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Suncor Energy Inc. (NYSE:SU)

2013 Investor Day

December 04, 2013 11:00 AM ET

Executives

Steve Douglas - VP, IR

Steve Williams - President and CEO

Mark Little - EVP, In Situ and Oil Sands

Kris Smith - EVP, Refining and Marketing

Francois Langlois - SVP, E&P

Steve Reynish - EVP, Oil Sands Ventures

Mike MacSween - EVP, Major Projects

Analyst

Mike Dunn - FirstEnergy Capital

Greg Pardy - RBC Capital Markets

Kyle Preston - National Bank

Steve Douglas

Good morning everyone. My name is Steve Douglas. I know quite a few of the faces in the room. I'm the Vice President of Investor Relations here at Suncor. However, you probably don't know, my father was a country pastor and the first thing he'd do on a Sunday morning was make all the people who sat in the back queues to come to the front, and I thought I was going to have to do that this morning, but we seem to be filling in.

This is Suncor's first ever Investor Day. We weren't sure what to expect in terms of attendance on a blustery Calgary winter day. We're very pleased with the number of people we have confirmed this morning and I am sure we have many, many more joining us from around the world on our webcast. Just before we get started, I want to take care of a couple of housekeeping details for the people in the room. If you want to use the restroom, straight out of the door as you just come in, and turn to the left or the right, they're on either end of the hallway.

If in the unlikely event, we have to clear the room, there are two signals that you could hear. One is a slow chime. That simply means we remain in place and await instructions. And if you hear a rapid chime we need to evacuate the room. And here is the surprise; you don't go down the stairs and out the front exit. In fact there could be emergency personnel coming in that exit. You go out these doors to my left, turn to your right, end of the hall turn right through the tumble doors and you go downstairs to the adjacent foyer. And if for some reason that's blocked the exit door is on this side, end of the hall down the stairs and again to the adjacent foyer. There will be hotel staff in the hallways directing you and hopefully that's the last time I have to mention anything about that nature.

Just want to quickly go over the agenda. We are going to try to stick very tightly to it. Because we do have a lot of people joining us on the webcast and some of them will be planning to pick up the certain portion of the agenda. So we will try to be quite prompt.

We will have a number of speakers this morning. The first one up will be Steve Williams, our President and Chief Executive Officer. He will be followed by Mark Little who is our Executive Vice President of the In Situ and Oil Sands. The downstream presentation will follow that with Kris Smith, the Executive Vice President of Refining and Marketing. We will take a brief brake at that point and when we come back, Francois Langlois, who is the Senior Vice President of E&P will present followed by a joint future focus presentation by Steve Reynish, our Executive Vice President of Oil Sands Ventures; and Mike MacSween, our Executive Vice President of Major Projects. I will wrap up the morning with a bit of a financial summary and then you'll have a chance to ask questions of the entire group. We start again in about 45 minutes for a Q&A.

As I said we will stick closely to the agenda, and there will be the opportunity for the people on the webcast to pose questions as well. They can email those in. We will get them in front of people to the extent we can. Worst case scenario we will respond to them in a very prompt manner in writing in the next day.

With that, I'll just point out one more thing, we have a couple of people who can help you out if you have any challenges or need anything from us during the day, [indiscernible], if you just raise your hand, Jennifer [ph], our analyst and Denise McCloud [ph] who has handled facilities is at the back. You can approach either of them if you need anything. You do or you should have internet access. There is a code at your place, should be able to get online if you need to do that.

With that I'll kick off the morning and handoff to Steve Williams, our President and Chief Executive Officer.

Steve Williams

Okay let me [indiscernible] to Steve's welcome and thank you for joining us today. A lot of familiar faces in the room. So pleased to see you. We specially arranged some fine Calgary weather for you. I liked Steve's analogy around like being back at school where the rooms filled up from the back and, sorry Greg, you got here are a bit late, so you're going to be in detention with me later, and you have to sit at the front and listen closely to us.

You've been hearing a lot from Suncor over the past few years and today really is an opportunity for some in-depth conversations, but more than anything it's an opportunity for me to introduce our senior leadership team with you. They come with extensive skills, great experience, a lot dedication, and I don't have any concerns in saying they are absolutely the best team in the oil industry.

The character of some of our conversations has changed over the last year and Steve and myself were reminiscing on a late slide a couple of weeks ago, about how things have changed. If we go back to couple of years, the discussion tended to be about should we, shouldn't we, come into Suncor or other company, should we, shouldn't we come into, Oil Sands. The question we get now is much more when. And so today we're going to concentrate a lot more on the detail of our business, so you can start to understand how powerful the Company's position is.

But let me start by introducing -- and I will get them to quickly stand although they're going to be coming later. First of all Mark Little is our Oil Sands and In Situ, EVP. Next to him is Kris Smith, who is running our Downstream. Next to him is Francois Langlois, who is running our Exploration and Production. Next to him is Steve Reynish, who has been running our Oil Sands Ventures. And next to him is our Mike MacSween, who is running our Major Projects Group.

We also have some other executives, not in room today; Eric Axford, who runs our Business Services; Janice Odegaard, who is our General Counsel. In fact Paul is, because he came late he's had to sit in the front row as well. Paul Gardner has actually joined us here as well.

I want to deal one of the elephants in the room first. So you've heard that Bart Demosky, our CFO has left Suncor to pursue an opportunity in another industry and let me say right up front, Bart will be missed and all of us wish him absolutely the best as he embarks on the next stage of his career.

We all make an announcement for a new CFO in due course. You should know that I have the highest of confidence in our financial team and their ability to continue to oversee and steward the Company's very strong financial position and one of the things you're going to see today is how powerful our financial position is. We are already engaged in a replacement process. That's going to include a full internal and external review, and I'm expecting that I'll announce an interim CFO next week.

I will also at the same time make a few other minor announcements, just about how between the team you can see here today and I've talked about how we're just going to rebalance some of our accountabilities through this interim period. I want to restate again, we have a very strong financial team. So I have no concerns as we go into that interim position.

And so let me now start to talk about the Company and where we are. So very exciting time for us. I think you're to get a flavor of that as we take you through some of our plans this morning. As I said, not only are we in a very strong financial position, but we're also in a very strong operational position and we're also in a very strong growth position and we're going to reasonably extensively today about how we're positioned, we believe in an unprecedented way to start to execute that growth.

The integrated model is demonstrating its strength across the value chain. We've seen significant and continued improvements in reliability and cash costs. Expect both of those to continue. You've heard about this emphasis on smart growth, which is focusing on cost, quality and returns, rather than where we used to focus which was harder on schedules, when growth was so much appreciated, almost at any cost. That's not the company we're now, it's about smart growth.

We're going to talk about the disciplined approach, and how it is helping us to deliver on our commitments, so you are invested and how we're achieving superior returns. And we're going to talk about how we continue to make progress in the three key areas that we've identified; operational excellence, capital discipline and profitable growth.

And I think it's fair to say that as this team transitions into its current position, part of our plan had been to earn in the respect of your guys and our owners back. And you've seen us do that by a degree of conservatism, some understatement and deliberatively trying to over deliver. And as we go through this morning, you will see how that's starting to be very powerful in terms of not only the opportunities ahead of us but the power that's on that balance sheet.

We've talked in some detail about organic growth. We've talked much less about inorganic growth, and that is by design. You will see as we get through this morning, the firepower we have on balance sheet is considerable. So it gives us the opportunity to potentially get into some inorganic activities. We are in no hurry. You're going to see us taking no short left or right turns. We have nothing specific in play at the moment, but you will hear us talking about our strategy, what the core of business is, what we think the opportunities are and if you were to take a step, then it will into those areas of our core business.

But first let me give just a little bit more detail on operational excellence and simply what that means is running the company well with a rigorous focus on continuous improvement. And we have a comprehensive operational excellence management system behind it and that's based on consistent standard processes and procedures, which start to de-risk the operation. It drives our continuous improvement and particularly you'll see our performance on safety, environmental performance and reliability in costs make continuous improvement.

So let me give you a few specific examples. First ones I'd give you are on safety and conventional wisdom is that we use safety as a bit of an indicator of how the rest of things are going. Normally if you can run your business safely, then you're concentrating on the things which deliver a higher quality operation.

We continue to see even 10 years into our safety program. We've seen just under a 20% improvement in total injury frequency over the last couple of years and for recordable injury frequency, it's actually over 20%. So we'll keep working hard on that but the indications are very good.

A few environmental examples and you know these are real and tangible and it is very important in the world we operate in today. First one I'll give is around greenhouse gas emissions and this one we give on a per unit basis because our business is growing so successfully. But we've cut our per barrel greenhouse gas emissions by a half since 1990.

I'd give you another example about some work we've doing around water consumption. In 2007 our water withdrawal from the Athabasca River was 45 million cubic meters. Our plan for next year is that it will be 15 million. So that 45 reduced to 15 million cubic feet meters and that's a 66% reduction. And we expect to see a 50% reduction in net water use for the same period. So exciting real tangible bits of progress being made.

We're going to set some aggressive objectives for the future on environment. There will be specific around water consumption, reclamation of disturbed land, energy efficiency and air emissions. Reliability is a key component of operational excellence. Suncor refineries are a great example of that. They've demonstrated world class reliability over many years and we've got utilization rates up over 90%. And of course both the people who were delivering that and that principle in focus for the organization has shifted across into Oil Sands and we're starting to see some of the same rates or progress there.

One of the consequences of that is the nameplate capacity of the refineries has been increasing. We've guided 17,000 barrels per day over the last few years, and as you'll see in the 2014 guidance we're planning to once again increase the Edmonton refinery nameplate capacity by another 2,000 barrels, up to 142,000.

Our focus and Mark will talk to it later, is on continuing to reduce cost. Mark will speak specifically to Oil Sands but I just wanted to say is broader than that. It is right away across the Company and we'll give some highlights. But most of what we'll talk about is specific to oil sands today. Project execution over the last few years is at or below budget. We're going to talk to that because it's very important as we start to look at our growth program going forward that we have a successful track record.

Second, I want to talk you to just a bit about capital discipline. We've been working very hard to spend wisely. That's meant selecting projects in the best interest of the company and its shareholders; executing those projects very well; aligning the assets with our strategic objectives and we'll talk to that today; and then where we have a surplus and we have a considerable surplus, returning that cash to shareholders. You will see the trends and you know the commitments that we've taken in terms of continuing that social contract with the cash we have.

We've made an excellence around capital. Our guidance is $7.8 billion for next year. That includes approximately $4.2 billion for growth projects and approximately $3.6 billion for sustaining capital investments. Getting that ratio back to very healthy rent growth has been a very important part of our focus.

We've also completed $4.5 billion divestment program. That's the sale of the majority of our conventional natural gas business in Western Canada and the most recent piece we've done with the gain on the sale. So I think that transaction demonstrates our commitment to capital discipline and aligning our assets with our strategic objectives. Also focus on capital discipline is reflected in a very strong balance sheet that Steve will talk to later and on how we focused on returning that cash to shareholders, both through share buybacks and dividends.

The final piece, so I just wanted to quickly talk to was profitable growth. It goes hand-in-hand with capital discipline. Our aim is to deliver the highest possible returns to shareholders. That means making some tough decisions. We've stopped the Voyageur project. It means some different projects, some multiple debottlenecking projects, we've looked at getting to that low hanging fruit and when you have significant assets on the ground, that's one of the opportunities available to you. It also means when you combine it with our Fort Hills decision on how we're reflecting the priority we place on making smart choices, when it comes to growing the Company.

Most decisions are being made in the context of our integrated model. So deploying capital to prepare our Montreal refinery to receive shipments of Western and England crude feedstock is further driving our profitability. We will give you some more detail on that later. We have a very effective suite of growth projects to choose from, so some difficult choices ahead for us which have the potential for production, not just through this decade, and we will talk most about this decade but also as we go further into the next decade and beyond.

In addition to Oil Sands, projects include the East Coast of Canada, sanction of the Hebron project earlier this year. We have a great project operated there. Exxon Mobil is a good example, and production from there is expected in 2017. But as I say growth goes way beyond 2020.

So on this chart what I just wanted to do was show you what some of those look like. If you see we have significant earn out in priority order here. But you can see we have significant Oil Sand's mining opportunities, Joslyn, Fort Hills expansion Audet, and the extension of our base operations around Voyageur South.

You can see we have a long list of In Situ projects. We're going to talk extensively today about replication, that's Meadow Creek, Lewis, Firebag, Mackay River South, and of course we will talk in any detail today but we have massive carbonate resources as well. And that was part of our strategy. So continuing to invest in the core of our business and we are working hard with others now to develop that technology. That's probably the next generation of investment, which will come outside of the schedules we are talking today.

E&P opportunities, clear strategy there, very close proximity to our existing operations in politically stable regions there, largely in the North Sea, on both sides of the North Sea and off of the East Coast of Canada. We also have a very large unconventional gas resource in the Montney. And we have optimization of the upstream production through further integration of our refining network and we will talk about that, and leveraging our midstream capabilities.

So growth, lots of opportunity for growth, but wherever is, it has to be responsible and we are having to respond to environmental challenges. You will see us talk about technology, innovation and importantly collaboration; not just in theory but in practice, the tailings technology we developed we believe is a game changing approach to how we can manage that particular challenge around environment, but it also has a huge economic benefit for some Suncor relative to the alternatives. We will also look at the advances in how we handle water. We will talk about some of those today.

So we are innovating and improving all of the time. We don't have a monopoly on good ideas. So you'll see us collaborate. You heard me talk about COSIA. So I won't into in great detail, about 13 companies, 90% of the production in Oil Sands, companies committing to all of the environmental priorities I talked about, sharing intellectual property, 560 pieces on it currently, That 560 took approximately a $1 billion to develop. And COSIA, to our knowledge is the largest collaborative innovative network in the world, in any industry. Those accomplishments wouldn't have been possible without having our own house in order first.

