AGM 2015

Apr 30, 2015

Good morning, and gentlemen. It's 10:30 in the morning and I would like to call this meeting to order. My name is Jim Simpson. I'm Chairman of the Board of Suncor or as Janice would say Board Chair. Sorry for that. On the platform with me is Steve Williams, CEO and President of the company. Beside him is Alastair Cohen, Executive Vice President and Chief Financial Officer and Senior Vice President and General Counsel, Janice Odegaard. On behalf of directors of the company and management, it's my pleasure to welcome you all to the twenty fifteen Annual General Meeting of Suncor. Before we begin the formal proceedings, I would like to talk a little for a moment about safety. And the procedure in case there's a fire alarm is not to panic, but to wait right here until we're instructed by management of the hotel to exit in an orderly way. And they'll be able to guide us and direct us to which of these exits that are clearly marked we should use. And what you do is you go straight out through the lobby and it will muster across the street in TransAlta Square in front of their building where there's plenty of room. Anyway, I'd like to now proceed with the formal parts of the agenda. To save time at this meeting, we've asked a number of shareholders to make motions and also we've asked people to second these motions. So we'll proceed in that manner. We've opened the meeting to media and other guests. However, only those who are shareowners or proxy holders are designated and allowed to vote on matters before the meeting. If there are any questions that come before this meeting, I would like it if you would stand at one of these microphones, state your name and whether you're a shareowner or a proxy holder and then your question. For general questions, we're going to have a period at the end of this meeting for Q and A that Steve and I will co host. Questions that are of a nature related to governance, I'll address those that have to do with operations or some of the business aspects of the company Steve will answer at the end of the meeting. So let's begin with the formal part of the meeting and the appointment of the scrutineers. Computershare Trust Company of Canada's transfer agent and registrar of the company is represented here today by Conor Doyle and Steve Nogler. And if there's no objection, I will appoint them to act as scrutineers to report on the number and percentage of shares represented at the meeting and to cast and to record and report on the votes cast and report on a poll that may be taken. You've all received notice of the meeting. I'll now call on Janice to report on the mailing of the notice. Thanks, Jim. The notice calling this meeting of shareholders was mailed on March 2435 to all shareholders of record as of the close of business on 03/04/2015 and has been provided to each director and to the auditors of the company. Thank you very much. A copy of that notice and proof of mailing will be filed with the minutes of this meeting. I'm advised by scrutineers that the scrutineers report has been completed and there is a quorum present for this meeting. I ask the Corporate Secretary, Janice, would you please read the scrutineers report? Thanks. The scrutineers report shows a total of seven sixty shareholders represented in person or by proxy, which represents approximately $952,000,000 shares, which is 65.88% of the outstanding shares. Thank you very much. I now declare the meeting regularly called and properly constituted for the transaction business. I propose to take votes by ballot for four items: election of directors resolutions to confirm amendments to Suncor's bylaw number one to confirm adoption of Suncor's amended and restated bylaw number two and on Suncor's approach to executive compensation. So we'll have ballots for those. I also propose to take a vote by show of hands for appointment of our auditor. Based on proxies received prior to the meeting, if we held a ballot vote on the appointment of the auditors, less than 2% of votes would be cast against that resolution. I now ask that the 2014 annual report, which includes the financial statements for the year ended December 3134 and the auditor's report be tabled. I think these are available. This is the annual report. It was mailed to those who requested it and it's certainly available online. We would be happy to answer any questions concerning the annual report during the Q and A following the formal part of this meeting. Next item of business is appointment of directors. Suncor's bylaws state that the number of directors to be elected shall at any meeting of shareholders shall be the number of directors then in office or such other number has been determined by the Board. The Board has determined that 12 directors will be elected at this meeting. You might have noticed two retirements Paul Haseltanx, who has been a director since 02/2009. Seven of those twelve years was with PetroCanada. And Jacques Lamar, who was elected in 2009 spending five years with the Board. And I just want to comment and thank those two gentlemen for their exceptional service to the Board. The insight that they brought was highly valued and appreciated. Okay. On behalf of the Board now let me start that again. Of the 12 directors nominated, 11 are independent and one Steve Williams, of course, is member of management. Their background and experience including principal occupations are described in Suncor's management proxy circular for this meeting. And again, the proxy circular has been mailed out to those who requested it and available online. And the meeting is now open to receive nominations for election to the Board of Directors. Good morning. My name is Helena Osoran and I'm a Suncor shareholder. I move to nominate the following candidates for election as directors: Mel E. Benson. Mel, would you stand up please? Jacinth Cote, Dominic Dell'Sandro, W. Douglas Ford, John D. Gass, John R. Huff, Maureen McCaw, Michael W. O'Brien, James W. Simpson. Now where are you standing? Ira M. Thomas, Stephen W. Williams, Michael M. Wilson. Thank you very much. May we now have a seconder for that motion? My name is Ryan Clark and I am a Suncor share shareholder. I second that motion. Ryan Thank you very much. I now declare the motions the nominations closed. 