Suncor Energy Inc. (SU) Q4 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Suncor Energy Fourth 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 Senior Vice President of External Experience, Mr. Adam Albeldawi. Please go ahead.

Thank you, operator, and good morning. Welcome to Suncor Energy's Fourth 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 fourth 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 fourth quarter earnings release. We will start with comments from Rich Kruger, President and Chief Executive Officer; followed by Troy Little, Suncor's Chief Financial Officer. Also on the call are Peter Zebedee Executive Vice President, Oil Sands; Dave Oldreive, Executive Vice President, Downstream; and Shelley Powell, Senior Vice President, Operational Improvement and Support Services. Following the formal remarks, we'll open the call up to questions. Now I'll hand it over to Rich to share his comments.

Thanks, Adam. Our fourth quarter of 2025 was about finishing a very good year on a very strong note and that is exactly what we did. I'll review operational performance. Troy will cover financial. Let me start with safety. 2025 was the safest year in company history, our third consecutive safest ever across the board fewer incidents, lower severity, both personnel and process safety. Relative to 2022, injuries and incidents are down 70% in 3 years. This is a credit to our people, our priorities and our processes. Now I recognize we put out an operational update earlier in the year, so I'll be relatively brief in summarizing some operational performance. Upstream production. 909,000 barrels a day in the fourth quarter, our best quarter of any quarter ever, 34,000 barrels a day higher than our previous past, which was the fourth quarter of '24. Full year at 860 kbd, again, best ever by 32,000 barrels a day versus '24 our previous best. And 20,000 barrels a day above the high end of our original guidance. Over the last 2 years, we've increased production, 114,000 barrels a day with the same asset base, no costly acquisitions, no major capital-intensive projects, growth from within upgrader utilization, an outstanding 106% for the quarter and 99% for the year, again, best ever. Refining throughput 504 kbd in the fourth quarter our best quarter of any quarter again ever, 12,000 barrels a day higher than our previous best, which was literally the prior quarter. Full year at 480 best ever, by 15,000 barrels a day by -- versus 2024, our previous best and 30,000 barrels a day above the high end of original guidance. Over the last 2 years, we've increased throughput 60,000 barrels a day with the same asset base, no costly acquisitions, no major capital-intensive projects, growth from within. Refining utilization 108% for the quarter, 103% full year, both best ever. All 4 refineries operated at 100% or higher for the second consecutive quarter. Product sales, 640,000 barrels a day in the quarter, our best fourth quarter ever, 27,000 barrels a day higher than our previous best, which was last year. Full year at 623 kbd, also best ever, by 23,000 barrels a day versus '24, our previous high. And 38,000 barrels a day above the high end of our real guidance. Over the last 2 years, product sales have increased 70,000 barrels a day, supported by the same assets. After never having achieved 600,000 barrels a day sales in any quarter ever, we've now exceeded 600,000 barrels a day in 6 consecutive quarters. Capital and cost, OS&G. Full year $13.2 billion within 1.5% of 2024 despite nearly 4% higher upstream production more than 3% higher refining throughput and nearly 4% higher refined product sales, higher absolute volumes, lower unit costs. Capital full year at $5.66 billion, down $510 million versus '24 and $540 million below original guidance. Yet we executed our business plan as designed. We simply delivered it at a lower cost. How? Through rigorous value testing, challenging design bases, quality job planning, disciplined cost stewardship and superior execution once in the field. To institutionalize, we now perform detailed readiness reviews before we spend money and comprehensive post-execution reappraisals after we spend money. Simply put, we are increasingly better stewards of our shareholders' capital. Final reflections on 2025. Best ever in most all regards, safety, operational integrity, reliability, et cetera, with volumes every category upstream and downstream, quarterly and full year was best ever, breaking records largely set a year ago for more than 2 years, Peter's upstream team, Dave's downstream team and Shelley's central support team have not only been breaking records. They have been shattering records all above the high end of guidance for 2 years in a row. How? Through crystal clear priorities, establishing ambitious daily, weekly, monthly performance targets, embracing industry best practices, promoting collaboration and teamwork and by rewarding our teams when they deliver with performance-based incentives. We continue to systematically raise the bar delivering higher, more reliable, more ratable operational results and consequently higher, more reliable, more ratable cash flow. Now I'll turn the clock back 2 years, Suncor's Investor Day in the spring of 2024. We outlined a series of commitments for a 3-year period 2024 through 2026, including upstream production growth, reduction in WTI breakeven, increase in annual free funds flow reduction in annual capital spend and a net debt target with 100% of excess funds to buybacks that are after 1 year ago, February '25, we detailed progress after the first year of the plan. Recall, we achieved nearly 2 full years of progress in 1 year. At the time, I hinted at the possibility of perhaps achieving a 3-year plan in 2 years. However, behind the scenes, I challenged our team to do exactly that. Now 2 years into an ambitious 3-year plan, very pleased to report, we indeed achieved 3 years of performance improvement commitments in 2 years, 3 and 2. 114,000 barrels a day of production growth in 2 years versus a target of 108,000 barrels a day in 3. Greater than $10 a barrel reduction in breakeven in 2 years versus a target of $10 a barrel in 3, greater than $3.3 billion increase in annual free funds flow in 2 years versus a target of $3.3 billion in 3 years. Capital reduced to $5.7 billion in 2 years versus a target reduction of 3 years. net debt of $8 billion achieved in the third quarter of 2024, 9 months early, and that $6.3 billion today, our lowest in more than a decade. Bottom line, we met or exceeded every single target of full year or more early. In life, trust and credibility are earned by delivering on commitments and today's Suncor delivers. So what does all this mean? We're bigger, better, higher performing, more reliable, more ratable, financially stronger and more resilient, better equipped to compete and win. We were previously a high-cost producer. Now we are a low-cost producer. Our balance sheet is rock solid with net debt nearly half of what it was 3 years ago. In fact, the lowest level since explicitly 2014 with tremendous flexibility and optionality, like an industrial machine increasingly generating cash with less relative dependence on oil prices. Proof year-on-year, WTI was down at 15%. Our AFFO was down 8% and our free funds flow down 6%. In 2025, share buybacks of more than $3 billion were $250 million per month throughout the year. increasing to $275 million in December. We were $250 million a month in January of '25 with WTI at $75 a barrel, and we were $275 million in December with WTI at $58 a barrel. We previously announced our plan to continue at this 10% higher level in 2026. And buybacks were independent of oil price in 2025 despite low oil price in 2026. Over the past 3 years, we've repurchased 163 million shares, more than 12% of our float at an average price of $50 a share. Along with dividends, buybacks are a fundamental tenet of our shareholder value proposition. So now what's next? 2026 and beyond. That's the exciting part. We are far from done yet. We know that you don't make the Hall of Fame with a few good seasons or in Bill Belichick's case by deflating footballs before a championship game. It takes sustained excellence, high performance, exceptional and consistent delivery of results, so we will detail a new value improvement plan on March 31 in Toronto, 2 horizons short term, the next 3 years, longer term in the next 15 years. The longer-term horizon will focus on bitumen supply and development options. We know it needs to be bold and ambitious, clear and compelling to keep your interest and support. So stay tuned, I wouldn't miss it. I can't wait to hear what we have to say. With that, I'll turn it over to Troy.

