IMO Imperial Oil

Dave Hughes VP, IR
Rich Kruger Chairman, President and CEO
John Whelan SVP, Upstream
Dan Lyons SVP, Finance and Administration
Theresa Redburn SVP, Commercial and Corporate Development
Prashant Rao Citigroup
Emily Chieng Goldman Sachs
Greg Pardy RBC Capital Markets
Phil Gresh JP Morgan
Dennis Fong Canaccord
Call transcript
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Good day, ladies and gentlemen, and welcome to Imperial’s First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I would now like to turn the call over to, Mr. Dave Hughes, Vice President, Investor Relations. begin. may you Sir,

Dave Hughes

afternoon, introduce for in the right Good just the us. like now. to folks everybody. you. joining Thanks I’d room Thank that are

Vice and Rich Vice Senior Commercial and Redburn, John Chairman, and have Theresa Finance the President and Vice We Whelan, Dan Kruger, President, Senior Senior President Administration; Lyons, Corporate of Upstream; CEO; President, Development.

information. performance, a want that and could today's assumptions. actual contain of forward-looking As guarantee financial noting comments not factors is future by usual, Any to I operating information start differ and on also future materially and of forward-looking a may results depending number

Forward-looking information and as on recent available Form quarter in first earnings EDGAR described and release those on XX-K, that SEDAR, and our are most all earlier the documents well factors assumptions was are our detail as our and further in issued website. risk today

So, opening pre turn questions please is do from Again, we’ll start Rich live them. And were Q&A. few to by have those in typical mix line. and and coming format, the this we a remarks questions as in refer Q&A over to to that making submitted, then some going with it we'll

Rich. I'll that, over turn with it So, to

Rich Kruger

business the the quarter a F&O I we but would before the differentials. out WCS And fourth detail lower my these in Canadian I’ll and and year-ago both respectively, those start barrel was barrel, results, talk quarter overall $XX quarter. story ‘XX relates light our have absolute environment on quarter afternoon more the Canadian quarter $X really I material price quarter it’s quarter-on-quarter, than particularly $XX. later the by $XX, was When -- that as of of both a on was comments at the of impacts movements Oil. afternoon, in a $X first Canadian heavy east. few to specifically or up Okay. $XX and And add both to and averaging the WTI $XX averaging offer the first good you in in prices about Imperial a up know I'll We first a MSW out of results quarter-on-quarter, said, Friday.

opposite and prices from down, Canadian minus the MSW/WTI these fourth from of reduced minus differentials with XX moving movements relative with decreasing greatly So, to X. up, global quarter, XX, minus prices XX WCS/WTI minus to to

the of order, Of course, effect as January Government opposed big went driver movements. price primary curtailment was these which market to Alberta's production X into the forces, behind year, this mandatory of

our with let $XXX me So, share. into that, get million, $X.XX net income with a

that our upstream, a with work dramatic Imperial, to day being help balance across of day XXX, or refiner, sales switch. and/or For roughly and of differentials and product product the line, refining barrel XXX barrel moderate price XXX,XXX to as defined and petroleum XXX,XXX roughly a producer petroleum equity impacts our then the sales integration balance they

the quarter crude increased extent upstream fourth by to income, net fourth $XXX year million and from materially $XXX about million, a prices. by it to $XXX by higher down down $XXX quarter, quarter. a first quarter, first the for So, large approaching ago driven earnings million was million, Relative the

first making with cogen $XXX million, the downstream the $XXX $X roughly billion Alberta year activities some receivables effect with $XXX Other working overall into quarter, saw upstream in working and working net in factors and very prices. experienced quarter we downstream with the total. out costs. pipeline like totaled $XXX with million, quarter prices, products impact positive of factored the upstream is ‘XX. Aspen, also the crude from negative similar XX% the reliability kind first million the about at we operating our expenditures, in payables of due fourth and quarter quarter-on-quarter projects capital feedstock like of exploration with of remaining million consistent Continue that saw cash we change. What the Spending the gen. expenditures capital refining to $XXX of That's of earnings here Kearl earnings to of by of up downstream of changes driven Cash to rising you However, about last totaled was negative was nearly this key were kind and year the was right large Cash crude and year million million. and are half a effect out. in, $XXX from million where in higher offsetting on was generated generated events in cash, part On quarter, falling upstream capital crusher, about capital quite year they Strathcona the $XXX total. our volumes

be markets original last we of in season ramp the that in would situ monies This the other We the we year from range limited result preparation in stated the original suggested we pace slow likely announced and would Aspen, a given XXXX would to the Aspen delay full-year due year to billion. guidance at year, $X.X drilling down to stemming $X.X After site market Our for mid winter season, of we in development, the SA-SAGD January, in expenditure this competitiveness of capital least government November one of largely Alberta's billion start-up. crude that development. investments in of down of included sectioned issued that we and intervention uncertainties in March issues.

full Aspen for called million in when scale we with such So, ramp enable to executing year CapEx million on resume guidance in we’re year. on which a will expenditures anticipate be now the now $XXX project Consequently, right. We be that Aspen actives time this the would judge $XXX expenditures to is of us roughly capital total way efficiently our plan down, the original of surplus this Dividends your memory, capital about strong $X.X and reliable refresh we invest expected to purchases, is to a sheet strategy, XX%. and X.X, XX% and allocation have sheet, to year-over-year versus is projects to pay via capital range of and billion attractive the $X.X billion at balance debt that billion dividend, share when capital $X.X Balance $X.X growing cash in to strong, debt buybacks. remains billion. to and as return if shareholders

consecutive Today, in third have million quarter. on We share quarter. a quarter, announced hand of the we compound at cash the $X.XX consecutive payments. billion years plus in payable of per if a XX% paid the be to $X years keep about increase f those the this payments, XX end bit then, of you who XXX growth And for or dividend, level, track plus dividend share. XX rate. declared at over And at $X.XX five-year a average these share would assume $XXX In XX% we dividends a that things, $X.XX of current

share flat. June the TSX million its ratably shares In XX continued buybacks, with has we ExxonMobil to XX up period. NCIB us addition, participate continued X% consistent allows of quarter. We approved over quarter, program outstanding that maintaining shares XX share roughly to in execute purchase program ownership June a the our to to this

