Good day. And welcome to the Imperial Oil Fourth Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I’d like to turn the call over to Mr. Peter Shaw, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. And welcome to our fourth quarter earnings conference call. I'm joined this morning by Imperial's senior management team, including Brad Corson, Chairman, President and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Sherri Evers, Senior Vice President of Sustainability, Commercial Development and Product Solutions; and Cheryl Gomez-Smith, Senior Vice President of the Upstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to today's conference call. Today's comments may also contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future performance and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described further in detail on our fourth quarter earnings release that we issued earlier today. All these documents are available on SEDAR+, EDGAR and our website. So I'd ask you to refer to those. Brad is going to start with some opening remarks and then hand it over to Dan, who's going to provide a financial update, and then Brad will provide an operations update. Once that is done, we will follow with the Q&A session. So with that, I will turn it over to Brad for his opening remarks.

Thank you, Peter, and good morning, everybody, and welcome to our fourth quarter and full year earnings call. I hope everyone is doing well and your new year's off to a good start, and apologies for my scratchy voice as I recover from a cold. But I'm really pleased to report another strong quarter for Imperial as we wrapped up 2024. We saw excellent operational performance across all our assets, both upstream and downstream, which largely offsets the impact of lower commodity prices on a sequential quarter-over-quarter basis. And despite the lower prices, our ability to continue to grow production and deliver strong downstream reliability resulted in a very solid end to 2024. Our Upstream continues to set records, and we achieved the highest fourth quarter production in the past 30 years when adjusting for the XTO divestment. We also realized the benefits of TMX pipeline and additional egress, which resulted in much narrower and more stable differentials compared to a year ago. Our Downstream business also performed very well over the quarter and contributed solid earnings with lower turnaround activity and higher utilization. We continue to benefit from the structural advantages of the Canadian market that supports stronger financial performance despite softer refinery crack spreads. Over the next few minutes, Dan and I will detail the results of a very strong quarter. So now let's review fourth quarter results. Earnings for the quarter were $1.225 billion, with cash from operating activities of $1.650 billion when excluding the impact of working capital. For the full year, earnings were $4.790 billion, down slightly from the prior year also worth noting that we delivered our second highest earnings per share of $9.03. These results reflect continued strong operational performance and our ability to capture value for our shareholders. In the Upstream, we…

Thanks, Brad. Starting with financial results for the fourth quarter, we reported net income of $1.225 billion. This represents a decrease of $140 million from the fourth quarter of 2023, primarily as a result of lower margins in our Downstream business, partially offset by higher Upstream production. When comparing sequentially, fourth quarter net income is down slightly from the third quarter of 2024, primarily driven by lower prices, partially offset by stronger operational performance. Now shifting our attention to each business line and looking sequentially, Upstream earnings of $878 million are down $149 million from third quarter, primarily due to lower realizations, partially offset by higher volumes. Downstream earnings of $356 million are up $151 million from third quarter, mainly reflecting lower turnaround impacts and favorable foreign exchange and inventory effects. Our Chemical business generated earnings of $21 million, down $7 million from the third quarter. Moving on to cash flow. In the fourth quarter, we generated $1.790 billion in cash flows from operating activities. Excluding favorable working capital effects of $139 million, cash flows from operating activities for the fourth quarter were $1.650 billion, down $147 million from the third quarter of 2024. We ended the year with nearly $1 billion of cash on hand. Shifting to CapEx. Capital expenditures totaled $423 million in the fourth quarter, down $46 million from the fourth quarter of 2023. In the Upstream, fourth quarter spending focused on sustaining and growing production at Kearl, Syncrude and Cold Lake. And the Downstream fourth quarter spending mainly continued to progress our renewable diesel project at Strathcona. Full year 2024 capital expenditures totaled $1.867 billion. Shifting to shareholder distributions. Consistent with our strategy to timely distribute free cash flow, we returned $3.9 billion to shareholders over the course of 2024. Moving into 2025, we continue to demonstrate our long-standing philosophy to deliver a reliable and growing dividend. As Brad already noted, we declared a fourth quarter -- I'm sorry, we declared a first quarter dividend of $0.72 per share early this morning, which will be payable on April 1. This represents an increase of 20% compared to the fourth quarter dividend of 2024. Now I'll turn it back to Brad to discuss our operational performance.