Thanks, Rich. I think the strong performance of the quarter and full year have been covered very well, and you can all find the detailed financials in our quarterly disclosure, so I won't repeat any of that here. Instead, as we transition from 1 year to the next, I would like to focus in on our financial resiliency and how that benefits those who choose to invest in us over the long term. Starting with our balance sheet. As Rich mentioned, our net debt closed the year at a greater than 10-year low of $6.3 billion, well under 1x debt to cash flow at $50 per barrel WTI and even lower current strip commodity pricing. Looking behind that number. During the quarter, we renewed our credit facilities with a consortium of Canadian, U.S. and international banks for tenors of 3 and 4 years, providing us with $5.2 billion in available liquidity not including our cash on hand. In addition, in November, we took the opportunity to refinance CAD 1 billion debt in 2 note tranches of 2 and 5 years, achieving the lowest Canadian energy industry spreads in those tenders in more than 15 years. When the near-term commodity price environment is uncertain, we believe investors look for companies that tangibly demonstrate their balance sheet resilience. And I would like to thank both our banks and our bondholders for the confidence they have shown in our business. Next, as you would have seen, our year-over-year share buyback -- share buybacks and dividend per share increased by 4% and 5%, respectively, when over the same time period, average crude prices decreased by $11 per barrel. This ability to offer stable, predictable shareholder returns is backed up by a WTI breakeven in the low 40s, a uniquely integrated set of assets, the flexible character of our capital expenditure plans as well as the continuous improvement mindset that is embedded at every operation and with every one of our 15,000-plus employees to our recently implemented operational excellence management system. At Suncor, our future is not defined by commodity cycles. It is instead defined by how well we perform through them. There is perhaps no better proof point of that than a comparison of the first and fourth quarters to 2025. Q4 AFFO of $3.2 billion was 6% higher than Q1 even though the average oil price had decreased from $71 to $59 per barrel. Finally, Rich referred earlier to the stewardship of our shareholders' capital and I wanted to expand on that a little, specifically as it relates to shareholder returns. I hear many companies refer to returning surplus cash to their shareholders in the form of share buybacks. Suncor doesn't think of our shareholders' money that way. We don't pay you what is left open. We pay you first. We look at our cash flow results, pay our dividends, fund our buybacks and only then consider our spending on other things. On that note, I'm pleased to say that we have continued share repurchases of $275 million per month into January and February, a level started in December of 2025, which represents an increase of 10% over the average monthly buyback in 2025. With that, I will turn the call back over to Adam so that we can take some questions.