for shares, $XXX program for June that quarter to the mentioned. runs a cycle We XX million or XX-month about first so Each I so. this June was And million that annually. NCIB renew

essentially more full to safe with In comment assets, the quarter. the as had basis, flat majority this speak, if to a below I a year. quarter to X%. where first compares uniquely production prior year-over-year bit bit in first havoc day, our the cold shovel bit that perspective, last day years XXX,XXX you XX,XXX a production hoped equivalent say, a weather, we about the our barrels that which the of And will assume we were it’s renewal I renewal over gross operations in That acutely quarter of year in where three weather. first at with we or caused be would were Upstream a a the cold, XXXX quarter over This we attribute similar XX% first to we barrels quarter would program. averaged of the of XXXs, June to look minute. on more it typically first that Liquids on look this said a mid our have I if XXX more produced the first year. preparing But right last to comment years, current the in has was Kearl, XXX,XXX into up due we the I’ll the quarter roughly. for year, perspective, colder oil will in think we Getting quarters later. back XXX, are mine. our challenging But you that in to were seek we're three averaged per total. average XXX,XXX or So,

year. So, we're atypical for not this

we work facility. the in as annual be quarter, our refer to to Second KX as first around quarter production what by turn expected range the same impacted at

and the turnaround quarter a included Second starts quarter doing in production turnaround going specific be The last for year was mid-May. as well that XX KX be about at we or this so, to work are days facility. XXX

a related installation about the year XX estimate IOL share. preparatory include of XX,XXX In share, ago, work, about comparable. a the payers, line bit scope less have crusher little project. Imperial million work generally barrels transport and $XX so will will days, barrels the impact plus of gross, and ongoing a that's quarter, hydro the this roughly supplemental work time, we'd cost or XX,XXX We total, in select work, million at note, items $XXX the $XX the tie some XX,XXX, And turnaround but some normal million with for inspections

degrees a on extremely daily capacity but there X,XXX beyond. for XXX,XXX year year-end a down minus February have C day us to average what XX end is If in The in it Canada outlook basis by February, supplemental a sounds continues X in barrels a in a barrels a with in XXX,XXX. us. it’s Our temperature XX the particularly the And schedule. interconnect fourth the you flow the in in Similar of we day, it little first of quarter. Lake, what cold full versus cold at from was give of consistent the about context. was 'XX, did Kearl, the crushing barrels last context, in weather, years. facility day for we forward, unchanged strange, QX. say affected -- And I’ll over was XXX,XXX XXX,XXX an day project at means at XXXX that to will that Cold perhaps to the five quite little remains winter, support tune minus in year XX think years, the we And affected average the annual coldest and a the point average from XXXX barrel

on time tools, productivity this all productivity when due and what affects considerations in well does? to is operations to It restricted work their base safety have their elements. So, we the limit workers because to exposure work the both --

we at Mahkeses simply it range In work to weather. cold extreme XXX. at takes second with of more we in Lake, our So, just is Cold anticipate turnaround done time we’ll have the This to things when be XXX the that major quarter, get plant.

five This around turnaround -- being recall, Cold may Mahkeses -- interval. You roughly every once about averages of barrels facilities Mahkeses XX has we major one turn is five steam day. XX,XXX, them. these XX,XXX on plants, a five-year Lake a

So, tend each the of plants to we year. have down one

is quite We’ll what of normal you started day cleaning, -- the work, do. And will work Maskwa generator Cost will a started We plant’s things turbine kind in at in of terms we work. kinds XX-day of quarter. last that this duration. give to maintenance, impact. cost regulatory this on the We is to of similar this and Technical million. It’s impact. year XX,XXX-barrel production XX-day maintenance about turnaround year a scope, it we the impact that about duration depending be, week. line have happens inspections repairs, production is $XX the So, plant base did the kind

Syncrude. on Moving to

Syncrude averaged XX% the barrels a Our share XX,XXX quarter. of day in

the with And program the The in of ever. Syncrude offset impacts subject first a government’s best specific that is of fourth the have quarter ‘XX, high year. We designated quarter partially this reliability continued operator Alberta to as the curtailment became these strong reliability effective orders negative Canada, orders following performance.

the major have expected Syncrude production done maintenance is first be were could quarter, other constrained. by artificially there by in of three take is third the the we down upside the that of the we we cokers, here work will words, the to of pipelines Crude second rapidly than in second more Western industry quarter, share we where turnaround unconstrained Canada and our $XXX,XXX KBD X-X, couple to work at not a quarter rail that. maybe will peaked big during In if call. rail. crude and to December. working late is With at be thing day similar from no increasing in will we full, more The second quarter forces in was Syncrude have market our out in better to one The next a have and So, ‘XX of say plant quarter. barrels

Industry XXX,XXX the XX,XXX government’s in and first April. Imperial, in rail quarter highlights a dramatically about mandatory directly crude March, similarly of February, economic important. prices differentials went by evaporated a in the And XXX,XXX, XXX,XXX XXX,XXX from January quite January, order curtailment on December, order, the with Canadian a and and I’d barrels the in in went incentive With March. this as dropped negative higher the reduced related being XXX,XXX is in inventory XXX,XXX to transport. what to February in inability probably in reduce consequence crude we levels, provincial essentially from day curtailment impact that's a true and in unintended negative offer XX,XXX to zero

tops crude So specifically, at essentially of the XX XX, million across end the province, inventories roughly tank barrels. the were year,

things right curtailment, initial were off rail to direction. about in XX to barrels it With dramatically. generally the dropped going continued February, started before the million in they good, looked drop Inventories

where inventories were then, before inventories And effect. essentially barrels ago, a million curtailment and they with However, today reported Genscape reduced again, XX right increased into order crude since the went rails. week curtailment reduced have at

