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2018 Budget Presentation – Canadian Natural Resources Limited (CNRL)

Canadian Natural Resources Limited (CNRL) · Nov 14, 2017 · 65 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. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 1
  2. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 2
    SNAPSHOT 2017F 2018B Funds Flow (C$ million)(1) $6,800 - $7,000 $7,900 - $8,300 Per share $5.60 - 5.75 $6.50 - 6.80 Capital expenditures ? net (C$ million)(2) $4,855 4,335 Annualized dividend (C$/share)(3) $1.10 Production (annual…
  3. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 3
    Oil WTI (US$/bbl) $49.98 $52.03 Natural gas NYMEX (US$/MMbtu) $3.13 $2.91 Natural gas AECO (C$/GJ) $2.32 $2.11 Heavy oil diff (%) 24% 28% Exchange rate (C$ = XUS$) $0.77 $0.80 Company Gross Reserves, before royalties, of crude oil…
  4. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 4
    Canadian Natural?s Key Message Growing Sustainable Safe Delivering Free Cash Flow
  5. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 5
    ? Flexible capital allocation to maximize value ? Strong Balance Sheet supports investment grade credit ? Defined growth / value enhancement plans by product and basin ? Large, diverse, balanced asset base ?Product mix ? Project…
  6. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 6
    ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable cash flow BUILDING A WORLD CLASS COMPANY 4 Balanced, Diverse Portfolio Heavy Crude Oil ~25% Light Crude…
  7. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 7
    ? Facilitates capital flexibility to maximize returns ? Diverse product types, transportation logistics and time horizons ? Strong inventory of Low Capital Exposure Assets ?Primary heavy crude oil, light crude oil in Canada and…
  8. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 8
    0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 SIGNIFICANT VALUE TO UNLOCK 6 1P Reserves After Royalties Note: Pro forma - CNQ Includes 70% ownership in AOSP. Excludes impacts of recently announced Pelican Lake acquisition.…
  9. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 9
    ? Control of our destiny ? Control development timing and pace eliminates commitments ? Control costs ? Operations flexibility with high working interest ? Return on capital maximized ? Drill-to-fill strategy ? Leverage existing…
  10. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 10
    7% 9% 11% 13% 15% 17% 19% 21% 23% 2011 2012 2013 2014 2015 2016 2017F 2018B 2019F 2020F 2021F Conventional Assets Conventional, Pelican & Thermal Conventional, Pelican, Thermal & Oil Sands Mining DECLINE RATE SIGNIFICANTLY…
  11. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 11
    0.5 1 2010 2011 2012 2013 2014 2015 2016 SAFETY IS A CORE VALUE 9 Delivering Safety Excellence ? Safety is a core value ? Committed to continuous improvement ? No harm to people, no safety incidents ? Top tier recordable injury…
  12. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 12
    0.055 0.060 0.065 0.070 0.075 2012 2013 2014 2015 2016 DELIVERING ENVIRONMENTALLY RESPONSIBLE OPERATIONS 10 Environmental Excellence ? Proactive environmentally responsible operations ? Continuous improvement to reduce…
  13. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 13
    0 50,000 100,000 150,000 200,000 250,000 2012 2013 2014 2015 2016 STRENGTHENING ENVIRONMENTAL INITIATIVES Canadian Natural GHG Advantage Primary Heavy Crude Oil ? Reduction of 71% from 2012 to 2016 in venting from primary heavy…
  14. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 14
    12 Leveraging Technology to Create Value & Enhance Performance ? 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* Research & Development Investment…
  15. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 15
    ? 4th largest CO2 capturer and sequesterer in the world(1) ? 18.4 million tonnes of CO2e conserved in last 5 years ? Reduced CO2 footprint ? Reduced CO2 charges STRONG ENVIRONMENTAL INITIATIVES 13 Tonnes per Year Horizon 0.4…
  16. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 16
    FLEXIBLE CAPITAL ALLOCATION MAXIMIZIES SHAREHOLDER VALUE 14 Balance & Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Sheet Strength Returns to Shareholders Economic Resource Development…
  17. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 17