12 directors are to be elected at this meeting and 12 persons have been nominated. I propose that we vote on this matter by ballot. And the Corporate Secretary will instruct us on voting procedures. Janice? Thanks, Jim. On this ballot vote, all shares for which proxies in favor of management have been received will be voted in accordance with the instructions of the shareholders giving the proxies. Only proxy holders and shareholders who have not already returned a proxy or who wish to change their previous instructions have to complete a ballot if they wish to vote. The blue ballot handed out during registration is the ballot to be used for this vote. If you wish to complete a ballot, but did not receive one when you registered please raise your hand now. I see we have a few. So I'll pause for a moment while the ballots are distributed. The ballot lists the 12 nominees named in the management proxy circular. To vote or withhold from voting for each director, please complete the ballot by placing an X in the appropriate spot beside the name of each nominee. When you've completed and signed the ballot, please raise your hand and it will be collected by an attendant and given to the scrutineers for counting. We'll give you a few moments to complete those ballots. I can see there's still a little time needed. Does anyone require additional time? Couple? Thank you. Okay. Well, the ballots are being collected and counted. We'll proceed to the next item on the agenda. The next item is appointment of auditors. Management has proposed that PricewaterCoopers be appointed as the company's auditors. Since auditors are appointed by shareholders, I ask for a motion appointing PricewaterCoopers as auditors. Good morning. My name is Ryan Danielson and I am a Suncor shareholder. I move that PricewaterhouseCoopers LLP, the appointed auditors of Suncor Energy Incorporated to hold office until the next annual meeting of shareholders or until a successor is appointed. Thank you, Ryan. May we have a seconder? My name is Serena Davis and I am a Suncor shareholder. I second this motion. Thank you very much. Any discussion? No. You've heard the motion. It's been seconded. Those in favor please indicate so by raising your hand. That's clear that the motion is carried. So we have a couple of bylaws that we need to confirm. And the next item of business is the resolution to confirm amendments to Suncor's bylaw number one, which increases the quorum requirements for meetings of shareholders and eliminates the ability of the chair of shareholders and directors' meetings to have a casting vote in the event of a tie. And this was described fairly clearly in the proxy circular. The reason that the Board is recommending this is it's simply a good governance practice in line with current best practices for governance. May I now ask that that motion be tabled? Good morning. My name is Rick Langel, and I'm a Suncor shareholder. I move that the resolution confirming the amendments to Bylaw number one of Suncor Energy Inc. Set forth on page 15 of the management proxy circular of Suncor Energy Inc. In respect of the twenty fifteen Annual Meeting of Shareholders be approved. Thank you very much. May we have a seconder? My name is Alejandra Buchan, and I'm a Suncor shareholder. I second the motion. You've heard the motion, which has been seconded. Are there any questions or comments? No. We have received proxies representing a total of over 99% of those cast on this motion, which direct that they may be voted in favor of the resolution. However, we will follow a ballot procedure as described earlier by the corporate secretary. And this time it's the yellow ballot that is going to be handed out was handed out at the beginning of registration and that will be used for this vote. So please mark on your ballot an X in the box either for or against. And when you've completed the ballot please pass it out raise your hand and pass it out to the aisle. I see we have a few. So we'll just pause for a moment. Any others need a little time? Okay. While those ballots are being collected and counted, we'll proceed to the next item on the agenda, which is another restatement actually of a bylaw. It's the bylaw number two, which is described in the management proxy circular amended and restated. And what it does is establishes a framework for advanced notice by shareholders intending to nominate directors for election to Suncor's Board. The Board believes that the amended and restated bylaws sets out a clear and transparent process for all shareholders who intend to nominate directors. The Board believes it does this by providing a reasonable length of time to notify Suncor of their intentions to nominate directors and by requiring those shareholders to disclose information regarding their nominee as mandated by applicable security law. The Board will then be able to evaluate the proposed nominees qualifications and suitability as directors and respond as appropriate in Suncor's best interest. Amended and restated by law number two is also intended to facilitate an orderly and efficient process for director election at meetings such as this one. So may I now have a motion for this resolution? Good morning. My name is Sandeep Man and I'm a Suncor shareholder. I move that the resolution confirming amended and restated by law number two of Suncor Energy Inc. Set forth on page 17 of the management proxy circular of Suncor Energy Inc. In respect of its twenty fifteen annual meeting of shareholders be approved. Thank you very much. May we have a seconder for the motion? My name is Blaine Hodder and I'm a Suncor shareholder. I second the motion. Thank you. We've heard the motion and the second. Are there any comments or questions? Yes sir. Would you go to microphone please? The pre requirement of nomination for director according to this motion is you have to have 5%, one percent or 5% of the share or having the experience to be