Imperial Oil Ltd. - Shareholder/Analyst Call

Apr.25.13 | About: Imperial Oil (IMO)

Imperial Oil Ltd (NYSEMKT:IMO)

April 25, 2013 11:30 am ET


Richard M. Kruger - Chairman, Chief Executive Officer, President and Member of Contributions Committee

Brian W. Livingston - Vice President, General Counsel and Corporate Secretary

Victor Leyland Young - Independent Director, Chairman of Audit Committee, Vice Chairman of Executive Resources Committee, Member of Nominations & Corporate Governance Committee, Member of Contributions Committee and Member of Environment, Health & Safety Committee

Richard M. Kruger

Good morning, ladies and gentlemen. I hate to interrupt the fun, but we have a meeting to run. My name is Rich Kruger, Chairman, President and Chief Executive Officer of Imperial Oil Limited. I now call the meeting to order.

Brian Livingston, Imperial's General Counsel and Corporate Secretary, will act as the Secretary of the meeting, and Pat Lee and Sherita De Vero [ph] of Canadian Stock Transfer Company, administrative agents for CIBC Mellon Trust Company, will act as scrutineers.

All nominees for election as directors of the company are seated at the head table. At all events organized by Imperial Oil our first concern is the safety of our participants. And with that in mind, I'll ask Brian Livingston to outline the emergency response procedures. Brian?

Brian W. Livingston

As always, our first priority is safety and ensuring that no one gets hurt. In the event of an emergency, the hotel has a 2-stage fire alarm system. In the first stage, bells and strobe lights will be activated, followed by an announcement stating the -- that the cause of the alarm is being investigated. No action is required during this first-stage alarm, unless directed by hotel personnel or the fire department. Should it become a second-stage alarm, the bells will ring at a high speed and an announcement will be made to vacate the premises.

Those of you who exit on the south side should move to the emergency exit. Use the fire exits through the plus 15 doors and follow the staircase down to the lobby exit. For those of you using the north side exit, there's a fire exit through the back service hallway. You should then follow the staircase to ground level and proceed to the main lobby of the Ernst & Young Tower at 440 2nd Avenue.

Do not use the elevators at any time during a fire alarm or emergency evacuation. If you are unable to physically manage the stairs, please remain seated and the attendants will escort each of you out of the building.

Attending today are the executive members of Imperial annuitant clubs and their spouses. The clubs are comprised of retired employees of the company, and they make a valuable contribution to the community and to the company.

This is an Annual Meeting of Shareholders, and only registered shareholders and proxy holders are qualified to take part. We will proceed with -- in accordance with the published agenda that has been provided to each of you. In order to expedite the business of the meeting, in the case of management-initiated business, we have invited certain shareholders of the company to move and second the motions to be passed at the meeting. If you wish to address the meeting, please make use of the microphones. If you are unable to reach a microphone, please raise your hand and an attendant will bring one to you. The attendants will assist you to ensure that you are heard by everyone. Please state your name, raise your colored admittance card and identify yourself as either a shareholder or a proxy holder.

All questions are to be directed to the Chairman of this meeting. He will attempt to answer them, taking assistance from the directors and managers here today where appropriate. If you wish to submit a question in writing, you can do so on the bottom tear-off portion of the agenda card and hand it to one of the attendants. We will answer as many questions today as time permits. Our shareholder services representatives will ensure that any remaining questions will be answered at a later time.

Unless otherwise specified, when the votes of the shareholders are taken at this meeting, the voting will be by ballot. There are 2 items to be voted on at this meeting. It will be recorded on one ballot, and the ballot will be collected after the second vote. If you have already submitted your proxy, you'd need not vote by ballot. If you have not submitted a proxy or you wish to change your proxy vote, you can obtain a ballot now from the attendants. Please raise your hands if you desire a ballot.