April, refer to set operations a Imperial, inventories a next of Now, as reducing movement. some mines think we’ve rail, one months. But clearly, we the resumed little spring only We the we XX,XXX while ahead, as not rail but couple of a alleviate particularly at help mid-March. On limited about to explicit kind kind look the major maintenance of of achieved. some averaged for crude the we of in pressure increasing objective that’s prices activities, being the month day barrels what of we may provincial of the up curtailment ramped -- bit not is over in

tell the those be not so, to on or a refiners month. And this XX barrels XX,XXX you rail. there tier. or on time. not, get have sell slight whatever, up incentive will finalizing if work may is rail select discontinue we be is depending for at by the May to this our to targeted you made, We're a at terms was plus go And there We we and plans economics. so June them. there we day move of sales, customers, is incentive will this based with purely But operations. There may what to resume will And down, an If I we can money rail

just On quarter throughput, disappointing XX% a was I barrels would day. To the refinery XXX,XXX a me, this operationally. utilization. --

at a was barrels of strong year, of a last four events the had were particularly recover small but we collectively three here worked to cold reliability of ability significant events against I’d of each us extremely and refineries. relatively and in respond in years. it over year, the XXX,XXX. about Last throughout the averaged we context, And by This say our series small plagued XXX,XXX occurred. individually terms our year, a when weather day again, quarter at For first them

or a if are the day an we of Our in was about share. impact to refinery that, $XX cost estimates per million would earnings XX,XXX put about that it estimate And about us we $X.XX barrels quarter throughput.

the each our every highest and to level every challenge but every it’s Now, and quarter. week, like and achieve all month, each is reliability us, all things these of of each operations, the just are behind

to corporate how heavy to of and or downstream that dollar financial to light, heavy back in commented I about for If each And year barrel fourth Canadian the first we net global our both light I’d there a -- quarter $XX differentials. each million performance. affects million isolating quarter, earnings XX-K WTI those Imperial how Going I’d we overall point the estimate to to prices, and $XXX were due we of light both impact you offer that a earlier curtailment, movement do quarter. of it where worked we for change Alberta on, would differential we curtailment. crude the have exclude earnings a increase $XX detail heavy negative upstream, I prices million commented and the barrel equate figure absolute crude for government’s that reduce, action a to are in sensitivity in suggesting out, and to -- -- and would or you

differentials math $XX So, $XX average, by $XX, somewhere in with on light get the you by sort. to reduced $XX, $XXX heavy a that can the of $XX quarter-on-quarter, barrel, hence there,

Looking second into the quarter.

$XXX lies the product million. to sell money are much share. of margin stock, it, factor the are about make had We with our to sales in to we a because met XX-day $XX of at and about the the rub. large the for Strathcona a commitments the midst when note sell preplanned of as it, as shared product in it. we as being well that time don’t purchases, mid-March mid-May we duration sell purchase in scope, the normal absolute cost, quarter, therein we on kind $XX some when had of a kind third-party but replacement Sarnia purchase event We $X.XX will to earnings $X.XX year for end-of-life million turnaround you change-outs, I at when equipment, in million reliability was at million. the in to order though, as the $XXX that we last manufacture of think estimate, upgrades, and impact second cost catalysts, turnaround All we’ll a various a quarter, refinery. It's the We have of

The April but same a it a quarter the material Xnd, and had tower did nearly comment a financial but So, Sarnia, fell for out some addressing of impact this of of the this tall outside was occurred at the work. year preparation an at that was turnaround Sarnia XXX-foot is time, not We plant. hydrocarbon-free. on fractionation inside tower, in of what incident that was at for we I’ll service ago. the turnaround as tower also

The was is one Fortunately, jet with manufacture, and or components. no no it. hurt to select both used fuel we issues tower air and had spills some gasoline

timing inspections cost, the are be consequential Now have have produce insurance impact on gasoline to loss, because damage, units a and for and at reconfigure underway; We We're evaluating it jet repairs and slightly be will we determined. components, deductible as rates. well. financial not other to to are options although this; do reduced it's products,

repair I year. first each We this barrels at sales, the average have Petroleum on consistent years. five look goes a more work in say the the in the on quarter day, will quarters, first seasonal product years XXX,XXX with and if quarter prior last last continued on. five have QX, to first essentially with average, demand, investigation they product to happened as of XXX,XXX over flat And the average

of sales branded customers the agreements consistent for sales our autonomous past, communicated Our program. product to to in longer-term truck what customers’ meet superior provide needs. we to continue with suite a strategy strategic major and strive is in supply channels and Canadian offerings haul product very markets via grow the stronger Kearl a to have our

Kearl. Day our truck ongoing our we November, autonomous During described pilot Investor at last

making that our about programs conditions. XXX talked testing greater that plan workforce focused We we implementation productive that full talked $X.XX about could Specifically, service. had a of then made big We’ve And with reduction in the for conversion. regulatory we team in trucks of expectation detailed this mining ramp-up Alberta suite the conditions work. sands technology our you fleet continue six news excellent engagement a operation. whole was go of deliver required and the oil developing than We cost on barrel. recently, the our ensure to fleet a months full the Northern work over build operating this is Most progress we a that attend approval confidence on would operating see a to months, would procedures for in in XX last

decision that performance barrel. a about up related, I'll excited financial expand to is With not I a evaluation quarter of by environment be vehicles another could also operating we what skip open make full XXXX, $X.XX in So, oil over supply the just the XXXX. so I characterize that, do it and time or expanding than year the would conversion we that that, a in on to anticipate we we solid, I'm this our I more from summarize enable would at press position our the doing I XXXX add costs outlined to in and a expect we autonomous trucks and quite lower add early XX that, helping great. of on be of comments, other so I things and eight dynamic or a the end also sometime to course indeed work. today year sands. cost operationally, to release, end, would XX the today's or maybe bad, very will about continue solidifying It be fleet We'll before market not If the politically. will I'll certainly to final is your XX in technology of job. on And just and XXXX in autonomy. -- And and that is example would -- I'll and couple great team first that point savings it's time. that, the potential by The would but is was a yet

purchases our and strength market our once financial suggest both integration resiliency balanced conditions. interpret our uncertain our strength think I and to changing continued expressions And and portfolio, financial share competitive and confidence. and to I you highlights Our again dividend XX% of would increase

to off back kick I'll to Dave it the turn Q&A describe So, process with and that,

Dave Hughes

Rich. Thanks, Okay.

