Good day, ladies and gentlemen, and thank you for standing by. Welcome to Cenovus Energy's 2021 Budget Release Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. You can join the queue at any time by pressing star one. Members of the investment community will have the opportunity to ask questions first. At the conclusion of that session, members of the media may then ask questions. Please be advised that this conference call may not be recorded or rebroadcast without the express consent of Cenovus Energy. I would now like to turn the conference call over to Ms. Sherry Wendt, Vice President, Investor Relations. Please go ahead, Ms. Wendt. Thank you, Operator, and welcome, everyone, to our 2021 Budget Conference Call. I'm here this morning with President and Chief Executive Officer Alex Pourbaix, our Chief Operating Officer Jon McKenzie, Chief Financial Officer Jeff Hart, and our Executive Vice President, Strategy and Corporate Development, Kam Sandhar. Due to COVID-19 physical distancing guidelines, the rest of our leadership team members are in listen-only mode today from other locations. We look forward to having everyone back in the same room once protocols allow. I'll refer you to the advisories located at the end of today's news release. These describe the forward-looking information, non-GAAP measures, and oil and gas terms referred to today, and outline the risk factors and assumptions relevant to this discussion. Additional information is available in Cenovus's annual MD&A and our most recent annual information form and Form 40F. All figures are presented in CAD and before royalties unless otherwise stated. You'll find our updated guidance posted on cenovus.com under Investors. Alex will provide brief comments, and then we will take your questions. We'd ask analysts to hold off on any detailed modeling questions and follow up directly with our Investor Relations team after the call. If you could please keep to one question with a maximum of one follow-up. You can rejoin the queue for any other questions. Alex, please go ahead. Thanks, Sherry, and good morning, everybody. It's really hard to believe that just three months ago we were announcing our intention to combine Cenovus and Husky. Now, after a lot of great work by our combined team, we've closed this transaction. Today we've released our 2021 capital budget, which puts us firmly on track to significantly progress the integration of the company while realizing or exceeding our synergy targets. Of the CAD 2.3 billion-CAD 2.7 billion we expect to spend across the business this year, about CAD 2.1 billion of that is sustaining capital. This will enable upstream production of about 755,000 BOE per day at the midpoint and downstream throughput of around 525,000 barrels per day. That budget range also includes about CAD 520 million-CAD 570 million this year for the rebuild of the Superior refinery. We plan to restart Superior in the first quarter of 2023 at a total rebuild cost of about $950 million US. About a third of that has already been spent, and we anticipate the bulk of the go-forward costs will be recovered through insurance proceeds, although we haven't reflected that in our capital estimates. Our new timeline for the restart is largely due to our conservative estimate of COVID-19 impacts on construction activities, and our revised cost estimate reflects the addition of safety enhancements and modernized systems to improve performance and reduce costs. We've spent a lot of time studying this project, and we're highly confident in our revised budget and timing. We believe the project will add value, increasing throughput capacity at Superior to 49,000 barrels per day, with up to 34,000 barrels per day of heavy capacity, giving us the ability to run a wider variety of feedstock and further diversifying our product mix with increased asphalt capacity. One of the key benefits of combining Cenovus and Husky is the $1.2 billion in annual run rate synergies we expect to achieve. That includes $600 million in annual corporate and operating synergies and a further $600 million in capital allocation synergies. With today's budget, we are on track to realize nearly $1 billion of those synergies in 2021 and to exit the year meeting or exceeding a run rate of $1.2 billion. Let me give you just a few examples of the work we have underway to get us there. We've already started consolidating our IT systems and services. That includes moving to single planning and HR platforms this year. Besides the significant run rate cost savings we will achieve from integrating these systems, we will also be able to work more efficiently. We are also evaluating the benefits of applying best practices from our top-tier FCCL projects across our oil sands portfolio. We believe that this is going to enhance their value and increase efficiency. By combining our companies, we will be able to realize greater economies of scale in areas such as procurement. In addition to these cost synergies, with our fully integrated value chain, we now have a clearer view of the revenue synergies and are in an even better position to optimize the commercial value of every barrel of oil we sell. This includes leveraging our expanded storage capacity to increase optionality and capture higher margins. Bringing the two companies together also inevitably means overlap and redundancies in a number of areas and roles across our business. When we announced the transaction, we said these redundancies would likely result