Suncor Energy Inc. (SU) Q3 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Suncor Energy Third Quarter 2025 Financial Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Suncor Energy's Chief Financial Officer, Mr. Troy Little. Troy, please go ahead.

Thank you, operator, and good morning. Welcome to Suncor Energy's third quarter earnings call. Please note that today's comments contain forward-looking information. Actual results may differ materially from the expected results because of various risk factors and assumptions that are described in our third quarter earnings release as well as in our current annual information form, both of which are available on SEDAR, EDGAR and our website, suncor.com. Certain financial measures referred to in these comments are not prescribed by Canadian generally accepted accounting principles. For a description of these financial measures, please see our third quarter earnings release. We will start with comments from Rich Kruger, President and Chief Executive Officer; followed by Kris Smith, Executive Vice President. Also on the call are Peter Zebedee, Executive Vice President, Oil Sands; Dave Oldreive, Executive Vice President, Downstream; Shelley Powell, Senior Vice President, Operational Improvement and Support Services; and Adam Albeldawi, Suncor's Senior Vice President of External Affairs. Following the formal remarks, we'll open the call up to questions. Now I'll hand it over to Rich to share his comments.

Our third quarter was about completing this year's major maintenance and building momentum for a strong finish to the year. We accomplished both. I'll highlight operational performance. Kris will cover financial. First, I'd like to make a few comments on safety. I've shared before that 2023 and 2024 were the safest years in Suncor's history, while the first 9 months of 2025 have been even safer across the board, fewer incidents, lower severity, both personnel safety and process safety. I strongly believe that being a great company in oil and gas starts with being a safe company. Our performance now places us among the safest oil and gas companies in North America. Upstream production, 870,000 barrels a day in the third quarter, far and away our best third quarter ever. In fact, 41,000 barrels a day higher than our previous best, which was achieved last year. Also, within 5,000 barrels a day of our best quarter of any quarter ever, this was accomplished despite turnaround activity at both Firebag and Syncrude. A bit of context. Over the past 2 years, our third quarter has averaged 850,000 barrels a day, 145 higher than the prior 3-year average. I'll comment more on this performance shortly. Upgrader utilization, 102% for the quarter with base plant following the successful coke drum replacement project at 106%. Year-to-date utilization at 96%, with both base plant and Syncrude exactly at that level. Refining throughput, 492,000 barrels a day in the third quarter, our best quarter of any quarter ever, exceeded our previous best, the third quarter of last year. The third quarter is typically the highest throughput quarter each year, that said, with back-to-back records in '24 and now '25, we've averaged 27,000 barrels a day or 6% higher than the prior 3-year period. Our third quarter results were achieved with an industry-leading 106% utilization. All refineries were effectively at 100% or higher with records set at Sarnia and Montreal. Overall, year-to-date, we're at 101% on pace to beat our annual record of 100% set last year. Product sales, 647,000 barrels a day in the third quarter, again, our highest quarter of any quarter ever. 34,000 barrels a day or 6% higher than our previous best quarter, which was the fourth quarter of last year. Recognizing all sales are not created equal, our highest margin retail sales are up 8% year-on-year, while lower-margin export sales are down 11% year-on-year. Our strategy is to achieve both volumes and value growth. Operating costs, year-to-date OS&G, $9.7 billion, essentially flat with year-to-date '24 despite 32,000 barrels a day higher upstream production, 14,000 barrels a day higher refining throughput and 21,000 barrels a day in higher product sales, higher volumes, lower unit costs. Turnarounds. On our second quarter call, we shared second quarter turnarounds were completed at historically low cost and best ever durations. Our third quarter turnarounds were completed equally well. A couple of examples. Montreal refinery, our hydrocracker and hydrogen plants. Previously, 55 days to complete the work, we budgeted it at 50. We completed it in 40, going from industry fourth quartile to second quarter. Previously, it cost us $80 million. We budgeted it at $71 million. We completed it for $62 million, again, going from industry fourth to second quartile. And I'm really pleased to say it was completed without so much as a cut finger or a spilt barrel. Edmonton refinery, synthetic crude unit completed at an industry first quartile level. Firebag, Plant 92 in July, similar story, under budget, ahead of schedule. Syncrude, 81 coker completed early in the fourth quarter at best ever performance, cost and schedule. Historically, this work took us 72 days. We had a very aggressive budget of 50, and we did it in 48. Literally, every single turnaround in '25 has been completed at lower cost and best ever durations. In aggregate, our '25 turnaround program is approaching industry second quartile in North America with second quartile in North America representing best-in-class in Canada. And the best news, we aren't done yet. We have tangible plans and a pathway to further improvement. 2025 is the second consecutive year our annual turnaround program was completed at under $1 billion. Under $1 billion is now Suncor's new norm versus $1.25 billion historically. I'd like to -- here, I'd like to kind of pause and make a comment or 2 on a context on our performance. For 2-plus years, the last -- the past 8 or 9 quarters, we have announced performance records. Safety, production, throughput, product sales, asset utilization, turnarounds and so on. We've dramatically reduced our WTI breakeven and at the same time, reduced our net debt. We've materially grown free funds flow, fueling higher return of capital to shareholders. We've strengthened an already uniquely integrated high-quality asset base, consolidating ownership and achieving full control of Fort Hills, debottlenecking upstream and downstream capacities at little to no cost, expanding bitumen transfer capabilities between base plant upgraders and other assets and capturing downstream synergies during and outside of turnarounds. The impact of our actions is most notably seen in our volumes, which are historically the lowest in the second or third quarters of each year. However, starting in '24 and now again in '25, our second and third quarter volumes have been higher, much higher with significantly less variation versus historic first and fourth quarters. How? By design. We are systematically reducing variation and elevating overall performance, embracing an industrial engineering mindset, improving systems, processes, practices and tools, delivering higher, more predictable, more ratable results quarter after quarter in turn, delivering higher, more predictable, more ratable cash flow quarter after quarter. A few illustrations. Third quarter 2025 AFFO, $3.8 billion with WTI at $65 a barrel. Last time we had $3.8 billion AFFO was the third quarter of '24 with WTI at $75 a barrel. Third quarter free funds flow, $2.3 billion, the highest operationally since fourth quarter of '22 when WTI averaged $83 a barrel, $18 higher. Year-to-date free funds, $5.2 billion, within $200 million of 2024 despite oil prices being $11 a barrel lower. Buybacks, $250 million a month in 2025 every month, independent of oil price, $2.50 when WTI was $75 in January, $2.50 when WTI was $61 in May. Year-to-date, we bought back more than 42 million shares, 3.4% of our float at an average cost of $53. Year-on-year, $340 million more in buybacks despite oil prices being down $9 a barrel. At today's oil price, I strongly believe buying our stock is our best investment, and we intend to keep buying it month after month after month. The fact is our business model and uniquely integrated asset base now coupled with much higher performance offers investors a unique and I believe a premium value proposition, high performance with more predictable, more ratable cash flow delivered with less relative dependence on oil price. With any large industrial complex, the highest performance occurs when systems and capabilities align in sync. What you are seeing is Suncor's unique integrated cash generation capabilities increasingly aligned and in sync with fundamental attributes that cannot be readily replicated. 2025 guidance. On our second quarter call, we revised capital guidance down, dropping the range midpoint by $400 million to $5.7 billion to $5.9 billion. Today, we believe we will come in at the low end of the revised range. Now based on third quarter performance, we're revising 2025 volumes guidance up across the board. Production revised range, 845,000 to 855,000 with our midpoint up 25,000 barrels a day. Refining revised range, 470,000 to 475,000 barrels a day, the midpoint up 30,000 barrels a day. Refined product sales revised range, 610,000 to 620,000, midpoint up 45,000 barrels a day. We expect to exceed the high end of our original guidance for the second consecutive year. Now I recognize the temptation to conclude, well, we must have been conservative. But let me remind you, every single turnaround was completed at its shortest duration ever. Our massive coke drum replacement project was executed flawlessly and upstream and downstream asset utilizations are once again at record levels. The result, every volume category in 2025 is expected to be a new annual best ever. So was our original guidance conservative? Or is today's Suncor simply continuing to outperform. I've said before, we are institutionalizing a culture that every barrel in every dollar matter. With that, I'll turn it to Kris.

