Cenovus Energy (CVE) 31 Jul 222022 Q2 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Cenovus Energy's Second Quarter Results.

As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. advised rebroadcast conference of without be be may Cenovus Please or recorded the Instructions] that call this not Energy. [Operator express consent over now Ms. would like turn conference I to call the to Investor Relations. Sherry Wendt, Vice President, Please go ahead, Ms. Wendt.

and and you, referred These Second Results the XXXX to information, describe outline the located the Conference to of to end measures to Quarter at refer forward-looking operator, the and and oil Please today's factors Thank terms assumptions everyone discussion. advisories this Cenovus' today and welcome gas Call. news risk non-GAAP release. relevant

questions. MD&A Additional Investor XX-F. we'll follow-up the our brief information Executive and is in royalties team available questions in are We that Pourbaix, figures then stated. detailed recent on Cenovus' our Canadian Form you Chief annual instead call. our off Instructions] and and otherwise please will and take and before and with please unless Officer, Relations AIF any provide presented directly dollars ask go most hold comments, All ahead. Alex President Alex, modeling [Operator after on those your

Thanks, Sherry. Good everyone. morning,

always, start going morning's call I'm our priority, health safety. As top this and with to

to reliability the continuously Cenovus on safety bar and Our at aim through is culture. learning a raise

we in ongoing course to with successfully us thermal the activities Lloyd Canadian and these executed presented year. a of along staff Lloydminster. additional the some these Having turnarounds planned quarter refinery maintenance accomplishments safety I highlight half And and the and at to well safely maintenance Lake, our a we and both dedication at safely programs Christina normal turnarounds large This reliability. their back manufacturing, our in plant at our challenges positions and of and undertook for as thank projects. completed for and successfully we of want completed turnarounds number at In operated upstream, maintenance assets. our turnaround upgrader

that towards longer-term are I'll on and and projects ESG our emissions today. we build includes released we to efforts This report progressing our also targets. our QX on note of It's capture making by our available our moving we towards XXXX. Net emissions Before as carbon progress Zero ambition and storage results, website the reducing our on XXXX updates

Turning results. now to our

Over the the we quarter, strength demonstrated our second of operations. continued

returned the we've Lake of Following work in exceptionally to successful review, a well the been barrels production At And planned continue diligently and following ability teams and maintenance Creek, to reaching safely and XXX,XXX safety turnaround, day. has over confident Christina the normal we in quickly optimize asset thorough rates. deferred to next QX a turnaround technical July, a single Foster our year. for on operating to The intervals originally the reliably. project, are running

production is our the come quarter. other August. high Sunrise Spruce we've rates, we new have barrels XX,XXX You'll the in and there. North on to project. track Lloydminster Thermals continue of the close the reflected full-year and We're expected Lake increased and add This started the to also capacity deferral half online to see third is per that The slightly will of guidance early purchase production day run of in at steaming

in were upgrader day spreads. get given beyond seasonal margins We exception Lima, over throughput high the day with above crack the in quarter. excited Cenovus which that per to this and model. crack historic we barrels deploy historic the and were nameplate norms. in with is downstream, operating of We to even refinery, Lima spreads from all at barrels our of In to U.S. continue further team reduced we crack our future. the spreads Our in during This benefited ran per to its XXX,XXX to time, see also XX,XXX same Overall, strong the unprecedented our means plan particularly the turnaround at point highest. up some of June refineries of at throughput, potential refining, when but basically, saw production get

While year more has Gasoline remains gasoline softened have weeks the the come few forward rates the utilization with running strong. remainder levels. returned for down curve of it refineries high the at past over have somewhat, inventories cracks to and normalized

have not five-year distillate remain crude averages. while they stocks However, edging to and Hardisty. below differentials have Meanwhile, just up, U.S. heavy continue at been widened

past, together a of outlook and with While side integrated model the has now the now transaction. put differentials Cenovus, the the receive light-heavy for we drastically, largely we in Clearly, U.S. meant refining are pain benefit seeing Husky of business. on greater widening downstream changed the much the for benefit we the

outlook of business While financial refining dramatically so has cash too performance increased, our our the the have for U.S. taxes. expected

the cash said, more cash was since slightly cash April. quarter in QX, $XXX and than total $XXX around end shift to tax the the significant to we Our mainly guidance lower million That the fourth increased taxes of our the double for spreads our assumption XX% quarters. range have Similarly, be we expect at of with year the for do for each of third last remainder tax more in than increasing of of full-year in Chicago saw the in million guidance crack our we XXX reflect QX. what nearly

