Good morning. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to MEG Energy's 2022 Q2 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, simply press star then the number two. Thank you. Mr. Derek Evans, CEO, you may begin. Thank you, Pam. Good morning, and thank you for joining us to review MEG Energy's 2nd quarter operating and financial results. In the room with me this morning are Eric Toews, our Chief Financial Officer, Darlene Gates, our Chief Operating Officer, and Lyle Yuzdeski, our General Counsel and Corporate Secretary. I'd like to remind our listeners that this call contains forward-looking information. Please refer to the advisories in our disclosure documents filed on SEDAR and on our website. I would refer listeners to yesterday's press release for more detail beyond the comments we've prepared this morning. Prior to jumping into the details of the quarter, I want to point out that this is Eric Toews' last quarterly conference call before retiring on August first. On behalf of the entire board and management team, I wanna thank Eric for his dedication and valuable contributions during his time at MEG. Eric has led a number of strategic initiatives which have transformed MEG's balance sheet, including the sale of the Access Pipeline to the Pathways Alliance and the completion of a number of complex refinancing transactions, which have been instrumental in getting us to the place we are today, where we're returning capital to shareholders. On a personal note, Eric's been an amazing partner. I'm grateful to have had the opportunity to work alongside him these last four years and wish him all the best in the future. In the 2nd quarter, bitumen production averaged 67,256 barrels a day at a steam oil ratio of 2.46, compared to 101,128 barrels per day at a steam oil ratio of 2.43 in the 1st quarter of 2022. Production in the quarter was impacted by the scheduled major turnaround at the Christina Lake Phase 2B facility. Despite a tight labor market and supply chain challenges, the turnaround was completed safely, on time, and on budget. Following the turnaround, the Christina Lake facility experienced an unplanned electrical event, which resulted in a slower than forecast production ramp-up during the month of June, which impacted full year 2022 average production by approximately 2,000 barrels per day. Christina Lake facility has now returned to full production and MEG's second half 2022 average production levels are expected to meet or exceed the record production levels the corporation reached in the 1st quarter of 2022. Due to the slower post-turnaround production ramp up, MEG revised its full-year 2022 average production guidance to 92,000-95,000 barrels a day from 94,000-97,000 barrels per day. MEG also revised its full-year non-energy operating costs and G&A expense to $4.60-$4.90 per barrel and $1.75-$1.90 per barrel, respectively, reflecting lower full-year production guidance. In the 2nd quarter, MEG initiated its share buyback program and continued to make significant progress on debt reduction. Year to date, we've applied over $1 billion of free cash flow to debt repayment and share repurchases. Highlights from the 2nd quarter results include funds flow from operating activities of $412 million and adjusted funds flow of $478 million, free cash flow of $374 million, total capital expenditures of $104 million, primarily directed towards sustaining and maintenance activities, including approximately 44%, which was directed towards the completion of the major planned turnaround. Net operating costs averaged $12.97 per barrel, including non-energy operating costs of $5.65 per barrel. Power revenue offset energy operating costs by 30%, resulting in energy operating costs net of power revenue of $7.23 per barrel. Year to date debt reduction of $700 million US, including $379 million US in the 2nd quarter of 2022. MEG initiated its share buyback program during the quarter, and to date has returned CAD 139 million of capital to shareholders through the repurchase for cancellation of approximately 7.24 million MEG common shares. During the quarter, MEG renewed its existing modified covenant-light credit facilities, resulting in total available credit of CAD 1.2 billion with a maturity date of October 31st, 2023. On June 16th, 2022, MEG announced the hiring of Mr. Ryan Kibik as the corporation's next chief financial officer, who will succeed Eric Toews effective August 1st, 2022. MEG realized an average AWB blend sales price of $100.42 per barrel during the 2nd quarter of 2022, compared to $83.55 per barrel in the 1st quarter. The increase in the average AWB blend sales price quarter-over-quarter was primarily a result of the average WTI price increasing by $14.12 per barrel. MEG sold 79% of its sales volumes in the US Gulf Coast market in the 2nd quarter of 2022, compared to 58% during the 1st quarter of 2022. The increase quarter-over-quarter is primarily the result of apportionment on the Enbridge Mainline being 0% in the 2nd quarter of 2022, compared to 10% in the 1st quarter. On June 15th, 2022, Canada's major oil sands producers announced the combination of three existing industry groups, all focused on responsible development into a single organization called the Pathways Alliance. The new organization incorporates the Oil Sands Pathways to Net Zero Alliance launched in 2021, Canada's Oil Sands Innovation Alliance, COSIA, created in 2012, and the Oil Sands Community Alliance, OSCA, created in 2013. Combination of these industry groups integrated into a single