Thanks, Dan. I know you've all had a chance to look through the numbers, but I do want to focus your attention on some of our key performance highlights. Upstream production for the quarter averaged 460,000 oil equivalent barrels per day. And as I mentioned earlier, this represents the highest fourth quarter production in over 30 years when adjusting for the XTO divestment. Production was up, 13,000 barrels per day versus the third quarter and up 8,000 barrels per day versus the fourth quarter of 2023, mainly due to higher volumes at Cold Lake. Our Upstream also delivered the best full year production in over 30 years with 433,000 oil equivalent barrels per day, a 5% increase in total or a 14% per share increase versus full year 2023. So now let's move on and talk specifically about Kearl's record year. Kearl's production in the fourth quarter averaged 299,000 barrels per day gross, which is up 4,000 barrels per day versus the third quarter and 9,000 barrels per day lower versus the fourth quarter record previously set in 2023. As targeted, Kearl achieved over 280,000 barrels per day in 2024 and set the full year production record of 281,000 barrels per day. It's also worth noting in the last five years, we have grown Pearl production by 75,000 barrels per day, which is over 35%. This marks a significant milestone in Kearl's journey to deliver record production through efficient growth initiatives and achieved unit cash cost below our previously stated target of US$20 per barrel. We've made major strides in lowering unit cash costs at Kearl over the past few years. The full year unit cash costs of US$19.67 view as per barrel reflects the hard work of the entire Kearl team, not only to meet our previously set target…

Thank you, Brad. As always, we'd appreciate if you can limit yourself to one question, plus a follow-up, so that we can get to as many questions as possible. So with that, operator, could you please open up the lines for questions?

Thank you. [Operator Instructions] And our first question will come from the line of Manav Gupta with UBS.

I wanted to start by congratulating the management on another 20% dividend hike. Brad, if my memory is right, when you took over, the quarterly dividend was close to $0.22, and now you have raised it to $0.72 during your tenure. So it does take a very strong track record of execution to achieve that. So I just wanted to congratulate you on that. My first question is on refining. Your earnings are up materially quarter-over-quarter. When we look across the US refiners, the earnings are down 50% to 70% quarter-over-quarter. Help us understand what's driving the resilience of refining here? I understand you operated at a higher rate, but still, this is in stark contrast to what we are seeing for US refiners. So if you can help us understand the resilience of refining here?

Yeah. Thank you, Manav. And first, I really appreciate your recognition of the dividend increase over the last few years. That is something our organization is quite proud of as we have continued to grow our cash flow generation abilities and obviously, return that to our shareholders. So we're all quite proud of that, and thanks for that recognition. In terms of the refining strength, I'd say there's a couple of drivers there. First of all, as I've commented on the past, the Canadian refining sector and especially our Imperial refineries are well advantaged versus US counterparts. We have access to advantaged crude’s. We continue to have strong demand in the marketplace. We have exceptional infrastructure that allows us to move our products to premium outlets. And then as you also mentioned, we had really superb utilization over the quarter, which allows us to take full advantage of the market fundamentals that we see. So when we put all that together, a very resilient and profitable Downstream for us, and we're quite happy with that.

Perfect. My second is on Grand Rapids. It's clearly helping you drive production records at Cold Lake. Can you talk more about why the results of Phase 1 actually exceeded your expectations? Any future phases, as well as Leming, which can allow you to continue to grow the volumes at Cold Lake? Thank you.

