管理層發言
Good day. And welcome to the Imperial Oil Fourth Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I’d like to turn the call over to Mr. Peter Shaw, Vice President of Investor Relations. Please go ahead.
Thank you. Good morning, everyone. And welcome to our fourth quarter earnings conference call. I'm joined this morning by Imperial's senior management team, including Brad Corson, Chairman, President and CEO; Dan Lyons, Senior Vice President, Finance and Administration; Sherri Evers, Senior Vice President of Sustainability, Commercial Development and Product Solutions; and Cheryl Gomez-Smith, Senior Vice President of the Upstream. Today's comments include reference to non-GAAP financial measures. The definitions and reconciliations of these measures can be found in Attachment 6 of our most recent press release and are available on our website with a link to today's conference call. Today's comments may also contain forward-looking information. Any forward-looking information is not a guarantee of future performance and actual future performance and operating results can vary materially depending on a number of factors and assumptions.
Forward-looking information and the risk factors and assumptions are described further in detail on our fourth quarter earnings release that we issued earlier today. All these documents are available on SEDAR+, EDGAR, and our website. So I'd ask you to refer to those. Brad is going to start with some opening remarks and then hand it over to Dan, who's going to provide a financial update, and then Brad will provide an operations update. Once that is done, we will follow with the Q&A session. So with that, I will turn it over to Brad for his opening remarks.
Thank you, Peter, and good morning, everybody, and welcome to our fourth quarter and full year earnings call. I hope everyone is doing well and your new year's off to a good start, and apologies for my scratchy voice as I recover from a cold. But I'm really pleased to report another strong quarter for Imperial as we wrapped up 2024. We saw excellent operational performance across all our assets, both upstream and downstream, which largely offsets the impact of lower commodity prices on a sequential quarter-over-quarter basis. And despite the lower prices, our ability to continue to grow production and deliver strong downstream reliability resulted in a very solid end to 2024. Our Upstream continues to set records, and we achieved the highest fourth quarter production in the past 30 years when adjusting for the XTO divestment. We also realized the benefits of TMX pipeline and additional egress, which resulted in much narrower and more stable differentials compared to a year ago.
Our Downstream business also performed very well over the quarter and contributed solid earnings with lower turnaround activity and higher utilization. We continue to benefit from the structural advantages of the Canadian market that supports stronger financial performance despite softer refinery crack spreads. Over the next few minutes, Dan and I will detail the results of a very strong quarter. So now let's review fourth quarter results. Earnings for the quarter were $1.225 billion, with cash from operating activities of $1.650 billion when excluding the impact of working capital. For the full year, earnings were $4.790 billion, down slightly from the prior year. It is also worth noting that we delivered our second highest earnings per share of $9.03. These results reflect continued strong operational performance and our ability to capture value for our shareholders. In the Upstream, we achieved total production of 460,000 gross oil-equivalent barrels per day in the fourth quarter.
This marks the highest fourth quarter production over the past 30 years when adjusting for the historical volumes associated with the divested XTO assets, resulting in the highest fourth quarter Upstream earnings in the company's history. The strong results also contributed to the highest annual Upstream production in over 30 years at 433,000 barrels per day even when including the divested XTO assets. Our strong operating performance led to a unit cash cost reduction of nearly $3 a barrel when comparing to full year 2023. Looking ahead, we expect to continue to lower our unit cash costs based on advancing further growth and structural cost reduction initiatives. Kearl continued the year with yet another strong quarter, resulting in us achieving the asset's highest ever annual production, exceeding 280,000 barrels per day this year on a gross basis. I'm very proud of the team for achieving this production milestone.
I know they are squarely focused on carrying this momentum into 2025 and achieving even higher volumes. I'm also extremely pleased by the performance at Cold Lake. We delivered very strong performance in the fourth quarter with the planned turnaround activity behind us and all the new Grand Rapids wells producing. Our transformation of production and unit cash costs at Cold Lake is off to a great start as we leverage solid recovery technology with impressive results. In the Downstream, all our assets performed very well, with the only planned turnaround activity in the quarter being the completion of maintenance work at Nanticoke that we discussed on our last call. Refinery throughput averaged 411,000 barrels per day, which equates to a refinery utilization in the quarter of 95%, and a full year utilization of 92%, which is at the top end of our 2024 guidance. The fourth quarter also saw us continue to maximize shareholder returns.
