Menno Hulshof

Menno Hulshof asked about the significant quarter-on-quarter increase in U.S. market capture, seeking elaboration on the driving factors and expectations for market capture through mid-year, especially given limited planned turnaround activity. He also inquired about the status of West White Rose drilling and the projected 2026 exit rate.

Answer

EVP Eric Nuttall attributed the strong U.S. market capture to operational reliability, capitalizing on regional supply disruptions, commercial optimization between Lima and Toledo refineries, and favorable seasonal product mix (diesel/jet advantage, asphalt pricing). He reiterated a 70% market capture guidance at a $14 WCS differential, confirming positive impacts from PADD 2 egress initiatives. CEO Jon McKenzie and EVP Jeff Murray confirmed the Q2 timeline for West White Rose first oil remains tight due to weather, with final commissioning and SIT testing underway. Production guidance of 20,000-25,000 barrels per day for 2026 was reiterated, with ramp-up expected in the second half as new wells come online.

Menno Hulshof inquired about the West White Rose project, specifically the status of drilling, and what to model for an exit rate for 2026 if everything proceeds as planned.

Answer

CEO Jon McKenzie and EVP Jeff Murray confirmed the Q2 timeline for first oil is tight due to weather disruptions. Major construction is complete, the platform is commissioned and habitable, and subsurface connections are done. They are in the final stages of commissioning and sit testing, with drilling expected to commence very shortly. They reiterated the production guidance of 20-25 thousand barrels a day for 2026, with a ramp-up in the second half as new wells come online.

Menno Hulshof inquired about the operational status and Q3 utilization outlook for Cenovus's PADD II refineries, and asked about the potential risk to the Rush Lake asset's capacity following a recent incident.

Answer

President & CEO Jon McKenzie confirmed that the U.S. refineries are 'wide open' and operating as expected post-turnaround, with a clear operational runway ahead. Regarding Rush Lake, he stated it was a localized casing failure on a single well and the company is now in the recovery phase, though production has been removed from guidance for the year out of caution.

Menno Hulshof inquired about the operational status and Q3 utilization outlook for Cenovus's PADD II refineries and asked about the potential risks to Rush Lake's capacity following a recent well incident.

Answer

Jon McKenzie, Director, President & CEO, confirmed that U.S. refineries are operating 'wide open' with no major turnarounds planned until 2026. Regarding Rush Lake, he stated the incident was a localized casing failure on a single well and that, out of caution, its production has been removed from 2025 guidance while the company completes its investigation and works with regulators on a restart plan.

Menno Hulshof questioned the confidence level in the 2026 capital expenditure reduction, the reporting method for Narrows Lake, and the rationale behind adjusting the market capture definition.

Answer

CEO Jon McKenzie and CFO Kam Sandhar expressed high confidence in lowering the 2026 capital budget to the low CAD $4 billion range as major projects like West White Rose complete. McKenzie confirmed Narrows Lake will be reported within the Christina Lake complex. Sandhar explained the market capture definition was adjusted for FIFO impacts to better show underlying performance and improve comparability with U.S. peers.

Menno Hulshof asked about the potential normalized market capture rate for Cenovus's U.S. refineries and inquired about the strategy for capital returns, specifically weighing the acceleration of share buybacks against preferred share redemptions.

Answer

CEO Jon McKenzie stated that in a normalized environment, U.S. refinery market capture should be in the 70-75% range. Executive Kam Sandhar confirmed the commitment to returning 100% of excess free funds flow to shareholders, noting that while buybacks are attractive, the company will not lean on the balance sheet and will prioritize stewarding towards its $4 billion net debt target.

Menno Hulshof of TD Cowen asked for details on the drivers behind the positive operating expense guidance revisions and the rationale for optimizing the Lima turnaround while deferring other downstream work.

Answer

Executive Jonathan McKenzie attributed the OpEx improvements to higher production volumes and better energy cost management, reflecting a continuous improvement mindset. Executive Keith Chiasson explained the Lima turnaround is being optimized by using interconnected facilities at the Toledo refinery to process intermediate barrels, minimizing downtime. Other turnaround work was deferred based on new inspection data.

Menno Hulshof asked about the conditions under which Suncor would reconsider its CAD 275 million per month share buyback guidance, given its oil price agnostic nature. He also questioned whether Q4 2025 production would have been higher without adverse weather conditions in October and December.

Answer

Rich Kruger (CEO) linked the buyback commitment to reduced net debt and breakeven. Troy Little (CFO) highlighted Suncor's integrated business model for stability and predictability, reiterating the 'pay shareholders first' philosophy. Rich Kruger (CEO) confirmed that Suncor operates in all weather conditions and delivered throughout the quarter, implying effective mitigation.