in a 20-25% reduction in the size of our combined workforce. We wanted to move quickly and respectfully to address this. Since January 1, we have completed a significant portion of our planned workforce reductions, although there will be additional adjustments over the rest of the year and into 2022 as we continue our integration work. With our broader, more fully integrated suite of assets, we have greater latitude to focus our spending on higher return opportunities to maximize value across the consolidated business. For example, of the CAD 1.2-1.4 billion we plan to spend on our upstream assets this year, about 70% will go to our oil sands segments. This includes sustaining capital of around $450 a barrel for that segment, with spending focused on our Foster Creek and Christina Lake Oil Sands and Lloydminster thermal projects. While sustaining capital will vary from year to year, we expect to stay well within our long-term target range of $4-$6 per barrel. At Foster Creek, our production estimate for 2021 reflects incremental volumes anticipated from three new well pads scheduled to come online in the first half of the year. We have limited capital spending planned for our Sunrise and Tucker Oil Sands projects this year. Our 2021 plans for these assets include bringing on wells that have already been drilled and assessing opportunities to enhance our facility and operating models there. At our Lloydminster thermal assets, Bruce Lake North remains on hold while we focus our capital spending on drilling wells and implementing Cenovus's subsurface optimization techniques. For the conventional segment, we have a capital budget of CAD 170 million-CAD 210 million, primarily for optimizing existing infrastructure and for some land expiries. About a third of the conventional budget is for a planned drilling campaign that ramps up in the third quarter and will focus on high-return opportunities in a relatively robust natural gas price environment. In our offshore segment, we have development and drilling planned for our Asia Pacific assets this year. We expect those assets will generate significant free cash flow for the company over time, helping to accelerate our deleveraging efforts. In the Atlantic, West White Rose is on hold as we evaluate our strategic alternatives for the project, which is currently economically challenged. In our downstream segment, we continue to experience a weak crack environment in the near term. Our plan for 2021 reflects slightly lower throughput in the first half of the year due to weak demand, with some improvement expected in the second half. Overall, we remain committed to strengthening our balance sheet and maintaining and improving our investment-grade credit ratings. We'll allocate free funds flow towards reducing our net debt to below CAD 10 billion, which would represent about two times EBITDA at $45 WTI. Longer term, we're targeting net debt more in the range of CAD 8 billion or below. Above all, our disciplined approach is focused on maintaining safe and reliable operations across our expanded portfolio. That includes a commitment to continuous improvement in process safety and operations integrity and to maintaining robust COVID-19 protocols to protect our staff. We also remain dedicated to delivering leading environmental, social, and governance performance. Our expanded portfolio represents additional opportunities for Cenovus to lower its greenhouse gas emissions intensity and address other key ESG areas, such as investing in our local Indigenous communities and businesses. We are in the process of refreshing our ESG materiality assessment to make sure we continue to pursue ESG-focused areas that are most meaningful to our combined business and stakeholders. We will develop meaningful practical targets for climate and other ESG topics that align with a refreshed long-term business plan for our expanded portfolio. We expect to share those with you all later this year. In closing, our 2021 budget reflects our confidence that the Husky transaction was well-timed, positioning Cenovus with a more diverse and more integrated asset base. This allows for a stronger, more resilient company with an expanded set of opportunities for margin capture across the business and broader participation across the economic recovery. With that, I'll conclude, and I and my team are happy to take any questions anyone may have. Ladies and gentlemen, as a reminder, you can join the queue to ask a question by pressing star one. We will now begin the question and answer session and go to the first caller. First question comes from Menno Hulshoff with TD Securities. Thanks, and good morning, everyone. I'll just start with a question on reliability. Prior to the transaction, Husky had been making a big push towards becoming what they called a high-reliability organization, and they had made quite a bit of headway on that front. My question is, are there pieces of that program that still exist and incremental to what you were doing already? As a follow-up to that, maybe you could comment on the reliability improvement targets that you've set for some of the key Husky assets. Yeah, thanks, Menno. It's Jon McKenzie, and you're absolutely right. Husky was on a journey of reliability improvement and improving their process safety as well as personal safety performance. We are continuing on that journey, and we are adopting what I would call best practices across both companies. What we've built into our reliability assumptions