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Operator: Good day, and welcome to the Imperial Oil 4Q Earnings Call. At this time, I would like to turn the conference over to Dave Hughes, VP, Investor Relations. Please go ahead.

Dave Hughes: Thank you very much, and good morning everybody. Welcome to our fourth quarter earnings call. Here today are Brad Corson, Chairman, President, and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Simon Younger, Senior Vice President of the Upstream; Jon Wetmore, Vice President of the Downstream; and Sherri Evers, Vice President of Commercial and Corporate Development. Let me just start with the cautionary statement. Today’s comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to this conference call. Today’s comments may also contain forward-looking information.

Any forward-looking information is not a guarantee of future performance, and actual future performance, and operating results can vary materially depending on a number of factors and assumptions. Forward-looking information and the risk factors and assumptions are described in further detail in our fourth quarter earnings release that we issued this morning, as well as our most recent Form 10-K. All of these documents are available on SEDAR, EDGAR, and on our website. So, please refer to those. After Brad’s opening remarks, as usual Dan will give a financial update and then we’ll go back to Brad for an operating update and we’ll followed it all with a Q&A session. So, with that, I’m happy to turn over to Brad for his opening remarks.

Brad Corson: Thanks, Dave. Good morning, everybody, and Happy New Year. Welcome to our fourth quarter earnings call. I hope you’re all doing well and your New Year is off to a good start. As we close out 2022 reporting, I’m pleased to share another very strong quarter for Imperial in what has been a standout year for us, both financially and operationally. Our Downstream continued to deliver exceptional operating and financial performance in the fourth quarter, while Kearl tied a quarterly production record, and Cold Lake and Syncrude continued to deliver strong production results as well. It’s especially satisfying to see this level of operating performance in a year where commodity prices were so supportive, which in-turn allowed us to maximize value for our shareholders.

Looking back on the full-year, we are closing the books on what was the best year in the company’s history. A stark contrast to the challenges we faced just two years ago at the depths of COVID. In 2022, we set numerous records both operating and financial. We delivered record earnings and cash flow, as well as record shareholder returns underpinned by a 63% increase to our dividend and over $6 billion in share buybacks. Operationally, we continue to see Kearl deliver new daily and quarterly best ever, further supporting our confidence in achieving 280,000 barrels per day gross by 2024. Cold Lake delivered production at the high-end of the upwardly revised guidance range, and Syncrude had a best ever production year supported by the interconnecting bidirectional pipelines.

And in the Downstream, our refining assets achieved best ever utilization allowing us to maximize products available to the market. And in addition to these performance achievements, we continued to reinvest in the business and we successfully advanced multiple accretive capital projects such as completion of the Sarnia products pipeline, which improves our ability to supply refined products to markets in Ontario. We also made significant progress on our commitments to sustainability and decarbonization, including a decision to invest in Canada’s largest renewable diesel manufacturing facility at Strathcona. Material progress on the Pathways initiative, and establishing a corporate wide net zero goal. We’ll talk more about many of these achievements over the next several minutes.

And the overall macro environment remained positive through the year. And while commodity prices did soften somewhat in the fourth quarter, they remain quite strong due to global effects of ongoing supply challenges, growing demand, and ongoing geopolitical events. Our unrelenting focus on safety and reliability enables our strong operating performance in this environment and continues to underpin our strong financial results. Over the next few minutes, Dan and I will detail the results of what was a very strong quarter. So, now let’s review the fourth quarter results. Earnings for the quarter were just over $1.7 billion and our cash from operating activities was almost $2.8 billion. Another strong operating quarter, including Kearl matching its best ever production quarter and the Downstream setting a utilization record coupled with continued strong commodity fundamentals, most notably, robust diesel crack spreads supported these strong results.

Full-year 2022 saw record operating performance across our assets, which played a large part in generating full-year earnings of over $7.3 billion and operating cash flow of almost $10.5 billion, the strongest financial results in Imperial’s history. These strong financial results come with increased royalty and tax contributions to the provincial and federal governments providing economic benefits for all Canadians. We achieved total upstream production of 441,000 barrels of oil equivalent per day in the quarter, reflecting continued strong and in some cases record setting performance across our upstream assets, which I’ll talk more about in just a few minutes. I would also note that Northern Alberta experienced another significant cold weather event in December.

And I’m pleased to say, we managed through that of our operating teams who continue to work safely and diligently to provide reliable energy supply to the market. In the Downstream, we saw another outstanding quarter. Our refinery utilization in the quarter was 101%, marking the second quarter in a row with utilization at or above 100% and also the highest quarterly utilization we have seen in the company’s history, surpassing the previous record set just last quarter. This also contributed to the highest annual utilization in the company’s history. Given the current commodity price environment, driven by external supply challenges we’ve talked about previously, this level of performance is delivering tremendous value. The fourth quarter also saw us continue to maximize shareholder returns.

