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JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL)

Canadian Natural Resources Limited (CNRL) · Jun 27, 2016 · 43 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 1
  2. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 2
    CNQ ? Proven, effective strategy ? Flexible capital allocation ? Nimble to capture opportunities ? Balanced cash flow allocation ? Cultural advantage ? Strong operations ? Effective, efficient and reliable ? Safe and…
  3. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 3
    CNQ ? Flexible capital allocation to maximize value ? Strong Balance Sheet to support investment grade credit ? Defined growth/value enhancement plans by product/basin ? Diverse, balanced asset base ?Product mix ?Project timelines…
  4. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 4
    CNQ FLEXIBLE CAPITAL ALLOCATION MAXIMIZIES SHAREHOLDER VALUE 4 Balance and Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Sheet Strength Returns to Shareholders Economic Resource…
  5. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 5
    CNQ ? Significant portion of portfolio long-life, low decline ?Provides robust, sustainable cash flow ?Low reserve replacement risk ? Facilitates capital flexibility to maximize returns ? Deep inventory of mid-term projects ?Pelican…
  6. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 6
    CNQ BUILDING A WORLD CLASS COMPANY 6 Balanced, Diverse Portfolio ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable cash flow Heavy Crude Oil ~35% Light…
  7. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 7
    CNQ 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 CNQ IMO SU CVE OXY DVN EOG APC APA CHK NBL ECA HSE SIGNIFICANT VALUE TO UNLOCK 1P Reserves After Royalties Note: Based on SEC reserve reporting, sourced from…
  8. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 8
    CNQ $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 CNQ CVE IMO ECA HSE CHK EOG NBL SU OXY APA DVN APC Industry Leading 1P FD&A Costs INDUSTRY LEADING RESERVE METRICS CNQ ($/BOE) 8 1 Year 1P FD&A 3 Year 1P FD&A Peers…
  9. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 9
    CNQ ? Low reserve replacement costs ? Significant, sustainable cash flow ? More tolerant to commodity price volatility ?Low production decline ?Low costs to maintain production ? Minimal to no reservoir risk ? Greater opportunity…
  10. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 10
    CNQ Production levels maintained 10% 12% 14% 16% 18% 20% 22% 24% 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F Conventional Assets Conventional, Pelican & Thermal Conventional, Pelican, Thermal & Horizon…
  11. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 11
    CNQ ? Long-life, low decline asset base transition near completion ?Horizon Phase 2B start-up in 4 months 45,000 bbl/d ?Horizon Phase 3 start-up in Q4/17 80,000 bbl/d ? Horizon targeted expansion capital drops significantly ?2016F…
  12. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 12
    CNQ 750 800 850 900 950 1,000 1,050 1,100 Capital ($ Billion) 2016F 2017F 2018F 2019F US$60.00 WTI $3.9 $4.5 $4.5 $4.5 Low Case $3.7 $2.7 $2.4 $2.4 VALUE DRIVEN 12 Canadian Natural 4 Year Production Growth Targets (MBOE/d)…
  13. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 13
    CNQ SIGNIFICANT CASH FLOW GENERATION 13 Canadian Natural 4 Year Free Cash Flow Targets ($ Billion) Capital ($ Billion) 2016F 2017F 2018F 2019F US$60.00 WTI $3.9 $4.5 $4.5 $4.5 US$60.00 WTI Note: Free cash flow represents cash flow…
  14. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 14
    CNQ ? Committed to lowering cost structure ?Execution/productivity step changes ?Leverage technology ?Regulatory effectiveness/efficiency ?Lower costs through the supply chain ? Disciplined approach lowered unit operating costs…
  15. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 15
  16. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 16
    CNQ Targeted Production 2015 2016F % Change(1) Natural Gas (MMcf/d) 1,726 1,725 - 1,785 2% Crude Oil and NGLs (Mbbl/d) North America 270 235 - 245 (11%) North America ? Thermal In Situ 130 110 - 130 (8%) North America ? Oil Sands…
  17. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 17
    CNQ ? Low commodity price provides further opportunities to enhance ?Right scoping and optimization ?Innovation; leverage technology ?Execution/productivity enhancements ?Gain regulatory effectiveness/efficiency ?Lower costs through…
  18. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 18
    CNQ 0 0.1 0.2 2010 2011 2012 2013 2014 2015 ? Safety is a core value ? Committed to continuous improvement ? No harm to people, no safety incidents ? Top tier recordable injury frequency in North America conventional…
  19. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 19
    CNQ ? Proactive environmentally responsible operations ? Drive continuous improvement to reduce environmental impacts ? Meet or exceed all regulatory requirements ? Reducing Greenhouse Gas Emissions Intensity ? Restoring sites to…
  20. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 20
    CNQ ? Largest crude oil and natural gas R&D investor in Canada in 2014 ? 7th largest R&D investor for all industries in Canada in 2014 ? 2015 $527 million ? 2014 $450 million ? 2013 $390 million TECHNOLOGY CREATES VALUE 20…
  21. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 21
    CNQ ? Control of our destiny ?Control costs, development timing and pace ? eliminates commitments ?Operations flexibility with high working interest ? Minimal capital exposure and return on capital maximized ? Drill-to-fill strategy…
  22. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 22
    CNQ Canadian Natural Operating Costs 2016 Area (C$/bbl) 2014 2015 2016F % Change(1) North America Light Oil & NGLs $17.24 $14.88 $13.50 - 14.50 (19%) Pelican Lake 8.52 7.24 5.75 - 6.75 (27%) Primary Heavy 17.61 15.01 13.75 - 14.75…