So a simple, well-defined strategy I hope is going to be very clear as we go through it today, a focus on operational excellence and profitable growth and a strong commitment to delivering results and I hope you will agree we have started to put those scores on the door. So you can tell from my tone, I'm very excited about where Suncor is and where it's headed. And that I believe is largely due to the strong experienced and ambitious leadership team we have here together with a very engaged employee base.

So that's all I wanted to say by way of introduction and now I will hand over to Mark Little.

Mark Little

Good morning everyone. I guess this doesn't go up, but there is three parts that I really wanted to talk to you today. One was just to add some color to our existing performance. The second key component was to talk a little bit about how we see taking our existing operating assets in the region up to 500,000 barrels a day. And thirdly I wanted to add some color to the In Situ growth and replication strategy that Steve referred to.

So first of all, we have a number of huge advantages I believe in the Oil Sands business and first is with our team. We have an incredible team and I remember when I first came to Suncor I talked about, whoa, this organization has heart and soul. And it's very difficult to measure, but I'll tell you it makes an enormous difference with us.

We also have incredible experience, both in mining and In Situ, the two primary Oil Sands technologies and off it we play a lot in that region obviously in all aspects of it. And one of the things that Steve talked to is that we're spending a lot of time trying to move talent from the refining side of our business, where they have outstanding refining and manufacturing capabilities into Oil Sands to strengthen our team and that is some of the journey that we have around reliability.

Secondly is our large resource base and I'll get into the details of that a little bit more, as to why we see that as a significant advantage to us, but with nearly 6 billion barrels of proved and probable and 19 billion barrels of contingent resource, we think we're extremely well positioned for the future.

Thirdly, operational excellence. Operational excellence is interesting because it is super easy to talk about; run the well, don't have issues, be reliable. But doing that every day is the challenge and so that is an enormous focus for us, within oil sands and I think that you're starting to see some of the benefits of it and we really do believe that this is becoming very real to us on our journey and we're very excited about the progress we've made. And lastly our large physical assets on the ground within the Fort McMurray and regional municipality of Wood Buffalo, and that sets us up for some very interesting investments that will deliver high economic returns to the shareholders and it's very difficult to debottleneck facilities unless they exist. And so having that large resource base is a huge advantage and I will talk a little bit more about that through my talk.

When you go to look at our Oil Sands advantage, one of the things we talk a lot about is our vision, balancing economic prosperity with environmental performance and social well-being. And so this is one of the reasons I think we've emerged as a leader in the development and implementation of oil sands technology is around this focus of balance. And Steve already talked about our Tailings technology.

One of the exciting things that happened this summer was we opened a fen within one of the reclaimed areas within our mining footprints. And this is one of the few fens that have ever been reconstructed within the world and it's exciting to achieve that milestone, but this is just one point in a long history that we've not only achieved but that we plan to achieve as we move forward. So it's very exciting for that and this has been recognized by a number of third parties, including 12 consecutive years on the Dow Jones Sustainability Index and making the Global 100 most sustainable corporations list in January of '13.

My next several slides are really focused on the existing assets that are on the ground operating today and I just thought I would just briefly touch on those before I dive into the details of that. So we essentially have two mine pits that are operating today, the Millennium Mine and the North Steepbank Mine that opened a few years back. Those two mines produce typically somewhere in the neighborhood of 300,000 to 330,000 barrels a day, depending on the ore grade and other parameters.

We have two upgraders within our existing base facility. The nameplate capacity on those two upgraders is 350,000 barrels a day. And then we have our In Situ assets. We have Firebag which has a nameplate capacity of 180,000 barrels a day and MacKay at 30,000 barrels a day.

So we have a very significant set of assets that are on the ground and they're integrated. We can move bitumen from any of our mines or In Situ facilities into our upgrader and so we have tremendous flexibility to not only move it in and out of the upgrader, but also to blend various products and ship it to market and we believe that that is a huge advantage to us as we move forward.

For those existing assets, we've made some progress in time to grow production. And not only grow segment production, the total headline number that you see that we published; but also to grow the value of that production; so upgrader reliability and margins, whether we are sending out sour or synthetic sweet crude. So given the large number of assets we have a significant focus on driving shareholder value and working on improved reliability and economic debottlenecks and expansions of those assets.

And in 2014 we have bit of a unique opportunity, at least over the last four or five years because we're going into a year where we do not have major turnarounds. We do have maintenance. The numbers will ebb and flow but not like you've seen in the last several years. So it's going to be a fantastic opportunity for our team, to be able to demonstrate some of the progress that we've made and show you the progress we've been making on that.

If you look at capital expenditures, one of the critical things we've been focused on is working to drive down our maintenance and regulatory capital and free up capital to be deployed to grow, whether that's in our own portfolio or the opportunities Steve's already mentioned. So as a result of that you can see on the right hand chart that is coming down. There is a significant focus on us and as Steve talked about, adding a lot of rigor into ensuring the every dollar that is spent is spent in the best interest of the shareholder.

If you get in and look at; one of our focuses is around maximizing the utilization of the assets. I already talked to this and what you will see is if you look at the left hand chart there, on the bitumen from operations, you will see that that number has increased over a period of time. Now some of that clearly is the Firebag investment that we made; Firebag 3 and 4, and so we've been making some good progress there.

But clearly in Q3, we were able to move forward with one of our debottleneck opportunities and that allowed us to be able to bring our bitumen into the facility in a way that allowed us to blend with a variety of diluents that we could ship to market. And so we also brought third-party diluents in for the site and we're able to shift bitumen to market for the first time using third-party diluents. That removed one of the constraints from our bitumen production and so because of that our bitumen numbers are increasing, and I think people all recognize that when you get into the numbers that we recorded in August and then again last night that we have a bunch of capability. And this has allowed us to try and run all of our assets at the same time at the maximum capability of it, so we have made some progress there.

We have also, maybe not that obvious but we've restructured the business to go structurally long bitumen within the region and that has certainly helped us and being able to manage the upgrader reliability. So we are in a position now where we can move forward and we always have the bitumen to put in the upgrader and ensure that it is amply supplied, and so our focus is to ensure that that happens each and every day.

So on the right hand chart, you can see that we've made some progress there. We're starting to see periods of time, months where we're running the entire upgrading complex above 90% utilization. And so we now need to take those months and turn them into quarters and turn them into years; that is the challenge that we're working on. But we've made some physician investments that allow us to feed the crude to those upgraders in a way that they have not been fed before to better manage quality, and this is a huge challenge.

It's managing the quality into the upgrader and so we've made some huge progress there. Why are we targeting 90%? When you look at our refining complex, a lot of our refineries operated about 95%. And one of the reasons is as we produced mine material, the mine material ends up coming in with relatively high sediment, chlorides and water. So the bitumen that feeds the frontend of our machines has about 3% and 3.5% of that volume is water, sediment and chlorides.

If you put that into a conventional refinery, I would say you're likely going to see it shutdown in less than a day. They're normally fed almost exclusively with material that has less than 0.5% salt, sediment and water. So it's a huge difference in quality and that's part of the challenge. People ask us, why don't Oil Sand upgraders operate at 95%. Part of it is the feed quality that it gets.

But that's a key area of focus. We've made tremendous progress and we're optimistic that we are going to deliver the 90% utilization on the upgrader on a regular basis and one of the reasons it's 90 as we required additional pegging and some maintenance to be able maintain it, given the feed quality. But it's something that we made huge progress on.

Let me talk a little bit about costs and it's clear that people don't fully understand our cost structure. So we thought we would provide a little bit more insight into that. And what you see on here is we segmented on the left hand side of the chart, the two different ways that we produce bitumen and I know that many people look at our business, as we shift bitumen to market and we shift synthetic crude oil, but we produce bitumen every day. We schedule that bitumen into the upgrader, turn it into a synthetic barrel and ship to market.

So when you go and look at our In Situ business, we think we've made excellent progress in making that fully competitive with the other In Situ businesses that are out there in our peers. We believe we're there today and we believe through some of the opportunities that we have, we can turn this into a strategic advantage and drive this lower as we move forward.

So one of the other things people are wondering is, are our costs coming down just because of product mix? And you can see on the chart that in 2014 both our mines Bitumen costs, as well as our upgrading costs declined, our unit cost declined. The only one that goes up on this chart is the In Situ side. The reason it's going up is because we're forecasting higher natural gas prices. And when you roll that into the segment and you take the Bitumen, you run it through the upgrader the total segment cost continues to decline.

Our focus as a business is to drive that segment cost down to $30 or lower and sustain it there and obviously in big turnaround years and such there is a bunch of noise associated with that but structurally get that down below $30 and hold it there. We're very excited about the progress we've been making and the three components that are driving this is mix obviously. Also the fact that our cost structure -- we're utilizing the assets more. So our reliability is up, we get higher utilization over a fixed cost and secondly real cost reduction that the team is focused on and delivering.

Why does this sound -- it's interesting. Steve Reynish will come up and talk about Fort Hills, but people have commented that our Fort Hills cost structure looks aggressive and when we look at it relative to our Bitumen cost that we show on here, we would say now although it's lower, it looks -- I think it benchmarks very well with what we see in our existing operation. So we feel very good about the progress we're making and that helps providing a little bit of insight into our cost structure and how we think about that business.

I now want to change my focus and talk about how do we close the 500,000 barrels a day and where does the oil come from. Now on the left hand chart here obviously one of the critical areas about half of the oil from where we started on this journey at about 300,000 barrels a day was coming from the In situ side, Firebag 3 and 4. And I am extremely pleased to be able to tell you that Firebag 4 has ramped up and achieved its capacity and now we have taken the entire Firebag complex above 90% utilization and we believe that as we go into the next year we will see it in the 90% to 95% utilization that you show in here, and that's really just accounting for maintenance and ebbs and flows and normal operations. So we made some great progress there and we're excited about that.

The other half of the production, so we talk about, so that gets us up just over 400,000 barrels a day; how do we get the 500,000 and I will talk to that in just a moment. One thing I would just point out in here and I probably should have talked about it on the cost chart is that as we increase the amount of material that goes through the upgrader, approximately one barrel into the upgrader equals 0.8 barrels of synthetic materials.

So one of the things you see on here, where it talks about upgraded yield loss is that as we continue to increase the material we put in, you can't just keep adding the Bitumen barrels to get to 500,000, the throughput gets reduced slightly. But obviously that's a huge value win for the shareholder as we increase the utilization of the upgrader and deliver that value.

I just want to talk about where does the 100,000 barrels a day come from. We said there is six projects that make up the 100,000 barrels a day with an average cost of between $20,000 and $30,000 a flowing barrel. And I would caution you on the 20,000 to 30,000 of flowing barrel because it's not all about the flowing barrel. It is about the resource too as how much it cost to get the physical barrel to the markets. And obviously resource development is a key part of that.

But if you look on the left hand side of the chart, the orange, if they are orange, the three orange projects that are there, the two on the left hand side we have now been operating. And the one that I talked about in bringing gas condensate and third party diluents into the site and allowing us to blend with third-party diluents and ship Bitumen to market is the one that you see on the far left hand side.

So we started that facility up in July. We have made great progress in that and that's one of the reasons that you are seeing the production numbers that you are seeing. Last night we posted our November production at 437,000 barrels a day, a new record for us, slightly ahead of what we had posted in August and that is a key part of that.

On the extraction de-bottleneck, this is really to allow us that we now have been able to demonstrate high mining tonnage through our extraction facilities. When high mining tonnage has high ore grade, it requires some additional capacity within our secondary extraction system. That is what that is. So the 6,000 barrels a day is an average because the [indiscernible] flows, sometimes we use it, sometimes we don't. But and that facility has just started up. So we will start seeing more of the benefits that would add in 2014.

The MacKay River debottleneck starts up next year and this is re-balancing and adding some additional water and steam-handling capacity that will allow us to grow that facility by 8,000 barrels a day taking it up to a nameplate of 38,000 barrels a day. Integrated reliability is just the journey that I talked about, the progress that we're making, so we expect to be able to deliver that. MacKay River 2, not so little bit more like an expansion. We are building essentially replicated facilities but we are re-using a lot of infrastructure so that in the operating cost side we do not have a full cost structure that is associated with it and a lot of the infrastructure already exists, so it's lower than full cost project that takes MacKay up to the 58,000 barrel a day nameplate.

And then the Firebad debottleneck, there is still a lot of work that's going on in framing up that project. But this again is re-balancing some of the steam and water handling and being able to take up the complex to 200 or maybe even larger and we're just working on that. But we've assumed 20,000 barrels a day associated with that. So we've been making some great progress and you're starting to see the benefits of that in some of the production numbers that we've been able to deliver. I just want to very briefly now touch on our resource on the In Situ side. And Steve Reynish is going to come and talk about some of the mining resource and how it adds up and such. So what we try to do is, this slide is not a third party slide, but it helps in framing up the resource.

While the thing on the -- we showed the map of Alberta here at a 135 billion barrels which is reported by the Alberta government and we went through and tried to understand who is holding this resource. And if you add up that major players within that that we show is just lines on this chart. It adds up to about two thirds of what the Alberta government states exist within the province. And you can see that Suncor, when we say Suncor has a large position in In Situ, we believe that it is very large. And you can see it relative to our peer on that, based on the public information that has been disclosed.

On the right hand chart, now obviously this is a little bit more subjective. This is our assessment, so this isn't something that you can go, like on the mining side where people have disclosed a lot of a quality; we've looked at this in some detail. So what that qualifications, what we tried to do is understand both a size dimension as well as a quality dimension using our rest of our people to try and understand our resource space and obviously we look at this. Should we trade our resource? Should we buy in front of it? Should we sell down our position, those sorts of things; and as we evaluated and we believe that the vast majority of our resource is very much in the upper tier of the qualities that are available.

