Suncor Energy (SU) 4 May 212021 Q1 Earnings call transcript

Good day, and thank you for standing by, and welcome to the Suncor Energy First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Relations. Investor VP, Bell, Trevor Please go ahead.

Officer; current and Thank results that in first annual Little, today's Welcome factors website, Chief may Executive Suncor's comments because contain The and materially referred morning. earnings form. EDGAR well assumptions our described first you, GAAP. are President Officer. comments risk are call. actual as note SEDAR, quarter in Chief Mark prescribed various differ to these of operator, results as suncor.com. of quarter are by With to they our information Both morning on from measures Cowan, are expected Canadian release information. good me earnings Please Alister and and these not forward-looking and Certain Financial available this financial our and the

please For our a see first quarter financial of these release. description measures, earnings

questions. Following up call formal to we'll open remarks, the

over comments. Now his I'll for it to hand Mark

Great. for Thanks, Trevor and you us. joining good morning. Thank

remarks, operating I Investor Day we analyst that Virtual and business the into our Before outlook in get investor at address performance May allocation an community for I our XX. will be would hosting day, from will On on note and detail and that capital to like we ESG our opening perspective.

utilization achieved pipelines. generated funds our position. $X our refineries their supported costs leadership performance on downstream business, Base our barrels excellence, operational fortifying production XX% operations of executed the namely: Situ Plant of continued commitments upon at shareholder across and focused As a primarily made interconnecting This In we quarter, our focus [indiscernible], Within day was on a resilience, remarks and shareholders, by our be result, billion today will In from our flexibility increased upgrading Syncrude returns company. results. we industry a as through flow first we our XXX,XXX first record the nearly disciplined quarter financial to and have the

model restructuring or our generated debt integrated $XXX shareholders buybacks funds $XXX from and XX% excluding funds We the related physically to roughly and $X.X announced by $X.X approximately from reduced total previously returned operations, reductions. approximately share dividends of after-tax through Our million to charge of headcount of operations. billion billion million our

February resumed at bought made shares cap including the purchases buyback a Our $XXX beginning buyback back market of yield on April, X% million, and XX we of in on representing for million our annualized an basis. approximately

in performance. a that the best our operating trend our On on second Base I Syncrude combined Plant quarterly Focusing SCO call, our the production and the with quarter quarter continued history XXX,XXX mentioned upgraders first set into barrels This fourth day. even reflects a at stronger production Together, performance of marked a our the these six-month maximize strategy barrel. ever the value over period. production to day. barrels of each This highest combined XXX,XXX SCO facilities quarters upgrading two with

a Many the story our the news cost have drive on we had in out costs, good which bottom to similar year improved the XXXX guidance of We you performance closing at of recognized end range. QX, continue down.

to below XX% the the strides business. significant reflecting these trended quarter in levels, on XXXX structurally first The initiatives the of our made cost improve

barrel the partner end to was a us With Oil operating owners gas costs a absorbing and with quarter. cash As $XX Along with barrel, during quarter-over-quarter at the more XX costs XX% first utilization the CAD are XX% result, mine operations progress first change XX,XXX Sands the third other by At on the made of decision ramp-up Fort barrels operatorship support, our the of achieved Syncrude, the natural a Syncrude strategy. reflecting increase. a averaged good quarter to than of Syncrude the personnel a mine plan. we of Hills, full smooth averaged making reset net in the quarter. transfer production a day, price

two-train Over keeping provide while Appropriate to production the a the consistent plant, on ore year. feed XX% flat. It operation. months, change This range increase at nameplate four to guidance for a the year. inventory operate we required the our profile does plant will production the to our impact ore merely available not inventory the production the of next capacity changes levels throughout are

on exported Our and funds Canada. across both midstream confident significantly downstream Canadian despite expertise margin billion margins unlocks profitability, see you the that generating pickup, had and and of our continue to increases. nearly improve stay-at-home as operation as another economy capture this build good $X assets cracks leveraged orders market-leading quarter, am We I in the of volumes volumes. level will from robust continued to and vaccinations we higher