We completed the accelerated NCIB in October and successfully executed our second substantial issuer bid in 2022, returning $1.5 billion of cash to our shareholders in December on top of the 2.5 billion SIB completed back in June. And this was in addition the $211 million in dividends paid in the quarter for a total of $851 million for the year. Altogether, this represents over $7 billion of cash returned to shareholders in 2022. The highest level of returns in Imperial’s history. And finally, this morning, we declared a dividend of $0.44 per share payable April 1, 2023. And I can assure you that in 2023, we are maintaining our core strategy of optimizing our existing asset base to drive maximum shareholder value, a strategy that will allow us to continue to focus on returning cash to our shareholders.

And with that, I’ll pass things over to Dan.

Dan Lyons: Thanks Brad. Starting with financial results for the full-year, we reported net income of over $7.3 billion as Brad mentioned, our highest on record and an increase of around $4.9 billion from 2021, driven mainly by higher realizations in the upstream and higher margins in the Downstream underpinned by strong operational performance. Looking at the fourth quarter, our net income of $1,727 million was up $914 million, when compared to the fourth quarter of 2021, primarily driven by higher margins in the Downstream. Looking sequentially, our fourth quarter net income of $1,727 million is down $304 million from the third quarter were down around $100 million when excluding the XTO sale that occurred in the third quarter.

This reflects lower realizations in the upstream, partly offset by improved upstream and Downstream volumes. Now, looking at each business line, the upstream reported net income of 531 million in the fourth quarter, down 455 million from the third quarter or down 250 million when we exclude the impact of the XTO sale, driven primarily by lower realizations, partly off offset by higher volumes. The Downstream’s net income was $1,188 million, up 176 million from the third quarter, mainly reflecting higher volumes from achieving record refinery utilization rates in the fourth quarter, including continued strong distillate production. Finally, our chemicals business continued to demonstrate reliable operational performance with net income of $41 million in the fourth quarter down from our third quarter net income of $54 million.

Moving on to cash flow. In the fourth quarter, we generated nearly $2.8 billion in cash flows from operating activities, down around $300 million from the third quarter, bringing our full-year cash flows from operating activities to around $10.5 billion, up over from last year reflecting strong earnings and favorable working capital impacts. Free cash flow for the quarter was $2.3 billion, bringing our full-year free cash flow to about $9.9 billion, $5.4 billion higher than last year, primarily driven by the increase in cash flows from operations that I just mentioned and by the cash received from the XTO sale in the third quarter. Total cash tax payments in 2022 were around $400 million. As previously discussed, we will be making a 2022 income tax catch-up payment in the first quarter and we anticipate that this catch-up payment will be on the order of $2.1 billion, which is lower than our previous forecast of around $2.5 billion.

Going forward, under current market conditions, we expect to be tax paying in 2023 on a current basis and therefore expect to make regular tax installment payments throughout the year at a tax rate of about 24%. Finally, we ended the year with over $3.7 billion of cash on hand, up $173 million from the third quarter. Discussing CapEx, capital expenditures totaled $488 million in the fourth quarter and just under $1.5 billion for the full-year. And the Downstream 2022 spending included completing the Sarnia products pipeline early in the year and progressing our renewable diesel project at Strathcona, which has been mentioned earlier, has now received FID in its plan to start-up in early 2025. In the upstream, 2022 spending focused on smaller projects to sustain and grow production at both Kearl and Cold Lake, as well as larger projects like the in-pit tailings project at Kearl and the SA, SAGD Grand Rapids project at Cold Lake.

As noted in our full-year 2023 guidance issued in December, we plan to complete the Grand Rapids project on an accelerated basis by the end of this year, about one- year ahead of schedule. This accelerated schedule increased our 2022 CapEx by about $100 million relative to our 2022 guidance of $1.4 billion. Shifting to shareholder distributions. We continue to demonstrate our long standing commitment to return cash to shareholders, a reliable and growing dividend is fundamental to our cash distribution strategy. And as Brad noted, this morning, we declared a first quarter dividend of $0.44 per share payable in April. We have increased our annual dividend payment for 28 consecutive years and this year we increased our quarterly dividend payment by 63% year-over-year from $0.27 per share in the first quarter of 2022 to $0.44 per share paid in the first quarter of 2023.

We completed our most recent accelerated NCIB program with purchases of over $400 million in October and we completed our second substantial issuer bid in December . We completed record shareholder returns of over $7.2 billion, including $851 million in dividends and share repurchases of about $6.4 billion. These share repurchases represent over 90 million shares and almost 14% of our shares outstanding. Now, I’ll turn it back to Brad to discuss our operational performance.

Brad Corson: All right. Thanks Dan. And so, now let’s talk about the operating results for the quarter. Upstream production for the quarter averaged 441,000 oil equivalent barrels per day, which is up 11,000 barrels per day versus the third quarter of 2022, but 4,000 barrels per day lower versus the fourth quarter of 2021. The drop versus the fourth quarter of 2021 is more than accounted for by the absence of XTO volumes in the fourth quarter of 2022, which totaled 15,000 oil equivalent barrels per day. So, adjusting for the sale of XTO, production actually increased by 11,000 oil equivalent barrels per day versus the fourth quarter of 2021. And the increase versus the third quarter reflects continued strong operating performance at Kearl and Cold Lake, as well as an excellent quarter for Syncrude following completion in the third quarter of its planned turnaround.