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

[Operator Instructions] And our first question will come from the line of Greg Pardy with RBC Capital Markets.

Incredible rundown, incredible year. Rich culture, the shift in the company's culture since your arrival and the reconstitution of the team and so forth, there's obviously been a huge driving force in underlying the performance. When it comes to successorship in the past, it almost looked as though a lot of those changes have been sort of preordained for years in the future. How does that change now under your watch?

Well, Greg, I think if I step back, I would say leadership development and succession planning. When I say leadership, that can be technical leadership, operational leadership and fundamental business leadership. To me, great companies have continuous pipelines of leadership development candidates. So more than 2 years ago, we started out with the development of a new leadership development framework. It is now in place. And Suncor is more about what you know, not who you know. And we value functional excellence and expertise versus generalist experience broad-based experience sets. But you need both, but we believe you need to know your business, know it extremely well. We conceptually target multiple candidates, 3 -- for example, kind of a 3:1 ratio of candidates for higher-level jobs in succession planning because things happen in life. But I would just wrap that up with succession planning and leadership development in the broadest sense are extremely high priorities. They have been high priorities from day 1 when I arrived. And quite frankly, it was one of a very short list of material commitments I made to the Board of directors.

Okay. And I'll shift gears on you a little bit. Just the mining operations performed very well in the fourth quarter. You had very mixed conditions. I'm just wondering, have there been changes that you've implemented sort of year-over-year to drive that performance?

Yes. I'll make a comment or 2, and then I'll ask Peter to expand on that. The unique thing about mining, of course, is we have to operate in a wide range of weather conditions. And when you think of mining, there's really it's more than this, but 2 fundamental areas that affect your performance during weather events. The condition of the mine itself and the condition of haul roads. And so haul roads are to mining like tracks are to a rail company. You have to design, operate and maintain them exceptionally because they're kind of the tracks or the arteries of your ability to sustain. So we put a very high priority in that. And so although there were a lot of conditions in the fourth quarter, wet conditions, of course, the cool off things like this. Our fourth quarter was our best quarter ever. And as you would expect, many of the months in that quarter were our best months ever. But Peter, why don't you comment further on what we've done, particularly around the autonomous haul system and the ability to operate in all weather conditions.

Happy to do that. And so we worked really closely, Greg, with our supplier, Komatsu in this case, a base plan to implement some technology on the truck. We call it mud mode but essentially, it reduces slippage and stoppage of the autonomous trucks and soft conditions. That was really successful. We also learned a lot during the implementation of that. In fact, we're working on a mud mode 2.0, if you will, to implement here by the spring of this year. So we're excited about kind of the next iteration of that technology. But really, in reality, it's a combination of multiple improvement activities across our mining operations both in our autonomous operations, which were now fully deployed at base plant up to 140 haul trucks running autonomously and in our staffed operations where we're continuing to work on the fundamentals, improvement activities such as more increased load factor on our trucks, reduce fueling time for pieces of equipment, optimizing our shift change. Just across the Suncor mining portfolio, last year, we moved 1.4 billion tons of material. It's a 12% increase year-over-year in total material movement at essentially the same cost base. And so we're just continuing to drive that efficiency year-over-year. We always talk to our teams about how little things add up to a lot in the mining business. And that's what the teams are focused on these little opportunities, adding up to a lot over the 1.4 billion tons to drive value.

