Suncor Energy Third Quarter 2026 Financial Results Call - SUNCOR ENERGY INC

Good day and thank you for standing by. Welcome to the Suncor Energy 3rd Quarter 2026 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Suncor Energy's Director of Investor Relations, Mr. David Johnson. Thank you, Operator, and good morning. Welcome to Suncor Energy's third quarter earnings call. Please note that todayís comments contain forward-looking information. Actual results may differ materially from expected results because of various risk factors and assumptions that are described in our third quarter earnings release, as well as our current annual information form, both of which are available on CDAR+, EDGAR, and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian generally accepted accounting principles. For a description of these financial measures, please see our third-quarter earnings release. We'll start with comments from Rich Krueger, Chief Executive Officer, followed by Peter Zebedee, President and Chief Financial Officer. Also on the call are Adam Al-Badawi, Executive Vice President Upstream, Dave Oldreve, Executive Vice President Downstream, and Shelley Powell, Executive Voice President, Development and Projects. Following the formal remarks, we'll open the call up to questions. Now, I'll hand it over to Rich to share his comments. Thanks, David. Our third quarter involved completing major maintenance for the year, positioning for a strong finish, and maximizing value in today's business environment, we accomplished all three. We also announced the sale of non-core offshore East Coast assets and a series of senior leadership transitions, actions that will position us well for the future. I'll discuss operational highlights, and Peter will follow with financial, starting with safety. The third quarter was our safest quarter of the year for both personnel and process safety. But rather than recite data, I want to recognize an employee, Emma Todd, projects manager and EHS leader. Emma was recently awarded the Alberta Mine Safety Association's 2026 Trailblazer Safety Leader Award, recognizing her passion and commitment in leading people to work safely. Emma first came to my attention a few years ago on a project that was struggling. She rolled up her sleeves, put her boots on the ground, and got things back on track. But most impressive was that Emma knew by name every contractor on site. She epitomizes safety leadership at today's Suncor, and we are extremely proud of her. Upstream production, – 853,000 barrels a day in the quarter, a rebound of 92,000 barrels a day from a very wet second quarter, and our second-highest third quarter ever, only behind last year's record. Achieved despite Syncrude's 47-day coker turnaround, which was successfully completed in the first half of October. Upgrader utilization – very strong 98% in the quarter and 96% year-to-date. Base plant in Q3 achieved an exceptional 107% of nameplate capacity. Syncrude was 88% given the Coker turnaround. Performance, which is extremely valuable given today's synthetic price premiums. Refining throughput, 488,000 barrels a day in the quarter, on par with last year's best ever. Here again, performance delivering tremendous value in today's business environment. 95% utilization in 3Q, throughput 28,000 barrels a day higher than our internal business plan and consensus, achieved despite a 37-day turnaround at Edmonton and a 31-day event at Montreal, and despite temporary curtailment at Sarnia, did Line 5's unplanned outage. With all this activity, how did we achieve this exceptionally high throughput? Story time. Historically, a turnaround of the Edmonton Refinery's fluid cat cracking unit would require reduced crude throughput, equal to about 30% of the refinery's capacity, or 45,000 to 50,000 barrels a day. Because when this unit is offline, there's no ability to process the heavier gas oil stream coming off the larger crude distillation unit. This is where the story gets interesting. Joel Allum, downstream production coordinator, came up with the idea to temporarily store gas oil and to blend it with production streams from our oil sand upgraders 400 kilometers away in Fort Mac, creating a new marketable sweet synthetic crude. This innovative idea enabled full crude throughput during the entire turnaround, preserving 46,000 barrels a day of throughput that historically would have been curtailed, adding 3% to Edmonton's annual average utilization rate and 1% to Suncor's overall utilization rate. The best part, it generated in excess of $50 million in incremental free funds, $50 million. One idea by one person, Joel, embraced and implemented by our team, leveraging Suncor's fundamental competitive advantage, our unparalleled physical integration. This idea wasn't in our annual business plan, and it wasn't on our March investor deck. It illustrates our culture to continually add value and compete. My thanks to Joel and his upstream and downstream colleagues. You guys rocked it. Product sales, 677,000 barrels a day in the quarter, a record by a whopping 30,000 barrels a date, and nearly tied with our highest order ever, continuing a string that every month in 2026 has achieved a new sales record. Now the ninth quarter in a row above 600,000 barrels a day after never reaching 600,00 barrels a day in any previous quarter. Retail, our highest value channel with number one market share, year-to-date volumes are up 4.3% year-on-year. Jet sales at 38,000 barrel a day are up 65% year-on-year, and exports at 75,000 barrels a day are up 80% year-in-year. We continue to operate at industry-leading refining utilization to meet our customers' needs, achieving both value and record sales in Canada as well as in thirsty global markets. So third quarter was a big turnaround quarter for us. You'll recall historically we spent one and a quarter billion dollars per year on turnarounds. In 2024, on our I-Day, we committed to reduce turnaround costs by $250 million a year over three years. We achieved that commitment in two years. In mid-25, we increased our ambition by another $100 million to $350 million a year in reductions. We achieve that this year. 2026 being a big year, with the third quarter being a big turnaround quarter. Edmonton and Montreal, the largest events in the downstream and Syncrude in the upstream. Results, Montreal, best ever cost and duration. Edmondon, best ever cost in duration. Syncrute, best every cost in generation. Three for three, a Suncor hat trick. 