the and health the above wave and is and hold McMurray. else. third Currently, of pandemic importantly, in we the all our contractors Canada impacting of region Fort employees safety Finally, most of significantly the

with turnaround at and situation start we've June. least until Syncrude in the our of UX this Plant Given Base of turnaround the delayed the at middle schedule,

been see will and decision XXXX overlap efficiently. These gets when our this We expect to currently Syncrude performed turnaround the This measures material completion ensure the to maintenance and guidance. assets. safely planned impact We two no taken have be supports of our minimizes the between finalized. can

rapid McMurray accelerate governments players the in continue industry and and also to with to vaccinations community We and work with the testing now Fort region. of other

times. the Alister to its We during now community through I'll financial citizens over go assistance to these trying highlights. provide it will to hand our continue to and

the Mark $X.X quarter, billion from highlighted, of Suncor In operations. generated Mark. funds first as Thanks,

reducing approximately Consistent expect the call. by our allocated sheet outlined approximately buybacks. excluded Syncrude charge repayment restructuring balance billion. other as the share deploy integration and to company-wide technology operatorship funds across flow third debt third said, we charges we progress plans our we total debt after-tax we by and the We Mark our thirds year $XXX one-third quarter company. resulting restructuring strengthened as do of processes investments as from and for XXXX, million two this of with during free we another the that We later this, staffing to balance record the $X.X reductions XXXX Now in to approximately quarter announced

and for issuing debt a equivalent I in in purchased rate. the average at short-term appealing XX-year the the We of this our integrated billion confidence also for very of X.X% program repurchased at Oil million. paper our viability X.X approximately X.X April, portion In beginning we per an commercial long-term issuance terminated Restarting U.S. Canadian CAD million believe a we models. Sands February, market's demonstrates shares in share. the of markets by physically share XX an buyback the million additional our shares $XXX at $XX

million repurchases of $XXX year-to-date, million over So that's stock XX or just shares.

in quarter-over-quarter. operations generated supported results barrel, respectively. Oil CAD significant funds nearly QX Sands and billion realizations were flow, is of barrel price per CAD progress doubled made the Our The quarter. improving financial XX our per bitumen XX% SCO levels. operational approximately XX realization $X.X strong nearly and

barrels from achieved CAD segment day nearly by we compare unit our are absorbing of If while not but nearly selling our performance. $XXX I cost generated gas increase cost million. coming operations cost XXXX also barrel. aggregate The general down Mark and for and to noted, are absolute natural progress XX% the seasonality, Sands improvement This of $XXX a E&P increasing per Oil funds production XX As our per operating, by per million price down, prices. in with only continue to QX was realizations costs XX,XXX

lower production timing see sales E&P. delayed purely is will sales issue. our from you the financial statements, Loadings our than in were This sea are in given some and As challenging a the quarter states.

from the operation second in provide operations. to which an funds We uplift quarter. $X will expect our finally, from to reverse, approximately of this funds downstream recorded billion And

is tailwind, extended utilization XXXX from of are and but We levels our industry-leading Canada. a stay-at-home rates integrated our across a this improvement So logistics FIFO reflection despite do continued the network. most healthy our from orders our model, a of midstream we benefited capabilities recognize and

are volumes with to allows not end able Our the simply others model place us consumer do. that to

As in allocated is operating expected buybacks. free be macro February, current the any additional repayment and funds performance, our to debt I environment to flow pricing solid said and given share

free that, to flow for closing XXXX and of one-third share pass Our capital two-thirds XXXX. back change, maintain comments. I'll and debt allocation approximately Mark to our to funds some for buyback not for With repayment it guidance we will

Great. Thanks, Alister.

free with our focus sharp improvement do discipline ever. on capability Investor Day hope first performance. excellence, further focus returns, in are towards we tailwinds fortifying Canada, on costs, positioned of generation to demonstrate downstream May our a on upstream us form expected stronger Combined can in the operational XXXX and financial flow [indiscernible] of to margin funds $X our than and quarter both our large the resilience, financial shareholder capital our and XX. join is our particularly and the results business Our from benefit business target, I everyone enhancement billion in

initiatives are lowering We generation our more back and and our resilience with Trevor including With details costs while you. our capability forward adding flow all environmental better returns that business that, the structurally achieving funds performance. to shareholder looking plans, base, of financial are capital about and increased of sharing targeting increasing this the the to

turn call to some back to Thank you, the Mark and Alister. operator take questions. I'll the Operator?

