Suncor Energy Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Personnel Safety: 2024’s lost time injuries were down 30% year-on-year and down 60% over last 2 years, lost time incident rate tied for best ever. Recordable injuries were down 16% year-on-year or 30% over last 2 years, recordable incident rate in 2024 was best ever. Process safety performance in 2024 was best ever, 30% better than previous best, positioning in first quartile in North America.
• Upstream and Downstream Performance: Upstream production full year 828,000 bbl/day, best ever; refining throughput 465,000 bbl/day, best ever; refining utilization 100%, best ever; refined product sales 600,000 bbl/day, best ever. Total OS&G $13.1 billion, down $324 million year-on-year despite higher volumes. Total capital $6.2 billion, more than $200 million below midpoint of guidance. Free funds flow $7.4 billion in 2024, returned $5.7 billion to shareholders.

Segment Performance

• Upstream Production: Full year 2024 upstream production was 828,000 barrels a day, the best year in company history, 51,000 barrels a day or 6.5% higher than previous best, 82,000 barrels a day or 11% higher than 2023, and 18,000 barrels a day above high end of guidance. Full year Upgrader utilization was 98%, the highest annual average ever, 6% higher than previous best. Firebag had 234,000 barrels a day in 2024, up 17,000 barrels a day or 8% year-on-year, and over the last 2 years added 35,000 barrels a day or 18%.
• Refining: Full year refining throughput was 465,000 barrels a day, best year in history, 24,000 barrels a day or 5.5% better than previous best, 44,000 barrels a day or 10.5% higher than 2023, and 20,000 barrels a day above high end of guidance. Full year refining utilization was 100%, highest annual average ever, 5% higher than previous best. Refined product sales full year was 600,000 barrels a day, best year in company history, 46,000 barrels a day or 8% higher than previous best, 47,000 barrels a day or 8.5% higher than 2023, and 20,000 barrels a day above high end of guidance.

Guidance

• Upstream: Expect upstream production to average 810,000 to 840,000 barrels per day in 2025, factoring in planned maintenance like downtime at base plant with 91-day coke drum replacement project starting in second quarter, annual coker turnaround at Upgrader 2 at Base Plant and Syncrude in third quarter, and small planned turnarounds at Fort Hills in second and fourth quarters.
• Downstream: Guiding to an average refinery utilization of 93% to 97% in 2025, higher than 2024 guidance but offset by planned maintenance activities at Sarnia refinery starting in Q1 and Edmonton refinery starting in Q2.
• Capital: 2025 capital guidance $6.1 billion to $6.3 billion, consistent with plan outlined at May Investor Day, including asset sustainment and maintenance capital and economic investment capital.

Risks

• Market Uncertainty: Fluctuations in crude oil prices, refining cracks, and other market conditions can impact financial results.
• Tariffs: Uncertainty regarding tariffs and their impact on crude oil movement and sales.
• Maintenance Uncertainty: Planned maintenance activities in 2025, such as the coke drum replacement project, may introduce uncertainties in performance and results.

Question and Answer

• Q: Greg Pardy - On 2025 business balance between upstream and downstream A: Rich Kruger said the philosophy is to get the most out of existing asset base, looking at constraints and debottlenecks company-wide. Peter Zebedee mentioned looking at constraints in Oil Sands segment to unlock additional barrels. Dave Oldreive talked about downstream potential with constraint busting and optimization.
• Q: Dennis Fong - On Fort Hills mine progression and equipment deliveries A: Peter Zebedee said Fort Hills transition to center and north pits is well underway, with ore delivery from center and north pits, and equipment deliveries of trucks are on schedule.
• Q: Manav Gupta - On breakeven and free cash flow upside A: Rich Kruger said achieving $7 in first year of breakeven reduction was a combination of early achievements and more than expected benefits, and there is still inventory of continued improvement with potential for upside.
• Q: John Royall - On 2025 production guidance and Firebag potential A: Rich Kruger said 2025 production guidance is based on continued high performance, and Firebag has seen significant production increase through actions like unlocking water and PSV constraints with more potential for further growth.
• Q: Adam Wijaya - On retail business and expense management A: Dave Oldreive said retail growth plan is on track, evolving as market is competitive, enhancing offerings, and Rich Kruger mentioned expense management is a result of rigorous culture with potential for continued improvement in 2025