nominated. Business bodies consist of the general public. So I'm going to put a motion on this. So that's what the reason because of the audience. I'm sorry. I didn't quite understand what you say. As I said, I did indicate that this motion basically in order to nominate yourself as a director, you have to have 5% of the full share of the company or 1% or having the experience to be nominated. Yes. That's what the condition. I'm against that motion. I because of the this body consists of the general public in general. That's why I'm voting against this motion. I'm just going to put a motion on this as well to change this amendment. We have a motion, but I'm honestly not clear on what your motion is. I understand the preamble, but not the motion. Janice, did you? The gentleman was commenting that he's not in favor of the motion and explaining that he doesn't feel that it should be passed. So, yes, thank you very much for your comment. Okay. Yes, we appreciate your comment. The matter will go for a ballot, so you'll have a chance to register your vote. And thus the motion has been made and seconded and we'll proceed to that. Again, this will be by ballot. We'll follow the same procedure as described earlier by the secretary. This is now the green ballot where you can express your views. Please mark an X in the box either for or against. You've completed your ballot raise your hand so that it can be collected. Everyone got a ballot that needs one? Do we need any more time? All set. Thank you. The next item on the agenda is what's commonly known as a say on pay. It's an advisory vote that either supports or does not support the compensation proposals that were made in the proxy. These votes these types of votes are non binding and what they are is a vehicle to allow shareowners to provide feedback to the Board and the Compensation Committee for their future consideration. And of course, the Board would take any such votes seriously. The form of motion set out in the management proxy circular follows the recommended best practice for the Canadian Coalition of Good Governance. And may I ask for a motion to that effect? Good morning. My name is Wes Johnson and I am a Suncor shareholder. I move on an advisory basis and not to diminish the role and responsibilities of the Board of Directors that the shareholders accept the approach to executive compensation disclosed in the management proxy circular of Suncor Energy Inc. Delivered in advance of its twenty fifteen Annual Meeting of Shareholders. Great. Thank you. May we now have a seconder? My name is Serena Davis and I am a Suncor shareholder. I second this motion. Good. Thank you. You've heard the motion and it's been seconded. Are there any comments or questions on this advisory vote? We have received proxies representing a total of over 93% of the votes cast in this motion, which direct that they'd be voted in favor of the approach to executive compensation. And we will now follow the same ballot procedure as we have in the other three items. This time it's the pink ballot. And again, mark with an X whether you're for or against. When you've completed raise your hand the ballots will be collected. Does everyone have a ballot that needs one? We're all set according to our scrutineer. Okay. Now it's time to turn to formal remarks by Steve Williams and Alastair. Steve? Thank you. Thank you, Jim. And good morning to everyone. We can relax a little bit now. It's the formality is coming towards an end, a few more things for us to do. But thank you for joining us at the AGM. It's an important meeting for us. I'd like to start by adding my thanks and appreciation to the two departing Board members Paul and Jacques. Both have played a really important part in guiding our company and always with the shareholders' interests in mind. They've been active members of our Boards engaging in great debates and providing a lot of thoughtful input. So to both of you, thank you for contributing to our success. I'd also like to welcome our newest Board member, Jacinth Cote. We're excited to have you here and I'm sure we're going to be having some fun debates. Our AGM is almost always about providing a perspective over the past year and over the year, which is coming. As we move through 2015, the need for perspective and the resilience to be able to deal with the challenges of the low crude price environment have never been more important. As we've all seen, the drop in crude prices has created a lot of change for us in a very short period of time. Capital spending plans have had to be revisited. Companies have reduced their workforces. Suppliers and contractors have seen their work slow or even stop. Across the country, revenues to governments have also fallen affecting their ability to be able to fund critical services. So in short, the impact of low crude price environment has been significant and far reaching for all of us. Our strategic focus and commitment to deliver value to shareholders has prepared Suncor well to be resilient in this type of environment. We've come into the downturn with a sound balance sheet, an integrated business model and a very focused strategy. And of course, an unwavering commitment to what we've called operational excellence and capital discipline. Cost management has always been an important focus for us at Suncor. In fact, we've been working hard for many years to drive down our costs. But in response to the low crude price environment, we've accelerated those efforts. Dollars 1,000,000,000 reduction in our capital budget, operating budget savings of $600 to $800,000,000 and a reduction a tough reduction in our workforce of 1,000 positions. So it's important to emphasize that we're implementing those reductions without affecting our basic operations. We're focusing on safety. We're focusing on reliability and focusing on our environmental performance as we do that. Now I'm also pleased to announce that the cost management initiatives are really taking effect. We've announced some results last night and one of the headlines you'll be seeing is the impressive cost reductions we've had particularly in