Patrick O'Rourke

Patrick O'Rourke asked about Kearl's high output in December and January, the impact of weather, and the target for 300,000 barrels per day high output days in 2026. He also inquired about the downstream market capture and outlook for local markets in 2026 if diesel and distillate margins soften.

Answer

Cheryl Gomez-Smith, Senior Vice President of the Upstream, confirmed that Kearl's cold weather protocols are working, leveraging ore selectivity and a secondary processing chemical. She outlined a clear path to the 300 KBD target for 2026, including debottlenecking and recovery projects, with potential for even higher output. Scott Maloney, Vice President of Downstream, noted fluctuating but positive refining margins, emphasizing Imperial's flexible assets and logistics network to capture demand and benefit from local renewable diesel production.

Patrick O'Rourke asked about Kearl's high output in December and January, the impact of weather, and the goal for 300,000 barrels per day high output days in 2026, and also inquired about the downstream market capture, flexibility, and outlook for local diesel and distillate markets in 2026.

Answer

Senior Vice President of the Upstream Cheryl Gomez-Smith confirmed that cold weather protocols are working at Kearl, leveraging ore selectivity and secondary processing chemicals. She outlined a well-defined path to 300 KBD through winterization, productivity, reliability, turnaround optimization, and recovery projects, noting opportunities beyond 300 KBD. Vice President of Downstream Scott Maloney stated that refining margins, though fluctuating, remain positive, and Imperial's advantaged assets and logistics allow it to capture demand and margins. He highlighted the Strathcona Renewable Diesel facility's role in supporting distillate plans.

Patrick O'Rourke of ATB Capital Markets asked about the risks and opportunities in the renewable diesel market, given recent volatility and legal challenges. He also requested an update on the Pathways Alliance carbon capture project, particularly concerning the urgency of ordering long-lead items amid shifting political sentiment.

Answer

CEO Bradley Corson emphasized that Imperial's renewable diesel project is differentiated by its integration into the Strathcona refinery, proximity to feedstocks, proprietary catalyst, and a built-in base demand, making it robust. On the Pathways Alliance, Mr. Corson reaffirmed the members' commitment to decarbonization and stated that discussions with governments are ongoing to secure the necessary fiscal and regulatory support. He acknowledged the urgency but confirmed that foundational work continues.

Patrick O'Rourke from ATB Capital Markets asked for an update on Kearl's progress towards its 300,000 bpd production target, given its strong performance. He also inquired about the current downstream market, including product demand and opportunities related to crack spreads.

Answer

Bradley Corson, Chairman, President and CEO, expressed high confidence in achieving the 280,000 bpd target for Kearl this year and confirmed the team is working on projects to reach 300,000 bpd. On the downstream, he noted stable product demand and recent strengthening in crack spreads, positioning Imperial well for Q3.

Patrick O'Rourke's representative asked about the key drivers of operating costs at Cold Lake and Kearl, the role of energy prices, and the outlook for working capital for the remainder of the year.

Answer

Bradley Corson, Chairman, President and CEO, detailed that Kearl's cost improvements are driven by initiatives like the completed autonomous haul truck conversion and more efficient turnarounds. He noted Cold Lake's costs are more sensitive to fuel gas prices but will benefit by about $1/bbl from the Grand Rapids startup. Dan Lyons, SVP of Finance and Administration, added that working capital is volatile but the significant negative impact in Q1 is not expected to repeat, with some reversal of the inventory build possible over the year.

Patrick O'Rourke of ATB Capital Markets inquired about Canadian Natural's strategy for managing its 2027 debt maturities and asked about the potential for secondary recovery and waterflooding within its conventional assets.

Answer

CFO Victor Durell explained that strong projected cash flow should reduce future refinancing needs for the 2027 maturities. President Scott Seltz added that the company is actively pursuing secondary recovery, highlighting a promising Palmer flood test in the Clearwater formation and an implemented waterflood at its Smith asset.

Patrick O'Rourke asked for an update on the Pathways Alliance carbon capture project timeline and inquired about the Kirby solvent recovery project, specifically if the asset has reached a steady state with its 80%+ solvent recovery.

Answer

Scott Stauth, President, stated that the company hopes to re-engage with governments on the Pathways project soon but provided no specific timeline. For the Kirby project, he clarified it is not yet at a steady state. While some wells perform to expectation, others require mechanical workovers to optimize performance, and the company is gathering more data before expanding the solvent injection strategy.

Patrick O'Rourke of ATB Capital Markets asked for an update on the Pathways Alliance carbon capture project timeline and questioned whether the Kirby solvent-assisted SAGD pilot project has reached a steady state with its high solvent recovery rates.

Answer

President Scott Stauth stated that while there is no firm timeline for a Pathways update, the company is eager to re-engage with governments. He clarified that the Kirby project is not yet at a steady state; while overall results are positive, some wells require mechanical workovers to optimize performance before expanding the technology.