Brian W. Livingston

The first item of business deals with the constitution of the meeting. Mr. Chairman, I can formally advise the meeting that the notice of the Annual Meeting of Shareholders; form of proxy; management proxy circular, which includes the financial statements and the auditors' report, was sent to each registered shareholder, the directors and the auditors. The summary annual report was sent to each registered shareholder, except for those which requested that they not receive the annual report.

I can also advise, Mr. Chairman, that a quorum for the annual meeting is present.

Richard M. Kruger

Thank you, Brian. Since the quorum is present, I declare the meeting to be properly constituted and competent to transact business as an Annual Meeting of the Shareholders of Imperial Oil Limited. Victor Young, Audit Committee Chairman, will now prepare the auditors' -- present the auditors' report and comment on the activities of the audit committee.

Victor Leyland Young

Thank you, Mr. Chairman, and good morning, ladies and gentlemen. It is my pleasure to present the report of the audit committee of Imperial's Board of Directors.

The committee is comprised of 5 independent directors. Our independence is critical to sound corporate governance as well as shareholder, investor and public confidence. The committee's mandate is to assure the Board of Directors and shareholders of the integrity of the financial information prepared and reported by the company's management, as well as the practices and procedures used in preparing that information. To achieve this, we have unrestricted access to management, internal audit and our external auditors. We receive reports and meet independently with both the external auditors and the company's internal auditor.

In 2012, the audit committee met 5 times. We reviewed the quarterly and annual financial statements supporting management's discussion and analysis. This included reviews of accounting practices and control assessment reports from both internal and external auditors. The committee also reviewed various aspects of the company's risk management, as well as site restoration provisions, progress reports regarding the company's capital projects, oil and gas reserves reporting and compliance with regulatory requirements and Imperial's business ethics policy.

The audit committee has concluded that sound governance practices are in place throughout the organization. The company's capital structure remains very solid. Its accounting practices are transparent. Imperial does not use special-purpose entities, special adjustments or pro forma reporting, nor does it use derivatives to speculate or hedge on the future of commodity prices, its foreign exchange requirements or interest rate exposure. Its revenues are recorded at fair value at the time of sale. And its business controls are well developed and effectively executed to ensure that financial statements are accurate and properly reflect our business activities.

At Imperial, business controls are applied with discipline and rigor. The application of controls is continually assessed for improvements. Senior management acts upon opportunities identified through internal audits and regular self-assessments. In addition, all employees are expected to adhere to Imperial's well-developed controls practices.

Imperial complies with all applicable government's laws, rules and regulations. The Standards of Business Conduct contains policy and guidelines on such matters as conflict of interest, integrity of dealings both inside and outside the company and competition law and restricted trade practices. Directors, officers and employees are required to fully comply with Imperial's Standards of Business Conduct.

Imperial encourages employees to ask questions, voice concerns and make appropriate suggestions regarding its business practices. All employees are expected to report promptly to management any suspected violations of the law, company policies or internal controls so that management can investigate and take appropriate corrective action in a timely manner.

Finally, it is the audit committee's responsibility to ascertain the competence and independence of the auditors. To that end, the audit committee has a separate private session at each meeting with both the PricewaterhouseCoopers partner and Imperial general auditor to obtain assurances of their independence and to provide them with opportunities to raise potential concerns. To further ensure the auditors' independence, the audit committee monitors the work done by PricewaterhouseCoopers, and the audit committee approves their engagement and fees for audits and other services provided. We approve their audit program, assess the results and approve, in advance, any non-audit services to be performed. This process helps ensure the auditors' independence.

The audit committee also has the responsibility to recommend the external auditors to be appointed by the shareholders. In this regard, I am pleased to recommend to you today that PricewaterhouseCoopers be reappointed as auditors of Imperial Oil Limited. You will be asked to vote on this recommendation later in the meeting.

And Mr. Chairman, that concludes the report of the audit committee. Thank you.