Menno Hulshof questioned the conditions under which Suncor would reconsider its CAD 275 million per month buyback guidance, particularly in a lower oil price environment, given its oil price agnostic nature in 2025. He also asked if Q4 production would have been higher without wet weather in October and cold December, or if mitigation efforts negated weather impacts.

Answer

CEO Rich Kruger explained that the ability to commit to buybacks stems from reduced net debt and a dramatic reduction in breakeven, aiming for consistency with dividend growth. CFO Troy Little highlighted Suncor's unique integration, predictable profitability, and 'paying shareholders first' philosophy, pointing to the 2025 track record as proof. Regarding weather, Rich Kruger stated that Suncor operates in all conditions and delivered throughout the entire quarter, implying mitigation efforts were effective.

Menno Hulshof of TD Securities requested an update on the progress of deploying Autonomous Haul Systems at Syncrude and asked if the expected economic benefits would be consistent with those seen at the Base Plant.

Answer

President and CEO Rich Kruger and EVP of Oil Sands Peter Zebedee confirmed that the AHS deployment at the Base Plant is progressing well, with plans to implement the system at Syncrude in 2026. They stated that the economic case for Syncrude is consistent with the Base Plant, expecting significant benefits in safety, direct costs, and productivity.

Menno Hulshof of TD Securities inquired about any federal government response to the recent industry letter on the political landscape and asked about the drivers of Firebag's exceptional performance, specifically whether it's from new practices or improved execution.

Answer

CEO Richard Kruger stated that while it's 'pretty early,' conversations with the government are ongoing following the letter from 38 energy CEOs. On Firebag's performance, Kruger described a deep-dive approach with technical experts to unlock the asset's full potential by exploring new completion technologies and expanding the use of non-condensable gas (NCG) injection. He clarified that while NCG is used now, the plan is to apply it at a much larger scale to improve efficiency.

Menno Hulshof of TD Securities inquired about Suncor's perspective on potential Syncrude consolidation and the status of Lease 29 discussions. He also asked about the company's flexibility to divert cargoes from U.S. markets, particularly with the TMX expansion, in a potential tariff scenario.

Answer

CEO Richard Kruger stated the company will look at any opportunities where its operatorship can create unique value, without commenting on specific assets. CFO Kris Smith added that Lease 29 is not a current focus. Regarding market access, Kruger highlighted that 60-65% of Suncor's barrels stay in Canada and that its integrated nature and coastal access provide a "natural hedge," giving him confidence in Suncor's position relative to peers in a potential tariff environment.

Menno Hulshof from TD Cowen asked for a quantification of the production beat, distinguishing between turnaround efficiencies and base asset outperformance, and confirming no maintenance was deferred. He also inquired about the strategy for extending intervals between turnarounds.

Answer

President & CEO Rich Kruger confirmed no maintenance was deferred and estimated that production was about 30,000 bbl/d above internal plans due to turnaround execution and offsetting gains. Regarding turnaround intervals, Kruger and EVP of Oil Sands Peter Zebedee explained the focus is on extending intervals for both components and entire units, guided by benchmarking, with specific examples at Syncrude aiming to extend cycles from 3-4 years to 6 years.

Menno Hulshof asked for details on the scope of the materials and supplies inventory optimization work and the practical changes in procurement and inventory management going forward. He also inquired about shifting fundamentals for Western Canadian heavy oil since the Venezuelan news broke, including increased supply risk and rising Enbridge mainline apportionment.

Answer

John Whelan, Chairman, President and CEO of Imperial Oil, explained the inventory optimization was informed by external benchmarking, focusing on enhanced analysis, better material optimization, and a standardized approach across sites to improve visibility and utilization. Regarding heavy oil, Mr. Whelan noted no significant changes observed, with initial market overreaction to Venezuelan news subsiding. He emphasized Imperial's integrated business model and competitive position.

Menno Hulshof asked for elaboration on the scope of the materials and supplies inventory optimization work and the practical changes in procurement and inventory management, and also inquired about shifting fundamentals for Western Canadian heavy oil since the Venezuelan news broke.

Answer

Chairman, President and CEO John Whelan explained that the inventory optimization was informed by external benchmarking and best practices, focusing on utilization, movement, age, and cost-benefit analysis. He detailed implementing a standardized approach across all sites to improve visibility, utilization, and reduce complexity without compromising reliability. Regarding Western Canadian heavy oil, Mr. Whelan stated no significant changes were observed, noting an initial overreaction to Venezuelan supply news and emphasizing Imperial's focus on its integrated business model and competitive position.