And so the quality chart there shows about 60 billion barrels of the Alberta resource. So it's not all encompassing. The first line chart is about two thirds of Alberta and two thirds of that again are about 60 billion barrels is what's represented. We think we are extremely well-positioned to move forward. How does that add value to the shareholders? One of the things we've been doing is try and understand that resource in a holistic sense and what our strategy is around it, and through that, I mean an assessment of that resource with the information that we have, obviously we haven't drilled all of that resource up.

But we have identified approximately 10 locations where we have somewhere around 500 to 600 million barrels of high quality resource. And so when we say high quality we believe that the quality can be economic, using today technology. So we think we have an excellent resource position and why 500 to 600, we could operate for somewhere in the neighborhood of 30 to 40 years at 40,000 barrels a day. And we believe we need that scale to be able to operate it efficiently. So the properties on this page are all a 100% owned by Suncor except for Meadow which we have a 75% interest in.

We are in a process of doing a multi-year acquiring program that's helping us to further delineate these areas and try and understand exactly how we would move forward. And the intent is for us to -- because the rest of our characteristics are quite close that we would be able to design a facility that could be replicated across all of these different pockets and that would help us in driving down not only our construction cost but also our operating maintenance tactical cost as we move forward. How does that play out? So this slide shows in here a number of replication phases. Notionally we think of those replication phases of somewhere in the neighborhood of 20,000 to 40,000 barrels a day. So, this is an all Suncor, this is just on In Situ resource that we're looking at. Obviously, the Suncor's opportunities are much greater.

So, as a result of that it helps it in driving some consistency on the regulatory front, on the construction of the facility and Mike MacSween will touch on that in his remarks, looking at about how we sequence [indiscernible] and the timing with notional ratio and that's just about a year between phases whether its six months or a year but its notional at this point in time and driving down our cost by using standardization and our ability to execute.

I just wanted to shift and talk a little bit about, so we're very excited about the replications strategy and the opportunities there, I just wanted to talk little bit about upgrading. Clearly, upgrading is an opportunity for us. Everybody has the numbers, we have not delivered the nameplate capacity or 90% of that nameplate capacity, we planned to do that. And so that's a huge focus for us as I mentioned before and so I showed up in the bitumen line.

But we also show align in here that says upgrader debottlenecks and the upgrader debottlenecks the focus there is that we believe that we can be debottleneck the upgrader. Now, that doesn't obviously integrates our production in fact because of the shrinkage that I talked about production goes down slightly, you've got 80% yield, but we're very excited about the opportunities, we've identified opportunities that we believe will allow us to the debottleneck the upgrader somewhere in the neighborhood of 5% to 10% and that could be significant obviously for our shareholders.

And finally on here, we show Fort Hills, Paraffinic Froth Treatment coming through likely both the oil sands upgrader as well as the Edmonton refinery and by doing that we've talked about the Fort Hills crude been a premium crude because of the technology is different, again Steve Reynish will talk about that but we believe that we can capture that value by taking it through our facilities instead of trying to extract that from the market and we're very again heading down the path of what concert plans and place and that will displace the situ and ship more of that to the market.

And finally with [indiscernible] we see that as a sustaining project but likely it may have some growth aspects to it and that is to be determined. Obviously one of the questions I talked about is that the resource could be economic using today's technology. So why when we consider new technology and that of course we will, we're in the process of looking at it, we have a number of facilities that are underway and I think just from the top line on that slide we have a history of delivering value by implementing technologies and driving commercial value for the shareholders and we are looking hard at that and how that would play in the replication strategy and how that plays out over a period of time and whether it thinks like SAGD LITE, we talked briefly about high Paraffinic Froth, whether its N-SOLV or the ESEIEH technology we have the verity of technologies that we can select and that we continue to progress as we move forward and more details will be available on that as we further progress our replication strategy.

And then finally, I just wanted to come back to what we started with. We have a phenomenal resource within the oil sands base, the quality is high. We have a team that has the [heart] and it has outstanding experience in both In Situ side of the business as well as the mining side. The advantage we have in the combined organization to be able to bring the skills that we have in the refining side that compliments the oil sand and vice versa as we move forward.

The reality of being able to create operational excellence in the work that we do every single day is made huge sites for us and we have not only some fabulous opportunities between now and 2020 but we also have incredible opportunities post that period.

Thank you. And I'll now pass it over to Kris Smith.

Kris Smith

Good morning. I can tell you it's always a hard active follow, to follow Mark Little and oil sand value story. And I'll tell you we're just excited about the integrated value story as well and I guess I have control over the slides too.

So, little bit of my bio up there, I won't go through it, I mean I've actually just been on the job for about three month. So, I'm excited to come here and talk about refine and marketing but I've actually worked in many aspects of the company that work in the oil sand business for a number of years [indiscernible]. I've previously been in the downstream, I lead our crude supply and marketing organization. So, I'm very excited about our integrated value story and really that's the story of refining and marketing. And so I'm going to share some of that with you today. And Suncor's refining and marketing business segment is an important component of Suncor's overall business delivering leading financial performance and a demonstrated track record of operational excellence. Refine and marketing is a key part of Suncor's integrated business model and is committed to delivering value through integration including investing in profitable projects that are aligned with our corporate strategy. And so in my presentation I am going to lead you through some slides through that discussion give an overview of our refining and marketing business. I won't assume that everyone knows it intimately and also talk about that integrated value story and what it means for Suncor and our investors.

So little bit about refining and marketing and I'll go through some more detail as I go through the presentation. But essentially our refining and marketing business is made up of four refineries about 460,000 barrels a day of capacity, actually 462,000 because we're going to be adding some capacity here into next year. Three of which -- three of those refineries have access to inland crudes and so our price advantage, and the third one that we're working very hard to bring within that orbit and I'll talk about that a bit later. We also have a top tier lubricants business plants in Ontario that sell high value lubricants across North America and globally. We operate Canada's largest ethanol facility and we also have a strong refined products marketing arm in both wholesale and retail, which includes Canada's gas station under the Petro-Canada, which is the number one share of market across the country and I'll talk a bit about that as well.

So I want first of all to talk a little bit about the assets position because really this is the foundation which drives this integrated value story for Suncor. With respect to our refining network we have a solid asset base that's in advantage markets and is delivers integrated value for the corporation. Just to go briefly through the assets; our Edmonton refinery, one of our premier refining asset which is connected to our oil sands base business as it receives oil sands crude as its feedstock, a 100%. It's a 140,000 barrel a day refinery and we're actually rerating as Steve mentioned to a 142,000 as we continue to work to debottleneck and maximize throughput through our facilities. Our Commerce City refinery, which is located right next to Denver, Colorado, refinery which we purchased in 2003, 98,000 barrels a day of capacity it's in an advantage market where crude has logistics issues and therefore we can access cheaper feedstock as well there is some physical integration with that facility we process about 15% of its crude slate using oil sands stock.

Our Sarnia refinery out in Ontario, 85,000 barrels a day also has access to cheaper inland crudes and about 75% of that refinery's feedstock slate is oil sands crudes. And then Montreal refinery, which we'll be talking about in a bit more detail later on I'm sure there is a lot of interest in that refinery. That refinery is currently not within the inland crude orbit but we're working hard to bring it into that orbit. It's a 137,000 barrel a day refinery, one of the only refinery left in Montreal and one of only two in the province of Quebec. In addition we have what we consider or talk about as our Eastern Canadian manufacturing complex, and you'll see that within Eastern Canada between the Sarnia and Montreal refinery. We also have our lubricants facility and our ethanol plant and we integrate and optimize value across the chain. We trade barrel feedstocks between those plants so that we can optimize and ensure that we're delivering top value and I'll talk about that a little bit later as well.

But I do want to say we're on market access and I am sure this is a topic that of interest to a lot in the room and on the webcast. And Suncor has a well-developed market access plan and we actively support all major access solutions that are in place today and that are being discussed for the future. We're able to leverage our midstream capability, marketing flexibility and inland refining position to maximize the value of every barrel for the corporation. Suncor has sufficient takeaway capacity to take all of our planned production to market and we have robust plans in place. That includes the portfolio of pipeline positions. We have sufficient capacity to move all of our production today and we believe we have all the capacity that will require to move it in the near and the long term. Utilizing that portfolio of pipeline positions and as well utilizing our very strong logistics flexibility and that includes tankage position, utilizing rail for flexibility where it make sense as well as our strong marine capability, and in that way we'll ensure that our production gets to market. But it's not just about getting to market it's about getting to the best market. And through our inland refining position and our coastal access strategies, we believe that we'll be able to maximize netback for the oil sands barrel and for the investor.

And you can see through the chart, that chart gives the view of our planned sales, so that would include not only the specific production that Mark was referencing on Oil Sand, but would also include any [indiscernible] that would be included in those sale and you can see that we have between our inland refining position as well as our portfolio of pipeline positions and other market access logistics. We have more than sufficient capability to move that production to market and we also actively work in the trading tier as well, that we can take advantage of that excess capacity.

Now this is one of my favorite charts and I think it demonstrates the power of the integrated model. And this is using our 2012 price realization both within the upstream in Oil Sand and also in refining. And as you can see through this chart, last year our price realization for Oil Sands is $82 a barrel. Our inland crude cost, so for those three refineries I referenced with $86 a barrel. So very close, obviously some small differences because of geographic locations. You see that our Montreal refinery right now because it doesn't have access to those inland crudes, is [indiscernible] a Brent based price.

But the exciting part of the Suncor value story is that the ultimate price realization that we are bringing back is well in excess with Brent's and it is with a $128 in 2012 or $16 above Brent on a combined basis. And so when we talk about integration, in the company we think about it in two aspects. There is difficult integration which we drive to maximize the value out of every molecule that we produce and right now we do maximize to greatest extent possible with that physical integration. So for instance the Edmonton refinery takes 100% of its feedstock out of the Oil Sands region.

But we also have financial integration. So even those refineries which may not be a 100% physically integrated, they have access to the discounted crude and that provides an integrated value story for the company as well. So a very powerful story for the company and for the investor and this translates in the refinery marketing business. You know, it's a real pleasure to come in and lead a business, a part of our business, a segment that's actually number one in the industry.

On an earnings per barrel basis you can see here in this chart, regardless of this business environment, what the crude price environment has been over the last three to four years and you could actually go back further. The Suncor refining and marketing business has been at the top when compared against its peer group, and that peer group includes all major refiners across North America. A very powerful story and that comes from our advantaged asset position both in terms of integration, geographic location, and is also driven by execution. And Mark and Steve both referenced in earlier in terms of the utilization and the asset availability that we were able to deliver in the refining segment of our business, delivers real value and places us at the front of the path.

And so I want to talk a little bit about those assets and strategic decisions, and how we view our refining business. Because I think you're getting the sense, I would probably use the word integrated, probably I hope 10 times so far and I know Steve and Mark used it a bunch of times in their presentations as well. And we make decisions in our asset base to ensure that we're driving that value for the shareholders. Our approach is to continually assess our refining asset base to ensure that it's delivering significant value and is on strategy for the company in terms of our integrated value and the markets that we participate in.

We continually assess our refining and asset position. We look for opportunities to deliver value, both through integration, advantage markets, and exceptional operations. And this timeline just gives you a sense of some of those decisions over the past decade. And I will just run through them really quickly because I think they are important to give you a sense of what drives some of our investment decisions. And so if you look back to 2003 when we acquired the Conoco refinery, that's the Commerce City refinery, formerly a Conoco asset, located next to Denver Colorado. We bought that asset. We were able to get it at a compelling purchase price in an advantage market and we were able to begin working on delivering some synergy. And that asset has delivered tremendous value for us.

We were, shortly thereafter in 2005, able to purchase the neighboring refinery which at that time it had been owned by Valero. Again we were able to take that refinery, combine it with the previous Conoco asset and deliver synergistic value and operate both as one facility, again delivering top value. If you look into 2005, you know some decisions were made to close the Oakville refinery. There was a lot of rationalization in the refining sector in Eastern Canada at that time and it made better sense for us to close that refinery, increase the capacity of Montreal, and then drive greater synergy in the region. If we look into 2008, we made investment decision to fully integrate the Edmonton refinery into Oil Sand, at that time we called it our refinery conversion project, RCP, a significant investment for our shareholders but one that pay huge dividends and those dividends actually I would say has been multiplied since the merger as well because since the merger that was formally a Petro Canada asset now that we're all in one company we're able to drive tremendous integrated value and then I'll tell you Mark and I spent a lot of time talking about oil sands and the Edmonton refinery and the integration through our two facilities to ensure that we're maximizing value every step of the way. And now on the horizon for us is Montreal. And we'll talk about that in a bit more detail. So I hope that gives you some sense that when we look at the business we look at every opportunity and that we can drive value with the assets we have and do we have the right mix and what mix do we need for the future.

This next slide actually I'm going to canter through it here pretty quickly and move on because I think I probably covered a number of these points. I think people in the room and on the webcast understand the point that this is about driving maximum value I was like to say maximum value for the molecule we produce across the chain. And so we look to optimize the oil sands barrel through the integration as I just gave the example Edmonton and the oil sands plant. We have integrated operating plans between those facilities. And we respond quickly to market and operational changes so we can drive the best value out of our production. But we also optimize in the downstream as well. And I don't want to minimize that point. It's not just about the integration upstream to downstream but we also look to optimize between our own refining assets and example there I mentioned the Eastern Canada. When we look at Montreal, when we look at Sarnia and that lubricants facility, there is sharing of molecules between those plants as well. Matter of fact, 75% of our [VGO] feedstock for our lubricants facility is actually produced out of Montreal.