Richard M. Kruger

Thank you, Victor. I concur with Victor's comments. PricewaterhouseCoopers have served our shareholders well for many years. They have a great deal of experience in auditing the company's diverse operations. The audit committee and the directors are satisfied that they should continue to carry on their work. So Brian, will you please read the motion regarding the reappointment of PricewaterhouseCoopers as auditors of the company?

Brian W. Livingston

Mr. Chairman, the motion is that PricewaterhouseCoopers' charted accountants be reappointed auditors of Imperial Oil Limited to hold office until the close of the next annual meeting.

Richard M. Kruger

Will someone so move?

Unknown Shareholder

[indiscernible] Lang [ph], I'm a holder of a valid proxy to this meeting, and I so move.

Richard M. Kruger

Thank you, Mr. Lang [ph]. Is there a seconder?

Unknown Shareholder

Mr. Chairman, my name is Tam Samji [ph], I'm the holder of a valid proxy for this meeting. I second the motion.

Richard M. Kruger

Thank you, Ms. Samji [ph]. You've heard the motion made by Mr. Lang [ph], which has been seconded by Ms. Samji [ph]. Is there any discussion?


Richard M. Kruger

I now call for the vote. For those of you who obtained a ballot, please mark it now for the reappointment of auditors.


Richard M. Kruger

The next item of business is the nomination and election of directors. All of the nominees are here today. May I now receive nominations for directors for the ensuing year?

Unknown Shareholder

Mr. Chairman, my name is Lori Bason [ph], I am a holder of a valid proxy for this meeting. I nominate as directors of [indiscernible]: Krystyna Hoeg. Ms. Hoeg is the retired President and Chief Executive Officer of Corby Distilleries Limited.

Rich Kruger. Mr. Kruger is the company's Chairman, President and Chief Executive Officer.

Jack Mintz. Dr. Mintz is the Palmer Chair in Public Policy for the University of Calgary.

David Sutherland. Mr. Sutherland is a retired President and Chief Executive Officer of the former IPSCO Incorporated.

Sheelagh Whittaker. Ms. Whitaker is a Corporate Director.

Darren Woods. Mr. Woods is a Vice President of ExxonMobil Corporation and the President of ExxonMobil Refining & Supply Company.

And Victor Young. Mr. Young is a Corporate Director.

Richard M. Kruger

Thank you, Ms. Bason [ph]. Is there any discussion?


Richard M. Kruger

As there is no further discussion, I declare the nominations closed. The required number of candidates for directors having been nominated, may I have a motion to elect the nominated candidates as directors of the company?

Unknown Shareholder

Mr. Chairman, my name is [indiscernible] Bakshi [ph]. I'm a holder of a valid proxy for this meeting. I move that the candidates nominated as directors be elected directors of Imperial Oil Limited to hold office until the close of the next meeting [ph].

Richard M. Kruger

Thank you, Mr. Bakshi [ph]. Is there a seconder?

Unknown Shareholder

Mr. Chairman, my name is Bolina Hainan [ph], I'm a holder of a valid proxy for this meeting. I second the motion.

Richard M. Kruger

Thank you, Ms Hainan [ph]. You have heard the motion made by Mr. Bakshi [ph], which has been seconded by Ms. Hainan [ph]. Is there any discussion?


Richard M. Kruger

I now call for the vote. For those of you who have obtained a ballot, please mark it now for the election of directors. When you have finished marking your ballot, please hold up your ballot and an attendant will collect it.


Richard M. Kruger

We have now come to the part of the meeting set aside for the Chairman's remarks.

Well, first of all, let me say I'm pleased to be here today and I am pleased to have the opportunity to lead Imperial Oil through its next phase of growth. Imperial is a company with an incredible history and an exciting future. It is driven by motivated, skilled people committed to delivering outstanding results.

Before I review our 2012 results, I'd like to briefly share a perspective on global energy demand, a perspective that will provide context for our strategies. With growing populations and economic development, the world will need more energy: energy to fuel economies and energy to improve standards of living. In summary, global energy demand is expected to increase by 35% by the year 2040, predominantly in developing regions like Asia, Africa and South America. While renewable and other sources of energy will play an increasing role, oil and natural gas will continue to grow and remain the largest sources of the world's energy.