advance. past, As in did provide folks submit we a opportunity did we’ve to in receive questions an the We few. done

So, and Q&A a of to move I’ll line. start out with over those we’ll then couple the live

Manav the question comes from of Gupta Credit So, first Suisse.

last guys call, But debts. had are the by to volumes crude rail. will indicated given restarting that then, the heard cut we lower On zero, rail Imperial crude be you by

on wanted ground. what changed understand to So, the I

Rich Kruger


hit think, barrels will comments my time that host meeting have points including the different be those in different at in economic at most manner we terms, can on customers. that we I I And a price. we sell the And look of on various conditions possible. customers’ needs in

March and if So, day we’ve conversely, economic had going through a an economic we April, largely those i.e. decrease shipments, commented that once if look we if opportunity barrels that on, it limited or sense. I’ve would again doesn’t to make forward continues, to will in mid through differentials sense, XX,XXX it resume If customers, increase because that shipments. makes crude

it's a So, largely month-to-month decision.

can Of to overnight. switch a you is flip put this bring back them on railcars, not service, in course

it involved in some But, as So, volumes with -- made there that, that that sense tranche for you resumption of way. move it. to saying interpret preplanning March limited is in can economic that

Dave Hughes


question the We that but also update in -- a your had comments. I around provided believe you refineries, on you Sarnia an

the go? the allocation Stanley. delaying next capital your from with we to will question freed an free Benny capital cash expect we prices extra flow? Morgan is You’d Where tighter and oil higher up Can the development on will So, Aspen strategy, given differentials. get Wang, from updated go

Rich Kruger


we’re I with go sheet strong; fundamentals, to I is comfortable our balance debt back if think, level.

in capital go about X.X these put to you the year-on-year if pecking We So, talked basis hand billion. and of on a averages I about order, how hand. of two kind kind our sustained would

roughly. is $X.X annual so our X.X operations about years, current XX year. dividend, look our cash Our If million, I back averaged dividend the rate billion amount a at last $XXX over from about

look over cash XXXX. So, was $X.X you our capital be It it in billion sustaining would flow. half of and dividend time about at if that

sense So, Currently, think what would years. But be economic that we capital have to couple it it an supplemental is crusher, for example. that; we now and makes as last cogen, beyond do that good we the beyond will Kearl of incremental has growth. Strathcona that it’s for if buybacks for go surplus, do when

So, overall is safe a then I think that buybacks to monies to it or continuing likely we’ve would driven rates be talked at about. directed that buybacks the spending by would that mean Aspen, at with will on capital -- additional what would the assume reduced be those mean

we’ll to a I’d for period level comment more We’ll we to that again, about of have specific the Here probably -- buyback. have renewal more have coming the mid-XX mid-XX, say XX-month up. will

X% we’re allowed course to of up to outstanding go Of shares.

it solidifies does at I think just recent what for it outlook higher the continued buybacks level. more the


from [Operator comes our question from the Rao first line Instructions] And of Prashant Citigroup.

You may begin.

Prashant Rao

are unintended to right explicitly started. in where we curtailment, that I consequences alluded alluded, so stated -- this the you you comments shouldn’t inventories kind say Rich, back of of it your prepared about of sort the

think be price, inventories. here that bit do with if a maybe thesis a new of going thinking on back or to less tight the are now the temporarily. different of pricing. mean we And that than excess a in thesis of drift you It conversations that you get with of think you benchmark a that up sense victory perhaps do half targeting excess inventories was sort right us and we’ll we And original should on bit with loosens then, say there’s bucket been let's back administration, from claiming the that of see the in helps oil to agree supply a I prices early puts to going would rising incoming perhaps the reversion globally with your days oil but -- in addition gets in differential. some targeting year, government beyond

thoughts had So, on two a those then, points? I your follow-up And rail. wanted to get I

Rich Kruger

competitive historical. numbers absorb inventories price -- decrease as victory on look levels out I’m go whatever, increase other clearly, of But, drive get higher down it When to thoughts XX, much, -- declaring seasonal And some I or production if unintended But, assumptions has player or were a but or at price rail in so When there small step you system were are events, those are this. economics takeaway would take two volatilities. success and politician the hand-in-hand. instead to XX in And price some in there back and capacity. in big also that cushion of or and consequence or for place, But, thrown for to that, parallel two most me, increases has I an higher upstream rail numbers, I'll versus I the a you. the down, say the there, like million helped that think some million a as certainly the put okay, that to out fall the occurred, or off And was with I tank excuse objective program objectives that drive or and a you I kind look and something at their they inventories explicit. more is was were engineer fair were there guess, -- so, could And in XX the was of from offer this. obviously price. a there price. you top quite and not describe reason. barrels were the to of XX And objectives help

we that's I capacity. really started. they takeaway four into think inventories months the the that where here right grace increased we look are and saving short-term, big prudential a negative. are only In this that's the at for I'll

vivid by what that issue was or think And So, investments it's around as it say, uncertainty crude what to exacerbated in assets. not sell considered clearly much confidence. in increasingly, Canadian the I not of government X about has short-term short-term markets months And may And don't I would talk it's not and consequence may traders about this. down months. trade, confidence to most quite slow confidently companies from due may be the prices do. are trade that’s a X you, is our this. we And decision been risky talked can much as before out, in already XX months, to and I investor example is suffering they reluctant to is too or the X predict other that months, buy unintended that Canada intervals, X objective one another because crude met. been

if is bit. it's bit of worked. to I view be a can issues fundamental not short-term this use The of analogy, the issue, it’s might have if little this temporary. a like has this So, you measure, I I And addressed. a price is road the inclined think been only kind euphoria, But the down your little say kicking as,

things we're in confidence. risk going record We face no improvement investor have markets of to this, the about And that restore incur start don't it's And -- there's on with a go doing I come don't -- have we up. lasting to work, trade this, quite let time to this. we're along and

last dollars cars So, to were opposed that and we in we've what of of prices. takeaway for terminals, maximize to achieve as can attempting people we so year a clear is can we develop business. billions out got artificially get loading would market and strive capacity to late what got and to we and Western Alberta it hope it terminals and rail there parties for and the that in doing exactly we to get and back produce shutting and procuring what incentive We've expect where do inflate power is to offloading

