Quarterly / Earnings Reports | Second Quarter (2Q) Update | Drilling Activity

CNRL Talks Q2 Results; Production Up +15% YOY to 1.05 MMBOEPD

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Canadian Natural Resources reported its Q2 2018 results.

Highlights:

• North America natural gas production was as expected at 1,485 MMcf/d in Q2/18, representing decreases of 4% and 7% from Q1/18 and Q2/17 levels respectively.

• Operating costs of $1.28/Mcf were realized in Q2/18, a decrease of 2% from Q1/18 levels, strong results given lower natural gas volumes due to the Company’s proactive decision to shut-in volumes and delay activity on certain natural gas assets.

• In Q2/18 the Company has made the following proactive and strategic actions to maximize value in the Company’s natural gas assets, including:

• Completion of major turnaround activities at natural gas processing facilities to correspond with challenged natural gas prices.
• Deferred capital and development activity including recompletions and workovers of certain natural gas assets, resulting in a production impact of approximately 20 MMcf/d in Q2/18. The Company will look to execute these deferrals in Q3/18 or Q4/18 with improved natural gas prices.
• Q2/18 production volumes of approximately 27 MMcf/d were shut-in, due to low natural gas prices.
• Q2/18 production was impacted by 12 MMcf/d related to solution gas associated with the curtailment of primary heavy crude oil production.

• Additionally, the Company’s natural gas production was reduced by approximately 65 MMcf/d in Q2/18 due to restrictions at the Pine River plant, operated by a third party. In Q2/18 Canadian Natural, subject to regulatory approval, agreed to acquire the facility from the third party, which needs to complete a meter upgrade that will take approximately four weeks, at which time the Company targets to complete maintenance work on the facility and will assess increasing plant throughput and reliability to match field capacity of approximately 145 MMcf/d.

• As a result of the items listed above and proactive actions going forward, the Company’s 2018 corporate natural gas annual production guidance has been revised and is targeted to range from 1,550 MMcf/d – 1,600 MMcf/d.

• The Company uses natural gas in its operations representing approximately 35% of its total equivalent gas production providing a natural hedge from the challenging Western Canadian natural gas price environment. Approximately 32% of the natural gas production is exported to other North American markets or sold internationally, with the remaining 33% of the Company’s production being exposed to AECO/Station 2 pricing.