For the full-year, upstream production was 416,000 oil equivalent barrels per day. Strength in commodity prices was a key part of the story throughout 2022. I noted on our third quarter call that the WTI WCS differential was coming under some pressure in the quarter, resulting in a widening of around $6 per barrel versus the second quarter. And we saw this continue in the fourth quarter with the WTI WCS spread widening further by over $7 per barrel to a level of approximately $26 per barrel. I would note, however, that we’ve seen a modest narrowing of the spread so far in the first quarter to around $23 per barrel and expect further narrowing as the year progresses. I would also note that we continue to see strong diesel crack spreads, which provides a counter to the wide crude differentials and highlights the value of integration between our upstream and Downstream.

Additionally, our Downstream directly benefits from lower prices on the heavy crudes we process, especially when coupled with the higher diesel crack spreads I mentioned. And further, Syncrude synthetic product commanded a strong premium in the fourth quarter. And all of this adds up to very robust cash generation for our Downstream business. And once again, underscores the strong value of integration that we realize. So, now let’s move on and talk a bit about Kearl. Kearl’s production in the fourth quarter averaged 284,000 barrels per day gross, which was up 13,000 barrels per day versus the third quarter and was up 14,000 barrels per day from the fourth quarter of 2021. This fourth quarter production is in-line with Kearl’s previous best quarter, which was the fourth quarter of 2020, and contributed to the best second half of production in the assets history.

And as I mentioned earlier, the team was able to successfully manage through a significant cold weather event in December. This is notable at Kearl, given some of the challenges we faced in the first quarter of last year, due to weather, and reflects the positive impact of enhanced winter operating practices that were developed and implemented after the January 2022 weather issues. The strong second half demonstrates fully recovering from the challenges of the first quarter and brings full-year production at Kearl to 242,000 barrels per day gross. And as a further demonstration of Kearl’s strong second half and finish to the year, on December 29, the asset yet again broke its record for daily production, delivering an all-time high of around 360,000 barrels per day gross.

And yes, that starts with the . We are seeing strong production for this time of the year as we move into 2023 with January month-to-date production at Kearl at around 265,000 barrels per day. I recognize that winter is far from over, but this is a great start. Finally, turning to operating costs. We saw a slight increase of just under US$2 per barrel versus the third quarter to just under US$27 per barrel all-in, driven partially by higher energy requirements and incremental maintenance and support of our winter operating strategy. Given a number of structural cost reduction initiatives we are working on, we continue to target sustainable unit operating costs at or below US$20 per barrel at Kearl. And what a year 2022 was for Cold Lake, an ongoing focus on production optimization and reliability resulted in exceptional full-year production levels with Cold Lake averaging 144,000 barrels per day, which was at the high-end of our revised guidance and represents its highest full-year production since 2018.

Production for the fourth quarter averaged 141,000 barrels per day, which was down 9,000 barrels per day from the third quarter and just slightly below the fourth quarter of 2021. This is also the fifth consecutive quarter with production at or above 140,000 barrels per day. And we’re continuing to invest in Cold Lake. We are in the early stages of the Leming field redevelopment, and as we mentioned with our 2023 guidance release, we have accelerated Grand Rapids Phase 1 now expecting to start up later this year. Imperial’s share of Syncrude production for the quarter averaged 87,000 barrels per day, which was up 8,000 barrels per day from the fourth quarter of 2021, due to lower unplanned downtime and up 25,000 barrels per day from the third quarter of 2022 following the completion in the third quarter of the assets turnaround.

Throughout 2022, the interconnect pipeline between Syncrude and Suncor averaged about 3,000 barrels per day of export sales, enabling Syncrude to achieve record annual production of 77,000 barrels per day Imperial share. In 2023, Suncor, the operator, will continue to focus on the implementation of a significant transition plan. The integration of systems, processes, and people remains a high priority and is largely on plan. We expect that the realization of synergy benefits will continue to grow with further integration in 2023. And so, now let’s move on and talk about the Downstream. In the fourth quarter, we refined an average of 433,000 barrels per day, which was up 7,000 barrels a day versus the third quarter and up 17,000 barrels per day versus the fourth quarter of 2021, reflecting continued strong operating performance and minimal planned turnaround activity.

Refinery utilization was exceptional at 101%, marking the second quarter in a row with utilization at or above 100% and also the highest utilization in company history. Another outstanding quarter and a great credit to our refinery teams who remain focused on reliability and optimization to deliver these results. On a full-year basis, our refineries individually achieved records bringing total full-year throughput to 418,000 barrels per day, which represents a utilization of 98%, which was also the highest in company history and well above our annual guidance of 92% to 94%. And something we talked about before that still may not be fully appreciated is the flexibility we have in our Downstream operations, allowing us to adjust our product slates to capture market opportunities such as what we are seeing with diesel right now.