Yes. I'll just make one last comment, and then we'll continue. You mentioned the word culture or cultural changes, Greg. One of the big things and it's hard to see from the outside is our shamelessly embracing industry best practices wherever they exist in mining, whether that's hard rock mining, in Canada outside of Canada, oil sands mining. So increasingly our leaders, our teams observe, listen, learn and apply. And that is looking from the outside in on how we can get better. And so we have embraced and modified historic practices across the board when we see someone who does something better than us, that is a very cultural a cultural aspect of today's Suncor that I believe is quite different than we were not too many years ago.

One moment for our next question and that will come from the line of Dennis Fong with CIBC.

First off, congrats on obviously another very strong quarter. My first question here, I wanted to follow a little bit along the lines of what Greg was addressing the second question. But I wanted to maybe remind the call back to Q1 '25 where you Rich highlighted a lot of field-driven optimization. Can you provide maybe a bit of an update on like the backlog of these field-driven optimization opportunities that you see, frankly, across upstream and the downstream. And obviously, how that has really improved cost structure despite headwinds in things like mine plan or some of the mining KPIs.

One of the things that start with, Dennis, is it's a bit less of a backlog of field-driven optimizations because what we do now when we see that opportunity, we team tackle it. We get on with it. And what we see is, again, it ties a little bit to that cultural is that we continue to replenish our ideas and opportunities. And it's been a huge part of why our refining network is now consistently at or above 100% utilization. Because we have been optimizing those assets, pots and pans and fundamentally increasing the denominator. And Dave, do you have an example or 2 you maybe share with Dennis.

Sure. Maybe Dennis, I'll give an example out of Montreal. Montreal we've seen some pretty significant increases in our throughput 2 years ago, we were about in that plant about 120,000 barrels a day, but we knew and the team in Montreal knew they could do more and really didn't have a signal to challenge constraints. So we came up with a new philosophy in our downstream of value and volume. So we run our refineries full, and we challenge our sales teams to sell full. And with that signal, Montreal went after a few things. One of the things they went after is -- and it's in the theme of small improvements that add up big, and this is like field operators, challenging constraints and flagging ideas. We've replaced 2 control valves, 1 pump and power and a small motor, $100,000 investment gave us 20,000 barrels a day at the Montreal refinery. That's a $100 million a year improvement for $100,000 investment. We have lots of other opportunities like that and lots of improvements in that space that are similar. That's a good example of what we're...

And it starts with leadership, being interested boots on the ground, in the field, listening to people who do the work and understand it better than anyone. And then when they see that opportunity supporting it, promoting it and making it happen. And when you start doing that, you engage your workforce, and they come forward with more and more ideas. So you've heard us say multiple times, we're not done yet. It's not necessarily because we have this long list of things to do, but we are embedding and ingraining a culture of continual improvement in driving. And always, in any facility, you will always have a limiter or the bottleneck. And if you systematically identify what that is and attack it then something else becomes the bottleneck. So I think on this one -- in this particular topical area, we will never be done.

That's obviously a lot to frankly look forward to. My second question and maybe carrying along the lines of kind of continuous improvement, finding where all the limited happen to be. I believe it was in the last conference call you highlighted single train capacity at Fort Hills to be about 110,000 barrels a day. How have you looked at the after performance of the facility? Have you been able to identify opportunities to further and consistently run at that high level and maybe even further optimize beyond the we'll call it, 220,000 capacity of the 2 trains, especially as we go forward to opening up mining availability.

One quick comment, and then Peter will expand on it. As we look at this opportunity for continued growth from within, the areas where we see the most -- the biggest opportunity set are Fort Hills and Firebag with the identified opportunities where we're confident we can continue to increase their overall production level. Peter, why don't you comment explicitly on Fort Hills and your 2 Ferraris, you have up.

And yes, we have been, as we mentioned in the last call, really testing what the stream day production capacity is of the Fort Hills asset. We're pleased to rates up over 220,000 barrels a day from both trains. We are looking to ensure that we can deliver that to reliably day in, day out, and that is really going to come down to ensuring that we've got the right material movements from the mine in front of us that we're able to deliver the production volumes into the plant and do that sustainably while maintaining a healthy mine inventory. That is all really dependent on making sure that we're opening up our North pit, which is the last and final pit at Fort Hills in the right manner and sequencing the material into the plant in a way that is sustainable along with enhancements, I would say, to the front end of the plant, where we look to kind of metal up and protect against some of that erosion that comes with the higher material throughput that we're running. So I know the team is really highly focused on doing this. And yes, we've seen some success and you've seen the calendar day rates come up through the fourth quarter, and we look forward to more of that here as we go along.