All right. Thanks, Rich. Good morning, everyone. Well, since this will be my final earnings call, I do want to start by first thanking the investment community for your engagement, your questions, your partnership over these last 3 years. And it's certainly been a privilege to engage with all of you during my time here at Suncor. I'll have a bit more to say on my retirement in a moment. But before I do, let's first talk about what is an exceptionally strong quarter. To begin with, I'm pleased to announce that the Board of Directors has approved a 5% dividend raise for an annualized dividend of $2.40 per share, which is in keeping with our commitment to reliably and sustainably grow the dividend. This dividend increase is a direct result of the great progress our team has made in sustainably growing incremental free funds flow. And because of our steady return of cash to shareholders through our share buyback program, this increase in our dividend does not affect our WTI breakeven price. Our buyback program continues to be a key driver of per share dividend growth, creating a reliable flywheel for shareholder returns. It's yet another proof point that we are doing what we said we would do, delivering reliable growing cash returns to our shareholders. The third quarter is also another strong quarter for shareholder returns, consistent with our disciplined capital allocation framework. We returned just over $1.4 billion to shareholders, including $688 million in dividends and $750 million in share buybacks. At the end of the quarter, we had repurchased 3.4% of our equity float, supporting future dividend and free funds flow per share growth. Our approach remains unchanged: drive growing free funds flow and returning 100% of excess funds to our shareholders on a full year basis. As Rich mentioned, our buybacks have been consistent despite commodity movements in 2025, a testament to the predictability and quality of this company's cash flows. Turning to the business environment in Q3. It was marked by slightly higher commodity prices with WTI averaging USD 64.95 per barrel, which was up $1.25 per barrel versus the prior quarter. Notably, we saw an improvement in our downstream 5-2-2-1 custom index of USD 3.35 per barrel with improved cracking margins, averaging $31.20 in the quarter versus $27.85 in the prior quarter and contributing to strong financial performance in our downstream. This improvement in commodity prices was partly offset by a stronger Canadian dollar, moving from USD 0.72 to USD 0.73. We have seen some weakening of crude price as we moved into the fourth quarter, but our strong operations, coupled with our integrated business model ensures the continued resiliency of our free funds flow through a lower commodity price environment, supporting continued strong cash returns to shareholders. Now Rich talked a lot about records in his opening remarks. I do want to highlight another one of those. This quarter, AFFO was $3.8 billion or $3.16 per share, and it was the second highest Q3 AFFO in Suncor's history despite much lower crude prices. You'd have to go back to Q3 of 2022 for the record, which was in a commodity price environment over $90. Operating earnings were $1.8 billion or $1.48 per share. How did we generate $3.8 billion of AFFO with average WTI at $65? Well, to begin with, a number of those records that Rich was just talking about, record third quarter upstream production of 870,000 barrels per day, including oil sands at 812,000 and E&P at 58,000. Record total bitumen production of 958,000 barrels per day, record quarterly downstream with refining throughput at a whopping 492,000 barrels per day and utilization of 106% and record quarterly refined product sales of 647,000 barrels per day. That's a lot of records. Total OS&G expense in the quarter of $3.3 billion is consistent with the first 6 months of the year, further demonstrating our operating leverage with higher volumes and flat absolute costs. Capital expenditures in the quarter totaled $1.4 billion, including $565 million of economic investments and $874 million of sustaining and maintenance capital as we execute our fall turnaround schedule. Working capital use was $183 million in the quarter, primarily reflecting the timing of payments and net debt at quarter end was $7.1 billion, with net debt to trailing 12-month AFFO at 0.5x. This is all about managing our balance sheet in the best interest of our shareholders while continuing to steadily return significant cash to them. I do want to spend a moment on what I believe is an underappreciated part of the Suncor story, our ability to consistently generate industry-leading margins across the value chain. We often emphasize the strength of our integrated model, allowing us to capture margin at every step from extraction out of the ground to the upgrader, to the refinery and finally, to customers all along the value chain. Like our peers, we make bitumen, but then we transform those barrels into high-value products. Rich has previously described this as our ability to make craft cocktails for our customers. It's this competitive advantage, coupled with our strong logistics and trading capabilities that enabled us to sell our oil sands barrels at 96% of average WTI over the quarter. And our downstream margin capture is consistently above industry benchmarks. This quarter was no exception with margin capture at 92% of our custom 5-2-2-1 index, an index which represents the margin power of our downstream business. LIFO gross margin was USD 28.87 versus an average New York Harbor and Chicago 3-2-1 crack of $26.39. Suncor is quite simply a margin machine, and this should be recognized as a core driver of this company's value proposition. Now this is my last quarterly call with Suncor. I do want to take a moment to express what a privilege it's been to work at this company for the last 25 years and to be part of this executive team for the last 13. Over my 25 years, I've worked in almost every part of this company, and I've seen its tremendous growth over that time to become Canada's premier integrated oil sands company. I deeply believe in the strategic importance of the oil sands to the long-term prosperity of Canada and Alberta and as a source of long-term value for our shareholders and know that Suncor will play a significant role in that future as it continues to grow its competitive advantage of maximizing value of this world-scale long-life resource through its unmatched integrated value chain. I want to thank the Board, Rich, all my colleagues for their support over the years, and a thank you to all our employees for their dedication and drive to deliver results each and every day. As I said, it's been a real privilege to be a part of this team. I also want to congratulate Troy on his appointment to the CFO chair and know that his experience and leadership will be critical in the years ahead. This company is so very well positioned for the future. And as I move on, I'm confident that Suncor will continue to deliver exceptional value to our shareholders through operational excellence, capital discipline and a relentless focus on value creation. And with that, for a final time, I'll turn it back over to Rich.