In fact, our refining network was able to deliver record distillate production at our existing assets, allowing us to capture maximum value from the strong diesel margins throughout the year. As we have noted before, 2022 was a relatively light year for planned maintenance and turnarounds at our refineries. As we communicated in our 2023 guidance announcement back in December, 2023 will be a more typical year for planned maintenance in the downstream. And finally, with respect to our refining business, I am very pleased and proud to note that late last week, we announced that we have made the final investment decision to develop what will be Canada’s largest renewable diesel manufacturing facility at our Strathcona refinery. This unit will produce more than 1 billion liters of renewable diesel annually, primarily from locally sourced feedstocks and could help reduce greenhouse gas emissions by about 3 million metric tons per year.

Work is already underway, and we expect renewable diesel production to start in early 2025. We continue to expect a strong return for that project, particularly as we’ve added accretive rail logistics scope to access high-value markets. The updated cost estimate for this capital investment is $720 million. This current higher cost reflects three main drivers. First, as we shared with our December guidance press release, we’ve added rail logistics scope, which will allow us to access higher value markets for the products. And second, we refined preliminary directional estimates around project development activities for things like construction requirements. And third, we’ve seen some cost increase for materials such as steel, as you might expect, given the inflationary environment we’re in.

But most importantly, even with these higher costs, we are still seeing a very similar strong return and this is primarily because of the highly accretive nature of the added rail logistics scope, but also further refinement of overall economic value. This project is another example of our focus on reinvesting in our business with an eye to the energy transition and future competitiveness and doing so in a way that creates value for our shareholders. Now, petroleum product sales in the quarter were 487,000 barrels per day, which is up 3,000 barrels per day versus the third quarter and down 9,000 barrels per day versus the fourth quarter of 2021. Demand for all products has remained stable with motor gasoline at around 95% of 2019 levels, diesel at essentially 100%, and jet actually exceeding 2019 levels in the fourth quarter at around 115%.

We continue to see a positive downstream margin environment in the fourth quarter, and though we did see some weakening of motor gasoline margins, they remain within normal historical bands. Diesel margins remain extremely strong. These dynamics are driven by number of factors, including low product inventories, and a global shortfall for diesel fuel. And that brings us to Chemicals. This business continued to deliver strong results with earnings of $41 million in the fourth quarter, which was down 13 million from the third quarter and down 23 million from the fourth quarter of 2021, primarily driven by lower margins. This brings full-year chemical earnings of $204 million, another very healthy year for our business despite being in a down cycle for chemicals, and once again highlighting the value of having this business fully integrated with our Sarnia refinery.

As always, I’d like to wrap up by highlighting a couple other items of note, particularly as it pertains to our ongoing commitment to improving sustainability and reducing our overall environmental footprint. First, as we continue to make progress on advancing the lower carbon solutions that will support our journey towards Net Zero, Imperial has now established a company-wide goal to achieve net zero emissions for Scope 1 and Scope 2 by 2050 across all of its operated assets, not just oil sands. We expect to achieve this through collaboration with government and other industry partners, successful technology development and deployment and supportive fiscal and regulatory frameworks. This announcement builds on our previously announced net zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company’s 2030 emission intensity reduction goal for operated oil sands.

I’d also like to highlight that the Pathways Alliance entered into an agreement with the Alberta provincial government on space, enabling the Alliance to begin more detailed work evaluating the storage zone by using test wells to get a full understanding of the characteristics of the geology in the hub region. This progress is very encouraging and marks a major milestone in our efforts to progress our plan to help Canada meet its climate goals and ensure our country becomes a preferred global supplier of responsibly produced oil. There is a tremendous amount of activity going on with the Pathways Alliance. In October, the Alliance communicated and expected total investment for the first phase of the project at around $24 billion and initial efforts under this phase are already underway on activities such as feasibility studies, environmental assessments, and early engineering work.

In closing, another excellent quarter to finish off an excellent year. We saw high reliability in our operations across the board, setting a number of operating records across our assets, and allowing us to continue to benefit from a strong business environment and to deliver very strong financial results. We returned over $2.1 billion to our shareholders in the quarter via our reliable and growing dividend and the successful execution of our second substantial issuer bid. This contributed to shareholder returns for the full-year in excess of $7 billion. We continue to make progress on our commitment to lower our carbon footprint. In addition to the continued progress on Pathways, we announced a decision to move forward with renewable diesel investment at our Strathcona refinery, as well as a corporate-wide net zero by 2050 goal.

And we announced our intention to accelerate our deployment of next-generation in-situ technology with the Grand Rapids project at Cold Lake. So, all-in-all, a fantastic year for Imperial. Our continued focus on our strategic priorities, those being continually improving reliability and investing in high-value opportunistic growth opportunities generated tremendous value for Imperial and a focus on shareholder returns resulted in the highest level of cash in our history being returned to our shareholders. As we look ahead to 2023, I’m viewing the year with a high level of optimism and excitement. We are coming off the strongest year in the company’s history, and with our ongoing focus on safe and reliable operations that drove our 2022 performance, I fully expect the company to deliver another excellent year.

As always, I’d like to thank you once again for your continued interest and support. And now, we’ll move to the Q&A session. So, I’ll pass it back to Dave.

