Greg Pardy

Greg Pardy of RBC Capital Markets sought Canadian Natural Resources' broad perspective on the progress and ease of collaboration with the new federal government regarding 'pathways' initiatives, and specifically asked about the potential implications of accelerating T block decommissioning on 2026 abandonment expenditures and financing costs.

Answer

President Scott Stauth noted more positive engagement with the new federal government but emphasized the critical need for detailed understanding of 'carbon competitiveness' to ensure collaborative growth. CFO Victor Darel clarified that while overall abandonment expenditures are projected to increase modestly in 2026, the net impact over the next five years would be fairly modest due to an estimated 75% tax recovery on these expenditures.

Greg Pardy of RBC Capital Markets inquired about the company's engagement with the new federal government, specifically regarding progress on 'pathways' initiatives and the perceived ease of collaboration, seeking broad strokes on the current approach. He also asked about the potential acceleration of T block decommissioning and its financial implications for the 2026 capital budget, particularly regarding abandonment expenditures.

Answer

Scott Stauth, President, noted more positive signs and encouraged dialogue with the federal government but emphasized the need for detailed understanding of 'carbon competitiveness' for future growth. Victor Darel, CFO, clarified that while 2026 abandonment expenditures might modestly increase, the net impact after a 75% tax recovery over the next five years would be modest.

Greg Pardy of RBC Capital Markets questioned if there has been a shift in how Canada's Competition Bureau processes acquisitions, given recent delays, and sought clarification on the timeline for reaching the $15 billion net debt target.

Answer

President Scott Seltz characterized the Palliser block acquisition delay as a 'unique circumstance' and stated he does not anticipate a significant change in the regulatory process going forward. CFO Victor Durell confirmed that based on current forecasts, the company is on track to reach its $15 billion net debt target in 2026, with no change to its share buyback policy.

Greg Pardy asked about the operational performance of human-operated haul trucks versus autonomous systems, particularly in extreme cold, and questioned the company's capital allocation strategy between net debt reduction and share buybacks.

Answer

Scott Stauth, President, addressed the operational query by stating that while he couldn't compare directly to autonomous systems, the key challenge for their operations is the duration of extreme cold weather. Victor Darel, CFO, explained that the company's free cash flow allocation policy (60% to buybacks, 40% to the balance sheet) is viewed on a forward-looking annual basis, indicating a balanced approach will continue over the coming year.

Greg Pardy of RBC Capital Markets inquired about the operational performance of Canadian Natural's human-operated haul trucks versus autonomous systems, especially in extreme cold, and questioned the company's financial strategy regarding net debt reduction versus shareholder returns.

Answer

President Scott Stauth addressed the operational query, stating that while he couldn't compare directly to autonomous systems, the company's teams are highly effective at managing cold weather challenges. CFO Victor Darel explained the financial strategy, confirming a balanced approach to free cash flow allocation, with the 60% buyback and 40% debt reduction policy being managed on a forward-looking annual basis.

Greg Pardy inquired about the combined impact of the Shell swap and Chevron acquisition on shareholder returns and potential organic growth at the AOSP assets, and also asked if the accelerated thermal development projects were part of a deliberate strategy.

Answer

President Scott Stauth explained that the acquisitions add approximately 93,500 bbl/d, which will significantly boost free cash flow and shareholder returns. For organic growth, he highlighted the existing approval for a 100,000 bbl/d Jackpine Mine expansion. Regarding the accelerated thermal projects, Stauth clarified this is a result of the company's continuous improvement culture, where learnings from one pad are applied to the next, and is a normal part of their operational process.

Greg Pardy asked for details on what the company is doing differently to optimize turnaround activities, referencing the decoupling of construction. He also questioned what key elements, such as fiscal regime and egress, need to be in place for the company to advance its large-scale IPEP and PFT projects.