2026 is now the third consecutive year with turnaround costs below a billion. Our schedule performance has improved from third and fourth quartile to first and second quartile in North America. Cost has similarly improved with further improvement planned. Specifically, we have an additional $150 million reduction included in our 2028 targets. On October 4th, we announced an agreement to sell our interest in Terranova, White Rose, and West White Rose to Ithaca Energy PLC for $1.2 billion in upfront cash and potential additional payments of up to $350 million based on future oil prices over a 27-month period. With the transaction, Ithaka assumes all future obligations associated with the assets, including a $500 million regulatory well compliance program starting in 2027 at Terranova and estimated abandonment liabilities, which total 1.4%. Through the first half of 2026, these assets contributed about 18,000 barrels a day or 2% of our upstream production. But most importantly, this transaction is consistent with our strategy and our value proposition. We create value through our unparalleled, physically integrated upstream and downstream asset base underpinned by large, long-life oil sands resources. These assets certainly of value, frankly, were not in that family photo. In Ithaca, we found a buyer whose strategy and core competency is aligned with these assets and consequently was willing to pay us accordingly. Win-win for both parties. As stated in our press release, our 2026 IDAY commitments to grow free funds flow by an additional $2 billion a year and reduce our WTI break-even by a further $5 per barrel through 2028 remain unchanged, reflecting our confidence in continuing to deliver exceptional shareholder value. A quick wrap-up, Suncor remains focused to excel, to compete to win with best-in-class operating performance ambitions, definitive value-based priorities and plans, organizational alignment top to bottom, and a team-based results-oriented culture delivering reliable and rateable high performance literally built to win in any and all business environments. With that, I'll turn it to Peter. Well, thanks a lot, Rich, and wow, what a quarter for me to begin my role as CFO. As I reflect on the quarter, I'm incredibly proud of the progress we've made over the past four years. That hard work has fundamentally strengthened the business and positioned us to maximize value in today's commodity environment. Not only have we improved our resilience in lower price environments by reducing our WTI corporate break-even by more than $10 a barrel, we've expanded our earnings power at higher prices even more significantly. The third quarter of 2026 was proof of that. We delivered a record $6.7 billion in adjusted funds from operations and a record $5.2 billion in free funds flow. Those exceptional results, however, only tell part of the story. To fully appreciate how much this business has changed, let's compare where we are today versus 2022 when we also had record high AFFO and refunds flow. Let's start with oil sands. Through the first nine months of 2026, the benchmark crude prices for WTI, SIN, and WTS averaged roughly 15% below 2022 levels. On price alone, that would have reduced oil slands AFFOs by $1.5 billion. And yet today, our oil sands AFFO increased by $160 million to $11.1 billion. How did we do this? Higher production, higher margin, pure performance. The improvement in the downstream was even more remarkable. Through the first nine months of 2026, New York Harbor 211 crack spread, net of RVO averaged 16% higher than in 2022. Yet downstream AFFO grew by over 60% to an astounding $7.9 billion. How do we do this? Record throughput and a much stronger margin capture in a business that many had thought was already at the top of its game. The value we've created is clear. Q3 year-to-date AFFO, 15% higher than 2022. Free funds flow, 18% higher. On a per share basis, both were roughly 40% higher, we are generating more cash flow and significantly more value per share. And it's not simply the result of commodity prices. This is the result of a fundamentally stronger business. The value we create extends well beyond our shareholders. When Suncor succeeds, Canadian governments share in that success. Q3 year-to-date, our operations have paid nearly $8 billion in income taxes and royalties to Canadian governments, reaching record high levels. This equates to about 40% of our free funds flow pre-royalty and pre-tax. This performance reflects years of improving reliability, strengthening integration across the value chain, and capturing higher margins from every barrel we produce and refine. And we're not done yet. There is no finish line when it comes to improving this business. Every improvement creates the opportunity for the next one. And this is precisely why we did not change our normalized refunds flow growth or WTI breakeven reduction targets, even with the sale of Terranova, White Rose, and West White Rose. We have a clear line of sight to delivering those targets. Let me highlight a couple of examples on how the team keeps finding new ways to raise the bar. At our Canadian West Coast Burrard terminal, we have more than doubled our export capacity, helping Canada supply much-needed energy to global trading partners and giving our teams greater flexibility to capture value. Between BurrARD and Montreal, we exported 92 cargoes over nine months. That's nearly 60% higher than in all of 2025, and at much lower contracted costs than the freight rates we saw in the market. At our refineries, we continue to find and capture improvements across the business. In July, the Commerce City team identified and addressed the constraint to plan three furnaces. After never having run above 38,000 barrels a day, the unit is now operating at 43,000 barrels a date, a full 5,000 boroughs a day increase to throughput. That improvement alone is expected to generate roughly $50 million of value in the second half of this year. We have built a business that is consistently finding and capturing opportunities beyond what was visible only a few short years ago. And that same discipline extends to how we manage the balance sheet and allocate capital. We ended the quarter with $1.8 billion in net debt, and I know many on the call today are forecasting a net cash position by the end of the year. This is an exceptionally strong balance sheet. During the quarter, we returned over $2 billion to shareholders, including $1.4 billion of share buybacks and $700 million in dividends. Beginning in October, we increased our monthly buybacks from $500 million a month to $750 million a month, reflecting our ability to sustain that level for an extended period of time. On the dividend, our philosophy remains unchanged. That is to sustain our integrated asset base, deliver a reliable and growing base dividend, return capital through consistent and rateable highbacks, and invest in high growth opportunities. We look to give long-term investors a predictable framework that they can count on through the cycle. To be very clear, every member of our board and our executive team treats our dividend as an unbreakable promise to our shareholders. The only way to grow it is by building a stronger and more resilient business, and that's exactly what we've been doing. The 10% dividend increase we announced is underpinned by structurally higher earnings power, a materially lower share count, and confidence in our investor day plan. The absolute dividend level will remain fully sustainable through the cycle. With sizable increases in both dividends and share buybacks, we are on track to deliver record annual shareholder returns in 2026. Today's Suncor is generating more cash, maintaining a stronger balance sheet, and returning more value to shareholders. And with that, I'll turn the call back over to David, and we can take some questions. Thank you, Peter. I'll return the callback to the operator, and we can go to the questions. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Please stand by while we compile the Q&A roster. And our first question will come from the line of Greg Party with RBC Capital Markets. Your line is open. Yeah, thanks. Good morning. Thanks for that rundown. And, Peter, there is a lot of energy in that voice this morning. So I'm assuming you've had your double espresso. I brought my best. That was two cups of coffee. All right. So this has not been the first quarter where you have, you know, just talked about how much the downstream business is delivering and so forth. I mean, it's such a bigger business than it was five years ago. Just curious in terms of thinking around projects, growth projects, aimed at either margin improvement or growth in the downstream. Greg, I'll take a shot at it, and then I'll ask Dave to comment. Again, what makes us different is this uniquely physically integrated upstream and downstream. Our downstream is historically, Peter alluded to it, but thought to be among the best parts of our business. And what we found is you can take something that's already good and make it better and better. With the re-rate in capacity last year, that was a big part of it. The further supporting of the growing refined product sales is another part of it. And, you know, we've said over and over, we're not done yet. We don't see it necessarily as building a new refinery, anything like that. Generally, refineries are closer to the markets, but the idea of continuing to incrementally expand capacity, continuing to create value not only in that headline throughput number, but in the secondary units that all make custom products to fit for the market. Part of our story this year has been our ability to dial up, dial down to meet market needs at home and abroad. We don't see any of that changing. Dave, I don't know if I left anything left for you, but if I did, man. I think you covered it well, Rich. Maybe I'll share a couple examples of some of the things that we're doing to give some color to where we're finding value. Rich, you mentioned in your remarks the $50 million benefit that Joel found on optimizing during the Edmonton refinery turnaround. But in Edmontон refinery, we're really focused on filling out our intermediate units, our conversion units, with custom blends from our oil sands operations. We've done that over – we increased that by 8,000 barrels a day so far year-to-date, generating $75 million of value. And in addition to that, we're getting more diesel yields out of these units for a total of $140 million of value at Edmonton so far year to date. And I would say that's not done yet. We continue to, you know, as Peter mentioned, we've hit a constraint, we bust through the constraint, we hit the next constraint, and we keep working on those opportunities. We haven't seen the end of that yet. And that's all in additionto what Rich mentioned on the turnaround. So Nick Romando and his team are doing an awesome job there at Edmonton. I'll give you an example in Sarnia. It's a small volume, but it pays off really well. This is a value opportunity in Sarnia. Kyle Hills and Arsalan Tahar in Sernia found that we had this 800-barrel-a-day specialty stream, a solvent stream that we made off of our reformers in Srenia, that was causing us to have to run the reformers at higher severity. They worked with our integrated team, found a different product that we could make that could allow our reformERS to run at lower severity, and that reduces our downtime due to catalyst change-outs. It increases the yield on our reformers, which ultimately produces more high-octane gasoline and provides a total benefit of $40 million a year. Peter mentioned Commerce City. Lots of great work going on there. He mentioned Plant 3. We're doing similar things in Plant 2 with some new crudes that help fill out the bottom of our crude pipe stills. And we've got some things going on in Montreal, which I'll plan to share on the next quarter, but we're not done yet. I think, you know, Greg, cutting through that is when you have technical and operational teams that are provided the right focus and leadership, they continue to find opportunities, and we're beyond scratching the surface, but we're far from done. And so I think you can continue to expect very strong results upstream, downstream, as we go forward because of the culture that we continue to create here. Yeah, very good. Very good. Yeah, the downstream is just super impressive. The overall business is super impressive, so I want to maybe just shift gears onto the, you know, just to anything you want to say maybe about progress on the MOU. I know the negotiations are still pretty heavy duty there, but also related to that, back at your investor day, you framed a very, very large resource base as well as upstream growth optionality. I'm just wondering, pretty open-ended question, but just wondering how those pieces fit together. Sure. We do have a huge high-quality resource base, and in many, many instances, it has advantages, synergies, because of our existing footprint, whether that's LUIS, expansions at Firebag, et cetera. The, you know, if you talk about growth in general, we're less concerned about what today's oil price is and more concerned about what will the oil price be five years, 10 years, 15 years from now. So in high prices, inevitably questions come up about growth and are you changing it? But the question we ask ourselves is, has the world fundamentally changed? And we don't know if it has yet. There's a lot of theorists and so-called experts. I haven't met anyone in my career, Greg, who can accurately predict long-term oil prices. So we look at generating attractive returns through mid-cycle prices when we can enjoy good business environments and we can withstand weak ends. Now, as it relates to the MOU and the interactions between industry and the government, I think it's important to step back. What's the goal? The goal is that Canada is globally competitive on a fiscal and regulatory risk framework so that we can attract and incent capital. That's the goal. So the MOU has many components to it, the so-called three Ps, pipeline, production, pathways. We've seen some things occur, the new mega deduction, there seems to be some momentum on a West Coast pipeline. We're all anxiously waiting to hear more from the province on royalties and incentives there. The parties are all sleeves rolled up, meeting endlessly, working hard together. So that goal is the global competitiveness of the industry. And from a Suncor standpoint, we would far rather have a good deal when we're ready versus a bad or an incomplete deal at an artificial date or deadline. So we're working hard. And, you know, the days on the calendar are just other days to me. November 15th is coming up. Whether we have something on November 15 or not, I don't