Yeah. Thanks for that question. We are extremely pleased with what we're seeing at Grand Rapids, certainly higher volumes than the funding basis that we previously shared with the market with an objective of 15,000 barrels a day. As indicated, we're seeing more in the range of 22,000 barrels a day. It's early days. We started up Grand Rapids in terms of producing volumes back in May. So we have seven months or so of production run time, I would say. Our reservoir engineers are very busy analyzing those results and understanding what the implications are for future phase developments at Grand Rapids. And as mentioned, in the past, we have several phases in the future. And so that's very exciting. And so I think as time goes on, we'll be able to better describe not just the long-term productivity of Grand Rapids Phase 1, but what it means for broader developments at Cold Lake. Way too early to tell about Leming. We're in the process of constructing it. But again, it's super exciting and reaffirming when we could start up a production. You know, a project like Grand Rapids, which as you'll recall, we accelerated by about a year. So, we accelerated it and now we're seeing more production, and all that adds a lot of value. So, I think just an exciting signal of what's ahead for the future.

Thank you.

And the next question will come from Dennis Fong with CIBC.

Hi, good morning and thanks for taking my questions. I guess the first one here is, I guess, congratulations on another strong quarter at Kearl. I was actually hoping you could kind of dive in a little bit more into initiatives that you're currently undergoing that are helping kind of maintain, again, these high levels of performance? Namely kind of focusing on maybe a little bit around the autonomous fleet as well as on the technological advancements that you're applying to production?

Yes, it's a great question, Dennis. And as you know, I'm super proud of what the team has been able to achieve at Kearl. And it's just been kind of a steady result of record after record after record. And as you know, from the guidance we set out in December, we are anticipating further production records, further reduction in unit cash, and the net result of that is continued growth in cash generation. Cheryl is sitting right next to me here. And she's got her hand on the wheel for Kearl. I'm going to let her make a couple of comments about -- specific to some of those growth initiatives.

Great. Thank you, Brad. So, as Brad mentioned, we're continuing to transform our mining business. And I think it's important to start with the exceptional progress that we made in 2024 and how we're rapidly improving competitiveness. So, in that space, I'll highlight a few things. We're going to continue on our journey with reliability and maintenance improvements. The second part is around mine fleet productivity gains, and this gets to your question specifically about our AHA trucks. And I'm pleased to report that we've seen anywhere from 8% to 10% increase in productivity resulting from the automated trucks. We're going to continue with debottlenecking and optimization, including digital initiatives, and we've got a full slate of digital that we're leveraging across the board, both within the plant as well as the mine. And finally, I'll anchor it in -- we're really building a continuous improvement culture. So, it's looking for those next opportunities across all that slate. So, plenty of opportunities as we look forward. But I think the most important is building on that foundation of 2024.

And -- thanks for that, Cheryl mentioned this continuous improvement mindset, and I have to brag a little bit on one example of that is around our turnaround duration. And you'll recall how just a few years ago, we were doing two turnarounds a year, each one about 35 days in duration. So, about 70 days total. And we took a decision to reduce from two turnarounds a year to one turnaround a year, extend that interval between turnarounds from 12 months to 24 months. So that took us from 70 days to about 35 days. Since then, the team continues to look for ways to improve on the efficiency of those turnarounds. And this last year, they completed a single turnaround in less than 20 days. So we've gone from 70 days a year to 20 days a year, and we're taking some steps in this year's turnaround to equip ourselves to potentially extend the interval even further and reduce that annual turnaround impact to something even less than what we've seen historically. So, just another great example of how the team continues to capture benefits, but doesn't stop there. Looks for what's next. And I think that's a good example.

Appreciate that underlying context in just kind of the holistic approach that you're taking to development. My second question -- and if you'll help me take it in a slightly different direction. You've obviously done a great job executing on projects that grow and develop existing assets within your portfolio. Can you remind me a little bit on the priorities the company has or focuses on when you're allocating capital, whether it be growth, M&A, A&D or shareholder return? And specifically to you, Brad, obviously, you have the prior position to this one. Historical experience with evaluating assets both within your portfolio and outside of the company, how you kind of rank in order and even look or evaluate how you examine your existing portfolio versus what -- or how you can make it better? Thanks.