the oil sands business, but right away across the company. We've achieved a 20% decrease quarter over quarter in cash operating costs in the oil sands operation and that's in a large part due to those efforts. Our Q1 results also included record oil sands production nearly 440,000 barrels per day reflecting strong reliability and minimal unplanned maintenance. We also saw record upgrader reliability and robust refinery utilization rates. So the quarter demonstrated our ability to generate solid cash flow even in this low crude price environment. Cash flow from operations in the first quarter was almost $1,500,000,000 or $1.02 per common share. And these accomplishments come at a time when others in their industry are grappling with the realities of the lower crude price environment, whether it's a reduced ability to generate cash or whether it's facing challenges in attracting capital for investment, various companies have had to make very tough choices, often destroying value in the process. At Suncor, our resilience stems from being in a very strong position and that's due to a number of factors. First, that strategy I talked about optimizing the base business, pursuing profitable growth, returning cash to shareholders and being an industry leader in sustainability. You've also heard us talk about the importance of our integrated model, which helps us to capture the earnings across the value chain. Integration has always been top of mind in the strategic decisions we've made around our operations. And that includes the investments we've made in our network of pipelines, in the rail unloading facilities and in our marine terminal on the St. Lawrence. It has also driven our decision to secure additional storage on The U. S. Gulf Coast. Our integrated model is without doubt a competitive advantage, helping us adjust to changing market conditions and deliver value for our shareholders. In 2014, it allowed us to capture global based pricing on volumes equivalent to 97% of our Upstream production. In fact, our analysts just put 100% in because it's not they find in their models it's not worth worrying about the other 3%. Another competitive strength is our rigorous approach to capital discipline. Suncor's unwavering focus on costs has helped to drive the strength of our balance sheet. When it comes to our capital, the priorities remain the same: fund the base business, invest in profitable growth and return cash to shareholders. The decisions we made in 2014 reflect that unwavering focus. Those included the deferral capital spending at Mackay River II and the White Rose extension and that's pending more favorable market conditions. Together with the project operator, we also deferred a sanction decision on the Drosselin mine, while we look to optimize that development plan. So these decisions while difficult allowed us not only to preserve the health of the balance sheet, but also to increase our dividend for a twelfth consecutive year. They also helped us fund long life projects in flight including Fort Hills and Hebron. We view both of those projects as essential elements of our profitable growth plan forward. At our existing operating assets, we continue to make progress on our operational excellence journey. In addition to reducing operating costs, we've seen improved reliability including the firebag plant achieving average production rates in late twenty fourteen in excess of its nameplate capacity of 180,000 barrels a day. Safety, a key element of operational excellence remains a very high priority. We've been working hard at implementing the solutions recommended by our Oil Sands Safety Step Change Task Force following the tragic fatalities early last year. We're conscious of the importance of being trusted stewards of valuable natural resources and that's why we're driving improved performance on air, water, land and energy efficiency. And we're actively engaged in discussions about broader environmental issues like climate change. We've made progress. For example, we achieved a 20% decrease in water use at the oil Sands versus 2013. So we remain keenly aware of the need to be part of that conversation and getting to solutions. The work in these areas isn't always easy, but it's been critically important. And I'm very proud of the Suncor team and what they've delivered in each of those areas. As I look ahead, I remain confident about the strength of the company, its strategy and our future growth projects. Our progress on Fort Hills gives me good reason. All critical milestones were achieved on the project in 2014, including a majority of long lead procurement orders being released to the market. Detailed engineering activities are now 75% complete, while construction activities are 25% complete and on their way to being 50% complete by year end. And the project remains on track to deliver approximately 73,000 barrels per day for Suncor with first oil expected in the 2017. As we grow, we're focusing on market access. We continue to be very well positioned with takeaway capacity to satisfy our short and medium term requirements. However, we do recognize the importance of market access to the industry and the Canadian economy and we're committed to supporting the pipeline infrastructure projects. Now resilience can be defined as the ability to recover from or adjust easily to misfortune or change. The price drop, which started last year, certainly highlighted the value of this quality of our business. Suncor has and will continue to demonstrate a resilience that our shareholders can depend upon. So thanks to a well defined plan, focused on operational excellence, capital discipline and profitable growth, we're delivering tangible results for our shareholders. Behind our business strategy is a dedicated and highly experienced team of Suncor leaders and employees. They continue to raise the bar on performance. They're focused on building and maintaining strong relationships with stakeholders. They collaborate and leverage technology to advance environmental performance. Now as I turn the floor over to Alastair Cowan, our EVP and Chief Financial