Dennis, I'm a lot like you. I don't remember all the numbers or get involved in a lot of the details on that stuff. But for example, why do you guys smile? One of the things we've had the name plate at Fort Hills is 194,000 barrels a day and had a target of 175,000 from a production level. So kind of a 90% level. Our belief is with that a bigger denominator that 220,000 or something, a production level in the order of 200,000 barrels a day should be the more near-term ambition. And you want to save a few things for Investor Day. But I think I've just established Peter, what the minimum there might be for 4 barrels.

One moment for our next question. And that will come from the line of Menno Hulshof with TD Cowen.

I'll start with a question on buyback guys. $275 million per month. You mentioned that the $250 million per month in 2025 was fairly oil price agnostic and that you've repurchased $275 million in January and February and that buybacks are quite senior within the capital stack. But presumably, there are conditions where you would reconsider your $275 million guide or maybe not. Any thoughts there would be helpful.

I'll make an opening comment, and then obviously, we'll turn it to Troy on this. A real key enabler in our ability to do this and make this commitment has been to reduce our overall net debt materially over a relatively short period of time and this really dramatic reduction in our breakeven. And what we've said, we wanted to buy back shares at a rate at least consistent with dividend growth so that our overall dividend burden doesn't grow and increase our breakeven and we found -- we've achieved all of those. But Troy, you want to talk more explicitly about the buyback. And Menno, my sense is you might be suggesting what if we were in a lower oil price world, what might that mean? But Troy, do you want to comment further?

Yes, sure. I would say to answer that question, I would look at the makeup of our business because I think when you do, you will see something unique and how we're going about this. Our level of integration and I don't just mean between the upstream and the downstream, I mean within the upstream itself allows us to capture margin opportunities over the short term that others can't. It also drives greater utilization of the assets, both under normal conditions and also when anyone ask that experiences planned downtime. Both of these allow us to maximize and make more predictable and stable our profitability. I would also point to this attitude that I think we've conveyed about paying our shareholders first. So ultimately, they'll rather than count on my own words, much as you pointed out, Menno, look at our 2025 track record and just watch what we're going to do in 2026.

Terrific. Maybe I'll just -- I'll follow up with a follow-up question to Greg's on Q4 production, which was clearly very strong. Do you think production would have been even higher in the absence of wet weather in October and extremely cold December? Or was there no weather impact at all, given the mitigation work that's been undertaken.

We run an outdoor business. We mine. We mine come hell or high, wet, dry, cold, hot, and we got to design and operate for that and maintain our assets. So we put on -- when it rains, we put on raincoats. When it's cold, we put on mittens. But no, we delivered throughout the entire quarter.

One moment for our next question and that will come from the line of Neil Mehta with Goldman Sachs.

I guess, Rich, just wanted your perspective on the refining market, particularly in Canada, you ran well, but you also captured very well in the margin premium relative to the U.S. has kind of been sustained. And so for those of us who probably have less visibility into the Canadian refining market in particular? Just how do you think about the sustainability of the Canadian refining premium relative to the U.S.?

Neil, if you look back and you can look back over quite a long time. 15 years or so, you were going to -- if you were choosing to be a refiner anywhere in the world and profitability was at the top of your list, I think you had to pick Canada. And then when you say, well, why is that? Well, we've got product pricing based on import parity, we have locally advantaged crude prices. We've got a lot of structural things that contribute to an advantage but then what you've seen here for this company now for 2.5, 3 years, is an advantaged structural setting with high-quality asset base but increasingly run and operate it better and better and better, more opportunistic for the market. So I think that's part of the commentary that Troy had a little bit, the integrated nature, how we manage and maximize the value of molecules and as craps go up and down, I think those -- the majority of those fundamental advantages we will retain those here. Dave, do you have anything else, particularly around margin capture or whatever to add?

Yes, Rich, what I'd add to that, and I think you characterized it well. I mentioned earlier, we have our signal of value and volume. And really, we run our refineries full. We have a signal to cellphone. And then over time, we improve our yields and our sales channel mix. And over the last year, we had record crude throughput, as you know, but we also had record gasoline production, record diesel production and record jet fuel production. So we're translating those that throughput into valuable products. And we've also increased our percent branded channel mix as well by growing our retail mostly and a little bit on our wholesale side of our business. So we're selling that through our most profitable tiers. So that's probably the biggest thing we've been doing is making sure the yields are strong with the additional throughput and selling through the optimal channels to keep our margin capture.