I facts I don't I up, So, the at the other going with on see other parameters associated look facts. this than of And off I like any price of most policy. work what when

Prashant Rao

I answer. a thorough That's very Thanks. that. appreciate

into segues that. then, On perhaps the rail

all capacity a and details think market scant terms do you that it’s that how have have to on the what economics railcar assume And rail that to the -- on been has, versus least Is I viability this yours and go? means and program. way of some contracts available say about was the if in that of forward. rails contract Alberta move don't the to work producers’ If would where take sense course, the as has they’ve that that that, capacity rails And on to that have around rescind for revisiting how both program that able capacity administration that. overall on contracted entered assuming maybe of market in that government I in get agreements? well of work now what looking incoming you there capacity. in is ramp room program previous that are sort does is at the want the going the we free economics conversations? but of working rail to the there we reform -- that the incrementally margin to administration’s would terms talked maybe in about as other into, out think, Assuming rail there at also forward, going But, we of the your

Rich Kruger


not with if we day we we were or I think, to on we had really first that sense. don't terminal to do the no But, we that well, I I'll XXX province February made know as ramping in filling in we're I and have that the at XXX,XXX has were know. capacity. contracts December, has. plans what then look, to terminal a up. the XXX year, to the to a a it start went it that privy get XXX quarter the I barrel Late up in And zero in because goal contract of

sure hundred buying new building there's right now anybody, of several barrels I'm and capacity thousand rail buying not makes day when unutilized capacity, that a sense. So,

were rail whether to were the then make and deals we by get collective back CPCN, cars. government, what does decided. think incentive suggest a that of building meet odd about several business day of and economic were crude industry to and like is the do there is me that's with I just meet environment’s further to kind more industry, what think I to capacity incentive we that there that can bringing be idle if does. business I late let's market will I’ve in incentive in that. everything in we’re the to because were need if year, a rail thousand got is do capacity was expand increase build, expanding whether we, that have what a need. people hundred business barrels our today. But, when lot to rapidly, sense talking There responding new it seems can everything that existing industry do we we that’s and that That’s currently really right, would capacity a smart the they then whatever, of the we doing that’s


the Neil And Goldman question of our next from Mehta line Sachs. from comes

You may begin.

Emily Chieng

Chieng far? XXXX that’s of associated Aspen guys guess been of Emily how currently taking to we made XXXX the is should you of please? the and Can Thanks Neil. on this I some about spend today. going so that the the Hi, discuss think And progress with at sort profile for time behalf capital into start-up the

Rich Kruger

upstream the months, Yes. made the decision we months of or just spend. first any project, -- November, kind is were so When ramp-up a we in the like six slower on

lower The bit big the years first capital a in a spending is couple is for spend, prepare the startup. last years year The on years are the middle.

getting on So, we were just started spending. the

very ramp-up the question not. the do or we a so, jump curve And made we decision that was, rapid us, before on

to about we’re said that’s we maybe ordered. site year. things example, quarter, some right to But So, million. preparation work select equipment And in we around in that’s work this numbers. spent that plan some doing progress, that’s XXX are spend been These round now complete for I the $XXX or

and We short-term. it a a will put that in where can be condition the place maintained in

brakes. doing the versus in time’s ramp-up we right, efficiently feel that that best we activities, will slamming And can I’ve with And impact activities so, cost slowdown resume the that we a the project. to we’ll us. the described orderly and do position in that think, absolute this also lowest in When on

I with of spend roughly decision, where you think, here. ramp have And it evolved have would money so, conditions faced look business we of year. we with construction about we're I up I’d be the enough say year, that we’re winter position, again? we said spent we year can to seasons this in at do So, I ready If i.e. things would if will and this money million. that amount amount What later think the that’s $XXX next this

right start we’re that resume later feel back we're yet very get to right this the execution. to direction do are that talk decision, But, on spend that, another project minimal full execution see the this that wrapping and just things this about likely we don’t we be If of as not will direction going the time You things than to there because you think and up in the year later all and then project to a delayed more ready of yet year ready in in XXXX is we the a I startup. curve. you the see less year in are aren’t make what the that going year,

don’t I I ‘XX we $X.X they in be have recall, so our recall, spending about ‘XX, XXX in or we and that. me, the would ‘XX the million said of period, each think investor of to time front peak and page of we in year. we will $XXX something day, roughly in project the kind I billion talked kind were

spend, a years the will of shoulder of bit kind three years have and little be you’ll capital peak So, then less.

do Right one or we is the just the later what then it But, will another. moved is this one that. out. we move just moving shifted it question that be move now we So, profile spend to it elect been we’ve year. do And the yet has year

Emily Chieng

moving And back Kearl. then, just to

sounds some average to in the saw rate that sort similar quarter, it step-up as be This are to Is though first quite of we XXX,XXX of in would production production, second at half. of So, run the similar what levels implies quarter a last sort facility. second the then still the downtime if KX year? targeting that of today you barrels given

Rich Kruger

of fan, down by are hydro are confidence middle very the an have quarter, the the XXX detailed we’re cetera. touchdowns things quite the average, And and XXX quarter conveyors, you that transport, in et to looked But, crusher, on bearings on was of made fan, in particularly did to the we Kearl the fourth enhancements at years maintenance XXX, and have a few have it year -- be or overall probably when we’re right. actually we because conditions a -- with from lot less of chains second U.S. get and the work, the ‘XX, might it was to at a it when prior specifically when last we the the football on annual when high. late year we if time. the talked at we over et weather you talked highest, couple last have that's sports are knew XXXish is and Emily, third were we of a on reliability like that about we we on cetera, range improve teeth half, might But if the productivity the

throughout that XXX. and year, are the in the all And commitment this So, XXX, we our we XXX something like fourth at up where XXX, said the is that in quarter that, unchanged we I last delivered somewhere we quarter think for year. year. third on ended at That's around exactly

And yes the And to are do confidence And that. XXX, the high was as big look that because our At we the quarter second bump supplemental real not say The last year year. the crusher the again flow year turn as realize would they the we and same take with at second of of folks first this going mid-year, it timing of up of XXX, the comes the get will to is is going this interconnects that to across is around, is to nature XXX the the quarter things. this going year. The steady of it's is half way. the realize it’s reason to year. do are minds end state XXX, occur

‘XX ‘XX at kit. as and looked we've the same fundamentally So,

day do really that relative talking and optimizing we debottleneck, squeeze But, do change. optimization to can we reliability to or can those last or more, few XXX barrels can that. we step about Now, may looking are we year’s we a several are at not better, we're able be a and always thousand a

long this hear. year that’s to quite wanted I Perfect. exactly to barrels profile we're will quite you a day XXXX. a deliver the similar to Thank we are So, XXX,XXX That’s confident answer to, and yes, look going what .