We for costs operating venture significantly rates year, impacts joint quarters. second That have our higher with activity completed second the the the barrel by the our fall can on almost particularly versus you of half downstream. partners. in first guidance turnaround throughput the year, and seen all said, for and now This in operating the reflects turnaround first operated per refineries the expect the cost increased half to also in costs

the billion Funds results, free funds of in $X.X also In billion. terms was the Cenovus' $X history. flow was was excess financial of Free highest our adjusted flow $X.X flow and billion funds quarter's about

at funds towards excess returns, shareholder end billion and over $X is our net which of dividend. base $X QX, and XX% QX about billion allocated the Given flow debt free above we've between of was

the delivered such, we to over quarter. buybacks shareholders through As $X share billion second in

are buybacks returns, share preferred mechanism share the price before, range variable about least for talked it the around I've our recently. when As is been has at

About while our capital continued to $XXX guidance mid-cycle We opportunities value shareholder deleverage also in progress the at $XXX oil million. the will rest spread to at sands. the operating of view go to This Sunrise, in about capital of of of application share how in the model million will restart in will intrinsic oil acquisition about added towards balance continuing closes. around deliver additional to and returns additional Sunrise once the our the $XX to work Capital XXXX. to example debt opportunistic pricing shareholders ability our half maximize strong be at a disciplined take natural of rooted The Foster advantage accounts nameplate. sands on including QX buybacks increase Thermals can for that This a outlook back inflation. with across these Cenovus' also incremental and the will interest that some XX% an is increasing activity of to tandem we've financial year floor. accelerate We've to look about increased basis adding the strength. We've the million pricing includes Lloyd framework for XXXX continue this conventional To in great return White also into drilling strategy for Rose sheet project. and the WTI. operational drilling $XXX of continued business through Lake will our million optimize gas towards The Christina also volumes in to $XXX drive fourth net and West added around some Creek, to quarter. returns for portfolio, was production

we hurdle incremental volumes production see this as higher expect cost barrel capital and us a half strong $XX returns WTI with to for over well of today's position prices. towards production increased to also rate increasing of capital And momentum day year, at per go meet return above. very All barrels XXXX. of activity at commodity second into of will continues upstream the the higher XXX,XXX we in The our even

business drive barrels I the be And acquisition incremental Sunrise represent interest online closes, earlier. the production. in a increased of thousand Spruce the Our day short-cycle will day Thermals, the conventional coming adding mentioned production XX,XXX of will program drilling also few once a adds. Lloyd will Lake production a North about that barrels BOEs in XX,XXX

set from we September further as again and excess on production we positioned Thinking there Looking still ahead, production of we're down deliver. increasing XX,XXX at head shareholder to activities even we its year, Overall, while And demonstrating we later to we rates And back about debt major first for a back on be the operations rebuild move billion second that, can to Toledo and in the full team normal off-station an year BOE the in end Terra the is looking back once of normal flow of of let's plan see results, turned XXXX. this our free by next to allocate the to and first everyone's year. its restart the with begin downstream, expected kind towards about net XX% QX's come early Indonesia have turnaround, the of of per business coming start-up questions. to all to to returns. back variable as QX, Superior year. refinery strength over refinery quarter next shareholder the is the we'll developments of to delivered around Nova is to following continue we XXXX and returns work to solid the stronger into day half will half operations, be with $X.X funds soon the With assets

first Instructions] and to TD Menno Securities. We the question-and-answer is caller, go now who session begin the with Hulshof will [Operator

you're a be Good about they're numbers, remains to start especially million everyone huge inflation Maybe and for net And a on small to XXXX if I'll basis thanks timeframe. XXXX issue. White either, the $XXX questions. just my like year they're but not $XXX looks million with going Rose. in an through not taking morning It West spending

is question interested of seeing cost the is, are to that doing? stake opportunities I in So And guess project? so, in reduce that you'd my And further much you something XX% in? be is locked your if how

to $XXX here is it of spend Hi, is part the $XXX business. in. million of three you in million years, is Ramsay from through Upstream mean Most Yes, say. I those our locked our as profile Norrie it

the We have previously all purchased equipment. hardware

kept any exposed actually not to of inflation from kind of areas. And kind we're those we've the asset activity So warm.

did So again, that we we the as recognized is this restarted reset within the all budget project. of

So exposure escalation forward. further we don't as to cost we expect any move

project the exactly just our to we continue we ensure share forward. We'll of kind look maximize now. to for the be production value would where equity from that in forward work to safe now is to it early as we Our with like co-venturers move we And can XXXX.