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Dave Hughes: Okay. Thanks, Brad and Dan. We’re going to go to the Q&A now. I would ask you to please limit yourself to one question and a follow-up. So with that, operator, could you please go to the first question?

Operator: Yes, thank you. We will go first to Greg Pardy with RBC Capital.

Greg Pardy: Yes, thanks good morning, and thanks for the detailed rundown. Brad, I was wondering if we could just dig back into Kearl a little bit, not so much the production rates, which has been strong, but perhaps your comment around the weather proofing that was undertaken last year and that prepared you as well for the cold weather we went through in December. Could you be more specific in terms of the actions that you took?

Brad Corson: Yes. Thanks for the question, Greg, and Happy New Year. It’s really kind of a combination of several initiatives that encompass operating practices and procedures, establishing appropriate limits on certain metrics that we use to monitor our business. We also invested in some equipment upgrades and further monitoring. And so, it’s really a wide range of things, Greg. And so, when we put all those things together, it is about ensuring that we’ve got the right procedures in place, we’ve got the right equipment in place, we’ve got the right monitoring of extreme conditions, and we have contingency plans on how to react to those extreme conditions. So, it’s difficult to be, kind of more precise in a limited amount of time because it’s a lot of very discrete activities, but something that the team spent really several months in really, kind of reassessing on all of the root causes that contributed to the downtime last year and making sure we understood that root cause and taking appropriate mitigations.

Hope that’s helpful.

Greg Pardy: Yes. No, it is. It is. Understood. And hopefully, we’d learn a bit more of that on your Investor Day in April. But maybe just the follow-up question, completely shifting gears. And perhaps a question for Dan comes back to €“ you did two SIBs last year. You’ve got, what, $3 billion plus of cash on hand. Your cash tax is smaller. Your NCIB is exhausted. I mean we’ve got nothing in for repurchases in the first half of the year, which we know is off the mark. So, I’m just wondering what your appetite is for another SIB and just generally how you’re thinking about that?

Dan Lyons: Yes, Greg, I would say, look, our policy, our sort of philosophy on returning surplus cash to shareholders has been unchanged for a long time. So, to the extent we continue to generate, the market gives us and our operation forms gives us surplus cash, we’re going to return that to shareholders. So, what will happen first half of this year, it’s going to depend on market conditions, obviously. But we can’t, I don’t know if you pointed it out, but we can’t renew our NCIB until late June essentially, call it, July 1. So, could there be a return before that? It’s possible. We have not made any decisions. We don’t know where our cash is going to be, but as a broad principle, when we generate surplus cash, we will return it to shareholders and our go to has been the NCIB.

And if that’s not available or exhausted, it’s in the SIB. As we’ve said before, we’re not wedded to that, there’s other things like special dividends, but the SIB seems to be what the vast majority of our shareholders prefer relative to special dividend. So that remains our go to at this point. So, we’ll see what happens, we’ll see what the market gives us.

Greg Pardy: Okay, understood. Thank you both.

Operator: We’ll go next to Doug Leggate with Bank of America.

Doug Leggate: Thanks everyone. Hi, Brad, Happy New Year and to all your team. I wonder if I could ask a couple of questions. One operation and one about my favorite topic, as Dan knows well is dividend policy. So first, operationally, your refining performance was €“ compared to your peers is quite extraordinary. And obviously, your distillate yield is a little higher. You’ve got some exposure to WCS, but I wonder if you could, kind of walk us through, how you see the outlook for your refining business? Because it looks like there’s been some channel changes in terms of how you’ve been able to maximize margins, particularly, I guess, in the Northeast during the fourth quarter. So, anything you would call out on the strength about refining performance is my first question, and then I’ll have my follow-up, if that’s okay?

Brad Corson: Okay. Yes. Thanks, Doug, and Happy New Year to you as well. When we look at the refining business, it is very much around maximizing value of our products driven by, kind of our operating envelopes at each of our three refineries, coupled with the commodity pricing and the crack spreads that are available to us. And what we saw late in the year, third, fourth quarter was the extremely robust diesel crack spreads, and that was very motivational to us, both operationally and financially to maximize diesel. And so, a great credit to the team. They optimized around their operating envelopes and each of our three refineries set records around levels of distillate that we produced and that had two beneficial effects. I mean, one is put more product on the market at a time when the market needed it, and it also allowed us to maximize value from that strategy.

As we look into the first part of this year, we’re continuing to see a lot of strength in the diesel side of the business. And so, the teams are continuing to optimize around that. And we’ll just continue to assess that as the year goes forward, but it really does speak to the capabilities of our assets where they can shift between diesel and jet and motor gasoline to maximize value.

Doug Leggate: Okay. So, nothing unusual in the quarter then other than just optimization, basically, which is a go-forward I suppose?

Brad Corson: Yes. I think that’s right. Continuing to optimize around the market conditions that we see.

