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January 2018 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Jan 3, 2018 · 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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. January 2018 Corporate Presentation – Canadian Natural Resources (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 $4,335 Annualized dividend…
  3. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    Oil WTI (US$/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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Canadian Natural?s Key Message Growing Sustainable Safe Delivering Free Cash Flow
  5. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    North America North Sea Offshore Africa ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable cash flow BUILDING A WORLD CLASS COMPANY Balanced, Diverse…
  7. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    0 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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    0 50,000 100,000 150,000 200,000 250,000 2012 2013 2014 2015 2016 STRENGTHENING ENVIRONMENTAL INITIATIVES 11 Canadian Natural GHG Advantage Primary Heavy Crude Oil ? Reduction of 71% from 2012 to 2016 in venting from primary…
  14. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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 Tonnes per Year Horizon 0.4 million…
  16. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    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…
  17. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    CAPITAL DISCIPLINE 2018 Capital Budget *2017F net acquisitions, excludes the AOSP acquisition costs. ($ million) 2017F 2018B North America Natural Gas & NGLs $460 $440 North America Crude Oil 920 1,115 International Crude Oil 420…
  19. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    Targeted Production 2017F 2018B % Change(1) Natural Gas (MMcf/d) 1,655 - 1,705 1,650 - 1,710 - Crude Oil & NGLs (Mbbl/d) North America 236 - 246 253 - 263 7% North America ? Thermal In Situ 112 - 122 107 - 127 - North America ?Oil…
  20. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    2018 Capital Breakdown Maintenance Capital ($ million) 2018B Exploration & Production(1)(3) $1,765 Thermal In Situ Oil Sands 335 Oil Sands Mining & Upgrading 880 Total Maintenance Capital $2,980 Growth Capital 2018B(2) Long Term…
  21. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Capital ($ 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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    $0 $1 $2 $3 $4 2017F 2018B 2019F 2020F 2021F SUSTAINABLE GROWING FREE CASH FLOW Canadian Natural 5 Year Free Cash Flow ($ billion) Capital ($ billion) Strip pricing $4.9(2) $4.3 $4.4 $4.5 $4.5 (1) Based upon 2018B midpoint to…
  23. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    TOP TIER ASSET BASE 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…
  24. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    SIGNIFICANT LAND BASE & OPPORTUNITY 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…
  26. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    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 Rate Time
  32. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    Pelican Lake Acquisition ? Synergies ? Consolidation of major facilities ? Consolidation of well services and testing facilities ? Area management optimization ? Source water ? polymer quality optimization ? Opportunities to…
  33. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 WTI (US$/bbl) 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 Note: Assumes…
  34. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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 WTI (US$/bbl) $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…
  39. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    BEST IN CLASS OPERATIONAL PERFORMANCE 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.…
  42. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    See Advisory for pricing assumptions and cautionary statements. 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…
  44. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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…
  47. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
  49. January 2018 Corporate Presentation – Canadian Natural Resources (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. $0.00…
  50. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    -10% -5% 0% 5% 10% TOP TIER PRODUCTION PER SHARE GROWTH Production per Share CAGR (2012 - 2016) Production/share (% CAGR) CNQ Peers include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, MRO, NBL, OXY and SU. Source: BMO 2017 Cost…
  51. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    BEST IN CLASS RETURN ON EQUITY Return on Equity (2012 - 2016) Peers Include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, MRO, NBL, OXY, SU. Source: FactSet and RBC Research estimates at August 24, 2017 and Company reports. Note:…
  52. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    -2% 0% 2% 4% 6% 8% 10% Peers Include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, IMO, MRO, NBL, OXY, SU. Source: FactSet and RBC Research estimates at August 24, 2017. Note: Free cash flow yield is calculated as funds flow from…
  53. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% SHORT TERM INCREASED RETURNS TO SHAREHOLDERS Returns to Shareholders Short Term Change in Dividend vs. Peers (3 year) (%) Change in Dividend Peers Include: APA, APC, BP, CHK, COP,…
  54. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    Advisory Pricing Assumptions 2017F 2018B 2019F 2020F 2021F Strip(1) US$ 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…
  55. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    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 including any…
  56. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    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 ?…
  59. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    2017 Corporate Guidance November 2, 2017 Q4/17 Revised 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…
  60. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    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 Project 1,565…
  61. January 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
    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…
  62. January 2018 Corporate Presentation – Canadian Natural Resources (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. January 2018 Corporate Presentation – Canadian Natural Resources (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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