One other thing I'd add to it, Dave, I think what your teams have done in the collaboration between the operations, the supply and trading and the marketers. Those are 3 functional areas of expertise, but how they work together, increasing jet fuel production in the East, optimizing diesel in the West, things to really target the market and to fine-tune or moderate our facilities to meet the market demand I think that's been -- I mean, I've been a part of seeing that evolve. I think that is stellar. And every molecule and every dollar matters. And last time I checked, your teams aren't dropping too many on the ground.

No, they're not. And tune in for Investor Day, we have some really great stories to tell on yield improvements as well.

That's great. That's great color. Just a follow-up is as some quarter earned the license to do M&A at this point, I mean your mousetrap seems to be working really well. And for a long time, it was about fixing the business organically and getting the multiple up but a lot of that's happened. And to the extent that there are other companies that could benefit from the way that you are running your business. Are you a natural consolidator? Or is the story you're going to tell at the end of March is one of organic and more stay-the-course? Just your perspective on that would be helpful.

Yes. I'll start out with what our goal is to be a value creator for our shareholders. And that largely starts on a per share basis, whether that's free funds flow or whatever. In terms of earning or credibility trust, we talked about that, it's based on delivering on commitments. I think we're past -- wow, these guys had a good quarter or 2. I think we've passed that. So I hope there's probably others listening that can answer this better than I, that we've earned the trust and credibility that any and all actions we do internal or organic or inorganic will be in the shareholders' best interest to increase their ultimate value.

One moment for our next question. And that will come from the line of Doug Leggate with Wolfe Research.

Rich, I know you don't want to get in the front any more than you already have perhaps of March 31. But I wonder if I could ask you to maybe put some gating items around your spending levels beyond 2026. Should we expect the $5.6 billion, $5.8 billion to be like a cap? Or how do you think about it in terms of the proportion of cash that goes back to shareholders. Now if I may just add on to this, some of your peers talk about a percentage of cash flow. Some talk about a percentage of free cash flow. You've obviously talked about 100% going back to shareholders because of where your debt is. But but that's free cash flow, which is discretionary on your level of spending. So what's the capping item on CapEx.

Yes. Doug, I think it's a really relevant question in things. As we look at this, our view is competing and winning in today's oil and gas world, there's a whole bunch of components. Obviously, your size and scale, the quality and longevity of your resource base on and on. But when -- in capital, we were increasingly talking about it's not only return on capital, but return of capital. And I think Troy's introductory comments were aimed at amplifying what we believe is important to the majority of our shareholders and what we strive to provide. And so I've kind of hit on this at some investor meetings and broadly on calls, we have been constructing a longer-term plan where we can have our cake and eat it too, where we can develop incremental resources over time and we can continue to return capital to shareholders while we're doing that. We won't have to stop the presses for a multiple year period while we have our capital expenditures blows out. And key in doing that is having the optionality within the resource base, which will be a big part of our conversation on March 31. One is our resource base, not only our 2P reserves, but our contingent resources, what we believe we have there, the advantages we believe those have in terms of capitally efficient development, Lewis, Firebag South or Firebag Phase 5 as we call it, but how we think we can do all that and do it within a capital construct that stays kind of at or below about that round numbers about that $6 billion level. And then in a $60, $65 a barrel world, we continue to grow dividends. We can invest and replace production decline, perhaps even grow it. And we can continue, and this was not in a priority order, to return cash to shareholders via buybacks. So we are carefully assembling this orchestra in such a way that we think we can offer the most value, not only long term but each and every quarter, each and every year to shareholders. Troy, do you have anything you'd add to that?

Doug, I'll just add. I think if you look at the model of the company that we've built here, a lot of it is around stability and predictability. You've seen that the last 3 years with respect to our OpEx, which is roughly remained in the same range even though we've significantly increased both our production and our refining utilization. I think you're going to see that in CapEx. And I think we've demonstrated that so far. It's certainly our plans for the long term. And you've also already seen it shareholder returns. We really want to be a company that investors can count on largely regardless of what's going on in the external environment.

I'll just add one comment to that. It's not like we operate and perform and then see, okay, what are we? What can we do? We have had a very conscious-focused vision of what we want this company to be and where the unique space in investors' portfolio, we believe we could occupy if we achieve that. And all of our efforts have been geared toward creating that company. And I think you're seeing that more and more predictable, ratable, reliable, industrial machine like the ability to return on and return of capital. All of this has been part of a very deliberate vision or plan for several years running, and we've been putting the building blocks in place and you're starting to see it now. And we're having fun with it and we're not done yet.