organization with combined leadership will enhance the alliance's collaborative efforts to advance responsible oil sands development and to progress the alliance's goals, including achieving net zero greenhouse gas emissions from oil sands production. Key focus of the new Pathways Alliance will be to continue the considerable work already underway to reduce greenhouse gas emissions from oil sands production by 22 million tons annually by 2030, and ultimately achieve its goal of net zero emissions from oil sands production by 2050. MEG's capital allocation strategy is designed to provide increasing return of capital to shareholders as progressively lower net debt targets are reached. MEG reached its $1.7 billion net debt target in the 2nd quarter of 2022. At net debt levels between $1.7 billion and $1.2 billion, approximately 25% of free cash flow generated is being allocated to share buybacks, with the remaining free cash flow applied to ongoing debt reduction. In the current commodity price environment, MEG expects to reach its $1.2 billion net debt target in October of 2022, and to reach its $600 million net debt floor in the second half of 2023. During the 2nd quarter of 2022, MEG repaid $379 million through the redemption of the remaining $171 million of MEG's second lien notes, and through the repurchase and extinguishment of $208 million of MEG's outstanding senior secured notes due February 2027. MEG has repaid approximately $2.3 billion of outstanding indebtedness since 2018. During the quarter, the corporation initiated its share buyback program. In the 2nd quarter, MEG purchased, for cancellation, 4.45 million common shares, returning CAD 94 million to MEG shareholders. Year to date, MEG has purchased for cancellation 7.24 million common shares, returning CAD 139 million to MEG shareholders. During the 2nd quarter, MEG amended and restated its revolving credit facility and its letter of credit facility agreement guaranteed by Export Development Canada, and extended the maturity date of each facility by 2.3 years to October 31st, 2026. Total credit available under the two facilities was reduced from CAD 1.3 billion to CAD 1.2 billion and is comprised of CAD 600 million under the revolving credit facility and CAD 600 million under the EDC facility. The revolving credit facility retains its modified covenant light structure, meaning it continues to contain no financial maintenance covenant unless MEG is drawn under the revolving credit facility in excess of 50%. If drawn in excess of 50% or CAD 300 million, MEG is required to maintain a first lien net debt to EBITDA ratio of 3.5 or less. MEG continues to have no first lien debt outstanding. As I bring my remarks to a close, I once again want to extend my thanks to our team for their commitment and perseverance. I'm proud of what we've been able to accomplish and confident in our future and our commitment to sustainable, innovative, and responsible energy development. On behalf of MEG's board of directors and our management team, we want to thank you for your support. With that, I'll turn the call to our operator to begin the Q&A. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Neil Mehta at Goldman Sachs. Please go ahead. Good morning team. Eric, congratulations on your retirement, and thank you for the partnership over the years. Thank you, Neil. The first question is on the macro, Derek. We've been a little surprised to see WCS widen out as much as it has, in light of inventories in Alberta. I guess part of it is Gulf Coast fuel oil, but part of it seems to be the SPR. Would just love your perspective on the sustainability of that wider differential, how you guys are thinking about the 2023 and 2024 outlook there, and anything you're seeing real time in terms of being able to get the barrels out of the market. Thank you. Neil, thanks for the question. It's a very appropriate and topical one at this time. One of the things that has happened as a result of Russian-Ukrainian sort of conflict is that Russia has had to find a home for its Urals barrels, and it had to find a home quickly. What we've seen happen in the market is their Urals barrels, which are a heavy sour barrel, have been marketed to both China and India. What we've seen is they've been marketed at a fairly deep discount, a deep enough discount to stop some of those U.S. Gulf Coast barrels moving across the dock and moving to Asian markets, in particular India. If we look at the dynamic that existed in late Q4 and early in Q1 of this year, you would've seen 2-4 million barrels a day or a month of product, heavy product, moving across the dock to Asia. Those volumes have dried up, as you know, Indian companies and Chinese companies source those barrels from the deeply discounted Russian market. That would be the number one factor that has driven an increase of sort of supply on the U.S. Gulf Coast of our product that has broadened out the differential. You're right, the SPR releases have had an impact. You know, that impact was about 1 million barrels a day. It's waning, as that gets towards the end of the program. It's currently down at about 700,000 barrels a day. In that September 16th to October 21st period, it's going to drop down to about 550,000 barrels a day of product. That product is now going to be predominantly light as opposed to heavy. Our view is, on both of these factors, is that, you know, a deeply discounted Russian barrel is what you would do if you were Russia and trying to find a home for your product quickly. But we don't think that