WCS Terrific. WCS And by quick I'll crude WTI, differentials that a range, that in on just currently $XX in with question range. $XX follow-up Maya maybe heavy in rail,

an can Hardisty Hub of this the remind So uptick? from should stabilize cost Thanks. range comment see see we the be maybe should and whether to whether foreseeable -- for just you on what the as structure you activity yes, maybe Bruderheim we anything? expecting in differentials do well. levels Or need in not committing even terms or just to or these us on before And future

Coast we're online. it's kind still on historic by the ramp-up sour a projects Gulf Keith pipeline, in kind I for currently strategic kind Interestingly really end medium all although current to of the sands rail. two that, and say. rail, enough, what cost barrels But the August the of should and the And kind sufficient with numerous October. kind putting apportionment WTI I additional being following some low release, wide it's so it's into kind structure, there's U.S. in a the of contributing on lighten heavy market into there's timing, though, factors, Alberta, distillate impacting production is so by heavy you more very in note we're demand in spread that the of timeframe egress. the oil when would Really, been offer of of that which huge is spread And pressure Coast. seeing we're turnaround would reserve seeing the as is petroleum anticipating Chiasson. we're as of Menno, light one well to seeing then ramp-up U.S. of forecasted up We're Hi, kind which the coming barrels the obviously, factors coming of norm, up those combination and Gulf seeing look crude getting prices, crude in of at the

seeing company between capturing From operations this wide positioned better So up we're is at time. you're operations, than current benefit wider to a the historically U.S. a our point a in crude our downstream lot that these differential perspective, differentials. from we obviously Canadian And not some advantage of quite it were. ramp with and

Terrific, thanks Keith. That's all I had.

next take our with Greg Capital now question We'll Markets. Pardy RBC from

is else? thanks. for sustaining good couple think size Thanks, into one the given look we first how we of as Hey, about morning. CapEx business the me. A kind pressures But the inflationary all and everything and should 'XX, just of

Jon it's Greg, Hi McKenzie.

flat in well the plants safe is range. of to since consistently the as that given upstream, guidance we've Husky that production our that with condition. that stable billion And we sustaining and $X.X capital pretty and fixed So acquisition as the market included kept did downstream kind in

So to we're I things consider. two assets. there's One is think adding

So on requirements. Toledo will bring the half of there example, as the pressure about. then capital up, our inflationary you've other sustaining that talked take and Sunrise is for And we increase that

not So to would question that some pressure, billion probably we're of we'll that. moving as as our assets, in at be $X.X through we are where the right give $X.X billion and an But billion, X.X. range. of inflationary that. we we've $X.X into some higher. and but that now, through think were drilling budget say But like the our order take currently of definitive fair areas I you account conventional it's to It's to And more it's to XXXX add around then it from incremental a that answer magnitude costs, seeing some work into we we got of working of

think Alex. Hey million represents in just capital $XXX put everything it's you with $XXX million of addition, about true about perspective, to And of if kind that Greg, I'd it John kind agree of probably said. inflation. that And

we're relatively impact. budget that So about talking a sort of on the modest single-digit

for Okay, thanks that.

is downstream. the the operation wondering describe operating elsewhere just with profitable. think you but a operating or demonstrated the improvements kind things can of on few maybe of on favorable there's question. lot also case, Cenovus I just making of in much a right Second that Toledo I'm in been an you've I And the if on and just going mean terms what's better has in bull that, going upstream.