Doug Leggate: Okay. That’s a good answer. Anyway, thank you. We’ll keep an eye on it going forward we might have some upside risk to Street numbers if our performance continues. My follow-up is, kind of a hypothetical, I guess. I realize Greg asked about the SIB. I want to ask about the balance between the buybacks, which obviously had some limitations and thinking back to the share price response to when you raised your dividend last October because it seems to us that long life that’s higher reliability, long-life assets like yourselves with tremendous cash dividend cover, you get paid on a dividend discount model and your dividend growth potential remains quite extraordinary, compared to your peer group. So, I guess my question is, how should we think about that balance between continuing to go after things like an SIB versus stepping up a sustainable dividend payout because let’s say that a 10% buyback means your starting point is a 10% dividend growth.

So, how should we think about that balance? And I’ll leave it there. Thank you.

Brad Corson: Yes. Thanks for that question. And obviously it’s something we spend a lot of time thinking about as well. And I guess it starts with, kind of the foundation of our capital allocation strategy, which is to provide a reliable and growing dividend. That’s where we start/ And we have a long history of that. We’ve been paying a reliable dividend to our shareholders for over 100 years. We’ve grown that dividend year-on-year for the last 28 years. And so that is core to our strategy. And that’s going to continue to be the first place we go as we think about shareholder distributions. We certainly supplement that with NCIBs and SIBs to be reflective of current market conditions and cash flow generation, but the foundation is this reliable and growing dividend.

And you’ve seen us grow it quite significantly over the last couple of years. And we see that there is potential for further growth in the dividend, but we are always going to be conscious of the sustainability of that dividend. So, when we take a decision, whether it’s a small growth or a large growth, it’s with a lot of consideration to what does the future look like and ensuring that that dividend is sustainable over a wide range of scenarios, not just the current market we’re in, but we’re recognizing we are in a commodity market that has a cyclical nature to it. And whereas we’re all benefiting from $80 crude today, it wasn’t that long ago that was $40 or below. And certainly, the potential is that somewhere in the future will return to lower levels of commodity pricing.

And we want to make sure that, that dividend is sustainable. So, we’re going to continue to evaluate on that basis. Mathematically and mechanically, you are exactly right though, as we buy back shares and we reduce the outstanding share count. That gives us flexibility to raise the dividend, but not really raise the cash outlay for the dividend because it applies to fewer shares. And as Dan just described, we bought back almost 15% of the shares. So that gives us significant flexibility in that regard. So as we go forward over the next couple of quarters, we’ll be continuing to evaluate what’s the appropriate strategy to return cash to shareholders, but again, that strategy starts with growing the dividend.

Doug Leggate: Appreciate the answers guys. Thanks so much.

Operator: We’ll go next to Dennis Fong with CIBC World Markets.

Dennis Fong: Hi, good morning and thanks for taking my questions. The first one, maybe I wouldn’t mind starting. You guys have focused on optimizing the existing assets in your opening comments, as well as the acceleration of the Grand Rapids project. I wanted to hopefully pick your brain a little bit about maybe the pipeline of additional projects that can possibly drive, we’ll call it, upside in terms of upstream production, as well as helping, kind of moderate cost inflation or even lowering unit operating costs amongst your various assets.

Brad Corson: Yes. Thanks for that question, Dennis. And we do have a suite of project opportunities across our assets. It sounds like your question is mostly focused on the Upstream, although I would just maybe first note what we’re doing in the downstream with the renewable diesel project, 20,000 barrel per day growth to the Strathcona asset, which is slightly above 200,000 barrels a day base today. So, 10% increase right there alone. So that’s on the downstream. But back to the upstream, we have now for several years, laid out this vision at Kearl to grow to 280,000 barrels a day, and we continue to make material progress towards that, and that’s with multiple project initiatives, brownfield, high-return projects. And as you know, we have now firmed up our guidance and commitment that by next year 2024, we will reach 280,000 barrels a day at Kearl, and we’re continuing to evaluate further opportunities to move us even beyond 280,000 barrels a day.

We’re not ready to talk about those details yet because the asset teams are still, kind of finding that work program, but when we get to Investor Day, we’ll start to lay out, kind of some more details on that. And at Cold Lake, you’ve heard us talk about Grand Rapids Phase 1, acceleration of that now for a startup to the end of this year. We haven’t talked a lot about it on these calls, but in parallel, to the Grand Rapids project, we’ve also initiated our Leming redevelopment project at kind of the original field at Cold Lake. And so that project is about a year behind Grand Rapids and a little bit smaller. It’s more like 8,000, 9,000 barrels a day, but it does represent another growth opportunity for us. We’re continuing to do, kind of infill drilling across Cold Lake, and that’s contributing to the higher volumes that we saw last year.

And then we’ve got a whole pipeline of additional solvent deployment opportunities at Grand Rapids, I mean at Cold Lake. You’ve seen us deploy SAGD, SA-SAGD, we’re continuing to explore future generations of opportunities that will allow us to not only grow production, but do that in a lower cost way and also, quite importantly, with lower emissions intensity. So, all that work is going on. Further out, of course, in the pipeline, we’ve got Aspen. And before we’re ready to progress that, we’re doing some more work on solvent technologies that we think have the potential to further reduce the capital cost, the operating cost, and significantly lower the emissions associated with that project as well. So, we’ve got a technology that we’ve proven in the lab.

