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January 2019 Corporate Presentation – Canadian Natural Resources (CNRL)

Canadian Natural Resources (CNRL) · Jan 16, 2019 · 75 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 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 1
    Corporate Presentation December 5, 2018
  2. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 2
    Delivering Value & Growth SNAPSHOT 2018F 2019B Capital expenditures – net (C$ million) $4,605 $3,700 Annualized dividend (C$/share)* $1.34 $1.34 Production (annual average, before royalties) Crude Oil (Mbbl/d) 812 - 822 782 - 861…
  3. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 3
    TABLE OF CONTENTS • Corporate Strategy Page 1 • A World Class Company Built for All Cycles Page 2 • Delivering Real Value to Shareholders Page 6 • Value/Growth Opportunities Page 11 ? Montney Page 12 ? Heavy Crude Oil Page 13 ?…
  4. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 4
    Key Message Optimal Cash Flow Allocation Increasing Returns Unique, Balanced Asset Base Robust Throughout Cycles Proven Effective Strategy
  5. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 5
    Canadian Natural A Unique E&P Company • Long Life Low Decline asset base • Low maintenance capital requirements • Effective and efficient operations • Flexible, disciplined free cash flow allocation • Strong Balance Sheet,…
  6. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 6
    A World Class Company Built for All Cycles
  7. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 7
    Canadian Natural Strategy • Flexible capital allocation to maximize value • Strong Balance Sheet supports investment grade credit ratings • Defined growth / value enhancement plans by product and basin • Large, diverse, balanced…
  8. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 8
    Balanced, diverse production mix • International exposure • Vast, balanced resource base to develop • Growing, sustainable adjusted funds flow • >50% light crude oil and SCO production BALANCED PRODUCT MIX PROVIDES FLEXIBILITY…
  9. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 9
    BOE Production Mix Long Life Low Decline Production ~57% Low Capital Exposure Production ~43% Maintenance Capital of ~$3.1 billion required ~10% Corporate Decline Rate 7 Canadian Natural’s Advantage Low Corporate Decline Rate…
  10. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 10
    Balanced Asset Model Robust Through All Cycles Long life low decline assets provide sustainable production and free cash flow • Exercising capital flexibility by reducing spend on low capital exposure assets • Low capital exposure •…
  11. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 11
    1P Reserves After Royalties – 20170 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 CNQ SU CVE OXY EOG DVN NBL CHK IMO APC HSE APA ECA MASSIVE LOW COST RESOURCE TO DEVELOP 9 1P Reserves After Royalties – 2017 Peers include:…
  12. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 12
    Robust Financial Position Long-Term Ratings Outlook Short-Term Ratings DBRS BBB High Stable n/a Standard & Poor’s BBB+ Stable A-2 Moody’s Baa2 Stable P-2 BALANCE SHEET CONTINUES TO STRENGTHEN 10 Robust Financial Position…
  13. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 13
    Canadian Natural’s Competitive Advantages Balanced portfolio of assets ? Diverse product inventory and time horizons ? Owned and controlled infrastructure ? Long Life Low Decline assets ? Low maintenance capital requirements ? Size…
  14. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 14
    Safety is a Core Value 0.0 0.5 1.0 2013 2014 2015 2016 2017 DELIVERING EFFECTIVE & EFFICIENT OPERATIONS 12 Delivering Safe, Effective & Efficient Operations Total recordable injury frequency (per 200,000 hours) Operating Costs…
  15. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 15
    Delivering Real Value to Shareholders
  16. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 16
    Canadian Natural 2019 Targeted Free Cash Flow Scenarios ($ billion) Note: Free cash flow represents adjusted funds flow less capital. See Advisory for cautionary statements, definitions and pricing assumptions. Free Cash Flow ~$2.9B…
  17. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 17
    Balance & Optimize the Four Pillars of Capital Allocation • Balance Sheet Strength ? Balance Sheet strengthens through free cash flow allocation policy • Economic Resource Development ? Disciplined corporate capital allocation ?…
  18. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 18
    Free Cash Flow Allocation Policy 16 Targets = 1.5x Debt/EBITDA and $15.0 billion in Absolute Debt Note: Policy is effective November 1, 2018 and targeted to be in place until at least the Company’s Normal Course Issuer Bid renewal in…
