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November 2016 Corporate Presentation – Canadian Natural Resources

Canadian Natural Resources · Nov 11, 2016 · 61 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. November 2016 Corporate Presentation – Canadian Natural Resources – slide 1
  2. November 2016 Corporate Presentation – Canadian Natural Resources – slide 2
    Delivering Value and Growth SNAPSHOT 2015 2016F Cash flow(1) (C$ million) $5,785 $3,900 - 4,300 Per share ? basic(1) (C$) $5.29 $3.55 - 3.90 Capital expenditures ? net (C$ million) $3,853 $4,370 Dividend (C$/Share) $0.92 Common…
  3. November 2016 Corporate Presentation – Canadian Natural Resources – slide 3
    2015 2016F Oil WTI (US$/bbl) $48.76 $43.76 Natural gas NYMEX (US$/MMbtu) $2.67 $2.52 Natural gas AECO (C$/GJ) $2.62 $2.04 Heavy oil diff (%) 28% 32% Exchange rate (C$ = XUS$) $0.78 $0.76 Company Gross Reserves, before royalties, of…
  4. November 2016 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. November 2016 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. November 2016 Corporate Presentation – Canadian Natural Resources – slide 6
    CNQ 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…
  7. November 2016 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 Lake…
  8. November 2016 Corporate Presentation – Canadian Natural Resources – slide 8
    Balanced, Diverse Portfolio ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable cash flow Crude Oil ~35% Light Crude Oil and NGLs/SCO ~30% Natural Gas…
  9. November 2016 Corporate Presentation – Canadian Natural Resources – slide 9
    0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 SIGNIFICANT VALUE TO UNLOCK 1P Reserves After Royalties Note: Based on SEC reserve reporting, sourced from 2015 corporate reports. Peers include: APA, APC, EOG, CVE,…
  10. November 2016 Corporate Presentation – Canadian Natural Resources – slide 10
    $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) 1 Year 1P FD&A 3 Year 1P FD&A Peers Source: BMO…
  11. November 2016 Corporate Presentation – Canadian Natural Resources – slide 11
    ? 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 ?…
  12. November 2016 Corporate Presentation – Canadian Natural Resources – slide 12
    ? 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 to…
  13. November 2016 Corporate Presentation – Canadian Natural Resources – slide 13
    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 Forecast Production levels maintained…
  14. November 2016 Corporate Presentation – Canadian Natural Resources – slide 14
    ? 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 ~$2 billion…
  15. November 2016 Corporate Presentation – Canadian Natural Resources – slide 15
    750 800 850 900 950 1,000 1,050 1,100 Capital ($ 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 $2.4 VALUE DRIVEN Canadian Natural 4 Year Production Growth Targets (MBOE/d) Low…
  16. November 2016 Corporate Presentation – Canadian Natural Resources – slide 16
    ($ 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 from operations less capital and dividends. See Advisory for pricing assumptions and…
  17. November 2016 Corporate Presentation – Canadian Natural Resources – slide 17
    ? 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 ? ~$1.1 billion…
  18. November 2016 Corporate Presentation – Canadian Natural Resources – slide 18
    ($ 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…
  19. November 2016 Corporate Presentation – Canadian Natural Resources – slide 19
    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…
  20. November 2016 Corporate Presentation – Canadian Natural Resources – slide 20
    ? 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 the…
  21. November 2016 Corporate Presentation – Canadian Natural Resources – slide 21
    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…
  22. November 2016 Corporate Presentation – Canadian Natural Resources – slide 22
    ? 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 natural…
  23. November 2016 Corporate Presentation – Canadian Natural Resources – slide 23
    ? 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 $390 million TECHNOLOGY CREATES VALUE Leveraging…
  24. November 2016 Corporate Presentation – Canadian Natural Resources – slide 24
    ? Control of our destiny ?Control costs, development timing and pace ? eliminates commitments ?Operations flexibility with high working interest ? Minimal capital exposure and return on capital maximized ? Drill-to-fill strategy…
  25. November 2016 Corporate Presentation – Canadian Natural Resources – slide 25
    Canadian Natural Operating Costs 2016 Area (C$/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 (19%)…
  26. November 2016 Corporate Presentation – Canadian Natural Resources – slide 26
    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 reserves(1) ? Significant…
  27. November 2016 Corporate Presentation – Canadian Natural Resources – slide 27
    $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 Basin/Septimus…
  28. November 2016 Corporate Presentation – Canadian Natural Resources – slide 28
    ? 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 ? Cardium ?…
  29. November 2016 Corporate Presentation – Canadian Natural Resources – slide 29
    ? 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 opportunities ?…
  30. November 2016 Corporate Presentation – Canadian Natural Resources – slide 30
    ? 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…
  31. November 2016 Corporate Presentation – Canadian Natural Resources – slide 31
    ? 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…
  32. November 2016 Corporate Presentation – Canadian Natural Resources – slide 32
    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 DIFFERENT…
  33. November 2016 Corporate Presentation – Canadian Natural Resources – slide 33
    ? 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 operator ?…
  34. November 2016 Corporate Presentation – Canadian Natural Resources – slide 34
    ? 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 ? Major…
  35. November 2016 Corporate Presentation – Canadian Natural Resources – slide 35