in the budget is the continued improvement that we've seen over time and the continued trajectory towards what we would consider to be top quartile performance. Okay, thanks for that, Jon. This is probably another one for you. Just on the credit side of things, many of your integrated peers were put on a negative watch by S&P this week, citing changes to the global risk assessment. It was great to see that you guys were not on that list, but any thoughts on why you were exempted and maybe any thoughts on your IG Outlook would be helpful? Yeah, Menno, it's Jeff here. As we were going through, and clearly we worked with the rating agencies through the process. Given where we were in that, I think that was considered, and that view was considered in our assessments. I think you're referring to S&P, so that is why it was embedded in, and we do not expect any changes in relation to that. As far as credit ratings longer term, I think we would target that mid-triple B place where we want to be to make sure we're not on the bottom rung of investment grade, but that is really where we want to be. It was factored into our analysis at the time we worked through the deal. Perfect. Thanks a lot, Jeff. Next question comes from Greg Pardy with RBC Capital Markets. Yeah, thanks. Good morning. A couple for you. First one is just the, maybe I missed it, but just the $300 million reduction in your sustaining CapEx from $2.4 billion to $2.1 billion. Can you just give me a sense as to where a lot of that really came from? Hi, Greg. It's Jon again. I'll give you a bit of a sense, Greg, but what I would tell you is that for a go-forward run rate, I would still think that CAD 2.4 billion is the right number. We do have flexibility around the assets to reduce and increase that through time, but CAD 2.4 billion should be the number that you're using. If you look at where that money is being spent, we have squeezed the upstream again this year, and we continue to spend it at a rate that is probably not indicative of where we need to go long term. I'll talk to that a little bit more in that Christina Lake Foster, we've always said that should be around CAD 800 million. This year, we're going to be spending about CAD 600 million, but long term, you should be using that CAD 800 million figure. The other thing that we're doing across the other assets that we've got with Husky is we're not spending money this year in places like Tucker, Sunrise, and Coal Lake. That is simply because over time, what we'll do there is we'll reconfigure the development plans there to bring those development costs down. Going forward, what you'll see is sustaining capital as well as operating costs continue to decline on those assets. The squeeze this year has been a little bit on the upstream, but we're very comfortable that we can run that in a safe, reliable way and meet our production targets. Yeah, Greg, it's Alex. The only thing I would add to that is I'd kind of think of it, this was not a situation where we were kind of squeezing the rock to get everything out. Although the 2.1 million, as Jon said, is probably low as a run rate, it actually is a rate that we are very comfortable that we'll be able to deliver that production guidance and without in any way, shape, or form starving the assets from a safety or reliability perspective. Okay, terrific. Good to know on that then. The second one is not so much around the budget, but you've had time to look at the portfolio. I know your debt levels are assuming really it's the organic allocation of free cash to reducing debt and so forth. What about non-core asset sales? Maybe not so much what you're looking to sell immediately or what have you, but have you completed the bucketing exercises to which assets are truly non-core? If you get a reasonable price vis-à-vis retention, they go versus stuff that you would sort of really see as core to the combined operations? Yeah, Greg, it's a good question. I would say it's kind of a journey. I think there's some assets that we would have immediately identified as not core. There's a couple of fairly chunky things that we're continuing to do some work on to determine where they fit in the portfolio. As I think you were kind of alluding to, the fact that we haven't given an articulated list of non-core with expected proceeds and date of divestiture should not at all be considered that we do not consider this important. In fact, I would view this as probably one of the best ways we can accelerate our balance sheet recovery by divesting of a good chunk of these core assets. We're just taking a tiny bit of time, but more than anything, from a marketing perspective, we're being—I don't know that kind of giving out that data really helps us in terms of maximizing our proceeds for these assets, but nobody should take the fact that we're being a little circumspect about that as evidence that we're not focused on this. We are laser-focused on this. Okay, thanks very much. Next question comes from Neil Mehta with Goldman Sachs. Thanks so much. Appreciate this opportunity this morning. The first question was on Superior, pushing out the restart there a little bit. Just walk us through at the ground level, what's happening at the asset? What are some of the moving pieces there? Confidence about timing around restart at Superior? Neil, it's Jon. Thanks for the question. At Superior, we've been diligent since last year. We've been understanding this project from a number of different perspectives. Where