  19. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 19
    5 Year Production per Share Growth (Production/Share) Capital ($ billion) Strip pricing $4.6 $3.7 $4.7 $4.7 $4.5 *Based upon midpoint to midpoint for indicated year range. Note: See Advisory for pricing assumptions, cautionary…
  20. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 20
    Return on Capital Employed (2013 - 2017) 5 Year Average CNQ* *2013 - 2016 included on average ~$2 billion per year of project capital which did not earn a return (2017 - ~$900 million and 2018F - ~$230 million). Peers include: APA,…
  21. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 21
    Returns to Shareholders *Includes PrairieSky distribution and shares purchased from January 1, 2013 to November 30, 2018. ($ million) 2013 - 2018F 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Dividends Share Purchases &…
  22. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 22
    Canadian Natural Returns to Shareholders Horizon Phase 1 build years ($ million) Note: Based upon dividends declared. *2018F share purchases are YTD, as at November 30, 2018. 20 YTD* 18 years of dividend increases 21% CAGR since…
  23. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 23
    Committed Management • Substantial management and director invested wealth delivers clear alignment with shareholder interests Peers include APC, APA, CVE, DVN, ECA, EOG, PXD and SU. Note: Based on share ownership data from October…
  24. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 24
    Value/Growth Opportunities
  25. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 25
    Value/Growth Opportunities Potential Rate(1) MMcf/d Potential Rate(1) bbl/d Natural Gas & Light Crude Oil(2) 2,000 200,000 Heavy Crude Oil(2) - 250,000 Thermal in Situ Oil Sands - 120,000 Oil Sands Mining & Upgrading Near Term -…
  26. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 26
    Overall Montney Lean Gas…
  27. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 27
    Natural Gas, Light Crude Oil & NGLs Greater Wembley Area Potential CNQ Land Base Existing Montney wells Gas Plants Pipelines Progress Gas Plant Sexsmith Gas Plant Wembley Gas Plant Large, concentrated liquids rich Montney…
  28. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 28
    Gas cycling/storage targets two objectives ? Increased liquids recovery ? Store produced gas during low price periods • Pilot targeted for Septimus in 2019 • Opportunities throughout liquids rich land base • Leveraging strategically…
  29. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 29
    Heavy Crude Oil Technological Advancement - Horizontal Multilateral Opportunities ~500 km AB SK CNQ Land Base CNQ Heavy Crude Oil Producing Properties Potential Multilateral Horizontal Opportunities Smith Golden Lake •…
  30. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 30
    Thermal In Situ Oil Sands Portfolio Potential Peace River Lindbergh Saleski Liege Germain Pelican Wolf Lake Primrose Grouse Leismer Gregoire Birch Mtn. Ells River Marie Lake Kirby Ipiatik CNQ Thermal Producing…
  31. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 31
    Oil Sands Mining & Upgrading Near Term Opportunities Joslyn Lease Plan Estimated cost savings of over $500 million ? Significant value realized from savings and efficiencies through optimizing the mine plan • Paraffinic Froth…
  32. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 32
    Oil Sands Mining & Upgrading Potential Long Term Opportunities Horizon Phase 4 & 5 ? Increase capacity by ~260,000 bbl/d of SCO ? Executed in a step wise and disciplined manner ? Significant potential, contingent on market access •…
  33. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 33
    International Light Crude Oil South Africa Exploration Drilling 5 structures identified with up to ~1.0 billion barrels OOIP per structure • 20% working interest(1) ? Upfront cash consideration and financial carry ? Future bonus…
  34. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 34
    Asset Overview
  35. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 35
    Natural Gas, Light Crude Oil & NGLs Core Area Summary *Company Gross proved plus probable reserves at December 31, 2017. AB SK MB CNQ Land Base BC Largest natural gas producer in Canada ? Q3/18 ~1,489 MMcf/d ? 9.5 Tcf 2P…
  36. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 36
    International Light Crude Oil Summary Q3/18 light crude oil production ? ~47,000 bbl/d • 2P reserves ? 305 million barrels* • North Sea ? Low decline ? Low risk development opportunities • Côte d’Ivoire ? High return, low risk…
  37. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 37
    Heavy Crude Oil Core Area Summary *Company Gross proved plus probable reserves as at December 31, 2017. AB SK Smith Cliffdale Pelican Lake CNQ Land Base CNQ Heavy Crude Oil Producing Properties Bonnyville & Lloydminster area…