Dave Hughes


up. back Q&A So, to finish pre-submitted questions go will we've through will then we which live more we of and to got a couple this go

So, Suisse. from Manav Credit Gupta,

Given pressures seeing ahead the we KBD XXX progress guidance schedule, at conservative supplemental XXXX the of side? proceeding is on for Kearl, are

Rich Kruger

whether the did crusher interconnected incurred, of and either downtime cost? said love that’s was going on what you transport, I and say that crushers in that And confidence, I fluids wasn't increment it the And question. we ago -- as that’s just the cheek not the the thing. love facilities year that incremental we I that now bit was that between XXX? having what long your could too could with might that’s then, last because opportunities another weather do redirect and this. we whether to can if love prior quantified the crusher, that you fact, two back for deliver we start-up reliability that the hydro have saw. from asked it commitment have is are been ago, I I I'm when a XX. being facility. minutes was we we bearings, lost XXX then to people further that same in is had tongue the Obviously, became one opportunity XXX when incremental opportunity downstream the based at events, we asking, better slurries chains, teeth, you And are the And How and little than we said. arrived at facility looked year,

promise but in day can the enhance. don't at come barrels XX, looking at I'm or what’s XX,XXX okay, that. of at stability, our know stabilize, we bottleneck, increments time, you in the a come level I I now our a but we don't day And I reliability X,XXX barrels barrels and X,XXX X,XXX or confidence workforce one maybe operations, than is, is, yet. next now, whether or those is promise is they opportunity a or the always can you next is question would in And hesitant maybe to X,XXX what a to if your day. it's high. when look do what reach downstream, better So, it, upstream the say

more building redundancy what will that team are have the next operation, look reliable more we incredibly in, to allow work with stable to at a be and Kearl I operation, So, will a we at we are able deliver. believe and what's our capable

able XXXX. I good, quantify doing and that. I based above blocks this I to that So, at on lost we're But, quantification look forward do we’ll was anything do ready right said, know comfortable point the not that that out opportunity, that. better solid don't to I’m can the say XXX quite be experienced-based on of but to in That

Dave Hughes

Okay. Wang, Benny question is from And pre-submitted Morgan final Stanley.

these to we a persisting Your you on talk Chemicals dynamics be can were the weighing expect than business And had expecting, tougher about margins here? do quarter headwind? you

Rich Kruger

question, Good Benny. Yes.

in in year, back If averaged the so in over wider even or five $XXX $XXX been high to a ‘XX. five years ‘XX high five a prior you about profitable in million million most about The years or earnings with so, history the million in they have range years our about look low. chemical. business our swing chemicals last from a and that, low of business, We've chemicals a million in of of $XXX to averaged a $XXX $XXX to million our

historical certainly So, is earnings. been The The seen year-on-year. installed, our the quarter bit of capacity in there highs U.S. this We’ve when has driver down polyethylene they anticipated. has a built or behind line. the major and crackers quarter that biggest they're recent long you Gulf well in Coast as more below most higher the look typical than on been are a and we're and at XX, and bit our margins, like first our industry been is that behind have now driver

ethane for come are trying with increased cost higher new that are as ethane. capacity. And on absorb that you’ve combine you seen capacities to specifically with markets demand So, feedstock and

we to these that. decrease bit so some advantages the about oversupply of North of on to North talked advantages, transportation have polyethylene. And America worked have We’ve our before of in American a got cost You’ve on both location customers, our of our some margins. feedstock

is enjoyed last mind as we up and But to to model, year an the going to our business a too early the own $XXX in in but definitively it a profitable over we’ve earnings So, that predict. would be headwinds. we’re giving recent that my as closer million It $XXX the there factors opposed forward, not profitable million, million expect to will I’m stay very five market year $XXX business, uniquely as just and yet stay a don’t all on recognize some higher looking are years. been that will years. at it it number if has know behind it in


you. from line And Greg Thank next question from Markets. of RBC the Capital Pardy our comes

You may begin.

Greg Pardy

was generally lots just quick then got ones rundown not work. the so as into your quite when U.S through, those of there, One Exxon for to notes using are two you it to you cars, you. rail is, The are redeploy I to able good relates network? the

Rich Kruger

go want to me at that one you time, answer Do one? a

Greg Pardy


Rich Kruger

get into is rail wasn’t to decided rail on XXXX, looked in business, at we our the all the sat going drawing every bad when important, the on I going context cool. think is things rail decided it's looked pipe board, We there back south. pipe things and what said, -- but we if west, happen. east, which everybody And direction, else in said, at to be

heard me insurance Greg that you've was many say it an policy. times So,

the our test deal it Gulf whether they wide range partner, a only Alberta largest is the and the us, our table put fleet cost whether and of most to and next we owner customers, So, deployed refinery, offloading then agreements can build the America. efficient, industry. facility brought of in terminal. as Kinder and not able ExxonMobil but they getting operate design as to that that that brought Edmonton beauty in we from railcars of a services. to key direct with structure be whether was very negotiated agreements, majority North against were could, And we will part effective, land to time we a up rail path And to the that’s absolute Coast Morgan, a that in And partner the anybody was on expertise. the not is to we constructed I itself

might those in to can make were we able and get it back more sense, when them incentive, They service. and economic when get to place finish And ExxonMobil. there we offload call a what similarly, back not we have So railcars. economic does there to them what’s right now was we railcars do in we up but return

because gives them fixed we what it our again, and to need So, much when we does, that those those lower cars by rail operations costs can And very us can back. spinning cost call. a offload we similarly