Thanks, Kris. First of all, I want to thank you and congratulate you. You have been an integral part of our turnaround over the past few years. Your timing couldn't be better wrapping up with the quarterly results. And for those on the phone, I got to know Kris quite well, outstanding executive, a class act and I am proud to say a close friend. Kris, you'll be missed, but not forgotten. We all wish you, Sandra, Ethan and Catherine. I was going to add Mazie, your Golden Retriever that I see walked by the house, the best in your future endeavors. I also want to thank -- congratulate Troy, our new CFO; and Adam, our new Senior VP of External Affairs, which includes Investor Relations. Gentlemen, it was high performance that earned you these roles. And as you've heard me say, high performance results in even higher expectations. I look forward to continuing to work with you as we create shareholder value. With that, I'll turn it over to Troy.

Thank you, Rich. I'll turn the call back to the operator to take some questions.

[Operator Instructions] The first question comes from the line of Greg Pardy of RBC Capital Markets.

And I probably put your conference call commentary right up in that first quartile. So great, great rundown. So first off, Kris, just all the very best. I sure hope our paths cross again soon. And big congratulations, I think, to Troy and looking forward to working with Adam. So questions wise, there are a couple of things kind of going through my head. But Rich, I wanted to come back to maybe what the prevailing narrative was on Suncor before you got there, to some extent, which was, hey, old assets can't be fixed. And I've heard that from multiple quarters. How do you put that together perhaps with the maintenance interval extension that we're now seeing at U1, but also just the planning and turnaround and improved turnaround performance? I'm just -- it's a very broad question by definition, but I just want to get a better understanding of how all those pieces fit together.

Well, 2 things, Greg. First of all, I'll start off. I appreciate you saying first quartile because that gives us room to improve. Our goal is best-in-class. Second thing, I think I'm living proof that age shouldn't directly correlate with performance in a negative way. So -- but I'm going to turn this over to the team to I left here in a moment because the entire way we're approaching our business, the depth, the analytics upon which we plan and perform our work is fundamentally different. So Shelley, maybe I'll start with you, but then I'll ask perhaps Peter and Dave to give a quick example in the business. But Shelley is kind of at the central point of how we've redesigned our entire approach to operational excellence.

Yes. And the first thing I would say on that, like the intervals as well as just across performance, for us, it really starts with benchmarks. We want to look and see what does global performance look like, and then we want to be the best of the best in that bunch. So we look at the best intervals that are being achieved across several units in the globe. And then we do the work to understand what would it take for us to hit that benchmark. So the work is really about making the right decision at the right time. Peter?

Yes. I would also say, Greg, and you mentioned U1 there. We're moving the intervals at U1 to 6 years. That's really a function of the upgraded metallurgy on the drums, the investment that we put in with the coke drum replacement project this year and coupled with some work on the coker frac section that has enabled us, and we're confident in our ability to extend it to 6 years. So it's a real success story. And you see that replicated across a broad variety of our upstream oil sands assets, both the Syncrude, Firebag as well as Fort Hills.

Yes. And for the downstream, I'll use Edmonton as an example, but we're applying the same principles and the same logic across all of our assets. The downstream also starts with benchmarking. For Edmonton, we just completed a sweet crude and hydrocracker turnaround block. That was an interval increase from 4 years to 5 years. And going forward, that unit will be on a 6-year interval. So that's a 50% increase over 2 cycles. In the spring of this year, we did a sour crude and hydrocracker block. And that was an increase from 3 years to 4 years due to some improved catalysts we put in back in 2021. In this turnaround, we made some modifications to the distribution of flow over that catalyst, and we're planning on a 5-year interval going forward. So that's 3 years to 5 years, 65% improvement in turnaround interval over 2 cycles. We're applying that same logic across all the units in Edmonton, but we're also applying that same principles across all of our refineries. Grounded in solid work selection and benchmarking, we're applying that same approach everywhere. We're not done yet.

