staying kind of at or below about the $6 billion level. In a $60 or $65 a barrel world, we continue to grow dividends, invest and replace production decline, and perhaps even grow it, and this was not in a priority order, return cash to shareholders via buybacks. We are carefully assembling this orchestra in such a way that we think we can offer the most value, not only long term but each and every quarter, each and every year to shareholders. Troy, do you have anything you would add to that?

Troy Little, Chief Financial Officer

Doug, I'll just add. I think if you look at the model of the company that we've built here, a lot of it is around stability and predictability. You've seen that the last three years with respect to our OpEx, which has roughly remained in the same range even though we've significantly increased both our production and our refining utilization. I think you'll see that in CapEx. I think we've demonstrated that so far. It's certainly our plans for the long term. You've also already seen it in shareholder returns. We really want to be a company that investors can count on largely regardless of what's going on in the external environment.

Richard Kruger, President and Chief Executive Officer

I'll just add one comment to that. It's not like we operate and perform and then see, okay, what are we? What can we do? We have had a very conscious focused vision of what we want this company to be and where the unique space in investors' portfolios, we believe we could occupy if we achieve that. All our efforts have been geared toward creating that company, and I think you're seeing that—a more predictable, ratable, reliable industrial machine-like ability to return on and return of capital. All this has been part of a very deliberate vision or plan for several years running, and we've been putting the building blocks in place, and you're starting to see it now. We're having fun with it, and we're not done yet.

Douglas George Blyth Leggate, Analyst

I appreciate those answers, guys. Rich, I wonder if I could do a quick follow-up. I know it does not affect you because your model is uniquely integrated. But obviously, there's a lot of focus on what's happening to crude spreads in Canada. I just wonder if I could ask you to just reiterate your immunity to any weakness that we see in WCS and perhaps offer any color as to what you see as a dynamic beyond the normal seasonality. Are you seeing anything materially different because your colleagues over at Imperial didn't seem to think there was anything materially changing? I'd love to hear your opinion on that.

Richard Kruger, President and Chief Executive Officer

Well, I think, Doug, you accurately flagged one of the really fundamental attributes that makes us different. It is this immunity or the lack of any material movement in our economic performance with WCS differentials. That gets back to again, this integrated aspect, all the way from our upstream to our downstream, our ability to upgrade bitumen or heavy crudes to light crudes and things. There is a unique asset base that is different for us. When we look at world events, think about how differentials have ticked over the last decade. They have been tight of late; they've widened here a little bit, and they bobble around with news on Venezuela and other things. I don’t dismiss it at all, but much of that outside noise from a Suncor perspective is kind of much ado about nothing. We look for opportunities in that, and there may be opportunities for us when others get sick or have issues. We may just have a little sniffle. So there's opportunity in that for us when others have more volatility than we have. Our vision for a number of years has been to strengthen ourselves to build that resiliency, flexibility, and optionality. So when we see something we want to do, we can do it confidently and without hesitation. I think I'm getting off the track of your question a little bit, but I think that's where we are. So the market conditions—we’re largely market takers. But our unique construct gives us a position where we don't overreact or panic as things change. Our view right now is that there are things going on around the world, but I don’t think any of them will be fundamentally material to how we continue to deliver value.

Operator, Operator

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

Manav Gupta, Analyst

I actually wanted to follow up a little bit on the refining macro. So if you look at last year, there was a very bearish sentiment in refining, but as the year progressed, fears were proven completely wrong. You guys generated almost $4 billion in your cash from operations from refining. We started this year with pretty much the same sentiment on refining, which was pretty negative. When we look at the fundamentals, the cracks from January to January are actually up, and the capacity additions are more limited. So I'm just trying to understand from where you're sitting in terms of refining macro, if you can make some comments, in terms of diesel and gasoline. Do you expect 2026 to be somewhat of a similar year for 2025, which was a very strong year? If you could just talk a little bit about that.