Meeting the world's demand will be a challenge, a challenge in balancing environmental, social and economic considerations. This is a challenge Imperial looks forward to undertaking.

Now to our results. 2012 was a strong year for Imperial. We delivered our results through an unwavering commitment to the areas listed here: safety, the environment and operational integrity; technology and innovation; integration and synergies; profitability and shareholder value; and long-term, responsible growth. These areas serve as the foundation for our disciplined, value-based approach to our business.

I'll continue, starting with safety. Simply put, our mission is to achieve a workplace where nobody gets hurt, nobody. In 2012, we made significant progress in our journey towards this goal. We continued our trend of improving total workforce safety and achieved best-ever results. In addition, not a single employee experienced a lost-time injury of any kind. And we are particularly proud that our contractor lost-time incident rate is in order of magnitude better than the industry average. Working safely is good for people, and it's good for business.

Protect Tomorrow, Today describes our approach to environmental management. We strive to improve performance and minimize adverse impacts to the environment. In 2012, we continued to improve performance by further reducing spills and releases. In addition, we had no incidents that disrupted the public or sustained a material environmental consequence. Societal expectations continue to increase, and our efforts are focused on systematically reducing the footprint of our operations.

More broadly speaking, we seek to manage risks and achieve excellence through our comprehensive approach to operational integrity. Our operational integrity management system or OIMS is widely recognized as the industry standard. We ensure effective risk management, in part, by applying rigorous, best-practice-based operating procedures. We also place tremendous emphasis on training and development so that Imperial's workforce can manage steady-state operations efficiently and respond effectively when the unexpected occurs. Operational integrity and risk management receive the highest priority within Imperial.

One of the attributes that sets Imperial apart from the competition is our long-term commitment to and investment in technology and innovation. The science developed in our research facilities is applied in our upstream and downstream operations, providing industry-leading capabilities and delivering impressive results. We also have direct access to more than $1 billion worth of additional research each year through our affiliation with ExxonMobil. As a result of this collaboration, we are a leader among Canadian oil sands producers in efficiency and environmental performance. And in 2012, we joined Canada's Oil Sands Innovation Alliance to work collaboratively with our energy peers in advancing best practices.

With market access and supply cost challenges, we leverage the advantages of Imperial's integrated business model. Year-on-year, our teams capture significant value through self-help initiatives to increase productivity and enhance margins. With access to global expertise through our majority shareholder, ExxonMobil, we are able to apply the industry's best practices, best practices not only developed based on Canadian experience but relative to the best of the best worldwide.

The proof of our focus on operational integrity, technical innovation and integration is ultimately seen in the bottom line: profitability and shareholder value. In 2012, we achieved the second highest earnings in our company's history, $3.8 billion, up $400 million from 2011. We delivered an industry-leading 23% return on capital employed, and we generated nearly $5 billion in cash to support our growth. To this end, we invested $5.7 billion in new opportunities funded primarily from cash flow from operations. Our balance sheet remains strong, with flexibility to support growth plans. Lastly, we increased our dividend for the 18th consecutive year.

Imperial seeks to produce results today while also focusing on the long term. To continue creating economic value, we must balance social, environmental responsibilities. In addition to our commitment to safety and environmental performance, we invested more than $15 million in communities across Canada through contributions and employee giving programs. Imperial employees have a long history of giving generously their time and their money to worthy causes. And speaking of our employees, attracting and retaining a skilled, motivated workforce is critical to our long-term success. To this end, we are excited that we will soon provide our Calgary-based employees a new modern office complex with a number of attractive amenities. This campus-style complex in Quarry Park, expected to be complete in 2016, will accommodate our future workforce growth.