Answer

CFO Mark Stainthorpe explained that turnaround optimization stems from strong drilling results, efficient facility construction, and decoupling execution plans to bring volumes on sooner. For the IPEP and PFT projects, he stated that a strong fiscal regime for the Pathways project to manage CO2 emissions is a key requirement, along with sufficient market egress capacity from pipelines like TMX and future Enbridge debottlenecks.

Greg Pardy of RBC Capital Markets asked about Vermilion's future plans for portfolio streamlining beyond the recent asset sales and inquired about the shareholder return framework, specifically the potential payout ratio and preference between dividends and buybacks once the $1 billion debt target is reached.

Answer

Dion Hatcher, President & CEO, confirmed that portfolio streamlining is ongoing, with plans to exit Hungary and a decision not to pursue opportunities in Slovakia. He also mentioned they will test the market for their Croatia asset to focus capital on core growth areas. Lars Glemser, VP & CFO, addressed shareholder returns, stating the company will maintain the 40% of excess free cash flow payout, with a focus on debt reduction first. He indicated a preference for share buybacks over significant dividend increases for incremental returns.

Greg Pardy from RBC Capital Markets inquired about Vermilion's future plans for portfolio streamlining beyond recent divestments and asked about the shareholder return framework, specifically the target payout ratio and the preference between dividends and buybacks once debt reaches the $1 billion target.

Answer

President and CEO Dion Hatcher confirmed that portfolio streamlining is ongoing, with exits from Hungary and Slovakia underway and a potential market test for its Croatia assets. VP & CFO Lars Glemser stated that the company is comfortable with the current return level of 40% of excess free cash flow and will prioritize share buybacks over large dividend increases once debt targets are met.

Greg Pardy of RBC Capital Markets inquired about the stream day capacity of the U1 upgrader following its recent project and questioned the appropriateness of the $8 billion net debt target in light of improved cash flow, asking about the potential for a substantial issuer bid (SIB).

Answer

EVP of Oil Sands Peter Zebedee clarified that U1's stream day capacity remains the same, but the project's benefit is the structural extension of turnaround intervals to six years. President and CEO Rich Kruger and CFO Kris Smith acknowledged that while the $8 billion net debt target is not changing today, its appropriateness will be re-examined as performance improvements accelerate. They emphasized their commitment to predictable, high-priority buybacks, which could be increased based on enterprise performance.

Greg Pardy from RBC Capital Markets asked about the progress of Suncor's retail EBITDA growth strategy, whether the retail business is considered core long-term, and if headwinds affecting the free funds flow target have been less acute than anticipated.

Answer

EVP, Downstream Dave Oldreive confirmed the plan to grow retail EBITDA by $200 million by 2026 is on track, driven by network high-grading and strong loyalty program growth. CEO Richard Kruger affirmed that while no asset is untouchable, retail is currently a 'very, very valuable part of our portfolio' due to its integration benefits. Kruger also stated that Suncor has been more effective at counteracting cost headwinds than anticipated a year ago by actively driving efficiencies.

Greg Pardy of RBC Capital Markets inquired about the expected balance of operational improvements between Suncor's upstream and downstream segments for 2025 and asked for details on the company's "multidimensional integration" strategy, particularly regarding bitumen sourcing.

Answer

CEO Richard Kruger stated that the philosophy of maximizing the existing asset base is company-wide and that opportunities exist across both upstream and downstream. EVP, Oil Sands, Peter Zebedee, explained they are consistently finding and reengineering bottlenecks to unlock barrels. EVP, Downstream, Dave Oldreive, added that his team sees more potential through shorter turnarounds and constraint busting. On integration, Zebedee described treating upgrading like refining, moving bitumen from various sources (Firebag, Fort Hills) to where it's needed to keep upgraders full. Kruger emphasized this integration extends to meeting market demand for specific products.

Greg Pardy of RBC Capital Markets inquired about the specific operational changes driving Suncor's successful turnarounds and asked about potential future synergies at the Syncrude asset beyond the existing bidirectional pipelines.

