Suncor Energy Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: 2025 YTD safety performance continued to improve, with Dean Wilcox's base plant team winning the John T. Ryan 2024 National Safety Award. Process safety in Q1 2025 was significantly better than Q1 2024, being best ever first quartile in North America.
• Production: Upstream production was 853,000 barrels per day (highest Q1 ever). Refinery throughput was 483,000 barrels per day (highest Q1 ever) with 104% utilization. Refined product sales were 605,000 barrels per day (highest Q1 ever).
• Costs: Total OS&G expense was $3.3 billion, down 4.2% in absolute dollars vs Q1 2024 despite higher production and throughput. Operating leverage was achieved with 3-4% higher absolute volumes and 4% lower absolute costs.
• Projects/Initiatives: Base plant autonomous haul truck operations were leveraged for improved productivity; coke drum replacement and cogeneration project completed with surplus power exported to grid; Syncrude Aurora mine truck loading increased load factor to over 100%; Fort Hills commissioned world's largest hydraulic shovel PC 9000 for faster loading.

Segment Performance

• Upstream: Oil sands production in Q1 2025 was 791,000 barrels per day, with in situ averaging 283,000 barrels per day. Fort Hills had 176,000 barrels per day in production. Upgrading utilization was strong, with base plant at 103% and Syncrude at 100%. E&P averaged 62,000 barrels per day, up 5,000 barrels per day from Q4 despite temporary logistics challenges at Newfoundland loading terminal.
• Downstream: Refining throughput was 483,000 barrels per day (highest Q1 ever) with 104% utilization. Refined product sales were 605,000 barrels per day (highest Q1 ever). Refining margin capture averaged 99% on a LIFO basis compared to the 5221 index.
• Financials: Total OS&G expense was $3.3 billion, down $143 million (4.2%) from Q1 2024 despite higher production. Adjusted funds from operations were $3 billion, and adjusted operating earnings were $1.6 billion.

Guidance

• Q2 2025 turnarounds on plan, including Sarnia, Edmonton, and base plant Upgrader 1 turnarounds. Focus on returning 100% of excess funds to shareholders. Capital expenditures in Q1 were $1.1 billion, including $600 million economic investments and $500 million sustaining/maintenance capital. Refining index remained strong, and the company is positioned to weather market uncertainty with improved operational and financial performance.

Risks

• Weather variability affecting Oil Sands operations; market uncertainty impacting commodity prices; operational risks during turnarounds and projects (e.g., potential delays or cost overruns in upstream turnaround).

Question and Answer

Q: How is Suncor managing Oil Sands assets through cold weather?

A: Focus on resiliency, engineering to accommodate cold, with winterization programs designed to mitigate weather impact. We are not weather takers but weather makers, engineering to reduce risk from variability.

Q: What is the progress of the Mine Connect tool in optimizing operations?

A: Mine Connect tool provides insights for operations team to take immediate action. It identifies outliers, allows real-time response, and generates value through quick action by leadership based on data insights.

Q: How is retail EBITDA growth being achieved?

A: Growing retail and wholesale through 8 site enhancements, 20 rebrands, 6% year-on-year retail growth, 9% year-on-year Petro-Pass Truck Stop growth. Leveraging Canadian Tire relationship to increase Petro-Points membership by over 30%.

Q: What drives the high refining margin capture?

A: Strong asset utilization, full capacity utilization of refineries, optimized volume mix through best-in-class supply and marketing, and integration across the value chain to capture full value.

Q: What are the risks and preparations for the upstream turnaround?

A: Risks include operational delays, but preparations involve experienced teams, prework done (e.g., early planning, training, equipment readiness), and risk management to ensure on-time and on-budget completion.

Q: How is capital flexibility managed?

A: Judicious economic spend with high hurdle for economic payout, focusing on sustainment capital improvement and risk-based work selection to drive capital efficiency and return excess funds to shareholders.

Q: What's the status on political landscape and emissions cap?

A: Early stages, industry has signed letters calling for investment environment to enable energy growth. Conversations ongoing, but industry emphasizes importance of energy to Canadian economic health.

Q: What's the outlook for Firebag performance?

A: Firebag continues exceptional performance with focus on completion technologies, non-condensable natural gas utilization, infill drilling, and further development to maximize asset potential.