with question [Operator Greg of RBC Instructions] from first Capital. the your And Pardy line comes

for Really morning. digging me, bit into Hills. I back a one guess little good question Mark, just Hey, and its Fort

versus right, of basis is that a ultimately the a plan wondering mean and in buffer. the follow-up exit is that the I'm for sort then you what sustained then methodology, a kind on a inventory you've of from from does moved of So what ore laid And whether costs? sustained just-in-time out, terms rates have with

way you shutting the when operation and literally train it. about minimum. trains way periods talking below to down the ramp two for of Yes. it's we fair Thanks, it two that. of of up, that's with average an slowly Yes, the I Part changing you trains a guess some constantly running in Greg. are time, interesting of them cases characterized is issue

plant. look, view our of was, within enormous an creating variability amount the So this is

for get into full the have that a in all we're to although XXXX, $XX we cost initially to is full you be of expect but which and expecting much just the mine $XX stated XX% get at QX very of off reductions be don't Hills, Let's ready Fort to overburden, as get expecting our we're year-end. the to rates. be or we go XXXX. then that into you And in barrel in we as at range implemented, capacity September, within at mid rates plant in clear And

– smooth? when last piece savings Okay. you've that And you of on haul just into autonomous are them. last piece Terrific. The cost seeing deployed that the helpful. is – as that is think the it's trucks, I of working? And then flipping How that of that's all

Yes.

support and before, is there's and Part staffing Hills. trucks, also stated Fort we of cost at of such. operation that we the driving the but of down haul Greg, changes As lots structurally were autonomous around

So they're yes, They're delivering operating. non-cost and well and reductions. they're going up

Thanks Terrific. Okay. much. very

Greg. Thanks,

your And Neil line next question Goldman from Mehta with the of comes Sachs.

you. Thank Yes.

questions So in deleveraging like the up of looks capital first first buybacks the good It returns, in quarter. of the just set here pace you around picked April.

and how XXXX just of forward So your you the approaching relative can are about share in about you you're repurchase to pulling talk plans? buyback thinking the some

Neil, would that the I to March. Yes. we as it we numbers consistent we generating one-third in are that with pretty were two-thirds and deploying April the flow, realizing we we – say free was are cash that and said. buying in back

wouldn't consistent. forward. that, I say it’s pulling pretty With we’re currently anything So

said. and allocate we the As allocations flow, generate repayment the to it debt we buybacks cash that we’ll and

a cases out? follow-up about ground And that? in conditions flush area. managing of the COVID What Fort is the at manage if the schedule, are risks the you then you around point? Can on a little you this know to just I doing And sense the us around talked that bit give turnaround your you McMurray could

Yes. Thanks, Neil.

operate amount world. we've has things. COVID before, As changed from protocols, masks, working testing. This Everything augmented recently we've to be in able sanitization all bussing, sorts a stated things been there's of massive rapid different to of a that with

consortium. rapid We’re part Canadian CDL screening of the

the positive communities testing the We're in rapid people working are help accelerate would say And in such. with to the within that Alberta testing that now that across in And asymptomatic up COVID I the just about recently, we've individuals. governments used health and region. so be industry then collaboration able of our X.X% finding Fort vaccinations that. and and from McMurray implemented being testing And to been with that's to we

now. people as working I and about in think question big all area and companies a right this soon hugely of McMurray the possible. on turnaround, get within issue the The vaccinated into encourage testing to is, are this on their the a specifically number to rapid turnaround. would – turnarounds accelerating, and But industry coordinating is important turnaround key certainly is vaccinations. part your of Syncrude's all focus of together as of there's Fort going the and the

is was of vast was wanted that majority that, last view already getting the way focusing Our so situation to that do we we made thing is The out UX before and the lot just with on started. and we're it such. execute such hoping The up pool. of a should stressed. and us able labor open overstress labor turnaround COVID it situation of much better the and And to being efficiently sense in vaccinations manage to actually we'll and safely acceleration be a to the turnaround, within Syncrude