Now in addition Mark talked about operational excellence, Steve talked about operational excellence and I think you also get a sense of how important that journey is for the company. Because as strong as our asset position is, as strong as our strategies are, we also have to flawlessly execute them and it's something that Steve had spent a tremendous amount of time with his team talking about and driving and it's a journey that we're on and we're making real progress against it. I think Mark has given you a fence of that in the oil sands business. We're just as focused in the refining and marketing side of the business as well. I put this slide up because I think there always -- these are two great indicators of that journey. I think Steve mentioned safety has been one of the hallmark of understanding how your business is running. And I'll tell you it's the number one value of this company is safety first and to have safety above all else because we look to deliver reliable, consistent, repeatable performance and production in a safe way.

And you can see through this chart we've been driving safety performance through the refining and marketing end of the business to levels that are industry leading. As well, if you look at our refinery performance from utilization or an asset availability perspective it's also clear that we're making tremendous headway in that respect as well. We've been driving our utilization upwards of 95% plus. Matter of fact, we achieved the utilization record in the third quarter of 98% and a throughput record of 449,000 barrels per day. We've increased our nameplate capacity by 6% over the last two to three years and we're continuing to look for opportunities to debottleneck that capacity. And I have to say a big part of this success and Mark mentioned it and I'd be remised if I actually -- if I didn't mention it as well is it's not just the folks who are sitting up on this panel talking to you today it's those employees that are out, working in the plants, working in the offices, delivering this value day-in-day-out. I believe we have one of the most experienced and committed and engaged workforces in the industry.

And when I look at the refining and marketing industry -- business if you came and spent some time you would see how much experience we have. And the job of it is actually that we've been able to transfer a lot of that experience between our downstream business and our upstream business. Matter of fact, I think we've sent over a 100 folks to the oil sands business in the last two to three years, top quality, experienced people out of the refining business to work with Mark's team as they progress the journey on the upgrader. So I keep telling Mark we will want some of those folks back at some time.

So let me move through just a few other pieces and I think one is certainly forced on a lot of people's mind is Montreal. This is an exciting story for our company and for our investors. We see a real opportunity connect in this facility to the inland markets and deepen its integration into Suncor. As you can see through this chart in 2012 if you look at our inland crude as a percentage of total crude throughput we're forecasting that we're going to be able to connect Montreal in and drive that to a 100%. And how are we doing that? We're doing it through staged, careful phased investment and decision making. So currently we're putting in crude rail receipt facilities in Montreal matter of fact they're very close to being operational just talking to the folks last night about it and that will enable us to receive 35,000 to 40,000 barrels a day of western based crude into Montreal, a huge win for that facility.

Obviously Line 9 is a big story, we're fully committed to that project, we believe in it, and it's working through the regulatory process right now. We are very optimistic about where that project is at and if it moves at the pace that we would expect, we would hope to see that Line 9 reversal and connection to be happening if not later in 2014 sometime in the following year. Get those two projects together and Montreal becomes fully fed by inland crude. And just to you a sense of what that means for the corporation, each one barrel $1 per barrel decrease in Montreal blended feedstock cost is going yield approximately $35 million a year and after tax earnings.

So it is a huge story for us. We also have others stage investments and I'll talk about them very briefly. We are right now pursuing an upgrade to our hydrocracker Isomax back in our investment plan is in our capital for next year, and that is actually an expansion of modification project for that unit. We are adding a third reactor and also upgrading and expanding some of the internal. What this is going to allows us to do? Is it going to allow us to increase yield, increase catalyst life, reduce maintenance cost, and actually some of the metallurgy upgrades will allow us bring in some modest volumes of oil sands crude.

And then the coker, which I know I've been asked a lot about any plans about coker in Montreal. What I'll say about the Montreal coker project is we're looking at it very closely right now, it is in scoping. We are looking at our ability to leverage equipment and engineering that we've invested in the past that, I think most people are aware that this -- we have a coker project in Montreal that was shelved at the time of the merger. We now see an opportunity but we're also being very prudent and careful about the investment decision around the coker, and we will be going through the balance of this year and into next really assessing that opportunity for the company, and we'll be not making that investment unless it makes absolute sense in driving our profitable growth objectives.

So just a few points on the other part of the business and you can say, as you can see we got very excited about the refining side of the business and the value that it drives, but I think it's important for folks to understand that we have a very strong marketing side to this business. We operate the Petro-Canada brand and we operate one of the premier wholesale and retail product distribution asset groups in the country. Our retail business is the number one share of market in urban gasoline in the country at about 21%. We operate 1500 sites nationally. We also have 44 sites that we operate in Colorado under a third-party brand.

Our wholesale business which includes 246 Petro-Pass truck stops and 63 markers and distributor operations across the country, move products across the value chain from the rock all the way through the Petro-Pass and also our retail channel, and so we're able to optimize, and our value story has not stopped at the refinery gates. Our value story starts at oil stand, starts at conventional production which Francois will be talking about in a moment, and it continues right through the value chain through refine product and no one drive higher value than Suncor when it comes to that. And one of the things I think an important point to understand is that our sales exceed our refining capacity by about 25%, and why is that important, we can keep our refineries fold which drive scale, drive cost in right direction, and we're able to maximize value.

As well we operate our lubricants business and I mentioned this bit earlier just a few facts on the our lubricants business, it doesn't get a lot airplay necessarily, but it is a very profitable business for us, it's a 24,000 barrel a day facility located in Montreal. We produced industrial grade lubricants some of which actually find their ways to the oil sands in terms of heavy duty engine oil, drilling fluids, food grade lubricants. We produced some of the world's top quality food grade lubricants as well and a lot of people are surprised by this. We're actually playing the agricultural state in herbicides and long tier products. And we're actually very excited about this product chain as well.

It's fairly new for us but we believe it's actually quite groundbreaking, and we're going to be able to do some interesting things with it. As a matter of fact [indiscernible] long tier product was recently used at the 2013 U.S. Women's Open by the Greenkeeping Software. This business sells about 350 products in 17 countries worldwide most in North America and Europe, but we're actually expanding our business into Asia. And as I mentioned earlier that facility is actually feedstock integrated with our eastern refiners. We also operate Canada's largest ethanol facility; I mentioned that earlier, a 400-million liter per year facility corn based ethanol makes us the largest manufacturer, 100% of that is blended in our own production. So that creates huge synergy for us, and actually we're giving corn prices right now, it's actually a tidy business to be in from a profit perspective.

I also want to mention just briefly because I do get asked the question about RINs the tier 2 renewable fuel standard in the U.S., we obviously operate a refinery down there. And that -- for some of the downstream competitors in the U.S. that's becoming a significant issue in terms of cost of meeting those renewable fuel standards.

What I will say is that we're able to meet the majority of our commitments under those regulations through our own blending. We do purchase some credit but they are not material from a total refinery network perspective.

And so I'll just conclude my presentation by saying the refining and marketing side of our business, I think you get the sense of the value story from integrated perspective. And we're very excited, we've demonstrated the track record of operational excellence in that segment of the business, we're actually looking to transfer that across the corporation. And I will tell you every one of the employees that I work within the downstream are fully committed to delivering that value for our investors.

And with that I think I'll hand it back over to Steve Douglas.

Steve Douglas

Thank you Chris and thanks for catching us up just a little, we're only two or three minutes behind time. We're going to take a break now. We'll take about 15 minutes but we're going to start back sharp at 10:35 Mountain Time. So if you'd be in your suits ready to go, we'll get started then, enjoy your break. Thank you.

[Break]

Welcome back folks. In the excitement of starting of day, I didn't remind that -- I didn't remind folks that today's comments do contain certain forward looking information. Obviously, our actual results could vary materially from expected results and based in certain assumptions and risks and you can check all those out in our Q3 release and our AIF. And we do actually reference a number of non-GAAP measures, non-Canadian generally accepted accounting principle measures and those are all described in our Q3 release and in our AIF and of course those are all available on our website suncore.com.

We're going to move forward now, I just, we have had a number of enquiries over the web this morning asking about the detailed presentation with notes and that should now be available for download. So as you're following on the webcast, in addition to the webcast slides, you should now be able to download the entire presentation and notes. With that I am going to hand over to Francois Langlois, our Senior Vice President of Exploration and Production.

Francois Langlois

Thanks Steve. I will [indiscernible] other than to tell you that E&P is what I have done for over 30 years. I love to talk about it. So maybe a hard press to stay in that 30 minutes here, but I will try to give you the next layer of the onion sort of speak, give you a bit of color on the fantastic suite of assets that we have in the E&P business. So I think that Steve has made it very clear, over the last several years or a couple of years that what is E&P to do inside Suncor, and I think it's clear. It is the complement of the base business, and by providing a number of great things to the portfolio.

It provides high return projects in all low cash cost in turn create resiliency to oil price. It provides diversification outside Oil Sands and exposure to different basins and different sources of oil. It provides access to international market because I am sure you've realized and you know quite well, we are essentially hardwired, production is more or less hardwired to Brent pricing. So over the last -- and I want you to -- there is a little more detail, over the last several years we made changes to the portfolio. We've restructured it. The last being of course the disposition of our North America conventional gas asset; and I will cover that a little more detail as we go forward.

So these changes in accretive has created a very high value and value driven portfolio looking forward. We are anchored in very large Shale assets and these assets have a very strong record of reserve growth and continued growth actually as we look through them historically. On the accretion side the portfolio continues to be focused in the current areas in which we operate and they have a record of breaking some resource at the front of the value chain as well. And I will speak about those and give you a little bit more color on this.

So if you look ahead, we have a very impressive suite of very well identified projects, some that are nearing completion, some that have been sanctioned and are under development. So if couple up those with our high value concentric growth that we have around these base, these based assets, we have a very-very strong portfolio going forward, and one that delivers a lot of value. So let me walk you through some of them here. And I will give you a quick stand here, and I think you will be quite familiar with this.

The portfolio is primarily in five major regions. Some that we operate, and some in which we're enjoying venture operations. Some of them are onshore, some of them are offshore. And I will just take a moment here to say that we have a very experienced team, it's not a very large team, but the E&P inside our Suncor has a lot experience both domestically and international and we are able to do all the work that we do very well here in and in all those tiers. So each of these tiers has different things going, it's got different physical systems, it's got different growth potential, it's got different geology. But the portfolio as it stands now is very strongly linked to Brent pricing.

It's something that -- things you are aware of. So very quickly, so if you look at East Coast of Canada, it's currently our largest area, produces about 50,000 barrels a day. We have an office in St. Jones Newfoundland as you probably know where we operate the Terra Nova FPSO facility. And as a joint venture partner we're also partners in Hibernia and White Rose. So it makes us -- we have a very distinctive position to be in all the East Coast assets and the major assets that are producing on East Coast of Canada. And of course, I will give you a bit of a view of Hebron as we go forward. We will also maintain that status as Hebron comes in later on here.

In the North Sea we have 40,000 barrels a day production from the world class Buzzard field, while in Norway we are building our capability there and we're establishing Norway as a footprint and into exploration where we intend to grow it organically and we've had success so far. And we hope to make that into material presence as we go forward. North America, as you are looking, as I just mentioned, we repositioned the business here, getting out of the conventional assets and likely to establish is the concentrated footprint in those assets that we think can compete as we look forward in a challenged gas price environment that we see in North America, we have a pretty good judging the assets, are able to compete in those tough terms.

So just a quick snapshot here, basically giving you a bit of the history of where we had been in E&P since the merger; and we just see here, we started with the big base of production and we've reshaped that portfolio towards the set of material high quality assets with long reserved life and lots of reserved replacement potential. So over the four year period as you see we have disposed of about 130,000 barrels a day, equivalent of production and we've created $4 billion cash flow and as we have heard, as you have heard many times, that cash that we generated was critical than we repairing the balance sheet that was not doing well post-merger.

So when we retained, we've retained the more profitable barrels and we've retained those assets that we see growth and we see opportunity for continued growth into the next decade. And again I will give you a quick snapshot of this. The other thing that's happened in this repositioning is quite positive given the way the natural gas prices have gone in North America as we reposition the portfolio from a liquids weighting that used to be about 60% four years ago and we're now following the sale of our legacy assets we're sitting at about 97% liquids weighting in the portfolio. In repositioning we've also lowered our OpEx, our operating products liability of barrels. So we'll be exiting 2013 with operating cost on per barrel basis that will be below $10, so great repositioning and we're nicely set up.

The next slide I'm not going to dwell on it very long here. I've mentioned resiliency to the oil price and portfolio does that. I mean we have low operating cost in E&P and if you combine that with a variable tax and royalty regimes or for instance production sharing contracts we are resilient to oil price that means the portfolio continues to deliver cash flow in low price environment and you know that and I was just going to point out quickly and I'm sure most people in the room realize that. If you look at the terms of the production sharing contract in North Africa on a per barrel basis it doesn't show the actual same value on per barrel basis the value is lower, so cash flow or what not doesn't work very well so with these assets and this kind of resiliency so what we see is that if you assume the 2013 conditions for instance the business will generate between $2 billion and $2.5 billion if you consider a price between $80 and a $110 brand.

So E&P currently is 25% of Suncor overall production but these assets are very strong. And again let me give you a quick pristine through them here. If you look at these assets here we're anchored essentially in four major high quality assets. They all happen to feel the large to giant size and giant now is about fine with a million barrels and as the way the wisdom goes big feels tend to get bigger and that's definitely what we've seen with those fields all of these fields have grown well beyond the reserves that were initially contemplated attention. And it grows to infield drilling through enhanced recovery through extensions and in some cases through concentric exploration. So this is what high quality assets deliver and we have some great ones in the portfolio.