Answer

Shelley Powell, SVP of Operational Improvement & Support Services, detailed that turnaround improvements stem from doing less work via risk-based inspections and using technology like drones. President & CEO Rich Kruger and EVP of Oil Sands Peter Zebedee added that Syncrude synergies are expanding through deeper operational integration and knowledge sharing, which is maximizing upgrader utilization across the entire asset base.

Greg Pardy questioned how the Asian assets, Liwan and Indonesia, fit into the company's long-term portfolio and asked if the significant working capital tailwind from Q2 is expected to reverse.

Answer

President & CEO Jon McKenzie described the Asian assets as part of a 'harvest strategy,' generating about $1 billion in annual free cash flow. EVP & CFO Kam Sandhar explained the Q2 working capital release was largely driven by price movements and tax refunds, and while some fluctuation is normal, the goal is to keep working capital low to support deleveraging and shareholder returns.

Greg Pardy questioned how the Asian assets, Liwan and Indonesia, fit into the long-term portfolio and asked whether the significant working capital tailwind from Q2 is expected to reverse in the second half of the year.

Answer

Jon McKenzie, Director, President & CEO, described the Asian assets as a 'harvest strategy' that generates approximately $1 billion in annual free cash flow with minimal capital needs. Kam Sandhar, EVP & CFO, explained that the Q2 working capital release was largely driven by commodity price changes and tax refunds, and while the goal is to minimize future builds, some fluctuations are always possible.

Greg Pardy inquired about the scope of work and performance objectives for the Toledo refinery turnaround, and the marketing strategy for allocating Foster Creek versus Christina Lake barrels to different markets.

Answer

CEO Jon McKenzie explained the Toledo turnaround involves eight major units and is aimed at achieving a step-change in reliability, similar to previous successful turnarounds. Executive Geoff Murray detailed that marketing decisions are made monthly to optimize overall value by considering both locational and grade differentials, ensuring the highest netback for the Oil Sands segment as a whole.

Greg Pardy asked about Cenovus's strategy for marketing barrels via the Trans Mountain pipeline, particularly to Asia amid potential tariff threats, and questioned the evolving role of the company's Asian gas assets in its overall portfolio.

Answer

Executive Geoff Murray explained that while current demand is split between Asia and California, potential tariffs would likely shift volumes preferentially to global markets via Trans Mountain. CEO Jon McKenzie reiterated that the Asian assets are a high-margin, stable cash flow generator, with a strategy focused on minimizing investment and elongating contracts.

Greg Pardy of RBC Capital Markets asked for Cenovus's perspective on the performance of the Trans Mountain pipeline and the expected path for WCS spreads in the coming months.

Answer

Executive Geoff Murray stated that the Trans Mountain pipeline is operating well and has had its intended impact, contributing to a tighter heavy differential in Alberta. He noted that recent widening of spreads is attributable to U.S. Gulf Coast refinery outages, but expects differentials to remain narrow long-term due to the pipeline's access to global markets.

Greg Pardy inquired about the deployment of AI and proprietary data analytics across the business and whether the benefits are fully realized. He also revisited the topic of the net debt target and the capital return framework upon reaching it.

Answer

President and CEO Brendan McCracken stated that AI technology is nascent and not fully baked in, with deployment occurring across the entire portfolio. EVP & CFO Corey Code reiterated the $4 billion net debt target, noting it's not a hard stop and the company has not committed to a specific allocation framework change once the target is reached.

Greg Pardy asked for the expected quarterly cadence of capital expenditures and production for the remainder of the year. He also requested an estimate for the company's net debt level by year-end.

Answer

President and CEO Eric Greager provided a quarterly breakdown, projecting CapEx of ~$375M in Q2 and ~$275M in Q3, with production expected to be ~147,000 BOE/d in Q2, rising to ~151,000 BOE/d in Q3. CFO Chad Kalmakoff addressed the debt question, estimating roughly $100 million in debt repayment for the rest of the year, assuming $60 WTI and after dividends, while noting the variable impact of foreign exchange rates.