We completed the accelerated NCIB in mid-December with purchases of $1.475 billion during the quarter. In addition, we paid $317 million in dividends in the quarter for a total of $1.2 billion in dividends for the entire year. In total, we returned $3.9 billion of cash to shareholders in 2024 and $16 billion over the past three years. Finally, this morning, we declared a dividend of $0.72 per share, payable on April 1st, 2025. The $0.12 per share or 20% increase is the largest nominal dividend increase in company history. This is further demonstration of our commitment to growing the dividend and returning surplus cash to shareholders, reflecting our confidence in delivering on the guidance we communicated in December. As we move into 2025, we remain focused on our core strategy of optimizing our existing asset base to maximize shareholder value, a strategy that has allowed us to increase our quarterly dividend per share by over 225% since 2020. With that, I'll pass things over to Dan to discuss our financial results in more detail.
Thanks, Brad. Starting with financial results for the fourth quarter, we reported net income of $1.225 billion. This represents a decrease of $140 million from the fourth quarter of 2023, primarily as a result of lower margins in our Downstream business, partially offset by higher Upstream production. When comparing sequentially, fourth quarter net income is down slightly from the third quarter of 2024, primarily driven by lower prices, partially offset by stronger operational performance. Now shifting our attention to each business line and looking sequentially, Upstream earnings of $878 million are down $149 million from the third quarter, primarily due to lower realizations, partially offset by higher volumes. Downstream earnings of $356 million are up $151 million from the third quarter, mainly reflecting lower turnaround impacts and favorable foreign exchange and inventory effects. Our Chemical business generated earnings of $21 million, down $7 million from the third quarter.
Moving on to cash flow. In the fourth quarter, we generated $1.790 billion in cash flows from operating activities. Excluding favorable working capital effects of $139 million, cash flows from operating activities for the fourth quarter were $1.650 billion, down $147 million from the third quarter of 2024. We ended the year with nearly $1 billion of cash on hand. Shifting to capital expenditures, total capital expenditures in the fourth quarter totaled $423 million, down $46 million from the fourth quarter of 2023. In the Upstream, fourth quarter spending focused on sustaining and growing production at Kearl, Syncrude, and Cold Lake. And the Downstream fourth quarter spending mainly continued to progress our renewable diesel project at Strathcona. Full year 2024 capital expenditures totaled $1.867 billion. Shifting to shareholder distributions. Consistent with our strategy to timely distribute free cash flow, we returned $3.9 billion to shareholders over the course of 2024.
Moving into 2025, we continue to demonstrate our long-standing philosophy to deliver a reliable and growing dividend. As Brad already noted, we declared a fourth quarter dividend of $0.72 per share early this morning, which will be payable on April 1. This represents an increase of 20% compared to the fourth quarter dividend of 2024. Now I'll turn it back to Brad to discuss our operational performance.
Thanks, Dan. I know you've all had a chance to look through the numbers, but I do want to focus your attention on some of our key performance highlights. Upstream production for the quarter averaged 460,000 oil equivalent barrels per day. As I mentioned earlier, this represents the highest fourth quarter production in over 30 years when adjusting for the XTO divestment. Production was up 13,000 barrels per day versus the third quarter and up 8,000 barrels per day versus the fourth quarter of 2023, mainly due to higher volumes at Cold Lake. Our Upstream also delivered the best full year production in over 30 years with 433,000 oil equivalent barrels per day, a 5% increase in total or a 14% per share increase versus full year 2023. Now let's move on and talk specifically about Kearl's record year. Kearl's production in the fourth quarter averaged 299,000 barrels per day gross, which is up 4,000 barrels per day versus the third quarter and 9,000 barrels per day lower versus the fourth quarter record previously set in 2023.
As targeted, Kearl achieved over 280,000 barrels per day in 2024 and set the full year production record of 281,000 barrels per day. It's also worth noting in the last five years, we have grown Pearl production by 75,000 barrels per day, which is over 35%. This marks a significant milestone in Kearl's journey to deliver record production through efficient growth initiatives and achieved unit cash costs below our previously stated target of US$20 per barrel. We've made major strides in lowering unit cash costs at Kearl over the past few years. The full year unit cash costs of US$19.67 per barrel reflects the hard work of the entire Kearl team, not only to meet our previously set target of US$20 per barrel, but to beat it. Talking with Cheryl and the team, they continue to find new opportunities and leverage the current momentum to drive down unit cash costs even further. This is very exciting, and I look forward to sharing at our upcoming Investor Day some of these opportunities and how they will help to support our new target of US$18 per barrel.