know. But I know we're all working hard, and I believe we're sharing federal, provincial, and industry, the same objective of a globally competitive Canada. Excellent. Excellent. Thanks so much. One moment for our next question. And that will come from the line of Dennis Fong with CIBC. Your line is open. Hi. Good morning, everyone, and congratulations on a solid quarter. My first question here follows along the lines of, I guess, Greg's first question, but kind of expands on some of the prepared remarks there. And so when we think about what we'll call the interconnection between Syncrude, Baseplant, Firebag and Fort Hills, this was frankly critical in terms of maintaining upgrader utilization and throughput through the year and obviously through very challenging conditions. And further, I think in Q3, you were able to showcase how that interconnection was helpful with respect to obviously your refining turnarounds and so forth. The question here is, what are you looking to do to bolster that physical interconnectivity beyond what has already been outlined, like ore sharing at Fort Hills or interconnect pipeline and or obviously the physical connection between your Fort McMurray oil sands and Edmonton and your eastern refineries? Adam, you want to, you just, you, at the end, you linked into the refining, but Adam, why don't you start out in terms of kind of a vision and our priorities in the upstream overall? Yeah, happy to do that. Dennis, you actually captured one of the main things that makes us quite unique in the upstream, and that is the ability to have physical integration across all of our assets in the upstream. So whether that is firebag bitumen going to the base plant operator, whether that's firebag Bitumen going into Syncrude, whether it's Fort Hills Bitumen going to base plant operator, or sours in between Syncrute and base plant. So when you take a step back and take a look at what makes us unique, that is one of the main things that makes us incredibly unique in the upstream business. So how do we leverage that? There's a couple of ways we leverage that. The first way is when you look at the performance in our upgraders over the last several years, one of their main focus areas for us has been increasing the utilization. And as we increase the utilization, clearly that increases the bitumen fee that we need from our minds and from our in-situ assets. So the physical integration that we have across the assets enable us to actually continue to increase upgrading rates. And that's where you see some of the higher price realizations that you saw in Q3. The second main way we take advantage of this is during maintenance events. So when there's maintenance events at our mine production assets, we now have the ability to move bitumen from different in-Situ assets to the upgraders to keep the upgraders full. Again, ensuring we maximize value from those big, big money makers. So there's a couple of examples of how we leverage integration that we have. As we look forward, we are always looking to see how we can maximize that even further. So for example, the record transfers that you're seeing from Fort Hills to the base plant upgrader is a result of the continued deballnecking activities our team has done to maximize PFT bitumen to the base plan. And we are continuing to find opportunities to do that even further. I think a key part of all this is as we have improved underlying asset performance, now we can continue to optimize and create incremental value. But when you have assets where you have too much variability in their performance, you can't optimize. And I'll take just the tail end of your question and extend that to the downstream. I would bet a week's pay that I think the Edmonton Refinery is the only refinery in North America that runs 100% on feed stock from the refinery's owner. I, I would guess if, if not it, there's, it's probably a, Dave will kick in part of that week's paid, but so what we were able to do is Edmontон with its pots and hands, primary units, secondary units, we can literally moderate what Edmonton can maximize value on from our upstream operations. Sarnia, far further away, runs with well over half of its feedstock with Suncor Crudes. As you get further away to Montreal, the percentage goes down, but that interconnectedness is still a key differentiator with us, and that allows our upstream and downstream teams to work hand-in-hand, maximizing every dollar and every barrel. That is, at the core, that is what makes us different and unique relative to a broader peer set. Great. Thanks for that color there. My second question, and if we go back in time, Rich, you've made past comments on Suncor's ability to provide quote-unquote craft cocktails to refineries, whether it be your own or third party, with what they need for, frankly, feedstocks to optimize, frankly your own upstream and downstream realizations. Can you talk towards Maybe from taking a step back and thinking about this strategically, how kind of a combination of logistics, global marketing, obviously the tanker capacity that you have, time contracted, as well as your ability to expand kind of your network to market globally, how that's really improved, we'll call it market intelligence, your ability to act more opportunistically, especially given the volatility of the market, and what that maybe means for kind of value generation for both upstream and downstream. This has been a really fun area. And of course, it gets back to that, again, the predictability, stability of the underlying assets. And sometimes a dentist, we'd rather be lucky than good. And in this case, we, a few years ago, we started to look at the opportunities beyond our core domestic markets. You've heard the story about how Dave came in and we philosophically changed our strategy on sales and said, run our facilities full out, we will find profitable homes for that. That extended beyond Canada, whereas in the 24-I Day, we said we could market in 21 countries. This year, we sent 45 countries. Did we have a vision that we would necessarily do that? No, not necessarily. But with events in the world, started by Russia, Ukraine, now in the Middle East, as we've had those opportunities and as we locked in logistical capabilities, not only pipeline access to the coast, but you mentioned time charters. We've got, what, now nine time chargers that can be in crude or product service off of the coast. I mentioned how export volumes are up 80% year on year. where typically an export market is a market of last resort. You kind of get your barrel there because you don't have a better home for it. Those markets now have been particularly valuable because of acute shortages, so that this full, holistic, integrated model extends well beyond upstream and downstream. It is logistics. It's markets. It' s customers abroad, And that is an area we have changed materially. But here again, our rallying cry is we're not done yet. We keep seeing opportunities. Our traders, both particularly in Calgary and Houston, we've got some folks in London as well, they're extremely sophisticated