And Greg, I'd just add to close this one out. There is not a new refinery in North America. The entire refinery network has some age to it. And I would say just candidly, the -- and I don't know where it all came from. It doesn't really matter, but the statement or narrative that old assets couldn't perform, that was an excuse for subpar performance, and this company doesn't make excuses anymore.

Yes. Okay. No, I think you've captured it. So let me relate this then to your share price relative valuation and then just your trajectory. So the trajectory that you're on right now would suggest that your outperformance is going to continue. But there's this gap between your relative valuation and others. So the market is either impatient, just has recognized it, what have you. If you look at your $8 billion net debt target in the context of improved mid-cycle cash flows plus the trajectory, does that not suggest either moving the $8 billion up, number one? Or secondly, maybe taking a more aggressive stance with respect to share buybacks like doing an SIB or what have you?

I'll start it out, and then I'll ask both our new and departing CFOs to comment on it. As we put that target in place, it was about a little less than 2 years ago now, it was on the assumption of a rate of improvement in '24, '25 and '26. We've accelerated. We've improved faster than we anticipated in that. In fact, you heard us, we talked about this 3-year plan. Are we going to achieve 3 and 2. That's kind of a separate question. But the examining of how we manage the balance sheet, looking at the business [indiscernible] the return of capital to shareholders, these are very active dialogues. These are not where we set something in stone, and that's just the way it is. We want to be outstanding technical and operational executives, and we want to be astute and outstanding money managers. So maybe I'll just give that. But Kris or Troy.

I'll make just a few comments and ask if Troy wants to add anything as well. I mean, Greg, on the back of Rich's comments, we've set ourselves up in this company to ensure that we're really managing the balance sheet well, but we're driving that free funds flow growth, and we're returning that excess cash to shareholders. We set that debt target a couple of years ago now when we kind of reset the company. We're obviously ahead of schedule on just the level of improvement this company continues to drive. I expect that Troy and Rich are going to continue to look at what the appropriate level of leverage is for the company but prudently manage this balance sheet for the long term and really -- and have that underscore of ratable, consistent buybacks to our shareholders and return of cash. So right now, we've been at a very consistent level for the last number of quarters. We think there's a ton of value in that consistency. And I know that's something that Troy and I have talked about is really it's the brand of the new Suncor is the ability to deliver consistently, ratably, reliably to our shareholders. Will that change over time and be managed prudently and obviously looking at how we view near-term and medium-term commodity price? Of course.

I think I would just -- I think your question is, is our net debt target or how we view debt, is it static? Really, the level of debt that a company carries or should hold depends on a few things. It depends on the company's underlying cash flows, the consistency of the performance of our assets, the quality of the leadership team that's managing those assets and also the external environment. I think everyone would agree on those first 3 things, Suncor has made an enormous amount of progress in the last few years. So my intent is to manage the balance sheet, just like my colleagues in operations manage their assets, and it's to deliver consistent returns to the shareholders.

The next question comes from the line of Doug Leggate of Wolfe Research.

I would also like to add my congratulations to everyone, Kris. It's been a real pleasure. And as you'll see in a second, I'm going to challenge you on one last question, if I may. And Troy...

I've got Troy here.

All right. So let me -- if I may, Rich, I'm probably front-running a little bit 2026, but I want to try and hit the capital outlook. So obviously, there is one substantial project still in your portfolio, which is West White Rose that obviously is 2026, as we understand it. And a fairly large slug of capital. And I guess my question is that as you start to think about the use of discretionary cash flow going forward, as some of these bigger projects, one-off projects roll off, how are you thinking about the absolute level of discretionary spending versus that sort of almost $6 billion number. Does that go lower? Or does the capital get reallocated to other things?

Yes. Thanks, Doug. As we've looked at it, one of the things that I heard early on our market, we spend a lot of money. We generate a lot of money, but we spend a lot of money. So we have had a very concerted effort at exhibiting discipline on all of our operating costs, our capital costs. I think turnarounds are a vivid example of our maintenance or our sustaining capital is being -- has been driven down and will continue to do so. And that was all so we could open up headroom for economic capital for growth and quality investments. We don't have a hard cap, but we had set internally that we want to have a year-on-year-on-year capital expenditure at less than $6 billion a year. That was a core tenet in our 3-year plan. We're achieving that now this year. If anybody is anticipating waking up on guidance and seeing a bigger number next year, stay in bed, don't get up early. We're going to deliver that. And what that does is it allows us to be very judicious about quality. And at a capital construct of less than $6 billion, you can pick the oil price world, is it $50, $55, $60 a barrel. We believe we can continue to pay a reliable and growing dividend, fund our full capital program and buy back shares. And we want to thread the needle where we can do all of that in most any business environment. And the unique level of our integration and the kind of the natural hedges that are within our construct, upstream, downstream all the way to the customer now gives us less volatility less dependent on what the external world is. We want to be a cash machine that invests wisely and returns capital to shareholders predictably and reliably. It's taken us a couple of years to get all the bells and whistles in place to improve fundamental performance. But I think that's what you're seeing now. And to me, that's quite exciting. So the -- we put a high bar to justify new economic capital because it really needs to be tested against an alternate use of returning that capital to shareholders. And I think at our current share price, as I said, I think we're in an extremely good buy. And so that will be the push and pull we will have internally. And we have quite rigorous discussions and debates on that, but they're all centered on how can we increase shareholder value the highest, fastest and best.