As we begin 2025, Kearl is off to a very strong start and is on track to set another record, with January production over 280,000 barrels per day. Turning to another highlight of 2024, Cold Lake. For the fourth quarter, Cold Lake production averaged 157,000 barrels per day, which is up 10,000 barrels per day versus the third quarter, and up 18,000 barrels per day versus the fourth quarter of 2023. The impressive quarterly results were driven by better-than-expected production from the new Grand Rapids project, which brought on lower cost barrels and started the transformation at Cold Lake, further reducing our unit cash costs towards our stated US$13 target. The strong production resulted in unit cash costs of US$14.21 per barrel in the quarter, which is a decrease of over US$1.50 per barrel compared to the same quarter last year. On a full year basis, our unit cash cost of US$14.75 per barrel is more than $2 per barrel lower than last year.
A major highlight this year has been our new solvent-assisted SAGD production from Grand Rapids, which continued to impress in the fourth quarter. Last quarter, I highlighted Grand Rapids achieving an average of 15,000 barrels per day, and on an instantaneous basis, peaked rates of 22,000 barrels per day. While I'm pleased to confirm that these volumes were maintained, resulting in an increase of 7,000 barrels per day, up to 22,000 barrels per day for the fourth quarter. While early, our data shows clear upside on the original project funding basis of 15,000 barrels per day. I continue to look forward to the first full year of Grand Rapids production in our operations in 2025 and the advancement of future solvent-assisted SAGD growth projects at Cold Lake. The next step in our transformation of the Cold Lake asset is the Leming redevelopment project. Construction continued on the facilities through the quarter, which will leverage existing infrastructure and steam capacity.
Start-up is expected to begin in late 2025 and average about 9,000 barrels per day at peak production. A few comments on Syncrude; Imperial's share of Syncrude production for the quarter averaged 81,000 barrels per day, which was flat versus the third quarter and down 4,000 barrels per day versus the fourth quarter of 2023. During the quarter, Syncrude continued to utilize the interconnect pipeline to import bitumen and gas oil, driving record annual upgrader utilization rates and producing about 9,000 barrels per day, our share of incremental Syncrude sweet premium in the quarter. As we move into 2025, we look forward to continued focus on reliability and costs at Syncrude. Now moving on to the Downstream, which also had strong operations in the fourth quarter. Overall, we refined an average of 411,000 barrels per day, reflecting a utilization of 95%, our highest quarter this year. Compared to the third quarter, when we had turnarounds at Nanticoke and Strathcona, we processed an additional 22,000 barrels per day.
The strong fourth quarter and the successful execution of turnarounds throughout the year enabled us to achieve the top end of our 2024 full year guidance with throughput of 399,000 barrels per day and a utilization rate of 92%. Looking ahead to 2025, we have a lighter turnaround year compared to 2024 and are on track to have the construction on the Strathcona renewable diesel project facilities completed in the second quarter, with expected first production in the middle of 2025. Petroleum product sales in the quarter were 458,000 barrels per day, which is down 29,000 barrels per day versus the third quarter and down 18,000 barrels per day versus the fourth quarter of 2023. Results year-over-year reflect the variability in discretionary sales choices and were not driven by market demand. Overall, we continue to see resilient demand in Canada, with gasoline and diesel at approximately 90% of pre-pandemic levels and jet fuel recovering over 100% when compared to 2019.
Turning now to Chemicals. Earnings in the fourth quarter were $21 million, down $7 million versus the third quarter, mainly driven by lower prices, partly offset by the absence of the aromatics earnings shift in the third quarter, which we previously discussed. Earnings in the quarter were up $4 million versus the fourth quarter of 2023 due to the absence of prior year turnaround activity, partially offset by lower prices and the aromatics earnings shift. In closing, this was another excellent quarter to finish off a very strong year. We achieved record volumes in our Upstream, significantly reduced our Upstream unit costs, and delivered high Downstream utilization. As we begin 2025, I'm confident in the team at Imperial and our ability to deliver another very strong year, as we continue to create significant value for shareholders by progressing on our journey to achieve the new volume and unit cash cost targets we outlined in our recent guidance.