    Balanced Yet Flexible Capital Allocation Q4/16 to Q3/17 Note: Capital allocation from Q4/16 to Q3/17. Balance sheet strength includes changes in foreign exchange. Excludes capital and funds flow related to the AOSP acquisition.…
  18. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 18
    ($ million) 2017F 2018B North America Natural Gas & NGLs $460 $440 North America Crude Oil 920 1,115 International Crude Oil 420 410 Total Exploration & Production $1,800 $1,965 Thermal In Situ Oil Sands $380 $960 Oil Sands Mining &…
  19. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 19
    Targeted Production 2017F 2018B % Change(1) Natural Gas (MMcf/d) 1,655 - 1,705 1,650 - 1,710 - Crude Oil & NGLs (Mbbl/d) North America 236 - 246 253 - 263 7% North America ? Thermal In Situ 112 - 122 107 - 127 - North America ?Oil…
  20. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 20
    2018 Capital Breakdown Maintenance Capital ($ million) 2018B Exploration & Production(1)(3) $1,765 Thermal In Situ Oil Sands 335 Oil Sands Mining & Upgrading 880 Total Maintenance Capital $2,980 Growth Capital 2018B(2) Long Term…
  21. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 21
    Capital ($ billion) Strip pricing $3.8 $4.9(2) $4.3 $4.4 $4.5 $4.5 750 850 950 1,050 1,150 1,250 1,350 2016 2017F 2018B 2019F 2020F 2021F HIGH VALUE PRODUCTION GROWTH 19 5 Year Production Growth (MBOE/d) 1) Based upon…
  22. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 22
    $0 $1 $2 $3 $4 2017F 2018B 2019F 2020F 2021F SUSTAINABLE GROWING FREE CASH FLOW 20 Canadian Natural 5 Year Free Cash Flow ($ billion) Capital ($ billion) Strip pricing $4.9(2) $4.3 $4.4 $4.5 $4.5 (1) Based upon 2018B midpoint…
  23. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 23
    Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada ? Q3/17 natural gas production ? ~1,593 MMcf/d ? Q3/17 average NGLs yield ? ~25 bbl/MMcf ? Large resource base ? 10.6 Tcfe reserves(1) ? Significant…
  24. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 24
    $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 0 1.0 3.0 4.0 5.0 6.0 Production Capability (Bcfe/d) STRONG PORTFOLIO OF LIQUIDS-RICH GAS PROJECTS Deep Basin/Montney Natural Gas Projects Return on Capital, 15% After Tax Tier…
  25. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 25
    North America Light Crude Oil Core Area Summary ? Q3/17 light crude oil and NGL production ? ~93 Mbbl/d ? 2P reserves ? 233 million barrels(1) ? High quality light crude oil horizontal multi-frac opportunities ? ~182 active…
  26. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 26
    ? Q3/17 light crude oil production ? ~44 Mbbl/d ? 2P reserves ? 386 million barrels(1) ? North Sea ? Operating efficiency gains and more favorable tax regime increase returns ? C?te d?Ivoire ? High return development…
  27. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 27
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 0 20,000 40,000 60,000 80,000 100,000 Production Capability (bbl/d) DIVERSE ASSET PORTFOLIO Light Crude Oil Projects Return on Capital, 15% After Tax Tier 3 Tier 2 Tier…
  28. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 28
    Primary Heavy Crude Oil Core Area Summary ? Largest primary heavy crude oil producer in Canada ? Q3/17 production of ~99 Mbbl/d ? Large inventory of development opportunities ? Controlled pace of development ? Premium land base and…
  29. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 29
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 ABILITY TO ADD SIGNIFICANT GROWTH Primary Heavy Crude Oil Projects Return on Capital, 15% After Tax Tier 3…
  30. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 30
    ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is realized ? Current production ~67 Mbbl/d ? Industry leading operating costs ? Q3/17 operating costs $6.00/bbl ? 2P reserves ?…
  31. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 31
    Time Polymer After Waterflood and Primary 22% Waterflood After Primary 15% Primary 6% A CANADIAN NATURAL ADVANTAGE Pelican Lake Recovery Modes Polymer After Primary 28% Rate Recovery Factor
  32. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 32
    ? Synergies ? Consolidation of major facilities ? Consolidation of well services and testing facilities ? Area management optimization ? Source water ? polymer quality optimization ? Opportunities to accelerate development on both…