on the markets we compete in. We're not trying to be a global trader, but the markets we compete in, they're extremely knowledgeable, seeing opportunities, and it's one of the reasons you see if you start doing realizations per barrel, this and that, because those profits we put back into the business that generated them, you have seen and you will continue to see premium prices for Suncor production and products because of that level of sophistication. It is, we have a lot of fun with it, candidly, and we have, we believe we'll continue to create more value that our peers are unable to replicate. Thank you so much. I'll turn it back. One moment for our next question, and that will come from the line of Arun Jayaram with J.P. Morgan. Your line is open. yeah good morning uh rich and peter um i was wondering if you could uh give us an update on your in-situ growth plan and the 400 kbd opportunity i know that you guys are focused on selecting an epc under the design one build many concept and i wanted to maybe provide a little bit of update on that as you look to scale lewis and firebag over the next decade Sure. One of our announcements here recently was the shift of Shelley Powell to her broader portfolio to the EVP of the, in particular, the in-situ growth plan to create that level of senior executive focus and time on that. So, Shelley, why don't you tell Arun what the heck you've been working on? Perfect. Great opportunity. So, all of the projects that we talked about in our investor day plan are actually progressing quite well. They are exactly where we would expect them to be. I was actually in the field last week and toured quite a few of them. All of them are fully staffed. We've got materials on the ground. So things are progressing in a way that we would absolutely expect on these shorter term ones. I think to your broader question on engineering and the larger projects, you are right. We are right in the middle of evaluating who do we want to partner with long-term, not only on the engineering side, but also on the field construction side. We are setting ourselves up to enter longer term type relationships with these organizations, really thinking about what we've been talking about as a portfolio rather than individual suites of projects. We think that gives us the opportunity really to utilize the economies of scale, to look at optimization, to ensure we have construction workforce security over the longer term, and we think we have a really attractive portfolio that we can deliver over the long term. So, really excited about where we're at, and things are off to a very strong start. And in anticipation of a question. I'll answer it ahead of time. We're also looking at right now relative to that March I-Day plan doing the what if. What if we wanted further growth? What if we wanted to go a bit faster? What would be the incremental investments we would make? Where the timing? So that's one thing. And the second part of it is also looking att the progress we've made over the last few years on debottlenecking our facilities and getting the incremental five, 10,000 barrels a day, what further opportunities remain on that? So we have a plan we laid out. It's in situ growth. It is fundamentally six phases of in situ projects over a decade. That's the base case. But we are asking ourselves and doing some preliminary work saying, well, what if? What if we wanted to do more? What if we wanted to go faster? We haven't landed on that yet, but that is, it ties with this conversation about the fiscal and regulatory environment in Canada, the MOU, if all that turns out to create that globally competitive business environment, that may be something we do. And we're able to look at all these because we're underpinned by a tremendously large, long life, high quality resource base. Without that, these would be academic exercises for us. They're not academic exercises. They're real-life opportunities. Great. And my follow-up is you made the decision, obviously, to monetize some of your non-core offshore assets in Eastern Canada, yet you are maintaining your 2028 Investor Day objectives, the $2 billion of free blends of flow growth at 65. Can you just talk about what's outperforming in the portfolio for you to maintain those targets? And is the 100 KBD growth target still intact? Yeah, I'll take it in reverse a room. The 100 KBT, we don't add up to that right now. If you take 2028, the assets that we are looking to sell will be about 40,000 barrels a day of the grand total. and then so the 100 becomes a 60. But at the end of the day, production, throughput, those are drivers, but our fundamental objectives are free funds flow per share. That's the growth we're after. And our confidence in either the breakeven or the free funds growth remained because on March 31st, folks saw a snapshot in time, but this organization continues to work and make things better. And I think that little example I shared with Edmonton, $50 million during the turnaround, Peter shared an example or two. These illustrate that we keep coming up with new ideas to add value. And when the executive team sat back, looked at that, we did the adjustments for the asset sale, which would have said, well, production is going to be lower. The free funds flow would have been lower. A break-even wouldn't have been as high. And we sat there and looked at each other, all held hands, and said, no, we're still going to deliver on these commitments that we made because we have confidence in this organization, the people, and the ideas with the momentum we've established. And so we're going to achieve those, if not exceed those. And so it's not really any one or two things or three or four. It's just the cross-organization, alignment, commitment, and momentum we have that gives us confidence we will achieve those. Great. Thank you very much. Thanks, Lorraine. One moment for our next question. And that will come from the line of Doug Leggett with Wolf Research. Your line is open. Well, thanks. Good morning, everyone. Thanks for having me on. I wonder, Rich, we've heard a lot about incredible reliability, utilization rates, and so on. And I wonder in the context of your dividend break-even trajectory, are we seeing a reset in the underlying production capacity? I don't want to say you're understating what you've achieved, because it looks like, is it utilization that's getting better, or is it the de-bottlenecking and the capacity that's actually increased, in which case, what does that imply for your dividend break-even trajectory? I'm not asking too many questions, I guess. Thanks, Doug. You know, every time I go out there and make a commitment, these son-of-a-guns that I'm sitting around the table with prove me wrong, because they do better. We re-rated our downstream from 466,000 barrels a day to 511, the full capacity. And this guy sitting two to me to the left, he's been telling me that lately we've had days north of 520. And, you know, it's like I thought capacity was 511. So, you Know, things keep getting better. But you're exactly right. As that continues, that