we are today is really a highly de-risked project. What I would say, further to your point, one of the things we really like about this project is it's absolutely on strategy for us. This is a small refinery that consumes the molecules that we produce, and it's pipeline connected to Harvest. It produces a product slate that is well-insulated in the market, and we quite like it. If you look at where you are in the project, I mentioned it's largely de-risked. We're about 94% on the engineering, about 85% on procurement, and about 65% on fabrication. We're very, very confident in the timelines and in the cost estimates that we've given. We have been working diligently with the insurers as well, and we have high confidence that the vast majority of this is going to be covered by insurance. We feel really good about it. It's a good project. The economics are good. It's well de-risked, and it fits well into the portfolio. Thanks, Jon. The follow-up is just on the Asia gas business. One of the risks around Leone over the years has been the potential for price recontracting. Given the volatility in Asia gas pricing and your ability to also get a premium price because there's a capital element to your pricing as well, do you feel like some of that risk has been reduced? Just talk about pricing economics as you see it over the next couple of years for both Leone but also for Indonesia. Yeah, it's Jeff here. I mean, I think you look at, I’ll start with Indonesia. If we look at that, we do sell into industrials in the area, and we've seen stability there. Obviously, when you think about the upstream, it's a government project. We are tied in there, and we've seen very little moves there. Through that, if there's any change in prices, you're always made whole. In Asia and China, what we kind of see is we talk about $9.50-$10 US for kind of the existing fields between 3.1 and 34.2, and clearly 29.1 coming on will be in that kind of $7.50 US range. I think with what we've seen in demand and offtake, and obviously, I think the prioritization of the domestic gas production and the activity there, we're feeling fairly confident about it. The proof's always in the pudding with the offtake we're seeing, and we're seeing very good demand. We have seen prices recover just generally in the import business in China as well, which kind of feeds into confidence in the pricing. Great, guys. Thank you. Next question comes from Dennis Fong with CIBC Growth Markets. Hi, good morning, and thank you for taking my questions. I guess the first one here is just a quick follow-on, I guess, to Neil's question there around Superior. Just given the revised project cost estimates to $950 million from $750 million, what were some of the major, I guess, differences between the two estimates? I know you mentioned just a focus around the safety component of things as well as ensuring that the project has a bit of a conservative CapEx budget. Were there any specific changes that drove the incremental cost associated with the project, or was it kind of a start-and-stop situation that was COVID? Yeah, thanks, Dennis. It's Jon. It's actually exactly what you said. It's really, this is really a like-kind rebuild, and there have been some upgrades that are necessary just as you go through time, technology changes, and you can't make exact like-kind changes. With things around some of the processing units, we've added additional safety procedures, which we think are prudent. I just come back to the point I made earlier in that we've had an opportunity to get in under the covers of this project for the last eight, nine months and really beat it up. This is something that we're very confident in. We've given you a schedule and a capital budget that we feel is conservative but appropriate. We think we can deliver well under the parameters that we've put out to the market. We feel very good about it. Yeah, and Dennis, it's Alex. As a guy who spent a lot of his career on major construction projects, I would just say, as Jon said, this is almost a uniquely de-risked project at this stage in its development. You think about the engineering at 95% complete, procurement almost 90% complete, and fabrication two-thirds complete. Where we are with those elements of the project just really significantly de-risk it because there's so many fewer unknowns than you would normally expect at the start of a project. We are highly, highly confident of that capital number and that in-service date. I think Jon and his guys have put a great deal of conservatism going forward. Great. Great. My follow-up is really just around capital allocation thoughts. Obviously, there is a high degree of focus on driving best practices or picking best practices between the two companies. There is obviously a little bit of focus on some of the higher quality assets in general or the ones that have maybe a lower threshold for driving economic returns. What yardsticks or how could you describe some of the factors that you guys are considering with respect to looking at asset management as well as, we'll call it, kind of offsetting or managing any kind of the production declines or kind of incremental costs that could be driven on a per-unit basis when you're looking at some of the assets that are receiving, we'll call it, less capital in the near term and how that influences your capital allocation decisions going forward. Thanks. Yeah, Dennis, it's Jon. One of the things we said during the acquisition phase of this is that