that's going to persevere or continue. The market will take or tighten up that arbitrage, and we do believe that, Asian suppliers will be back, buying product across the dock. We're seeing early indications of that already, in the coming month. With respect to the SPR, that program is winding down. I think, the Biden administration pointed to how they were gonna start refilling the SPR, as early as 2023. We fully expect that these differential levels will return to where they were, you know, prior to the conflict, the Russian-Ukrainian conflict. All right. Well, that's kind of the follow-up to the extent you think that some of this macro distortion is temporary and you've seen, while the stock's been extraordinary over the last 2 years, it's pulled back meaningfully over the last 6 weeks. How does that influence your thinking around leaning into the buyback and taking advantage of any dislocation? I think, well, any dislocation provides an opportunity for us to continue to buy back shares. You know, I don't think we're going to lean into it disproportionately. We have a program that we have articulated to our shareholders, that, you know, at this juncture, 25% of cash flow goes to share buybacks. It's very mechanical in terms of, you know, we look at what we have available in any given month for free cash flow, 25% of that goes into the market. You know, I'd love to, obviously buy back more shares at a, you know, as we've seen this pull back in the market. You know, we're not timing the market. We have a program that we've articulated, and we're gonna continue with that. Okay. That's helpful. Thanks Derek. Thank you. Your next question comes from Menno Hulshof with TD Securities. Please go ahead. Yeah, thanks. Good morning, everyone. I'll start off with a question on vertical integration. We've seen a big move in AECO and even the condensate premium. It's sitting at roughly $5 a barrel, which are both obvious inputs in your business. But then there's still this massive arb between AECO and pretty much every other global benchmark that many think will tighten in the coming years. So I guess my question is, how much time are you spending thinking about vertical integration these days? And would you ever consider an acquisition to hedge out some of the price risk on those key inputs? The short answer is, you know, we have thought about vertical integration in this life and in past lives. Menno, I would tell you that, you know, we are not in the natural gas business or the condensate business. Yes, they are big inputs, but they're not ones that we feel there's very efficient and effective markets out there. We're delighted with our brethren in the natural gas business. You know, as you look at AECO production today, it's reaching all-time highs, as the Canadian natural gas business responds to the very strong price signals that we see. We're not planning on vertically integrating the business. We're very good and very effective at controlling our cost structure inside of the oil sands space. All that being said, we do look for opportunities to take advantage of dislocations in the market on the condensate side and on the natural gas side. I think if you in reviewing our quarter, you'll see that we've locked in 7,000 barrels a day of condensate prices for 2023 at a very significant discount to the market. You know, if you're looking for us to take action in terms of how we're gonna manage those input costs, it'll be through strategic hedging of those and opportunities that you know are dislocations in the sort of the historic pricing patterns that we can take advantage of. Got it. Thanks for that, Derek. I guess the second question would be related to the federal discussion paper on oil and gas emissions reductions that was recently published. Maybe this is specific to me, but it came a bit out of left field from my perspective and reopens the debate on cap-and-trade, among other things, and certainly surprising given how aggressive the pathways targets already are. How much of a risk is this from your perspective, and how long could this hang out there for? What is your understanding of the next steps? Menno, you're not the only person that was surprised last Monday. I think everybody in Calgary is going, "Where did this come from?" We knew there was a you know obviously the emissions cap paper is you know we expected something. We just did not expect such a strident sort of focus on the 42% reserve targets or emissions reduction target in that paper. You know, I guess I'd start off by saying you know we share the government's goal of tackling the challenge of climate change. I mean the Pathways group has been up front. You know we've been at this now for over 18 months. We've set our own ambitious targets for oil sands sector to achieve a 22 megaton annual reduction by 2030. You know, that's a very ambitious goal on its own. You know, obviously, the net zero goal by 2050. You know, we have a plan, and we think it's one of the few plans out there. It's ambitious at 30%. I don't know how we get to 42%. I think that personally, in my humble opinion, is almost unrealistic. You know, it's not that we wouldn't want to try and get to 42% if we could, but you can't ignore the reality of the regulatory environment in this country. You can't ignore the reality of what I'm gonna say, the carbon pricing regime and the ability to trade carbon credits from a pan-Canadian perspective. You can't ignore the reality of the fact that the federal government and the provincial government aren't talking. Without