break-even, which for us, of course, includes our full dividend, we continue to drive it down. The downstream kind of subsidizes or enhances that break even. So as we said, the new year, new plan this year was going to be going from around 43 to a 38. this year, in part because of some special circumstances, we're going to achieve more than we thought we would have achieved this year. We're not necessarily sure if that will endure over time, but these fundamental improvements, whether it's de-bottlenecking, those incremental barrels, they greatly add to our ability to drive down that break-even. And I think the 10% dividend increase is illustrative of the confidence that we have going forward. We've been kind of 5% year after year, roughly equal to the fraction of shares we've been buying back. So Peter ramped up the buybacks to 750 here. The dividends going up by 10%. The 10% probably is a pretty good indication that with the amount of shares, we think we'll be buying back and our confidence in the underlying business, you can continue to expect further shareholder returns, whether via dividend and or buybacks. I guess we'll wait for the update. But Rich, my follow-up, I'll try and ask this as succinctly as I can, but years ago, we all used to think about pre-royalty and post-royality payouts and how they were ring fenced and so on and with the tax change in september um clearly you're getting accelerated you know i want to call it a tax shield but depreciation that maybe you know makes the previous discussion some somewhat less relevant and i guess what i'm going with this is when you laid out your strategy through 2028 you didn't have that tax treatment in your capital plan so i'm wondering in the context of what you just answered before about maybe you want to look at growth options. Has the tax treatment changed your thoughts on whether you decide to go after more growth? What the tax treatment fundamentally does, under current rules, we're able to ultimately depreciate our investments. It's just the time at which we can depreciate them. So if you do that over a 10-year period or a three, I'm making this up, or a two or three-year period, it enhances the calculation of a rate of return, and it can accelerate a payout of an investment. So fundamentally, these accelerated depreciation rules help de-risk long-term capital-intensive investments. Are they game changers in terms of do you do something or not do something? Maybe, but I don't think it fundamentally changes the long- term investment profile. So wow, We will now do a whole bunch more, but if you couple accelerated depreciation with an incentivized royalty system that starts to do some of the same things, if you clear up some of the regulatory complexities that would extend approval timeframes up front, you start coupling several of these things together, which are all part of the component parts of the MOU. Now you're changing the fundamental underlying fiscal and regulatory regime, and yes, that in aggregate can lead us to be more ambitious, more aggressive on long-term capital investments. Any one item is nice, but probably on its own not sufficient to materially alter the capital allocation framework. Great stuff. Thanks so much for answering the questions, Rich. Thank you. One moment for our next question. And that will come from the line of Menno Holschoff with TD Securities. Your line is open. Thanks and good morning, everyone. I'll start with a question on your global markets push. It didn't look like you were impacted in any significant way by the spike in freight rates in the quarter. and you did touch on some of this, but can you just elaborate on how the freight rate risk is currently being hedged out through contracting and how that challenge is generally being managed? And while we're at it, could you maybe put the bookends on sort of the number of cargoes that potentially get shipped in Q1 and Q, call it Q4 and Q1, and anything else within your global marketing push that you would want to flag? Thank you. Dave, why don't you take that? You and your team manage those for us. Yeah, sure. Thanks, Menno. Good morning. Rich mentioned our nine time-chartered vessels, which we fortuitously locked in before the rates went up dramatically. We're able to use those vessels for crude, particularly off the West Coast. That goes to typically China or into the California markets. And we're seeing massive savings relative to current spot freight rates, and we take that back as our net back. We also have four MR vessels. Those are 300 KPD product vessels, mostly working off the West Coast, to move diesel to markets. And same thing, we're seeing much lower freight rates, which helps us with our net backs. Combine that with our advantage logistics, we get really good value for our diesel sale. If you think about export cargos, we exported 92 cargos year-to-date. That's about 60% more than we did in 2025 as a whole. What we do is we optimize based on our product netbacks, our alternatives domestically, and we balance between diesel and jet mostly. There's very little gasoline that we export. And we will optimize that based on price, based on market conditions, and hard to say what Q4 and Q1 will bring, but we will make sure we optimize that to maximize value to Suncor in the current market. Without saying, it's been a huge part of our performance this year. Absolutely. Having that level of flexibility. And although the terms on those time charters are proprietary just for competitive purposes, they don't go forever. But we have that well into next year. We'll still have those before any of those will be looked at being renewing and things. And that gets back to that comment I made earlier. Sometimes we'd rather be lucky than good. And we took a lot of these actions, not anticipating the unique benefits we'll see now, but they have been extremely valuable for us. And I think in the quarters ahead, they're going to continue to be. Okay, thanks for that. And then I guess the second question is for Peter on the balance sheet. You talked about net debt falling a lot in the quarter. Like a lot everybody else, we have clear line of sight to a net cash build. And, you know, given I've chatted with you about this in the past, but it seems like that is more of an output rather than something that the company wants to get to. So how are you thinking about sort of free cash allocation to the extent that oil prices and crack spreads remain elevated? I think there's probably limits to how much you want to grow. You recently increased the monthly buyback to $750 million. How should we be thinking about that into 2027? Yeah, thanks a lot, Meadow. And obviously, the balance sheet is in exceptional shape right now. And as we spoke about before, our philosophy on share buybacks has always been to buy back proportionate to our overall dividend. We're certainly doing that right now, and so that philosophy remains unchanged. We believe in returning excess funds to shareholders. We're always going to maintain the flexibility to respond to any material changes that may happen in the market. But, you