Menno Hulshof from TD Cowen questioned what additional learnings were gained from the February cold snap beyond those from 2022. He also requested more details on the scope and key success metrics for the Enhanced Bitumen Recovery Technology (EBRT) pilot at Aspen.

Answer

Chairman and CEO Bradley Corson and SVP of the Upstream Cheryl Gomez-Smith explained that cold weather protocols developed after 2022 worked as intended, and future efforts will focus on building capacity and redundancy. Gomez-Smith further detailed that the EBRT pilot, starting in 2027, aims to validate three key metrics: production uplift, overall resource recovery, and solvent recovery, which will derisk the technology for potential future sanctioning.

Menno Hulshof asked about any new operational learnings from the February cold snap beyond those from 2022 and requested more details on the scope and key success metrics for the Enhanced Bitumen Recovery Technology (EBRT) pilot.

Answer

CEO Bradley Corson and SVP of Upstream Cheryl Gomez-Smith confirmed that protocols developed after 2022 worked as intended, resulting in much better performance during the recent cold snap. Future work will focus on building more capacity and redundancy. Regarding the EBRT pilot, Gomez-Smith detailed that it's a small-scale project starting in 2027 to validate three key areas: production uplift, overall recovery, and solvent recovery. This staged approach is intended to de-risk the transformative technology before wider application.

Menno Hulshof from TD Securities requested an update on the status of TMX pipeline toll negotiations. He also asked for more detail on the remaining steps for the Strathcona renewable diesel project and the expected timing for it to become cash flow positive.

Answer

CEO Bradley Corson provided no specific update on TMX toll negotiations but confirmed Imperial is actively shipping on the pipeline. Regarding the Strathcona project, he stated that construction is expected to finish in Q2 2025 for a mid-year startup, with feedstock and hydrogen supply on track. Mr. Corson anticipates the project will begin generating positive cash flow in the second half of 2025.

Menno Hulshof of TD Cowen asked about the company's current thinking on the timing and size of the next growth phase for the Grand Rapids project. He also sought an estimate for when the first volumes from the Strathcona Renewable Diesel facility are expected.

Answer

Chairman, President and CEO Bradley Corson stated it is premature to detail the next phase of Grand Rapids but confirmed significant potential exists beyond Phase 1. Regarding the Strathcona Renewable Diesel project, he anticipates construction completion by spring 2025, with commissioning around mid-year, contingent on coordinating with suppliers.

Menno Hulshof inquired about the timeline for formally increasing Kearl's production capacity to 300,000 bpd or higher, and asked if Imperial plans significant IT upgrades for cybersecurity and data aggregation.

Answer

Bradley Corson, Chairman, President and CEO, stated that while the team is actively working on plans to reach 300,000 bpd at Kearl, with more details to be shared at the next Investor Day, it's best to temper expectations of exceeding that figure for now. On IT, Corson explained that data analytics are already integral to improving performance and that the company takes cybersecurity very seriously, working with ExxonMobil to employ the latest safeguards, and has not experienced any direct cybersecurity events.

Menno Hulshof asked about any additional learnings from the February cold snap beyond those from 2022 and inquired about the scope and key success criteria for the Enhanced Bitumen Recovery Technology (EBRT) pilot at the Aspen lease.

Answer

SVP of Upstream Cheryl Gomez-Smith stated that operating protocols developed after 2022 worked as intended, leading to much better results during the recent cold weather. Future efforts will focus on building more capacity and redundancy. Regarding the EBRT pilot, she explained its goal is to validate three key areas: production uplift, overall resource recovery, and solvent recovery, which will de-risk the transformative technology for potential future sanctioning.

Menno Hulshof from TD Securities asked for an operational update on the fourth quarter to date, specifically if any assets had significantly outperformed or underperformed. He also requested details on scheduled maintenance turnarounds for 2026, including which assets (presuming Horizon) and their expected scale.

Answer

Scott Stauth, President, reported that all assets were performing as expected in Q4, showing strong optimization and utilization consistent with prior quarters. He confirmed that Horizon would have the most significant turnaround in Q3 2026, with other thermal facilities undergoing routine five-year maintenance.

Menno Hulshof from TD Securities inquired about the operational performance of Canadian Natural Resources' assets halfway through the fourth quarter, asking if any specific assets had notably outperformed or underperformed, and sought clarification on the scheduled major turnarounds for 2026, particularly for Horizon and other thermal facilities.

Answer

President Scott Stauth reported that all assets were performing as expected with strong optimization and utilization quarter-to-date, with no specific assets to highlight for outperformance or underperformance. He confirmed that Horizon would undergo the most significant turnaround in Q3 2026, alongside routine five-year turnarounds for thermal facilities.

