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April 2017 Corporate Presentation – Canadian Natural Resources

Canadian Natural Resources · Apr 27, 2017 · 55 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. April 2017 Corporate Presentation – Canadian Natural Resources – slide 1
  2. April 2017 Corporate Presentation – Canadian Natural Resources – slide 2
    Delivering Value and Growth SNAPSHOT 2016 2017B Funds flow(1) (C$ million) $4,293 $6,500 - 6,900 Per share ? basic(1)(C$) $3.90 $5.90 - 6.25 Capital expenditures ? net (C$ million) $3,794 $3,890 Current annualized dividend…
  3. April 2017 Corporate Presentation – Canadian Natural Resources – slide 3
    2016 2017B Oil WTI (US$/bbl) $43.37 $55.58 Natural gas NYMEX (US$/MMbtu) $2.45 $3.41 Natural gas AECO (C$/GJ) $1.98 $3.06 Heavy oil diff (%) 32% 29% Exchange rate (C$ = XUS$) $0.75 $0.76 Company Gross Reserves, before royalties, of…
  4. April 2017 Corporate Presentation – Canadian Natural Resources – slide 4
    ? Proven, effective strategy ? Flexible capital allocation ? Nimble to capture opportunities ?Balanced cash flow allocation ?Cultural advantage ? Strong operations ? Effective, efficient and reliable ?Safe and environmentally…
  5. April 2017 Corporate Presentation – Canadian Natural Resources – slide 5
    ? 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 ?…
  6. April 2017 Corporate Presentation – Canadian Natural Resources – slide 6
    FLEXIBLE CAPITAL ALLOCATION MAXIMIZIES SHAREHOLDER VALUE Balance & Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Sheet Strength Returns to Shareholders Economic Resource Development…
  7. April 2017 Corporate Presentation – Canadian Natural Resources – slide 7
    ? 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…
  8. April 2017 Corporate Presentation – Canadian Natural Resources – slide 8
    North America North Sea Offshore Africa BUILDING A WORLD CLASS COMPANY Balanced, Diverse Portfolio ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable cash…
  9. April 2017 Corporate Presentation – Canadian Natural Resources – slide 9
    0 1,000 2,000 3,000 4,000 5,000 6,000 CNQ SU APC OXY EOG CVE DVN CHK NBL IMO APA ECA HSE SIGNIFICANT VALUE TO UNLOCK 1P Reserves After Royalties Note: Sourced from 2016 corporate reports. Peers include: APA, APC, EOG, CVE, CHK,…
  10. April 2017 Corporate Presentation – Canadian Natural Resources – slide 10
    7% 9% 11% 13% 15% 17% 19% 21% 23% 2009 2010 2011 2012 2013 2014 2015 2016 2017B 2018F 2019F Conventional Assets Conventional, Pelican & Thermal Conventional, Pelican, Thermal & Horizon Forecast DECLINE RATE SIGNIFICANTLY…
  11. April 2017 Corporate Presentation – Canadian Natural Resources – slide 11
    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 operations…
  12. April 2017 Corporate Presentation – Canadian Natural Resources – slide 12
    2015 Reduction vs 2014 Levels Conventional Operations 7% Horizon Operations 5% International Operations 13% ? Proactive environmentally responsible operations ? Drive continuous improvement to reduce environmental impacts ? Meet or…
  13. April 2017 Corporate Presentation – Canadian Natural Resources – slide 13
    $0 $100 $200 $300 $400 $500 $600 2009 2010 2011 2012 2013 2014 2015 TECHNOLOGY CREATES VALUE Leveraging Technology to Create Value & Enhance Performance ($ million) Note: Sourced from Company internal reports. *Per Infosource…
  14. April 2017 Corporate Presentation – Canadian Natural Resources – slide 14
    ? Enhance Balance Sheet strength ? Horizon Phase 3 targeted start-up in Q4/17 ?Incremental 80,000 bbl/d of SCO production ? Horizon debottleneck decision in Q2/17 ? Target 6% production growth(3) ? Capital ~$3.9 billion ? Targeted…
  15. April 2017 Corporate Presentation – Canadian Natural Resources – slide 15
    ($ million) 2016 2017B* North America natural gas & NGLs $277 $460 North America crude oil 512 910 International crude oil 477 420 Total Exploration and Production $1,266 $1,790 Thermal In Situ Oil Sands $192 $365 Horizon Capital…