know, this is the power of Suncor. This is the Power of the integration that we bring to the table and that's to provide reliable and predictable and rateable shareholder returns through the cycle. And you can count on us to continue that. And maybe if I just add one other point to that, if we choose to grow faster than we outlined in our I-Day plan, the incremental capital that we're looking at is not overwhelming in any regard. So if the business environment stays strong and we would choose to invest more in the near term, the ability to return cash, the reliable and growing dividend, and material buybacks. We think we're going to be able to do all of that. We don't have any particular, you know, goal or driver to build up a war chest of cash for any particular reason with a net debt at or near or below zero. We have a lot of flexibility for whatever we choose to do. So you can interpret that as there'll be continued material cash return to shareholders, in particular that incremental dollar via buybacks. Thanks to the both of you. I'll turn it back. Thank you. One moment for our next question. And that will come from the line of Manav Gupta with UBS. Your line is open. good morning rich you kind of talked about you know who made the family photo and who did not but there were a couple of fascists i think hebron and hibernia which did make the family photo and i'm trying to understand what drove the decision to keep those members in the family photo thank you to keep keep from them keep hebrone oh yeah yeah yeah the um hebran and Hibernia, of course, they're non-operated. And a big part of who's in the family photo and how close you snuggle up to me and my wife is, what do you bring to the party? And can we add value to what you do? Hebron and Hibernea bring a lot to the Party. They're longer life, They're a stable operation, a rock-solid operator who knows how to operate in the offshore quite well. And fundamentally, we cash dividend checks each month from them, and they run it really well. So they add material cash flow. It's not to say the assets we're looking to sell don't, but they're not our core competency. I don't think people buy Suncor because we operate a single FPSO off of the East Coast. So there are some distinctions there. And we've always talked about the East Cost as really a tale of two cities. There's the platforms, the Hebron and Hibernia, and the floaters. And we look at them in different ways and make different decisions based on how we see them. Thank you. my quick follow-up here is we are seeing WCS differentials widen, but given your refining capacity, integration, and the diesel margin, the impact of those differentials will be minimal for you compared to your peers. Can you talk about that? Yeah, you know, you hit on it well. Our level of sensitivity or immunity to a differential is uniquely low relative to a peer set. And everyone is talking about what's going on. It's not so much that there's, you know, the pipes are overstuffed so you can't get more out. It's some of this unique freight situation you're seeing in the Gulf Coast. There's a Venezuelan cruise. There's an number of other factors here. So, yes, they've certainly widened. Although the underlying WCS price is still at a historic level is quite high, we don't see this as kind of the new norm. We don't see these widening differentials as enduring, but while they do, we are less affected by them than the rest of our peer group. Again, keep going back to that unique construct of our upstream and downstream asset base. Thank you so much. You're welcome. And one moment for our next question. That will come from the line of Patrick O'Rourke with ATB Coremark. Your line is open. Hey, guys. Good morning, and thank you for taking my question. Obviously, you've covered a lot of ground throughout the entire business, particularly the downstream, so that's been terrific. Maybe I'll keep it brief here then. When I look at year-to-date capital spend and we think about the normal cadence for Q4, it seems like it puts you down one of two paths here. one path where you're you know at or below the low end of your your full year capex guide or another path where uh maybe you start pre-investing in 2027 and some of the strategic initiatives you've spoken to i guess um as of where we sit today which which path would you you think you'd prefer to deviate down yeah fair question patrick and we we are tracking toward the low end of guidance on the capital. And in part, we didn't talk about it a lot in the second quarter, but these unique rain events also slowed some of our capital activity that involves moving dirt things because of the weather conditions. So we're tracking to the low-end. Given where we are, we've been asking ourselves some of the monies that we had planned on spending in 27. Does it make sense, given we have the capacity to move some of that to 26, if it makes sense, we've been looking to do that. That's probably lost in the roundoff, though. It's not big, big numbers, but we have said that we're planning a future at or below $6 billion in capital. That is still where we are. We'll have guidance here in about a month for the next year. I think you can probably guesstimate what you might see on the capital side of it. So we're just looking at, are there good, thoughtful, wise things to do versus macro changes? And part of that, make no mistake, part of that coming on the low end of guidance is continued good performance. We've talked about turnarounds. I just flagged three of them that were best ever. So our organization continues to do a good job of being very thoughtful, frugal, and wise with capital allocation. And that's part of the reason we're tracking to the low end. Okay, great. And then just thinking, you know, you touched on a little bit, but WCS differential here, you've touched on your time charters. I mean, And typically, the locational discount has been sort of between Hardesty and the Gulf, but now it's between the Gulf and maybe other waterborne crude markets. Based on the assets you have to move barrels here, what sort of ability do you have to mitigate WCS differentials by, say, pushing those heavy barrels that are not upgraded further out the value chain here in the fourth quarter and into 2027? Dave, do you want to comment on that? Yeah, sure. Patrick, as you know, we export off of the West Coast on our TMX volumes and we get to capture full market value for those products. We have commitments on pipe into the Gulf for some of our volumes. But at the end of the day, really, and we'll maximize into our refineries, but make no mistake, we're always maximizing heavies and sours into our refiners regardless of where the DIF is, it's pretty much always economic for us. So really, we see ourselves continuing to do more of the same in that space. And like Richard said, we're pretty indifferent to the WCS DIF overall. If the DIFF is wider, we make it up in the refining business or we make it up on our upgraders. We see it as pretty indifferent to our operation through the fourth quarter. Because of those time charters, when and