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November 2018 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Nov 1, 2018 · 58 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. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
  2. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    Delivering Value and Growth SNAPSHOT 2017 2018F Adjusted Funds Flow (C$ million)(1) $7,347 $9,900 - $10,300 Per share $6.25 $8.08 - 8.41 Capital expenditures – net (C$ million)(2) $4,972 $4,605 Annualized dividend…
  3. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    Oil WTI (US$/bbl) $50.93 $67.99 Natural gas NYMEX (US$/MMbtu) $3.11 $2.95 Natural gas AECO (C$/GJ) $2.30 $1.47 Heavy oil diff (%) 23% 39% Exchange rate (C$ = XUS$) $0.77 $0.77 Company Gross Reserves, before royalties, of crude…
  4. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Canadian Natural’s Key Message Delivering Free Cash Flow Safe Growing Sustainable
  5. November 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. November 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 adjusted funds…
  7. November 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. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    Canadian Natural’s Advantage Impact of Long Life Assets on Decline Rates (%) Maintenance Capital of ~$3 billion required 23% 21% 19% 19% 17% 16% 15% 53% Reduction in 13% Corporate…
  9. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    IMO 2020 Regulations Positive Net Impact to CNQ • Demand / Pricing for low sulphur diesel likely to increase ? Value of synthetic crude oil (“SCO”) likely to increase ? SCO has high distillate yield amenable to low sulphur…
  10. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    1P Reserves After Royalties (MMBOE) 8,000 7,000 6,000 5,000 4,000CNQ3,000 2,000 1,000 0 CNQ SU CVE OXY EOG DVN NBL CHK IMO APC HSEAPA ECAPeersPeers include: APA, APC, CVE, CHK, DVN, ECA,…
  11. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    Advantages of Infrastructure Ownership/Operatorship • Control of our destiny ? Control development timing and pace eliminates commitments ? Control costs ? Operations flexibility with high working interest NATURAL GAS •…
  12. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    Canadian Natural 5 Year Free Cash Flow After Dividends ($ 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 Sensitivity US$1 WTI = ~$250MM US$1 Diff =…
  13. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    Balance & Optimize the Four Pillars of Capital Allocation Maximizing Shareholder Value Balance Returns to Economic Opportunistic Sheet Resource Shareholders Acquisitions Strength…
  14. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Free Cash Flow Allocation Balance SheetStrength Return toShareholders Economic ResourceDevelopment OpportunisticAcquisitions Annual Adjusted Funds Flow Less: Net Capital Expenditures Dividends 50%…
  15. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    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 Baa2 Stable P-2 • Strong financial position as of September 30, 2018 ? Debt/book…
  16. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    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 Actual…
  17. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    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 Actual Forecast See Advisory…
  18. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    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, $1.34 per common…
  19. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    Canadian Natural Return to Shareholders ($ million) 2,800 2,600 2,400 22% Dividend CAGR 2,200 YTD* (2009-2018F)…
  20. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
  21. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Natural Gas & NGLs Core Area Summary • Largest natural gas producer in Canada BC AB SK MB ? Q3/18 natural gas production ???~1,489 MMcf/d East 451 MMcf/d ? Q3/18 average NGLs yield ? ~26…
  22. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    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 $2.00 Tier 3 Tier 2 Tier 1…
  23. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    North America Light Crude Oil Core Area Summary • Q3/18 light crude oil and NGL production ? ~93 Mbbl/d BC AB SK MB • 2P reserves ? 239 million barrels* • High quality light crude oil horizontal multi-frac…
  24. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    International Light Crude Oil Summary • Q3/18 light crude oil production ? ~47 Mbbl/d North Sea • 2P reserves ? 305 million barrels* • North Sea ? Operating efficiency gains and more favorable tax regime increase…
  25. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Light Crude Oil Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 $30.00 Tier 3 Tier 4 $20.00 Tier 2…
  26. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    Primary Heavy Crude Oil Core Area Summary CNQ Heavy Crude Oil Producing Properties CNQ Land Base CNQ ECHO Pipeline • Largest primary heavy crude oil producer in Canada ? Q3/18 production of ~92 Mbbl/d • Large…
  27. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    Primary Heavy Crude Oil Projects Return on Capital, 15% After Tax WTI (US$/bbl) $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 Tier 2 Tier 1 $10.00 $0.00 25,000 0 1 7 13192531…
  28. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    Pelican Lake Polymer Flood • Industry leading EOR technology Crude Oil Production • Capital requirements are reduced and polymer driven performance is realized ? Q3/18 production ~63 Mbbl/d • Industry leading…
  29. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    Pelican Lake Projects Return on Capital, 15% After Tax WTI (US$/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…
  30. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    Thermal In Situ Oil Sands Portfolio Birch Mtn. Ells River Grosmont Saleski Gregoire Grand Rapids Leismer • Q3/18 production volumes of ~112 Mbbl/d • 2P reserves ? 2.58 billion barrels* • Majority…
  31. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    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…