Similarly, as we look ahead in 2025, our commitment to shareholder returns is unchanged. We have demonstrated that ongoing commitment with the accelerated completion of our NCIB in December and the announcement today of our largest nominal dividend increase ever. I'm very pleased by the operating momentum that we have carried into this New Year, and I'm excited about the opportunities we have ahead of us to increase volumes, lower costs, and deliver greater free cash flow for our shareholders. Before I wrap up, I would like to recognize Sherri Evers for her many contributions and accomplishments as part of our management committee over the last four years. Her leadership of a diverse portfolio resulted in significant progress across many key areas of the business, including her instrumental role in Pathways since day one. We wish her all the best in her new role with ExxonMobil. As always, I'd like to thank you once again for your continued interest and support. Now we'll move to the Q&A session, and I'll pass it back to Peter. Thank you.
Thank you, Brad. As always, we'd appreciate if you can limit yourself to one question, plus a follow-up, so that we can get to as many questions as possible. So with that, operator, could you please open up the lines for questions?
分析師問答
Thank you. Our first question will come from Manav Gupta with UBS.
I wanted to start by congratulating the management on another 20% dividend hike. Brad, if my memory is right, when you took over, the quarterly dividend was close to $0.22, and now you have raised it to $0.72 during your tenure. So it does take a very strong track record of execution to achieve that. So I just wanted to congratulate you on that. My first question is on refining. Your earnings are up materially quarter-over-quarter. When we look across the US refiners, the earnings are down 50% to 70% quarter-over-quarter. Help us understand what's driving the resilience of refining here? I understand you operated at a higher rate, but still, this is in stark contrast to what we are seeing for US refiners. So if you can help us understand the resilience of refining here?
Yeah. Thank you, Manav. First, I really appreciate your recognition of the dividend increase over the last few years. That is something our organization is quite proud of as we have continued to grow our cash flow generation abilities and obviously return that to our shareholders. So we're all quite proud of that, and thanks for that recognition. In terms of the refining strength, I'd say there are a couple of drivers. First of all, as I've commented on in the past, the Canadian refining sector, especially our Imperial refineries, is well advantaged versus US counterparts. We have access to advantaged crudes. We continue to have strong demand in the marketplace. We have exceptional infrastructure that allows us to move our products to premium outlets. As you also mentioned, we had really superb utilization over the quarter, which allowed us to take full advantage of the market fundamentals that we see. So, when we put all that together, a very resilient and profitable Downstream for us, and we're quite happy with that.
Perfect. My second is on Grand Rapids. It's clearly helping you drive production records at Cold Lake. Can you talk more about why the results of Phase 1 actually exceeded your expectations? Any future phases, as well as Leming, which can allow you to continue to grow the volumes at Cold Lake? Thank you.
Yeah. Thanks for that question. We are extremely pleased with what we're seeing at Grand Rapids, certainly higher volumes than the funding basis that we previously shared with the market with an objective of 15,000 barrels a day. As indicated, we're seeing more in the range of 22,000 barrels a day. It's early days. We started up Grand Rapids in terms of producing volumes back in May. So we have seven months or so of production run time, I would say. Our reservoir engineers are very busy analyzing those results and understanding what the implications are for future phase developments at Grand Rapids. As we've mentioned in the past, we have several phases in the future, and so that's very exciting. As time goes on, we'll be able to better describe not just the long-term productivity of Grand Rapids Phase 1, but what it means for broader developments at Cold Lake. It's too early to tell about Leming. We're in the process of constructing it. Again, it's super exciting and reaffirming when we could start up a production project like Grand Rapids, which as you'll recall, we accelerated by about a year. So, we accelerated it and now we're seeing more production, and all that adds a lot of value. An exciting signal of what's ahead for the future.
And the next question will come from Dennis Fong with CIBC.
Hi, good morning and thanks for taking my questions. I guess the first one here is, I guess, congratulations on another strong quarter at Kearl. I was actually hoping you could kind of dive in a little bit more into initiatives that you're currently undergoing that are helping maintain these high levels of performance? Namely, focusing on the autonomous fleet as well as the technological advancements that you're applying to production?
