Steve Douglas - IR Steve Williams - President and CEO Alister Cowan - EVP and CFO.

Guy Baber - Simmons Greg Pardy - RBC Capital Markets Phil Gresh - JPMorgan Mike Dunn - FirstEnergy Capital Arthur Grayfer - CIBC Ashok Dutta - Platts Chester Dawson - the Wall Street Journal Jeff Lewis - The Globe and Mail.

Good morning, ladies and gentlemen. Welcome to Suncor’s First Quarter 2015 Financial Results Call and Webcast. I would like to turn the meeting over to Mr. Steve Douglas, Vice President Investor Relations. Mr. Douglas, please go ahead, sir..

Well, thank you, operator and good morning everyone. Welcome to the Suncor Energy Q1 earnings call for 2015. With me here in the Calgary are Steve Williams, our President and Chief Executive Officer along with Alister Cowan, Executive Vice President and Chief Financial Officer.

I need to remind you that we will have some forward-looking statements this morning.

Please note that our comments contain forward-looking information and actual results may differ materially from expected results, because of various risk factors and assumptions that are described in our Q1 earnings release, as well as our current AIF and these of course available on our website.

As certain financial measures referred to in our comments are not prescribed by Canadian Generally Accepted Accounting Principles and for a description of these please see again our Q1 earnings release.

After our formal remarks, we’ll open the call to questions, first for members of the investment community and then time permitting to the members of the media. I’ll now hand over to Steve Williams..

Good morning and thank you for joining us. These are certainly interesting times in our industry. [Indiscernible] in the first quarter were down about 50% year-over-year forcing many companies in our sector to take drastic action to weather the storm.

We’ve seen budgets flash, growth, deferred and debt and equity issued in response to the low oil price environment. Here at Suncor, we’ve taken decisive steps to sustainably reduce our costs in response to the fall in crude prices, but our balance sheet remains very healthy. And our fundamental strategy remains very much intact.

We’re continuing on our operational excellence journey which means steadily improving reliability, reducing costs and profitably growing our production. It also means an unwavering focus on safe, reliable and environmentally responsible operations. I am very pleased with the progress we’ve made in the first few months of 2015.

During the first quarter, strong reliability and a very light maintenance schedule contributed to companywide production of over 602,000 barrels per day, a 10% increase versus the first quarter of last year.

At the same time we demonstrated the financial and operational discipline necessary to generate free cash flow yet again, even as benchmark crude prices dipped to six-year lows. We had a strong start to the year to despite a very challenging market and here are some of the highlights.

With a relatively mild winter in Northern Alberta our oil sands operations ran almost flawlessly. The Firebag In Situ plant continued to exceed expectations averaging almost a 189,000 barrels per day and reducing steam oil ratios to 2.6.

In the mine, we took advantage of improved ore grade and strong reliability to produce over 318,000 barrels per day. So all added up to new quarterly records for both total and upgraded production, which increased year-over-year by 13% and 11% respectively. We also continued to drive down the costs of our oil sands operations.

Our cash operating costs dropped by more than 20% quarter-over-quarter to C$28.4 per barrel that included a record low of $14 per barrel for In Situ production. And it's not just fuel cost falling; our absolute oil sands cash costs for the quarter were down by almost 125 million even as we grew production.

So we certainly benefitted from a 50% drop in natural gas prices, but more importantly our controllable costs were down by over 5% on an absolute basis and of course our costs are denominated in Canadian dollars.

At prevailing exchange rates, our first quarter cash cost came in below US$23 per barrel and we did say that again, our oil sands cash costs were below US$23 per barrel.

In the E&P the operation story was also positive, the ramp up of Golden Eagle and stronger reliability from all of our producing assets allowed us to increase offshore production by 2.5% while maintaining operating costs of well under $10 per barrel.

We did see some modest production from our Libyan assets, but no listings were recorded in the first quarter and we continue to exclude Libya from our guidance in the ongoing uncertainty in the region.

Turning to the downstream, our refineries operated very reliably once again during the first quarter, utilization rates exceeded 95% which supported a modest increase to refined product sales. And I am pleased to say that our cost reduction efforts were not confined to the upstream.

In the downstream we took advantage of lower gas prices and also realized a number of efficiencies that allowed us to lower our operating, selling and general expense by 8% quarter-over-quarter. So all-in-all it was a strong operational quarter as demonstrated by improving reliability, growing production and declining costs.

