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September 2018 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Sep 1, 2018 · 55 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. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    Delivering Value and Growth SNAPSHOT 2017 2018F Funds Flow (C$ million)(1) $7,347 $10,100 - $10,500 Per share $6.25 $8.25 - 8.55 Capital expenditures ? net (C$ million)(2) $4,972 $4,595 Annualized dividend (C$/share)(3)…
  3. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    Oil WTI (US$/bbl) $50.93 $64.80 Natural gas NYMEX (US$/MMbtu) $3.11 $2.86 Natural gas AECO (C$/GJ) $2.30 $1.43 Heavy oil diff (%) 23% 32% Exchange rate (C$ = XUS$) $0.77 $0.79 Company Gross Reserves, before royalties, of crude…
  4. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Canadian Natural?s Key Message Delivering Free Cash Flow Safe Growing Sustainable
  5. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
    Canadian Natural?s Strategy ? 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…
  6. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    Balanced, Diverse Portfolio North America North Sea ? Balanced, diverse production mix ? International exposure ? Vast, balanced resource base to develop ? Growing, sustainable funds flow ? 50%…
  7. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    Advantages of a Balanced Portfolio ? Facilitates capital flexibility to maximize returns ? Diverse product types, transportation logistics and time horizons ? Strong inventory of Low Capital Exposure Assets ? Primary heavy…
  8. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    Canadian Natural?s Advantage Impact of Long Life Assets on Decline Rates (%) 23% Maintenance Capital of ~$3 billion required 21% 19% 19% 17% 16% 15% 53% Reduction in 13% Corporate…
  9. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    IMO 2020 Regulations Positive Net Impact to CNQ ? Demand / Pricing for low sulphur diesel likely to increase ? Value of synthetic crude oil (?SCO?) likely to increase ? SCO has high distillate yield amenable to low sulphur…
  10. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    1P Reserves After Royalties (MMBOE) 8,000 7,000 6,000 5,000 4,000 CNQ 3,000 2,000 1,000 0 CNQ SU CVE OXY EOG DVN NBL CHK IMO APC HSE APA ECA Peers Peers include: APA, APC, CVE,…
  11. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    Advantages of Infrastructure Ownership/Operatorship ? Control of our destiny ? Control development timing and pace eliminates commitments ? Control costs ? Operations flexibility with high working interest ? Return on…
  12. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    Natural Gas & NGLs Core Area Summary ? Largest natural gas producer in Canada BC AB SK MB ? Q2/18 natural gas production ???~1,485 MMcf/d ? Q2/18 average NGLs yield West 1,020 MMcf/d East 465…
  13. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    Deep Basin/Montney Natural Gas Projects Return on Capital, 15% After Tax AECO (C$/GJ) $3.50 Infrastructure Advantage Tier 4 $3.00 Greenfield $2.50 $2.00 Tier 3 Tier 2 Tier 1…
  14. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    North America Light Crude Oil Core Area Summary ? Q2/18 light crude oil and NGL production ? ~90 Mbbl/d BC AB SK MB ? 2P reserves ? 239 million barrels(1) ? High quality light crude oil horizontal multi-frac…
  15. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    International Light Crude Oil Summary ? Q2/18 light crude oil production ? ~43 Mbbl/d ? 2P reserves North Sea ? 305 million barrels(1) ? North Sea ? Operating efficiency gains and more favorable tax regime increase…
  16. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    Light Crude Oil Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 $30.00 Tier 3 Tier 4 $20.00 Tier 2…
  17. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    Primary Heavy Crude Oil Core Area Summary CNQ Heavy Crude Oil Producing Properties CNQ Land Base CNQ ECHO Pipeline AB SK ~200 km ? Largest primary heavy crude oil producer in Canada ?…
  18. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    Primary Heavy Crude Oil Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 Tier 2 Tier 1 $10.00 $0.00 25,000 0 1 7 13192531…