Menno Hulshof followed up on the Duvernay assets, asking for specifics on operational improvements compared to the previous owner and how the asset's returns are expected to compete for capital against the Montney play.

Answer

Scott Stauth, President, stated that the Duvernay asset will be very competitive with the high-liquids Montney play. He highlighted efficiency gains from optimizing completion designs and reducing drilling costs per meter, which is consistent with the company's standard approach to maximizing capital efficiency on all assets.

Menno Hulshof of TD Securities asked for details on how Canadian Natural's operational approach in the Duvernay differs from the previous owner, Chevron, and how the asset is expected to compete for capital against the Montney play on a full-cycle returns basis.

Answer

President Scott Stauth stated that the Duvernay will be very competitive with the high-liquids Montney. He highlighted that CNQ is applying its standard efficiency-focused approach, optimizing completions and reducing drilling costs per meter to maximize returns, consistent with how it manages all assets in its portfolio.

Menno Hulshof requested details on the 5,000 bbl/d Albian pipeline modification and other near-term debottlenecking opportunities, and asked if CNQ would ever consider rebuilding its North Sea position given Europe's focus on energy security.

Answer

President Scott Stauth described the Albian modification as a low-capital debottlenecking of piping and pumps. He noted that recent reliability projects are performing better than designed, creating further opportunities. Regarding the North Sea, he confirmed the plan remains to wind down the assets, stating that the shift in Europe's energy policy likely came too late to change CNQ's long-term strategy there.

Menno Hulshof inquired about the production trajectory for synthetic crude oil (SCO) through the end of the year and into 2025, considering recent performance and turnaround schedules. He also asked for an update on the solvent-enhanced oil recovery pilots, including current results and the timeline for a commercial-scale decision.

Answer

President Scott Stauth confirmed that SCO volumes are expected to be strong for the remainder of the year, with the only interruption being a planned turnaround at Scotford, which has been shortened. CFO Mark Stainthorpe added that 2025 should also be a strong year as there is no turnaround planned for Horizon. Regarding the solvent pilots, Mark Stainthorpe noted early positive results with steam reduction around 20% and expects to provide a more comprehensive update on commercial potential by mid-2025.

Menno Hulshof from TD Cowen requested a detailed breakdown of the newly identified $100 million in Westbrook acquisition synergies and asked for an update on the M&A opportunity set in Europe, including how a potential acquisition would be funded.

Answer

Randy McQuaig, VP-North America, detailed that the additional $100 million in synergies stems from organizational restructuring, reduced service costs from a larger program, and lower processing fees, amounting to ~$30 million in annual savings. Dion Hatcher, President & CEO, added that European M&A opportunities still exist, particularly with majors looking to divest onshore assets in the Netherlands. He explained that funding is manageable due to long closing timelines and the high free cash flow generation of target assets, which reduces the final cash outlay.

Menno Hulshof from TD Cowen requested a more detailed breakdown of the increased $200 million synergy estimate for the Westbrook acquisition and asked for an update on the M&A opportunity set in Europe, including potential funding strategies.

Answer

VP-North America Randy McQuaig explained the additional $100 million in synergies stems from organizational restructuring, reduced service costs, and lower processing fees, amounting to approximately $30 million in annual savings. President and CEO Dion Hatcher noted that European M&A opportunities persist, particularly from majors intending to divest in the Netherlands, and that funding is manageable due to long closing timelines and the high free cash flow nature of target assets.

Menno Hulshof asked about capital expenditure flexibility in a $50 oil price scenario, which assets would see cuts first, and the current corporate decline rate. He also inquired about the status of infrastructure build-out for the Pembina Duvernay development.

Answer

President and CEO Eric Greager explained that the company has significant capital flexibility and has already reduced the budget, primarily from the Eagle Ford and Viking assets. He noted they could defer Duvernay wells if needed and confirmed the corporate decline rate is approximately 35%. Regarding the Duvernay, Greager described a hub-and-spoke infrastructure approach, with facilities being built out in conjunction with the drilling program and their partnership with Gibson.

Menno Hulshof inquired about the economics and potential inventory growth of the refrac program, and also asked which of the company's emerging Canadian heavy oil plays management is most excited about.

Answer

President and CEO Eric Greager responded, confirming the refrac program has strong economics with IRRs exceeding 100% and that the company expects to continue the program at a measured pace. Regarding heavy oil plays, Greager highlighted that Peavine continues to exceed expectations, and the company is also very excited about the REX formation at Morinville and the Waseca play in the Greater Cold Lake area, all of which are developing nicely.