Our long-term focus on operational excellence is clearly delivering results. At the same time, we’re making excellent progress on future group projects at Fort Hills, all critical milestones continue to be met; engineering has surpassed 75% and construction is more than 25% complete and both continue to track to schedule and budget.

The current oil price environment presents a number of key opportunities including lower costs, increased productivity, better resource availability and improved work quality and we can capitalize on those through disciplined project execution. So this will enhance our ability to deliver the project as per the plan.

Meanwhile construction continued in the first quarter on the gravity based platform at the Hebron project off the east coast to Canada. The Fort Hills and Hebron are on target to produce first oil in late 2017. Together these two projects will contribute over 100,000 barrels per day of new volumes once they ramp up to full production.

These projects are an excellent fit with some core strategy to profitably and responsibly developed long life assets that we generate cash flow across multiple price cycles. Now speaking of price cycles, I’d be remiss if I failed to comment on the current pricing environment. On last quarter’s call I promised not to get into forecasting oil prices.

Nevertheless I am asked my [given] oil pricing just about every meeting I have with investors and analysts. And to be honest I am not overly concerned with crude prices, at least not short-term swap prices. Suncor has no impact on global pricing and I’d rather concentrate my efforts on the things which we can control.

We focus on continually improving the reliability of our operations, taking unnecessary cost out of the business and profitably growing our production. If we’re operationally excellent and capital disciplined, our business will be profitable through all phases of the price cycle.

When oil prices are high as they were the past few years, we'll build cash on the balance sheet as a hedge against lower oil prices.

When oil prices are low as they currently, we'll draw down some of that cash and continue to execute on our strategy and we’ll take advantage of soft market conditions to achieve cost efficiencies in both our base business and our growth projects.

Most importantly we’ll [indiscernible] our means growth production and return cash to shareholders throughout the price cycle. We’ve had a very strong start to 2015 and we’re tracking very well against our various guidance metrics.

I’ve summarized our strong operational performance in the quarter and now going to ask Alister Cowan to take a closer look at some of the financial details..

Thanks, Steve. As everyone knows the first quarter featured the lowest [gains] from our crude prices in six years. As we’ve said before Suncor was prepared for the downturn in prices and the integrated business model has proven very resilient.

We generated almost $1.5 billion in cash flow from operations; this number was virtually identical to last quarter even though the average brand crude price fell by well over $20 per barrel to average just over $55 this quarter.

This underlines the strength of Suncor’s [individual] business models that captures profitability across the entire value chain. Despite a negative $170 million FIFO accounting impact as a result of the falling oil prices the refining and marketing group posted operating earnings of $492 million and cash flow from operations $678 million.

Earlier on the call Steve referenced to the cost reductions achieved at [all times and our own damage], these are just two examples of the cost base efficiencies being realized right across the company.

In January as you know we announced [indiscernible] operating budget in the range of $600 million to $800 million including our reduction in our workforce to 1,000 positions. About time we anticipated phasing in the budget cuts over a two-year period. For the first quarter results, you can see we’ve already made substantial programs.

Our operating, selling and general expenses were down by over $160 million or about 7% versus the same quarter last year. When we achieved these reductions to our growing production by over 50,000 barrels per day. We’ve been focused on streamlining our business processes and primarily removing structural costs.

Now this is part of our comprehensive exercise that begun well before the drop in oil prices and I am confident that we’ll continue to achieve and potentially exceed our cost reduction targets in the quarters to come. We’re also targeting capital cost efficiencies.

As part of the January announcement, we're committed to reducing our 2015 capital expenditure by $1 billion, bringing our capital guidance for the year to range of $6.2 billion to $6.8 billion. In the first quarter capital send of just over $1.3 billion and keeping in mind the seasonality of our spending were on track to meet the target.

Significantly we were able to fund our first quarter capital spending entirely from cash flow from operations and produced almost $150 million in free cash flow.

So even in a quarter with the Brent average price with just over $55 per barrel, we were able to maintain our operations at capacity, continue to invest in our key growth projects and pay a dividend of over 22% higher in Q1 of last year.

And most importantly we continue to maintain a rock solid balance sheet, our net debt to cash flow was running at 1.2 times and our debt to capitalization is at 26%.

We finished the quarter with over $4.8 billion in cash on the balance sheet and undrawn lines of credit of $6.7 billion and we continue to attract a strong investment grade credit rating.