Yes. Thanks for that question. I'll offer a few comments, and Dan may want to jump in as well. But I mean, fundamentally on our capital allocation strategy, it is underpinned by this long-standing approach, commitment, principle that we are going to return surplus cash to our shareholders. And so that starts with this reliable and growing dividend. And as you saw today, we've actioned that with another very material dividend increase. We then look at other opportunities to efficiently return surplus cash to shareholders. And so our NCIB has been our go-to for many, many years. And then where we've had additional capacity beyond that. We've looked to exercise an SIB, and we've done a few of those in our history and maintain the aperture for that in the future. So that's kind of the basic building blocks of our capital allocation. I guess I should mention debt as well. We're at a level of debt that we're very comfortable with. So we don't see really a priority to pay down debt at this point. We're at a very low level of debt leverage. So we're quite comfortable with that. And then the question on M&A opportunities really comes to looking at potential opportunities outside our portfolio versus what we already have within our portfolio. And we're in, I think, a really unique position of having a deep inventory of really high-quality investment opportunities. And so we're allocating capital for those as they relate to the existing assets. You hear us talk about what we're doing at Kearl, at Cold Lake, what we're doing at Strathcona. But then looking to the future, we're quite excited by the potential of Aspen project. And so we're actively progressing a pilot project that will allow us to fully validate and commercialize the EBRT solvent technology, which we believe will significantly unlock value for Aspen relative to other solvent technologies. So that's a very material investment for us, material production growth opportunity. So as we look at other M&A opportunities, we're comparing those to things like Aspen. And so strategically, to pursue an acquisition, it needs to compete with what's already in our portfolio. It needs to have unique synergies and be really consistent with our longer term strategies. And that aperture is open. We have an internal team of folks that are regularly evaluating opportunities. But up till now, we haven't seen anything that we believe is more value accretive than the projects within our portfolio like Aspen. So we don't need to make an acquisition, but we're looking for something if it makes sense. So that's how I would characterize that. Dan, anything else on capital allocation?

No, I think you covered it well, Brad. But just to maybe summarize, the reliable growing dividend is the first place, the first stop for our free cash flow. And then we go to sustaining capital and then we look at high-return growth projects, which would include, as Brad said, potential M&A, but it's a high bar given our return expectations in our internal portfolio. And then since we're happy with our debt level, after that, it's a return of the surplus cash to shareholders. So that's in a timely way. So no change to that. It's been our consistent philosophy for quite a while.

Great. Really appreciate the context from both of you. I'll turn it back. Thank you.

And the next question will come from Greg Pardy with RBC.

Thanks. Good morning. Thanks for the rundown, Brad. And maybe just first off, just all the very best to Sherri going to XOM. I wanted to ask you really on two fronts. One is technical, a little bit more around Cold Lake. But probably the bigger one is, how are you thinking about the tariff threat that you've got going on? I'm sure you've had time to analyze that and then there's a relationship with Exxon. How well-equipped are you to withstand something like that? And then secondly is as it relates to shareholder returns, is it really just essentially driven by cash balances? So in other words, if we did see tariffs and cash balances still ticked up to levels where you could repurchase stock, how would you think about those? I know very hypothetical, but obviously, just a huge issue, obviously, overhanging Canada right now.

All right. Thanks for that, Greg. Yes. Obviously, a lot of interest and discussion over tariffs really across all sectors, but especially energy. And as I've talked in the past, the U.S. and Canada are really strong energy partners and benefit from each other. And the U.S., heavily dependent on Canada's heavy crude. So, we don't know what's going to happen with tariffs. And I don't have any unique insight. But I, along with many others, have spent a lot of time educating on both sides of the border around kind of the unique and integral energy system that exists and how that is mutually beneficial to both countries. And so I'm hopeful that as we move forward, diplomacy will prevail, and we will end up with no tariffs, no restrictions on energy flow. I believe that's a win-win scenario, and anything else, any tariffs will result in negative impacts broadly to the economy and customers. So, let's hope we avoid those. But I can't control that. So, what we're focused on is what can we control. And what we control is ensuring that we have the lowest cost of supply. We have options for where we place our crude and products in the market. We're trying to do that at the lowest possible cost and I believe that gives us unique resilience. And we obviously produce a heavy crude. We also are acquiring light crudes to meet our refinery runs. And some of those, even as we see -- if heavy crudes are impacted negatively with value, we would expect to see some offset of that with the light crudes that we're running in our refineries. So, the strength of integration, I think, makes us much more resilient than others. So, February 1 appears to be a big day for tariffs. And so we'll be watching that closely. But I am confident that we will continue to be profitable. We'll continue to generate material cash flow and be in a position to return that to our shareholders. And that clearly underpinned our decision to raise the dividend today. Dan, anything you want to talk about with respect to shareholder returns or anything like that?