the is Greg, Hi it's lots going question there Keith. for Yes, because on. thanks

of high opening Alex's I remarks, about into think barrels kind talked throughput kind market. a in of a hitting Lima record we in of June XXX,XXX crack of day north

very So partners further some capabilities. downstream our that we're our But of also working assets was with at good. enhance to our in U.S. joint non-op venture

in mode, handle advantage currently ramp-up second higher So as well it gives barrels, to Toledo finished it able heavier additional be as which the is it number will crude additional a total has TAN where higher barrels, asset phase barrels. an but

projects to then a through barrels Wood obviously, these type increase heavy difference. some of able now makes new Borger expansion in connection there. the improve crack with gone pipeline big product yield River which, access well. significant as spreads to And Canadian their in has So is capacity clean

of at So of Superior from finally, in and we're additional asset, advantage. of a across and into to moving the over seeing And start-up heavy that crude construction joint Canadian that are then our taking which into significant starting Texas process adds progress ramp-up we value venture and refinery.

start. So per for and QX as everything full tracking is a plan product

exciting So and a on lot's time. going pretty

much. thanks very Terrific,

with Dennis CIBC We'll now World our next take Fong Markets. question from

for thanks and my morning questions. good taking Hi,

one is Sunrise. around just The first

that to potential just XX,XXX as underway see close underspending underway seen to to at you should the you we ability relative the potentially well thinking or barrels the either least currently timing a or have timing Given given about how day current the asset the on as or production return projects at potentially higher, of that the recently. more kind be what it's and levels, production

from excited Ramsay again. the Sunrise asset. Hi, actually our Dennis, We're it's Upstream Norrie business about quite

ownership take development our over it, plans kind we XXX% of are As of unchanged.

site. philosophies to to Lake Creek looking continue our Christina and the Foster actually are subsurface We apply to

we're is more seeing we've in the we're we've As the are actually redrill To been drilling slightly actually very our good forecast, expand studied of reassuring. kind the coming we opportunities. do date, that which as a And wells seeing opportunities. above site, geology, lot

the underinvested a confident was above we actually get asset the we operate. So we'd and back XX,XXX nameplate really for it to And of of number to reinvesting what years. doing I'm barrels is can a getting day, XX are grow next it how it's exactly we we year all meantime, and we're into forward. this forecasting up year. through as there. the go get months to as to the I'll showing and take continue In actually production next And like XX,

within reach quickly expect So I'd you'll can. three as we'll probably try levels, and us nameplate and those above numbers we years, as see

Great. Great, capital bit here. allocation thanks. My maybe second little question is a more around

given about asset thinking to potentially further quarter Just [Technical does how Difficulty]. you've seen profitability increased you're with of debt you kind integration, through upstream the reduced of as cost already cash or what done structures initiatives term potentially free within you alongside level along flow, of that incremental retirement generating affect the maybe and respect are And this and how guide that the we've that kind were outlined? downstream the

Did we lose him?

line Yes, is disconnected. actually sir. It his looks like

Okay. Well, that. answer back, if move maybe we'll And Dennis on. can comes we

Not a problem.

from Goldman Neil Your next with Sachs. come question Mehta will

stock post into down And you buyback Good morning, it slowed leaned I on when quarter, to want like capital really team. looks ran. then the the it. you start-off guys allocation. on And

XXX% versus we think how allocation, track you a So is your good cash Can about And company on if think around optimizing free just about you payout as cost a dividend? flow variable job base. your you've XXXX? shift buyback to the capital the the philosophy done about to talk

think It's about that and always will much how Sure, has changed the at buybacks will where kind jump value on note Neil. think mean, look that you some have we case. at others share And mid-commodity at heavily we the significant a into apply. not NAV versus free at with leaned and about But value. going periods when flow, in represented It of entirely QX our I'll the that behind thinking we suspect, that about I you we felt we you financial discipline that think I rightly quite we I framework, real of we cash dealing shareholder thoughts. Alex. on the that quite go will depending of may for focused in focused shareholder is think And be value, mean think I after when forward, we will most on driving shareholders. one where and advantage our very two those, the all. we're

variable So on the $XX of got surprised and a spare terribly at be see if and is But be a price between of focused to share is going we'll that shareholder real it's on shareholders. focusing we XXX%. probably $XX, the see And you X% of XX% one four, no versa, we're if hit vice to we commitment and dividends. us once returns X%, should important lot cash,

of view. wouldn't In terms But at I expect of flow. think don't see anything them cash forecast of around And at that floor the of billion look analysts that probably where the and or we'll before are, we off would be $X move all either me that end year. the I that sometime forecast, of kind I most