We want to further validate it with a field pilot test, and so we’re progressing plans for that. So, really a strong pipeline of opportunities there. And then, of course, at Syncrude, we’ve talked before about the work we’re doing with Suncor, the operator and the other owners around how can we generate further value from that asset. And of course, the bidirectional pipelines has been a very positive contributor, but we’re continuing to look for other ways to increase reliability and productive capability out of that asset as well.

Dennis Fong: Great. Great. That was very fulsome answer. My follow-up here is more on the downstream side. I guess, expectations for some of your peers going into the first quarter suggest some level of downtime just on the back of extreme weather we saw going into the end of 2022. Do you mind talking to your ability to further take advantage of some of these increased margins that we’re seeing in the first quarter, as well as the ability of Imperial to capture value out of the commodity price volatility that we’re seeing both from an oil side, as well as the product side? Thanks.

Brad Corson: Yes. Thanks for the question. And I am pleased to be able to talk at this point of a very different result than from the weather than we saw a year ago when, of course, we did have some challenges at Kearl. For this year, despite those weather challenges across our assets, both upstream and downstream, including all three of our refineries, we’ve managed quite well through those extreme weather conditions, very high reliability. And so, we haven’t experienced the downtime that others have. And so, we’re quite fortunate in that regard and a great credit to our operating organization. And what that allows us to do is, as you made reference, we continue to find ourselves in a very strong margin environment. And so that high reliability, coupled with those high margins will allow us to generate significant value.

And on top of that, though, as others experience downtime, and we never wish that on our competitors, but it’s just the reality of the situation they find themselves in, then that sometimes opens up opportunities for us to on, kind of a one-off basis, supply some of their customers in the market. And so, it generates an opportunity for us to even increase our product sales beyond, kind of our normal levels. And €“ so again, our teams are working diligently to see how to best supply customers with products and how to do that in the most economic way.

Dennis Fong: Okay. Thanks Brad. I’ll turn it back.

Operator: We’ll go next to Menno Hulshof with TD Securities.

Menno Hulshof: Thanks and good morning everyone. I’ll start with Strathcona renewable diesel. You clearly had enough confidence in the economics to FID last week, but given the cost and the scope increase, could we get your thoughts on, sort of the range of outcomes on project returns or even the project hurdle? And finally, where do things stand in terms of signing of feedstock supply agreements?

Brad Corson: Yes. Thanks for those questions, Menno. I mean, first, I would just say, we don’t normally talk about individual rates of returns on projects like this, although I can assure you, it’s a very robust return. It’s double-digit return and it competes very well with other projects in our portfolio that are competing for capital and hence, the reason we took it to FID. But I have with me Jon Wetmore, who is the VP of our Downstream and has been directly involved with this project from the outset and bringing a lot of leadership to moving it along, kind of through the decision process. And so, maybe I’ll turn it to him to talk maybe a little bit more about cost and then also, kind of the €“ some of those supply contracts.

Jon Wetmore: Thanks, Brad. It’s Jon Wetmore here, Menno. Thanks for the question. We did see some cost increases on the project, and I think Brad talked about that in his opening remarks. Really, they’re driven by the fact that we’ve seen some amount of inflationary pressures in the projects, labor, and materials. A little bit of constructability issues as well as we’re knitting together some catalysts that are third-party catalysts with our highly advantaged dewaxing catalysts that’s proprietary to ExxonMobil technology. But when we did that, the last layer of costs that we saw come in to this is really around added logistics and some very high-return additions to the project scope. They come in the way of us looking at where we want to sell the renewable diesel across Western Canada and potentially into the U.S. The return on all those added logistics in that last layer of scope that we added is incredibly strong, and it really nullified the impact of all those cost increases on the project’s rate of return.

So, we’re really happy and had a good review with our Board here about reviewing the project’s rate of return as being neutral even after that $200 million of cost was added. So, we’re very strong, as Brad said, competes very well with the rest of our portfolio. There’s nothing about the fact that it’s a renewable diesel project or driven by regulatory compliance that in any way suggests that its rate of return is below our portfolio, very, very competitive and at the top of our portfolio. In terms of feedstock, we’re working diligently around that with some of the best in industry that provide vegetable oils. We’re looking at a variety of different sources so that we are insulated to a little bit of everything from weather conditions to local sourcing challenges.

We’re learning a lot about the industry as we go. And we’ve got a lot more left to learn. We’ll be humble and say that there’s a lot of the €“ the whole area of the vegetables oil supply chain that we’ve got to develop and add to this project, but we’ve got our fingers into a lot of opportunity there. We feel very good that all that will be in play in the first year of the project start-up, and we’ll continue to develop some sophistication €“ added sophistication around those feedstock deals as time comes.

Menno Hulshof: Terrific. That was super helpful, Jon. Maybe I’ll follow-up with the question since you’re the first pathways member to report. So, pretty standard question. How are things looking in terms of resolution of discussions with the Feds on additional incentives? And is it possible that we see something with the announcement of the budget or do you think it’s a bit further out than that?

