Strategic Performance and Market Dynamics

• Management attributed strong performance to unprecedented commodity volatility, noting that March saw price moves in major benchmarks exceeding the 95th percentile.

• The company is leveraging its U.S.-centric asset footprint and pipeline connectivity to provide a reliable alternative to global supply chains disrupted by Middle East geopolitical events.

• Refining market capture reached 138%, driven by commercial optimization including the use of Jones Act waivers to displace international crudes with domestic grades.

• Strategic positioning in Chemicals benefited from a shifted cost curve where high oil prices and stable U.S. ethane feedstocks disadvantaged global naphtha-based producers.

• Operational excellence initiatives are targeting structural cost reductions, with over 200 active projects aimed at reaching a $5.50 per barrel refining operating cost by 2027.

• The commercial organization has tripled its time-chartered vessel fleet over two years, successfully insulating the refining system from historic spikes in global freight rates.

Outlook and Strategic Initiatives

• Management expects refining margins to remain constructive through the remainder of 2026 and into early 2027 due to tight global product inventories and 'demand constriction'.

• The Western Gateway Pipeline project is expected to reach a Final Investment Decision (FID) in mid-to-late summer 2026, targeting a 2029 in-service date for the West Coast market.

• Guidance for Q2 2026 assumes worldwide crude utilization in the low-to-mid 90s, though management noted backwardation and inventory impacts could present headwinds to capture rates.

• The company remains committed to a $17 billion total debt target by year-end 2027, planning to use stabilizing markets to draw down excess cash balances currently held for liquidity.

• CPChem's major growth projects, Golden Triangle Polymers and the Ras Laffan Petrochemical Project, are on track for full startup in 2027.

Financial Adjustments and Risk Factors

• Reported an $839 million mark-to-market loss on derivative positions used as economic hedges; management expects to recover approximately $500 million of this by year-end based on the forward curve.

• Working capital saw a $3 billion use in Q1, primarily reflecting inventory builds and $3.2 billion in cash collateral requirements for margin calls during peak volatility.

• Corporate costs included one-time expenses associated with the decommissioning and redevelopment of the idled Los Angeles refinery site.

• Debt levels were temporarily increased via a term loan and short-term facilities to manage liquidity requirements during the period of extreme price swings.