those three issues being addressed, you can set whatever ambitious plan you want, but you're never going to be able to achieve them. You know, this is where, to me, Pathways has differentiated and distinguished itself. It has a target out there. It's got the 30%, yet those 3 items that I mentioned stand in our way of us even getting to the 30%, let alone the 42%. Do I think these things are manageable or that we can fix these things and move forward? Yes. Do I think we can get to 40%, 42%? Yes, we will get to 42% over time. Unless there is a concerted effort to address all three of those issues in the very near term and to bring a sense of urgency to, you know, fixing our regulatory environment, better communication between all levels of government, and creating a price of carbon that we can take to the bank and finance some of these projects on, if that does not happen, then these targets are unrealistic. I agree with all of that. Thanks Derek. Thanks, Menno. Your next question comes from Greg Pardy with RBC. Please go ahead. Thanks. Hey, good morning. You know, Derek, I hope the press on the line gets that in the Globe and Mail or other papers tomorrow morning to send a message. Look, just all the very best to Eric and welcome, Ryan. Just wanna maybe just take it back to the company. I'll maybe just hit three things. How are you thinking about hedging WTI? Does the dividend become a part of the conversation at that floor level of CAD 600 million? Then how should we be sort of thinking about 2023 CapEx? Okay. Are we thinking about hedging WTI? No. Our philosophy on hedging has not changed. You know, just to repeat it, we hedge to protect our capital program, and we look at what commodity price, WTI commodity price would have to be for the year. You know, this year it turned out that we'd need an average price of $45 WTI to have sufficient fund flow to cover off our capital program. We thought that was highly unlikely and decided probability of that was very, very low, and we weren't going to hedge. That would be the same way we look at hedging WTI in if we were going to hedge WTI on a go-forward basis. Not planning on doing that, but as you would have heard in a previous caller, where we were talking about condensate and a little bit about natural gas, we will hedge our inputs, if we're provided with, you know, sort of a dislocation or an opportunity in the market. Obviously, condensate, as we've talked, as you know, is our single biggest cost. Being able to lock down 10%-15% of your condensate at a significant discount to historical market prices is important. On the natural gas side, that's, you know, another big operating cost for us, even though we can mitigate that with our power sales. We will look and continue to look and have targets in place to take advantage of the market, should it present the opportunity to do so. With respect to your second question on the dividend, you know, when we reach our net debt floor of $600 million U.S., would we look to put a dividend in place? That is absolutely one of the tools that we're going to look at. You know, we will provide greater clarity on that obviously as we move forward and get closer to that target. You should expect to hear more on us on that going forward. You know, just to elaborate on that a little bit, what we have seen others do is put dividends in place and special dividends in place. We have a unique opportunity to be able to watch and see how those are reflected in the price of the underlying equity of those organizations. We will, you know, we're not sitting on our hands over here. We're watching, we're looking at how the market is responding to, you know, dividends and special dividends. Those will help inform how we put in place a return of capital type structure on the dividends when we hit that $600 million. On the third part of your question, which I believe was, you know, how do we see CapEx 2023, you know, we're watching inflation very carefully, Greg. You know, oilfield tubulars, drilling and service completion costs, service rig costs are up significantly. Labor, steel are all continuing to move, and I wouldn't say they've plateaued. As we think about what our CapEx program for 2023 will be, it's going to be larger than it is today, you know, just on the inflationary basis. But there'll also be another element. As we move from our existing development area in Algar, we're going to move further south down to Surmont, and that will require sort of an incremental level of sustaining capital that than what we had in our budget this year as we build the emulsion lines, the steam lines, all the product lines in the infrastructure to move a significant difference out into a part of the reservoir that is likely gonna have a much lower steam oil ratio by virtue of the fact that we don't see any underlying water there. Kind of excited about getting down there and continuing to not only expand the infrastructure but move into you know another new area. Terrific. Thanks very much, Derek. Thanks Greg. Ladies and gentlemen, as a reminder, if you do have any questions, please press star one. There are no further questions at this time. Please proceed. Thanks, Pam, and thank you everybody that's joined us this morning for our 2nd quarter call. We're excited about what we've been able to achieve in the first half of 2022 and look forward to reporting on our operational performance and our return on capital program when we release Q3 on November 10th. Have a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a good day.