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December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL)

Canadian Natural Resources Limited (CNRL) · Dec 4, 2017 · 63 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 1
  2. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 2
    Delivering Value and Growth 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) $4,855 4,335 Annualized dividend…
  3. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 3
    Oil WTI (US$/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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 4
    Canadian Natural?s Key Message Growing Sustainable Safe Delivering Free Cash Flow
  5. December 2017 Corporate 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. December 2017 Corporate 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 Balanced, Diverse Portfolio Heavy Crude Oil ~25% Light Crude Oil…
  7. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 11
    0 0.5 1 2010 2011 2012 2013 2014 2015 2016 SAFETY IS A CORE VALUE Delivering Safety Excellence ? Safety is a core value ? Committed to continuous improvement ? No harm to people, no safety incidents ? Top tier recordable injury…
  12. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 14
    Leveraging Technology to Create Value & Enhance Performance ? Largest crude oil and natural gas R&D investor in Canada in 2016 ? 4th largest R&D investor for all industries in Canada in 2016* Research & Development Investment ($…
  15. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 16
    Balance & Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Sheet Strength Returns to Shareholders Economic Resource Development Opportunistic Acquisitions FLEXIBLE CAPITAL ALLOCATION…
  17. December 2017 Corporate 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. December 2017 Corporate 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 $960 Oil Sands Mining &…
  19. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 19
    Targeted Production 2017F 2018B % Change(1) Natural Gas (MMcf/d) 1,655 - 1,705 1,650 - 1,710 - Crude Oil & NGLs (Mbbl/d) North America 236 - 246 253 - 263 7% North America ? Thermal In Situ 112 - 122 107 - 127 - North America ?Oil…
  20. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 20
    2018 Capital Breakdown Maintenance Capital ($ million) 2018B Exploration & Production(1)(3) $1,765 Thermal In Situ Oil Sands 335 Oil Sands Mining & Upgrading 880 Total Maintenance Capital $2,980 Growth Capital 2018B(2) Long Term…
  21. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 21
    Capital ($ 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 5 Year Production Growth (MBOE/d) (1) Based upon midpoint…
  22. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 29
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127 133 139 145 151 157 163 169 175 181 187 193 199 205 0 25,000 50,000…
  30. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 31
    Rate Time Polymer After Waterflood and Primary 22% Waterflood After Primary 15% Primary 6% A CANADIAN NATURAL ADVANTAGE 29 Pelican Lake Recovery Modes Polymer After Primary 28% Recovery Factor
  32. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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…
  36. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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* SAFE, STEADY, RELIABLE OPERATIONS Athabasca Oil Sands Project Operating Cost Reductions *2017F reflects mid-point of guidance for the 7 months…
  41. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 43
    0% 10% 20% 30% 40% 50% 60% 70% SIGNIFICANT BALANCE SHEET STRENGTH Canadian Natural Debt to Book Capitalization Improves Quickly Debt/Book Cap (%) Bank Covenant Actual Forecast See Advisory for pricing assumptions and…
  44. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 44
    21 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…
  45. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 45
    Canadian Natural Return to Shareholders $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…
  46. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 46
    eers Integrated Peers 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…
  47. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 48
  49. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 49
    $0.00 $20.00 $40.00 $60.00 $80.00 ROBUST & SUSTAINABLE 2016 Corporate Breakeven Oil Price (US$/BOE) CNQ Peers Integrated Peers Peer Average Peers include: APA, APC, CPG, CVE, DVN, EOG, HSE, IMO, OXY and SU. Source: BMO 2017…
  50. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 51
    BEST IN CLASS RETURN ON EQUITY 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 54
    Advisory Cautionary Statement Project progress and financial results are dependent upon economic and regulatory conditions, commodity prices, global economic factors, project sanction and capital allocation. Pricing Assumptions 2017F…
  55. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate 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. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 58
    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 ? Basic 2.41 1.72 2.08 3.60 (0.58) (0.19) Capital expenditures (net, including combinations) 6,414 6,308 7,274 11,744…
  59. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 59
    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)…
  60. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 60
    Total capital projects 910 Technology and Phase 4 15 Sustaining capital 415 Turnarounds and reclamation 175 Capitalized interest and other 50 Total Horizon Project 1,565 Athabasca Oil Sands Project - Sustaining Capital 140 Total…
  61. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 61
    2018 Corporate Guidance November 7, 2017 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 North…
  62. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 62
    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 (Including Thermal In Situ) 10.0 - 12.0%…
  63. December 2017 Corporate Presentation – Canadian Natural Resources Limited (CNRL) – slide 63
    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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