  16. April 2017 Corporate Presentation – Canadian Natural Resources – slide 16
    Targeted Production 2016 2017B(1) % Change(2) Natural Gas (MMcf/d) 1,691 1,700 - 1,760 2% Crude Oil & NGLs (Mbbl/d) North America 240 232 - 242 (2%) North America ? Thermal In Situ 111 105 - 115 (1%) North America ? Oil Sands…
  17. April 2017 Corporate Presentation – Canadian Natural Resources – slide 17
    ? 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 ?…
  18. April 2017 Corporate Presentation – Canadian Natural Resources – slide 18
    TOP TIER ASSET BASE Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada ? Q4/16 natural gas production ? 1,578MMcf/d ? Q4/16 average NGL yield ? ~25 bbl/MMcf ? Large resource base ? 10.6 Tcfe…
  19. April 2017 Corporate Presentation – Canadian Natural Resources – slide 19
    $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Source: Company reports. Note: Peers include ARX, BNP, CVE, ECA, HSE, PGF, PWT. *Deep Basin/Septimus operating…
  20. April 2017 Corporate Presentation – Canadian Natural Resources – slide 20
    $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Production Capability (Bcfe/d) STRONG PORTFOLIO OF LIQUIDS-RICH GAS PROJECTS Deep Basin/Montney Natural Gas Projects Return on Capital, 15% After Tax $2.00-$2.50 Tier 3…
  21. April 2017 Corporate Presentation – Canadian Natural Resources – slide 21
    ? Q4/16 light crude oil and NGL production ?~88 Mbbl/d ? 2P reserves ? 233 million barrels(1) ? High quality light crude oil horizontal multi-frac opportunities ? ~182 active waterfloods ?Maximize recovery ?Shallow decline…
  22. April 2017 Corporate Presentation – Canadian Natural Resources – slide 22
    ? Q4/16 light crude oil production ? ~46 Mbbl/d ? 2P reserves ? 386 million barrels(1) ? North Sea ? Operating efficiency gains and more favorable tax regime increase returns ? Offshore Africa ? High return development…
  23. April 2017 Corporate Presentation – Canadian Natural Resources – slide 23
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 DIVERSE ASSET PORTFOLIO 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 $25.00-$40.00…
  24. April 2017 Corporate Presentation – Canadian Natural Resources – slide 24
    Primary Heavy Crude Oil Core Area Summary ? Largest primary heavy oil producer in Canada ? Q4/16 production of ~97 Mbbl/d ? Large inventory of development opportunities ? Premium land base and extensive infrastructure ? 2P reserves…
  25. April 2017 Corporate Presentation – Canadian Natural Resources – slide 25
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 ABILITY TO ADD SIGNIFICANT GROWTH Primary Heavy Crude Oil Projects Return on Capital, 15% After Tax Tier 1 Tier 2 Tier 3 Tier 4 0 20,000 40,000 60,000 80,000 100,000…
  26. April 2017 Corporate Presentation – Canadian Natural Resources – slide 26
    ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is realized ?Q4/16 production ~48 Mbbl/d ? Industry leading operating costs ?Q4/16 operating costs $6.57/bbl ? 2P reserves ? 384…
  27. April 2017 Corporate Presentation – Canadian Natural Resources – slide 27
    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 2017 Primary Polymerflood after Waterflood Polymer After Primary THREE PRODUCING REGIMES ? THREE…
  28. April 2017 Corporate Presentation – Canadian Natural Resources – slide 28
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 GROWING PRODUCTION WITH LEADING EDGE TECHNOLOGY Pelican Lake Projects Return on Capital, 15% After Tax WTI (US$/bbl) 0 5,000 10,000 15,000 20,000 Infill Drilling and…
  29. April 2017 Corporate Presentation – Canadian Natural Resources – slide 29
    2017B Operating costs Targeted net wells* Non-Fuel Fuel 54 $6.00 - $6.50/bbl $8.75 - $9.25/bbl ? Vast resource base with short, mid and long-term value ? 2P reserves ? 2.52 billion barrels(1) ? Majority working interest and…