East Coast has been tremendous if you look over the years we've produced 335 million barrels and billions and these assets the beauty of them is that they continue to produce and generate more reserve opportunities again that were contemplated. The North Sea Buzzard is again the current jewel it is the last giant field found in the North Sea which host light oil and it's been a great asset for us. We've produced 110 million barrels and as we probably noted as well Buzzard has had a few reliability issues in last few years and those have been fixed, so the past technical issues that were leading to the reliability was evolved in soft and so there is a bright future for Buzzard when you look forward.

I'll just take a minute here to talk about Terra Nova it's had a history of delivering really high cash flow it's a Suncor and the [laptop] here has been little tough just to let you know. We have now fixed all these long term standing technical issues that we have that impacted the reliability as well as the few unforeseen repairs that have hit us over the last couple of years. So we've taken these issues very serious and we've fixed them. And I think going forward what we see out of Terra Nova is that we'll go back to the design reliability for the asset so the facility to reliability which was the sign of 85% but we're confident that we're going go back to that number. What that means is that we have the great past of this asset that has generated great cash flow is going to continue because we see additional reserves in the field. Again those reserves that were now contemplated the sanction so on the base of a good asset that will perform well we're going to be able to extend the life of the field as we move into the years to come.

So North Africa I'll talk about Libya just a few words. Obviously different challenges that have affected us in our Libyan asset were instability in the country has impacted local production and I'm sure you're aware of this several of the terminals have been -- have stopped operation. I mean despite these conditions we continue to see value in the asset. As you know the most of the value in this asset is in the development of the big fields that we have that have had a very low recovery so far. So by putting in relatively low CapEx dollars we can enhance the recovery and since there is such a large not the reserve in place it has a large impact. That being said the asset we produce about 40,000 to 50,000 barrels a day and that generates about $150 million to $200 million of cash flow from [master] year for Suncor. So what the presence there the asset is good the presence is in material. And I'll say is that's helping us to be patience with the conditions that we've seen in Libya. And we do expect the production to come back but I couldn't give you a reliable date or reliable information on when they will come, so patience is what we're using right now.

So building a platform asset so what I'm going to do here is talk a bit about the exploration. So we have and one point I'll make is that we have such a strong base of assets and such well identify growth in the coming future that for us exploration we know it's needed, we know it's the strong foundation to E&P group and we're addressing it. The great thing we have it is for us, it's not urgent that we do this, we're not pressured in being a high risk explore that through lot of money at exploration. So that strong portfolio of developments and extensions and more of that allows us to patience to grow exploration portfolio smartly. But when we're thinking about exploration portfolio in the E&P business at Suncor, we're thinking of balance risk exposure and a measured spending to it and let me say few words about this.

What I mean about balance risk exposure is that we averaged the dollars we spend into three categories. One is near field concentric place and also the ones that probably have modest size but have great returns and can often be turned into [indiscernible] have high profitability.

We also look at new prospects in the basin in which we operate and that we know well. So, that's typically a little more risky but that will attempt to generate new place that could be standalone and there is a trend openers that really with higher risk and that creates a lot of running room. So, we believe the balance is important in making sure that you put the dollar so that you have predictability of results as you apply your money through exploration without via volatility but still exposing you to significant resource. And we also think it's going to be measured.

So, expect on a go forward that E&P business at Suncor will not be spending much more and excess of 10%, 20% of its budget on exploration. It is not like high content explorers do but this is our design and you can expect to see this going forward, it's a measured approach.

So, if you look at the exploration portfolio, next year we'll be drilling six wells in the offshore and some of them are actually to appraise some of the discoveries we have made. So, we have a program that's growing and has delivered some good results so far.

And on that theme actually I'll just give you a quick snapshot in Norway which is for us a principle exploration theater. We've participated in -- so we've been there about seven years and we've participated in the number of [indiscernible] in the North Sea and all the sectors essentially of Norway and so far we've accumulated a portfolio of about 15 licenses and on each license is multiple prospects.

So, we have host of prospects on these licenses and we're on all basin, we're in the north sea sector, we're on the Norway region and we're also have part [indiscernible] which I'm sure you know has created a bit of excitement in the business.

So the track record for sure has been driven and overall we are four out of seven and we're currently apprising two of these discoveries and hopefully we'll see them as to the bottom line as we move forward in our plans.

I'll say few things about North America. Again, that's the biggest change we've had in the portfolio and we've disposed almost a 100,000 boe equivalent of 575 million and just beginning we made -- or at the merger we made $3 billion in proceed. The asset that we divested were legacy assets, they were mature, they were declining, some plans were at the fraction of their throughput capacity facing decommissioning and expensive to operate in lot of cases and most of the gas we produce was [indiscernible] and then in lot of cases it was also high shrinkage gas. So potential growth associated with these assets was very limited. So, we did not see these assets as foundational. So, when you combine what the gas price we saw as a slow recovery and the declining nature of these assets and given their financial performance we thought it was going to divest these assets.

What we've kept, we've kept the Montney, Montney shale gas and some smaller assets [indiscernible] and the Monteny shale gas is quite significant as I'm sure some of you know it's located right next to progress and [indiscernible] that's now progressed in the Kobes Altares area we have about 95,000 acres of this resource and roughly it's probably equivalent to 7 tcf perhaps a bit on conservative basis.

So, there is no question on either right condition that these assets could do well. We look at the market now and think that those assets in North America that are very competitive they are in the top, top tier of the business, we'll be able complete in the challenging price environment. So, we're in the process of assessing these assets and delineating and appraising the resource and we're looking at our options looking forward on those.

I'll just take a few minutes here to say, I'm talking about exploration on one end of the spectrum and I'm talking about these big projects that recently sanctioned like Hebron and I just want to take a quick few minutes to talk about what's in the middle, and in the middle are basically these extension projects that are associated with these big assets and I'll just give you a snapshot on material they are, I mean I'll use [indiscernible] one to make that point but if we in aggregate when you look at this for our four key assets we see probably a 150 million barrels of reserves from these add on projects extensions and filling what not and we'll need a number of wells to do over the years but these projects were often lot speak about them in detail and some of them are sanctioned and some are not sanctioned but they are all there in the plan that we have in front of us here. And the great thing about some of these assets and some of these projects is that they tie back to existing facilities, so they tend to be very profitable.

And I will just mention one as an example of this, around the White Rose field and I am sure if you monitored the Husky press release, as we're partners with Husky. And so basically there is a project that will have a well head platform as you see on the chart there added to the White Rose field. And this platform it allows a number of wells to be drilled and to recover about 115 million barrels of oil that otherwise will be very difficult to tap into. So it's a great advantage once you have a platform the wells are cheaper, you can renter, it has a number of advantages so you extract a lot of value of these barrels that otherwise you could not.

So everything is proceeding, the engineering is proceeding and it's going to be the way it goes it ties back to the FPSO for process and for storage. So everything is gone -- going forward and as you have seen perhaps in the press we have just signed a benefits agreements with the province and [indiscernible] recently and we expect sanction on this project to take place sometime in 2014.

I will just give you a couple of highlights on some of the bog projects that are happening here and elsewhere. And this one is the Golden Eagle that's happening -- that's operated by Nexen and we're partner, we're about 27%. The project is expected to produce about 140 million barrels and over almost a 20 year period. First was expected sometime late 2014 early 2015 and the development originally on the gross basis will be 70,000 barrels a day. So this facilities you see here, you see the big jack has been prepared for floating to location and if will be dropped on the sea floor. There is two platforms that are used for this particular development and there is other tiebacks, subsea tiebacks that connect to these platforms.

The project is proceeded extremely well so far, we're on time and on budget and both of these big jackets are actually in place and the well head top side is on, so we're just waiting next year, we will drop the process platform on top and then drilling will begin and we should be on track to first oil late '14 and or early '15.

The other very large project that I am sure you have seen Hebron, and again at 700 million barrels estimated by the operator it is definitely a giant oil field and this is a long life platform asset, it should produce for 30 years and I am sure there will be additional that will be connected to this, and this picture tell, this is definitely a megaproject, this is like $14 billion and you will be able to produce with the tune of about 150,000 barrels a day here going forward.

It's a gravity based structure, very much like the Hibernia facility and when it's ready it will be floated and dropped on the sea floor and begin production.

The project is going well according to plan and we expect to meet the objectives at this point. So again as I mentioned earlier with us -- with our interest of 23% in Hebron will basically continue to have Suncor in all assets in the East Coast and all large producing assets on East Coast.

So bringing this to a close and this is not intended as a production forecast but as a precise production forecast this is just a snapshot to show a bit of what the moving parts in E&P portfolio moving forward. So I'll walk you through it very quickly. The base layer of the graph is the Libya production and basically that's the existing development of these large fields that I was talking about and as indicated before, Libya again, the volumes are there significant but the whole asset produces about 150 million to 200 million for us every year.

The next layer is first ongoing projects approved developments no large fields as well as projects that are sanctioned and will begin production. So those are all in the bank happening in their firm projects. We know with high certain -- there is essentially almost complete certainty that these will deliver. When you go to the pale blue -- it includes some of these extensions and in fields and some projects are in flight. For instance like our Norway asset, they are being appraised the discovery that are being appraised and making their way to sanction.

So this is the grouping of all those things that are not yet sanctioned but have a high probability of occurrence. So it gives you an idea as you go forward, of the curve so high probability that we're somewhere in the blue region here. One thing to note again here the high probability does not include significant explorations addition or possible M&A that would be added on top of that.

So again I think what I would like -- the point I would like to leave you with is the go forward the portfolio is very, very strong. It enables to sustain production with a very high probability.

And the last slide there is a bit of that, with a bit more color I think it provides a bit of review what these projects are and the nature of them and the timing of development. But together so if you combine the existing assets the upcoming projects that we have and if you combine the viable prospect inventory that we have in E&P business it creates a really solid portfolio, one that could be expected to continue to deliver the kind of numbers that the businesses has delivered, so something in the two or three billion dollar range that could be expected. We're keeping an eye also, probably I mentioned, the inorganic growth opportunities, we are doing that primarily in our operating theaters, but again with such a strong production base that we have there is really no pressure to compete for us or no urgencies to transact.

So if something has a good shift, has great value, north shift or position, we certainly have the balance sheet to make just about any deal possible. So just summing up here, when you look at E&P, it's very well positioned for the future. It provides a very powerful complement to the base work and business. And again it offers high return, low cash cost, exposure to resource outside of the Oil Sands, and there is direct exposure to Brent pricing that has been quite valuable little over the last few years. So in other words it provides venture diversification and profitability to Suncor. Thanks.

Steve Reynish

Thanks Francois. So this is Steve Reynish, you have my short bio within the book in front of you all. I would say, I spent something like 25 years in the international mining business and I've been in the Oil Sand here in Alberta for something I think in excess of 10 years now as well. So I am here to talk about in 15 minutes or so on, mining joint venture portfolio. AS you know I think we are involved in three joint venture mining projects. We have an interest in the Syncrude consortium that's been operating for a number of years in the Fort McMurray area.

We have an interest in total Joslyn mine that is still under development of course. And we have an interest and are the operator of the Fort Hills mining project which was sanctioned about a month or so ago, now. But I think for the purposes of today, let's focus on the Fort Hills project. Why we think this is a great project for shareholders? I am going to talk about why that project is a good fit with Suncor. Mike McSween is going to follow behind and explain to us why we are very comfortable, we can deliver that project on time and on budget which has always proved to be a bit of a challenge for the region.

So in terms of Fort Hills, we did have to work on this project to satisfy three key criteria. First of all the project have to make sense in its own right as a project; had to be able to achieve the right returns, had to be an attractive project and compete with alternative projects within Suncor and within our partners portfolios, and those that follow this project in some detail will know it has evolved in terms of capacity, technology line-up, a number of different aspects to enable us to get this project to the point where we wanted it.

Over and above that, it goes without saying, Suncor is not a single project company. This is a project that's part of our portfolio. And it happened like, a sense for me, strategy point of view and as complementary to all the other activities that Mark and Chris and Francois has just been talking about. And I think it is important to remember, this is just part of the Suncor portfolio and I think that will become clear as we go through it. And then as I said, the first criteria was, even when we were very confident we have a good project, we still have to satisfy ourselves and our partners and shareholders that we can deliver this project.

And as I said Mike will add a little more color to that in a moment. So it all starts as Mark talked about this morning, with good resource. And Fort Hill really takes over those boxes. The size of the resource is compelling, massive numbers when you look at, over three billion barrels of contingent resource in the whole leases there. Suncor share over a billion barrels. And this is the prospect of that, typically at the top end of the quality scale for Oil Sand resources as well. So we've come up with a project in total of a 180,000 barrels a day. Suncor's share is some 40% - 41% of that. And the size of this resource means that this project has a life of 50 years plus.

And it is very difficult, I think, sometimes, so as to get our heads around, you know a 50 year life, what the future may bring in terms of prices for us and how do we actually evaluate an opportunity of this scale going forward. And I think as you know from our previous announcements we're looking at the very first oil Q4 2017 a ramp up to full production in the next 12 to 18 months thereafter.

This is of course a joint venture project, one of the things we're very proud of within Suncor, is that our team going through these developments that I was just talking about had to come up with a project that would appeal and meet not just Suncor's criteria but of course the criteria for our partners who are both very well-known names either in the mining business or in the international oil and gas business. So the team is on an excellent job in achieving that, we have a support of all three partners on the project and I would say a lot of in enthusiasm by the partners going forward as well.

Quick history lessons for those that do know the region the old Bitumen site that was the four [indiscernible] of the modern oil sands business is actually located on the Fort Hills leases, in the picture there that's the original plan that was running during the 1930s and 40s achieved something like 250 barrels of day of production, it was very much obviously a pilot plant. And our calculations that was delivered at a capital intensity of about $1,000 daily floating barrels. So the costs have come on a little bit since Wednesday.