there was a real opportunity for us to allocate capital differently between the two companies. Part of the synergies that we saw on the capital side was being able to invest more in the higher-return, higher-quality assets and less in some of the traditional assets that Husky had been, Husky in particular, I guess, had been investing in. We saw that as something that was part of the $600 million. When you look at the budget that we've put out, as I was mentioning previously, the vast majority of the oil sands spend is going to FCCL and Lloydminster. That shouldn't mean that you should be thinking that that's any kind of a comment on the economics of Tucker, Lloydminster, and Sunrise in particular. We think there's lots of opportunity for us to invest in those assets to bring down sustaining capital and operating costs through time. Now, internally, even on sustaining capital, we have internal targets that these or the capital needs to generate returns at $45 WTI and then on the conventional side of the business at $1.50 for GJ Gas. We run those screens across everything that we do. I think what you'll see going forward as we get into 2022 and 2023 is that you'll see an entirely different development plan in areas like Lloydminster, Sunrise, and Tucker that's going to reflect those kind of economics. You'll continue to see those net backs get better and better and the sustaining capital costs continue to come down. I would make the same comment on the conventional side of the business. We continue to find areas where we can invest capital productively in that portfolio. You'll see we've substantially increased the capital this year to take advantage of some very high economic return projects. These are all robust to the $1.50 gas, and we're going to continue to see those costs come down in terms of operating costs and sustaining costs in that basin as well. This is kind of where we are for 2021, but I think you're going to see additional synergies come in 2022 and 2023 as we continue to rework these development plans using Cenovus technology operating practices and drilling practices. Great. Thank you. Next question comes from Benny Wong with Morgan Stanley. Hey, good morning, guys. Thanks for taking my question. Alex, just want to get an update in terms of how you're thinking about your downstream strategy. I think refining has largely been in the past viewed as more of a hedge for differentials for Cenovus. For Husky, it was more of an integrated model, but I think some operational challenges often are sometimes distracted away from that. I wanted to get an update in terms of how you see that business, how you want to position it going forward to improve overall profitability and reliability. As investors looking at that part of the business, what they should look for when thinking about ascribing value to that over time. Sure, Benny. When you—I think about the downstream business and the integrated business model, and you'll probably recall that even two or three years ago when I was relatively new to this role, I was always saying that we liked the integrated business model, and particularly the ability to move our molecules to our own upgraders and refineries. At the time, it just was not realistic given the really lofty valuations of the refining sector at the time. I would say we always kept it in the back of our mind. If there was ever any silver lining to this pandemic and the, they call it, the energy commodity crisis that ensued, it was in what happened to the valuation of refiners, including Husky. That was really kind of the opportunity that we saw to recreate that molecularly integrated business model and to do it at a valuation that I really think is once in a generation that we were able to achieve with this deal. As I said, I'm a big fan of the molecular integration, and I think it is going to give us a great opportunity, as Jon talked about, of continuing to drive overall our free funds flow break even lower going forward. It has the added benefit of reducing our exposure to the light-heavy diff. I would say that was kind of a bit of a freebie that was attached to it. It was not the sole reason to do it. It was really to achieve the benefits of the integrated business model. I don't know, Jon, if you'd add anything there. Yeah, maybe just a couple of things, Benny. Alex, again, touched on some really key words. What we've created is an integrated value chain. Anytime you're connecting your upstream to your downstream with physical logistics, what you really have is optionality. We are not in a world where we have to run this on a supply-based model or we have to run the downstream on a merchant model. We have the ability to flip between. What we will do is optimize across the whole. We do not necessarily have a strategy that would say the downstream is going to be run as a merchant's group of refineries or it is going to be run as a supply-driven model. We have the ability to flip between and really optimize with what the market gives us. That is what we are going to do both in the short, medium, and long term. Great. That's very helpful, guys. Appreciate the thoughts. My follow-up is really on a specific asset, your Lima refinery. We saw headlines of some operational hiccups. Just wanted to get an update there and any color in terms of how long we should expect that facility to be down or curtailed. Thanks. Yeah, Benny, it's Jon again. You're right. We did have an issue in the Lima refinery early in January. We