Brad Corson: Yes. Thanks for that question. I kind of start my response by just noting that we continue to make great progress on, kind of the whole breadth of, kind of the pathways activities, including, as I put in some of my earlier remarks, progress on the pipeline, the main trunk line design, environmental studies are underway in the field. We’re continuing as individual companies to work on the capture side of each of the many projects that will feed captured carbon into the pipeline, and of course, great progress on the pore space award from the provincial government. On the federal side in terms of financial support, those discussions continue to be very constructive, continue to move forward. The federal government, I think was a when they came out with €“ in last year’s budget speech, the announcement of the 50% investment tax credit, a very enabling first step for us.

But as time has gone on, and we’ve seen what’s happened south of the border with the U.S. Inflation Reduction Act and some of the incentivization that’s provided there, it’s critically important that our projects in Canada be competitive for investors that have choices to invest in either the U.S. or Canada or globally for that matter. And so, the level of fiscal support is lagging. And we’ve always said we needed more than that 50%. So, that’s not a surprise. And we’re also optimistic that the province will contribute to that as well. So, it’s really a tri-party discussion that’s going on between the Pathways Group and the federal government and the provincial government. Now, whether that will get resolved or clarified further in the upcoming budget speech, I’m not sure.

But again, this €“ it’s complex and it takes a lot of important engagement to balance, kind of financial priorities and applications, not just for our projects, but across the broader industry and other sectors that also need access to capital. But again, it’s very positive that both governments understand what we need to move these projects forward and they’re both very supportive of moving these projects forward. So, I’m optimistic that if it’s not in the budget speech, it will be soon thereafter that will get, kind of not just clarity but resolution so we can move forward on these projects.

Menno Hulshof: Thanks Brad. I’ll turn it back.

Operator: We’ll go next to Neil Mehta with Goldman Sachs.

Neil Mehta: Yes. Hey guys, hey Brad. Thanks for taking the time. Two quick questions for me. One is your outlook on M&A, Brad, you spent a lot of time in M&A markets , and what do you think Imperial’s role could be in that going forward? And then the other is your views on WCS, we’ve seen a lot of volatility there. So, those would be the two topics.

Brad Corson: Okay, thanks Neil and Happy New Year. On M&A, our position on that has not changed from what I’ve described in the past, which is very much centered around keeping the aperture open looking for opportunities that are strategic and accretive for our portfolio. And part of that determination is not just what’s available in the market, but also looking at our existing inventory of our own opportunities. And as we’ve continued to evaluate M&A opportunities, and we’ve evaluated several, we continue to conclude that they, from a value standpoint, don’t compete with projects and investment choices we already have in our portfolio, whether that be smaller projects like a Grand Rapids or like a renewable diesel that we just talked about or an even larger project like an project.

And so, we’re going to continue to evaluate how do we best maximize value for our shareholders? Is it through acquisitions? Is it through continuing to advance our own deep pipeline of opportunities. And that assessment may change over time depending on what’s available in the market to what degree is consolidation occurring or incentivized. And so again, we’ll just continue to evaluate that, but no fundamental change. And as you saw in 2022, and I hope you’ll continue to see that in 2023, we can generate a lot of value from our existing portfolio. We can return a lot of cash to shareholders. And so, that’s our first priority, but the aperture is always open. And then on the WCS differential, as I’ve discussed in the past, we saw that differential widen pretty substantially in 2022 that was driven by several external factors and not the typical egress constraints that we saw in the past.

That was not a material factor in the widening this last year. It was more about the release of SPR barrels that we’re competing with the Canadian heavies for market share. It was some refinery outages in the second half of the year that reduced demand for the heavies. It was the impact of natural gas prices, energy on refiners’ ability to convert crude in the products and how they €“ what products would require less energy to produce. And so, all that kind of suppressed the demand for WCS for heavy Canadian crudes and that caused the spread to widen. Many of those effects were limited in duration. And so, now we’re starting to see a return back to a more normal situation as the SPR program was completed. Refineries, mostly returning back to the operation.

So, we are seeing continued growth in demand for WCS. And so, I think that’s going to €“ we’ve seen that spread already tighten a few dollars a barrel this year. And as we look forward, we think it will continue to return to more normal levels, but it takes €“ as supply demand balances globally have been disrupted by what’s happened with Russia and Ukraine and the sanctions, those balances take a while to, kind of restabilize. And so, it’s not a couple of week type thing, not even a couple of month type thing. It’s often several months, but I think we’re now starting to see that, kind of a more stable environment.

Neil Mehta: Thanks Brad.

Brad Corson: Thank you.

Operator: That does conclude the Q&A. I will turn the call back over to Dave Hughes for closing remarks.

Dave Hughes: Okay. Thank you. Thanks, everybody, for joining us this morning. If you have any further questions, please just reach out to anybody on the Investor Relations team here, and we’re happy to continue the discussion. Thank you very much.

Operator: This does conclude today’s call. You may now disconnect.