Officer, I would like to thank you for your continued support and confidence in Suncor. Thank you, Steve. Good morning, everyone. I'm very pleased to be able to present Suncor's financial results for the past year. As Steve mentioned, 2014 was a very significant year of change, especially in terms of pricing environment. Suncor did however produce another year of solid results in terms of production, earnings and cash flow. Those results were the outcome of a sound financial strategy, which continues to be aimed at supporting our business plan of balancing profitable growth and returns to shareholders, managing risk and volatility around our business and providing financial flexibility. Production in 2014 came in at just under 535,000 barrels of oil equivalent per day, including 113,000 barrels per day in our E and P segment and 422,000 barrels per day in the oil sands. The operational excellence journey that Steve's described has included a strong focus on reliability and productivity. And it's encouraging to see continued improvement particularly at oil sands where our production is concentrated. In terms of our financials, Suncor's financial strength continues to be apparent. That's demonstrated by our 2014 cash flow from operations, which exceeded $9,000,000,000 $5,500,000,000 of cash on hand and a strong investment grade credit rating. As we navigate through this low price environment, our intention is to continue to live within our means. Our integrated business model is strong and mitigates risk and volatility. Even at today's oil prices, we have the ability to generate sufficient cash flow to cover sustaining capital and the dividend and a large share of our growth capital requirements as demonstrated by yesterday's Q1 results. The free cash flow we generate continues to distinguish us from our peers. This past year, we produced free cash flow of almost 2,100,000,000 That's significantly more than all of our Canadian peers combined. Operating earnings for the year were just over $4,600,000,000 with net earnings of just under $2,700,000,000 Our operating earnings, particularly in this current price environment, reflect the strength of our integrated model and the ongoing focus on controlling costs across our business. On the capital side, Suncor has taken a prudent approach to spending that resulted in us ending the year $300,000,000 below our revised capital budget guidance of $6,800,000,000 And as we move through 2015 and beyond, we will continue to make decisions with a strong focus on capital discipline. Our competitive position is reflected in our strong balance sheet and our team led by Steve remains committed to ensuring it remains that way. Our reason is simple, a healthy balance sheet followed by a sound strategy and a disciplined approach gives us predictability and flexibility. And this is a particular advantage for us as we make strategic allocations around capital. Our low debt and strong liquidity means we're able to invest in the business throughout market cycles. And yet, we're acutely aware that capital discipline is about living within our means. That means we don't embark on large capital projects unless we have a high level of certainty that we can fund them through to completion out of cash from our operations or on hand. And Fort Hills and Hebron are two great examples of being able to take advantage of this position in a strategic fashion. Our capital allocation priorities remain the same, fund the base business, improving reliability, invest in profitable growth and return cash to our shareholders. Now that approach has served Suncor well and we believe it will continue to do so going forward. While others are taking on debt with $100 oil, we were generating free cash flow and returning it to shareholders, while also building our balance sheet at the same time. Our performance and strategic direction has been recognized by the credit rating agencies, which have maintained a strong investment grade credit rating. Suncor continues to set itself apart from our competitors on the basis of our long life reserves and low decline production, our industry expertise and commitment to sustainable development, the integrated model we operate and of course our financial strength. That financial performance has been translated into returns for shareholders of $3,200,000,000 in 2014. Now that included $1,700,000,000 in the purchase of common shares and $1,500,000,000 in dividends. The increase in the dividends over 2013 reflected a 40% increase compared to the prior year and highlighted our ongoing commitment to shareholders. The Board has endorsed an approach to ensure that dividends will be reliable, sustainable, meaningful and competitive and that dividends are expected to grow in line with the growth of the business. Over the past five years, we've achieved a compound annual growth rate of over 25% and our dividend has increased every year from 2,003 to 2014 inclusive. We believe certainly that the dividend provides an attractive return for our shareholders and is part of the company's compelling investor proposition. As I said at the beginning, 2014 was certainly a year that saw significant amount of change. Suncor entered the low price environment with a strong balance sheet, a focused strategy and an emphasis on capital discipline. That solid foundation has served the company and its investors well and I believe positions us to continually or consistently return value to our shareholders. So I too would like to thank you for your ongoing support and I'll now turn the microphone back to Jim Simpson. Thanks. Thank you, Alacer and Steve. Well done. Now it's time to complete the business of the meeting. We have received the scrutineers report. Janice, I saw that paper passing up. Would you please read the report? I would be happy to. Thanks, Jim. Firstly, with respect to election of directors and to expedite reading these reports, I will round the percentages. And for directors, I will declare the percentages in favor of the candidates Mel Benson, 96% Jacin Pote, 99% Dominic D'Alessandro 99%, Doug Ford 96%, John Gas 98%, John Huff 