Return of Capital Framework
Q: Will you adjust capital returns if net debt rises above $10B?
A: Management emphasized that having reached their net debt target of $10 billion, they are now focused on returning 100% of free cash flow to shareholders through dividends and share buybacks. They consider this debt level conservative given the company's size and asset base. While any material acquisition increasing debt above $10 billion would be evaluated, they remain committed to the current framework.

Shareholder Returns and Buybacks
Q: Will buybacks increase, and are variable dividends considered?
A: With net debt at $10 billion, the company allocates 100% of free cash flow to shareholders via dividends and share repurchases. They assess returns on an annual forward-looking basis rather than quarterly to manage working capital effectively. Currently, the focus is on the buyback program, where they see lots of value. They will consider other opportunities, including special dividends, with the Board going forward.

Capital Allocation: Buybacks vs. Reinvestment
Q: How do you balance buybacks and investing in assets?
A: Management balances reinvestment and shareholder returns by ensuring a prudent capital program that delivers growth and value on a per-share basis. They focus on value growth rather than just production growth. Given the strong free cash flow, they can effectively balance increasing dividends with share buybacks.

Capital Budget Breakdown
Q: How much is growth vs. sustaining capital?
A: Maintenance capital is approximately $1 billion, but it varies due to the nature of the asset base. In 2024, they are drilling longer-life assets earlier and lower-capital opportunities later to align with egress opportunities. Growth capital varies yearly based on production timing, especially in thermal projects where some production is realized the following year.

Trans Mountain Expansion Impact
Q: How will TMX affect crude differentials?
A: The Trans Mountain Expansion (TMX) is expected to complete and start up in Q2 of this year. TMX will help alleviate differentials on Western Canadian Select (WCS) and restore the Synthetic Crude Oil (SCO) premium, benefiting both heavy and light crude products.

Flexibility in Gas Growth Plan
Q: Will gas production plans adjust due to low AECO prices?
A: Management is monitoring gas prices and will allocate capital to areas providing the best returns. They have flexibility to adjust growth, especially in gas, if AECO prices remain low. They anticipate relief in the AECO system with the upcoming LNG Canada project.

Debottlenecking Projects and Production Growth
Q: Update on Horizon and AOSP debottlenecking progress?
A: The Horizon debottleneck project is nearing completion, with final installation during the Q2 turnaround. This will enable non-turnaround years in 2025 and turnaround years in 2026, alternating annually. The Naphtha Tailings project will add 6,300 barrels per day of SCO after 2027. At Scotford, a debottleneck project finishing later this year will add 5,600 barrels per day net to the company.

Inflationary Outlook
Q: Are cost increases moderating? Is 3%-5% inflation expected?
A: Cost increases have stabilized. They expect 2024 to reflect mostly labor cost increases in the 3% to 5% range , with no significant inflationary pressures anticipated beyond labor costs.

Primary Heavy Oil Expansion
Q: Can you expand primary heavy oil if gas prices stay low?
A: They can allocate more capital to primary heavy oil assets. Multilateral drilling programs have been effective, and they have a large land base with multiple zones. If gas prices remain unfavorable, they may increase drilling in primary heavy oil to optimize returns.

Solvent Projects and Growth
Q: How will the solvent project at Kirby impact other assets?
A: The solvent project reduces steam requirements by about half, lowering overall capital needs. If successful, it offers opportunities in the Jackfish and Kirby areas to continue pad development without expanding steam facilities. This leads to better capital efficiency for drill-fill opportunities and potential for additional growth.

Operating Performance Amid Extreme Cold
Q: Did the cold snap impact first-quarter operations?
A: While extreme cold weather poses short-term challenges in conventional and oil sands mining assets , these events were short-lived, and the teams managed effectively. There was no material impact on the business.