Looking forward the capital allocation priorities remain unchanged, fund the base business as it continues its operational excellence journey to lower costs and improved reliability, invest in long-term profitable growth in our core business areas and return meaningful cash to our shareholders.

We certainly don’t want anticipate a substantial oil price to [covering] in the short term, but we do anticipate higher prices down the road. In the meantime we will continue to live within our means and take the necessary steps to preserve cash and maintain our balance sheet strength.

As I said before, our financial strategy is designed to enable us to manage through the inevitable oil price cycle. We will remain committed to capital discipline, operational excellence and profitable growth and I am confident that we’ll continue to produce strong results going forward. With that I am going to pass you back to Steve Douglas..

Well thank you Alister and Steve. Just a couple of highlights before we go over to Q&A. LIFO cycle again was a factor as we had a falling Canadian dollar during the quarter and it was a net after tax negative impact of $170 million in the first quarter.

Stock-based compensation was an impact after tax of $93 million in the quarter and finally as everyone is aware the exchange rate was very significant in its impact with the falling Canadian dollar, there was an after tax negative impact of $940 million to our net earnings based on our U.S. denominated debt.

With that I should also reference our 2015 guidance no changes to production or to our capital spending it’s little early in the year with just three months under our belt to make any changes there.

We did adjust some of the assumptions around international factory current tax payable all the details are available on our updated guidance on the Web site. With that, operator I’ll turn it back to you and we will take questions..

Thank you, Sir. We’ll now take questions from the telephone lines [Operator Instructions]. First question is from Guy Baber from Simmons. Please go ahead..

I wanted to start off on the theme of the operational excellence journey. But could you just comment on the exceptionally strong upgrader performance this quarter with the SCO output of 347,000 barrels a day? If you could just talk about that improvement and the uplift it gave to your bottom line versus more historical utilization efficiencies.

And then if you could talk about how sustainable you believe that is and if you are continuing to run that well on a leading edge basis? And then I have a follow up as well..

Let me answer that for you Guy so in some ways there are no surprises for sleep and working in a diligent way over multiple years to improve upgrader reliability.

What we said was that we were expecting to move the whole complex up to above 90% utilization over a number of years and the full extent of that program was going to take us two turnaround cycles and the unit two where we’re seeing the big difference has its main turnaround next year.

So, some of the results we’ve always seen a little conservative in terms of what we’ve been guiding on. So, some of the results are starting to come. So we haven’t re-guided because it’s the first quarter and we do build in into our guidance some unplanned work as well as planned work.

But it's a trend we’ve seen over a number of years is a result of the obsolescence. We do expect to see that trend continue that in fact we’ve seen it continue although we’ve got some minor turnarounds going on in the plant at the moment.

We’ve seen it continue into April, so very much on target, very much for the trend, and we expect to see that trend continue for the next couple of years..

And then also obviously great progress on the 600 million to 800 million of cost reduction initiatives so first congrats on that.

Could you just talk a little bit about where perhaps you’ve been the most successful on a different [indiscernible] in the market?.

I’ll give you some examples I mean I would say I'm really pleased with the excellent progress that has been made I am a little bit cautious sometimes about the words I use like successful because a big part of it was a significant reduction in workforce which is a difficult thing to have to manage.

We targeted 1,000 we’ve actually realized just over 1,200 as we speak. A lot of what we’ve been doing is we've been looking at productivity not just numbers.

So the sorts of things that are happening were flying less people in and out we using far more local labor we’ve seen better quality people come in, we’ve negotiated savings with contractors, we’ve reduced overtime by different scheduling, we’ve reprioritized things like IT spend. So to be honest what we’re doing is its part of the process.

We’re going to overachieve versus the 800 million we talked about and we’re going to reduce the time we did in from two years to this year. So we will continue because it’s part of the search of operational excellence for perfection but of course you never quite get there. So very pleased with what we’ve done.

The program is continuing and we’ll overachieve this year..

Thank you. The following question is from Greg Pardy from RBC Capital Markets. Please go ahead..

Steve the base oil base [indiscernible] number was quite impressive when you look at the balance of this year and really going ahead how much of that number do you think is going to be sustainable? In other words volumes were higher you’re taking absolute cost out of the system, eventually we will go back into higher oil price environment, but is it the trend you think will continue to see going down based on those [indiscernible]?.

Two things I would say Greg. I think it is a trend and the best fields the trend you get is if you look at what happened over the last four or five years so we’ve come from approximately $40 down to this 28 number.