    ? 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…
  36. November 2016 Corporate Presentation – Canadian Natural Resources – slide 36
    ? Inventory of 6 additional defined projects ? Potential of 200,000-260,000 bbl/d facility capacity ? Active commercial projects ? Tangleflags and Senlac ? July production ~3,000 bbl/d ? Seven opportunities identified ? Geological…
  37. November 2016 Corporate Presentation – Canadian Natural Resources – slide 37
    ? 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 expansion…
  38. November 2016 Corporate Presentation – Canadian Natural Resources – slide 38
    80 82 84 86 88 90 92 94 2013 2014 2015 BEST IN CLASS OPERATIONAL PERFORMANCE Horizon Oil Sands ? Operations Industry Leading Utilization Rate Note: Peers include AOSP, Suncor, Syncrude. Source: Peer data per FirstEnergy…
  39. November 2016 Corporate Presentation – Canadian Natural Resources – slide 39
    50,000 100,000 150,000 200,000 250,000Horizon 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…
  40. November 2016 Corporate Presentation – Canadian Natural Resources – slide 40
    $0 $500 $1,000 $1,500 $2,000 $2,500 50,000 100,000 150,000 200,000 250,000 2013 2014 2015 2016 2017 2018 2019 FUTURE EXPANSION CREATES VALUE Horizon Oil Sands Expansion Production Capacity Plan Note: Production capacity…
  41. November 2016 Corporate Presentation – Canadian Natural Resources – slide 41
    Long-Term Ratings Outlook Short-Term Ratings Standard & Poor?s BBB+ Stable A-2 DBRS BBB High Stable n/a Moody?s Baa3 Negative P-3 ? Strong financial position as of September 30, 2016 ?Debt/book capitalization 40% ?Available bank…
  42. November 2016 Corporate Presentation – Canadian Natural Resources – slide 42
    0 10 20 30 40 50 60 70 2012 2013 2014 2015 2016F 2017F 2018F 2019F WELL WITHIN COVENANTS AND LONG-TERM RANGES Debt / Book Capitalization Note: See Advisory for pricing assumptions and cautionary statements. (%) Bank Debt…
  43. November 2016 Corporate Presentation – Canadian Natural Resources – slide 43
    0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2012 2013 2014 2015 2016F 2017F 2018F 2019F RETURN TO CONSERVATIVE TARGET RANGE IN 2018F/2019F Debt / Annual EBITDA (x) Note: See Advisory for pricing assumptions and cautionary…
  44. November 2016 Corporate Presentation – Canadian Natural Resources – slide 44
    (C$ 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…
  45. November 2016 Corporate Presentation – Canadian Natural Resources – slide 45
    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 Return…
  46. November 2016 Corporate Presentation – Canadian Natural Resources – slide 46
    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 interests…
  47. November 2016 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. November 2016 Corporate Presentation – Canadian Natural Resources – slide 48
  49. November 2016 Corporate Presentation – Canadian Natural Resources – slide 49
    $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 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 $ 1.50-$2.00 Tier 2 $1.00-$1.50 Tier…
  50. November 2016 Corporate Presentation – Canadian Natural Resources – slide 50
    $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…
  51. November 2016 Corporate Presentation – Canadian Natural Resources – slide 51
    $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 3 Tier 4 Tier 2 Tier 1 0 20,000 40,000 60,000 80,000 100,000…
  52. November 2016 Corporate Presentation – Canadian Natural Resources – slide 52
    $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…
  53. November 2016 Corporate Presentation – Canadian Natural Resources – slide 53
    $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…
  54. November 2016 Corporate Presentation – Canadian Natural Resources – slide 54
    Advisory Cautionary Statement (1) Project progress and financial results are dependent upon economic and regulatory conditions, commodity prices, global economic factors, project sanction and capital allocation. Pricing (1) Refer to…
  55. November 2016 Corporate Presentation – Canadian Natural Resources – slide 55
    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…
  56. November 2016 Corporate Presentation – Canadian Natural Resources – slide 56
    Hedging Note: The Company?s outstanding commodity derivative financial instruments are expected to be settled monthly based on the applicable index pricing for the respective contract month. At September 30, 2016, the Company had the…
  57. November 2016 Corporate Presentation – Canadian Natural Resources – slide 57
    Key Historic Data Operational Information 2010 2011 2012 2013 2014 2015 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 425 389 451 478 531 564 Natural gas (MMcf/d) 1,243 1,257 1,220 1,158 1,555 1,726 Barrels of oil…
  58. November 2016 Corporate Presentation – Canadian Natural Resources – slide 58
    Net earnings 1,673 2,643 1,892 2,270 3,929 (637) per share ? Basic 1.54 2.41 1.72 2.08 3.60 (0.58) Capital expenditures (net, including combinations) 5,514 6,414 6,308 7,274 11,744 3,853 Balance Sheet Info (C$ million) Property, plant…
  59. November 2016 Corporate Presentation – Canadian Natural Resources – slide 59
    Corporate Guidance November 3, 2016 Q4/16 2016 Revised Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,690 - 1,720 1,705 - 1,735 Crude oil and NGLs (Mbbl/d) North America 232 - 238 235 - 245 North America ?…
  60. November 2016 Corporate Presentation – Canadian Natural Resources – slide 60
    Owner?s costs and other 310 Total capital projects 1,920 Technology and Phase 4 5 Sustaining capital 370 Turnarounds and reclamation 160 Capitalized interest and other 280 Total Horizon Project 2,735 Total Capital Expenditures…
  61. November 2016 Corporate Presentation – Canadian Natural Resources – slide 61
    Steve W. Laut President Tim S. McKay Chief Operating Officer Corey B. Bieber Chief Financial Officer and Senior Vice-President, Finance Lyle G. Stevens Executive Vice-President, Canadian Conventional Mark Stainthorpe Director,…

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