  19. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    Pelican Lake Polymer Flood Crude Oil Production Polymer Injector ? Industry leading EOR technology ? Capital requirements are reduced and polymer driven performance is…
  20. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    Pelican Lake Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 Tier 4 $30.00 Tier 3 $20.00 Tier 2 Tier 1 $10.00 $0.00 0 5,000 10,000…
  21. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Thermal In Situ Oil Sands Portfolio Birch Mtn. Ells River Grosmont Saleski Gregoire Grand Rapids Leismer Grouse Kirby Ipiatik Primrose Wolf Lake Marie CNQ Thermal Producing Properties…
  22. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    Thermal In Situ Oil Sands Primrose / Wolf Lake Primrose North Steam Generation Facility Primrose South Steam Generation Facility Primrose East Steam Generation Facility Wolf Lake Central Oil…
  23. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    Thermal In Situ Oil Sands Kirby South SAGD ? Strong performance ? Q2/18 production ~35 Mbbl/d ? 2018 plans ? 4 infill producers ??First production targeted July 2018 ? 2 step-out producer / injector well pairs…
  24. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    Thermal In Situ Oil Sands Kirby North SAGD ? Reinitiated for development ? Major facility equipment on site Kirby North ? Lease delineated and ready for drilling ? Targeted first oil in Q4/2019 ? Targeted capacity of…
  25. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Thermal In Situ Oil Sands Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 Primrose Pads $10.00 $0.00 0 25,000 50,000 Wolf Lake…
  26. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    Oil Sands Mining & Upgrading Canadian Natural Advantages CNQ Operating Oil Sands Mining Operations CNQ Lands CNQ Horizon Oil Sands CNQ AOSP ~72 km Fort McMurray ? Operating synergies 2…
  27. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    2018 Capital ($ million) 2017 2018F North America Natural Gas & NGLs $488 $440 North America Crude Oil 1,036 1,115 International Crude Oil 416 410 Total Exploration & Production $1,940 $1,965 Thermal In Situ Oil Sands…
  28. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    2018 Production Targeted Production 2017 2018F % Change(1) Natural Gas (MMcf/d) 1,662 1,550 - 1,600 (1%) Crude Oil & NGLs (Mbbl/d) North America 239 253 - 263 8% North America ? Thermal In Situ 120 107 - 127 (3%) North…
  29. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    2018 Capital Breakdown Maintenance Capital ($ million) 2018F Exploration & Production(1)(3) $1,765 Thermal In Situ Oil Sands 335 Maintains Production Volumes Oil Sands Mining & Upgrading 880 Total Maintenance Capital…
  30. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    5 Year Production Growth (MBOE/d) 1,350 1,275 1,200 1,125 1,050 975 900 825 750 Capital ($ billion) 2016 2017 2018F 2019F 2020F 2021F Strip pricing $3.8 $4.9(2) $4.6 $4.4 $4.5 $4.5 (1) Based…
  31. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    Canadian Natural 5 Year Free Cash Flow After Dividends ($ billion) US$64.80/bbl WTI / US$20.88/bbl WCS diff $6 US$52.03/bbl WTI / US$14.34/bbl WCS diff $5 Cash Flow…
  32. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    Balance & Optimize the Four Pillars of Cash Flow Allocation Maximizing Shareholder Value Balance Returns to Economic Opportunistic Sheet Resource Shareholders Acquisitions Strength…
  33. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    Robust Financial Position Long-Term Ratings Outlook Short-Term Ratings DBRS BBB High Stable n/a Standard & Poor?s BBB+ Stable A-2 Moody?s Baa3 Stable P-3 ? Strong financial position as of June 30, 2018 ? Debt/book…
  34. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    Canadian Natural Debt to Book Capitalization Improves Quickly Debt/Book Cap (%) 70% Bank Covenant 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F See…
  35. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    Canadian Natural Balance Sheet Strengthens Quickly (Debt/EBITDA) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F See Advisory for pricing assumptions and…
  36. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    Returns to Shareholders ? Disciplined allocation of capital delivers sustainable dividend policy ? 18 consecutive years of dividend increases ? $0.335 per common share quarterly dividend declared March 2018, $1.34 per common…