  30. April 2017 Corporate Presentation – Canadian Natural Resources – slide 30
    ? Strong performance ? Quarterly production in Q4/16 ? ~39 Mbbl/d with an SOR of 2.6 ? 2P reserves ? 164 million barrels* ? Reinitiated for development ? Major facility equipment purchased ? Lease delineated and ready for drilling…
  31. April 2017 Corporate Presentation – Canadian Natural Resources – slide 31
    ? Strong netbacks ? High quality crude oil ? Produced solution gas offsets fuel requirements ? Significant development opportunities ? Steamflooding ? First commercial horizontal well steamflood at Primrose East, Primrose South…
  32. April 2017 Corporate Presentation – Canadian Natural Resources – slide 32
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 LONG-LIFE, LOW DECLINE ASSETS GROWTH POTENTIAL Thermal In Situ Oil Sands Projects Return on Capital, 15% After Tax WTI (US$/bbl) Primrose Pads Kirby North Wolf Lake…
  33. April 2017 Corporate Presentation – Canadian Natural Resources – slide 33
    ? World Class asset ? 2P SCO reserves ? 3.60 billion barrels(1) ? Phased development (SCO) ?Phase 2B on stream ? Q4/16 production of 178 Mbbl/d of SCO ? Targeted start-up of Phase 3 Q4/17 ? Potential 5,000 -15,000 bbl/d…
  34. April 2017 Corporate Presentation – Canadian Natural Resources – slide 34
    80 82 84 86 88 90 92 94 96 2013 2014 2015 2016* 2017B BEST IN CLASS OPERATIONAL PERFORMANCE Horizon Oil Sands ? Operations Industry Leading Utilization Rate Note: Peers include AOSP, Suncor, Syncrude. *2016 reflects planned…
  35. April 2017 Corporate Presentation – Canadian Natural Resources – slide 35
    50,000 100,000 150,000 200,000 250,000 Horizon Oil Sands Significant Operating Cost Reductions Production (bbl/d) Annual Operating Cost (C$/bbl) Phase 3 80,000 bbl/d Phase 2B 45,000 bbl/d Note: Production capacity assumes 3…
  36. April 2017 Corporate Presentation – Canadian Natural Resources – slide 36
    Horizon Potential Debottleneck ? Early indications show Phase 2B may exceed design rates ?December 2016 ~184,000 bbl/d ?January 2017 ~195,000 bbl/d ?February 2017 ~203,600 bbl/d ? 2017 budget includes a 24 day turnaround and tie-in…
  37. April 2017 Corporate Presentation – Canadian Natural Resources – slide 37
    ? 70% operated working interest in the Athabasca Oil Sands Project (?AOSP?) Mines ?Ownership share equal to 196,000 bbl/d of mined bitumen capability ? Total Proved Producing Reserves of 2.6 billion barrels at AOSP (70%) ? 70%…
  38. April 2017 Corporate Presentation – Canadian Natural Resources – slide 38
    7% 9% 11% 13% 15% 17% 19% 21% 23% 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F Conventional Assets Conventional, Pelican & Thermal Conventional, Pelican, Thermal & Horizon Legacy and AOSP assets DECLINE RATE…
  39. April 2017 Corporate Presentation – Canadian Natural Resources – slide 39
    750 850 950 1,050 1,150 1,250 1,350 2016 2017F 2018F 2019F Pro forma CNQ Capital ($ Billion) CNQ Base $3.8 $3.9 $4.2 $4.5 Pro forma - $17.3 $4.7 $4.9 SIMILAR PRODUCTION GROWTH ON LARGER PRODUCTION BASE 4 Year Production…
  40. April 2017 Corporate Presentation – Canadian Natural Resources – slide 40
    -$1 $0 $1 $2 $3 $4 $5 Pro forma CNQ STRONG CAPACITY TO STRENGTHEN B/S, PROVIDE RETURNS TO S/H AND GROW ASSETS 4 Year Free Cash Flow ($ billion) Capital ($ billion) 2016 2017F 2018F 2019F Strip pricing $3.8 $4.3* $4.7 $4.9…
  41. April 2017 Corporate Presentation – Canadian Natural Resources – slide 41
    ? Strong financial position as of December 31, 2016 ? Debt/book capitalization 39% ? Available bank lines of $3.0 billion ? Disciplined allocation of capital delivers sustainable dividend policy ? 17 consecutive years of dividend…
  42. April 2017 Corporate Presentation – Canadian Natural Resources – slide 42
    Balance Sheet Improves Quickly Long term range 1.8 to 2.2x 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2012 2013 2014 2015 2016 2017F 2018F 2019F Actual Pro forma Impact (Debt / EBITDA) Transition to Lower Crude Oil Price…