Now we’ve had an exceptionally good quarter so two things have helped us or three things if you like the basic cost management is done very well and we're pleased with that. But we did have very low gas prices and we had exceptionally high reliability so both of those things helped.

So, there's definitely a trend we've not guided re-guided for this year because we do have two quarters with not major maintenance but some maintenance in the upgrade of regions so, but we will take a look at guidance towards the middle of the year in third quarter to see if we should be reducing it but you know you can definitely start to see that we will be at the very low end of guidance if we continue this..

Okay great and then just maybe staying on the cost front the Syncrude numbers were also considerably lower I mean we haven't numbers like that for a very long time, is there anything, I mean Syncrude volumes were good in the quarter but is there anything around things like deferred maintenance, reclamation that are taking a real bite out of the Syncrude numbers or was this simply a volume [indiscernible]..

Let me say a couple of things I mean of course you should really address the questions to the operator but I'll make a few comments. We've been working on operational excellence within Syncrude and the same components are there, better cost management and management of reliability.

I'm on the record as having been disappointed with Syncrude's performance over the last three or four years but also on the record that they have been diligently working on what I believe are the right issues.

Your question gets right to the important bit, the most important thing we’re looking from Syncrude is costs coming down and reliability coming up, so it was a good quarter but I'd like to see that improvement continue..

Okay thanks for that Steven and maybe just a last one. Spending wise you guys have been last few years, call it mid sixes in billions per year, how should we be thinking about CapEx maybe into think as we enter '17 with Hebron and Fort Hills finishing up that year..

You know I mean I think the best indication of the discipline in the [indiscernible] we've had around our capital budget is to look it through, what was a fairly big cycle over the last four years. We've kept to our 6.5 billion. You're right I mean the pace of spending on Fort Hills and on Hebron is next year.

But broadly speaking you will see us applying the same sort of capital discipline, so if I go back three or four years we were talking about that and I can remember you asking the question about will we be between $8 billion and 9 billion, you're going to say is much closer to the numbers historically we’ve been spending..

Thank you, the following question is from Phil Gresh from JPMorgan, please go ahead..

Hey good morning. First question is just around the capital cost opportunities on Fort Hills and Hebron you know without making you commit to saying that the capital cost could be lower, maybe just talk about what you're seeing trend wise given what you've been seeing on the operating cost front..

Okay, I mean you recall Phil when we said we were going ahead with particularly Fort Hills, and the same logic goes across to Hebron, parts of the reason for wanting to go ahead at this time was our view not that we foresaw the significant down cycle in crude price but we did see a drop off in activity in the Fort McMurray region and so we anticipated the upward pressure on the cost of major projects would start to come down.

So part of the reason we went ahead in this timeframe was to be able to spend the majority of the money on the project at a very low cost time in that particular business and region.

That's proving to be the case, so you heard me saying the project's going very well, construction's 25% complete it will be 50% by year end, engineering is 75% complete, what we're seeing, if you think about how we set up the reason for setting up the joint venture was to derisk our exposure so we have 40%, there' definitely a derisking going on the project.

So the risk, the upside risks are improving relative to the downside risks which is very-very encouraging so as we continue to hit the milestone that continues to be the case and of course we've used virtually none of the contingency which is in excess of $1.5 billion on that project.

So all of the signs are the execution of the project is going very well and we're seeing real trends up there, so the quality of the work, the quality of the labor, the commitment of the contractors has been exceptional. .

And if you run the current strip kind of through your model in Fort Hills I mean would you be comfortable that there's still low double digit IRRs at the profile..

Sure I mean there're lots of puts and takes on the economics but you know there are some mitigating factors that you have to look at, you run the strip, and of course that's the important point, we put the long-term price and this is a 52 year project in a short-term spot prices through construction are not that relevant to the IRR calculation.

So as we redo and having much from our original numbers when we put current exchange rates in crude prices. So things are looking pretty good..

And just my final question is, how do you think about the long-term growth of the company today? Has anything changed at all, I am still thinking kind of through the cycle mid-single-digit growth just kind of coming back to the question about CapEx post Fort Hills just how are you thinking about things [overall]?.

I mean the simple answer is yes, I mean what we are looking at is the major growth projects are going ahead there are about 100,000 barrels a day building up in that 2018 timeframe, so considerable growth.

The other things of growth is the continued reliability improvement that -- I think there was a bit of skepticism about initially but they are clearly manufacturing themselves now that’s what the upgrader production is around, that’s what the Firebag improvements are being around.