  33. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 33
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 0 5,000 10,000 15,000 20,000 GROWING PRODUCTION WITH LEADING EDGE TECHNOLOGY Pelican Lake Projects Return on Capital, 15% After Tax Tier 1 31 Note: Assumes AECO= $2.50…
  34. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 34
    ? Q3/17 production volumes of ~122 Mbbl/d ? 2P reserves ? 2.52 billion barrels(1) ? Majority working interest and operatorship ? Effective and efficient thermal operator ? Leverage use of technology to enhance recovery and optimize…
  35. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 35
    ? Strong netbacks ? High quality crude oil ? Q3/17 production volumes of ~81 Mbbl/d ? Produced solution gas offsets fuel usage ? Significant development opportunities ? Steamflooding ? Follow-up process to CSS ? First commercial wells…
  36. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 36
    ? Strong performance ? Q3/17 production ~37 Mbbl/d ? SOR of 2.7 ? 2P reserves ? 164 million barrels* ? 2018 plans ? 4 infill producers ? First production targeted ? July 2018 ? 2 step-out producer / injector well pairs ? First…
  37. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 37
    ? Reinitiated for development ? Major facility equipment on site ? Lease delineated and ready for drilling ? Targeted first oil in Q1 2020 ? Targeted capacity of 40,000 bbl/d ? 2P reserves ? 371 million barrels* ? 2018 drilling ?…
  38. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 38
    0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000 275,000 $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…
  39. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 39
    ? Operating synergies 2 sites ? Committed to environmental leadership ?CO2 capture and sequestration ? Top tier reliability and utilization ? Significant economies of scale ? Strong performance culture ? Top tier operating costs ?…
  40. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 40
    $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 2013 2014 2015 2016 2017F* AOSP Horizon SAFE, STEADY, RELIABLE OPERATIONS 38 Athabasca Oil Sands Project Operating Cost Reductions *2017F reflects mid-point of guidance…
  41. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 41
    Horizon Oil Sands Industry Leading Utilization Rate Peers data includes SU, Syncrude, AOSP per TD Securities ?Mine Your Own Business? October 2, 2017. Peer 2017F data reflects YTD June 30, 2017. *2017F for CNQ reflects utilization of…
  42. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 42
    ? Strong financial position as of September 30, 2017 ? Debt/book capitalization 42% ? Available liquidity of $3.9 billion* ? Disciplined allocation of capital delivers sustainable dividend policy ? 17 consecutive years of dividend…
  43. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 43
    0% 10% 20% 30% 40% 50% 60% 70% SIGNIFICANT BALANCE SHEET STRENGTH 41 Canadian Natural Debt to Book Capitalization Improves Quickly Debt/Book Cap (%) Bank Covenant Actual Forecast See Advisory for pricing assumptions and…
  44. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 44
    See Advisory for pricing assumptions and cautionary statements. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 SIGNIFICANT BALANCE SHEET STRENGTH Canadian Natural Balance Sheet Strengthens Quickly (Debt/EBITDA) Pro forma ratio…
  45. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – 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…
  46. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 46
    0.0% 0.5% 1.0% 1.5% 2.0% 2.5% CONSISTENT HISTORY OF VALUE CREATION Committed Management ? Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder…
  47. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – 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. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 48
  49. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 49
    Peers include: APA, APC, CPG, CVE, DVN, EOG, HSE, IMO, OXY and SU. Source: BMO 2017 Cost Study. Reflects 2016 actuals. Includes operating costs, G&A, F&D costs, return on capital of 10%, income taxes and quality differential. $0.00…
  50. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 50