I appreciate those answers, guys. Rich, I wonder if I could do a quick follow-up. I know it does not affect you because your model is uniquely integrated. But obviously, there's a lot of focus on what's happening to crude spreads in Canada. I just wonder if I could ask you to just reiterate your immunity to any weakness that we see in WCS and perhaps offer any color as to what you see as a dynamic beyond the normal seasonality. Are you seeing anything materially different because your colleagues over at Imperial didn't seem to think there was anything materially changing. I'd love to hear your opinion on that.

Well, I think, Doug, you accurately flagged one of the really fundamental attributes that makes us different. And it is this immunity or the lack of any material movement in our economic performance with WCS differentials. And that gets back to again, this integrated aspect all the way from our upstream to our downstream, our ability to upgrade bitumen or heavy crudes to light crudes and things. There is a unique asset base that is different for us. And so when we look at like world events and things, you just look back over the last decade or so, what differentials have done here. They've been tight of late, they've widened here a little bit. They bobble around when there's news on Venezuela and other things and/or tariffs and I don't mean to dismiss it at all but much of that outside noise from a Suncor perspective is kind of much to do about nothing. Because of, again, what we are, who we are and how we're constructed. Now we look for opportunities in that. And there may be opportunities for us when others catch COVID or catch flu, we might sneeze and have a little bit of a sniffle. So there's opportunities in that for us when others have more volatility than we have. And we think the creation of shareholder value often occurs under weaker or distressed market conditions more so than it does under strong and growing market conditions. So our vision for a number of years now has been to strengthen ourselves to build that resiliency that flexibility and optionality. So when we see something we like or we want to do something that makes sense, we can do it confidently and without hesitation. And I think I'm kind of getting off the track of your question a little bit, but I think that's where we are. So the market conditions were largely market takers. But I think our unique construct gives us a -- we don't overreact or panic as things change. And our view right now is there's things going on around the world, but I don't think any of them are going to be fundamentally material to how we continue to deliver value.

One moment for our next question and that will come from the line of Manav Gupta with UBS.

I actually wanted to follow up a little bit on the refining macro. So if you look at last year, there was a very bearish sentiment in refining, but as the year progressed, fears were proven completely wrong. And you guys generated almost $4 billion in your cash from operations from refining. And we started this year with pretty much the same sentiment on refining, which was pretty negative. But when we look at the fundamentals, the cracks Jan to Jan are actually up. And the capacity additions are more limited. So I'm just trying to understand from where you're sitting in terms of refining macro, if you can make some comments, in terms of diesel and gasoline, do you expect 2026 to be somewhat of a similar year for 2025, which was a very strong year. If you could just talk a little bit about that.

I'm going to ask Dave to comment explicitly in a minute. But I'll tell you, as a large miner and a big upstream company and understanding the geopolitical uncertainties and the importance of breakeven and stuff. When I go to bed at night and say my prayers I thank God for the downstream. Because the level of integration we have, it provides this natural hedge and support. And sometimes upstream goes up, downstream goes down and vice versa. So it is a really fundamental part of this value proposition and what we deliver. Dave, so other than that philosophy, do you want to offer some specifics on that?

Yes, for sure. I mean, specifically, if you look even at today's cracks, Manav, and as you're aware, we're soft -- gasoline is pretty soft in the Mid-Continent. L.A. market is strong across the board. The harbor is strong on diesel, particularly with recent cold weather and reasonably good on gas cracks. Distillate margins through '25 were strong. and they really peaked in October, November. And I would expect diesel to continue to remain strong through the first quarter, and we've seen that trend over the last few years where diesel has been above gasoline. That plays the Suncor's strength. We have a pretty low G to D ratio. We also have pretty good G to D flexibility, and we can win in any environment, but we really like good diesel cracks. In the fourth quarter, we achieved not only record refinery utilization but record diesel production. And how do we do that? I'll give you an example out of Edmonton, this is a little sneak preview of maybe some things we'll share at Investor Day. The first half of the story or the second half of the story, stay tuned. In the Edmonton refinery, we made a few simple routing changes that took advantage of some improved catalysts that we put in during our turnaround and structurally increased diesel yield by 8,000 barrels a day. And that resulted in a correspondingly lower diluent production, so much higher value product on the diesel side. We did that for $140,000 investment and that delivers about $45 million a year in incremental value. And then we were able to move that through our -- we did that through the third and fourth quarter of last year.

Third and fourth quarter. So it really had minimal impact on 2025. And it's all...