I were prices imagine. view... stock would Canadian, your Is the And

Yes.

world as been way? have And if higher. you was Has I your of the WTI guys $XX mean, could mid-cycle remember, have Yes. you of there's that view about? think is lot any to what repriced changed then I in reasons of talked for Alex, a mid-cycle, that kind

of be curious I'd thoughts So there? your

the world have guy, a oil position We in potentially are I'm I lot and I'm in even can world people has where to gotten oil. the or of get trouble think in still of sure $XX works $XX new the prices. era don't a a of times there changed don't commodity lot below. A think know. we're at not We cycle that much. assuming simple by my

discipline think with but -- still for for So -- we're on but mean, this apply. lot A in to continue potentially the oil of be going conservative can still that those that's I outlook, we fundamentals -- we're applying I really And the time brought here. $XX. world being,

you Yes, Thank we much. that. appreciate so

No worries.

Gupta We'll Credit with now question Suisse. take our next from Manav

would the as Hey guys, of crude? the in closer you would we be mean, heavy, us refinery. what yield, like? light, yield product of and Superior get the superior start-up remind reconfigured through if Can talk it then gasoline WCS starts be help I what feed as the to to secondary you ties online? slate, could And and refinery come output looking terms also,

Yes. Thanks, Keith. Manav. It's

of be the should in actually batch of rebuild, as Superior operations. kind we're and to run It think You being able used through going to reconfigured. operations run continuous to

will up. we're product of large barrels at will that be be XX,XXX a percentage, it. with through a third about XX% think finished And as to able percentages. looking throughput Canadian that is day will accelerated run when product a a So product of two-thirds be are be around of then going products starts the XX% and it you heavy a asphalt to small slate, some to When

for should I QX XXXX. it. that's way about up you said, the it's gearing And So like thinking be

one I you a Toledo is, you the deal, come do already that for refinery? of go has right last although still can BP And didn't I where world wanted to things ask those the we you price, revisit of combined could the think earnings the back you see true. a you full question And be quick just operator and that operator Toledo a possibility Perfect. guys Sunrise refinery? follow-up quarter of do here I XXX% I could one think then be call, did BP envision and

Hey been We that the and refinery our also Toledo would our gave asset I you think our and that those in the goal of terms is last a have that been are very quarter that assets to core us. That strategic us us. guidance in for assets I Alex. is that operate own suspect we've Manav, ultimately, of good strategic through and us assets to would it's continue lot gone to one that note logic having there. focused through, that not of be of of industrial it a eventually that at is we a contemplate there's ever one probably we which and has refinery a change biggest probably ownership. on, of going But time be a the something larger think turnarounds to would role

Thank you questions. so for taking much my

No worries.

We'll now take John our JPMorgan. from question with Royall next

my Hey good for morning Thanks guys. question. taking

adjustments So you waiver, et guidance, pressures, guidance the just looking your gas see portion and you type side it a where or the cetera? there? on can what downstream on to the OpEx the side for out relative of at better upstream to pressures a of was bump give is the us the a from maintenance magnitude called sense from didn't bump I'm And wondering we the inflationary wet there was what if meaningful other

venture the kind the Hey activity, longer. numerator couple went A and John, it's is of that our percentage to joint and it's of the a due Keith. Yes, maintenance turnarounds denominator. of large

we saw may kind but impacting expense So for the that's utilization some year. in throughput we of addition, not people know, our And turnaround. impact in

lot things they long, cost and cost a when turnaround that right of side So the they OpEx run goes more. into of

as in venture reduction was large the of both a refineries. was associated overruns unit joint well on as So the the bump cost percentage throughput the with the OpEx

significant going in that of think OpEx and is us the see year, maintenance I you forward. a should unit half we So when look behind the reduction second all of at

around then year, the Creek? Foster really That's into in curve of the And next you pushing there today's about to at prices just other deferral helpful. behind can out? Got backwardated the trying with drivers simply that talk it. are it Was turnaround drivers capture

mean, Ramsay all try Norrie to It's Yes. maintenance, the is year I opportunities do throughout minimize planned ongoing And we in outages. have the assets. maintenance Upstream. for we what the our full from here of

the So scope. as I was as basically mean, this work straightforward assess we

We doing regulatory are this inspection year.