But the old miners of course knew what they were talking about and knew the value of those Fort Hills leases and looking at this job when we brought resource quality in the size of the resources comment I was making at the start we can see that Fort Hills is very much up there at the better end of the quality range. I am very much up there in terms of the size of the recourse as well. Competitors in that chart are actually the developed operating sites, and that means that Fort Hills is in our view robust undeveloped mining opportunity in the region and is logically the next one of the rank here and to bring it into production.

So it starts with a resource, but then of course we have to get the process and the technology right. My comments on this would be that the front end of our process, the crushing the conveying the extraction is very much the tried and tested model that we have in the oil sands, that's now the standard methodology for mining projects in the region. And the backend the solvent extraction part is new technology to Suncor but not to the region of course. And this is where we add paraphilic solvent and partially upgrade the Bitumen before shipping it from the plant.

The other plant of the lab that's not shown on this chart but is extremely important and does go to cost and reliability that I will talk about in a moment is that the Fort Hills lab will be a multi train configuration. So we have two production trains at the front end crushing and extraction. We actually have three trains in that secondary extraction part of the process. And that enables us to take power to this plant offline for the maintenance that these plants require.

And of course a lot of the technology, lot of the configuration that's gone into this has been based on the decades of experience that Suncor has in working of the [indiscernible] with Mark that Mark talked about a little earlier.

In terms of the economics you have seen that but again we have to make the criteria in terms of those key numbers that you have in front of you there, the overall capital expenditure of course is important but we would say as part the Suncor portfolio this is nothing that will particularly stretch our balance sheet, this is a project that is well within the means of Suncor and its partners. It is a project that we calculate will give us double digit returns and we think that we have come up with a project that has a capital intensity in line with what's been happening in the industry over the last few years. But actually puts us I a relatively competitive position.

We'll just talk about included in those project returns is an element of integration with the Suncor infrastructure and presence in the region there. And if you look at this chart number 10 you'll see on the right hand side Mark was talking about a lot of this a little earlier. We have the connections between the Firebag in situ the upgrading complex at our base operations and we also have what we're calling these tank farm which is a storage blending facility that came into operation earlier this year, came out of actually the Voyageur project. The connects in additional to all the other connections that we have those material through to the market access and the refineries that Kris was talking about a little earlier as well. So everything you see on the right there the upgrading complex Firebag these tank farm are Suncor assets in the geographical region that are up and running today. There is flexibility within that portfolio there to move different molecules in different directions to achieve the optimum planned and movement of materials at any given point in time.

Fort Hills which is obviously a joint venture project taps into that arrangement. So Fort Hills will be shipping hot bitumen to this East Tank Farm where it can be moved to a number of different locations on that chart again to optimize our position. So some of the synergies that we're talking about in the region there synergies with East Tank Farm, synergies with the existing upgrading complex, synergies with our pipeline connections, synergies with our downstream refining units, Fort Hills plugs right into what we were hearing about it earlier today.

If I turn to the cost profile and I know there has been some discussion on this. Our plans show that the Fort Hills mine will have an operating cost in that $20 to $24 a barrel range. People have commented that that looks fairly aggressive Mark was talking about that a little earlier. But what I can tell you is this is based on a lot of understanding knowledge and deliberate design work and some upfront investment to get these numbers where we want them. And a couple of features, Fort Hills actually play into this. Obviously it's a brand new mine and facility and it's been designed with very short haul routes over an extended period of time that plays into the cost that's a big part of the cost element. And we're also making use of the TRO tailings technology that Suncor is pioneered that will be used at Fort Hills and we will have our tailings locations very close to the operations again cutting down on some of the transportation movement of volumes in the project.

And some of the -- that multi-train design that I was talking about earlier leads us to be looking at 89%-90% utilization of this asset once it is built. So I think in many respects we'll looking to build our Fort Hills project that will be up and running with the same sorts of parameters that Mark he is taking his operations to the same place. And so we think that's very robust, we think that makes a lot of sense and we have a lot of confidence in those numbers you see in front of you. Similarly on the sustaining capital, don't forget this project doesn't have an upgrader so this is a mining project only. But it's a brand new design. It will only have one fluid tailings pond for the whole of its life because of this new TRO technology we will only have one fluid tailings pond the rest of it will be these dry tailings technology. That has a dramatic effect on a sustaining capital. And generally we'll be using less water than historically in other projects. So what I would say in summary on this is that there has been a lot of design work to put pressure on these costs. We think we will be starting up in a place where Mark and his operations get to through the modifications that he talked about and we think this is a compelling story for shareholders.

I'll just turn to what is my final slide which comes back to this notion of this very-very long life of this asset. And what I would say I would just remind you that Fort Hills is just part of the Suncor portfolio and it's one of the projects that kind of puts a very long life base on the all the other projects that my colleagues talked about earlier this morning. The scale has been de-risked through the partnerships. We have established a project that makes sense in its own right we have a project and I think it fits very much to the Suncor strategy and the Suncor portfolio and it's going to be around for 50 plus years. So that is why we like Fort Hills, that is why I think, we and our partners sanctioned it. We think it time has come and I will pass over to Mike to tell you why we think we can deliver the promise that I've just talked about.

Mike MacSween

Thanks, Steve. I always hate to look my own picture and before we start it today, Steve Douglas was asking me -- he concerned that the background is little bit different in your picture versus all the others, and I said, well not so much the background but the fact we're in the same suit, it is something that might get noticed. Now, my wife will botch that I am a consummate cheapskate and so I do own other suits, but I guess someone is going to be worried cost, its best project I is dressed this way. So anyway it is about cost, it is about controlling cost, and I will talk as Steve Reynish described the aspects of controlling cost with respect to Fort Hills, but it's beyond just the cost that I'm part of the major project group and establishing over the last number of years of very good track record of delivery, not only with cost but with scheduled and with the reliability and consistency of the assets.

And that's really -- I think born out over the last three years and that reflected on me the MD&A that have come through and you see these on a quarterly basis with these individual projects that get noticed or noted and talked about, but in reflection over the last three years there is a $20 billion set of projects that have been delivered consistently with projects at or below the projected cost on schedule and best of the all they're running reliably, and not it is critically important for the company. It's critically important for delivering the returns that Steve talked about and with respect to smart growth. Because we want to be focused very much on the developing and selecting the right projects and then having flawless execution as we move forward, once that process is complete.

And it is -- I think the project team that we have that differentiates us with the next of engineering, construction experience over 15 years in the Athabasca region. People have been operating background to ensure that the reliability and consistency of the facility is there once the cost and schedule has been met because all aspects need to get delivered to have the returns that we drive for it. I have shown three projects that we had some recent success with and these are at Royal Sands based operation. First is extraction plant 300 which is primary extraction facility. Mark Little referenced the tailings reduction operations or TRO that was delivered last year and it was a transformational step for us in terms of technology and leads us to the point that Steve Reynish described where we're able to operate now with one tailings pond.

And the last piece was more [indiscernible] expansion which was commissioned last year. These are significant projects in that they've made important steps for base operation, allowed us the platform to debottleneck and see some of the production benefits we recently achieved there. There are also significant in that, these are the front-end units we're building for Fort Hills. So in the last three years, if you look at the front-end units in mining in primary extraction and in the extraction tailings areas, we've effectively built and developed those exact units. And so when we look at productivities that we've been able to achieve with these facilities when we look at the ability to execution in regions when we look at the technology and we look at the teams that have been deployed, those are very key aspects that give us confidence that we will deliver better in the promises.

I think the other portfolio things that we've been part of certainly Firebag and described reaching the -- Firebag nameplate capacity and the delivery of in situ projects and what's plan in the future that's been a key aspect of the production enhancement. Kris Smith described the Montreal coker project and other portfolio options we have in the downstream, we've just commissioned in the last couple of years the gasoline benzene project in Denver similarly on budget on time and running reliably. And then in East Tank Farm one of the key infrastructure projects just delivered the summer which enabled us hot bitumen delivery again on budget and delivered on time.

So, there has been a number of key projects making up that portfolio a picture of $20 billion, it's a number of strategies that we looked at that have enabled us to do that. So it's not one thing or generally relatively simple, they're not complex but I think they're important to be disciplined around it's an example of where operational excellence is applied in the development and execution of projects. As starts with intact teams -- I'll reflect back first on some of what we've observed in those projects that have been delivered and then I'll spend a little bit of time describing what we're doing with Fort Hills specifically with these aspects. So intact teams -- one example I think of most recently was between Firebag 3 and 4 where we had intact teams not only with the project executors but the operations and the contracting groups that were part of those projects that remained part of the Firebag 3 on the Firebag 4 and we saw great benefits in terms of the efficiency of construction, the turnover, the number of punched items or items that had to be rectified. And so Firebag 4 delivered three months ahead of plan and 15% under what was anticipated or projected. And so those are -- that's one example of where the benefit of intact teams. And I would say replication and improving which is about the fifth point down were applied. We've got an extensive database over the last 15 years of projects in Northern Alberta to understand the productivity factors that exist and what we've seen and others have experienced when work force sites become very big the work becomes very complex. And there is some level of science to breaking down the work to minimizing the complexity that exist on a particular work force especially given some of the challenges we have inherent with the region. And that goes to staggered execution understanding what work to do in winter and what work to do in summer, and so planning and the engineering all aspects of how the execution hits the field and needs to be brought through in a way that is unique to the specific region.

Offsite fabrication and tapping into the global supply chain is another set of two key items that will allow us to manage the workforce of the site to a level that we can effectively deal with the ongoing issues that occurred there and to get to areas where we've got higher productivity and open up more work fronts at the same time. So those are two aspects that we've been increasingly applying with each project we've done and we'll look to do so going forward.

Modularization, lots of -- and certainly I'll say fabrication in the global supply chain play into modularization but it's a key aspect of applying what we've learned in offshore production what we've learned from other regions in the world and dealing with some of the logistical challenges because certainly there has been examples with projects that have had serious logistics challenges. And so it's all important to account for that in the engineering such that those issues are dealt with and planned for in a way that things get to the site as needed. And so that has been a key focal point for us with the projects we've done and honestly going forward. And then touch on infrastructure being in place I think that has to go with the detailed engineering being in place as well and making sure that we're very-very disciplined with delivering engineering before we get into the field and we have a number of key aspects of delivery that we have as checkpoints. And certainly we do not go to the field until materials are there or that or we've got engineering complete.

Compensation models, this goes to fixed price contracts, this goes to alignment of interest contracts. It depends on what we're building, where we're building and at the time we're building in terms of what makes the most sense in this instance. But what we've been able to work to deliver I think over time working with many contractors that we've developed close relationships with is at least alignment of interest. And certainly going forward we'll look to enhance on that. So those are the basic strategies as I described they are not anything that's too revolutionary they're quite consistent to what we've done to deliver the projects over the last three years. And I'd like to spend a little bit of time around Fort Hills in terms of some examples of what we're doing.

So intact teams and replication improving front this existing designs I described the front end units the primary extraction the TRO facilities as well the mine. And certainly when it comes to our teams that have been participating in those projects over the last three years that we've delivered and the contracting groups that we've worked with we've kept those teams intact. We've got the similar people who have had the experience of building something very recently involved and actively executing what we're doing. And certainly that's true in other areas as well where we've brought in experience and capability from aspects of the operation.

In terms of the work force on the site this staggered execution we have those units that I described very much advanced and engineered well into detail with engineering so we're actively driving piles on the site which is an example of good winter work. We're not going to be flooring cements until we get into the summer period. So the fact that we've got the units we've recently built low advanced we will move forward with execution of those and it will allow us to effectively cap the site workforce at 5,000 to 5,500. We do have 1,000 people on the site as I mentioned. We've got tank facilities that are active. We've got the infrastructure that is in place to support stable consistent ramp up and a planned consistent ramp up over the next year and half to get effectively on a stage sort of processes to well-planned execution and to that peak workforce. And in terms of the multiple compensation models, roughly 75% of the contracts we've entered into thus far have been either fixed price or at least with alignment of interest.

So I'd say that we've been successful in delivering that with the work today, so it is possible to project going forward in the future but I do think there is across the industry a period of opportunity here, given some of the other major projects that are either getting completed or are staged through this following hours. And it is something we actively look out and drive for and having an opportunity, I think the other projects that are in the portfolio across the other parts of the business either in In Situ and or in the downstream allows us to have pretty much a programmed approach to how we are going to execute to drive capital cost down.

So certainly we are working to deliver on our promises associated with Fort Hills and that even better. But what we want beyond just meeting capital cost as to drive capital cost down in the region. And we are in a unique position given the scale of the assets that we have, given the balance sheet we have, to plan over the longer term, in very much a programmed approach. And so it's more engineering replication as Mark described, it is getting to optimize modularization, accounting for all of the engineering aspects and planning that to make that possible. It's getting into volume purchases over segments of programs and projects over five year periods.

And that's where we see the next wave, really applying the same pace of strategies that have allowed us to deliver the projects we have in the last three years, executing the ones we are delivering on right now, like Fort Hills but position us to drive capital cost down and improve as we could move forward in a step-change way. So that was in summary what I was going to cover. I think the last slide is just around technology and Mark described the portfolio of technology that we're looking at and certainly in the projects group where we're positioned with the engineering supporting and execution capability to deliver on those as they get developed.

So we're looking at smart growth, execution excellence, building on the platform that we've been delivering on for the last three years in the projects I described and you know really leveraging the strategies that are not -- they are complicated but need to be followed with thorough discipline.

With that I will turn it over to Steve.