  32. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    Thermal In Situ Oil Sands Kirby South SAGD • Strong performance ? Q3/18 production ~36 Mbbl/d • 2018 plans ? 4 infill producers ??First production targeted July 2018 ? 2 step-out producer / injector well pairs…
  33. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    Thermal In Situ Oil Sands Kirby North SAGD Kirby North Approved Project Area Approved Development Area Undrilled Development Pads • Reinitiated for development • Major facility…
  34. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    Thermal In Situ Oil Sands Projects 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 $70.00 LONG LIFE LOW DECLINE ASSETS GROWTH…
  35. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    Oil Sands Mining & Upgrading Canadian Natural Advantages Q3/18 production volumes of ~394 Mbbl/d • 2P reserves ? 6.06 billion barrels* • Committed to environmental leadership ? CO2 capture and sequestration • Top tier reliability…
  36. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    2018 Capital ($ 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 $398 $960 Oil…
  37. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    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 239 240 - 246 2% North America – Thermal In Situ 120 107 - 127 (3%) North America – Oil…
  38. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    5 Year Production Growth (MBOE/d) 750 825 900 975 1,050 1,125 1,200 1,275 1,350 2016 2017 2018F 2019F 2020F 2021F HIGH VALUE PRODUCTION GROWTH 36
  39. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Committed Management • Substantial management and director wealth at stake ? Strong motivation for management to perform ? Delivers clear alignment with shareholder interests Peers include APC, APA, CVE, DVN, ECA, EOG, PXD and SU.…
  40. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    Canadian Natural’s Key Message Growing Sustainable Safe Delivering Free Cash Flow
  41. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    Canadian Natural A Unique E&P Company Canadian Natural Delivers: ?Operations ? Vast, diverse well balanced assets ? Top tier effectiveness and efficiency ? Execution excellence ? Environmental leadership ? Production per share…
  42. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
  43. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Delivering Safety Excellence • 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 Corporate total…
  44. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Leveraging Technology to Create Value & Enhance Performance • Leading R&D Investor ? 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 &…
  45. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
    Investing in Carbon Capture & Sequestration / Storage • 3rd largest CO2 capturer and sequesterer for oil and gas sector in the world(1) ?17.9 million tonnes of CO2e conserved in last 5 years • Reduced CO2 footprint • Reduced CO2…
  46. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Environmental Excellence • Proactive environmentally responsible operations • Continuous improvement to reduce environmental impacts • Operating with world leading standards and comprehensive regulatory oversight • Meet or exceed…
  47. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Canadian Natural GHG Advantage Primary Heavy Crude Oil • Reduction of 71% from 2013 to 2017 in venting from primary heavy crude oil Vent (e3m3/year) 71% Reduction Absolute Vent Volumes
  48. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
  49. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    Balanced Portfolio of Natural Gas Sales Points (%) Note: AECO natural gas includes Station 2. Exports includes Dawn, Empress, Emerson and California. 2018F based on average 2018 volume split. AECO 0% 10% 20% 30% 40% 50% 60%…
  50. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    8 Production per Share CAGR (2013 - 2017) Production/Share (% CAGR) CNQ Peers include: APA, APC, COP, CVE, DVN, ECA, EOG, HSE, MRO, NBL, OXY and SU. Source: BMO 2017 Oil & Gas Global Cost Study and Bloomberg. CNQ -10% -6% -2%…
  51. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    Return on Equity (2013 - 2017) Peers Include: APA, APC, CHE, COP, CVE, DVN, ECA, EOG, HSE, NBL, OXY, and SU. Source: BMO 2017 Oil & Gas Global Cost Study. (%) CNQ (114%) 5.3% (9%) (16%) (43%) (113%)
  52. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    2018 Estimated Free Cash Flow Yield 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…
  53. November 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 Assumptions 2017…
  54. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    Hedging At September 30, 2018, the Company had the following derivative financial instruments outstanding to manage its commodity price risk: Note: The Company’s outstanding commodity derivative financial instruments are expected to be…
  55. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    Key Historic Data Operational & Financial Information 2012 2013 2014 2015 2016 2017 Daily production, before royalties Crude oil and NGLs (Mbbl/d) 451 478 531 564 524 685 Natural gas (MMcf/d) 1,220 1,158 1,555 1,726 1,691 1,662…
  56. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
    Results of operations (C$ million, except per share) Adjusted funds flow 6,013 7,477 9,587 5,785 4,293 7,347 per share – Basic 5.48 6.87 8.78 5.29 3.90 6.25 Net earnings (loss) 1,892 2,270 3,929 (637) (204) 2,397 per share – Basic…
  57. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    Corporate Guidance November 1, 2018 Q4/18 Annual 2018 Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,480 - 1,510 1,550 - 1,600 Crude oil and NGLs (Mbbl/d) North America – E&P 232 - 240 240 - 246 North America –…
  58. November 2018 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    Average Annual Cost Data Royalty Rate Operating Cost Natural Gas - North America (Mcf) 4.0 - 6.0% $1.20 - 1.28 Crude oil and NGLs (bbl) North America – E&P (Including Thermal In Situ) 12.5 - 14.5% $11.50 - 13.50 North America – Oil…

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