the doing on But mean, the go much it's could reduction turnarounds can. asset, I we multi-year large and actually just MBD with as a we we of and even and across X.X of against the deferment. be there's it maintenance through as literally about optimize year case what we So spread as planning try on programs, our the our

early So minimize it done that to straightforward we'll continue maintenance just and deferring and it. We've the year is really relatively next a that. We essential year. this that can do to And the process. we're outage do

So it's annual process. of part our just

have McKenzie bit John and more it's that what in turnaround we little we Norrie adds our do is chime out a and from where turnaround, I'll was managing any But thorough a evaluation. future, it, assets defer always a just take John, Hey scope a and elaborate and risk It on do a reliability you But of to Safety and paramount. reliable you the way. in maintenance opportunity about. time can value for an defer safe into the risk everybody. talking or

anything pricing just optimization to that seeing how we today. undertake. It to do have his group and were was Norrie really it were an didn't with So able

Great. you Thanks Thank very guys. much.

Market. CIBC now Fong Dennis World from We'll question with take a

was sure know you if question answered to The I'm not did, dividend. and the kind of replay. guys base you it, around me let that final really listen bit the if I'll guys of just

talking don't answer. No, we to We didn't dividend, around about your give question the you we'll Dennis. you to didn't, base but try get and repeat just why the an

cost some initiatives to done from and debt from both asset the and online. reduce the of It as interest working including -- term was structures, coming the the integration, back just lot you've Sunrise and lot excuse -- the a increased of the as a downstream me, upstream retirements well Sure. refinery around requirement superior

there at of there's level of range. it, again, sustainability in How I of base for look to dividend Or at are increasing is basis? it Is leverage? and opportunity How go-forward again, dividend? things increasing are kind guys towards it that given, the looking more a kind guys you those guess, the still capacity the all just pegged, now? is evaluating you now $XX on given right just this So versus WTI base that

would at of that look it But about we're our base five important competitive we a is have that are And fundamentally as at sustainability that I expect the call expect our we that able us And we we and moving the to the to we is dividend alluded reliably part that -- really, a $XX, at it plan, also to off kind earlier, dividend in bottom I deliver as for front we would pace if believe resilience contemplate Leverage of cycle. business. would not grow plan have continue dividend. dividend, would we're case. growing commodity that paying as -- kind when a to to the company we is dividend we dividend of it's And grow all it. we base of a the have and of year continue to mean, --

then Great. indulge Thanks. for one just if And more. me you

the report, to Investor down emission plan into for reduction both be as that side. a on XXXX bit the and emissions. the bit as previously from Just or you comments might within that little little more as that the news your but of further Can kind well believe you happen decreasing about both ESG as this release, how I sustainability discuss to of those related what your also line, your I helping outlined, well year CapEx, to know of opening contribute the some some carry least side a at is from on initiatives conventional at Day? XX%

Yes. DelFrari. Rhona It's

year update -- be as in exactly right And specific have $X said, more where next the plan, working those going be dollars. we billion we're to capital some have as you'll plan that now. designating about we over to we five our about business seeing we're year five months details So

where we for long-term targets track the are. beyond emissions on are into I particular. for we're XXXX in these and so mean And

of going mentioned the pads some and you're lot well that target. XXXX what we're the the some What in some are emissions we've off the seeing paying figuring so forward it's projects closer or years, that term in doing though in of opportunities pads, studies around years. you're going is, about to to well But And to where zero feasibility and see we of in to of best pathway the the getting but we're a on. CCS net see short that's early early there more reduce the or not are is dollars, the the capital conventional closer methane XXXX going we're as out some to Those big it our of putting basically.

Okay.

Perfect. Okay.

more is it So methane reduction.

Yes. And when end at we out the plan the five year. business detail revised more you'll with get come year our of

you Thank very much. Perfect.