had an issue in our cat cracker. You don't ever like to describe any incident or process safety incident as being minor. This incident will not keep us down for long, and it was really relatively minor in consequence. You can expect that unit to be back up in early to mid-February. We're thankful that nobody was hurt, and we're thankful that the issue is relatively minor in terms of consequence. Thanks, Jon. Appreciate the color. Next question comes from Phil Grush with JP Morgan. Yes. Hi, good morning. Thanks for taking the question. One of my questions is a bit of a clarification, I guess. The two-times leverage target at $45 WTI, is that a target for 2021 specifically? The reason I ask is because if I go back to the original slide presentation for the acquisition, it looked like it was closer to three times in 2021 and gradually moving to two times, I think, in roughly 2022. If you could just clarify that and the $10 billion leverage target, is that for this year or is that more 2022? Thank you. Yeah. Maybe I'll take that one because I was part of that original slide deck that was put together. The debt target of $10 billion, Phil, is the EBITDA generating capacity of the combined company at $45 WTI with a $13 crack and about a $12.50 differential. It was not a target specific to any year, but it is where we want to peg the balance sheet in terms of what we think is the right level of leverage for this company to be carrying on a go-forward basis. You can expect from us that all the free cash flow that we generate as a company until we get to that debt target is going to the balance sheet. Further, as Alex alluded to in his notes, we are actually going to drive below the $10 billion towards $8 billion. Between 8 and 10, there is some room to have a discussion around shareholder returns and some incremental capital that we might want to dispend on a discretionary basis. It is more of a framework than an annual target. Right. Okay. I guess just as a follow-up, similar topic of the original slide presentation, how do you think about the WTI break-even price for 2021? You did have some numbers around that as well. Yeah. Phil, it's Alex. I mean, when we go through this budget, we are dead on that 36 or right on that $36 a barrel break-even. I think the other number we had given was getting below $33 a barrel on the same metric. In 2021, obviously, those numbers are impacted by the one-time integration costs. As we kind of get through those, you will see in 2022 and beyond the company getting to that 33, sub-33 number. Yeah. Phil, if you remember, that $36 break-even number is predicated on a $13 crack and about a $12.50 differential, I think a 75-cent dollar. The reason that's important to us, and again, I think it's also contingent on a $2.4 billion sustaining capital program. When you normalize for the pricing, it really keeps us honest in terms of what we're controllable for. As Alex mentioned, when you take out the one-time costs for synergies and you get to the full run rate of the $1.2 billion, which we expect to be at the end of 2022, that number drops to $33. Right. Okay. That's helpful. The 36 for this year, is it inclusive of the one-time charges? It's inclusive of the one-time charges, yeah. A normalized capital, CAD 2.4 billion. Right. Okay. Thank you very much. Next question comes from Manav Gupta with Credit Suisse. Hey, guys. Over the last one week or so, we have had a whole bunch of executive orders issued here in the U.S. I'm trying to understand when Cenovus and Husky look at these, do they see an opportunity set where they say maybe U.S. production will start declining because of this bunch of executive orders? At some point, we could bring back our Christina Lake and Foster Creek growth projects, or is that too early at this point of the cycle? I mean, I'm not talking about 2021, but maybe 2022, 2023, you're looking at U.S. production actually declining because of the stricter regulations in the U.S. Could Cenovus and Husky push forward with some of the future expansions at Christina Lake and Foster Creek? You know, Manav, I think that that's part of the story. Obviously, the other part of the story is with this pandemic, the massive disruption in capital spending by the upstream business in the lower 48. I think the combination of both of those events ultimately, I think, create the opportunity for a positive situation for Canadian Heavy. Just on that point, I would say one of the things we're finding really interesting is a very, very strong demand for the heavies down in the U.S. and, frankly, offshore. I think all of that sort of directionally bodes well. I, for one, I don't think anyone in our industry should take any pleasure from seeing our industry peers having challenges, whether it's by political decree or otherwise. Yeah, I mean, I think directionally, those are helpful for the Canadian industry. As for whether that would cause us to accelerate development of any of the future FCCL opportunities, kind of as I know I sound like a broken record, but it's going to depend on our balance sheet, and it's going to depend on egress availability out of the province. We're feeling reasonably constructive on both of those. As Jon said, he and I and Jeff have been banging one drum here pretty hard, and it is balance sheet, balance sheet, balance sheet. That's where our focus is going to be, at least until we get comfortably below that CAD 10 billion number that you heard Jon refer to. Perfect. One quick follow-up