Suncor Energy Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Safety: Personal safety saw lost time events down 40% and recordables down 23% year-on-year. Process safety year-to-date is at a best-ever level, positioning Suncor in the first quartile in North America.
• Oil Sands Performance: Firebag managed through wildfires incident-free, with production impact limited to July at 60,000 barrels per day.
• Reliability and Utilization: Refining throughput and upstream production reached record levels. Operating leverage was achieved with lower absolute costs despite higher volumes.
• Turnarounds: Completed bulk of 2024 turnarounds on budget and ahead of schedule, with total spend under $1 billion, down 20% from the prior five-year average.
• Mining: 55 new 400-ton trucks are replacing smaller ones, with the first 35 in operation, saving over $300 million annually.
• In Situ Operations: Firebag implemented a $500,000 modification to diluent stripping capacity, increasing production and free funds flow.
• Fort Hills: Passed one year anniversary of acquisition, on plan, with potential for further debottlenecking.

Segment Performance

• Upstream: Third quarter upstream production was 829,000 barrels a day, the best Q3 upstream volumetric performance in company history. Oil sands contributed 776,000 barrels a day and the E&P segment 53,000 barrels a day. Upgrader utilization was 99% in Q3, with year-to-date utilization at 96%. Firebag had record months, including September at 247,000 barrels a day.
• Downstream: Refining throughput in Q3 was 488,000 barrels a day, up 5% from Q3 2023, the best quarter ever. Refined product sales were 612,000 barrels a day, a quarterly record. Refinery utilization was 105%, the highest ever.

Guidance

• Net Debt Target: Achieved the net debt target of $8 billion ahead of schedule, with Q4 starting 100% return of excess funds to shareholders.
• Production and Utilization: Q3 upstream and downstream performance exceeded guidance ranges, tracking above the high end.
• Free Funds Flow: Ahead of pace on incremental free funds flow targets set in May, with confidence in capturing gains and institutionalizing improvements.

Risks

• Business Environment: Fluctuations in crude oil prices, natural gas costs, and refining margins could impact performance.
• Operational Risks: Weather conditions, maintenance challenges, and supply chain issues could affect production and utilization.

Question and Answer

Q: What are the upcoming opportunities for Suncor?

A: Rich Kruger mentioned finding value through physical integration, asset utilization, and ongoing improvements in various areas like PFT to base plant, and operational teams working to capture value.

Q: Update on Cogeneration facility?

A: Shelley Powell said the cogeneration facility is in final stages of commissioning, improving steam system reliability, carbon intensity, and exporting electricity to the grid.

Q: How is Suncor achieving strong refining performance while peers are down?

A: Dave Oldreive cited record refinery throughput, margin capture, benchmarking, constraint busting, and small cost-saving initiatives adding up to strong performance.

Q: Firebag performance and run rate?

A: Rich Kruger said Firebag had September at 247,000 barrels per day, October higher, with ongoing debottlenecking and focus on maximizing production.

Q: Syncrude operating costs?

A: Peter Zebedee mentioned structural improvements in mining productivity, benchmarking, and optimizing operations to drive down costs.