So you see that and then we have a long list of growth projects behind that. So we own the market a clearer view of our replication strategy, it's coming along very nicely. So we have complete In Situ replication strategy which will take us through 10 years through to 2030 sort of timeframe.

And then we have some great conventionally in pre-projects as well. So within our ownership we have lots of opportunity for growth. Of course one of the benefits of the relatively good performance of our equity is we also have some opportunities in the market.

So there is nothing we much liked at the moment, our view is there is still is a little bit operating gap between buyers and sellers, but the best position to be in is to have a good balance sheet and be disciplined..

Thank you. The next question is from [indiscernible] from JMP Securities. Please go ahead..

Quick question on like dividend growth, I am trying to understand and this is on the prior question, once Hebron and Fort Hills spending start coming down starting 2017, how are you thinking about dividend growth and share buyback, the capital spending seems to be kind of tapering off.

So just trying to understand long-term how are you thinking about that?.

I mean I don’t think our strategy has changed and so I mean we look at the opportunities we have to deploy the funds and we compare them vigorously. So we look at the returns we get on our projects the dividend, we’ve also said we will keep our dividend meaningful, sustainable growing in proportion to our production.

So we plan this act would continue as the company continues to grow and then opportunistically we will buy stock back. So we both for the -- with the exception of this year for four years we bought back 10% of the company, our average share price buyback has been in the sort of mid $34 share range.

So we think that was very successful and you’ll see us using the same tools with the same discipline..

And last question that you just mentioned on [A&D] front if I have to think about it from that perspective are you looking at assets within Alberta or is it going to be international.

Like how should I think about that looking at this project?.

I mean to be honest if you look at our record, our record is being one of disciplined divestment rather than acquisition. So we did do the Petro-Canada deal, we did do the purchase of the Denver refinery both very much at the bottom the cycles they were in.

So, we’re now adverse to doing deals but recently we’ve been more into divesting of assets at the right time. It's not a great time to be selling assets right now, there are lots on the market. So we look at [counter fits] with our business, the first area we look at and I think of three broad areas we look at.

The first one is oil sands, very difficult for acquisitions to work in oil sands because we have the highest quality resource. So we have organic projects which those things have to work against. So it's very difficult, it's very tough for us to make those work.

We look at the downstream because we believe in this integrated model adding value and I think it's doing that. So we looked at all the assets on this continent to see if they fit with our integrated model. And then we do look around our conventional E&P and our strategy is being around approximately the percentage of E&P we have.

So our part of the joint ventures with Exxon and Shell off the East Coast of Canada, two great opportunities in the mid-term there and we do look other assets but overall our view has being there is still a gap between buyers and sellers expectations..

Thank you. The following question is from Mike Dunn from FirstEnergy Capital. Please go ahead..

Couple of questions on your upgraded output in the quarter, your [Technical Difficulty].

I think it’s fair to say that’s what I said almost flow less Mike when I talked about operations we didn’t have a perfect quarter on the hydrocracker it wasn’t back but we did have one unplanned shut down there.

So, I don’t know Steve if you would want to say particular numbers there?.

We probably lost something in the area of 25,000 to 30,000 barrels a day of sweet production over to sour Mike and so that does have an impact. But when you’re running at close to 100% you can’t expect the entire complex to be at that level so I think as we get to that top end you will likely to see that sweet sour mix weaken somewhat..

And it’s my understanding folks that you did have a strong quarter in terms of mined bitumen output partially due to the order rate.

But even if that was more of a normalized throughput from the mine would you have still been able to make that up from Firebag bitumen through the upgrader?.

We expected to do over 300 and we did. We run Firebag and MacKay River run full to the limit of the assets all of the time. So we take them to a limit. If we’re working on the same generator then its impacted our normal strategy is we run those -- we’ve run all of the bitumen sources full..

And then over to your E&P division your press release mentioned are you drilling the [beta around beta] right now off Norway and then as well maybe just shed some color on that non-commercial well off new from that you have the exploration expense for whether that was something this quarter or from prior quarters?.

I mean the answer to your first question is yes we are in the process of drilling that well and over the next few months we would expect to start to see the results and yes we wrote then [indiscernible] well that’s part of our normal E&P and of course you have to drill a number of those to hit a good one, so very much far off the E&P program..

Thank you. The following question is from Arthur Grayfer from CIBC. Please go ahead..

