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December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL)

Canadian Natural Resources Limited (CNRL) · Dec 1, 2016 · 51 slides

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Slides

  1. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 1
  2. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 4
    CNQ FLEXIBLE CAPITAL ALLOCATION MAXIMIZIES SHAREHOLDER VALUE 4 Balance & Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Sheet Strength Returns to Shareholders Economic Resource…
  5. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – 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. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 9
    CNQ ? Full capital flexibility to capture market opportunities ? Quick payout, high return on capital ? Extensive land base enables repeatable, low cost drilling ? Strong inventory of assets facilitates flexibility and replication ?…
  10. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 10
    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…
  11. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 11
    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…
  12. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 12
    CNQ ? Long-life, low decline asset base transition near completion ?Horizon Phase 2B on stream 45,000 bbl/d ?Horizon Phase 3 start-up in Q4/17 80,000 bbl/d ? Horizon targeted expansion capital drops significantly ?2016F ~$2 billion…
  13. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 13
    CNQ 750 800 850 900 950 1,000 1,050 1,100 Capital ($ Billion) 2016F 2017F 2018F 2019F US$60.00 WTI $4.4 $4.5 $4.5 $4.5 Low Case $4.4 $2.7 $2.4 $2.4 VALUE DRIVEN 13 Canadian Natural 4 Year Production Growth Targets (MBOE/d)…
  14. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 14
    CNQ SIGNIFICANT CASH FLOW GENERATION 14 Canadian Natural 4 Year Free Cash Flow Targets ($ Billion) Capital ($ Billion) 2016F 2017F 2018F 2019F US$60.00 WTI $4.4 $4.5 $4.5 $4.5 US$60.00 WTI Note: Free cash flow represents cash flow…
  15. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 15
    CNQ ? Committed to lowering cost structure ?Execution/productivity step changes ?Leverage technology ?Regulatory effectiveness/efficiency ?Disciplined approach driving lower unit operating costs through the supply chain ? ~$1.1…
  16. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 16
    CNQ ($ million) 2015 2016F North America natural gas and NGLs $375 $295 North America crude oil 718 550 International crude oil 1,062 480 Total Exploration and Production $2,155 $1,325 Thermal in Situ Oil Sands $314 $170 Horizon…
  17. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 17
    CNQ Targeted Production 2015 2016F % Change(1) Natural Gas (MMcf/d) 1,726 1,705 - 1,735 (1%) 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…
  18. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 18
    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…
  19. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 19
    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…
  20. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 20
    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…
  21. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 21
    CNQ ? Largest crude oil and natural gas R&D investor in Canada in 2015 ? 5th largest R&D investor for all industries in Canada in 2015* ? 2015 $527 million ? 2014 $450 million ? 2013 $390 million TECHNOLOGY CREATES VALUE 21…
  22. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 22
    CNQ ? Control of our destiny ?Control costs, development timing and pace ? eliminates commitments ?Operations flexibility with high working interest ? Minimal capital exposure and return on capital maximized ? Drill-to-fill strategy…
  23. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 23
    CNQ Canadian Natural Operating Costs 2016 Area (C$/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…
  24. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 24
    CNQ TOP TIER ASSET BASE 24 Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada ? Q3/16 natural gas production ? 1,567 MMcf/d ? Q2/16 average NGL yield ? ~26 bbl/MMcf ? Large resource base ? 10.0 Tcfe…
  25. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 25
    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 Q2/16 Q3/16 Source: Company reports. Note: Peers include ARX, BNP, ECA, HSE, PGF, PWT. *Deep…
  26. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 26
    CNQ ? Q3/16 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 ?…
  27. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 27
    CNQ ? Q3/16 light crude oil production ? ~50 Mbbl/d ? 2P light crude oil reserves ? 426 million barrels* ? Long reserve life ? Low decline waterfloods ? Exploitation based ? Offshore Africa ? High return development…
  28. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 28
    CNQ ? Largest primary heavy oil producer in Canada ? Q3/16 production of ~102 Mbbl/d ? Large inventory of development opportunities ? Potential to execute cost-effective large drilling programs ? Premium land base and extensive…
  29. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 29