Yes. Greg, you had kind of asked if returns to shareholders and buybacks in particular would be driven primarily by cash balances or other factors like the tariffs. And I would say it's going to be primarily bought by cash balances. Especially given our low breakevens, our ability to generate cash going forward through a range of environments, our low debt level. We don't need to have a huge amount of cash to sort of protect us going forward. However, of course, we'll take into account the environment, whatever is happening at the time as we make those decisions. But generally speaking, our philosophy has been consistent. It's timely return of surplus cash to shareholders.

Okay. So yes, very, very logical. And Brad, I want to come back to your thinking just around acquisitions versus organic. And I've mentioned before, every company seems to have significant growth initiatives underway right now. So when you kind of weigh acquisitions where there may already be an egress solution in place versus your organic growth initiatives, whether potentially could see some limitations on pipe capacity and so forth. Is that kind of dialed into your thinking when you go through that LT model?

Yes. Certainly, we would look at all aspects of that. We look at what's the cost competitiveness of an opportunity, what's the long-term running room of an opportunity, what are any egress considerations, are there unique tax pool considerations, what's the carbon intensity. So we'll take all those things into account. And back to my earlier comment, at least up until this point, when we look at the value we see of an Aspen development, it wins relative to anything else we would see when we look at all those factors together.

Perfect. Thanks very much.

Thanks, Greg.

And we have a question a question from Menno Hulshof with TD Securities.

Thanks and good morning, everyone. I'll start with on TMX. Can we just get an update on the status of toll negotiations? Last I heard, and it's been a while, but I believe the guide was from some of your peers was that it could be a midyear event. But with all the uncertainties, including tariffs, is it fair to assume that midyear is too optimistic at this stage? Thank you.

Yes, Menno, thanks for that question. I don't have a very specific update on that. Our teams are certainly directly engaged on it, but I don't have a very specific outlook on what's refresh timing. I would say, obviously, that -- more broadly speaking, we've been very pleased with the operation, the start-up, operation of TMX, and we are shipping on it on a regular basis. And that's really all I'm in a position to comment on at this point.

Got it. Thanks Brad for that. And then maybe the second question would be on Strathcona. Already, in the press release, you reiterated that you're still tracking to a mid-year start-up. But can we maybe just get a bit more detail in terms of what still needs to happen to get that project across the line? And then when you think about sort of cash flow positivity, is that -- is it possible that we see that in the second half of 2025? Or is that more likely a 2026 event?

Yeah. Thanks for the question. I mean, we're certainly excited by this project. We view it as quite strategic for us to expand our slate of product offerings to the market. It's a really important opportunity for us to help decarbonize the industry. So we view it as very positive. And as you'll recall, there's multiple components to the project. At the core of the project is the manufacturing facility that we're building at Strathcona refinery. And that construction is well-advanced. Modules have been delivered. We're in the in the process of hooking them up and we expect to complete that construction in the second quarter, which would then position us to start production somewhere around midyear. Now also, two other really key integral components is, first of all, the vegetable or agricultural oil supply stream. And so we have been in the process of negotiating supply arrangements, and we have sufficient supply established for us to be able to start this unit up. And then we're looking at longer term relationships as well. So that work continues, but ready to start up. And then the third really important component is the supply of hydrogen. And so that work is underway by Air Products, and also working to be in a position to supply us with initial supplies beginning in the second quarter/midyear timing. When we start up, I would expect we'll be at some reduced rates as part of a typical startup. And then over time, as we look at how to optimize each of those components with market conditions that will determine how quickly we ramp up, what's the ultimate product volumes. Really, just like any other product in our refinery that we're constantly optimizing over time based on the cost and availability of feedstocks, coupled with market conditions and demand for the product. But we feel really good about being able to start up midyear. In terms of positive cash flow, yeah, we view this as a very profitable undertaking for us, and we would expect to see positive cash flow in the second half of this year.