Just a few questions, the first one is on the cost side. Can you elaborate a little bit about that $600 million to $800 million spend.

What I am looking for is how much of those cost savings are really a reflection of the current pricing environment or the current deflationary cost environment? And so really what I am wondering is could we potentially see more cost savings just due to a cost deflationary environment like are all these related structural changes that we don’t expect to come back overtime?.

Yes, as a result, I mean I would say that Steve gave the good example of how we’re achieving those cost savings we did take to under people like the organization but Steve gave some other examples and they’re much structural changes in the way we’re doing our business rather than sort of taking one time price deductions ultimately do come back.

So really the majority of those cost reductions will be permanent structural changes in our cost base..

Looking at the CapEx number so as you said Alister that CapEx is 1.3 billion and taking into consideration that Suncor has a history of putting out CapEx guidance and then coming underneath that, is there a reason why I shouldn’t just take that 1.3 billion and times it by four and assume that’s what the CapEx will actually turn out to be this year?.

That was music to my ears, so I’ll hand it over to Alister so he can answer the question. But I wish you could see the smile on my face. We’ve been working for a number of years particularly in oil sands against a reputation of projects overruns, not being able to do things within our CapEx limits.

So it was a specific objective of ours to become much more disciplined about capital and to give a prudent but realistic estimate. So I am pleased there is a general realization now that we manage that in a disciplined way. Go on Alister if you can --.

And as I said in my comments CapEx is seasonal so the 1.3 billion was actually in line with what we expected as parallel overall 6.2 to 6.8 so those just multiplied by four is going to be some seasonality we’ve got some turnarounds coming obviously as you ramp up and the summer work and summer respective Fort Hills you will see that go up in the Next couple of quarters, we're still going ahead in our range of 6.2 to 6.8..

Okay and the last question from me is you talked about some planned maintenance in Q2 and Q3, in terms of context of the guidance of the 4.10 to 4.40 talk a little bit about where….

Sorry, you cut out there for just a second Arthur you said talk a little bit about?.

The planned maintenance for Q2 and Q3 and the oil sands operation, in terms of guidance 10-4 year volumes like you take out [indiscernible]..

Okay we got it, you are cutting out but I think we have the gist of it, it’s true we are right across the upstream producing at or above the high end of guidance, but we do have maintenance planned right across the upstream in the second and third quarters.

I would say that we certainly expect to be mid-point or above in our guidance production but you have to have quarters like Q1 in order to hit guidance because we do take that maintenance into account..

Thank you, [Operator Instructions] next question is from Ashok Dutta from Platts, please go ahead..

Hi, just a very few quick questions. Line 9 and Montreal coker, just wanted to find out what’s the latest with that..

Okay, Line 9, much as we anticipated we still anticipate it coming on in the second quarter this year so in the May-June timeframe, it is dependent on a final leave permission to start up from the NEB and that being given to Enbridge but we're working with both of those to try and secure the second quarter start up so you know I'm waiting to see it actually happen but it does still look as though signs are encouraging and of course the actual regulatory approval for Line 9 reversal was given last year so still on schedule.

Montreal - let me just say that you know the combination of the rail connection we've put into Montreal and the modifications we made to the [indiscernible] Montreal had one of its best quarters ever in the first quarter and of course as Line 9 gets reversed then that trend will continue.

The yields that we got particularly for distillates around the [indiscernible] have been above our expectations which is good news.

The coker is you know a refinery margin project that we will look at, at the right time, we're still investing in the development of that project this year and towards the end of this year beginning of next year we'll come across my desk to take a look at whether we approve this, so still being developed but not imminent. .

Okay, and just a very quick follow up, with Line 9 reversal would you still be looking at getting crude from the US Gulf Coast?.

You know, one of the strengths of Suncor is what I call our logistics and our intermediate, we run our trading organization to take advantage of the difference in prices, so, yes all is possible, we run that model you know every day and look at where the best trades can be made so we move material up from the Gulf Coast into Montreal, of course Line 9 will give us great access to inland cruse both from the Western side of Canada, here in Alberta but also for inland crudes in the US, so it just gives extra flexibility and we will take advantage of all of that..

Thank you, the following question is from Chester Dawson from the Wall Street Journal, please go ahead..

Yes, thank you for taking my question. Two main points up, first I wondering if you could tell me what your average realized price for Oil Sands crude was in the first quarter..

Steve's just looking up the number for you..