    CNQ ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is realized ? Q3/16 production ~48 Mbbl/d ? Industry leading operating costs ? Q3/16 operating costs $6.09/bbl ? Drives higher…
  30. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 30
    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 Primary Polymerflood after Waterflood Polymer After Primary THREE PRODUCING REGIMES ? THREE…
  31. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 31
    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…
  32. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 32
    CNQ ? Strong performance ? Quarterly production in Q3/16 ? ~38 Mbbl/d ? Instantaneous SOR = 2.6 ? Strong inventory of new pads to maintain facility capacity ? 2P reserves ? 176 million barrels* ? Reinitiated for development ?…
  33. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 33
    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…
  34. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 34
    CNQ ? Athabasca SAGD Projects ? Inventory of 6 additional defined projects ? Potential of 200,000-260,000 bbl/d facility capacity ? Small Scale SAGD Projects ? Active commercial projects ? Tangleflags and Senlac ? July production…
  35. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 35
    CNQ ? World Class asset ? 2P SCO reserves ? 3.63 billion barrels* ? Phased development (SCO) ? Current targeted nameplate capacity of 182,000 bbl/d ? Phase 2B on stream ? Targeted start-up of Phase 3 Q4/17 ? Potential future…
  36. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 36
    CNQ 80 82 84 86 88 90 92 94 2013 2014 2015 BEST IN CLASS OPERATIONAL PERFORMANCE 36 Horizon Oil Sands ? Operations Industry Leading Utilization Rate Note: Peers include AOSP, Suncor, Syncrude. Source: Peer data per…
  37. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 37
    CNQ $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 50,000 100,000 150,000 200,000 250,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37 Horizon Oil Sands Significant Operating Cost Reductions…
  38. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 38
    CNQ Annual Expansion Capital ($ million) $0 $500 $1,000 $1,500 $2,000 $2,500 50,000 100,000 150,000 200,000 250,000 2013 2014 2015 2016 2017 2018 2019 FUTURE EXPANSION CREATES VALUE 38 Horizon Oil Sands Expansion…
  39. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 39
    CNQ Long-Term Ratings Outlook Short-Term Ratings Standard & Poor?s BBB+ Stable A-2 DBRS BBB High Stable n/a Moody?s Baa3 Negative P-3 ? Strong financial position as of September 30, 2016 ?Debt/book capitalization 40% ?Available…
  40. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 40
    CNQ Long Term Target Range 25% - 45% 0 10 20 30 40 50 60 70 2012 2013 2014 2015 2016F 2017F 2018F 2019F WELL WITHIN COVENANTS AND LONG-TERM RANGES Debt / Book Capitalization Note: See Advisory for pricing assumptions and…
  41. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 41
    CNQ Long Term Target Range 1.8x - 2.2x 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2012 2013 2014 2015 2016F 2017F 2018F 2019F RETURN TO CONSERVATIVE TARGET RANGE IN 2018F/2019F Debt / Annual EBITDA (x) 41 Note: See Advisory for…
  42. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 42
    CNQ (C$ 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…
  43. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 43
    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 43…
  44. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 44
    CNQ 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% CNQ PXD DVN EOG APA APC CVE ECA SU ? Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder…
  45. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 45
    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…
  46. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 46
    APPENDICES
  47. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 47
    CNQ Production Capability (Bcfe/d) $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 STRONG PORTFOLIO OF LIQUIDS-RICH GAS PROJECTS 47 Deep Basin/Montney Natural Gas Projects Return on Capital, 15% After Tax $2.00-$2.50 Tier 3…
  48. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 48
    CNQ $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 DIVERSE ASSET PORTFOLIO 48 Light Crude Oil Projects Return on Capital, 15% After Tax $45.00-$50.00 Tier 3 - Deep Basin $40.00-$45.00 Tier 2 ? Deep Basin…
  49. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 49
    CNQ $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 ABILITY TO ADD SIGNIFICANT GROWTH 49 Primary Heavy Crude Oil Projects Return on Capital, 15% After Tax Tier 3 Tier 4 Tier 2 Tier 1 0 20,000 40,000 60,000 80,000…
  50. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 50
    CNQ $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 GROWING PRODUCTION WITH LEADING EDGE TECHNOLOGY 50 Pelican Lake Projects Return on Capital, 15% After Tax WTI (US$/bbl) 0 5,000 10,000 15,000 20,000 Infill Drilling…
  51. December 2016 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 51
    CNQ $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 LONG-LIFE, LOW DECLINE ASSETS GROWTH POTENTIAL 51 Thermal In Situ Oil Sands Projects Return on Capital, 15% After Tax WTI (US$/bbl) Primrose Pads Kirby North Wolf…

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