Now I'll highlight performance by business segment, starting with the Downstream. Our long-term strategies are noted here. In 2012, we benefited from lower-cost feedstock and strong operational performance, resulting in outstanding margins. High-valued products were efficiently marketed through Imperial's extensive terminals and networks. Products for refined products in Canada are mature, so significant growth isn't expected. In this environment, our strategy is focused on initiatives to continue to improve from within while at the same time remaining positioned to capture opportunities the market may provide.

Downstream earnings in 2012 were a record $1.8 billion, more than double 2011's $884 million. This increase reflected our ability to capture strong mid-continent margins. Cash flow was an outstanding $2 billion, and return on capital employed was 63%. Imperial also marketed over 445,000 barrels per day of refined products.

As the largest refinery in Canada, Imperial was well positioned in 2012. Our refinery system has competitive conversion capacity, which enabled us to take advantage of lower-priced crudes, increasing profitability. Refinery throughput of 435,000 barrels per day was up in 2011, reflecting facility reliability and product demand in Western and Central Canada.

During the year, we successfully completed our largest-ever maintenance program at Strathcona, and we announced plans to evaluate options for the Dartmouth refinery and related terminals.

Esso remains one of the largest branded retail fuel marketers in Canada and the second largest convenience store operator. Imperial markets retail products through 470 company-owned Esso sites and an additional 1,300 sites owned and managed by branded wholesalers and their dealers. We continue to upgrade our fueling and car wash facilities in major urban markets to further strengthen our competitiveness.

In lubricants and specialties, we market our products under the Mobil brand, which is prominent around the world. Mobile 1 is the world's leading synthetic motor oil brand and it is the factory fill of choice for many of the world's finest vehicles. In 2012, we had record sales of our flagship synthetic lubricants, contributing to our industry-leading market share. Imperial continues to enhance profitability to -- by transitioning to larger lube distributors.

Now let me turn to chemicals. In 2012, disciplined execution of our business strategy translated into continued strong performance. Imperial's Chemical facilities are fully integrated with refining, reducing costs and maximizing value. This is a strong competitive advantage that we enjoy. Chemicals also delivered record earnings in 2012, $165 million versus $122 million in the -- in 2011. Increased petrochemical sales and access to advantaged feedstock resulted in strong cash flow and return on capital employed. This business line continues to be an industry leader in unit costs and productivity.

In summarizing the Downstream and Chemical businesses: Our integrated model delivers impressive year-over-year performance, allowing us to fund upstream growth. Our strong results provide earnings today and the cash needed to invest for future earnings. This balance, along with our commitment to continuous improvement, continues to guide Imperial's business, as it has done for more than 130 years.

Let's look at the upstream. Imperial's Upstream strategy is summarized as maximizing the profitability of existing production, pursuing the highest-quality exploration opportunities, investing in projects that deliver superior returns and maximizing resource value through high-impact technologies. In 2012, we executed each aspect of this strategy.

Earnings totaled $1.9 billion. Production of crude oil, natural gas and natural gas liquids averaged 282,000 oil equivalent barrels per day, before royalties. And we are well positioned for continued production growth with high-quality proved reserves of 3.6 billion barrels and total resources of 16 billion barrels. We have one of the highest-quality, longest-life asset portfolios in Canada.

2012's performance was driven by our flagship operation at Cold Lake. Cold Lake is Canada's largest in-situ oil sands operation, with production to date of more than 1 billion barrels. Through sustained best-in-class reliability and strong reservoir management, we produced 154,000 barrels a day in 2012. We apply advanced proprietary technologies to grow production and add value at Cold Lake. The only way to describe this operation is world class. And the best news? We have significant growth ahead of us.

We have consistently increased production at Cold Lake through phase development, applying lessons learned to ensure cost-effective development and reliable operations.

Next step is the Nabiye expansion project. Nabiye will feature a cogeneration plant to maximize efficiency, reduce operating costs and lower greenhouse gas emissions. The project will capture or access 280 million barrels of recoverable reserves, adding 40,000 barrels per day of new production. Technology remains the key to unlocking even greater resource potential of this asset.