And moving on to Neil Mehta with Goldman Sachs.

Yeah. Thanks so much, Brad and team. I just wanted to spend some time on Upstream cash costs, where I know you guys are targeting $18 at Kearl and $13 at Cold Lake. Where are you in that journey? What's the next step? And what did this quarter tell you about your ability to ultimately get there?

Yes, thanks for the question. I mean, we're well on the journey. We're obviously below $20 at Kearl now, and we're in the $14 range at Cold Lake, and so well on our way. And maybe I'll ask Cheryl just to make a couple of comments about some of the near-term initiatives that we have underway. But as we laid out that guidance back in December, we feel quite confident in being able to achieve that.

Sure. Thanks Brad. Let me add a little bit more about Kearl, starting with, which is when we think about what's going to enable us to get to that $18 unit cash goal, it's really about leveraging the scale that we have as well as continued focus on reliability and optimization. So, as we have that incremental production, we're going to be leveraging basically our fixed cost structure accrual, and that's a very powerful lever in terms of lowering our unit costs. You've heard me mention before, it's that continued focus on reliability, maintenance optimization plus deployment of digital solutions. And so that in itself will get it to improve productivity as well as lower absolute costs. If I think about the Cold Lake side, that too is going to be leveraging our scale. And as we grow our production mix to these higher volumes, that's going to leverage that fixed cost base, but we're also introducing lower-cost barrels into the mix. So, as we -- and Brad mentioned about the progress, the early insights that we're getting from Grand Rapids SA-SAGD, as we continue this year with Leming, which are lower cost infills, we're both growing and transforming the volumes at Cold Lake. So it's both a numerator and a denominator opportunity at both Cold Lake as well as Kearl.

That's the follow-up. It's just the Kearl, you talked about $280, $290 this year with the goal of getting to $300-plus. I guess the question is, how plus is plus? And just your perspective on in a capital-efficient way, how big could Kearl be in the context of the budget that you laid out?

Yes. Thanks. I'll try to answer that. I think it's too early to tell how big plus could be. But the reason we shared that guidance is we do see the potential for future volumes above $300. And how much above $300 will be determined by our ability to continue to unlock cost-efficient barrels as we go forward. And we've been on this journey for five years now, if not longer, but especially the last five years, where we were at around 200, 205 back in 2019. And then we've continued to take very thoughtful, very capital-efficient steps to enable us to grow that. And as announced, we set another -- we set a record last year. We set another record this year, now with 281,000. And we see an increasing number of days that are above 300,000 for individual days and in some cases, weeks and months. And now what the team is focused on is how can they string together more of those days. And, of course, be able to offset any planned downtime, like a turnaround. So we see the potential for something above 300. But until we knock down barriers to get us from 280 to 290 and heading towards 300, I don't know that we fully realize what that potential is. But we're going to only pursue it if it's capital efficient. But we've got a great base there with material fixed costs. So generally, if we can add additional barrels, they're going to come at a lower variable cost to us and that adds value to the cash flow for the asset. So, more work to come there. But I hope, as you've seen us demonstrate over the last couple of years, we're laser-focused on it.

Thank you, Brad.

And the next question will come from Doug Leggate with Wolfe Research.