97%, Marine Makaw 99%, Michael O'Brien 99%, Jim Simpson 99%, Ira Thomas 97%, Steve Williams 99% and Michael Wilson 99%. With respect to the confirmation of amendments to bylaw number one, percentage of votes for the motion 99.68 and against the motion 0.32%. With respect to the confirmation of amended and restated bylaw number two for the motion 97.35% against the motion 2.65%. With respect to the advisory resolution on executive compensation for the motion 93.54% against the motion 6.46%. Thanks Jim. Thank you very much, Janus. I accept the scrutineers' report and declare the Board of Directors named in the circular have been duly elected. I also declare that the shareholders have approved the resolutions confirming the amendments to Suncor's bylaw number one and adoption of Suncor's amended and restated bylaw number two. I further declare that shareholders have accepted and support the approach to executive compensation as disclosed in the proxy circular. Okay. If there are no other matters properly brought before this meeting, may I have a motion for termination? My name is Alejandra Buque, and I am Asunco's shareholder. I move that the meeting be terminated. Thank you very much. May I have a seconder? My name is Ryan Clark and I am a Suncor shareholder. I second the motion. Thank you very much. Those in favor of the motion please indicate your approval by raising your hand. Thank you very much. That motion is carried. I now declare the formal portion of this meeting is terminated and we'll move into more enjoyable, I hope, less formal question and answer period to engage with you as shareholders. So the floor is now open. And if you would introduce yourself again when you come to the microphone that would be great. But before we really start that session, I would like to take a moment and introduce you to the senior management team of the corporation partly for recognition for them and the great work they've done, but also in case they're asked by Steve to answer some of the questions directly, I'd like you to know you already met and been introduced to Steve, Alastair and Janice. But I'd like to introduce to you Eric Axford. Eric is the Executive Vice President of Business Services Mark Little, Executive Vice President of Upstream Mike McSween. Mike is Executive VP also of Major Projects Steve Rainesch. Steve is Executive Vice President of Strategy and Corporate Development Chris Smith, another Executive Vice President for Refining and Marketing and Paul Gardner, Senior Vice President for Human Resources. Thank you, gentlemen. We'll now take questions from the floor. I might mention those who are on the web, you should see a box in the slide where you see the slide displaying the meeting, the box where you could submit questions and we'll be happy to take questions from those joining us on the web. Any questions? We have no online questions. How about questions from the floor? You're going to let Steve off the hook that easily. So I can because this is a more fun time actually formal piece. And it's always difficult to get the first question, but I just happened to think of one for Alistair. Very well Alistair. So we had our analyst call this morning. And for those of you who've known us for a long time, we've been on a journey of this capital discipline and trying to get our spend predictable and under control. And we had one question this morning which got us all smiling which was you've got in the habit Suncor of having a low capital expenditure and underspending what you said relative to the guidance at the beginning of the year. So they asked us what we would be spending this year and next year. So Alastair? Thanks Steve. I didn't know I was going to answer the first one. So I'll refer back to what I said in my comments. I mean the first thing is our philosophy is to live within our means. We'll spend what we're able to spend depending on the cash flow that we generate, which is dependent on oil price obviously or the cash that we've got on hand. If you look back the last few years at Suncor, the capital discipline we've applied around capital has been very much in evidence. You've seen the prior year levels of CapEx has been in and around that $6,500,000,000 And I think I would be fair to say Steve that perhaps we've guided on a more conservative basis historically and we've always come in at the bottom end of that. But I would say that over the last year, we've tried to bring our actuals much closer to the guidance and be there. But capital discipline will be very much an evidence. The capital will be quite consistent with what we've been spending. Thank you. And you can't see it from there, but I can see these guys here all relaxing thinking we got away with it no questions. The boss is up there he's sweating. Normally what happens is that we get the questions come in and now the really difficult ones go straight from here down to these guys. We do have another question. I think there's a gentleman behind you there. Number two? Yes. Hi, there. A quick question. Given the recent volatility in the price of oil both in 2008 and most recently, is there any intent by Suncor to start a hedging program to protect our cash flows and operations due to to remove some of the pricing uncertainty? Yes. I don't if I I think everybody probably heard that about how do we hedge, how do we protect against a future decrease in the price of our products. We do hedge, but not in the conventional way. So most people think of hedging as selling your product on the forward curve. So you've locked in a cash flow in order to be able to fund your business in growth. The way we do it, we used to do it that way. We don't do it that way at the moment and that's a very conscious decision. We hedge through two other mechanisms. One is in the good times we put some of the cash into our bank account so that we can pull on it. So we've hedged without paying a price for it. We've hedged with our own cash. The other hedge we have is the design of that integrated model. So by having a Downstream when the price of crude is low, we're able to make shift the profits from the