Historically, technological developments have increased recovery rates from about 20% of the bitumen in place in the mid-1990s to more than 40% today. New solvent technologies, in addition to steam injection, could further increase bitumen rates up to nearly 60%. In addition to further developing the Clearwater formation, the bread and butter of Cold Lake today, we plan to develop the Grand Rapids. The Grand Rapids has the potential for a multiphase development to produce a target of 1 billion barrels of heavy oil. This is in addition to the remaining 2 billion barrels we expect to produce from Cold Lake. We are currently piloting a new cyclic solvent technology, which offers even further upside.

Imperial owns a 25% interest in Syncrude and, through a management services agreement, provides technical support for this large oil sands mining operation. Syncrude has total remaining reserves of 4.6 billion barrels of synthetic crude oil. Our focus continues to be achieving operational efficiencies that will reduce costs and improve reliability. The prize at Syncrude is large. We continue to benefit from and tap into ExxonMobil's global experience to help in this effort.

When we talk about growth and the future at Imperial, we talk about Kearl. We refer to Kearl as the next-generation oil sands operation, next-generation because it features new technologies and innovation that will significantly improve performance. For example, Kearl includes the first commercial application of Imperial's paraffinic froth treatment process. This process produces saleable bitumen without the need for an on-site upgrader. The result will be increased reliability, reduced emissions and significantly lower lifecycle capital and operating costs.

So what's the big deal about Kearl? Well, literally everything. First of all, Kearl represents the largest capital investment in the history of Imperial. It will initially produce 110,000 barrels per day and, with expansion and debottlenecking, will increase to 345,000 barrels per day. This operation will produce bitumen for generations to come.

Now a few fun facts to convey the scale of Kearl. Thousands of workers continue to support the development, with more than 10,000 at its peak. Many of course are local community members. By the end of 2012, the Kearl project had spent more than $1 billion with local businesses, $220 million with local aboriginal companies. And last but not least, Kearl will represent a step change in environmental performance.

Kearl's environmental advantages are many. They will ultimately include energy-saving cogeneration, which reduces lifecycle greenhouse gas emissions; on-site water storage to eliminate river withdrawals and low-flow periods; progressive land and earlier tailings reclamation; and a state-of-the-art waterfall deterrent system. These improvements were made possible by carefully examining past oil sands mining operations and challenging our project planning and research teams to do better.

To summarize the Upstream: It is an understatement to say the future is bright. With projects currently underway and plans we are progressing, we are -- we expect to essentially double production from today's level by roughly the end of the decade. And a number of additional opportunities provide further growth potential, opportunities like Horn River, our recent Celtic acquisition and Beaufort exploration, opportunities for additional liquids development or potentially LNG export. Personally, I am excited about the years ahead relative to Upstream growth, and I am pleased to confirm the startup of Kearl is imminent.

Let me summarize. In 2012, all of our business lines delivered strong results. We focused on safety and risk management. We leveraged our integration to capture value. We remained committed to technology and continuous improvement. We advanced a significant Upstream growth portfolio, and we did it with the best-trained, most capable workforce in the industry. This is a pivotal time in the -- in Imperial's history, and I am confident that, by adhering to our business model and strategies, we will continue to deliver industry-leading results and shareholder value.

In closing, I would like to take this opportunity to thank our outgoing board members Bruce March and Robert Olsen for their contributions.

Bruce led Imperial's success over the last 5 years. And on behalf of the board, shareholders and employees, I thank him for his leadership. We wish Bruce continued success in his new role as Senior Vice President of Global Operations with ExxonMobil Chemical company. And Robert Olsen, my good friend and long-term colleague, we also thank you and wish you continued success with ExxonMobil's production company.

It is my pleasure to welcome Darren Woods as a Director. Darren is the President of ExxonMobil Refining & Supply Company and Vice President of ExxonMobil Corporation and, I would add, a close friend of mine. Darren, we look forward to -- we will look forward to benefiting from your experience and expertise as Imperial embarks on its future.