I appreciate the answer. And I guess we'll have to wait on 2026 for the actual cap number, but thank you, Rich, for that. Okay. My follow-up, I'm hoping this is for Kris, but Rich, I'm sure you're going to want to have an input to this. Look, you've just reiterated again, I apologize, that you think Suncor is a great buy here as you put it. We certainly concur. It's been a tremendous stock, obviously, and the turnaround has been extraordinary. But you are an oil company and oil prices are subjective and value, therefore, if your free cash flow is a function of the oil price is also subjective. So when you say you had a great buy, you're implicitly saying, I have an oil price here, which is not necessarily going to be right. So my question is this, when you look at your relative performance to your closest peer, which is probably Imperial, the big difference has been the rate of dividend growth and your dividend growth remains somewhat glacial despite all the improvements. So my question to you is, why emphasize the buyback with a pedestrian dividend growth and not if the improvements are flowing through to the bottom line, pivot to a more aggressive rate of dividend growth?

Doug, I'm going to turn it to Kris. The next time we're together, we'll have a couple of beers and we'll go through this as well. But Kris, go ahead, comment on it.

Yes. No, thanks. And again, if Troy wants to add anything here to the answer, I mean, thanks, Doug. Like first of all, our company, obviously, we're an oil company and commodity price makes a big difference. But this company also is differentially positioned in terms of our integrated business model and how we drive value and sustainable free cash flow and growing that. So start there. In terms of the dividend, our commitment is to reliably and sustainably grow that dividend and position this company so that we have a strong WTI breakeven that can weather through the commodity price cycle. And you've seen us over the last 2 years, reduce that WTI breakeven by -- we're on our way to $10 a barrel. So we've repositioned the sustainability of the company, which makes us more resilient in the lower end of the commodity price cycle. So we're not taking -- we're not betting on oil price in this company. What we're betting on is sustainably and reliably generating free cash flow and having a resilient company that does that. In terms of the dividend to the investors, we view that as a commitment and a promise. And this company is -- going forward, this is a commitment and a promise to our shareholders. We will grow it reliably. We have what we view is a competitive yield, but the share price is actually low, and that yield needs to be lower, and we'll continue to grow the dividend appropriately over the years. The cash return strategy, though, of buybacks, our view, it is one of the best mechanisms to get cash back to our shareholders and really drive that per share value to our shareholders. So we think we've got a winning formula in our capital allocation strategy, Doug. And maybe I'll just turn it over to Troy for any other comments.

Yes. I'll just add this from a perspective point of view. As a management team, our focus is on maximizing the free cash flow per share from our assets so that we can generate returns for our shareholders. We really look to our shareholders, though, to guide us on how they want those returns delivered to them. And the almost constant feedback we get is that our investors want a reliable and growing dividend, as Kris referred to, and they want the excess to be used for share buybacks. And until they really tell us something different, that's going to be our focus.

And Doug, I want to make one comment on this, too. I run the risk because I'm just thinking about it on the fly, and sometimes I get in trouble when I do this, but what they have, we're going to go for it. You talk about a peer or peers. I honestly don't think we have a true Canadian peer. I think the unique assembly of our assets, upstream, downstream, the differentiated value proposition we have, I think we have an ability under -- over a much wider range of market conditions to deliver predictable, reliable cash flow. Now at any point in time, whether it's oil price, gas price, low differential, high differential, downstream cracks or whatever, there can be parties that might stand out. But I think if you look over the test of time, who has been assembled to compete and win for the long term, I increasingly don't think that looking around Calgary is the right lens to look at us on. So I'm probably going to get in trouble for that. I'm probably going to be challenged on that and stuff. But you ask me a question, you get what I -- you get the answer I feel, and that's how I feel.

The next question comes from the line of Dennis Fong of CIBC WM.

First off, I'd just like to echo Greg and Doug's congratulations to the team on the quarter and specifically to Kris, Troy and Adam for their, I guess, new roles or exiting your existing role. My first question really focuses on Fort Hills. Q3 operations and production was quite strong. From our observations of the mine plan, it seems like you've opened up potentially the first cut and should have turned that maybe over to operations. Can you maybe talk towards the progress on the second cut? And maybe as you're kind of progressing through the plan, what that means for optimization of the asset?

Peter, why don't you take that?

Yes. Thanks, Dennis. You're absolutely right. We are actively producing ore from the first cut, the first pit in the North Pit 1 now, and that's going exceptionally well, blending off that ore with ore from center pit. And you have seen, as you saw in the third quarter, our production volumes start to increase. We've also just started opening up the second pit in the North pit, which will be an active blending pit. So we're just kind of in the top cut of that now, and we'll develop that over the remaining months here in 2025 and into '26. And our drive is really to take the Fort Hills volumes up to nameplate and potentially beyond in the next couple of years. And it really give lots of opportunity. So we're trying to get up into that 195,000 barrels a day, 200,000 barrels per day range in the next couple of years. That's the goal. North Pit 2 is going to be a big part of that, and we're just in the top stripping of that area of the mine right now.

We continue to test and evaluate the plant. And I think there, Peter, I don't know if you have any specific comments on that, but we have a lot of capability and capacity with that plant. So the focus on the bitumen delivery is the key because we do have a really a stellar facility there.

Yes. And we really have proven that out, especially through 2025, we've taken the opportunity to really test the range on the fix plant to really put some high throughput in it from the mine. It delivered better than what we expected even. And so our confidence in the ability of the fix plant to take the ore from the mine is extremely high. And so right now, it's all about getting that mine set up to deliver those high production volumes here into the future.

Great. Really, really, really. I appreciate that context there, Peter and Rich. My second question, and maybe it's address to Dave. Rich, in your opening comments, you highlighted record refined product sales through the quarter. I was hoping you could touch on and maybe highlight what you found in your opportunity to visit a variety of the retail logistics and distribution terminals across Suncor's Canadian operations and how that feels or drives comfort level or an ability to kind of press throughput on downstream and market those volumes in the most, we'll call it, profitable channel?

Dave, do you want to go?