anyway, if looking per cars, are we’re cost structure you If it’s at might if day we not the barrel. for low they on you’re you paying them flexibility and operations. And didn’t even them are and our well, say they’re way. money efficiency you in of there the bought but the were huge or leased next move we’re Now, Whereas as that them. idle, them, yard, fundamental our and -- is to them for paying either and we either have losing if staring relationship well had that rail

venture We're the we it with to foresight unique So, month. situation. we the deal on the and flexibility. great able Greg that have about a of twice plan really time a cars of roundtrip have this And I to attribute order a and position

and loaded challenge who I of see Gulf again. transport meandering than time. back. that trips are all of So, i.e. round home Coast unit they in can would full the and XX-day days XX get cost to include are from anyone period back more cars to down do it because else that drives And to to Edmonton

give you answer that thought the is But answer one ask -- than yes, for I to I’d Greg. you on your question yes. quick So, more

Greg Pardy

no. That’s No, helpful. Yes.


mean just I not I is lot mean Imperial-Exxon, of it's other Here turnaround. is the is, but one a there

storage outlined period and time? obviously terms would now Kearl both say would then of into kind barrels so building to forth. turnarounds fair of it modulate just to Lake, putting we’re the in But, were what that sales going you that and at that be given of in into i.e. that be So, you've maintenance your of Cold advance

Rich Kruger

upstream. Not much on so the

we But, facilities. don’t inventory product we refine will our We on to customer the same or But and XXX to produce meet think build it's barrels we know, downstream. necessarily needs yes, go I those to buy important produce XXX.

upstream for the cost and their downstream buy Our the pay whoever feedstock guys it. highest to lowest looking are to our to will are guys barrels sell looking

sell facilities storage try is continue turnaround, produce a the ramping-up customer buying those We and are and get to a needs each market. we advance so product to practice at while levels can not service. it's the upstream, the meet on in really more inventory, gain. So, of But of the out storage downstream of

Greg Pardy

Last for Kearl… me. Okay. one

Rich Kruger

three… You that’s said two,

Greg Pardy

Okay. going like Well, you’re question. to this

are no I rate, it where even is then us So, an idea ideally your But, like like run need we Kearl? on really progress and enhanced disclosure the might that have costs and approximate just at where dollars barrel just operating what be are idea you okay. operating where OpEx is you Kearl day making. even costs, this in at XXX,XXX a was Can in give QX Canadian

Rich Kruger

that’s talk kind that objective on our the to they $XX that necessarily on the we order from longer-term barrel autonomous the of of kidding. I operating XXX are number U.S., example, at. quarter on Greg, down they they to ask year, talked of trucks, flip talked about in through we XXX, things somebody where driving then about we in for a down would a to were of average, like and in of don’t going for get just kind I’m kind probably going recent range of first XXXX the like kind driving typically costs higher you want to we've say a than I’m because that. are and the thought barrel, That in first $XX of cheaper barrel. remains that outlook. -- ‘XX, the producing we costs higher we the perhaps -- than energy let's year-on-year be math. -- one, see, less. But that first a barrel somebody the a had XXX a describe $X would the barrel XXX -- $X would be quarter and quarter, of average almost almost a than In that approaching we incremental versus year-on-year. the -- you a about, of much XX comes also would that or that were is cost the that. That work know higher be some I do or part keep the barrel had energy would would higher And --

I do we the somebody how to that many check in math on think produced have quarter. the -- barrels me

some close. we XXX I road think recognizing work year did And probably go from we’re preparatory construction and next that going to work pretty XXX. that’s on to

more earth moving. So, phase be be to we're able mine have to to the accommodate going expanding

of quarter if do work to started a I also I in we barrel So, this the of would that And put of dollar first that year. now. some of into couple that, take

will that all would but not higher barrel first the a this was ‘XX. in we $X of that of to been Some $X quarter of say than year I continue, have would

for but the the to prepare costs, giving pricing, front you and preparatory electricity, mine some XXXX. gas numbers energy up, an let math, I'm for provinces costs, relates gas So, of expanded higher we really natural that add work it then greenhouse as I’ll


from Gresh And the of JP our line next Morgan. question from Phil comes

You may begin.

Phil Gresh

it upstream OpEx follow-up If a at on the just well. some a saying is like couple quarter-over-quarter. I quarter Yes. the have around the quarters, that costs. Greg's Obviously, you're question preparatory look has quick be cost may color of I to that the the so been It to sounds Thanks. you looks like OpEx. X.X side. appreciate Actually or quarter, tend very second on as there past occur billion turnaround

layering moving a trying you for upstream XX,XXX I'm do And think the business Kearl to we the OpEx additional like normal think of like about about the So, production for is day how of what Thanks. barrels? calibrate, then, the barrels rate in in our forward? OpEx run just as XXXX, those incremental

Rich Kruger


fourth because at Lake turnaround a rate. third to the things on Phil We going that weak, And go and Kearl normal run for bridges talked have at is know the that Cold I about sound quarter I the but and on was One turnaround often quarter. of the this at work in Kearl. I KX it said example, depends, Mahkeses of the kind the will second

So, rate. and quarterly-to-quarterly, as not it's kind of it looking smooth not and monthly-to-monthly run even it's at upstream,

reached do better -- and have X.X really mentioned. you in that of that to things year come a do another question I upstream or aspect quarter You work to heavy this you billion a of have have have I run the higher billion, the barrels quarter been ago, think kind like quarter up there. to second quarter the than of do to plant Canada. because rate of year, on your one I look kind we’ve think, of it, on that's is operations, a lot cheaper than rate. second higher second you the in where If Kearl, of The the almost run I a some norm at comment anything we've unique your incremental average. on kind new don't the of part get X