Steve Douglas

Thank you Mike, and certainly I hope you appreciated the comments from all of our leaders. The morning has gone very-very quickly, but hopefully they've given you some interesting insight into the business and also given you a window into the incredible depth of leadership that we have here at Suncor. I am mindful of the time, because I do want to get to our Q&A period which will be a chance for you to ask questions, follow-up questions to each of the presenters. But I do want to kind of wrap things up here a little bit and put a bit of bow around some of the concepts you've heard this morning.

So let me jump to this because it has become something of a mantra at Suncor, the whole notion of capital discipline. You hear it over and over again and I can tell you, it's not just a key message that this spokespeople like to lead you with. It really has engrained itself in the DNA of this company. There is a huge focus on the capital allocation process. It starts with optimizing the base business and a number of our presenters have talked about the investments in the base business drive -- Mark in particular you talked about really driving operational that come through our operations and optimizing every barrel of production. And we're accomplishing that while reducing the actual sustaining capital that we're putting into the business.

Secondly; investment in profitable growth. A couple of people mentioned that, Steve mentioned earlier today, obviously the focus is on organic growth. We've a tremendous suite of opportunities and a massive resource that we're looking to profitably monetize, where both Steve and Francois mentioned the opportunities on the inorganic front as well, and I wanted to just maybe put some caveats around that. Certainly anything we looked at on that front would have to meet a number of criteria. One it has to be on strategy. It has to fit with that integrated models that we've talked to you about today. it has to match with that integrated suite of assets; nothing on the frontrunner as we speak, but we do have a very-very capable business development group and we evaluate every opportunity that comes along.

And finally, I say it last, but it is certainly not least and that is returning cash to shareholders. We have a very-very strong track record in that regard; it's something that's relatively new to Suncor. But over the past five years we have managed to increase the dividend by a compounded annual rate of over 30% and it's certainly been a focus in this past year of course we had a 54% increase to the dividend. Can tell you that both the management team and the Board of Directors are absolutely committed to a dividend that is meaningful, that's competitive, that's growing and that is sustainable. And the review is underway now and news in our dividend front you will see -- we have moved the timing on that up so you will certainly hear news in the dividend 60 days down the road here as we report our fourth quarter results in early February.

That's a terrific way of allocating our cash in a very value added way. The second way is also quite new to Suncor and we did our first share buyback in September of 2011 and in just a little over two years we have actually repurchased and cancelled over 7% of the outstanding shares. We think it's a great way to returning cash to shareholders and add value and it will be part of the capital allocation program going forward. Of course what's enabled us to that is the tremendous cash generation of the business.

2010 was a turning point for Suncor as we move from a net user of cash to a net producer of cash and our cash flow from operations started to out strip our capital spending program. In the past two or three years we have increased the size of that wedge of free cash flow over and above our capital expenditures. We spent -- couple of things that contributed to that, one is that capital disciplined approach of really ensuring that the marginal dollar is spent well.

We set a capital envelope of $7 billion to $8 billion and we have actually been beneath that envelope the past two years and we'll come in under it this year. As you look to 2014 we remain in that $7 billion to $8 billion spending window with a $7.8 billion planned capital spend. But with the lots of opportunities that we have going forward with continued growth in profitable production we'd expect the cash flow to continue to increase and we may well move beyond that $8 billion window in future years.

But I think the key is we'll spend within our means, we'll stay true to those principles of very, very disciplined capital allocation. Speaking of our 2014 plans the complete guidance is on our websites but I wanted to highlight a couple of things for you. One of course is around that capital spend. While it remains in that $7 billion to $8 billion window an important thing to observe is we're ramping up the amount of capital that's dedicated to growth. And in 2014 we have on the go a number of major profitable growth projects, both in the E&P group with Hebron and Golden Eagle and of course that ones that Mark talked about in the oil sands and also beginning in Montreal with growth capital going into that business as we transform it into an in land refinery.

What you also see is continued growth in profitable production. We're going to meet, we fully expect to meet our guidance production this year and if you take that guidance production the actual production from 2013 and look forward to 2014s mid-range of guidance what you see is our overall oil production going up by about 10% and our oil sands production up by over 14% and much of that is high value SCO. So very good story in terms of production growth.

Well that production growth is driving cash flow. Many companies in our sector have the promise of free cash flow. Suncor also has the promise of free cash flow but it's not two or three years down the road. We have actually been delivering on it. This is a pretty compelling chart; it looks that Suncor versus the peer companies, the direct peer companies here in Canada. And over the past two years and three quarters of this year Suncor has generated almost $6 billion in free cash flow.

And we're defining free cash flow here as cash from operations, less capital spend, adjusted for working capital and less dividend payments. It's a pretty compelling number and we're very optimistic that you are going to see this trend continue as we move forward with profitable growth plans.

2010 was a pretty defining year for Suncor, the last chart you saw that we started generating free cash flow in that period. This looks just a slightly different way, it looks that versus North American peer groups, I think they are 25 companies in this comparison. And it looks that cash flow from operations per barrel of production, it's pretty striking. After the Petro Canada transaction we took about a year to refocus the portfolio so also I described how sold down non-performing non-core assets and ended the balance sheet. Kris talked a lot about how we really brought the integrated model to play, and we've now done 12 consecutive quarters with more than $2.25 billion in cash flow generated. During that period we've been typically first, second, or third, certainly among the top five in North America every single quarter. And think about that because that's through some of the most volatile crude prices that we've seen probably the most volatile crude pricing environment we've seen in North America and this model has proved very resilient through [indiscernible]. And we certainly expect that to continue.

This is an interesting chart we didn't generated internally but we love to share it with people because it puts the light to the idea that oil sands are the high cost curve producer and are the producers perhaps threatened by decline in oil prices. This chart looks at the breakeven world oil price required in order for companies and these are global energy companies the majors, the super majors and companies similar in size to Suncor. The global price they need in order to meet their CapEx requirements and their dividend obligations. Almost every major and certainly super major needs more than $100 oil price in order to breakeven on cash from operations and those obligations you can see Suncor is quite low down on the ground well under $100. And what it says is we're extremely well positioned to continue to grow this company profitably and deliver returns for the shareholders in almost any foreseeable oil price environment.

So let me wrap up by coming right back to it the mantra the integrated model. We think its delivering very-very strong results for shareholders, strong cash generation, strong growth opportunity and strong results. We're pleased with where we've been and I'd say we're even more exciting about where we're going now. We hope you agree. And with that I am going to ask the tech folks to mic-up our panel out in the audience we have a couple of volunteers with microphone maybe they could just stand up. They'll get around to you if you just raise your hand we'll get around to you and please till you have the microphone in order to ask your question because we do want the people on the webcast to hear the questions and the responses. And if we have time we'll also address the number of questions that have come in over the webcast. So ask you to prepare your questions and we've got about 40 minutes I think of Q&A.

Question-and-Answer Session

Unidentified Analyst

[Indiscernible]. Thank you guys for all the detail, I had a question on the in situ replicating strategy. I was hoping you guys could give us some comments on what are the primary factors there that will determine the overall timing of that program? Is it primarily the delineation process? Just trying to get a sense of what the opportunity might be to accelerate that program or just kind of how we should be thinking about timeframe long term? And also may have missed this with your comments. Do you have any idea for us how to think about what the capital cost there? How to think about that in comparison to some other Greenfield in situ type projects we could make up? Thank you.

Steve Williams

One of the things about it is that the regulatory process takes some time and to be able to enter into the regulatory process there is a certain level of definition you need including the resource delineation side. The only place in that portfolio where we have an existing approval is on MEDO for a total of 80,000 barrels a day which is the area that we own 75% of with our joint interest partner. So primarily the focus is for us to be able to go through and initiate these projects we need to be able to get through the regulatory process, we need to be able to line enough of these facilities up with regulatory approvals that we know that were not going to get disrupted in the middle of replication otherwise you defeat the purpose. So to a large degree I would say that the timing that we've showed on here is quite aggressive. We constantly are looking for opportunities around what is the optimal timing and how that fits with the market. So we will continue to work that but we don't see significant and material ways to bring that on a lot sooner.

And the other thing is that we have some significant steps forward with MacKay River 2 as well as the Firebag Debottleneck but essentially bring on increment of 20,000 barrels a day that aren't specifically to replication. Half of this point in time would be very speculative because we're still looking at technology options and looking at a variety of different things which may take tradeoffs between capital and expense in those sorts of things. So, at this stage of the game I really don't have a good answer for you.

Mike Dunn - FirstEnergy Capital

It's Mike Dunn with FirstEnergy. Maybe for Steve, just regarding your dividend how the Board and how you're thinking about your dividend policy going forward. Are you -- I guess the way I kind of think about it is whether you're thinking about at oil price level whether be $80 or what at which the dividend is more or less self-funded with the growing debt. Is that how -- just trying to get a sense of how the Board is thinking about the how much cash to deliver and how much to commit and what oil price to count on to pay that. Thank you.

Unidentified Company Representative

I think Steve mentioned and there in terms of we want it to be [indiscernible] we want it to be affordable, we want it to be sustainable and although we've increased the rates, Steve talked about their 30% on appraise through the last five years it's still in terms of the yield spaces at a comfortable level. We've positioned deliberately last year when we put a 54% on at the end of top half of the S&P and we saw that is one is the markers we would take to [indiscernible].

If you look at also it's all factors in terms of how we come to an affordability conclusion. The reality at the moment is that the prices we're talking, volatility through prices in the last few years for crude and products we've been generating around the $10 billion cash mark and our dividend cost phase in the 1.1 billion for last year increases as we go to the rate for the full year.

So, we feel overall it's still in affordable range with some potential ahead of it and what we want to do is start to, it's not hard to grow but the reason we've going forward is so if you see the relationship between the performance of the company and the dividend we pay to our shareholders becoming more closely connected. All I can say in terms of time clearly it say a board decision in terms of what our divided increase will look like but I think what you see is more of the same, the same principles we'll be taking into account, the same contract with shareholders in terms of linking it to our earnings and the plan you've seen today shows a world were stable crude price earnings, the Company continues to grow in earnings potentially, we'll grow with that.

So, I think you'll see the thing that [indiscernible] carry forward.

Greg Pardy - RBC Capital Markets

It's Greg Pardy with RBC Capital Markets. Just a couple of questions the first is what is the timing and what are conditions associated with the next phase of growth at Firebag. And the second question is just with respect to the Montreal coker. Could you provide some details around how much of that project was initially completed and can you just give us an idea what you think the ballpark cost might be associated with that project. Thanks very much.

Unidentified Company Representative

So, maybe I can go first and talk to you of Firebag question. Originally, Firebag was setup to be able to put in all six phases. So, we have the fourth phase up and running and phases five and six wasn't originally part of the plan, we essentially by doing that were draining a container of resource around that facility. What we have done when we looked at the facility and looked at it, we find that we can expand the existing footprints which is essentially phases one to four through the debottleneck at a substantially better economic return than going forward with the full investment that was required under five and six.

Once you get it there, what we've been looking at is the optimal size of the facility relative to the investment and resource space and we do believe that as I mentioned we do have a debottleneck that's about 20,000 barrels a day and we do see that there could potentially be a second phase that would take the entire complex up to about 220,000 barrels a day nameplate. We are only showing one in our debottleneck plant at this point in time. If you go and look at the total resource we showed for Firebag, it's very-very large. So we do see and Steve showed this on one of his slides that the frontend is post 2020, we see the potential of a new development at a different location within Firebag to tap into those resources. And that's something that could potentially fit into our replication strategy. But we do believe that once we get into the 200,000 or 220,000 barrels a day with the economic opportunities that will allow us to debottlenecked to that, that we will reach the optimal for the shareholders and so the potential of moving ahead with five and six now is something that we don't and no longer envision.

Steve Williams

Okay, and thanks [indiscernible] I will take the Montreal question on the Coker. So the Coker project, I would say it was about 20% - 25% complete, just in terms of some early equipment delivery and front-end engineering. Now we're close to the 20% and even that project was shutdown. Now we are in middle of stocking. I think one thing to understand that's important is that, when that project was originally configured it wasn't based on Western Canadian heavy. It was based on the international mining type heavy. And so the characteristics of the barrel are bit different, and so it requires us to take a really close look at the engineering. We're able to leverage a good amount of the equipment from the ground and a lot of that front-end engineering.

So the good news is actually we're going to really be able to leverage the previous investment dollars. But we have to do some work because it needs to be reconfigured to take out Western crude. So we're a little early right now to give you a cost estimate. But we are able, I would say, we can leverage equipments that's already been purchased. We can leverage some of the existing engineering that was done, and so we think -- and just to give you a sense, you know the size that we were talking about a 30,000 barrels a day at Coker that would translates to those 75,000 a day of diluted bitumen. Now those numbers are subject to some movement. But just to give you a sense of scale and you've put in the work that's been previously done, we think we could deliver the project at a very competitive cost to other similar projects.

Francois Langlois

We would like to add to that, when we talked about Montreal, first the vast majority of the economics for Montreal come from turning it to an invent-refinery, the [indiscernible] project is important, but the vast majority of the economics come before that.

Steve Williams

Yes. And that's why, that was even I made the point in my comments that, you know this investment decision, you will need to stand on its own to see if we compete it and compete with capital with all of the other projects we have on the go.

Unidentified Company Representative

Maybe, picked up a few questions that were coming over the website, one I will pick up. Can Suncor's management provide a roadmap to getting total upstream production to a million barrels by 2020, similar to what Mark provided for the Oil Sands?

And what I would say to that is, it's probably conspicuous by its absence, in fact that we haven't actually put that stake in the ground and it may be seen as a matter of Semantics, but we are much more focused on profitable growth than we are on getting to a particular hurdle or milestone by a particular date. So I think if you look at our current IR debt, and look at the growth side on page 6, and add the barrels, I think you see it getting up towards something like 900,000 barrels by the end of the decade of daily production. But our far bigger focus than any particular sign post, is adding profitable production. Maybe over to Mark, there is question around carbonates.