Yes, it's a great question, Dennis. I'm super proud of what the team has achieved at Kearl. It has been a steady result of record after record. From the guidance we set out in December, we anticipate further production records and further reductions in unit costs, resulting in continued growth in cash generation. Cheryl is sitting right next to me here, and she's got her hand on the wheel for Kearl. I'm going to let her make a couple of comments about some of those growth initiatives.
Great. Thank you, Brad. As Brad mentioned, we're continuing to transform our mining business. It's important to start with the exceptional progress that we made in 2024 and how we're rapidly improving competitiveness. I’ll highlight a few things. We're going to continue on our journey with reliability and maintenance improvements. The second part is around mine fleet productivity gains, which gets to your question specifically about our AHA trucks. I'm pleased to report that we've seen anywhere from an 8% to 10% increase in productivity resulting from the automated trucks. We're continuing with debottlenecking and optimization, including digital initiatives, and we’ve got a full slate of digital that we're leveraging across the board, both within the plant and the mine. Finally, we’re really building a continuous improvement culture, looking for those next opportunities across all that slate. Plenty of opportunities as we look forward, but I think the most important is building on that foundation of 2024.
Thanks for that, Cheryl. I’d like to mention that this continuous improvement mindset is strongly evident in our turnaround duration. You might recall how just a few years ago, we were doing two turnarounds a year, each taking about 35 days, about 70 days total. We decided to reduce from two turnarounds a year to one turnaround a year, extending the intervals from 12 months to 24 months. We went from 70 days of turnaround time to about 35 days. Last year, the team completed a single turnaround in less than 20 days. So we’ve gone from 70 days a year to 20 days, and we're taking steps in this year's turnaround to potentially extend the interval even further and reduce that annual turnaround impact even more. This is a great example of how the team continuously captures benefits and looks for what's next.
Appreciate that underlying context in the holistic approach you're taking to development. My second question concerns your project's growth and development within your existing portfolio. Can you remind me of the priorities the company has or focuses on when allocating capital, whether it be growth, M&A, A&D, or shareholder return? And specifically for you, Brad, given your historical experience evaluating assets both within and outside of the company, how you rank and evaluate both your existing portfolio and can improve it?
Thanks for that question. I'll offer a few comments, and Dan may want to jump in as well. Fundamentally, our capital allocation strategy is built on a long-standing commitment that we will return surplus cash to our shareholders. This starts with a reliable and growing dividend. As you saw today, we've actioned that with another very material dividend increase. We then look for other efficient ways to return surplus cash to shareholders, such as our NCIB and past SIBs, and maintain that as a possibility for the future. This is the basis of our capital allocation. I should also mention debt; we are comfortable at our current debt levels, so we don't see a priority to pay down debt. Regarding M&A opportunities, we evaluate both existing and potential assets. We are fortunate to have a deep inventory of high-quality investment opportunities in our portfolio. We're actively progressing our Aspen project, which we believe will unlock significant value relative to other solvent technologies. When we evaluate potential acquisitions, they must compete with our existing projects. We have not identified anything that we believe is more value-accretive than our internal projects, at least so far. That’s how I would characterize our approach. Dan, do you have anything to add on capital allocation?
No, I think you covered it well, Brad. To summarize, the reliable growing dividend is the first place we focus our free cash flow. Then we look at sustaining capital and at high-return growth projects, which would also include M&A, but it's a high bar given our return expectations for our internal portfolio. After that, we timely return surplus cash to shareholders, so no changes to that. It's been our consistent philosophy for quite a while.
And the next question will come from Greg Pardy with RBC.
Thanks. Good morning. Thanks for the rundown, Brad. I wanted to ask you really on two fronts. One is technical, a little more around Cold Lake. But probably the bigger one is how are you thinking about the tariff threat that you’ve got going on? I’m sure you’ve had time to analyze that and then there's a relationship with Exxon. How well-equipped are you to withstand something like that? The second part is related to shareholder returns. Is it driven by cash balances? In other words, if we did see tariffs and cash balances still ticked up to levels where you could repurchase stock, how would you think about that? I know it's hypothetical, but it’s a huge issue overhanging Canada right now.
