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October 2016 Corporate Presentation – Canadian Natural Resources

Canadian Natural Resources · Oct 31, 2016 · 60 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 1
  2. October 2016 Corporate Presentation – Canadian Natural Resources – slide 2
    Delivering Value and Growth SNAPSHOT 2015 2016F Cash flow(1) (C$ million) $5,785 $3,500 - 3,900 Per share ? basic(1) (C$) $5.29 $3.20 - 3.55 Capital expenditures ? net (C$ million) $3,853 $3,500 - $3,900 Dividend (C$/Share) $0.92…
  3. October 2016 Corporate Presentation – Canadian Natural Resources – slide 3
    2015 2016F Oil WTI (US$/bbl) $48.76 $43.67 Natural gas NYMEX (US$/MMbtu) $2.67 $2.45 Natural gas AECO (C$/GJ) $2.62 $1.96 Heavy oil diff (%) 28% 32% Exchange rate (C$ = XUS$) $0.78 $0.76 Company Gross Reserves, before royalties, of…
  4. October 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. October 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. October 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. October 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. October 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 Heavy Crude Oil ~35% Light Crude Oil and NGLs/SCO ~30% Natural…
  9. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 10
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 Industry Leading 1P FD&A Costs INDUSTRY LEADING RESERVE METRICS CNQ ($/BOE) 1 Year 1P FD&A 3 Year 1P FD&A Peers Source: BMO Capital Markets, 2016 Global Cost Study. Peers…
  11. October 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. October 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. October 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 Canadian Natural?s Advantage…
  14. October 2016 Corporate Presentation – Canadian Natural Resources – slide 14
    ? Long-life, low decline asset base transition near completion ?Horizon Phase 2B start-up targeted in October 45,000 bbl/d ?Horizon Phase 3 start-up in Q4/17 80,000 bbl/d ? Horizon targeted expansion capital drops significantly ?2016F…
  15. October 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 $3.9 $4.5 $4.5 $4.5 Low Case $3.7 $2.7 $2.4 $2.4 VALUE DRIVEN Canadian Natural 4 Year Production Growth Targets (MBOE/d) Low…
  16. October 2016 Corporate Presentation – Canadian Natural Resources – slide 16
    ($ 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 from operations less capital and dividends. See Advisory for pricing assumptions and…
  17. October 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 ? ~$1.1 billion…
  18. October 2016 Corporate Presentation – Canadian Natural Resources – slide 18
    ($ million) 2015 2016F North America natural gas and NGLs $375 $160 - 195 North America crude oil 718 305 - 435 International crude oil 1,062 450 - 495 Total Exploration and Production $2,155 $915 - 1,125 Thermal in Situ Oil Sands…
  19. October 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. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 21
    ? 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 SAFETY IS A CORE VALUE Delivering Safety…
  22. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 23
    ? 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 $390 million TECHNOLOGY CREATES VALUE Leveraging…
  24. October 2016 Corporate Presentation – Canadian Natural Resources – slide 24
    ? Control of our destiny ?Control costs, development timing and pace ? eliminates commitments ?Operations flexibility with high working interest ? Minimal capital exposure and return on capital maximized ? Drill-to-fill strategy…
  25. October 2016 Corporate Presentation – Canadian Natural Resources – slide 25
    Area (C$/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%) Thermal In Situ Oil Sands 12.61 10.43…
  26. October 2016 Corporate Presentation – Canadian Natural Resources – slide 26
    Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada ? Q2/16 natural gas production ? 1,620 MMcf/d ? Q2/16 average NGL yield ? ~23 bbl/MMcf ? Large resource base ? 10.0 Tcfe reserves(1) ? Significant…
  27. October 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 Source: Company reports. Note: Peers include ARX, BNP, ECA, HSE, PGF, PWT. *Deep Basin/Septimus operating…
  28. October 2016 Corporate Presentation – Canadian Natural Resources – slide 28
    ? Q2/16 light crude oil and NGL production ? ~84 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 29
    International Light Crude Oil Summary North Sea C?te d?Ivoire Gabon South Africa *Company Gross proved plus probable reserves at December 31, 2015. ? Q2/16 light crude oil production ? ~54 Mbbl/d ? Offshore Africa increased 20%…
  30. October 2016 Corporate Presentation – Canadian Natural Resources – slide 30
    ? Largest primary heavy oil producer in Canada ? Q2/16 production of ~104 Mbbl/d ? Large inventory of development opportunities ? Potential to execute cost-effective large drilling programs ? Premium land base and extensive…
  31. October 2016 Corporate Presentation – Canadian Natural Resources – slide 31
    ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is realized ? Q2/16 production ~48 Mbbl/d ? Industry leading operating costs ? Q2/16 operating costs $6.81/bbl ? Drives higher…
  32. October 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 THREE PRODUCING REGIMES ? THREE DIFFERENT PROFILES Pelican Lake Production by Recovery Method Primary…
  33. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 34
    ? Strong performance ? Record quarterly production in Q2/16 ? ~39 Mbbl/d ? Instantaneous SOR = 2.55 ? Strong inventory of new pads to maintain facility capacity ? 2P reserves ? 176 million barrels* ? Regulatory approval in place ?…
  35. October 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. October 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. October 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 137,000 bbl/d ? Targeted start-up of Phase 2B October 2016 ? Targeted start-up of Phase 3 Q4/17 ?…
  38. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 39
    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…
  40. October 2016 Corporate Presentation – Canadian Natural Resources – slide 40
    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 assumes 3 months ramp up to full rates and…
  41. October 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 Negative n/a Moody?s Baa3 Negative P-3 ? Strong financial position as of June 30, 2016 ?Debt/book capitalization 40% ?Available bank…
  42. October 2016 Corporate Presentation – Canadian Natural Resources – slide 42
    Low 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…
  43. October 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 Low Case US$60.00 WTI RETURN TO CONSERVATIVE TARGET RANGE IN 2018F/2019F Debt / Annual EBITDA (x) Note: See Advisory for pricing assumptions and…
  44. October 2016 Corporate Presentation – Canadian Natural Resources – slide 44
    (C$ 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. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 46
    0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% ? Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder interests CONSISTENT HISTORY OF VALUE CREATION…
  47. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 48
  49. October 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. October 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. October 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. October 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. October 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. October 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. October 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. October 2016 Corporate Presentation – Canadian Natural Resources – slide 56
    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…
  57. October 2016 Corporate Presentation – Canadian Natural Resources – slide 57
    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 and equipment (net) 38,429 41,631 44,028 46,487…
  58. October 2016 Corporate Presentation – Canadian Natural Resources – slide 58
    Corporate Guidance August 4, 2016 Q3/16 Guidance 2016 Revised Guidance Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,645 - 1,685 1,705 - 1,735 Crude oil and NGLs (Mbbl/d) North America 235 - 241 235 - 245…
  59. October 2016 Corporate Presentation – Canadian Natural Resources – slide 59
    Total capital projects 1,890 - 1,990 Technology and Phase 4 5 Sustaining capital 280 - 310 Turnarounds and reclamation 110 - 120 Capitalized interest and other 130 - 140 Total Horizon Project 2,415 - 2,565 Total Capital Expenditures…
  60. October 2016 Corporate Presentation – Canadian Natural Resources – slide 60
    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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