Yes, for sure. Dennis, we -- as Rich mentioned, we changed our philosophy about a year or so ago to focus on value versus volume, but value and volume. So our plan is we run our refineries full and we sell full and then we improve our channel mix over time. And what's really great about what we've seen so far in that philosophy is it's all working. You've seen the records, but what you may not see in the numbers is the work that's happening to grow our most profitable channels. And that's our retail growth plans, our wholesale growth and really reducing the volume of exports that we make. So on the retail side, just maybe a few numbers because folks probably have seen some of this as you drive around the major cities across Canada. We've enhanced 23 sites this year, including rebuilding 2 new sites. We're on track to rebrand from other competitor brands, 75 sites across the country this year. And each of those operators, as they rebrand to the Petro-Canada canopy above their site are seeing significant increases in volumes. So we see the strong brand that we have in Petro-Canada continuing to grow. In fact, our share of market is up 1.5% this year. And our retail sales, as Rich mentioned, are up 8% year-on-year and 10% over the last couple of years. So we're growing our most profitable channels. Our distribution network is solid. And as we do need to export, we can do that incredibly profitably through our trading organization who sell direct to customer with minimizing the profit that's taken by the folks in the middle. And we can sell off both coasts. So we can sell off Vancouver and we can sell out of Montreal. We can optimize our network in between to go anywhere -- pretty much anywhere in the world with largely diesel is what we see exporting out of Canada. So our network is strong. We're growing the highest profitable channels, and we have lots of flexibility to continue to grow.

I'm looking at, Adam, as I say this, in late 2022, the company had a retail growth plan that had communicated to the market and had a series of commitments through '27 and stuff on that. I would say in the Investor Day, we need to give a good recap of where we stand on that. And just kind of a headline is we -- it's going quite well. We're delivering everything and more that in late '22, we said we were going to do. And I think, Dennis, one other little added point I'd make a nuance on it. In today's world of commodity price uncertainty and volatility, owning all the way through the customer is a competitive advantage because that can move around, whether it's the customer has the leverage or the manufacturer has the leverage or the producer does. But this is a key part of that uniqueness of our value chain that all integration is not created equal. It's quite -- in fact, it's quite different. And our unparalleled integration is a part of our story and a part of our performance.

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

Congratulations, Troy. Congratulations, Adam and Kris, it's been a real pleasure. I guess 2 questions. The first is just on the Investor Day. When is -- have you put a date out for that? I'm guessing it's going to be May like you did in '21 and '24, but I might have missed that. But as you think about that Investor Day, what are the kind of the tangible KPIs or targets you want to educate the market on? And how -- what's the right time horizon? Are you thinking new 3-year targets or going out further? Just give us a little bit of a preview for that.

Neil, as I answer you, I have a room full of people that are really, really curious as to what I'm going to say. So let's have some fun with this. Our original plan was sometime before midyear next year. That's not going to work. We're going to need to come out earlier than that. So we're looking at something earlier. We're looking at calendars when all you good folks are available. Those of you that have kids, when your kids are on spring break and all that, but we're going to pull that earlier. It won't be January or February, but it will be earlier than we had originally anticipated. And the second thing, the one area that periodically, and I read everything you guys write, every now and then when things are going really, really well, you guys look for what's the thing we can say as to why we have to justify to our bosses, we haven't all bought Suncor. So everybody wants to say, "well, what the hell is going to happen when the base mine depletes." So we owe you and will present a very compelling long-term value proposition on bitumen development and replacement. But that's longer term. And we've said in the last Investor Day that don't anticipate a whole bunch of expenditures in the next 5 years on it. So I think we're going to have to do both. We're going to have to give you what that long-term plan looks like, but we're going to have to give you kind of what is that next -- for fun's sake, we'll say, what's that next 3-year plan also going to deliver? So I think we're going to have to give you both longer term and a new set of targets short term that will be compelling and inspiring and create the case for man, this is a stock I just have to own. So a little bit earlier than we originally thought, two-pronged short term and long term. I'll tell you, I'm going to be there that day. I wouldn't miss it.

Well, I have to have a good pump up music before you get on stage. The follow-up is just on downstream. It does seem like we're in a good refining environment. Certainly, refining equities have done okay and downstream margins continue to do well up in Canada as well. So Rich, I would just love your perspective on the sustainability of the Canadian refining advantage. And if you think that we're going to sustain in a healthy environment. And then utilization averaging 101% for a system that was running low to mid-90s for a long time, do you feel like you've got some momentum here to be able to sustain at these type of levels as you go into next year as well?

David, let me take the second part, and then I'll turn it over to you on that. On the utilization and things, the teams across the company, facility by facility have undertaken a very concerted, okay, what's the limiter? What's the bottleneck? What's the last increment that if we make small changes can add incremental capacity. And when you now see -- and I literally think it's since mid-'23. I think we're 2 years, if you average over all that, I think we're at more than 100% utilization for that long period, and you get 106%. So what is it really saying? The underlying capacity has grown. So we need to -- and maybe that will be Investor Day, I'm not -- it needs to be soon, we will re-rate our downstream because it has more capacity than it previously had due to really smart, thoughtful, frugal work site by site by site. So there's something coming there. Is it sustainable? I think that gets right back to the turnaround discussions, our commitment to operational excellence on maintenance practices. The answer is absolutely, is it sustainable. Now year-on-year, we'll have more turnarounds here, less turnarounds there, I think you'll get a little variation year-on-year. But at the high performance levels you've become accustomed to this year and last year, our business plan, our guidance that you're soon going to see is very consistent with continuing to deliver that. So Dave, now I'll flip it to you on kind of the value that you're going to create in that enterprise.

Yes, for sure. And I'll just build, Rich, on your comments. On the downstream, not only do we see that sustaining, we believe we can continue to incrementally creep capacity with all of the little ideas that are coming from the grassroots of the organization as folks are aligned to drive growth. You mentioned the markets are strong. We're seeing, particularly on the diesel side, low inventories, the geopolitical risks, some lagging renewables in the U.S. and a growing short in California that's really starting to drive diesel as well as some local gasoline cracks in certain parts of the continent. So we see in the short term, some really strong cracking spreads going into the fourth quarter and through the fourth quarter. The longer-term view on Canada is we're going to continue, as I mentioned before, our retail growth plans. We have some plans on the wholesale side to do something similar. So we -- even in a market that is maybe growing slowly at a couple of percent per year, we believe our strategy is we can take market share in the most profitable channels, and we'll continue to do that. And as I mentioned, on the balance, we can run our refineries full. We have some of the lowest cost crude advantages in the globe, and we can export profitably pretty much anywhere in the world and continue to grow our refining capacity through that mechanism as well. So...