Thank you for your attention this morning. And now, I invite your questions or comments. For this part of the agenda, we have established guidelines so we may hear from as many of you as possible. First, to remind you, only shareholders and duly appointed proxy holders are allowed to ask a question. Please identify yourself by name and whether you're a shareholder or a proxy holder. Also, hold up the white or yellow admission card that was provided to you at the registration desk before you came in. And please keep your comments brief, taking no more than about 2 minutes to either state your comment or question. And third, please only ask one question each time that you're recognized so that we can have others participate. And if you have additional questions, if there's time, you'll be recognized again.

Now I open it up.

Question-and-Answer Session

Richard M. Kruger

Yes? Could I ask you to stand, please?

Unknown Shareholder

[indiscernible] My name's Amos Shidni [ph], I'm a shareholder. Could you elaborate on the paraffinic froth treatment, please?

Richard M. Kruger

Thank you, Amos [ph]. I appreciate you being here today. Proprietary technology that we developed. And the key to this technology, what we were trying to accomplish, is to create the ability to process bitumen on-site without the need for the many, many-billion-dollar investment that would come with an upgrader. So through our research efforts and our testing and piloting, we were able to develop a solvent that we can mix with bitumen froth that removes the particles, the water and the heavy hydrocarbon molecules that would not allow it to be transported in a pipeline without upgrading. So that's a huge advantage we've created by saving a great deal of investment on that upgrader to develop pipeline-quality bitumen. Really, really excited about it. And compliments go to our research efforts over the years to achieve it. It's a competitive advantage. Others? Well, Amos [ph], thank you for your question. And we have time, so I'm going to -- so I think you should ask it.

Unknown Shareholder

It's [indiscernible] reclamation site, I...

Richard M. Kruger

Yes, yes. Our Cold Lake, of course, is in-situ steam injection, and Syncrude and Kearl are both mining operations. The difference between Syncrude and Kearl, of course, is that, your last question, Kearl does not have that on-site upgrader, whereas Syncrude does. Well, thank you again for your question. I think we should give it to you. Go ahead.

Unknown Shareholder

[indiscernible] sharing that technology will fix [indiscernible].

Richard M. Kruger

Syncrude, of course, already has the upgrader. And to share that technology, you'd have to dial back the clock and essentially start Syncrude over again. So that specific technology is not likely to be applied at Syncrude. But what we will do is work very closely the synergies of the mining aspect of it, the transporting of the bitumen and all of those things that are in common. We will work very, very closely to share that back and forth to learn from Syncrude and to ensure Syncrude learns from Kearl. But the specific froth treatment process, the facilities are too different to start over. I'm almost afraid to ask if there's any more questions. You and I ought to get together for a cup of coffee. No, well, thank you for your questions.

And before we conclude, let me ask Brian Livingston to present the scrutineers' report on the number of shares and shareholders presented at -- represented at the meeting and the results of the balloting. Brian?

Brian W. Livingston

Mr. Chairman, the scrutineers have reported that the proxies counting in total of 88.2% of the shares, representing 11.4% of the registered shareholders of the company, have voted. Also, 61.1% of the minority shares are represented by a proxy.

The scrutineers have also reported on the balloting and they have informed me that PricewaterhouseCoopers have been reappointed as the auditors and the director nominees named in the company's management proxy circular have been elected as the directors.

We now invite all shareholders and guests to join us in the foyer for the coffee that Rich mentioned, and juice, where there will be an opportunity for further discussion. The directors, senior management and annuitant club executive members will be available to meet with you there. You will recognize them by their name tags. You can reach the foyer by exiting out of the doors to the rear.

Richard M. Kruger

Well, thank you, Brian. This completes all required business at our Annual Meeting of Shareholders, and I officially declare the meeting concluded. Thank you for attending today.

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