Suncor Energy Inc. Q2 FY2025 earnings call

• Personnel and process safety: First half of 2025 was safer than the previous two safest years (2023 and 2024). - Production: Upstream, refining throughput, and product sales all set quarterly and first half records. - Turnarounds: Edmonton refinery turnaround took 36 days (better than planned 41 days) with cost $142 million (11% lower than previous $159 million); Sarnia refinery turnaround completed in 28 days (better than planned 40 days) with cost $94 million (13% lower than previous $108 million); Base Plant Upgrader 1 turnaround finished in 67 days (better than planned <91 days) with cost $231 million (11% lower than planned $259 million). - Capital projects: Completed Base Plant U1 Coke drum replacement (a world-class project) and Syncrude Mildred Lake West mine extension ($1.5 billion gross project). - Operational excellence: New operational excellence system fully converted across sites, instilling better performance and reducing site-by-site variation.

Upstream production in the first half of 2025 was 831,000 barrels a day, the highest first half in company history, contributing significantly to revenue. Upgrader utilization in the first half was 94% despite major base plant turnaround activity. Refining throughput in the first half reached 462,000 barrels a day, also a company history high. Product sales in the first half stood at 603,000 barrels a day, another company history high. Operating costs: First half OS&G was $6.46 billion, down $135 million compared to the first half of 2024 even with higher production, refining throughput, and product sales.

• Revised 2025 capital guidance range from $6.1 billion to $6.3 billion to $5.7 billion to $5.9 billion, a midpoint reduction of $400 million. - Raised annual turnaround capital reduction target from $250 million per year to $350 million per year.

• Commodity price volatility, which can impact cash flows. - Exchange rate fluctuations, such as the strengthening of the Canadian dollar affecting financial results. - Global trade and tariff concerns that may impact the refining and product sales outlook.

Q: Regarding U1 stream day capacity, what's the current status?

A: Peter D. Zebedee: Stream day capacity on U1 remains around 140,000 barrels per day range. The real benefit is upgraded metallurgy and extended turnaround intervals structurally to 6 years.

Q: On capital expenditure and net debt, how is the $8 billion net debt target being evaluated?

A: Rich M. Kruger: The $8 billion was based on $50 a barrel WTI in a 1x coverage world. As we execute and exceed our 3-year plan, we may examine the net debt target. Kris P. Smith: We are focused on increasing excess free funds flow to shareholders and will evaluate all dimensions as performance improves.

Q: How is turnaround performance achieved?

A: David J. Oldreive: World-class turnaround performance begins two years prior with benchmarking, followed by disciplined processes like risk-based work selection, detailed planning using OEMS work processes, and strong field execution. It also involves expanding to extended turnaround intervals.

Q: What's the outlook for upstream production volumes in the back half?

A: Rich M. Kruger: The back half is expected to reach the top end of the guidance range or even exceed it as teams continue to find ways to improve performance.

Q: On refining macro, what's the outlook?

A: David J. Oldreive: The refining macro environment is fairly robust with strong diesel cracks and positive local retail sales for Petro-Canada brand.