Thanks for that, Greg. Yes, there's certainly a lot of interest and discussion over tariffs across all sectors, especially in energy. The U.S. and Canada are strong energy partners benefiting from each other, with the U.S. heavily dependent on Canada's heavy crude. We don't know what will happen with tariffs, and I can't provide unique insight; however, I, along with others, have been educating both sides about our mutual energy systems. I'm hopeful that diplomacy will prevail, and we will end up with no tariffs and restrictions on energy flow, as that would be win-win for both countries. What we can control is ensuring we have the lowest supply costs and options for placing our crude and products in the market. This integrated strength gives us unique resilience. As heavy crudes might be negatively impacted by tariffs, we would expect some offsets in light crudes. February 1 appears to be a big day concerning tariffs, and we will be watching that closely. I'm confident that we will continue to be profitable, generate material cash flow, and return that to shareholders. This underpins our decision to raise the dividend today. Dan, any comments on shareholder returns or related topics?
Greg, you asked if returns to shareholders and buybacks would be primarily driven by cash balances or other factors like tariffs. It will primarily be driven by cash balances. Given our low breakevens and our ability to generate cash through various environments, we don't need to have much cash to protect us at this point. However, we will consider the environment as we make those decisions. But remember, our philosophy has been to return surplus cash to shareholders in a timely manner.
I want to come back to your thoughts around acquisitions versus organic growth. Every company seems to have significant growth initiatives right now. So, when you weigh acquisitions where there may already be solutions in place versus your organic growth initiatives, which may face some limitations, is that factored into your thinking when you go through long-term models?
Yes, certainly. We consider all aspects, including the cost competitiveness of an opportunity, long-term growth potential, egress considerations, unique tax benefits, and carbon intensity. We evaluate those factors closely. Regarding Aspen, it wins based on all those criteria when we compare it to other potential acquisitions. So, we don't need to pursue an acquisition unless it adds unique value.
And we have a question from Menno Hulshof with TD Securities.
Thanks and good morning, everyone. I'll start on TMX. Can we get an update on the status of toll negotiations? Last I heard, some of your peers mentioned that it could be a mid-year event. But with all the uncertainties, including tariffs, is it fair to assume that mid-year is too optimistic at this stage? Thank you.
Yes, Menno, thanks for that question. I don't have a very specific update on that. Our teams are directly engaged in the negotiations, but I don't have an exact outlook on timing. More broadly, we've been pleased with the start-up and operation of TMX; we are shipping regularly on it, which is positive.
Got it. Thanks Brad for that. My second question would be on Strathcona. Already in the press release, you reiterated that you're still tracking to a mid-year start-up. But can you provide a bit more detail on what still needs to happen to get that project across the line? Additionally, when do you expect to see cash flow positivity from the project? Is it possible in the second half of 2025 or more likely a 2026 event?
Thanks for the question. We're excited about this project, viewing it as quite strategic for us to expand our market offerings. At the core of the project is the manufacturing facility at Strathcona refinery, wherein construction is well-advanced. We expect to complete that construction in the second quarter, positioning us to start production around mid-year. Critical to this are the vegetable oil supply arrangements, which we have that ensure we can start this unit up. Additionally, we're working with Air Products on hydrogen supplies; we're on track to receive initial hydrogen supplies by mid-year. We anticipate starting up at reduced rates and will gradually optimize production over time based on market conditions. We see this as a positive, profitable undertaking, and we expect positive cash flow in the latter half of this year.
And moving on to Neil Mehta with Goldman Sachs.
Thanks so much, Brad and team. I wanted to spend some time on Upstream cash costs, where I know you are targeting $18 at Kearl and $13 at Cold Lake. Where are you in that journey? What's the next step? What did this quarter tell you about your ability to ultimately get there?
Yes, thanks for the question. We're well on the journey, obviously below $20 at Kearl now, and in the $14 range at Cold Lake, showing we're on the right track. I'll ask Cheryl to comment further on some of the near-term initiatives we have underway.
Sure. Thanks, Brad. For Kearl, achieving our $18 goal involves leveraging the scale we have while focusing on reliability and optimization. As we have incremental production, we'll leverage our fixed cost structure, which is a powerful lever in reducing unit costs. The focus on maintenance optimization, deployment of digital solutions, and building a continuous improvement culture give us opportunities for improvement. For Cold Lake, as we grow our production mix towards higher volumes, leveraging fixed costs, and introducing lower-cost barrels will continue helping our journey. We're excited about the progress we're making at both Kearl and Cold Lake.