One last thing, kind of a related point. Our downstream, I think historically, folks have said, well, you guys are good downstream, high-performing downstream, et cetera, et cetera. All of that's true. But we've taken it from good to great, and our belief is it can be even greater. And it is so key to our financial resilience in uncertain times and the contribution to keeping our overall corporate breakeven at a very low and very competitive level. And I think what we've seen, the more we do in the downstream, and I'm smiling as I look at Dave, the more we do, the more potential we see. So this is a -- I've used this phrase now for several quarters in a row. We are not done yet, and that applies either equally or disproportionately to the downstream. There's a lot more value we believe we can continue to create. And so when you look at us, it may not always be plotting volume points, either upstream or downstream, may no longer be the best way to gauge are these guys improving? Keep looking at the dollars. and where they're coming from and the dollars. Now volumes, we're going to keep doing things to grow that. But increasingly, our mindset is in the value dimensions and the downstream is going to be a big part of that.

The next question comes from the line of Manav Gupta of UBS.

I actually wanted to start on a lighter note. As you get into the earnings call of Suncor, you were playing that Michael Jackson song beat it and beat it. And every 30 seconds, you were hearing beat it and beat it. And then when it kind of struck me, that's what Suncor has become, right? Keep raising expectations and then beat it. So whoever chose that song thought through it very carefully.

Manav, a quick one for you. We started that some time ago now, and it is one of the secrets of the crown, what our earnings call is going to be. There are only 3 people who know it ahead of time. Me, my wife and Troy. And my wife and Troy have way better sense in music than I. So now we're going to bring Adam into the inner circle on it. But we do spend a little bit of time thinking what is the appropriate call for the quarter. So thank you for noticing it. Troy is smiling because he picked this one.

I kind of figured it out because a couple of quarters ago, Rich, you were playing Eye of the Tiger from Rocky. So it's kind of your focus exactly was showing what your song was playing. So I kind of figured that out. That's why I talk about it. My quick one question here is, sir, when we look at Fort Hills and Syncrude cash operating costs, absolutely going in the right direction. Every quarter, we are seeing an improvement. I'm just trying to understand what further improvements can happen over here? And how much lower can you think you can take this both at Fort Hills and Syncrude? And I'll turn it over.

I'm going to turn it over to my operators here in a minute, but I think this gets at the very culture of the organization of spending, how we look at spending money, whether capital or operating. And I'll give you a little glimpse of my childhood. My dad would give me $2 to go to the store and get a pop and a candy bar, and I'd spend $1.84, and I'd come back and he'd say, where's my $0.16. And so it's a philosophy and it's a culture of we're not spending our money. We need to manage risk, be very thoughtful and frugal. And the -- I think our progress on operating costs is probably one of the best barometers of is our culture permeating deeply. Capital is allocated around this table. We can add or subtract, but operating costs are the decisions of literally thousands of people every day. And that is each month, when I see the numbers, that's where I get my best sense of, yes, okay, the organization has it. But on what continued improvements or -- Peter, do you have any comments, particularly -- you spend the bulk of it.

Yes. And I would say it really -- it does start with building that culture right from the front line. And we've put a lot of time and effort into building the transparency and an understanding with our frontline leadership and operators around the decisions they make on a given shift and what the cost implications of that are. And that has proven to be really effective. You start to see that flow through at the bottom line now. We are working, as I've said in multiple calls, mining productivity, where we spend the bulk of our money in the mines and getting more out of what we have from our mining equipment is a really big part of this cost journey. But we haven't stopped there. We've been working broadly across the rest of our operations, specifically in maintenance efficiencies on integrated activity and planning and ensuring that we're doing the right work at the right time in the most efficient way and building out that capability and knowledge of our front line, the folks that are making the decisions each and every day on what cost implications that have and then getting their creative decisions and driving efficiencies higher, and that's really what you're seeing flow through.

And I think some of the philosophical, we benchmark -- Shelley mentioned earlier, we competitively benchmark. We look at where gaps are, what actions can we take. So that was a part of our mining strategy on bigger trucks, fewer trucks, operated better, maintained cheaper. That was all part of that philosophy. The -- we have an internal philosophy around there's inflationary pressures in our business. Well, the market doesn't necessarily give us inflation on our products. So our business plans to get -- to walk in the door, you have to bring business plans to us that have fully offset inflation, and then we want to talk about how do we improve upon that. So it's just a real deep recognition we are in a commodity business and cost, managing cost is so absolutely essential. And I say cost, I mean every dollar we spend, whether it's capital or operating.

The next question comes from the line of Menno Hulshof of TD Securities.

Congrats to everyone on the call on the changes. Most of my questions have been answered, but I'll maybe follow up with a question on nameplate capacity. You touched on this already for the downstream in particular. But with certain upstream assets like Firebag also performing well above nameplate, what are your thoughts on re-rate potential? And I think the last time you talked about this, I think you suggested you were still working through a discovery process on how each asset could perform on a sustained basis. But on balance, and it's more of a philosophical question, but what's the real benefit to re-rating? I could make the argument either way, but curious as to how you're thinking about this.