upstream to the downstream. And indeed that's what's protecting us at this low point. Most of the cash flow has been coming from the downstream for these periods. So we hedge by that integrated model and by putting cash into our bank. For the question. Yes, sir. Yes. Bob, Claire, I'm a shareholder. That was my first question. My second question is what can you predict or what do you use to predict or what are you predicting for the oil price for 2015 and 2016? I know you have something out there. That's the question I get most. The analysts can probably spend one third of our time on the road talking to shareholders or analysts. And that question is the one we get most. And our answer is really simple. It's almost impossible to forecast with any degree of certainty what's happening to crude price. So we don't bet the company on our guess of the forward price. What we do is we have we make sure we've got a very robust balance sheet. So we've got bank we've got money in the bank. We've got credit lines ready if we need them. And we use that through the cycle. So instead of we don't run the company on spot prices in the crude market. Now we do have a view in the long run. And our view is that supply and demand will work and that prices will go back to the long term supply cost of crude. And our view currently is that that's in the 82,000,000 to 100,000,000 range. But we don't bet the company on that in the short term. We make sure we've got the funds to cover our operations and cover our capital expenditure. We have one question from the Internet. We have another one here at microphone two. The gentleman has been waiting for a moment. Yes, sir? I'm Michel Puckett, a long time shareholder. Your major property at Tar Sand is landlocked. So first of all Keystone pipeline is pretty much dead. Gateway pipeline going west is a long ways ahead. And Energy East going east pipeline is also a long ways away. At some point, aren't you a little anxious or concerned about where exactly your product is going to go since there's not enough for us to consume it here in Alberta? I mean the simplest version of the answer is no. So we have enough takeaway capacity to take us through into the 2020s. We spend an awful lot of effort getting in a position where our logistics work, but we have a we own significant pipelines ourselves. We have contracted volumes on significant pipelines. We are we work with all modes of transport road, rail, ship. So we're actually amongst most of the Canadian oil sands companies the most comfortable in terms of logistics. We're getting close to Line nine being reversed, which helps us even more. And only two companies benefit from that ourselves and Valero have got the contracted volumes on it. So the simple answer is we're comfortable. Now we're also supporters of all of those projects Gateway, Energy East and Keystone. So we're advocating and supporting, but we don't have any dependence on them in the medium term. Thanks, Steve. Would you wait just one moment? I want to make sure that the web system is working. So I have a question for the web that I'd like to state. Do you see any change in the economics of building upgraders in Alberta? That sounds a really tough one. Go ahead, Mark. The challenge with upgrading the provinces and the dynamics of it is you really need more heavy crude to come on relative to the conversion capacity. Upgraders convert heavy crude oil so that it can be used to make gasoline and diesel and usable products. So it's really that balance. As more and more heavy crude comes to the marketplace then you need conversion capacity to come on. It's a bit of a challenge in the province of Alberta. We stopped our upgrading project up north because the cost structure of building up north is very high and crude is relatively easy to move. There is the Northwest upgrading project that's going on in Edmonton, although that is being funded by the Alberta government because I don't think that the market would justify that. But if the heavy crude market gets oversupplied the economics will be there. And then the question is where is the most economic place in North America or on the globe to be able to upgrade that. And I think generally the view is it's not likely in Alberta, but that it depends a little bit on the political infrastructure and such associated with that. So we don't see ourselves participating in any significant upgrading in the province in the near future. Thanks Mark. Yes, sir. Hi, Jim. Paul Ziff. There's been mention about the deferral of projects both your company and a number of other companies in the Fort McMurray area and decreasing costs. Could you provide an overview of the your plans for the next five years for SAGD expansion? So, I mean, we have extensive growth plans. We've got a very long list of projects with resource in our ownership that we can develop. In the near term that's the two big ones are Fort Hills and Hebron. And both of those are as you heard us say are going well. We have a really exciting replication strategy that we're getting ready to roll out this year. Maybe Mark you want to talk about so it's a phased program through a long period. So maybe just want to talk a little bit about that? Sure. Thanks, Steve. The reason we called the replication strategy is we're trying to come up with exactly the same design plans. And so we've been looking for pockets of resource where we could have identical plants put down to drive down the cost. The resources there, we're trying to figure out how do you bring it to market at a less costly manner. And so we've identified nine different pockets that range between 400,000,600 million barrels with our current program. We've been drilling over the last couple of years to define that resource quality. And they end up in the Meadow area and Lewis, which is up more towards Firebag. And we also have some interest in some other areas there. And so we're getting very excited about that. We've defined a lot of these areas. We're now in the process of designing the facilities that could go with it. And then on top of that, which is kind of the conventional SAGD