Hi. Good morning everybody. Thanks for taking my questions. Hi, Brad, Happy New Year. So I've got two breakeven questions, if I may. They both might be Dan's bailiwick, but I'd love your perspective on it. First of all, someone -- I think it was Manav or Greg touched on the dividend earlier. 20%, another sizable bump obviously. But what I'm curious about is where do you see your breakeven today with the capital [indiscernible] have on the growth whether it's today or whether it's projected on where you see the growth going, how does your breakeven evolve? Because that headroom for dividend growth remains our a potent advantage for you guys relative to your peers. My follow-up is also a kind of a breakeven question related to the balance sheet. You guys have got a stellar -- one of the best, if not the best balance sheet in the industry and have done for a long time. And when we think about SIB, we tend to think about the question earlier about cash balances. We don't really think about, well, yes, but you've also got this stellar balance sheet. So I'm wondering if you could give us an idea where would you be comfortable with your balance sheet moving to over time? And I guess if I could circle back on the dividend question, where would you be comfortable with the dividend breakeven moving to over time? And I appreciate the chance to ask the question.

Yes. Thanks, Doug. Happy New Year. I'll let Dan take those questions. But first, I would just emphasize the work we have done to grow volume to lower unit cost continues to allow us to improve our breakeven. And what we're doing with the dividend is integral to that strategy. I believe we've said our breakeven including dividend is about $35 a barrel, but I'll let Dan kind of walk you through that.

Yes. Thanks, Brad. Hi, Doug. Yes, we -- this last -- this guidance call, I guess we had in December, which included, of course, our most current outlooks on volumes and capital and everything. We said our cash breakeven was for WTI U.S. dollars, less than 25. And for -- with dividends and sustaining capital, less than 35. So those are great numbers, obviously. And as Brad pointed out, we continue to -- our goal is to work that down through volume growth and unit cash cost reductions, which gives you headroom for dividend increases and other things and keeping the breakeven tight. I would say we like the low breakeven, but we're not wedded to them. Those are pretty low, and it wouldn't stop us from growing the dividend if we are above some -- if our breakeven went up a little bit. I mean that's a good reason for the breakeven to go up as you decreased your dividend, a bad reason would be higher unit cost and things like that. So I can't give you detailed numbers, except to say we're going to keep working it on the breakeven side with our volumes and unit cash costs. And on the dividend side, what we do is as we look out over a future period, we put some conservative assumptions on that, and we say, okay, what kind of dividend increase could we sustain? That's kind of our model. And we'd like to -- and that's what led to this 20% dividend increase this year and last year, in fact. So we see with our outlook, even at conservative estimates, we see room to continue to grow our dividend in a robust fashion. But we'll always be careful and make sure it's sustainable. So probably not getting into the detail, but hopefully, that gives you some more color on our thinking.

It does, Dan. What about the balance sheet in terms of the SIB, because obviously, you've got a lot of headroom if you did want to take advantage of that.

I feel like I -- we answered this question just recently, maybe the prior earnings call, I'm not sure. Look, is it possible we could borrow to buy back shares? It certainly is. It hasn't been our practice. We said we're happy with our debt level, about $4 billion, and we're kind of returning 100% of free cash flow beyond that. Certainly, we would be willing to leverage our balance sheet for attractive investment opportunities, M&A, things that make sense for us were accretive, met our criteria. It certainly remains a possibility for buybacks, but that's not what we've historically done. So maybe I'll just leave it at that.

Dan, I don't want everyone listening to think I'm a complete lunatic, so let me just clarify the question, and then I'll let you guys go. Sorry for this. So I guess the way I think about it is you can borrow at a very, very low cost to fund your projects, your growth at Kearl. And the tremendous free cash flow you have is available for the SIB. So I think about it more as leveraging for as a project finance as opposed to -- but at the end of the day, cash is king, so I get it. But thank you so much, guys, for the answers, and I appreciate time.

We don’t think you're a lunatic, Doug.

And the next question will come from Patrick O'Rourke with ATB Capital Markets.