  23. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 23
    CNQ TOP TIER ASSET BASE 23 Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada ? Q1/16 natural gas production of 1,722 MMcf/d ? Q1/16 average NGL yield ~24 bbl/MMcf ? 21% condensate, 16% C5+ ? Large…
  24. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 24
    CNQ $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Source: Company reports. Note: Peers include ARX, BNP, ECA, HSE, PGF, PWT. *Deep Basin/Septimus…
  25. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 25
    CNQ ? Q1/16 light crude oil and NGL production ? ~90 Mbbl/d ? 2P reserves ? Light crude oil 192 million barrels* ? High quality light crude oil horizontal multi-frac opportunities ? Montney ? Dunvegan ? Halfway/Doig ?…
  26. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 26
    CNQ OPTIMIZATION OF SIGNIFICANT RESERVE BASE 26 International Light Crude Oil Summary North Sea C?te d?Ivoire Gabon South Africa *Company Gross proved plus probable reserves at December 31, 2015. ? Q1/16 light crude oil…
  27. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 27
    CNQ ? Largest primary heavy oil producer in Canada ? Q1/16 production of ~114 Mbbl/d ? Large inventory of development opportunities ? Potential to execute cost-effective large drilling programs ? Premium land base and extensive…
  28. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 28
    CNQ ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is realized ? Q1/16 production ~48 Mbbl/d ? Industry leading operating costs ? Q1/16 operating costs $6.92/bbl ? Drives higher…
  29. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 29
    CNQ 0 10,000 20,000 30,000 40,000 50,000 60,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THREE PRODUCING REGIMES ? THREE DIFFERENT PROFILES 29 Pelican Lake Production by Recovery Method…
  30. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 30
    CNQ ? Vast resource base with short, mid and long-term value ? Allows flexibility in our capital allocation ? 2P reserves ? 2.41 billion barrels* ? Majority working interest and operatorship ? Effective and efficient thermal…
  31. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 31
    CNQ ? Strong performance ? Productivity at/near facility design capacity of 40,000 bbl/d ? Instantaneous SOR = 2.5 ? Facility repairs completed in Q1/16 ? Strong inventory of new pads to maintain facility capacity ? 2P reserves ?…
  32. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 32
    CNQ ? Higher netbacks ? High quality crude oil ? Produced solution gas offsets fuel requirements ? Expansion potential ? 864 horizontal CSS wells* ? 145 Wolf Lake SAGD wells* ? Steamflooding ? First commercial horizontal well…
  33. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 33
    CNQ ? Inventory of 6 additional defined projects ? Potential of 200,000-260,000 bbl/d facility capacity ? Active commercial projects ? Tangleflags and Senlac ? May production ~3,100 bbl/d ? Seven opportunities identified ?…
  34. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 34
    CNQ ? World Class asset ? 2P SCO reserves ? 3.63 billion barrels* ? Phased development (SCO) ? Current targeted nameplate capacity of 137,000 bbl/d ? Targeted start-up of Phase 2B 4 months ? Targeted start-up of Phase 3 Q4/17 ?…
  35. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 35
    CNQ 80 82 84 86 88 90 92 94 2013 2014 2015 BEST IN CLASS OPERATIONAL PERFORMANCE 35 Horizon Oil Sands ? Operations Industry Leading Utilization Rate Note: Peers include AOSP, Suncor, Syncrude. Source: Peer data per…
  36. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 36
    CNQ $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 50,000 100,000 150,000 200,000 250,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36 Horizon Oil Sands Significant Operating Cost Reductions…
  37. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 37
    CNQ Annual Expansion Capital ($ million) $0 $500 $1,000 $1,500 $2,000 $2,500 50,000 100,000 150,000 200,000 250,000 2013 2014 2015 2016 2017 2018 2019 FUTURE EXPANSION CREATES VALUE 37 Horizon Oil Sands Expansion…
  38. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 38
    CNQ 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 AMPLE TAKEAWAY CAPACITY Crude Oil WCSB Takeaway Capacity (MMbbl/d) Source: CAPP June 2015, Enbridge and Company…
  39. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 39
    CNQ Long-Term Ratings Outlook Short-Term Ratings Standard & Poor?s BBB+ Stable A-2 DBRS BBB High Negative n/a Moody?s Baa3 Negative P-3 ? Strong financial position as of March 31, 2016 ?Debt/book capitalization 38% ?Available bank…
  40. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 40
    CNQ (C$ million) Maturity Revolving bank line 1(1) $2,425 June 2019 Revolving bank line 2(1) $2,425 June 2020 Non-revolving syndicated term facility(1) $1,500 April 2018 Non-revolving term facilities(1) $ 875 February 2019 Operating…
  41. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 41
    CNQ 0 200 400 600 800 1,000 1,200 1,400 1,600 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Dividend Share Purchase PSK Distribution Horizon Phase 1 build years RETURNS TO SHAREHOLDERS A PRIORITY 41…
  42. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 42
    CNQ 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% CNQ PXD EOG DVN APA APC ECA CVE SU ? Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder…
  43. JP Morgan Inaugural Energy Equity Conference – Canadian Natural Resources Limited (CNRL) – slide 43
    CNQ ? Strong balance sheet ? Large, diversified, well balanced asset base ? Transition to longer-life, low decline assets reduces capital requirements while maintaining production ? Delivering increasing and more sustainable cash…

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