here is, as we look at the operating cost guidance, Christina Lake and Foster Creek, 7 or 8.25 or 8.50, that's absolutely best in class. You can break even at $30 WTI. As we move down, Sunrise, Tucker, even Lloyd, they're slightly on the higher side. I'm just trying to understand, as Cenovus gets more and more involved with all these projects, what's the confidence level that you could make even Lloyd, Sunrise, and Tucker more competitive? Maybe not as competitive as Christina Lake and Foster Creek, but definitely more competitive than what they are currently. Yeah, Manav, it's Jon. That's exactly the message that we're trying to convey, is there's lots of opportunity in the assets that we've acquired to bring Cenovus operating and development practices to those assets. We see lots of opportunity through time to drive not only the operating costs, but also driving the sustaining capital costs down from where we are today through bringing some of those practices and technology to those assets. The thing about Foster and Christina is it's not only the $6 and $8 operating costs, but the sustaining capital costs in a normalized environment are in sort of the $4-$6 range. That's the other opportunity that we have at Sunrise, Tucker, and Lloydminster. That is one of the reasons we really like this acquisition so much in that 130-140 thousand barrels a day, almost half of the production that we acquired is SAGD production, and that is right in our wheelhouse of what we do really well. Thank you for taking my questions. Next question comes from Chris Tillett with Barclays. Hi, guys. Good morning. I guess first, just a quick clarifying question for me, if you would. I guess typically, I think we've seen operating costs in Indonesia in the range of about $8-$9 per BOE. I guess just trying to make sure, is the implication there that costs are going up, or has something changed in the way that this has been reported? Yeah. Hey, Chris, it's Jeff here. There's a couple of things here. It's really just aligning the heritage Husky classifications to the Cenovus classifications. Broadly speaking, it's the service cost when you think about IS, finance, technical, and marketing services. Historically, at Husky, the operating units were classified as SG&A in the operating segments. Now it's in the operating segments, but really moving to OpEx. You'll see that impact throughout the heritage Husky assets. Okay. Understood there. Thanks for clarifying. I guess lastly, can you just—and apologies if I have missed this previously—but you mentioned the drilling campaign on the gas side beginning in the third quarter. Can you just talk a little bit about that growth and where that money is being spent and which side of the gas assets that you'll be focusing on? Yeah. The majority, there's actually two campaigns. There's one we're finishing up and then another one that we'll be starting up later in the year. Most of the drilling is on the Husky side—or sorry, on the Cenovus side of the legacy assets—but there is some money being dedicated to the Husky side as well. As I mentioned before, all of this capital is economic at $1.50 gas. In the pricing environment we're seeing today, and with this being a relatively short cycle, the economics are very compelling. The other thing that this will help do for us is it just drives down some of the unit costs and that we're able to leverage off some of the existing infrastructure as well. This is something we've been looking at for a while. The Husky assets do play a role in this and a piece of this, but it is really driven by the economic returns that these two programs are going to drive for us. Okay. Understood there. Thanks, guys. That was it for me. Thanks, Chris. Next question comes from Neil Mehta with Goldman Sachs. Hey, guys. Just a quick follow-up here. RINs prices, particularly the D6 RIN, have continued to march higher. I remember for Husky, this was a legacy challenge for them in periods of high RIN prices and volatility. Can you talk about how you're thinking about managing that risk? I think you have some disclosure in the deck, but just walk us through sensitivities and a ballpark RINs obligation dollar millions that you could anticipate in 2021. Yeah. Thanks, Neil. It's Jon. You're right. RINs prices have kind of continued to march up all through 2020. In particular, we've seen the D6 RIN hit sort of the $0.90 per gallon range. On a blended basis, what we think for us is this translates into sort of $4-$5 a barrel based on where we are today on RINs pricing. We do have the ability to offset some of that with the assets that we've acquired with Toledo and Lima, in particular, where we do have blending capacity in behind those refineries that does offset some of that obligation. The other thing I'd say, Neil, and you know this, is we believe that the RINs prices are embedded inside the cracks. This is really something that kind of gets passed on to the customer and something you need to deduct from the crack to get to your true available crack. At that kind of pricing today, we think that's kind of in the CAD 350 million range for us. Okay. That's terrific. Thanks, Chris. Next question comes from Dan Healing with Canadian Press. Good morning. Thanks for taking my question. I had a question about how the merger is affecting the staff of the two companies. Alex, you said that a lot of the reductions have been done already. There was an initial estimate of 20-25%. Can you tell me how many people that involves? Are