  38. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 38
    Heavy Crude Oil Pelican Lake Wabiskaw Pool Boundary CNQ Land Base CNQ Polymer Flood Heavy Oil Processing Facilities Industry leading Enhanced Oil Recovery (EOR) technology • Long Life Low Decline assets • Industry leading heavy…
  39. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 39
    Thermal In Situ Oil Sands Portfolio (1) Includes Kirby South, Kirby North, Primrose and Wolf Lake facility capacities. (2) Company Gross proved plus probable reserves as at December 31, 2017. CNQ Thermal Producing Properties CNQ In…
  40. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 40
    Primrose & Wolf Lake Development Opportunities Primrose North Primrose South Wolf Lake Primrose East Primrose 1,158 CSS wells 22 SAGD well pairs Wolf Lake 278 CSS wells 273 SAGD well pairs Acquired Lands – Primrose North 231…
  41. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 41
    Thermal In Situ Oil Sands Kirby SAGD Kirby South Approved Project Area Approved Development Area Drilled Development Pads Kirby Future Pads Ipiatik Future Pads Ipiatik Kirby Southwest Kirby North Kirby South ? Q3/18…
  42. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 42
    Oil Sands Mining & Upgrading Advantages CNQ Horizon Oil Sands CNQ AOSP CNQ Operating Oil Sands Mines CNQ Lands Joslyn • Q3/18 production volumes of ~394,000 bbl/d • Total of ~17.5 billion barrels OBIP(1) • 2P reserves ? 6.06…
  43. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 43
    Oil Sands Mining & Upgrading Operating Costs *2018 based upon YTD actuals. Operating expenses reflect production downtime for turnarounds (unadjusted). Source: Company reports. (C$) Equivalent to ~$3.3 billion in additional margin in…
  44. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 44
    Oil Sands Mining & Upgrading In Pit Extraction Process (IPEP) Potential for cost savings of $2.00/bbl - $3.00/bbl for operating and sustaining costs • ~40% less GHG emissions during bitumen production • Eliminates tailings ponds •…
  45. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 45
    Marketing
  46. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 46
    Marketing Natural gas • WCSB production constrained by takeaway capacity ? Production base shifting to liquids rich natural gas and associated gas from crude oil • Increased natural gas export pipeline access in 2021 and LNG in 2025+…
  47. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 47
    Canadian Natural Balanced Portfolio of Natural Gas Sales 2018F* Export MMcf/d Dawn/Ontario 160 Empress 190 Emerson (Minnesota) 100 California 15 Canadian Natural Consumption 36% Exports 30% AECO Sales 30% 4%…
  48. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 48
    Heavy Crude Oil Curtailments (US$/bbl) Note: Based on strip pricing as of January 8, 2019. 46 • Canadian Natural actively engaged with Government of Alberta to evaluate options to bring WCSB supply and takeaway into balance ?…
  49. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 49
    Crude Oil Outlook Effective Takeaway Capacity Increases Throughout 2019 Incremental NWR Refinery(1) ~50,000 bbl/d Incremental rail(2) ~150,000 bbl/d Conventional declines(3) ~45,000 bbl/d Enbridge Line 3 on stream ~370,000 bbl/d…
  50. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 50
    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 diesel…
  51. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 51
    2019 Plan
  52. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 52
    2019 Budget Strategy • Align capital spend and production growth with takeaway capacity in short-term ?Incremental takeaway capacity of ~615,000 bbl/d through 2019 • Disciplined capital allocation ? 2019 base capital budget slightly…
  53. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 53
    2019 Capital Budget ($ million) 2018 Guidance 2019 Base Budget 2019 Normalized Budget North America Natural Gas & NGLs $440 $365 $365 North America Crude Oil 1,115 775 1,055 International Crude Oil 410 460 460 Total…
  54. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 54
    2019 Base Budget Production Targeted Production 2018F 2019B % Change(1) Natural Gas (MMcf/d) 1,545 - 1,555 1,485 - 1,545 (2%) Crude Oil & NGLs (Mbbl/d) North America 240 - 242 221 - 241 (4%) North America – Thermal In Situ 106 - 108…
  55. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 55
    2019 Base Budget Capital Breakdown Maintenance Capital ($ million)(1) 2019B Exploration & Production(2)(3) $1,490 Thermal In Situ Oil Sands 375 Oil Sands Mining & Upgrading 950 Abandonment & Reclamation 265 Total Maintenance…
  56. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 56