While you do that maybe I'll ask my second question which is, you mentioned that you don't have any particular interest in Oil Sands M&A, but I'm wondering if you have any insight into whether others might be interested in Syncrude for example, there's been some talk, speculation that Imperial might want to increase its stake.

Are you aware of that, have they had any discussions with you about that as a major shareholder?.

No, I wouldn't have any comment, I can't comment on the theoretical competition type issues, I mean I think the fundamentals are still the same for all of us.

But you know one of the challenges around acquisition is if you hold excellent resource you have to benchmark other assets against them and I think that still is generally a disconnect between buyers and sellers, but other than that I would ask other Syncrude owners directly..

There is also the realized price, the average realized price for the oil sands in the quarter was C$47.67..

And then lastly could you give me any update on your crude by rail shipments in the first quarter and where you expect second quarter and beyond?.

We continue to ship significant volumes to Montreal 30,000 to 40,000 per day of rail. Other than that we really give as Steve Williams mentioned on an opportunistic basis.

So when there is an arbitrage opportunity, we can actually move anywhere in North America with our rail shipment and we’ll continue to do that, we have a large fleet of railcars and it's really about taking advantage of arbitrage opportunities. We don’t move our own equity crude by rail, we have sufficient pipeline access to move it all by pipe..

And just to follow-up on core, I think last quarter you said it was not efficient to rail it to the Gulf of Mexico is that still the case?.

It really comes and goes because the cars we’re seeing a lot of volatility in crude pricing and so it's really a day-to-day optimization exercise..

Thank you. The following question is from Jeff Lewis from The Globe and Mail. Please go ahead..

I was wondering about the 200 additional lay off, can you clarify from what area of the business those cuts were made?.

I mean I would just comment generally, the majority of these costs have been around what I would call our head office overhead. So, we’ve been working for a number of years on streamlining our work processes in the company and that’s where these have come from.

So although we set targets it was very much about how can we still do the critical important work for the company, but do it more productively and that’s where they have come from. So the majority are in Calgary and Toronto around our sort of head office functions..

And just as a follow-up regarding the cost reductions and Alister mentioned that a lot of them are from structural changes, can you be more specific on some of the areas of the business where you’ve been able to bring cost.

The release mentioned lower gas prices and higher volumes helped sort of drive the per barrel cost down, but what specifically have you been able to change in the business that you see that are sticking around at the year goes on?.

I mean it would be largely repeat of what I said earlier it's about productivity, it's about improved processes. So it's around better supply chain, IT, HR, finance, it's about how we work those processes better. So the changes we’ve made are permanent with different systems in place, which is why we think these things will largely be sustainable.

So it's about how you read it, the phrase that used to be uses how you reengineer or redesign those work processes. So it's those types of things..

But would you say the bulk of the savings are coming from things like that or from the higher volumes and lower gas prices..

No, the bulk of the savings are coming from -- those 600 million 800 million the gas prices have no impact and there are no good volume..

Thank you. The following question is from Scott [indiscernible]. Please go ahead..

Just get a little more mundane, can you tell us when you expect the current coker maintenance to wrap-up and when you’ll begin the vacuum unit and other coker work?.

Just general comments, I don’t know I think you're talking about the unit one upgrader annual inspection that's going on two of the coke drum, it's going very well, the work is on schedule, we’d expect it back on line in the next few weeks. And then in terms of the planned unit two vacuum tower work, we’ll be executing that in the fall..

Thank you. The following question is from Sean [indiscernible] from Mergermarket. Please go ahead..

Would you be interested in increasing your [indiscernible] crude?.

I think what I would say is I would just look back to our general position, I mean we’re not adverse to transaction, we have a long list of excellent organic project. So anything we look at has to work very well relative to those.

If we look at some cores track record on I would call general M&A type activity, we tend to be more in the disposal of assets than in the buying of assets over the last few years and that’s been part of that disciplined strategy by getting to our core business.

We do look at all potential opportunities at there but generally our feeling is there is a big gap between buyers and sellers..

Would you be interested in selling your share in some [indiscernible] crude?.

Same answer..

Thank you. We have no further questions registered. I’d like to turn the meeting back over to Mr. Douglas. Please go ahead, sir..

Thank you, Operator. And thanks to all the participants if you more detailed questions, we’re certainly available today and all the time. Thanks for taking part and we’ll look forward to talk to you again..

Thank you. The conference has now ended. Please disconnect your lines at this time. Thanks for your participation..