we've So that's why decided defer. to

few a Makes weeks. sense you See Mark. in

Neil. Thank you,

question And Gresh line comes Phil JPMorgan. your from the next of with

morning. Hi. Yes. Good

costs. operating the on just is question First

those showed the pretty and you've as to expecting As about, full-year. be you're in your for slides, flattish talked you

first low in XQ down do XQ. it was year-over-year, obviously some OpEx The but we quarter, and extraordinarily lap

you to lapping ability thinking permanent some saves out just will us some year? come could of that this that about continue maybe versus back costs cost to So you're how remind we'll the be knock temporary the

incremental Clearly, like supply the like ground structure it billion Yes. focus That applies generating $X haul this of is flow, things of a question. our around restructuring the lot on in cash our cost company. But autonomous things free chain. Phil, thanks the for the trucks. also affects with of the

affecting that's our supply we’re been well. million a quite hundred actually to couple chain, take technologies. of It's So and out tailings dollars of going trying our actually

driving we're technology. sustaining ARO capital past using our and of some the by our down So actually

on money working changes a level. out corporate Our trading the generate organization we're well. them. of work structural that supply doing with And expecting bunch on strategies of bunch and systems and is associated a then the as to trading of at We're

this quickly So as obviously are working we as at possible.

XXXX a because when detail get sense it. more up into But You'll actually with confident associated get invest cash better we're Investor to little going $X we've period the offer by it's a that's this billion I of to get shows continued that that we billion $X think the in joys through our much and increasing how ongoing into Day XXXX. this going that deliver the because we'll – And flows. by one very we're to bit and

but had still flows in levels then And back oil the kind of return on consistent to the business, seeing close just we cash Okay. were with in more E&P Got prices we XXXX it. the are E&P quarter, what year. last

of curious, recognize just takes you puts performance would was lower, I any I you how is So describe but could the on versus thoughts XXXX, production other E&P? and bit share E&P? especially the in the a

your if your half give address lost me try let it a I don't we think you of I Phil, question, can follow-up and point. but

care I sure. in base we looks resource that's really like. view don't short the think pure we because We're kind We goes the what we're a up part of or not it company, it, with of of player really for that care whether production associated don't down. E&P resource

And could right and focus making his online, work as right of decisions but inventory is quarter. potentially so selling with and the government Terra comments, process back that's that working mentioned around disciplined execution And is partners the to following we're Golden the Alister how there that the our and we get continue built nothing the the at in Clearly, the with finalized to in forward. is in associated time. just move we is, it. Eagle Nova one we're process

of And that. so some we'll see

from So are flow all we what see you didn't the producing. cash

necessarily quarter, of particular fully business. representative the it's any not in So

Okay.

Phil? Did that question, your answer

it. not said, cash with That I flow and as consistent as oil was $XX period, missing. Yes. else just I I a some – inventory quite was also was as is it But is mean, if But seemed factor you a nowadays. anything there and things. the you. I currency guess, like factors other there's curious well Thank figured

quantum jump just to in about sales million production the the and there. and inventory in I’ll is you impact just The cash some maybe of Phil, give build flow, there. $XX

All helpful. right. Thank you. That's Okay.

comes line And your next Credit Gupta question of with Suisse. Manav from the

little managing little. What of year it's was to flipped year, better this and focus bit wanted downstream. up than kind last Canada. saw U.S. a COVID is just U.S., I a all we Canada lot a on start it's quickly better managing slightly stuff of than

have the how U.S. and U.S. is looking than Canadian you sell refining a more the the now is suddenly both demand? demand this trying better little going stronger border side a Now situation little operations I'm and in regions. of in you to where be looking that understand, demand try will to products is manage on Suncor

Manav, think know, that demand I demand a in what you've in of going you well X% had it, is Yes. Eastern it’s everyone lockdowns is the described probably Like, something look of going and way, don’t U.S. is as the now. quite in Canada gasoline, coming And I we're But when strengthening in seeing XX% that the actually out at our other actually some I during off. you're is extreme right Western it's Canada off think lockdowns. most like of we've COVID. entire right. Canada, into

able are to market a to our product you associated we've starting degree, the it. doing export with to What been So into logistics some is marketplace. bifurcated this leveraging to get be