Yes. I think it's a fair question, Menno, on what's the benefit on it. It's probably as much as anything as credibility. How do you repeatedly extract more than 100% of something. So -- but our -- I'll tell you right now, we -- internally, we have 2 things. We steward to you the historic external utilizations, but that is not at all internal. When you come into our executive meetings and we look at assets, we look at their performance relative to their best 30-day average consecutively. So we run 2 sets of numbers. And the goal is to always improve based on historical performance. So the re-rating is a bit of a philosophical question on it. But the same approach that has been taken in the downstream has been applied to the upstream. And what is so uniquely similar in our business is our upstream has large plant operations, whereas many upstream around the world don't have that offshore platforms or whatever. So the same approaches and principles have applied. And you flagged Firebag. In 2022, Firebag averaged 199,000 barrels a day. In 2024, it averaged 234,000 and in the fourth quarter, it was 250,000, all without growth investment. So now what Peter and his team are scrambling to do is be sure we have the well capacity to feed. We would rather be a barrel short on the facility than a barrel short on the wells. So Peter has been doing an extensive infill drilling program, which are extremely lucrative. He's been looking at the expansion of noncondensable natural gas, so we can redeploy steam. So it's a continual chasing of the limiter, the last limiter and saying, how do we unlock potential? Is that well? Is that facility? But the principles apply across our business, upstream and downstream. And I give kudos to our operating teams because they've embraced this challenge, and they are repeatedly continually finding ways to unlock capacity. And when you're a capital-intensive business, return on capital, that -- in many cases, I came from a company where for decades, that was the holy grail. And I believe that. We've spent a lot of money. It's our job to maximize the return on that money we've spent. And I think our Suncor teams, upstream and downstream are doing a very good job on that. And I think my guys remind me, we're not done yet.

That's really helpful. Maybe my second question is on your incremental free funds flow target and WTI breakeven target as well. And last, we were -- I didn't see it in the release, but I believe the last time we were updated, you were guiding to achievement of both targets by the end of the year, which would be roughly a 1-year acceleration. Where do you stand on those targets today? Is year-end still a reasonable guideline? And is there upside to those targets over time?

Menno, we did the first year of the 3-year plan. We achieved nearly 2 years. We've kind of suggested and insinuated that we could achieve a 3 and 2. We've got 1.5 months, 2 months left in the year. But I got to tell you real quick, quick story. I'm reminded of the 2015 Super Bowl. The Seattle Seahawks were on the 1 yard line losing by 4 against the Patriots, about to punch it in with a battering ram of a fullback name Marshawn Lynch. They had victory, they were high fiving and celebrating. And for some unknown reason, they passed through an interception and they literally snatched the feet from the jaws of victory. They were celebrating before the game was over. We still got 2 more months left. I want this team focus like a laser to finish strong, but I think it is very fair and reasonable that you will get a comprehensive update on our 3-year plan and how we're doing on that quite early in the new year. And right now, home team is looking pretty good.

So you're going to be giving the ball to Marshawn then.

I got a lot of battering rams on this team. So I could give it to a number of folks.

The last question comes from the line of Patrick O'Rourke of ATB Capital Markets.

Congratulations to Kris, Troy and Adam there. So first question here. With respect to the extension that you guys have done on the turnarounds here, and you've obviously been very thoughtful about planning and benchmarking these things. But what are the signposts, and I'm sure you have them, but maybe you can articulate them to us around reliability, particularly later in the cycle with the assets where you've extended the turnarounds there. And then if you're thinking about this, and I know every asset has sort of a different turnaround cycle, but what's the quantification of the volumes to date that you've done through these extensions?

Tim, do you want to take a comment on the -- and I think on the first one, it's where I'd phrase it is, it's about managing risk. And it's about looking at as we extend intervals, the confidence that we can do that without having anything go boom in the night or -- and/or cost us more. Why don't you comment on that? And then maybe I'll come back on the volumetric impact.

Yes. I mean we're really employing a risk-based inspection methodology to see the state of our current units and then applying the appropriate engineering fix to be able to assure ourselves that we're able to get these units kind of to the next interval. As Shelley said at the start, we start with benchmarking. We see where other units of a similar nature are elsewhere in the world, and we set our North Star at or above that and then kind of back out, okay, what needs to be true to make that happen. We apply this risk-based inspection methodology, and we do the work that's necessary to give ourselves the confidence to achieve it.

And I think the key -- one thing I'd just add to it, too, is your interim inspection techniques is you're monitoring things. So we don't arbitrarily say, okay, we're going to a 6-year interval and then just wake up 5 years from now and start preparing. You are monitoring technical and operational data as we go. I like that you're using more sophisticated techniques. You're using drones in our business. You're using a number of things that help us ensure that those intervals are indeed the right intervals. And what I think we keep finding is opportunities to further extend. Dave, do you have anything you'd add to it?

Yes. Thanks, Rich. And I would just build on what Peter said is when we started our turnaround journey, we really focused on work selection. And what that did is allow us to do the right work at the right time and have a much better understanding of -- to do that, you have to have a better understanding of the condition of the equipment. And then the natural outcome of that was, hey, it looks like the equipment can go longer. Now that we really understand it better from a work selection perspective, we think it can go longer from a duration or interval perspective. So it really was an outcome of the work that we've done grounded in benchmarking. We know what the best of the best do for each technology that we operate, and that's really our target.

Shelley?

Yes. I just want to maybe underline what Peter said that when we talk about interval extensions, this is really a detailed technical engineering exercise. We follow a very rigorous management of change process that is embedded in our management system. So this isn't what does the benchmark say and let's go make it happen. This is a very detailed technical evaluation to make sure that we're very confident in the long-term reliability and safety of these assets.

And if I go back to your first question, this is not a third-party certified, but the increase in volumes this year, the revising guidance upward in both production and refining throughput, the bulk of those revisions up are exceptional turnaround performance related.

I am showing no further questions. I will now turn the call back over to Troy Little for closing remarks.

Thank you, everyone, for joining our call this morning. I look forward to continuing to work with you all in the future. And I also want to sincerely thank you for all your support these past several years. If you have any follow-up questions, please don't hesitate to reach out to our team. Operator, you can end the call.

This concludes today's conference call. Thank you for participating. You may now disconnect.