technology, we're looking at a lot of different technology fronts from using heated solvents to using radio wave technology to be able to provide the heat, which is very efficient and using solvent to do the production. So non water based technologies. We also have direct contact steam generator as a way of driving down the cost of the plant. So not only are we finding the resource, but we're also looking at technology fronts to be able to drive down the total cost structure to bring that to market. Okay. And I think there was a second piece underneath that question Mike that you just might want to quickly reference is about the Fort McMurray region. And we're executing billions of dollars of projects up there at the moment. And we're finding one of the reasons we wanted to build Fort Hills now move into replication now is that the overall market we anticipated would be quieter than other periods. And maybe you want to talk about it Mike? Sure. Thanks Steve. So we have seen over the last number of months with the downturn and the capital coming out of the system, availability of labor and a focus on productivity and indirect costs associated with capital expansion being a real driver for us to deliver the projects that are in flight. So certainly we've seen on the revenue side the pressures with the change in the marketplace that has alleviated some of the competitive pressures externally with both engineering firms, the procurement steps and with the construction in the field. And so for the projects that are in flight like Fort Hills presents us a great opportunity to focus on delivery in a better and more capital efficient manner. Good supplement. Thank you. And thanks for your good question, Paul. Saeed? Thanks, Jim. Saeed Tangier. I'm a shareholder. You recently send a cargo overseas. I just want to know what part of it were you focusing in which countries? And as well are you going to increase your transportation by rail? Okay. I don't know Chris. So it's a question about we one part of our strategy is we are able to get our crude onto the ocean and therefore move it around. And we announced that we've done the first one of those last year. So do you want to talk about that Chris and Rail? Thanks. So we have set up capability over the last eighteen months to actually take advantage of differentials that we're seeing in Alberta to move some of our production into other markets. And so we're able to do that in a couple of ways that we weren't able to do before. And one of that is to move off the East Coast Of Canada. We put capability in that we can take production to the East Coast, put it on a boat and then take it actually to the best market available. Sometimes that actually is a market in North America. One of our cargoes actually went into Europe. The one that Steve's referencing actually our first cargo went into Southern Europe. So we have the flexibility now to move production to these coasts. We also have flexibility to get it to the Gulf Coast as well. And we use rail, we use pipe and we use marine. And we take a look at what the economics are in any particular moment to where we can get the best netback for our production. So we're seeing lots of benefit from that and we're seeing the ability to actually improve that over time as our production grows so that our market access strategy that Steve talked about supports our growth plans as well. Very good. Any further questions? More from the web. It's an interesting one. Are you satisfied with the performance of Syncrude? And any interest in taking over operations management? So for those and I'm sure Joe is actually here making these questions up. Thanks a lot. We had this question this morning on the analyst's call. I think first of all what I'd say about Syncrude is we have been disappointed with the performance. So we've been working really hard with the other owners to and Exxon and Imperial the operator to get some improved reliability and get the costs down. We've seen some good signs. They're working on the right stuff, but it's not delivered much results until we get to this first quarter. And we've seen a real improvement. We've seen the costs come down. But of course what we're really looking for are the costs coming down at the same time as the reliability is coming up. And there are indications that that is starting to come. So that's good news. In terms of interest in a larger share or operating it, we currently have 12% and that's a very low level to want to be an operator of a plant. So it doesn't make sense for somebody who only owns 12% of an asset to be operating it. So the natural question is being well would you buy more of a share in it? And really what I would say is it just simply has to fit into our overall strategy which is we have a track record of relative to most companies not too many mergers or acquisitions. We've been bigger divesting assets rather than acquiring them. And the reasons for that are that anything we look at has to compete very well with that long list of projects we have in our own ownership. And what we found is and it's just a general comment not particularly about Syncrude is that there is a gap between what sellers of assets are expecting and what buyers are willing to pay. And the two deals we have done around the merger with Petro Canada and that we more than ten years ago we bought a refinery in Colorado. We tend to buy at the very low end of the cycle. And our view is the gap is still too big. So we haven't been particularly interested in pursuing acquisitions right now. We have a look. We look at all of the opportunities in the market, but they have to stack up against our own very good organic opportunities. Okay. Well, I think the questions are finished. I'd like to thank you for your interventions. I appreciate your questions. And I also appreciate those who are on the web that participated us through the Internet. So thanks for joining us today. I it's been a good meeting. We appreciate your interest in Suncor and look forward to connecting with you again this time next year. So thank you and I hope you have a wonderful day.