    2019 Value Adding Options Growth Projects $MM Value Oil Sands Mining* $200 Horizon Stages 1B/2 Horizon Paraffinic Froth On-stream date not delayed one year Increase reliability and lowers operating costs Restart execution, adds…
  57. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 57
    Technology, Innovation & Continuous Improvement
  58. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 58
    Technology, Innovation & Continuous Improvement Leading R&D investor ? ~$3.1 billion invested since 2009 • Benefits ? Unlocking reserves ? Becoming more effective and efficient ? Increasing production ? Reducing environmental…
  59. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 59
    Environmental Excellence Corporate GHG Emissions Intensity (tonnes CO2e/BOE) ~25% Overall Reduction 0.055 0.060 0.065 0.070 0.075 2012 2013 2014 2015 2016 2017 • Proactive environmentally responsible operations • Reducing…
  60. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 60
    3rd largest CO2 capturer and sequesterer for oil and gas sector in the world(1) • Reduced CO2 footprint • Reduced CO2 charges STRONG ENVIRONMENTAL INITIATIVES 58 Tonnes per Year Horizon 0.4 million Quest(2) 1.1 million NWR(3) 1.2…
  61. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 61
    Oil Sands Well-to-Combustion GHG Emissions Intensity (kgCO2e/bbl) Note: Total emissions intensity includes: production and upgrading, transportation, refining, transportation of refined product and combustion. CNQ Oil Sands includes:…
  62. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 62
    Capturing Technological Improvements in Oil Sands Oil Sands Operations Pathway to the Future GHG Emissions Intensity (kgCO2e/bbl) US Refined Average Note: Total emissions intensity includes: production and upgrading, transportation,…
  63. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 63
    Summary
  64. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 64
    Canadian Natural A Unique E&P Company • Long Life Low Decline asset base • Low maintenance capital requirements • Effective and efficient operations • Flexible, disciplined free cash flow allocation • Strong Balance Sheet,…
  65. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 65
    Key Message Optimal Cash Flow Allocation Increasing Returns Unique, Balanced Asset Base Robust Throughout Cycles Proven Effective Strategy
  66. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 66
    Pricing Assumptions 2018F 2019B 2020F 2021F 2022F Strip(1) Base Budget Normalized Budget October 29, 2018 US$ WTI/bbl $ 67.99 $ 52.88 $ 52.88 $ 67.62 $ 71.33 $ 72.07 $ 73.71 C$ AECO/GJ $ 1.47 $ 1.26 $ 1.26 $ 1.48 $ 2.35 $ 2.70 $…
  67. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 67
    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…
  68. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 68
    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…
  69. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 69
    A barrel of oil equivalent (“BOE”) is derived by converting six thousand cubic feet of natural gas to one barrel of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, since the 6 Mcf:1 bbl…
  70. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 70
    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…
  71. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 71
    Drilling activity, net wells Crude oil 1,203 1,117 1,023 115 174 495 Natural gas 35 44 75 19 9 21 Dry 33 30 19 6 7 7 Strats and service 727 384 437 166 268 289 Realized product pricing, before hedging activities & after…
  72. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 72
    Ratios Debt to adjusted funds flow, trailing 12 months 1.5x 1.3x 1.4x 2.6x 3.5x 3.1x Debt to book capitalization 26% 27% 33% 38% 39% 41% Return on common equity, trailing 12 months 8% 9% 14% (2%) (1%) 8% Daily production before…
  73. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 73
    Corporate Guidance 2018 Annual 2019 Base Budget Daily Production Volumes (before royalties) Natural gas (MMcf/d) 1,545 - 1,555 1,485 - 1,545 Crude oil and NGLs (Mbbl/d) North America – E&P 240 - 242 221 - 241 North America –…
  74. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 74
    Capital Expenditures (C$ million) North America natural gas and NGLs $ 440 $ 365 North America crude oil 1,115 775 International crude oil 410 460 Total Exploration and Production 1,965 1,600 Total Thermal In Situ Oil Sands 960 545…
  75. January 2019 Corporate Presentation – Canadian Natural Resources (CNRL) – slide 75
    North America Average Annual Cost Data & Other Information Royalty Rate Operating Cost Royalty Rate Operating Cost Natural Gas - North America (Mcf) 4.0 - 6.0% $1.20 - 1.28 3.0 - 5.0% $1.20 - 1.30 Crude oil and NGLs (bbl) North America…

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