  43. April 2017 Corporate Presentation – Canadian Natural Resources – slide 43
    0 10 20 30 40 50 60 70 2012 2013 2014 2015 2016 2017F 2018F 2019F Actual Pro forma Impact Covenant Debt / Book Cap (%) Bank Covenant Note: For illustrative purposes all 2017 values are annualized figures, assuming the…
  44. April 2017 Corporate Presentation – Canadian Natural Resources – slide 44
    (C$ million) Maturity Revolving bank line 1* $2,425 June 2019 Revolving bank line 2* $2,425 June 2020 Non-revolving syndicated term facility* $1,500 April 2018 Non-revolving term facilities* $ 875 February 2019 Operating demand loan…
  45. April 2017 Corporate Presentation – Canadian Natural Resources – slide 45
    0 200 400 600 800 1,000 1,200 1,400 1,600 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F Dividend Share Purchase PSK Distribution Horizon Phase 1 build years ($ million) 23% Dividend CAGR (2009-2017F)…
  46. April 2017 Corporate Presentation – Canadian Natural Resources – slide 46
    Committed Management CNQ 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2.5% ? Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder interests Note:…
  47. April 2017 Corporate Presentation – Canadian Natural Resources – slide 47
    ? 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 flow to…
  48. April 2017 Corporate Presentation – Canadian Natural Resources – slide 48
    Advisory Pricing Assumptions 2016 2017F(1) 2018F(2) 2019F(2) Strip US$ WTI/bbl $ 43.37 $ 55.58 $ 53.91 $ 54.11 C$ AECO/GJ $ 1.98 $ 3.06 $ 2.71 $ 2.59 WCS Differential US$/bbl $ 13.91 $ 16.09 $ 15.09 $ 14.61 FX 1.00 US$ = X C$ $…
  49. April 2017 Corporate Presentation – Canadian Natural Resources – slide 49
    Advisory Reserves Notes: (1) Company Gross reserves are working interest share before deduction of royalties and excluding any royalty interests. (2) Company Net reserves are working interest share after deduction of royalties and…
  50. April 2017 Corporate Presentation – Canadian Natural Resources – slide 50
    At December 31, 2016, the Company had the following derivative financial instruments outstanding to manage its commodity price risk: Sales Contracts Remaining term Volume Weighted average price Index Natural Gas AECO swaps Nov 2016 ?…
  51. April 2017 Corporate Presentation – Canadian Natural Resources – slide 51
    Operational Information 2011 2012 2013 2014 2015 2016 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 389 451 478 531 564 524 Natural gas (MMcf/d) 1,257 1,220 1,158 1,555 1,726 1,691 Barrels of oil equivalent (MBOE/d)…
  52. April 2017 Corporate Presentation – Canadian Natural Resources – slide 52
    Results of operations (C$ million, except per share) Funds flow from operations 6,547 6,013 7,477 9,587 5,785 4,293 per share ? Basic 5.98 5.48 6.87 8.78 5.29 3.90 Net earnings (loss) 2,643 1,892 2,270 3,929 (637) (204) per share ?…
  53. April 2017 Corporate Presentation – Canadian Natural Resources – slide 53
    Corporate Guidance March 2, 2017 Q1/17 2017 Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,700 - 1,740 1,700 - 1,760 Crude oil and NGLs (Mbbl/d) North America 229 - 235 232 - 242 North America ? Thermal In Situ…
  54. April 2017 Corporate Presentation – Canadian Natural Resources – slide 54
    Turnarounds and reclamation 135 Capitalized interest and other 90 Total Horizon Project 1,710 Total Capital Expenditures $ 3,890 Average Annual Cost Data Royalty Rate Operating Cost Natural Gas - North America (Mcf) 6.0 - 8.0% $1.00…
  55. April 2017 Corporate Presentation – Canadian Natural Resources – slide 55
    Steve W. Laut President Tim S. McKay Chief Operating Officer Corey B. Bieber Chief Financial Officer and Senior Vice-President, Finance Mark Stainthorpe Director, Treasury and Investor Relations CANADIAN NATURAL RESOURCES…

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