Suncor Energy, Inc. Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Safety: No life-altering or life-threatening injuries, lost time incidents down 50% year-on-year, recordable incidents down 20% year-on-year, process safety events down greater than 50% year-on-year, achieving first quartile U.S. fuel and petrochemical manufacturers performance.
• Reliability: Upstream production at 835,000 barrels a day, highest quarter ever; refining throughput 455,000 barrels a day, highest first quarter ever; product sales 581,000 barrels a day, highest quarter ever; upgrader utilization combined at 102%.
• Profitability: Suncor delivered solid financial results, generating $3.2 billion in adjusted funds from operations or $2.46 per share and adjusted operating earnings of $1.8 billion or $1.41 per share. Returned nearly $1 billion to shareholders.
• Autonomous trucking: North Sea Bank mine has over 50 autonomous trucks in operation, with plans to have 91 full base plant oil fleet autonomous by year-end, providing $1 million per truck per year in sustainable savings and productivity gain.
• Turnarounds: Second quarter is a big turnaround quarter, with turnarounds at Syncrude, Montreal, and Sarnia refineries commencing as planned, and a major turnaround at base plant Upgrader starting next week.

Segment Performance

• Upstream: Total production was 835,000 barrels per day in the first quarter, up 93,000 barrels per day or 13% from a year ago, the highest quarter in company history. Upgrader utilization combined at an impressive 102%.
• Oil Sands segment: North Sea Bank mine has over 50 autonomous trucks in operation, with plans to have 91 full base plant oil fleet autonomous by year-end. Firebag asset had record quarterly production of 229,000 barrels per day. Fort Hills had a strong quarter with production in line with the 3-year improvement plan.
• Downstream: Refining throughput was 455,000 barrels a day, up 88,000 barrels a day from a year ago or 24%, the highest first quarter in company history. Product sales were 581,000 barrels a day, also a record high.

Guidance

• No changes to production, capital, or cost guidance for the year as the team remains focused on delivering commitments.
• On May 21, the management team will outline the next 2 to 3 years' expectations, financial and operating, including volumes, CapEx, and shareholder returns.
• Anticipate a more comprehensive Investor Day later in the year with a longer-term outlook.

Risks

• Actual results may differ materially from expected results because of various risk factors and assumptions detailed in the first quarter earnings release and current Annual Information Form.

Question and Answer

Q: Greg Pardy asked about where Suncor is in the turnaround and shareholder return picture.

A: Rich Kruger said they've hit their stride, with continued consistency and predictability expected, and Kris Smith mentioned share buybacks were lighter in Q1 due to crude pricing but increasing confidence in cash flow generation with more details on May 21.

Q: Roger Read asked about autonomous trucking in more detail.

A: Richard Kruger mentioned belief in fewer, bigger autonomous trucks being safer and more efficient, and Peter Zebedee talked about over 50 units in autonomous operation at North Sea Bank mine with productivity gains and plans for more autonomous operations.

Q: Manav Gupta asked about the company's strong start and refining EBITDA margin.

A: Rich Kruger said it starts with safety, operational integrity, and reliability, with the integrated team focused on one goal enabling aggressive marketing and value capture.

Q: Dennis Fong asked about upstream增产举措 and upgrader yield.

A: Richard Kruger and Peter Zebedee talked about low-cost debottlenecking opportunities at Firebag, pilot projects for in situ technologies, and yield uplift from PFT due to physical integration enabling value maximization.

Q: Menno Hulshof asked about Canadian diesel market and OEMS system replacement.

A: David Oldreive talked about softening diesel market and Suncor's ability to find best customers and capture value, while Shelley Powell said OEMS is about standardized processes for repeatability and consistency across sites.

Q: John Royall asked about refining reliability and营运资本.

A: Kris Smith talked about changes in downstream accountability and collaboration across sites, and working capital drivers in Q1 being higher sales volumes pricing, with expectations of inventories winding down in Q2.