    10% -5% 0% 5% 10% TOP TIER PRODUCTION PER SHARE GROWTH 48 Production per Share CAGR (2012 - 2016) Production/share (% CAGR) CNQ Peers include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, MRO, NBL, OXY and SU. Source: BMO 2017 Cost…
  51. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 51
    BEST IN CLASS RETURN ON EQUITY 49 Return on Equity (2012 - 2016) Peers Include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, MRO, NBL, OXY, SU. Source: FactSet and RBC Research estimates at August 24, 2017 and Company reports. Note:…
  52. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 52
    -2% 0% 2% 4% 6% 8% 10% Peers Include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, IMO, MRO, NBL, OXY, SU. Source: FactSet and RBC Research estimates at August 24, 2017. Note: Free cash flow yield is calculated as funds flow from…
  53. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 53
    20% -15% -10% -5% 0% 5% 10% 15% 20% 25% SHORT TERM INCREASED RETURNS TO SHAREHOLDERS 51 Returns to Shareholders Short Term Change in Dividend vs. Peers (3 year) (%) Change in Dividend Peers Include: APA, APC, BP, CHK, COP,…
  54. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 54
    Advisory 2017F 2018B 2019F 2020F 2021F Strip(1) US$ WTI/bbl $ 49.98 $ 52.03 $ 52.03 $ 52.03 $ 52.03 C$ AECO/GJ $ 2.32 $ 2.11 $ 2.11 $ 2.11 $ 2.11 WCS Differential US$/bbl $ 11.81 $ 14.34 $ 13.53 $ 13.01 $ 12.49 FX 1.00 US$ = X C$ $…
  55. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 55
    Advisory Reserves Notes: (1) Company Gross reserves are working interest share before deduction of royalties and excluding any royalty interests. (2) Company Net reserves are working interest share after deduction of royalties and…
  56. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 56
    Hedging At September 30, 2017, the Company had the following derivative financial instruments outstanding to manage its commodity price risk: Sales Contracts Remaining term Volume Weighted average price Index Natural Gas AECO swaps…
  57. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 57
    Key Historic Data Operational Information 2011 2012 2013 2014 2015 2016 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 389 451 478 531 564 524 Natural gas (MMcf/d) 1,257 1,220 1,158 1,555 1,726 1,691 Barrels of oil…
  58. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 58
    Natural gas (C$/Mcf) 3.73 2.44 2.44 3.30 2.78 1.99 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)…
  59. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 59
    TSX trading info High (C$) 50.50 41.12 36.04 49.57 42.46 45.85 Low (C$) 27.25 25.58 28.44 31.00 25.01 22.90 Close (C$) 38.15 28.64 35.94 35.92 30.22 42.79 (1) Reserves prior to 2010 were calculated using constant prices and 2010…
  60. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 60
    2017 Corporate Guidance November 2, 2017 Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,700 - 1,750 1,655 - 1,705 Crude oil and NGLs (Mbbl/d) North America(1) 256 - 264 236 - 246 North America ? Thermal In Situ(1)…
  61. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 61
    Phase 3 500 Optimization and Reliability 170 Owner?s costs and other 210 Total capital projects 910 Technology and Phase 4 15 Sustaining capital 415 Turnarounds and reclamation 175 Capitalized interest and other 50 Total Horizon…
  62. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 62
    Effective income tax rate on adjusted earnings 27 - 29% Midstream cash flow (C$ millions) $75 - 85 Average corporate interest rate 3.75 - 4.00% Note: Production, net to Canadian Natural, before royalties. Interest rates are subject to…
  63. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 63
    2018 Corporate Guidance November 7, 2017 2018 Budget Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,650 - 1,710 Crude oil and NGLs (Mbbl/d) North America ? E&P 253 - 263 North America ? Thermal In Situ 107 - 127…
  64. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 64
    Total Oil Sands Mining and Upgrading 1,380 Total Capital Expenditures $ 4,335 Average Annual Cost Data Royalty Rate Operating Cost Natural Gas - North America (Mcf) 4.0 - 6.0% $1.00 - 1.20 Crude oil and NGLs (bbl) North America ? E&P…
  65. 2018 Budget Presentation – Canadian Natural Resources Limited (CNRL) – slide 65
    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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