That's a follow-up. It's just Kearl; you mentioned $280, $290 this year with a goal of exceeding $300. How high could that potentially go, considering the budget you laid out?
Yes. It’s too early to tell how high 'plus' could be. We've shared guidance because we see potential for future volumes above $300. How much above that will depend on our ability to unlock cost-efficient barrels. We've been on this journey for years, and while we now set and beat records, we're focused on stringing those excellent production days together, offsetting planned downtime, like turnarounds. We see potential for something above $300 but will only pursue it if it’s capital efficient.
And the next question will come from Doug Leggate with Wolfe Research.
Hi, good morning everybody. Thanks for taking my questions. Hi, Brad, Happy New Year. I’ve got two breakeven questions, if I may. The first one is about where you see your breakeven today with the capital you have on growth. Whether it’s today or projected growth, how does your breakeven evolve? That headroom for dividend growth remains a potent advantage for you relative to your peers. My follow-up is also a breakeven question related to the balance sheet. You guys have one of the best balance sheets in the industry. When you think about SIB, we tend to think about cash balances. I wonder if you could give us an idea of where you would be comfortable with your balance sheet over time? Also, where would you be comfortable with the dividend breakeven moving forward?
Thanks, Doug. Happy New Year! I will let Dan take those questions, but I wish to emphasize that our work to grow volume and reduce unit costs continues to improve our breakeven. As we discussed, our breakeven including dividends is about $35 per barrel, but Dan will walk you through those nuances.
Yes, we indicated that our cash breakeven is less than $25 for WTI, and our breakeven with dividends and sustaining capital is less than $35. These are great numbers! We continue to work on bringing those down through volume growth and reductions in cash costs. These improvements provide the headroom for dividend increases. We like the low breakeven levels, but we're not tied to them. A higher breakeven resulting from dividend growth is acceptable provided costs do not increase significantly.
And the next question will come from Patrick O'Rourke with ATB Capital Markets.
Good morning, guys. Congratulations on the dividend increase and the comprehensive rundown so far. I just have a couple of quick questions. Firstly, regarding the final steps for getting the renewable diesel facility operational. There's been noise in the renewable and LCFS market; I think there’s an antidumping lawsuit that's been launched. Could you walk us through some of the puts and takes around that market? Also, how are you viewing the market and the current risks?
Thanks for the question, Patrick. There are certainly other renewable diesel projects on both sides of the border that are struggling. However, our project is unique and shouldn't be characterized similarly. We benefit from economies of scale since we are building it within our existing Strathcona facility, giving us advantageous utility and logistical costs. Additionally, we process readily available agricultural oils, making transportation efficient. We're leveraging a proprietary catalyst from ExxonMobil, allowing us to produce a premium product over a wide range of conditions. We already have a base demand for renewable fuels to blend, enhancing our economics. Although there are questions about the carbon market's future, we plan to sell renewable fuels into multiple provincial markets with their own carbon requirements. All of these aspects create a differentiated offering relative to competitors. I hope this clarifies our position.
Yes, that’s terrific and very comprehensive. Regarding the Pathways project, can you provide an update on critical long lead-time items that need to be ordered imminently?
Yes, that’s a great question. The six companies in the Pathways Alliance view decarbonizing our industry as crucial, regardless of political parties. Canada has substantial resources and needs to be cost and carbon competitive. Our discussions with federal and provincial governments continue to establish the necessary fiscal and regulatory support to progress investment. We still have work ahead regarding commitments to our pipeline, crucial for our 2030 startup objective. As time passes, meeting that timeline becomes increasingly challenging. We’re continuing with engineering, permitting, environmental studies, and collaboration with Indigenous groups to advance this important project.
Thank you, and that does conclude the question-and-answer session. I'll now hand it back over to Peter Shaw for any additional or closing remarks.
Thank you, everybody. On behalf of the management team, we want to thank you for joining our call today. If you have further questions, please reach out to anyone on the IR team. With that, thank you very much, and have a great day and weekend.
Thank you. And that does conclude today's conference. We do thank you for your participation, and have an excellent day.