  37. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Canadian Natural Return to Shareholders ($ million) 2,200 2,000 22% Dividend CAGR 1,800 (2009-2018F) 1,600 1,400 1,200 1,000 800 600 400 Horizon Phase 1 build years 200 0 2004 2005 2006 2007 2008…
  38. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    Committed Management Management Ownership (% of Outstanding Shares) 2.5% 2.3% 2.0% ? Substantial management and director wealth at stake ? Strong motivation for management to perform 1.5% ? Delivers clear alignment with…
  39. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Canadian Natural?s Key Message Delivering Free Cash Flow Safe Growing Sustainable
  40. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    Canadian Natural A Unique E&P Company Canadian Natural Delivers: ?Operations ?Financial ??Vast, diverse well balanced assets ??Disciplined capital allocation ??Top tier effectiveness and efficiency ??Strengthening balance…
  41. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
  42. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Delivering Safety Excellence Corporate total recordable injury frequency (incident per 200,000 hours) 1.00 0.50 ? Safety is a core value ? Committed to continuous improvement ? No harm to people, no…
  43. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Leveraging Technology to Create Value & Enhance Performance Research & Development Investment Leading R&D Investor Average ($ million) ? Largest crude oil and natural gas R&D $500 investor in Canada in 2016…
  44. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Investing in Carbon Capture & Sequestration / Storage ? 3rd largest CO capturer and sequesterer for oil and gas 2 sector in the world(1) Quest ? 17.9 million tonnes of CO2e conserved in last 5 years ? Reduced CO2 footprint…
  45. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
    Environmental Excellence Corporate GHG Emissions Intensity (tonnes CO2e/BOE) 0.070 18% Overall Reduction 0.060 0.050 2013 2014 2015 2016 2017 ? Proactive environmentally responsible…
  46. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Canadian Natural GHG Advantage Primary Heavy Crude Oil Vent (e3m3/year) 200,000 160,000 71% Reduction Absolute Vent Volumes 120,000 80,000 40,000 0 2013 2014 2015 2016 2017 ? Reduction of 71% from 2013…
  47. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
  48. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    Balanced Portfolio of Natural Gas Sales Points (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% AECO 10% 0% 2015 2016 2017 2018F Natural Gas AECO Hedges Internal Consumption Exports &…
  49. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    Production per Share CAGR (2013 - 2017) Production/Share (% CAGR) 10.3% 10% 6% CNQ CNQ 2% -2% CNQ -6% -10% Peers Integrated Peers (11.0%) (11.6%)…
  50. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    Return on Equity (2013 - 2017) (%) 7% 5.3% 5% 3% Peers Integrated Peers CNQ 1% (1%) (3%) (5%) (9%) (16%) (43%) (113%) (114%) Peers Include: APA, APC, CHE, COP, CVE, DVN, ECA, EOG, HSE,…
  51. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    2018 Estimated Free Cash Flow Yield (%) 10% 9.6% 8% Peers Integrated Peers 6% CNQ 4% 2% 0% -2% Peers Include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, IMO, MRO, NBL, OXY, SU. Source: FactSet and RBC…
  52. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    Returns to Shareholders Short Term Change in Dividend vs. Peers (2014-2016) (%) Change in Dividend 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 22% US Canada R.O.W. Super Majors…
  53. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    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…
  54. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    Corporate Guidance August 2, 2018 Daily Production Volumes (before royalties) Natural gas (MMcf/d) Crude oil and NGLs (Mbbl/d) North America ? E&P North America ? Thermal In Situ North America ? Oil Sands…
  55. September 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    Other Information Cash income and other taxes (C$ millions) Sask. Resources Surcharge / Capital Tax $10 - 15 Current income taxes ? North America $600 - 700 Current income taxes (recovery) ? International and Petroleum Tax $0…

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