take question [Operator Varcoe Herald. the Instructions]. a now And Chris with from we'll Calgary

you rest become a is bite the spending a inflation. you plans little the for what Alex. where together seeing the of a I'm bit year your putting inflation And earlier you And concern wondering for XXXX? does this point Hi, are Alex, most? and talked as question capital it at into about for you're

of out most of sands years a lot planned think oil really an an But on think us. is is is that staged jump others I And not issue been definitely in may It's our big largely up sands, Chris, Hey, -- in the this. been in for advance. where in our the issue. in it we've seeing are really as activities because it oil I

have lot we well materials of procured contracts, in benefit procurement the lots our of advance. a So being long-term on contractors our of

it hasn't been has oil us the -- it sands hard on hit side. So

that up costs that could seeing but able little right we've components level kind it that or and like individual think drilling rigs, of a of in tubulars, range. side, casing, contractors, on maybe be frac probably a We drilling kind pipe, things. But around overall, more completion manage drill been we're below. lot like are the bit rigs, pressure sorts rigs, XX% in seeing towards conventional and be those now And escalation of to would I higher, significantly things of

XXXX on how Just those influence, them as that, position expect does do programs that you're have capital guess, How I plan? your that. a follow-up to guess, that? Just Do I because for of escalate XXXX? assembling you to you

a have right up inflation our We're is eat challenge always my find in to way process to is developing that be make inflation. try team inflation consider. or going we for I the the mean, budget something of And to XXXX. to to to for obviously,

years, that. And to we're some do able

But year. investment the to I it's going think coming have on. over of of change Next definitely of is year challenge. and decisions eye think is right not we something meaningfully our bit a a But our something be it's that now, I sort manageable might any

I would gas you it terms oil discussion week be pricing its system two the government of Just trade and were general oil directed I finally, last the towards one patch. that and versus for question the releasing to ask the last carbon was higher I guess a presented about wanted the federal reaction that in document in emissions cap. was cap to options what wondering your

off, out talked than are paper. about of mean, it achieved. oil we XX% options world XXXX that production. the in can the levels at those XXXX. two about path, reasonably emissions am literally very for to a Chris, on the and government Yes. lead first a I'll from that reduce we're if plan could policy in And say ambitious I this what by to worried more time I gas gas talk I either would production. options And maybe remain is about and shutting talking sector more when crying oil by And their

the And sectors I of the intended if that incredibly stay to very, that we resources You and production pathways the time Canada those needed was are -- goals And including reduction target initiative. cut represent obviously the risk going could if target when a very on a from XX% just XXXX, targets that in ultimately, worldwide. a transportation. very, be be hit. industrial those aware don't could those out, being everything think more including be these by other we any them, pathways we to industry -- possible I these much able goals, really, what said, going best we I of think strategies desperately are see And intended in of investing that our they're you're put really at agriculture, carbon is were do country, look difficult. they're heavy worked was at and quickly. aggressive to by incredibly be would I in are well, get to to case as to that out the asked

Thank you.

worries. No

We'll Williams Nia with from now Reuters. take next our question

Hi.

from and oil desperately just were saying about needs you what how world on Following gas the resources.

to you quite expecting grow as you pre-production were volatility growth As regulations just be cautious about? oil Cenovus, will on are and market well? production given you talking that Or also federal the

think those consultation great any there'll and I are certainly discussion mean, finalized. that I intended I going to be a government of deal think Well, be things of before there's the and

have of think focused in about I projects. we're So to organic, making our possible call about kind now an we give Husky decisions the and talking we've really and what large-scale on debottlenecking since capacity focused on a right practicality the I for company of brownfield I the lot business, creep, acquisition, been think are more talking been sort would it, we're is But And you rather growth growth, any organic just of -- example. not do.

over the And say have of If XX,XXX we year, you heard the at that again, we In look barrels expect back about production. us day. barrels at of end this XXX,XXX divested period, last you around once XXX,XXX ended we day year production. a a just interim today to year, at barrels

able really meaningful I so. think avoid been any pretty to that's doing we've greenfield And in growth. projects large-scale

production there? year? you about are what next And anticipating What

debottlenecking continue find will end I that we suggested there, day, that Norrie would I and will haven't I to brownfield in as XXX,XXX we'll continue to here or range. -- And at to of add those company kind we able around organic a opportunities. barrels year call this work. kind Well, the of would completed what But would be if ways expect growth be suspect barrels we I

Okay, thanks.

worries. no Yes, Thanks Nia.

telephone Pourbaix like over conference further to And Mr. I'd the it back closing comments. for turn questions. appears to there are no

operator. thanks, for everybody, out take much, days and And again, everybody once very of and busy your sure I'm care the you of safe. number time thanks from a taking your and Well, vacations, be

again all We participation, that now may conclude thank once your disconnect. does conference. for you today's And you