-- some supplemental that. barrel that $XX equipment. XX,XXX rate. They will sure operating yes handed than a at X,XXX may operating as those They a of a low you XX, was XX,XXX and and something year. example, will So, some order for barrels crushers on be honest less be barrel -- of U.S. because saying run day a keep X,XXX day a that John, marginal are will barrels new because as generally of the to that’s also we things. that the be me barrels that doing just other day, million be I the But won't $XX the not be that add

into that at $X that’s back are cost-effective a would that So, to barrel. $X if you say that pretty

things. about, But crusher be XX, it and just will you bulk that’s got and X And to on run -- the what be the So, said the negate to certainly it capacities. a just plant because aspects, and we and the energy the X. of X to downstream, have the I kind of will between somewhere closer the X,

drive then, So, of going the those down to operation. complete incremental to cost the are that. cost come work to unit whole quite barrels average And continue and effective I’ll

autonomous on the to example. that I Our goal down. as keep trucks an driving is used

suite in included barrel to to go to investor work, trucks, And other Whalen's less. autonomous material November, the included digital that of you back he listed If or a things. John things $XX day a get other was back goal

Phil Gresh

Okay appreciate I was $XXX look lot up upstream. trying a a on year, get Got little question this number may last XXXX the higher was some wasn’t XXXX quarter. we on I quarter. so granular was Syncrude thought which I it bit million, OpEx The to over I broader, see then was of it. if but it

of of essence question. the one was the that So,

Rich Kruger

much a Syncrude. year. sustainable necessarily things But, got a clearly this I not the of Syncrude think and it And not lot that’s each seen this they that every of lower are we’ve was think some factor. are year -- I quarter.

Phil Gresh

you're incremental the Sure. for And million XX,XXX? dollars Canadian that was mentioning for $XX that the OpEx

Rich Kruger



Thank from Fong you. of comes Dennis And our next Canaccord. the question line from

You begin. may

Dennis Fong

of previous up I’ll on quickly Aspen. just questions. the Just one follow

timing start or winter, be the -- having the the following analyzing or maybe indicated at are Aspen, further going use around looking to kicking kicking for the What that factors CapEx guys of kind that was line. to analogy You down to there respect you as decision. your of winter some in a with are business to the can decision potentially the subsequent make of to road, spending the either out and timeline qualification on around, further moving down make it existing

Rich Kruger

coming rail step business money were kind it largely the the happens in business I program kind up a where operating terminal this in and makes we new that on where They curtailment rail year Dennis, their rest in. on the end of environment, Aspen running. of hole think out of like would a year, put the get the of if what described has early to in see outgoing I be back kind that back of and back I administration of is, of in would market you so to and free I at have the ace articulated rail, curtailment a the quarter-by-quarter see world that administration expectations we would we what place.

met outlined been We the will administration inventory objectives have levels. of the not some outgoing see

is personally right there are a some in be like see coming now TMX. term look I things is I So, without a are Line some would decisions to free market, of a on a it on movement important longer at in then, intervention. world And have what like will in up we. of up. we on recent a government also on lot -- June theory access. -- play There pipeline world federal should Minnesota. decision up progress In coming There coming X We’d kind KXL.

what ready always that whole at. Aspen to the need brought to manner. to and things. go would necessarily everything things are that's an we the I in have those the we our that. going the did what we it and say economical I said on to was to to see we would was largely way that I risk with confidence -- direction But a say, a government same into at it's it look exactly like. intervention rail of incremental marketplace of will looked then, market and So, spectrum in some ability and move new I wouldn’t But alright when an And

continue does us see activities of those the or I at. goes things calls on other these So, I to or and think the we that the more we’ll we will what large certainly And a reinitiate that's confidence our things how mode. think unfolding year gamut on whether do on, and as Aspen for of it’s mean opine to either actions, be scale slowdown in looking

Dennis Fong

mostly into to allocating on that does supply does that market increment building production more out local and or effectively kind your then, apply And new velocity to just to market? of spending further around or the follow investment capital dollars exposure

Rich Kruger

quite on with Well, are decline area. about world, Cold decline in largely low mines can life, we Lake in with the mitigate of in keeps unique of terms drilling then, talked can that the stands the The capital And the the the flat. level And oil upstream flat long production. our it. essentially sustaining sustaining us capital on be

will make go take sense we those care money spend base. that on asset and existing So, to I want think our downstream. comments monies to will that the of Similar would

given in billion really makes that comes marketplace, volatility are question year we or downstream. allocation the what so, uncertainties that the see above beyond and the and sense, monies on and above a $X.X upstream capital whether the of they And sustaining,

Dennis Fong

here some repurchasing follow-on And a Greg’s final the around my I guess just a question of railcars. to bit question is of maybe

would a refurbished pricing call of to the around, well forth, around raw those Just as dislocations would given retail using of have to would refined been and been refined much that you actually crude a -- instead market little of local raw be using of transport railcars or as number sites in dislocation the so by bit some it rail How potentially barrel? a space. bitumen be then crude something potentially transport like product have

Rich Kruger

rail Imperial for therefore. John, It's go go transporting or it, service and railcars our not ExxonMobil alternate deployed redeploy use into use. crudes whatever heavy redeployed The may when back use used they for go we've they are in and use to terminal, for into Yes. choose and not ExxonMobil that Edmonton they fair? to they

John Whelan


Dennis Fong

you. my questions. perfect. Thank That's all Those are

Rich Kruger

good. Very

Dave Hughes


questions. end that’s of So, the our

some remarks. just Rich, closing So,

Rich Kruger

will market of the we differentials the with we're remain, great, environment. over have and like logistics, what we the and we there or you be quarter, a level assets, with. better, and and maximizing and do positioned kind in subsequent what is a core we will asset do flexibility balance, we at and questions the and the field, it business bad, of price compete I playing Yes. us to said. I have, I base -- When like that doubt it’s we about and I’d environment conditions, midstream access value. around -- not upstream to whether I will quarters whether downstream reiterate way give that's And that's kind the competing the integration not can look be on no like each everything solid, dynamic

just will there. it I end So

Dave Hughes

as just And any not further out you follow-up would discussions, everybody always, out right. I'd your please like further or hesitate by us. any do and questions All if to again to close time. reach contact thanking for like have

Rich Kruger

XXxX, We're XXX.

day, any can You time of day. any the him call

Dave Hughes

thanks time today. And with everybody that, for interest your and


participating conference. Everyone, Ladies day. have a does today's and you all and great program gentlemen, for disconnect. thank in the This may conclude you