U.S. a I think advantage that strengthening is bigger forward will moving if further. as and even the be

quarter, cover the an capability, in that, issue although of in to And the now we'll much in saying Canada so second turnarounds. have where leverage our inventory continue to less that we

our will we that as conclude much be so lower utilization And work.

in good Canada our So timing turnarounds well. I as really the is think of

egress Line seeing are issue could broader – TMX situation getting a X? How X, And slightly egress delayed. could view leave update the follow-up, on Okay. there's And on which always progress there. A in you. front. if it of Thank your if saw So keeps up. then this on you us We quick coming give you Canada? the Line us you I’ll

Thanks, Great. Manav.

On view of timelines sorry, of is bit this towards year this on two confidence the that you barrels bit around this a the line But if of been Line come of of expect – executing of a normal dynamic. market. Mountain, and around period on this XXXX Trans to always XXX,XXX time kind incremental it's that has a as around at never We're I of pipeline a within execution we end early X, by Those is the moving a expecting line. and are lot of certainty on And the Execution coming go to that – situation, the higher. end XXXX. egress out variability maybe day lines just time. had

So line Ontario if are Quebec. cognizant I the half the very will the for the that very do Canadian people Enbridge, in have hard are stays they gets and this Obviously, And one Northern we that Line as to from then because keep to finally oil a authority X, Canadian the Quebec, followed month there. flowing I the great be in of that this of market. doing as think emphasizing have that significant a it and line And to and including very ensure that. called things job significant consequence the governor and will This the the and that with the think is working hard well flows think on government of it this laws service. the Ontario shutdown. to don't is We be Ontario the stops this shutdown, and service. in refineries line who takes politicians, And we're of has into States line a that into keeping working working on both that obviously to

Thank you.

the your of next with Chris Barclays. And line question comes Tillett from

guys. morning. Hey Good

April? numbers quickly earlier First, figures of you for you clarify the in me. again, from Can the just terms buyback gave

Yes.

worth about back, April, stock So shares. $XXX bought we Chris, of million X.X in million

about shares So and in million – XX million year-to-date, it’s terms. over dollar just $XXX of

it. Got

you would occurs year as Okay. more speaking that? and in I you guess, your Thanks. just it comes approach there, of front-loaded Or door? throughout the have at in of flow And as Or then, sort the that? where on just, I describe your being kind generally head's terms the guess systematic of cash

It’s two-thirds of buying to trying said would – just flatline back. buyback. Chris, to debt it’s the cash so not taken view we And We're that, going repayment flow We the allocate we’ve and more systematic. systematically an more market we’re opportunistically the to into going it. time of and to one-third just our market. annual

helpful. of are of I'm spend heavy indication then me, highlighted through in remaining guess, rest the Makes doing. some the the the chunk turnarounds or can And maybe assuming the give for asset sense. versus I But you for is maintenance as how next Sands just That's shape good related about last figures over us the XXXX. a you and guys Okay. Oil any of presentation that to two to you quarter year? the that the

you go third all it's our October through of spend second the I Yes. actually We because as April in say of as and time. winter and maintenance try and possible period and to that and do we little majority fair vast year between look do the it essentially at quarter the our historically. back every money think

So some will certainly, quarters. capital the the the at with our more next we're push but the Base of in most spend that big get that's of quarters. you're going in Obviously, moving next two good occur money. to will of see actually the the the two quarter, our Plant turnarounds, a spending money could vast where portion And of third spent turnaround into majority

it. Got

guys. Thanks, Okay.

remarks. closing conference I'll moderator to And turn now over our the back for

everyone us operator. this for you, Thank morning. Thanks Great. joining

any See safe. be or answer happy to XX. Suncor them. XX reach May you. out Thank our at please here have myself on we'd questions, team stay you May Everyone, and to you hear further you If on and

today's concludes This Thank conference. you.

disconnect. may You now