Greg Pardy of RBC Capital Markets inquired about the second-half trajectory for CapEx and production, the potential for debt reduction and buybacks, and the key learnings and cost efficiencies from the Duvernay program.

Answer

President and CEO Eric Greager confirmed the company is targeting the midpoint of its annual guidance for both production and CapEx, with spending weighted towards Q3. CFO Chad Kalmakoff added that of the ~$500 million in expected H2 free cash flow, a couple hundred million should go towards debt reduction. Regarding the Duvernay, Eric Greager and COO Chad Lundberg highlighted strong well results in line with expectations, a 5% reduction in drill days, a 10% cost reduction, and valuable cross-learnings with the Eagle Ford asset.

Greg Pardy inquired about the specific drivers of the strong Downstream margin capture in Q1 and the company's strategic thinking on the pace of its renewed Normal Course Issuer Bid (NCIB) given market volatility.

Answer

CEO Bradley Corson and VP of Downstream Scott Maloney attributed the strong Downstream results to leveraging structural advantages, placing barrels in high-uplift markets, capitalizing on market volatility, and competitor maintenance activity. Regarding the NCIB, CEO Bradley Corson stated that Imperial's strong cash position allows for flexibility. He noted the company's historical tendency to accelerate buybacks to return surplus cash to shareholders in a timely manner, which also provides flexibility for a potential Substantial Issuer Bid (SIB) if needed.

Greg Pardy of RBC Capital Markets inquired about Imperial's preparedness for a potential U.S. tariff threat and how such an event would influence shareholder return decisions. He also asked how the company weighs M&A opportunities that have existing egress solutions against organic growth projects that may face pipeline constraints.

Answer

CEO Bradley Corson stated that while he hopes diplomacy prevails, Imperial's resilience comes from its focus on low-cost supply and market optionality, enhanced by its integrated structure. SVP of Finance Dan Lyons affirmed that shareholder returns are driven primarily by cash balances, not external threats, due to low breakevens. Mr. Corson added that when evaluating M&A, all factors are considered, and internal projects like Aspen have consistently shown superior value accretion.

Greg Pardy of RBC Capital Markets inquired about the technical specifics of the Grand Rapids project, including targeted reservoir recovery rates and solvent recycling. He also asked about the nature and benefits of the collaboration with Suncor on the EBRT pilot for the Aspen project.

Answer

Bradley Corson, Chairman, President and CEO, explained that while it's early to provide specific reservoir performance data for Grand Rapids, the initial ramp-up is consistent with their plan. He clarified the partnership with Suncor is for an EBRT pilot to lower costs and emissions, which could benefit Aspen, but the partnership is limited to the pilot itself.

Greg Pardy asked for more detail on the drivers behind the strong Downstream margin capture in Q1 and inquired about the company's strategy for its renewed Normal Course Issuer Bid (NCIB), particularly the potential pace of execution given market volatility.

Answer

CEO Bradley Corson and VP of Downstream Scott Maloney explained that strong Downstream results were driven by structural advantages, including placing barrels in high-uplift markets and capitalizing on market volatility. Regarding the NCIB, Corson stated the company remains committed to returning surplus cash to shareholders in a timely manner, noting that accelerating the buyback program, as done in the past, provides flexibility to consider options like a substantial issuer bid (SIB) later in the year.

Greg Pardy inquired about Gran Tierra's cash tax outlook for 2025 following the i3 acquisition, the strategy behind the share buyback program, and the primary motivations for acquiring i3 Energy, including future capital allocation.

Answer

EVP & CFO Ryan Ellson stated that the overall tax rate is expected to decrease in 2025 due to Canada's favorable tax regime. He also confirmed the share buyback is funded by free cash flow. President & CEO Gary Guidry explained the i3 deal provides a strategic entry into Canada for growth and diversification. He noted 2025 capital will target new discoveries in Ecuador, Colombian waterfloods, and oil opportunities in Canada.