how we contracted them, we don't have that same exposure to the differentials on the heavy crudes that are exported because of our freight rates. That won't last forever, but we also don't think the current world we're in will last forever either. Okay. Thank you very much. One moment for our next question. And that will come from the line of Travis Woods with NBC Capital Markets. Your line is open. Yeah. Good morning, guys. And apologies if this was touched on. I logged in a bit late. I think in the opening remarks, and you've done this last quarter as well, just continue to talk about efforts to capture global pricing largely through the refined product market given where where global cracks are but could you walk through some of the the detail and maybe some some color around what that is exactly and and what you're de-bottlenecking whether it's kind of you know egress to the to tidewater to be able to export to those markets and then what type of volume would we be thinking about in the product sales for Q3? And what do you think that contributed on the margin for the quarter as well? Without giving away too many of the trade and marketing secrets, obviously. Sure. Travis, we're going to cut you some slack for joining us late as long as you go back and listen into the earnings call song on your own time. You've got to hear that it's one for the ages um dave why don't you comment on that yeah um so so travis we we optimize our exports off both coasts and we have some unique efficient logistics uh with rail to the west coast uh and then ability to to trade direct to direct a customer through our own uh our own uh chartered uh time chartered vessels uh on the west Coast as well as the same thing on the east coast we have niche markets that we we deliver to where we see who see a unique value for our products which tend to be lower uh lower cloud into alaska on the west coast and scandinavia iceland places like that on the on the east coast and then there's a big short uh in central america that we have a have an established relationship with some counterparties there that uh that is very profitable for us we see our ability to grow that materially we've grown it already particularly the West Coast volumes and it has historically been a rail loading and unloading constraint and we've been busting through that and we think we have more more room to go on on that through the end of the first quarter and then the setup you have Dave again not to get into commercial terms but that getting products railed to the west coast the way your team has set that up that's quite competitive very good without pipe products to the West goes for fudging. Okay. And are you able to share what type of volume we're thinking about versus kind of domestic consumption, like using the 677 of sales for this quarter? How much would reach the tidewater of that number approximately? Yeah, Travis, we exported about 75,000 barrels day year to date out of the out of six set out of the six plus so more than ten percent and we have an opportunity to do more if the market um you know you know directs us in that direction we have opportunity to more and we have the opportunity to flex between diesel and jet molecules as well depending on where the market goes if round numbers we'll give we'll give a little more round numbers of that uh a little less than half of that export has been if i've had members right it's been crude and a little bit more than half products is that about right that's all that's the product volume that's just the product sorry yeah the crude volume is in addition to that gotcha you're using chips for the crew but that's this just the project yeah okay that's perfect yeah i was really just focused on on refined the refined side so that that's great color appreciate it i'll turn it back thanks guys thank you one moment for our next question and that will come from the line of Lydia Gould with Goldman Sachs. Your line is open. Thanks for taking my question. Could you talk more about costs and how you're driving improvements in your operating costs across assets or any other areas of the business where you see opportunities to take out costs or drive structural efficiencies? Sure. I'll make a general comment. Then I'm going to turn to Adam, particularly in the mining side of it. We recognize you have to identify who you are, what you are. We're a global commodity that is cyclical in nature. We generally can't control the prices of our products. So we have to just have an endless, ruthless, unwavering commitment to cost management. For us, our refineries are extremely competitive. Our upstream is two components. It's the large and growing in situ, and it's the larger mining. The mining has a higher ongoing operating cost structure. So, Adam, why don't you share some of the things we're doing there to just contain, control, reduce costs in the upstream mining sector in particular? Yeah. So in the upstream, and Rich spoke about this already, when you look at the two main businesses that sit you in the mining pieces, the in situ assets are already at a very competitive top quartile cost perspective. There is always work we are doing to continue to drive that down. But the big opportunity for us in the upstream is in the mining business. And when you look at the cost that we have in the mining business, there's a number of things we are doing to drive those costs down further. I could speak about a number examples to increase our productivity, but perhaps the example I'll speak to is the work we're doing to scale our autonomous haulage system. So you may recall that we've scaled and we've deployed AHS, autonomous haul system, at our base plant operations. We have around 140 trucks or so, ultra-class trucks, fully autonomous. In addition to the increased safety performance we get from that, we are seeing a reduction in our operating costs resulting from the deployment of AHS. So the decision has been made to now deploy AHS and scale AHS at the Syncrude Mildred Lake facility. We currently have just under 30 trucks kitted with AHS at Mildred Lake. And by the end of this year, we will have close to 40 trucks kitted with AHS on an operation. So that is an example of the work we're doing in our mining business to continue to drive our productivity up and reduce our costs. Thanks, Adam. So just to add to that, really two big levers, productivity in mining, little things make big differences with a large fleet, and then technology. AHS is a technology on it. So those are the two big levers we're operating. And we know, and internally, our mining has to be cost competitive to attract capital. And the teams understand that and are working hard to do that. That's great. Thanks so much. Thank you. I'm showing no further questions in the queue at this time, I would now like to turn the call over to Mr. David Johnson for any closing remarks. Thank you, everyone, for joining the call this morning. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can end the call. This concludes today's conference call. Thank you all for participating. You may now disconnect.