Good morning guys. Congratulations on the dividend increase and very comprehensive rundown so far. I'll just ask a couple of quick questions here. I guess you talked about the final steps with getting the renewable diesel facility on. A little bit of noise in the renewable and LCFS market here with -- I think there's an antidumping lawsuit that's been launched. Can you maybe walk us through some of the puts and takes around that market? You've talked about transportation advantage offtake for Imperial here out of the facility and how you're viewing the market and the risk right now?

Yeah. Thanks for the question, Patrick. And I've talked about this a little bit in the past. There are certainly other examples of renewable diesel projects on both sides of the border that are struggling. Our project is very unique and very different, and should not be characterized the same as these other challenged projects. We have multiple attributes that are quite favorable to our economic proposition, starting with the fact that we are building this renewable diesel facility within our existing Strathcona facility, which gives us tremendous economies of scale, unique aspects to utilities, to rail facilities, all those sorts of things that allow it to be more efficient than a standalone facility somewhere else. So, that's a big plus for us. Secondly, we are building it to process agricultural crops and oils from them that are readily available in close proximity. And so the transportation cost for those oils is quite affordable, quite efficient. We're also leveraging a proprietary catalyst from ExxonMobil that will allow us to produce a premium product relative to its utility over a wide range of operating conditions, especially cold weather. And so that allows it to be -- a 100% drop in fuel for regular diesel does not have to be blended as much. It can, but doesn't have to be. It can be also be used year-round versus just seasonally. So, all those things are advantaged. On top of that, what also underpins the economics is we already have, in our product offering, a base level demand for renewable fuels to blend. And so today, we purchase those on the market. In the future, we'll now be producing them ourselves and more cost efficiently than buying from somebody else. So, that enhances the economics. Certainly, a lot of questions about what's the future of the carbon market? I would just offer there that we plan to sell this product into multiple provincial markets, which many of them have their own stated carbon policies and requirements for low-carbon fuels. So, when I put all that together, we continue to believe we have a differentiated offering here relative to others. So, I hope that helps clarify that.

Yes. No, that's terrific and very comprehensive. And then just sort of secondly and this is sort of on the political front here, but with sort of a prorogation in parliament and potentially a bit of shift in sentiment towards carbon here, both -- from both sides of the political spectrum. I'm wondering if you can provide an update on the Pathways project here? I know that there were some of the sort of critical long lead-time items that need to be ordered in very short order. And sort of what the plan is with respect to that as we head towards the end of the year?

Yes. Patrick, that's a great question. And an important opportunity for me to reemphasize that the six companies that have formed together the Pathways Alliance and have been working together for multiple years continue to see the importance and the value of decarbonizing our industry. And that's what brought us together. And irrespective of political parties, we believe that's important. We in Canada, I think, are blessed with a tremendous endowment of resources, third largest oil reserves in the world. And that puts us in a tremendous position to support energy availability globally. But to be competitive and sustainable long-term, our view is we need to be cost competitive, and we need to be carbon competitive. And so to be carbon competitive over the long-term, we need to continue to look decarbonize. So our discussions with the governments, federal and provincial, continue. As we look to establish all the necessary fiscal support and regulatory policy support so that we can progress at investment. We still have work to do there. We're not at the point yet of committing to the pipe, which is kind of the first critical step. And as you point out, there is some urgency around that, based on our original objective of a 2030 startup. And as time goes on, it becomes increasingly difficult to meet that start-up timing. But we continue to work and we continue the engineering work. We continue the permitting work. We continue the environmental studies. We continue the indigenous collaboration, all with an objective of moving this project forward as timely as we can because we think it's important. So, more to come. Hopefully, we'll get further clarity from the governments on these open items and we can move forward.

Thank you.

Thank you. And that does conclude the question-and-answer session. I'll now hand it back over to Peter Shaw for any additional or closing remarks.

Well, thank you, everybody. And on behalf of the management team, we want to thank you for joining our call today. If you have any further questions, please don't hesitate to reach out to anybody on the IR team, and we'd be happy to answer your questions. And with that, thank you very much, and have a great day great weekend.

Thank you. And that does conclude today's conference. We do thank you for your participation, and have an excellent day.