Suncor Energy, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, Good morning.

Welcome to Suncor Energy's second 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 second 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 second quarter earnings release. We'll 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, Upstream, 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. I'll hand it over to Rich to share his comments.

Thanks, Adam. Our second quarter involved completing major maintenance positioning for a strong second half, and that's exactly what we did. Troy will cover financial performance. I'll first discuss operational, starting with safety. I'm pleased to report that our base plant mining received an industry safety award, the John T. Ryan Trophy for best-in-class safety performance, as recognized by the Canadian Institute of Mining. This marks the second consecutive year a Suncor mining team received this award. Extremely proud of our team for this well-deserved recognition for excellence in an area that represents our highest overall priority. Moving to upstream production. 761,000 barrels a day in the second quarter. Before I continue, though, a pop quiz. What's the difference between the story of Noah's Ark told in the Book of Genesis and the Fort McMurray region in the second quarter of 2026?

In Noah's Ark, the torrential rains stopped after 40 days and 40 nights. In Fort Mac, record rain and snow melt continued throughout the quarter, with total precipitation the highest in more than 30 years, 50% higher than the 10-year average. Unfortunately, it materially affected mining productivity and quarterly production with an estimated 50,000 to 60,000 barrels a day impact in the second quarter. Clearly, this was an unusual one-off event, but we learned from it to build resilience for future events by improving our planning and preparation with new 48- and 72-hour weather outlooks, by stockpiling ore in the most vulnerable areas within each mine, by pre-securing critical minerals and equipment such as gravel and graders, by using technology such as drones to monitor mine conditions real-time. The takeaway is we can't eliminate weather risk, but we can better mitigate the impact.

The good news, since late second quarter, things are back to normal, with production at expected rates. In fact, July's preliminary production is on the order of 870,000 barrels a day, which would be our second highest July ever. Despite this year's weather, over the last three years, second quarter production has averaged 59,000 barrels a day higher than the second quarter of the prior three years, with better turnarounds and higher asset performance driving the results. Upgrader utilization, 93% in 2Q with our spring turnaround at base plant now complete. Year to date, we're at 94%, a new record, 1% higher than the first half of last year. Refining throughput, 471,000 barrels a day in the quarter, our second highest 2Q ever. 28,000 barrels a day higher than our previous best 2Q, which was last year.

Montreal and Edmonton, our largest refineries, led the way at 151,000 and 161,000 barrels a day respectively, and a combined utilization of 99%. Overall, 2Q network utilization, 92% on our new higher rerated capacity of 511,000 barrels a day. With major maintenance activities completed at both Commerce City and Sarnia. Year to date utilization is 95%, a new record, 4% higher than the first half of last year. Here again, over the last three years, 2024 through 2026, 2Q throughput has increased every year, averaging 78,000 barrels a day higher than the 2Q of the prior three years, continuing to raise the bar and improve performance. Product sales, 655,000 barrels a day. Like refining throughput, our highest second quarter ever. 54,000 barrels a day higher than the previous best second quarter, which was last year.

Our eighth quarter in a row now with sales greater than 600,000 barrels a day after never achieving 600,000 barrels a day in any quarter over our history. A note of interest, jet sales were a record 51,000 barrels a day, 90% higher than our previous record of 27,000 barrels a day in the first quarter, achieved by fine-tuning our product slate to maximize global market value. Over the last three years, 2024 through 2026, 2Q sales have increased every year, averaging 101,000 barrels a day higher than the 2Q of the prior three years. Here again, raising the bar, improving performance. Over the last several years, we've talked a lot about turnaround performance, improving cost and schedule. As a reminder, historically, greater than 20% of our capital, roughly CAD 1.25 billion per year, was spent on turnarounds.

During our I Day in May 2024, we committed to reduce turnaround costs by CAD 250 million per year over 3 years. We achieved that objective in 2 years versus 3. In mid 2025, we increased our ambition to CAD 350 million per year in capital reductions. We now expect to achieve that in 2026, again, earlier than expected. This year, on March 31st, we upped our goal to CAD 400 million a year. With that context, I will highlight 2Q performance, focusing on Firebag, illustrating ways in which we continue to improve performance. Our Firebag turnaround involved major maintenance of the two largest of our four plants, 93 and 94. Combined, the two plants process roughly two-thirds of the field's 250,000 barrels a day capacity. In our guidance for the year, we included an estimated impact of 85,000 barrels a day in the second quarter.

This was our longest duration, biggest volumetric impact event of the year. The last turnaround of similar scope was completed in 2022, 4 years ago. It took 58 days at a cost of CAD 150 million. This year, with a slightly larger scope, we completed the work in 44 days for CAD 118 million. 24% reduction in duration, 21% reduction in cost. This work, to achieve this, started more than 2 years ago, included innovations in equipment inspections and work practices. Examples, using ROVs for internally inspecting long steam line sections, using drones for inspections inside large diameter pipes and vessels, circulating mineral oil inside process vessels to accelerate cleaning cycles. An idea by Firebag coordinators, Max Bombardier and Samantha Snow. Max literally observed a contractor years ago using Johnson & Johnson baby oil to clean equipment. He contacted Samantha, a process engineer at the time, to research it.

Samantha identified a Petro-Canada lube product. We tested it over time, this year we applied it at scale in plants 93 and 94, cutting two full days off of vessel cleaning by one simple idea. Save time, save money, kept people safer. This is one of a litany of examples of what Suncor people are doing today company-wide. Firebag results, lower cost, lower duration, and faster production restoration. The second quarter impact was 60,000 barrels a day from the turnaround work, a 25,000 barrel a day improvement versus the plan. We also completed prep work for future tie-ins and further planned debottlenecking, working smarter today and smarter for tomorrow. The final prize is, with the work we did, we will now be extending plant 93 and 94's next turnaround cycle to 5 years versus the historic 4 years. A total team accomplishment. Compliments to Nabil Jafri and his regional turnaround team, Miles Fleming and his operational management team, and Jason Gaudet and his central support team.

Working together, focused, collaborative, results-oriented. I have highlighted Firebag, but we also completed other second quarter work successfully. Base plant U2 Coker, completed in 46 days versus 60 days in 2021. CAD 203 million cost, 10% less than the last event at CAD 225 million. Commerce City Refinery, completed in 50 days versus 74 days in 2021. We have got more work to do in the third quarter, our second quarter results position us well for a strong second half. My overriding message, Suncor remains focused like a laser to perform, compete, and win. High operating standards, best-in-class performance ambitions, clear and definitive plans, priorities, short-term and long-term, a deep team-based, results-oriented, high-performance culture focused on what we can control and what we can execute.

We believe we offer a compelling value proposition, reliable, ratable, high performance, reliable, ratable, high cash flow. A literal machine built to deliver in all business environments. With that, I'll turn it to Troy.