you looking at coming in within the 20-25%? Could it be more? Could it be less? Hey, Dan. It's Alex, yeah. No, I mean, I think that guidance is still applicable. If you think about it, you can do the math, but the combined entity when we started out was about 8,600 employees. I think that 20-25% is still an accurate estimate. We would be getting a good way through that with just what we've done in the first month of the year here. Can you give us any indication of how many of those are in Calgary versus out in the field? They honestly, they're all over where the combined entities had operations. The majority, and I'd hate to give a percentage, but certainly the majority of those are coming out of the Calgary head office. Okay. Thanks. Yeah. Thanks, Dan. Next question comes from Luke Johnson with Energy Intelligence. Hi. Thanks for taking my question. I was just wondering if you could comment a little bit about how you're thinking about your offshore Atlantic assets and particularly the non-op discoveries in Flemish Pass. It doesn't look like you've allocated much, if any, capital to that region. Obviously, West White Rose is on pause, as you mentioned. It's currently uneconomic. Do you see Bay du Nord or any of these other discoveries as potentially economic right now, or should we consider them to be kind of more in the category of West White Rose? I guess, when can we expect an update on development planning for these Flemish Pass assets? Luke, I think it's Alex. I think the right way is really to kind of think about all of those assets together. When you hear Jon or myself talk about that East Coast business, we have put it largely on hold for the time being. Right now, with energy prices where they are, it remains a very challenged business unit for us. We're going to take the entirety of this year at least to assess the viability of that business going forward. Okay. Thanks. Okay. Thank you. Next question comes from Chris Varcoe with Calgary Herald. Hi, Alex. I'm wondering, with the cancellation of the permits for the Keystone XL pipeline, what impact is that going to have upon the company? What impact do you think that is going to have midterm and long term for the industry here in Canada? I think in terms of our company, Chris, it's a relatively muted impact and made all the more so because of the combination of Husky and Cenovus. One of the obvious benefits of that combination is it massively reduced legacy Cenovus, our exposure to egress challenges out of the province. If you take a look at the production that we have versus the egress options that we have in the combined company, the large, large majority of our production we can find a home for, and we're no longer having to sell at Hardisty or elsewhere in Alberta and be exposed to that light-heavy diff in the province. In terms of the industry, I mean, I think it's a tragedy. This is probably, if not probably, certainly the most exhaustively reviewed project in the history of pipelines from an environmental perspective. It was repeatedly found by the U.S. State Department to have no material serious risks to the environment. You're already seeing the impact of thousands of workers in Canada and the U.S. losing their jobs. I think that's a tragedy. I would say there are many other options for producers to get out of the province. We see TMX going ahead. We see Line 3 going ahead. Obviously, those are positive counterpoints to it. Yeah, it certainly was not happy news and I think unnecessary, unwarranted, and damaging for both countries. My other question is just regarding oil prices, obviously moving up right now. Is there any, I guess, thoughts in your mind about increasing spending on production at all in 2021, or is that money, any excess free cash flow going towards debt? I guess more longer term, where do you see the next production growth coming from the company in terms of your priorities? Yeah. I mean, I think we've been pretty clear, Chris. There'll be a point where we think we can talk about growth. We think that that's once we get our debt well below CAD 10 billion. I think one of the nice things about this combined entity is it really does provide us with a lot more diversity of options. I would say the FCCL assets, our Foster Creek, Christina Lake, continue to be among the jewels in the crown. I would think in a world where we're able to look at growth again, they would obviously compete very favorably for capital going forward. Thank you. We have a question from Nia Williams with Reuters News. Hi there. I was hoping you could talk about your crude by rail operations. Do you see shipments increasing this year? We brought crude by rail back on largely in Q4 of last year. We have been able to do a lot of really good work with our freight partners, and that has allowed us to really bring the cost down of those movements. I anticipate at some level we are going to continue that as long as we see differentials kind of in the kind of mid-teens, low to mid-teens. I think some element of rail movement makes sense, but I would not anticipate unless we see differentials widen significantly north of $15, for example. It is not going to be a huge element of our business. It is a modest part of it. At this time, I will turn the call over to Mr. Pourbaix. I just want to thank everybody for taking the time to listen in on our call, and we'll give you back the rest of your day. Thanks very much, everybody. This concludes today's conference call. You may now disconnect.