Richard Kruger, President and Chief Executive Officer

I'm going to ask Dave to comment explicitly in a minute. But I can tell you, as a large miner and a big upstream company, understanding the geopolitical uncertainties and the importance of breakeven, when I go to bed at night and say my prayers, I thank God for the downstream. The level of integration we have provides this natural hedge and support. Sometimes upstream goes up, downstream goes down, and vice versa. It's fundamentally part of this value proposition. Dave, so other than that philosophy, do you want to offer some specifics?

Dave Oldreive, Executive Vice President, Downstream

Yes, for sure. If you look even at today's cracks, Manav, as you're aware, gasoline is pretty soft in the Mid-Continent. The L.A. market is strong, across the board. The harbor is strong on diesel, particularly with recent cold weather and reasonably good on gas cracks. Distillate margins through '25 were strong, and they really peaked in October and November. I expect diesel to continue to remain strong through the first quarter, and we've seen that trend over the last few years where diesel has been above gasoline. That plays to Suncor's strength. We have a pretty low G to D ratio. We also have pretty good G to D flexibility, and we can win in any environment, but we really like good diesel cracks. In the fourth quarter, we achieved not only record refinery utilization but record diesel production. We did that through our North American network due to better efficiency. We implemented structural improvements that made a real impact, which we can share more of as we have those stories developing at Investor Day.

Richard Kruger, President and Chief Executive Officer

One other thing I'd add: the collaboration between operations, supply and trading, and marketers—those are three functional areas of expertise—has been stellar. How they've worked together to tackle the various challenges and to optimize the output based on market needs has certainly contributed to our overall performance.

Operator, Operator

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

Patrick O'Rourke, Analyst

Congratulations on a strong quarter. I was going to ask on Syncrude, but that was a very comprehensive answer there. So maybe I'll talk about sort of the refinery, the throughput levels that you've had here. You've been able to achieve over 100%. At what point do you think about formalizing those levels here?

Richard Kruger, President and Chief Executive Officer

I'll give you a little glimpse behind the curtain. We've been systematically debottlenecking and adding capacity across the entire network. We now run two sets of books. Externally, the nameplate of our system is 466,000 barrels a day; it's been that way for a long time. However, now that we are consistently above 100%, we know internally that the denominator is bigger. So instead of looking at 103%, or 105%, we might be looking at something like 95% or 96%. As opposed to patting ourselves on the back for being above 100%, we’re asking, at 95%, 96%, where is that last 4% to 5%? We will need to consider when to communicate externally that the new denominator is x because we don't want anyone to misinterpret that progression in improvement.

Patrick O'Rourke, Analyst

Okay. Great. And then maybe just on the return of capital, thinking about the debt position of the company here. With $6.3 billion versus the $8 billion target? I know there's been a working capital impact in the fourth quarter and historically a bit of a reversal of that in the first, but let's say we get towards the end of the year and the commodity conditions have been such that you're still sitting well below that $8 billion. How do you think about the signals for releasing that to shareholders? What's the preferred vehicle if you do make that decision? Maybe I'll add this sort of since you touched on inorganic, is there any potential that you would see that as dry powder where you can create per share accretion?

Richard Kruger, President and Chief Executive Officer

Troy, do you want to comment a bit?

Troy Little, Chief Financial Officer

Yes. I believe we don't view dry powder as a primary focus regarding acquisitions based on our balance sheet. Instead, we allow opportunities to guide our decisions. We have a strong history of both selling and acquiring assets. When considering return on capital, we take a long-term view, analyzing it over a year rather than just a month. Typically, we experience a working capital release in the fourth quarter followed by usage in the first quarter, and I expect this year to follow the same pattern. It's crucial to remember what I mentioned about the order of our payments concerning the balance sheet and share buybacks. There is clarity in how we plan to allocate our cash flow.

Operator, Operator

Thank you. I'm showing no further questions at this time. I would now like to turn the call back to Mr. Adam Albeldawi for closing remarks.

Adam Albeldawi, Senior Vice President of External Experience

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

Operator, Operator

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