Patrick O'Rourke asked about the company's appetite for M&A versus reaching debt targets in a volatile market, and also inquired about the slight dip in solvent recovery at the Kirby North project and plans for expanding the technology.

Answer

President Scott Stauth reiterated that CNQ is content with its organic growth opportunities but will remain opportunistic on accretive M&A, consistent with its long-term strategy. On Kirby North, he advised not to read into the minor recovery change, expecting a stable state by mid-year. He confirmed they are evaluating expansion of the solvent technology to other assets like Pike for 2027-2028.

Patrick O'Rourke asked what AECO price range would be needed to see capital swing back towards gassier assets. He also sought clarification on whether proceeds from the PrairieSky share sale are considered free cash flow for shareholder distribution and the motivation for the timing of that sale.

Answer

CFO Mark Stainthorpe explained that for high-liquids Montney wells, the economics work even at current forward strip prices. For lower-liquids wells, a stronger price would be needed. He clarified that the PrairieSky share sale proceeds are outside the free cash flow calculation for shareholder returns. The timing of the sale was simply opportune to capture good value from the investment.

Patrick O'Rourke from ATB Capital Markets inquired about the peak daily output and variability at Fort Hills and its role in achieving production guidance. He also asked about Suncor's appetite for acquisitions versus organic growth following the successful OEMS implementation.

Answer

EVP of Oil Sands Peter Zebedee stated that Fort Hills has demonstrated stream-day capacities exceeding 220,000 barrels per day, and the team is focused on achieving this reliably. On M&A, President and CEO Rich Kruger emphasized that the focus is on maximizing value from internal opportunities first, which provides a strong benchmark for evaluating any external deals, stating the company is focused on being more valuable, not just bigger.

Patrick O'Rourke of ATB Capital Markets inquired about the expected cadence of working capital in 2025 following a significant Q4 release and how Suncor decides when to return structural improvements to shareholders. He also asked how outperformance is allocated between dividends and buybacks.

Answer

CFO Kris Smith expects a working capital build in Q1 2025, reversing some of the Q4 release, but noted underlying structural improvements are occurring. He assured that as confidence in these structural releases grows, the cash will be returned to shareholders. CEO Richard Kruger reiterated the capital allocation framework, which prioritizes a reliable and growing dividend, quality investments, and returning surplus cash, emphasizing the commitment to shareholder returns is as high as ever.

Patrick O'Rourke asked about the key drivers behind the improved operating cost outlook for the Canadian downstream unit and questioned how low U.S. downstream operating costs could potentially go.

Answer

President & CEO Jon McKenzie attributed the Canadian downstream cost improvements to higher utilization, reliability, and lower gas prices, driven by tactical 'blocking and tackling.' For the U.S. downstream, he stated there is 'probably another $2 per barrel' of cost savings that can be achieved over time through a deliberate and safe journey.

Patrick O'Rourke sought to understand the key drivers behind the improved operating cost outlook for the Canadian downstream unit and asked about the potential for further cost reductions in the U.S. downstream business.

Answer

Jon McKenzie, Director, President & CEO, attributed the Canadian downstream cost improvements to higher utilization, tactical cost management, and lower natural gas prices. For the U.S. downstream, he identified crude slate, product placement, and unit costs as key margin drivers, stating there is likely 'another $2 per barrel' of cost savings to be achieved over time through a deliberate, safety-focused approach.

Patrick O'Rourke inquired about the allocation priorities between different forms of shareholder returns (buybacks, dividends, preferred shares) and the key drivers behind the strong Q1 margin in the conventional business.

Answer

CFO Kam Sandhar differentiated the base dividend as a core commitment, while buybacks and preferred share redemptions are discretionary and value-driven. Executive Geoff Murray attributed the strong conventional margin to better AECO gas pricing and significant value uplift from proprietary pipeline capacity. CEO Jon McKenzie noted the company's current focus remains on its four key strategic priorities.

Patrick O'Rourke from ATB Capital Markets asked about the intriguing multilateral cold flow wells in the thermal unit and the marketing opportunity for Canadian heavy barrels in PADD V via the TMX pipeline.

Answer

Executive Keith Chiasson expressed excitement about the conventional heavy oil program, noting active drilling and potential for 20,000 bbl/d of growth over 3-5 years within a highly integrated value chain. Executive Geoff Murray explained that the TMX market is still developing, with volumes currently split between Asia and PADD V. He noted PADD V is testing various crude types, and global shipping economics are influencing trade flows.

Asked for more details on the second German exploration well, the timing for the first well's testing and tie-in, and the company's capital allocation strategy regarding the balance between share buybacks and accelerating organic growth projects in Europe.

Answer

The executives described the second German well as a higher-risk, larger prospect with drilling to commence soon. The first well's testing is scheduled for Q3 with a tie-in for early 2025. They reiterated their commitment to the 50% return of capital framework, prioritizing buybacks due to the undervalued share price, while confirming they have sufficient capital within their budget to fund European growth projects without compromising returns.