We see this into '26, and we think there's opportunity to grow that even further in 2026. And then we sold that through our domestic channels as well as we have export capacity on both coasts. But we're not done yet Tune in for more on that one, on that story in March.

Perfect. My quick follow-up is and maybe you'll again talk more about the Analyst Day, but you took over the operations of Syncrude. We are seeing some improvements. Help us understand that you -- the changes you brought about once you kind of started operating that asset on your own versus the JV entity that existed in between. If you could talk a little bit about that.

I think some of the key things is Syncrude is fully part of the Suncor family. And so what that means is best practices, central support and just the scale and efficiency that come with as opposed to being a joint venture in kind of an island, you're now part of a continent. And so we have brought the best to bear. We have also -- whether it's best practices or people. We've moved people into Syncrude, moved Syncrude individuals out to other operations. So they're just getting the full benefit of the storyline we've told how we're systematically reducing variation asset to asset. And while we're doing that, we're elevating the overall performance across the enterprise. So Syncrude being fully fledged part of the family has been a big part of that. Everything we're doing applies to them equally as it would to any other asset, and that makes a difference.

Congrats on the great result. And again, once love the choice of the song that placed before the call starts.

[Operator Instructions] And our next question will come from the line of Patrick O'Rourke with ATB.

Congratulations on a strong quarter. I was going to ask on Syncrude, but that was a very comprehensive answer there. So maybe I'll talk about sort of the refinery, the throughput levels that you've had here, been able to achieve over 100% and you spoke to raising the denominator earlier on the call, at what point do you think about sort of formalizing those levels here?

I'll give you a little bit of a peek behind the curtain with what we have been doing to systematically across the entire network debottleneck and add capacity, we now run 2 sets of books. So externally, the nameplate of our system is 466,000 barrels a day. It's been that way for a long time. As we continue to report to you, that's the denominator. But what you're seeing is you were getting north of 100%, what you really know is the denominator is bigger than that. And so the second set of books is the internal books, the drive to be the best we can be. So this team in this room sits down weekly, monthly and literally daily and looks at performance and we compare to performance to our internal books with a bigger denominator. So instead of looking at 103%, 105% of might be looking at something that's 95%, 96%. And then as opposed to patting ourselves on the back for being north of 100%, we're saying, at 95%, 96%, where is that last 4%, 5%. So that's the philosophy of how we're doing things. And we need to think about when we go externally and say, okay, the new denominator is x because we don't want anybody to miss the memo when we do that in a year from now and say, well, how these guys, they were 103% in 2025, and now they're only 97%. Man, their performance went down. You got to look at the barrels and the percentages, but we know as we get -- as we continue to be north of 100% at some point in time, we have to come clean on what we -- what is the real capacity of this network and it's well above 466,000.

Okay. Great. And then maybe just on the return of capital, thinking about the debt position of the company here. $6.3 billion versus the $8 billion target? I know there's been a working capital impact in the fourth quarter and historically a bit of a reversal of that in the first, but let's say we get towards the end of the year and the commodity conditions have been such that you're still sitting well below that $8 billion. How do you think about the signals for releasing that to shareholders? And sort of what's the preferred vehicle if you do make that decision? Maybe I'll add this sort of since you touched on inorganic, is there any potential that you would see that as dry powder where you can create per share accretion?

Troy, do you want to comment a bit?

Yes. I don't think we look at dry powder for -- and I think you're suggesting acquisitions in terms of where the balance sheet is. I think we let the opportunities to find whether we want to do something like that. And I think we have an excellent track record of it, both from a disposition perspective as well as an acquisition perspective. When we think of return on capital, we do look at it over a longer time period than 1 month, look at it over a full year. You are right that the normal trend is for us to have a working capital release in Q4 and then actually usage in Q1. I don't expect that to be any different this year. It's important to go back to what I said about the order in which we pay things as people think about the balance sheet and how it's used around share buybacks or capital ultimately, there's some clarity in the order we're doing or paying out our cash flow because we actually look at it as though we're looking at the benefits of what our capital spending is versus the cost of any leverage that are associated with it. So it's not so much funding the buybacks themselves off the balance sheet. It's actually funding what's at the end of the line. So stay tuned if operations continue to improve on the path they have, that gives us more direction to increase those buybacks, but it's not so much related to where our debt levels are.

Thank you. I'm showing no further questions at this time. I would now like to turn the call back to Mr. Adam Albeldawi for closing remarks.

Thank you, everyone, for joining our call this morning. 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 all for participating. You may now disconnect.