Mark Little

Okay, so there was a question that was just around what are carbonate preserves and what is our current production of carbonate oil?

So we are not currently producing any carbonate oil in our production portfolio and we also do not count any of our carbonate resource in either reserves or in contingent resource. So we don't show it in either at this point in time. We have just under 300 sections of lands that contain carbonate resources and we continue to work the potential of that, but in none of my comments today nor in our reserves do we count any of that resource.

Steve Douglas

Questions from the floor?

Unidentified Analyst

It's [indiscernible] from Goldman Sachs. A relay question on the Montreal refinery; given that now like it's trading at $10 under Brent right now. Can you talk about what crude is resourcing currently and kind of our plans to perhaps to use Gulf Coast crudes over international lights? And then second questions, can you talk a little bit about your outlook on WCS, will this increase moving forward?

Steve Williams

So let me take the first part of that question. And certainly you know you will see a lot of volatility in pricing right now, and you are seeing a tremendous - not volatility between the brands and LLS and TI at the moment. We do have a very robust logistic and marketing infrastructure, so we do look for opportunities, if we can source barrel from the gulf course and bring them up to the Montreal refinery. The economics have to make sense given transportation cost but absolutely is on the table for us and giving more prices right now. I mean -- it would be safe assume we're looking very closely at it and we're very opportunities about that so we can maximize profitability and take advantage of those opportunities.

I think WCS -- I'll give a bit of an outlook on that. I don't if anybody else wants to [hover] against that. I will tell once the once it seems to be anybody's guess where it's going. And I think we think we're to see a lot of volatility certainly and heavy differentials for a while. It is part of the power of the integrated position that we're talking about earlier. Because for us whether that volatility is wide or narrow, it's going to deliver really great cash flow for the corporation.

Our view - my view would be we're going to continue to see some high volatility. It's going to take some time for prices to equilibrate. Once market accessed, position starts to align [indiscernible] out over the next number of years, but we feel very well positioned in either scenario to drive value of anybody.

Unidentified Company Representative

Sorry could you just repeat the second part of your question, it was about Syncrude.

Unidentified Analyst

So the Chicago model used to absorb most of Syncrude volume, which is now at [indiscernible] which were heavier [indiscernible] and series pushing out light demand for East. So I'm wondering as you looking Syncrude moving forward if you building any wider differential to [indiscernible] for that transportation costs even up to Montreal potentially with the Line 9 reversal. I am just concerned that maybe you're going to see why are differential for Syncrude moving forward than we previously had?

Steve Williams

I mean, I think certainly we're seeing a very dynamic market in terms of pricing, right. And there we see -- as you said some of that heavy being soaked up and pushing out some of those lights. Do we see potentially it impacting the value of the light barrel which is what you're talking about? And I think we pay - we do believe we're going to see some of that volatility and we could see an impact some of the light pricing overtime, but our market accessed position whether it's pushing production into the Midwest mid-tier, getting it out into our inland refinery, connecting up to Montreal and also market accessed out to the [indiscernible] that we're going to able to grab back that differential wherever it lands.

Unidentified Analyst

This is question for [indiscernible] Group. I have two questions to both Libya. I am curious to know what level of export Libya is doing right now, and then secondly, how do you ultimately see these political issues getting resolved?

Steve Williams

Those are tough questions to answer I'll tell you because we don't know vis-a-vis, but for sure the exports have been hampered, it moves a little bit, so I think you have read out. I am certainly not the authority on it, but it's a fraction of the throughput that Libya is able to produce at about 1.6 million barrels. In terms of shedding light on what it will take in the timing of solving the situation, I couldn't being to guess because I've indicated this is extremely complex, and I think all we can do as I mentioned the best thing for us is that it's not that material to us and that makes us able to be patient and see these issues resolved.

Kyle Preston - National Bank

It's Kyle Preston here with National Bank. Just a question regarding your longer term outlook for capital spending levels, Steve Douglas, I think you mentioned that it may move beyond 8 billion in some years, was that just a reference to the build out of Fort Hills? And what should we expect once you finished Fort Hills? Do we see a big drop off in capital spending or that just get to sort of transitioned over the new Seg-D development?

Unidentified Company Representative

Maybe I'll keep that went off and Steve if you want to add to it.

Steve Douglas

I would say that that suite of project opportunities that are currently in the growth plan, we can manage within that $7 billion to $8 billion envelop, so it's not really a kick up from Fort Hills as much as looking forward with profitable growth coming on with cash flow increasing. There is a whole suite of opportunities that are not yet in the growth plan that go beyond and I think that's where you'd start to see capital expanded above and beyond.

Kyle Preston - National Bank

We know that there is just double underlined everything, you've said Steve. I mean, if you look at a prime we've outlined here at a constant crude price then you see an increasing cash flow coming forward as the company is growing. What's key to assess that we've the ability to spend efficiently and that we've delivered high return projects and as long as we satisfy those then you will see CapEx start to move. We deliberately put $7 billion to $8 billion banks in play so that we could demonstrate a commitment to capital discipline. We already in the third year of that. We actually haven't spent the 7 billon of [indiscernible]. In both years, we come become and said, our disciplined has been so tight. We have under spent versus that budget. But what we're trying to say, let's fast forward that to the 2020, we will still be in that $7 billion $8 billion range, it may be exactly as you said we may come below it because there are things have changed in the industry which won't satisfy our spend efficiently or high return or we may move into a different world where clearly with such a rich suite of project we won't start executing those at different pace. If Mike can demonstrate and Steve can demonstrate through joint ventures and through our major projects departments when we can start to execute that then we will consider in that timeframe, so we're just saying 7 to 8 dozen last forever.

Unidentified Company Representative

There is one at the front grade party from RBC.

Unidentified Analyst

Thanks, we're picking at just a little static in terms of inorganic opportunities and so forth and we're in that ranks. Maybe Steve could just prioritize the uses of cash flow amongst dividends, buybacks, debt reduction, and then where acquisitions might fit in? Thanks.

Steve Reynish

I think you got in a sense - it's what we've already demonstrated. So first [indiscernible] is operational excellence, let's invest in our assets so the assets we've got we operated at most efficient point, and you've seen us doing that, you've seen reliability of R&N coming up, you've seen it coming up now in oil sand and as Frank said, he has invested through the last couple of years in the operated assets and start to see those come up. We've also put some pressure into the North Sea and [indiscernible] so the first thing is let's [indiscernible] asset to generate the cash in the first place. Then we have talked about attractive growth projects beyond that and we have a long list of attractive growth projects that we tried to demonstrate and showcase this morning.

We retained a significant amount of capital discipline through there, so you've seen us in the context of $10 billion cash flow, $9 to billion to $10 billion cash flow for the last three years, re-spending around that 7 to 8. So our track record is giving you an indication of what we think total capital is, so that's the sustaining capital then the growth capital on top of that. You've seen us commit significantly and we see dividend forever which is why we had some [indiscernible] in pace that those have come up because we have been testing our own integrated model [indiscernible]. We are growing increasingly confident and you seen the dividend come up as that confidence as increased.

We have also put share buybacks and the share buybacks come and go depend on a number of other things that were valued by of our own stocks, so we look at the [indiscernible] put together as well as our own view of what the [indiscernible] asset value of the company is and we buy against that. We have been very comfortable clearly to buy that 7% back. We have got still significantly fund in allocated to buy some more stock back and we're very comfortable at the price at the moment. So we will continue to buy stock back. We then look and say okay well if we've satisfied in running the business well, investing in a disciplined way in project and paying money back to our shareholder, and I think that [indiscernible] stable dividend and share buyback is impressive by any measure in terms of what we've been doing through last few years.

Then you make some reasonable assumptions about the price of crude through there, first of all the model is incredibly robust and that's the point [indiscernible], crude prices coming down relative [indiscernible]. But if you put some reasonable assumptions in there, you start to see there is significant free cash potentially available, and I know a number of the models I've seen that you guys have put together. I have those numbers in there. So we still have some firepower on the balance sheet. We looked at - we look at most of the opportunities around world. We centered absolutely on our strategies as we've gone through today and so far we haven't find it attractive relative to the organic opportunities we have.

So all of the transactions that have been taking place we're looking and it's not surprising when you see where we're on that curve, we're viewing some of our organic opportunities very highly relative to these options we're seeing in the marketplace. So we'll continue to look, I think the best time do good deals when you not in a hurry to do it. We continue to look [indiscernible] nothing on the front row.

Unidentified Analyst

Thanks, it is [indiscernible] Group. It sounds in terms of Firebag you're interested in doing more debottlenecking rather than additional stages. I was wondering for the new Greenfield development, [Matt and Louis], there is more characteristics very similar to Firebag or is there something different?

Steve Williams

Overall, the pockets of resources that I identified in those about 10 different areas when you look at it, I would say generally the characteristics are probably not quite as good as what we had at Firebag, but generally it's in the ballpark and that's one of the reasons that using conventional technology we believe that we can make an economic investment for the overall, for the corporation that's attractive using conventional technologies. So, the quality of the resource and I showed you on that quality chart that we showed that there is a little bit of variation in quality but overall we believe the quality is very good and it will make it very positive in moving forward.

Unidentified Analyst

Secondly, you've sort of deliberately way in talking about inorganic opportunities. Is there one area the portfolio that you feel like it could be stronger in for instance?

Steve Williams

I think what we've demonstrated this morning is the portfolio is very strong. So, there is a timing benefit in there as well if you look at good times happening to graded business to be able to respond to the volatility and still generate reasonably consistent cash flows the other side, this was one of those moments.

And in 40 years in this industry I'm not sure an integrated model would have pay that better on this continent and through the last three or four years. I think as Chris said, that's probably going to be the case for the next three or four years so that as market access starts to open up than we'll probably start to see little bit more reason in the differentials.

So, if I look at the model we have at the moment. When we think oil sand, we think oil sand integrated direct to customer. So, there have been opportunities there. We have a very healthy growth program that we're comfortable we can execute like the funds going in there. We've invested happily in the midstream and the effect that we have a spare refinery Montreal which we can put into that integrated model.

So, we feel very comfortable with that chain, there will be some opportunities it's becoming quite clearly a big company game in oil sand. So, I know that there is some opportunities that may appear in oil sands themselves that's one opportunity we'll look at. [indiscernible] if you look at our strategy we start because of the other opportunities we have, we start relatively conservatively which is for instance very stable basins where we really understand the geology.

So, things around the east coast of Canada, things around the North Sea either on the UK side or the North Region side have some attraction to us because we understand those and we've been partly to ventures there.

So, those are the places we will continue to look, I think the important thing is when you look at the last [indiscernible] where people need $440, $450 a barrel for clear that capital expenditure, we don't have a need to go into those high risk areas and you won't see this doing there, so, it very [indiscernible] core business today.

I'll just want to take the opportunity to add one comment to Mark's on replication. I think what we're saying is replication is the way forward. If you look at the way the industry use to invest and I remember being partly to that original Firebag decision, that was one of the first industry scale commercial facilities and we've learned a lot from that and in those learning which now take us into this replication strategy which says instead of building these very big customized plans, you reproduce at lower cost less flexible facility and just put it in. Of course but what you have to have to be able to that replication strategy is the quality and source of resources on Suncor Corp, so we're well positioned to execute our strategy.

Unidentified Company Representative

We had a question on Syncrude I don't know Steve if you want to take.

Steve Williams

So the question was, can you comment on your expectations for Syncrude reliability improvements over the coming few years, what is the main focus for improving this project?

I mean the first thing I would say is oil sands are one of the core scales that we have in the company, since we've become owners, we've been working very closely with the only other owners of backed project, all of us are satisfied with the rate of progress in terms of the reliability and asset performance over the last few years.

The operator in Exxon is a very capable operator. In fact they wrote the original book on operational excellence and how to execute it. There are some specific issues around oil sand which mean you have to take a global model and flex it in order to be able to get the rates improvements that Mark's been getting up there.

So, we're working very closely, we're working very closely with Exxon, very closely with Imperial to make sure we pool our knowledge and that the reliability of that asset comes up. I'm very encouraged by what I'm seeing, I think we're working on all the right basic underlying issues in it and I think we will start to see that asset performance improve and of course what the [indiscernible] offset is until that happens will not grow that and I think as we start to operate it well than the opportunities for further development may start to appear.

Steve Douglas

Steve that I guess we're very close to the progress there as all the other one as everybody is following that with great interest. I think the plans are actually very robust but it's a multi-year journey this is not -- this is going to take a number of years I think to play out as on ready to go we've got a few more ahead of us as well before it really gets to the point where we'd like to see it.

Steve Williams

Each of the presenters talked a fair bit about safety and operational excellence and Francois has a questions that's coming around that in E&P realm.

Francois Langlois

Sure Steve. The question came in as in-connection with all the operations one of the lessons learns for the company has learned from the BP horizon disaster and obviously industry has learned a lot of lessons from this and I want to describe those but what I can tell you for sure that for us in all our offshore operations including drilling and production safety is absolutely in top of mind and we have a very good track record and having a good track record means that you simulate all the learnings from industry whenever and wherever you can do that, and we've done that fully. So we've internalized all the findings we have to look at all the studies that were done, we participated in bunch of industry reviews where again everything was dissected. And we audited their process as against this so we're very confident that we have processes that are as good as we can have in industry.

Steve Douglas

Anything else from the floor? Okay, well I think I'll wrap it up there, and thank everybody for their attention and for their participation today both here in the room and on the website. Obviously we're certainly available the IRR team on any follow-up from today and for those in the room there are lunches I believe laid out outside and we'll try to be available some of this for chatting have two words. So thank you again. Appreciate it.

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Source: Suncor Energy Hosts 2013 Investor Day (Transcript)

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